CEO Interview: Merge Healthcare (MRGE) - Jeff Surges
June 27, 2011 - The Wall Street Transcript has just published Health Care IT Report offering a timely review of the Health Services sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Jeff Surges was appointed Chief Executive Officer of Merge Healthcare in November 2010. Prior to joining Merge, Mr. Surges served as President of Sales at Allscripts for three years. Mr. Surges led that sales organization with teams focused on direct, client, segment and international sales. He also oversaw the company's marketing organization to direct a single go-to-market approach. Prior to his tenure at Allscripts, Mr. Surges was President and Chief Executive Officer of Extended Care Information Network, Inc., before that firm was sold to Allscripts in December 2007. He transformed ECIN from an early-stage, venture-backed startup to the industry leader in case-management automation technology. Mr. Surges joined HBOC in 1997 from the acquisition of Enterprise Systems, Inc., where he served on the management team during their successful IPO and eventual sale to HBOC.
TWST: Please start by giving us a brief overview and history of Merge Healthcare.
Mr. Surges: Merge Healthcare (MRGE) is a leading provider of image interoperability solutions and informatics. What that really means is that we help hospitals, health systems and imaging centers. You will hear me refer to -ology and -ographies in the conversation today. Those are radiology, cardiology, orthopedics, mammography, oncology, pathology - all of the departments or areas within health care wherein X-ray, CT scan and imaging are needed and are a critical part of the care plan. To give you an example, somebody goes into the emergency room and gets an X-ray taken or somebody goes to an orthopedic surgeon for a knee surgery, and they have an X-ray done.
Merge provides clinical information systems in the form of software and services that help those -ology and -ographies across the health care setting operate more efficiently, store and retrieve large data files, which is a critical component to what we do, and then helps them save and connect those images to the electronic health record. That is another important step as the whole health care industry is starting to automate, and we are seeing the emergence of health-record technology. So Merge is a large pure play in information technology in hospitals' health care settings centered around enterprise imaging. That is what Merge Healthcare is in today.
TWST: Why did Merge enter the health care area? What was the reasoning behind that?
Mr. Surges: I think early innovators and early venture capital and private equity money continues to look at the health care industry as two things. One, it is very opportunistic in terms of the amount of opportunity to improve a process and reduce the cost, as well as the investment that health care is making overall in their budgets to information technology. Outside health care, most industries are spending 7%, 8%, 9% of their operating plans on information technology. Health care, up until the last few years, was always in last place in terms of that IT investment; they were in the 2% to 3% range. And so, the opportunity to provide information systems and solutions to a very challenging and important industry like health care always brings entrepreneurialism, always brings innovation into the sector.
We chose imaging because we think it's the YouTube and Netflix of health care. It's the largest file in the health care equation, and it's the most important attachment to the electronic health record. Simply put, a movie that you and I would buy through iTunes or through Netflix is a 4-gigabyte file. The size of an X-ray of my heart or of my hip or of my knee is a 5-gigabyte file. In health care, that is an extremely large file. It is difficult to store, save and to transfer, but yet it's the number one thing the doctor asks a patient for. When a patient goes to a doctor, the first thing he asks is, "Where is your X-ray? Can I see your X-ray?" That's what we specialize in. We are the YouTube or Netflix of health care.
TWST: What are your primary solutions?
Mr. Surges: The primary solutions that the company has centered itself around have been the largest imaging-centric areas of the health care equation. That is radiology and cardiology. Those are the two biggest areas where imaging is a critical component to the day job. Those two areas are strengths for us, and we've been a leading provider in those areas. With the advent of the HITECH Act and the stimulus reimbursement, which the Obama administration has incented physicians with to adopt electronic health records, we have centered our portfolio around both helping clients achieve meaningful use certification as well as interoperability, which is a really long way to say sending and receiving files. Inside health care, a big challenge has always been how to move data. Today, I can easily send a photo of my kids to grandparents in Florida. I create an e-mail, find the picture I want to send and attach it.
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