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Medem enters agreement with electronic health firm

Allscripts Healthcare is in position to own a majority share of Medem, but its medical society founders say they will still control the company's board.

By Tyler Chin, amednews staff. Sept. 13, 2004.

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As part of a strategic alliance with Medem Inc., Allscripts Healthcare Solutions Inc. has entered into two financial transactions that could result in its acquiring control of the medical society-founded electronic health company.

But even if Allscripts -- a Libertyville, Ill.-based seller of electronic prescribing and electronic medical records software -- gains voting control, it's anticipated that the societies would retain control of Medem's board, said AMA Trustee William G. Plested III, MD. That's because a major reason Allscripts is investing in Medem is that its value lies in the relationships it has with its medical society founders, which provide health information content to Medem.

"I don't think they have any intent of taking over the board or running the company, because once the AMA and the societies lose control of Medem and the intellectual data we're providing to it, we're going to run, and then of course, they have nothing," Dr. Plested said.

"I think what's important to know is that the current control of the board of Medem remains with the societies as we do this transaction initially and may continue in that fashion for the foreseeable future," said Allscripts President Lee A. Shapiro.

On Aug. 12, Medem issued a three-year secured convertible promissory note under which it can borrow up to $2.1 million from Allscripts. In connection with that deal, Allscripts bought part of J.H. Whitney & Co.'s stake in Medem for $500,000 and has an option to buy out the balance of the Stamford, Conn.-based venture capital firm's Medem holdings for $600,000.