Sentillion Sees Brighter Future in Healthcare Software Under Microsoft’s Ownership

2/18/10

Sentillion is no longer one of the little guys on the block. The Andover, MA-based provider of healthcare software announced this month that it officially became a subsidiary of technology giant Microsoft (NASDAQ: MSFT), a development that Sentillion founder Robert Seliger says will accelerate adoption of the firm’s software around the globe.

Seliger, who had been CEO of the firm, is staying on as general manager to lead the Sentillion business, which is now part of Microsoft Health Solutions Group. Sentillion, which is by some measures the largest operation to be acquired by the healthcare unit of Microsoft, has developed technology that is supposed to make it easier for staff in hospitals to access multiple software systems without having to stop and log in to each application. And while financial details aren’t being disclosed, it’s clear that Microsoft is investing in this technology to make its healthcare software user-friendly and practical for busy doctors and nurses.

Seliger tells me that, besides his new laptop from Microsoft and other planned upgrades at Sentillion’s main office in Massachusetts, there are few visible differences at the firm since he began reporting to Redmond, WA. Microsoft’s purchase of Sentillion followed a licensing agreement between the companies made in April to use some of Sentillion’s access-management technology for Microsoft’s Amalga Unified Intelligence System. Amalga aggregates data from separate sources within hospitals’ IT systems, enabling clinicians to, say, get a single view of a patient’s allergies, prescriptions, and lab tests without having to search the separate systems where those data live.

“We’ve known Sentillion for a long time, and the timing worked out really well for us to push forward with a deeper relationship,” said John Donaldson, director of business development and strategy for Microsoft Health Solutions Group, who has been dispatched from Redmond to oversee the integration of Sentillion into its new owner. “We’re anticipating learning a lot from Sentillion’s experience in the [healthcare] market.”

Microsoft has been providing software to customers in the healthcare sector for decades, yet it wasn’t until 2005 that it unified its efforts in the health and life sciences sectors with the formation of its Health Solutions Group, which is headed by corporate vice president Peter Neupert. Sentillion, on the other hand, has been focused exclusively on the healthcare market since it formed in 1998 with core technology originally developed at Hewlett-Packard. Seliger was part of a team at HP that worked with researchers at Duke University Medical Center in the 1990s to test what eventually became Sentillion’s core technology in a clinical environment, to show whether it would be useful, he tells me.

Sentillion has been a leader in the commercialization of single sign-on (SSO) and context management software in healthcare. Yet more and more companies have moved into this business over the years, making it a crowded market. A problem with IT systems in many hospitals is that their separate components—including software applications for pharmacies, laboratories, and nurses stations, to name a few—aren’t well connected. That could mean that a doctor would have to log in to each of the separate applications in his or her hospital’s IT system to search different records for the same patient. Sentillion’s software enables each of the separate applications to recognize authorized clinicians who have already signed in during a use session. The firm’s software also enables each application in a hospital’s IT system to understand which data a doctor is likely to need based on her previous searches of different applications.

This technology is useful for clinicians that use Amalga, Seliger explained. Say a clinician uses Amalga to pull together data on his patient from separate sources in a hospital’s IT system. Sentillion’s technology comes into play when that doctor, for example, wants to access one of those data sources—an application for the hospital’s pharmacy, let’s say—to order a prescription for his patient.

Microsoft’s Donaldson explained that the Health Solutions Group has now made six separate company acquisitions, and Sentillion is the largest of them in terms of its maturity in the marketplace and existing customer base. (The Health Solutions Group’s franchise products include Amalga and HealthVault, a system that enables patients to store and share their personal health records in a secure environment.) Sentillion says it has more than 150 healthcare customers and over 500,000 people that use its software. Seliger, who will report to Microsoft’s Neupert, says he is staying on indefinitely to run the Sentillion business in Andover, which is about 20 miles north of Boston. Sentillion employs between 75 and 80 of its 110 employees in Massachusetts, with the remaining workers distributed around the U.S. and at its office just outside of London in Surrey, UK.

Still, it’s unclear how well Sentillion’s venture backers and other investors have made out in this buyout deal. The firm raised about $29.5 million through three rounds of financing, Seliger says. (An early investor in the company was Polaris Venture Partners, which has operations in the Boston and Seattle markets; Polaris participated in the company’s Series A round in 1999.) The company’s main investors, according to Seliger, included Polaris, Newbury Ventures, InterSouth Partners, Split Rock Partners, Merrill Lynch Private Equity, and Wall Street Partners.

“While we’re not disclosing the financials of the transaction, I can tell you it was a good outcome for investors and shareholders,” Seliger says. “Our investors had been with the company for 11 years, which is a long time for a venture-funded company.”

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