Allscripts Drops Lawsuit Over $303 Million Deal

Posted on March 27, 2013 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. Contact her at @ziegerhealth on Twitter or visit her site at Zieger Healthcare.

Allscripts has agreed to drop a lawsuit against the New York City Health & Hospitals Corp. over a $303 million contract, Bloomberg reports.  In a display of what may be wishful thinking, Allscripts said it “looks forward to having the opportunity to work with HHC on other matters in the future,” according to Bloomberg.

Allscripts had sued the Health & Hospitals Corp., which runs the city’s public hospitals, when it awarded an EMR contract to Epic Systems. The contract involved tying together 11 public hospitals, 70 clinics, thousands of doctors and more than one million patients.

Allscripts had argued that it was a more logical choice because among other things, it offered a less costly choice. Execs had estimated that over 15 years, when ancillary costs are included, it would cost $1.4 billion to implement Epic, while its own EMR rollout could be completed for less than half that number.

But Alan Aviles, HHC’s CEO, argued that his team had given plenty of consideration to Epic’s rivals, spending four years on its nine-vendor shortlist. Moreover, he didn’t buy Allscripts’ savings estimates, according to a New York Times piece. Aviles noted that Allscripts’ estimate had assumed that application support for its product would cost nothing for 15 years, while HHC estimated the cost at $357 million.

Well, I don’t know what good all of this legal fencing did Allscripts. The vendor is already under closer scrutiny than its peers, given its management troubles and continued rumors that it will be acquired. I’d argue that the last thing it needs is to dissipate executive energies on a lawsuit that makes it look unreasonable or even desperate. But at least its leaders had the sense to drop the suit and move on.

Now it can turn its energies to the MyWay suit filed against it by a group of Florida physicians. The suit claims that the MyWay EMR, which was taken off the market last year, was defective, and that the offer of a free upgrade to its professional suite imposed additional costs.