CEO: Healthcare Management Systems passing $75MM mark

By Milt Capps Last updated 6:42 p.m. Oct. 19, 2009

Published October 19, 2009

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HMS CEO Tom Stephenson

Nashville-based Healthcare Management Systems Inc. has more than doubled its revenue in about three years, and is eyeing Federal stimulus programs for further growth.

HMS President and CEO Tom Stephenson told VNC today HMS' fiscal year ending Nov. 30 should hit the $75 million revenue mark, up from $56 million reported two years ago, and more than twice the $35 million in revenue reported in news accounts in 2006.

Stephenson said the 25-year-old, West End-quartered company now have more than 385 employees, most of them based in Nashville. The HMS headcount is higher than two years ago by only a handful, which Stephenson said is attributable to HMS' increased leveraging of technology in training, as well as in operations.

Stephenson's comments on revenue growth were prompted by VNC questions during an interview about the Oct. 13 HMS announcement that the company will later this month offer an electronic-medical records product that integrates seamlessly with hospitals' existing information-technology infrastructure.

The newly offered HMS Ambulatory EMR is being promoted as helping healthcare providers qualify for reimbursement via the American Recovery and Reinvestment HITECH stimulus funding initiative.

HMS is touting well in advance the impending operational release of its ambulatory EMR product, in order to capture the interest of hospitals that plan to adopt EMRs, driven largely by pressure from Federal agencies. Stephenson said that while some hospitals and hospital groups are deferring committing to EMRs, many others are moving ahead to shop for EMR solutions and commit to adoption, even though key rules and criteria for federal reimbursement will not be finalized for months.

Stephenson said HMS has "been trying to move customers toward EMR for the last five to seven years – now, we're going to try to do it in 12 months."

Stephenson expressed confidence HMS can cope with the Stimulus-driven demand for services the company now anticipates, and notes that there is likely to be more pressure on healthcare providers than on vendors to show "meaningful use" improvements in terms of patient health outcomes, as demanded by Federal agencies.

VNC learned yesterday that HMS' new ambulatory-EMR product was recently acquired from another company. Stephenson said he is not at liberty to discuss which company created and sold the EMR product to HMS, or to provide other details of the transaction. He said HMS identified the product-acquisition opportunity through a concerted search effort by management.

Although HMS has about 75 employees involved in software development and roughly 25 dedicated to information-technology services, the company has in recent years sought when possible to avoid costs associated with developing technology from scratch, instead choosing to enter partnerships, cross-marketing agreements and employ other tactics.

Beyond the new EMR technology, HMS is pushing hard to expand adoption of its computerized physician order entry (CPOE); internal electronic health record (EHR); and, recently completed release 8.1 of its overall software suite, encompassing physician tools and clinical technologies.

Two years ago, HMS provided an exit for some investors and obtained fresh capital, through a debt-and-equity transaction involving Primus Capital Funds and National City Equity Partners, both of Cleveland; and London-based LMS Capital. The HMS ESOP also remains an owner. Brentwood Capital Advisors was HMS' exclusive financial advisor in the2007 recap, as well as in the recent acquisition of the EMR product from an as-yet undisclosed seller.

Stephenson, 48, became president of HMS in 2005, and has been with HMS more than 20 years. He earned his bachelor's in mathematics and computer science in the Vanderbilt University College of Arts and Science, in 1983. ♦