Mr. Doyle: Medsphere was founded in 2002. Our purpose was to use the source code from the electronic health record system developed by the Veterans Administration - a system that was among the most widely deployed and successful electronic health records in the world - and to commercialize and make it available to all non-VA hospitals. The VA solution is called VistA, and Medsphere has taken the source code using the March 2002 FOIA (Freedom of Information Act) release of VistA. Then we invested millions of dollars and many years to make VistA usable by non-VA hospitals. We have a unique model, you might say. We view ourselves as a services company and believe the software is simply an enabler. We don't charge for the software; we charge for the services around the software. We give the software away to any hospital in the United States that wants it, and then we charge quarterly subscription fees to the hospital under a five-year subscription agreement. Under that contract, hospitals receive support, maintenance, free upgrades and membership in our ecosystem.
TWST: How is your company set up to compete with companies that are benefiting from ARRA?
Mr. Doyle: We think we are very well positioned. ARRA (American Recovery and Reinvestment Act) will pay hospitals and physicians millions between 2011 and 2015 for achieving meaningful use of clinical information systems. Our competitors charge hospitals $10 million, $20 million, $50 million, $100 million in license fees upfront for these software systems; then on top of these fees, they charge for maintenance and upgrades. The average hospital will receive $8 million to $12 million in ARRA stimulus funding between 2011 and 2015, but a lot of hospitals can't afford to pay $10 million or $20 million or $50 million in upfront license fees. Our model is hospitals don't pay anything upfront; they pay over time. So every hospital in the United States can afford an electronic health record system. Our average customer will pay Medsphere over a five-year period of time somewhere around $3 million, and they will get on average somewhere between $8 million and $12 million in government dollars back. It's a 3-1 return on the investment for the average hospital and the system will more than pay for itself over a short period of time. So it's a very disruptive offering. There is a reason only 1.5% of hospitals have a clinical information system today - most of them can't afford it, and we have fixed that adoption challenge.
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