Quality Systems spends $165 million to acquire HealthFusion and its mobile EHR MediTouch

By Jonah Comstock
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ipad-ehr-softwareQuality Systems Incorporated (QSI), the parent company of practice management and EHR company NextGen Healthcare, will acquire HealthFusion, makers of the MediTouch mobile EHR for small practices. The cash only deal is for $165 million, with a possible contingent consideration of $25 million depending on HealthFusion's performance before the March 2016 close of the deal.

QSI does already have a mobile EHR called NextGen Go. But the company is focused currently at larger enterprise practices, whereas MediTouch was designed for small practices.

"Having found HealthFusion’s MediTouch platform, designed by doctors for doctors, I thought we had a great opportunity to bring an efficient, natively mobile SAAS solution to a market that doesn’t have access to IT departments or larger staff to handle key tasks," Rusty Frantz, president and chief executive officer at QSI, said on a special investor call about the acquisition. "It’s a market where time spent in data entry and system management translates directly to fewer patients seen, fewer patients returning, less time with family, and less money coming in. We believe being able to take and thoughtfully extend the solution using our enterprise expertise is a great opportunity into the future."

However, Frantz noted during the question and answer session, the company will be careful to maintain the things that have made MediTouch successful (It's currently deployed in all 50 states to more than 6,000 subscribers).

"The number one guiding principal in this is 'Make sure the physician is incredibly efficient'," he said. "I said we would thoughtfully extend the solution, and 'thoughtfully' is definitely the word here. We don’t want to take physician efficiency down from what HealthFusion has delivered as we begin to add more and more enterprise capability."

NextGen Go, meanwhile, will pivot to become more of a population health tool as MediTouch becomes QSI's primary mobile EHR.

The cloud-based MediTouch EHR was designed to be used on an iPad and its various modules, including the EHR, medical billing, practice management, collections, patient portal, and clearinghouse, are all designed to run natively on a tablet. HealthFusion was founded in 1998 and raised $2 million in VC funds in 2010, plus a $150,000 debt round in 2012, according to CrunchBase.

The acquisition reflects a priority shift for QSI, which recently sold its Hospital Solutions division to QuadraMed for an undisclosed sum. The company is now focused on ambulatory care, which brings it in line culturally with HealthFusion.

"That cultural fit was one of the things within the transaction that made the principals of HealthFusion very comfortable with the acquisition," he told investors. "So my expectation is we’re going to be working in the trenches together to drive the industry into value-based reimbursement and increasing physician efficiency."