Business
Dynamic Healthcare Technologies Inc. (DHT) provides clinical information systems to a diverse customer base. Founded in 1994, the company offers products for the transfer of radiology, pathology, laboratory, surgical services and electronic healthcare records information. Each area is a distinct product line, and together form what the computer and software manufacturer calls its DynamicVision.
Over the last two years, Dynamic has restructured itself to take advantage of new and emerging technologies – particularly the Internet – and expanding opportunities in the business-to-business market. The Internet now is, in fact, considered Dynamic’s main medium of new sales.
In its earliest days, Dynamic was a service company that provided customer support for other product manufacturers, including IBM’s (Armonk, N.Y.) medical records product line. The acquisition of Turano Laboratory’s ISL5 laboratory information systems (LIS) line was Dynamic’s initiation as a product owner.
The company’s identity as a provider of mission-critical healthcare information systems was cemented in 1996, when it purchased Dimensional Medicine Inc. (Minnetonka, Minn.), designers of the architecture for what would become Dynamic’s LIS Premier series. Over the next three years, the company would transform itself, largely through a series of acquisitions that included the purchase and integration of Collaborative Medical Systems Inc., whose CoPath anatomic pathology system was already a market leader. These companies have since been retooled as needed, and follow all of Dynamic’s standard practices today.
Dynamic Healthcare Technologies Inc. |
T I M E L I N EAugust 1994: Dynamic Healthcare Technologies establishes its identity. 1996: Dynamic is listed on Nasdaq and raises the necessary capital to escalate product development, increase sales and pursue an aggressive acquisition and growth strategy. 1996: IBM and Dynamic agree to a partnership through which Dynamic markets, supports and maintains IBM’s Medical RecordsPlus enterprise-wide document imaging solution. May 1996: Dynamic acquires Dimensional Medicine Inc. (DMI of Minnetonka, Minn.), a developer and marketer of radiology information systems and converts DMI’s Minnesota offices to its radiology center. July 1996: The company begins beta site installation of its DynamicVision for healthcare records and PACsPlus product. Third Quarter 1996: The first enterprise-wide DynamicVision system sale is completed. December 1996: Collaborative Medical Systems Inc., makers of the CoPath anatomic pathology system, is sold to Dynamic, opening the door for the development of new open architecture, client/server solutions. February 1997: The company enters into a remarketing agreement with Sunquest Information Systems Inc. (Tucson, Ariz.). May 1997: The company completes the acquisition of Dynacor Inc. (Apple Valley, Minn.), a privately-held company specializing in the design and implementation of laboratory information systems, strengthening Dynamic’s position in the LIS marketplace. September 1997: Dynamic purchases IBM’s Medical Records Plus/400 document imaging software, an industry leader, and changes the product name to Dynamic Medical Records Plus. November 1997: The company signs an original equipment manufacturer distribution agreement with AutoCyte Inc. (Elon College, N.C.), acquiring the exclusive rights to sell the AutoCyte image management system in the U.S. and Canada as an OEM software contractor. 1997: Dynamic realizes its first profitable year since its formation in 1994. 1998: Three facilities are consolidated at the company’s Lake Mary, Fla., headquarters. 1999: Dynamic reports that nine-month revenues are 32 percent greater than year-ago period results, attributing the gains to lower expenses and more rapid deployment of systems. January 2000: The e-Premier LIS is available to Dynamic’s existing LIS customers as an enhancement to the current solution. |
The process culminated with painful changes in 1998 – a year marked by reduced profitability and downsizing. The industry was evolving and Dynamic realized that it needed to reposition itself. The result was a shift from a functional orientation to a product line focus.
This recasting helped position Dynamic in the vanguard of its industry, but perhaps too early. Revenues were slow to catch up to new product introductions. In 1998, revenues decreased by approximately $10.8 million, falling considerably short of company expectations.
By the end of the year, however, the company’s new orientation, marketing direction and product modernization helped to improve sales and visibility. Streamlined operations and a commitment to best practices and continuous quality improvement, combined with a 35 percent reduction in the size of its workforce over the previous two-year period, led to four consecutive profitable quarters.
Dynamic’s customer base today includes more than 650 medical facilities, covering large metropolitan hospitals to smaller clinics and physicians offices. The list includes Massachusetts General Hospital (Boston), Yale-New Haven Hospital/Yale University School of Medicine (New Haven, Conn.), Methodist Hospital of Memphis (Tenn.), University of North Carolina Hospitals, University of Pittsburgh Medical Center Health System, Memorial Sloan-Kettering Cancer Center (New York City), and the Mayo Clinic (Scottsdale, Ariz.).
Dynamic’s systems also are utilized by MediHealth Outsourcing (King of Prussia, Pa.) to market its services to Dynamic’s clients. PenRad (Plymouth, Minn.) is a major partner through an OEM agreement that permits Dynamic to market the PenRad mammography management application within Dynamic’s Vision for Radiology. An alliance with ComputerTalk Technology Inc. (Richmond Hill, Ontario, Canada) enables Dynamic to provide its speech recognition systems in radiology and pathology.
Chief Competitors
Doing business in five different product lines, Dynamic has no lack of vigorous competition. McKessonHBOC Inc. (San Francisco) provides products and services to the same client base through its IT division – which also outsources the products and services of its allied companies. Shared Medical Systems Inc. (Malvern, PA) is a well known and large competitor, with more than 5,000 customers in 20 countries and an array of IT systems. It competes directly with Dynamic with its Novius radiology and Novius lab systems.
Cerner Corp. (Kansas City, Mo.) also is viewed as a competitor in radiology and lab systems. Its comprehensive Health Network Architecture and HNA Millennium family of solutions features client/server technology, graphical user interfaces, and relational databases. Cerner has more than 1,000 clients in the U.S. and other countries. IDX Systems Corp. (Burlington, Vt.) is another established competitor in radiology with its Enterprise radiology solution.
In the pathology field, the Tamtron Corp. (San Jose) PowerPath 2000 system, on the market since 1997, is a principal competitor.
DYNAMIC HEALTHCARE TECHNOLOGIES |
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1996 |
1997 |
1998 |
1999 |
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Sales |
$19.8 |
$36.5 |
$25.8 |
$35.1 |
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Net Income (Loss) |
($15.6) |
$ 1.04 |
($ 9.01) |
$ 0.85 |
Principal Products
Dynamic’s radiology product line converted a year ago to a client/server platform, and now is implemented in more than 20 institutions, eight of which are already in a live environment. RadPlus is an image-enabled radiology information system (RIS) promising anywhere/anytime access for radiology result transcription and reports. Features include scheduling, patient trafficking, film tracking, reporting, and management of all radiology functions. The Dynamic Customizer, a database-driven companion product, gives users the flexibility to add or change fields and create new windows. It also is designed to reduce the expense and delay of programming.
Further, the automation of workflow makes it possible to merge these products with Dynamic PACSPlus, the company’s picture archiving and communications system, the Dynamic Optima mammography management system, and Dynamic Talk for continuous speech recognition. The powerful PACSPlus integrates information from the RIS with images and provides access to the patient’s complete radiology history via local and remote PACSPlus workstations.
Websight, another new product, is the linchpin that ties the Dynamic Healthcare products in each of its five product lines to new technologies. Websight, which uses Microsoft’s newest DNA standards technology, makes it possible to distribute information and images on the Internet via any conventional Web browser. There is an individual Websight module for each DynamicVision product line.
The client/server suite of products made its debut more than two years ago in the company’s pathology product line. Today, it is in more than 475 locations in the U.S. and Canada. According to CAP Today, the journal of the College of American Pathologists (Northfield, Ill.), Dynamic’s pathology systems command a 20 percent market share overall, and a 40 percent share of pathology systems at large university teaching hospitals and medical centers.
CoPath Plus – an updated version of Dynamic’s CoPath M – combines text, imaging and voice recognition at the desktop. The client/server Web-enabled system automates specimen accessioning and case dictation, produces reports and provides Snomed and natural language retrieval of diagnoses. CoPath Plus is live in more than 120 sites today, some of which are very large, academic medical centers. The related PICSPlus is an image capture system that produces ultra-high resolution microscopic and gross images that are linked and stored in the CoPath database.
In the LIS line, the newest entry is e-Premier (scheduled to go live in the second quarter), a Web-based lab info system which permits Dynamic’s LIS – the Premier Series – to work over the Internet.
Rounding out the portfolio are the electronic health record and surgical services products. Dynamic Record Plus, anchor of the company’s health record line, is an electronic document management system that gathers and maintains document imaging and workflow records – including process automation of medical records, the business office and other departments that require extensive documentation. Record Plus also handles management and prioritization of billing, claims, collections and insurance verification.
In services, the newest product is Surgi-Plus. Surgi-Plus is described as “a point-of-care preoperative evaluation system that dramatically improves the process of collecting, managing and accessing patient information collected prior to surgery.”
The system consists of two modules – one used in pre-op, which stores patient information, and the other that captures and presents documentation related to final preparation for surgery. The Dynamic Customizer affords the hospital or physician the ability to define their database and review post-operative report layouts and content.
Strengths
Dynamic’s tag line: Information Technology To Manage Care is not about to change.
The company prides itself on the simplicity of its mission – comparing itself to competitors which may have put time and energy into ancillary processes. Dynamic maintains that its focus from the start has been to capture and deliver information that will help healthcare providers deliver better care in a cost-effective and quality sensitive environment.
While not the biggest player on the block (outside of the pathology sector), the company’s relatively small size can be a source of strength. Dynamic today employs 202 people and has a sales staff of 12.
Dynamic also has formed productive strategic alliances. A 1996 partnership with IBM led to the 1997 acquisition of IBM’s Medical Records Plus imaging system and created a linkage that includes the integration of IBM’s MedSpeak/Radiology and MedSpeak/Pathology systems with Dynamic’s RadPlus and CoPath Plus systems.
KEY MANAGEMENTMitchel J. Laskey, President and CEO |
Other important collaborators include Sybase Corp. (Emeryville, Calif.), in a partnership that enables both companies to deliver enterprise client/server solutions, and Sunquest Information Systems (Tucson, Ariz.), which markets Dynamic’s pathology products exclusively.
Dynamic has an OEM distribution agreement with TriPath Imaging (formerly AutoCyte, Inc. of Burlington, N.C.), allowing the integration of the AutoCyte Image Management System (AIMS) into Dynamic’s PICSPlus pathology product. Through the agreement, Dynamic has the exclusive right to sell AIMS within the laboratory and anatomic pathology information systems markets in the U.S. and Canada.
Weaknesses
The financial losses of 1998 can be construed as a weakness, although a fading and eventually nonexistent one, if the healthy trend of the past year continues. Net income for the nine months ended Sept. 30, 1999, was $721,000, a $5.94 million improvement, compared with a net loss of $5.22 million reported for the same period in 1998.
Being a relatively small, lean company makes it more difficult to match name recognition of larger, more established competitors. Dynamic’s executives acknowledge that in the multi-trillion dollar healthcare business, size is a factor that may favor larger companies with similar systems – particularly if competing in several different markets.
To clear this hurdle and gain market share, the company intends – in the words of President and CEO Mitchel Laskey – “to stay close to our knitting, and stay focused and committed to being the best.”
In a market where it is difficult to stand out, Dynamic will bank on its growing reputation and the likelihood that prospects will talk to current customers.
The ever-changing healthcare business environment poses another challenge, and Dynamic vows to continue to evaluate its processes and be ready to shift market strategies to take advantage of emerging opportunities. To deal with this issue, Dynamic has committed marketing professionals to each product line, in addition to its corporate marketing team.
Outlook
With four consecutive quarters of profitability and positive cash flow behind it, Dynamic sees no signs of the trend abating in the near future. Officers vow to anticipate and stay a step ahead of where trends in healthcare information systems are going. This means several things: the introduction of new systems for the Internet and business-to-business uses, ASP delivery of software through a service model, fee-for-service risk sharing pricing models, and hand-held devices for use in the budding wireless arena.
The Websight products appear to be off to a fine start, as Dynamic promises continued R&D activity in this vital sector.
The plan is to grow, although the company is reluctant to announce specific measures it will take. Not surprisingly, it hopes to add products, increase its customer base and market share and show continued profits.
Mergers and acquisitions likely will appear on the horizon, although executives of the publicly traded company are not saying much at this time, only that they continue to discuss opportunities with other firms.
Assessing the future of healthcare and the volatility of that landscape, Dynamic accepts that there is a need for better information systems to make processes easier for patients and caregivers and more cost-effective for all. A likely outcome, they predict, will be a greater proliferation of information systems and spending.
Like its competitors, Dynamic Healthcare will be racing to keep up with advances in technology. Rapid developments in broadbanding and the wireless flow of information loom on the horizon and will figure prominently in the future of the company and the industry. 
