An Australian health informatics vendor is planning legal action in the UK, alleging that a recent merger between rival companies may destroy its distribution channel there.
ASX-listed IBA Health signed a distribution agreement with UK company Torex in March, enabling Torex subsidiary Torex Medical Systems to distribute IBA's range of electronic health record systems. As part of that deal, Torex chairman Chris Moore took a directorship at IBA.
Torex has since proposed a merger with IBA's major competitor, UK-based health informatics vendor iSoft.
Gary Cohen, Sydney-based chairman of IBA, said the Australian vendor would begin legal action if the UK's Office of Fair Trading does not refer the Torex-iSoft merger proposal to the Competition Commission there by November.
The merger would not affect IBA's business in Australia, he said, but could cause serious damage to its channel in the UK. The merger would 'substantially' lessen competition in the UK market and thus should be referred to the UK's version of the ACCC.
“We have been in the UK for nearly 10 years now, with our products at a number of sites in the UK. IBA products would be one of probably five, six products in the UK in relation to health informatics,” Cohen said.
Cohen said in a 20 October statement to the ASX that IBA's legal action was intended to force Torex to abide by the terms of the March agreement.
“IBA has made a substantial investment in the UK and we have world-class clinical products suitable for the National Health Service (NHS) program. This move by iSoft to merge with Torex would displace IBA products from the UK marketplace.
“This is contrary to the agreement we reached with Torex and is anti-competitive,” Cohen alleged in the statement.
He claimed that Torex would not be able to meet its distribution obligations to IBA if it merged with iSoft, partly because iSoft had “made it clear” the merged company would prioritise iSoft products.
Further, Torex chairman Chris Moore had been negotiating terms of the iSoft merger since taking a director's chair at IBA, according to Cohen.
“It is regrettable that circumstances have reached this stage, but we will not be bullied into accepting a merger which in our view, completely compromises our exclusive and legally-binding distribution agreement with Torex,” Cohen said in the statement.
IBA Health develops and supplies specialised e-health software for the health sector, such as administration, clinical procedure management, decision support, accounting and financial systems.
In Australia, IBA recently rolled out its health informatics software across the first three major sites in the first stage of an Australian Defence Force (ADF) 170-site multi-stage project.
“That's going to get the ADF major functionality and information [improvements] for critical information and better data ... for their services personnel,” Cohen said.
He said e-health software was now seeing rapid take-up in many parts of the world. Public and private clinics and hospitals, pharmacies, general practitioners and government departments could all gain from integrating and streamlining communications, record-keeping and messaging functionality.
Three years ago, hospital CIOs and CFOs began seeking ways to employ electronic clinical systems in the US. Today, perhaps one in two hospitals were adopting some type of e-health system, he said.
“The industry is now realising they need to invest more heavily in software and get a more efficient health care model. To that end, a lot of investment is coming both from governments and private industry,” Cohen said.