iSOFT: The new economy is in rude health in hospitals

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The Independent Online

From General Electric to the smallest penny stock, "visibility" – or the lack of it – is the word on all corporate lips.

Even before 11 September, the leading economies seemed to be on course for some sort of recession, and as profit warnings began to roll in they sounded very similar. In all sectors, but particularly the "new economy", companies have been forced to admit that the future, both for the wider economy and their own prospects, is too obscure to call.

So it makes a pleasant change to find a group that enjoys all the astronomical growth prospects of the technology revolution, but is also able to talk confidently about its short, medium and long-term outlook.

ISOFT's main product is software aimed squarely at public and private hospitals, and at the moment it is a near-perfect business to be in. The software is essentially a management tool for medical services, providing doctors with critical information, and budget planners with the data they need. That fits in very neatly with the overriding trend in healthcare, not just in the UK but in many countries around the world.

In 1998 Labour made it clear that investment in the health service was set to continue. As part of this, a government report was published that showed the NHS could be run far better if, across the board, its employees were given access to more information, especially at the point of care. The argument went that by giving a doctor better information about the patient, the chances of correct diagnosis and rapid responses are greatly improved.

That was answered in 2000 when the Government said it would be pouring £1bn into new information systems throughout the NHS.

This was all music to the ears of iSOFT, which is comfortably the leading player in the game. "Health services make the ideal place for installing this sort of software network," says its chief executive, Patrick Cryne. "There is a proven need for information and a large, but manageable area in which it has to be distributed."

Mr Cryne has also positioned iSOFT's business to pre-empt any worries that as the volume of patient-information traffic increases, the level of dependable security might fall. "The idea is to get data moving around so that it is in front of a doctor when he is treating a patient. The 'NHS Net' is not built to use public networks. That makes our service more expensive, but that's the price you pay to move sensitive information."

The shares, listed on the London Stock Exchange for over a year, have performed well as all this has sunk in. ISOFT has won long contracts that give technology shareholders a rare feeling of comfort.

But the company has exciting projects in the offing too. Long ago, it decided that the US was not a market it wanted a piece of. The barriers to entry are too high, and the insurance-based income system for public health services did not suit the business model. Other parts of the world, though, are ideal customers. Australia, Ireland and Scandinavia are just three on a growing list of territories where iSOFT is planting its flag.

A significant driver, in the UK and abroad, will be the growing spending power of private hospitals and clinics. They have always sought to sell themselves as better than the public sector, and have a high emphasis on new technology.

"There is a closing gap between public and private," says Mr Cryne, "but in both areas there is a focus on service to the individual. Providing data in a quick, efficient way takes a lot of the worry out of the system."