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Finnish based TietoEnator is a major Scandinavian IT service provider, and with more than 2,000 healthcare customers is also a leading European health IT player, following three acquisitions in central Europe in recent years.
However, the company has been through a tough time and is currently at a crossroads facing a plunging share price and having gone through an ultimately unsuccessful takeover attempt by a Jersey-based investment fund.
In an exclusive interview Arto Ryymin, the new executive vice President of TietoEnator’s healthcare and welfare business, tells E-Health Europe’s Philipp Grätzel how health IT can now help get TietoEnator back on track.
EHE: Mr Ryymin, on 1 June 2008, you became head of TietoEnator’s healthcare and welfare business – after having been part of the company for nearly 20 years. What is your broad vision for the European health IT market?
Arto Ryymin: “TietoEnator entered the health IT business nearly 40 years ago with administrative solutions for healthcare providers. Phase two, electronic patient records, started to boom in the mid 1990s. We were one of the first companies to provide EPR solutions in Europe.
“Phase three is what I would call the communication era. This is what has now started. It is about regional networking and about organising clinical pathways across several institutions. Phase four, finally, is where we are heading to: people will be more involved with their own health and caring processes and we will need ICT solutions for that. So the vision is to continue to improve productivity and quality of care, as we did before, and parallel to that to enable new structures of care.”
EHE: TietoEnator’s healthcare and welfare unit became engaged in Central Europe with the takeover of the three German health IT companies Cymed, ITB, and Waldbrenner. This was three years ago now. How does Central Europe compare to Scandinavia in health IT?
Arto Ryymin: “Overall, I would say that Scandinavia is a bit ahead in some areas. One reason is that Scandinavian countries are smaller than, say, Germany, and thus perhaps more flexible. But it depends on how you look at it. When it comes to ICT tools for patient involvement in the care process, for example, or mobile care, Scandinavia is certainly leading the crowd. On the other hand, our Central European hospital information system iMedOne is ahead in handling clinical processes. So it is a question of perspective.”
EHE: Could you give us a brief overview about TietoEnator’s healthcare and welfare business?
Arto Ryymin: “We are operating in Finland, Sweden, Norway, Denmark, Germany, the Netherlands and India, and have customers also in Luxembourg, Austria and Iceland.
“We have two comprehensive healthcare suites in our product portfolio: iMedOne is a modern SOA [Service Orientated Architecture]-based hospital information system that is currently used predominantly in Central Europe.
“Then Effica is an IT solution for hospitals, primary care and laboratories in Finland. In other Scandinavian markets we have a variety of different solutions that are tailored to individual large customers.
“Net sales of TietoEnator amounted to €1.772 billion in 2007, 8% of this is healthcare. In the first quarter of 2008, TietoEnator’s sales increased 6% to €468m. Operating profit rose by 15% to €37.6m, representing an operating margin of 8%, after 6% in 2007.”
EHE: TietoEnator’s healthcare and welfare unit is in many ways a prototype for a health IT company in the age of globalisation. The three takeovers in Germany three years ago were explicitly meant as a way to gain a foothold in Central Europe. Looking back, how successful was this Finnish attempt to globalise health IT?
Arto Ryymin: “We are absolutely convinced that it was the right step to go into Central Europe. We knew that it would take some time to get the integration process on track. As a manager, you always would like to see things move ahead faster. But we have to be realistic about time schedules, and we listen to our customers carefully.
“We have presented a roadmap at Medica 2007 which aims at consolidating our current offering and migrating our customers to iMedOne in the years to come. This roadmap has been accepted by our customers.
“All in all, the globalisation of health IT is happening, not as a big bang, but step by step. Healthcare is complex, and with 10 to 20 years, product life cycles are longer than in other industry segments. But still, it is happening, and we and our customers will be on a leading edge of utilising it.”
EHE: Have you already managed to create synergies between the Scandinavian core business and the new endeavours in Central Europe?
Arto Ryymin: Absolutely. Our mobile health services are a good example for applications that are of interest internationally. We are introducing these services, which were originally developed for the Scandinavian market, in Central Europe today already.
“With clinical pathways, it is the other way round. Our Central European HIS iMedOne is pretty strong in this field, and we will certainly use this experience for our Scandinavian products.”
EHE: Two years ago, TietoEnator’s healthcare management said that it aimed at becoming number three in the German HIS-market. According to a very recent survey, TietoEnator is number five now, with a market share of 6.5%. Will there be further takeovers?
Arto Ryymin: “It always depends on how you count market shares. If there are 2,000 hospitals in Germany, and 200 of them are our customers, we could talk about a 10% market share. Anyway, right now we will focus on organic growth and on strengthening our business with existing customers. Selected acquisitions remain a possibility if they provide us with good business opportunities.”
EHE: Recent years have not been easy for TietoEnator. Share prices plunged more than 50%, and only recently there was an unsuccessful takeover bid from Nordic Capital. How can the health IT business contribute to bringing TietoEnator back on track?
Arto Ryymin: “I strongly believe that healthcare and welfare ICT market is attractive and growing and it will continue giving excellent business opportunities for us. Honestly, the development of the share prices was not good. But we are looking ahead now. Key decisions about the future of the company have been taken, and we have learned our lessons.
“In times of an ageing population, healthcare and welfare offer attractive opportunities for an IT company. We and our customers have something special to offer here, not only in healthcare but also in the welfare sector, which is traditionally very strong in Scandinavia. This is recognised internationally: Some weeks ago, for example, TietoEnator’s homecare planning system Laps Care was nominated in the yearly operations research Franz Edelman Award, a renowned IT award in the US. This and other welfare solutions could be of interest in Central Europe as well. We are looking at that right now, but it is a bit early for final statements.”
Philipp Grätzel