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Andrew Patterson talks to Ian McCrae of Orion Health about how he has built a huge international software integration company supporting the health sector

Posted in Business
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By Andrew Patterson

Step inside any hospital or medical practitioner’s office these days and you’ll find paper files have almost become a thing of the past.

As health costs continue to skyrocket, efficiency gains are being achieved by investing in technology that has become the new mantra to reign in budgets that continue to grow exponentially.

Enter Orion Health, a New Zealand software development company that is quietly revolutionising the health care sector both here and overseas with its innovative approach to software integration.

These days the company has grown to become New Zealand’s largest privately owned software exporter and a global leader in eHealth technology.

Founded in 1993, by CEO Ian McCrae, Orion Health has grown from a specialist health integration vendor into a company that sells a comprehensive suite of eHealth solutions.

The big audacious challenge

Not one to shrink from a challenge after setting himself a sizeable one in 2006 that, at the time, he described as “particularly audacious,” Ian McCrae clearly still enjoys leading the business he created almost 20 years ago.

The goal was to build a one billion company by 2016 and after meeting him you’re certainly left in no doubt that his infectious drive, energy and vision for Orion means there’s every chance he’ll actually pull it off; though he is giving himself a bit of extra wiggle room these days to allow for the impact of the economic slowdown.

With a staff compliment numbering almost 700, Orion bears little resemblance to its humble beginnings in 1993 as a small software developer employing just four people.

McCrae says in those days the company had a very diverse range of projects on the go.

“Along with a range of offerings in the health sector, we also developed a baggage handling system, an airline reservation system and we even dabbled in some accounting software as well. However, over time we could see that health was going to be the big growth sector so in 1997 we sold off all of our other businesses and decided to focus on just that one area. It was also at that time we changed our name from Orion Systems to Orion Health.”

Success factors

What has made Orion so successful both here and overseas is its ability to fully integrate disparate software applications within various healthcare systems in order to achieve significant efficiency gains.

“Our first niche was in health integration. When we started off we had quite a few sizeable competitors but fortunately, one by one they eventually disappeared. So today we would be the leading vendor in the health integration space. Over time we’ve moved into a number of other niches to the point where we are now considered to be a full line vendor. “

“A typical hospital these days might be using two or even three hundred unique software applications and so now we can provide a fully integrated IT solution to an individual hospital or even to an entire health economy which is what makes us fairly unique”

“So essentially we’re in three major areas: integration, hospital software and applications to manage an entire country’s health system. So it’s really been a journey for us from a niche player to a full line vendor.”

Managing growth

Growing as quickly as the company has over the decade has enabled it to develop a range of core competencies.

“We’ve built most of it ourselves, although seven months ago we did acquire Microsoft’s hospital assets and they happened to compliment very well what we already had in place.”

Within the competitive space, Orion dominates some sectors but in others it faces fierce competition.

“One area where we have had an advantage is having a consistent board and ownership over the years whereas many of our competitors have been brought by investors seeking a quick exit which meant their strategy effectively kept changing.

“Over 15 years we’ve emerged as the dominant market leader in several areas.”

Embedding staff

Integrating medical professionals into both the operational and development sides of Orion has become essential for ensuring the company remains at the forefront of the health sector’s technology arm.

“We have a lot of doctors, nurses and pharmacists on staff, but what we really want to do more and more is work directly with local NZ hospitals. So we’ve entered into an R&D relationship with Christchurch Hospital so our staff are co-located with theirs. But for us it’s important our staff are working alongside doctors and nurses in hospital wards and understanding medical processes and procedures and that way our developers learn what their systems have to do next.”

Sector growth

Almost a decade ago getting medical practitioners to capture notes electronically was a rarity. These days its accepted practice which in itself is a huge change in attitude from a profession widely known for its innate conservatism.

But the growth of the heath sector globally is allowing Orion to mirror that growth while also allowing it to observe other health systems globally.

“In many ways, we’re quite unique because not only are we dealing with hospitals here and in Australia, but also the U.S., Canada and the UK. In addition, I was in China recently and they’re building some hugely impressive and enormous hospitals there all kitted out with the latest technology. I’ve also been in Moscow where they have their challenges while in Germany they’re big into genomics. So yes, when you look at the various health systems around the world there’s a great deal of diversity.”

“But NZ, despite being a small country, has at various points led the world in health and health innovation. 20 years ago we created a unique patient identifier, which sounds very simple, but it meant for the first time that we could actually link records. As a result of that fairly visionary system a lot more innovation was able to flow over the next 10 years.”

Staff recruitment

As many other technology companies have highlighted in this series, attracting staff remains one of the biggest challenges for Orion.

Ian McCrae remains unequivocal about what needs to change to remedy the problem.

“It’s a real problem that both the NZ school system and universities simply aren’t producing enough people who want to go into information technology. However, the real problem within the school system is that IT is seen to be on a par with woodwork and soft fabrics, which is just nutty. Change is only occurring very slowly, but the simple fact is that there just aren’t enough graduates coming out of university. We’re actually getting people sometimes with PhDs who we’re effectively retraining back into IT. To me that just seems crazy.”

“If you have a look at the jobs on Trade Me or Seek you’ll generally find they’re running 7 to 1 in favour of IT compared to jobs in the science sector and yet subjects like physics and chemistry are considered far more academic within the school system than information sciences and that just seems wrong.”

Orion Health might yet be the best example of why that situation will have to change in the future if New Zealand’s goal of becoming a South Pacific technology nirvana is to be realised.

 

KEY FACTS

Founded: 1993
Staff: 680 (NZ 340)
Turnover: $100 mln (2012)
Annual growth rate: 22%
Fastest growing market: USA
Domestic : export: 10% : 90%
International offices: 19
Profitable: Yes
Ownership: Private (Ian McCrae is the majority shareholder)
Recent highlights: International Business of the Year and Supreme Winner at the 2012 International Business Awards, ranked 18th in the Technology Investment Network top 100 companies

 

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2 Comments

So good to hear a good story

So good to hear a good story about a hard edged real business.  More of this please.  Much better than the finance stories about 'QE3' or 'Money Printing'.   Hard to know if any of that has any reality.  Go for it Mr McCrae.
I just hope we keep owning such enterprises in New Zealand.  Seems soon as somebody builds a goody like this, it gets sold away.

Agreed regards

Agreed
regards