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Avaya Solidifies Hold in Health Care With Acquisition

Stocks in this article: SI CSCO MCK

Digging a little deeper into discharge processes, we learned about another situation where EMR systems are enabling lots of new technologies. Discharge is not always to the patient's home as illustrated in our example above. Another outcome is that the patient needs care at another place, and the hospital isn't the best place to do it because of the significant costs involved. This means that the patient might be moving to a medium/short term care facility, in the local area.

Authentidate (ADAT) offers patient placement services for Avaya's discharge customers through a database of local providers. Linked into the hospital discharge system, it can coordinate all the manual work and send patients to the appropriate facility. Both systems work in coordination here, because the discharge process is the same. What Authentidate does is direct them to the next place the patient needs to go.

What else is Avaya working on? It is also working on patient admit processes, patient contact processes, follow-up processes, patient flow processes, and other solutions around mobility so that nurses can have all their information wherever they are.

Looking at the macro-economic environment, there has been a lot of talk about health care from the government. In the stimulus package, $19 billion was allocated for electronic medical record adoption.

The bill targets "meaningful use" areas, specifically, quality of care for patients. However, re-admissions are a critical part of it -- the more re-admissions you have, the lower the reimbursement amount. In other words, they want people to be healthy when they leave the hospital.

Hospitals are now adopting EMR systems, but finding that there is still a lot of care coordination that is done by the nurses. Avaya is able to interface with those EMR systems and Sanjeev is finding that as the EMR adoption rate increases, so is the willingness of hospitals to adopt technologies to improve processes like patient discharge.

Virtually every large hospital (200+ beds) can use patient discharge, while patient placement depends on the certain departments that utilize these functions.

With a clear understanding of their offering and the macroeconomic environment, let's take a look at the market potential here.

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