FRANKLIN, TN – It's been a busy summer on the transcription and speech recognition front. In one week this past month, two separate and significant mergers were announced.

 

On Monday, July 11, MedQuist announced its acquisition of Pittsburgh-based M*Modal for $130 million. By that Thursday, the news was out that Burlington, Mass.-base Nuance's newest strategic buy was

 

Atlanta-based Webmedx, which was acquired for an undisclosed sum.

 

KLAS analyst Ben Brown says the deals are good news for all four firms. "Neither of the two companies that were acquired were huge yet," he said. "They were still smaller players but had nice niches. I think they'll both be nice additions."

 

M*Modal Senior VP Don Fallati says that, having attained a strong position in the market as a speech understanding platform provider, having found good partnerships with transcription companies and RIS/PACS vendors, the time had come to ally with a partner that could help position for a future where EHRs make their next evolution.

 

"The industry is very much recognizing the value of the narrative component of documentation,” he said. “Not necessarily in conflict to EHR structured information, but I think they're seeing the merging of the two."

 

Beyond Stage 2 meaningful use, he said, as healthcare begins to "realize the promise of EHRs," with "decision support and analytics and the more robust care uses" coming to the fore, "these issues around the documentation types and quality of the data will play a crucial role."

 

That's why M*Modal "felt the urgency and the need" to sign on with a company such as MedQuist, Fallati said, with "north of $400M in revenues and a huge footprint" of 2,400 hospitals and clinics.

 

Indeed, added M*Modal CEO Michael Finke, MedQuist offers the "immediate resources and access to customers required to accelerate and extend our technology development efforts (toward) a whole new level of clinical documentation workflow and analytics solutions."

 

As for the buyer, MedQuist's new chairman and CEO, Vern Davenport (formerly of Misys) said the deal combines his firm's "strengths of capturing the physician narrative, our large customer base, global presence and deep domain expertise in healthcare with the innovations of M*Modal's currently available technologies and strong product roadmap."

 

"The MedQuist choice to merge with M*Modal was very healthy strategic technological acquisition," said Brown, who points out that the speech recognition engine it had been relying on was Nuance's SpeechMagic technology. "This gives MedQuist an opportunity to have their own speech engine IP, so they can be a little bit more of a captain of their destiny now."

 

Speaking of Nuance, its purchase of Webmedx was another smart move, says Brown. "Nuance continues to make strategic acquisitions, both for solid technology IP as well as to grow their footprint in the market. This looks again like another good acquisition to grow their already large presence," he said.

 

Nuance Executive Vice President and General Manager Janet Dillione said Webmedx's clinical documentation services and technology "will help to accelerate Nuance’s efforts to extend the power of its speech-driven solutions so that clinicians’ spoken words are not simply transformed into text, but through clinical understanding solutions can be used for clinical decision-making."

 

Webmedx's customers include more than 100 leading hospitals, including Bon Secours and Catholic Healthcare West. “Together with Nuance, we can expand upon and advance the physician-centric documentation services and solutions we provide, bring our award-winning services to a broader market, grow upon our customers’ satisfaction, and contribute to Nuance’s progressive efforts in clinical language understanding,” said Webmedx CEO Sean Carroll.

 

Brown notes that when KLAS analysts "go out and talk to Webmedx customers, they evangelize the level of quality they get in their transcription services. And they've started having some real success with their artificial intelligence engine that can take unstructured data and automate and structure it. It's been a differentiator for Webmedx, and they're another feather in Nuance's cap."

 

The question for all four firms, as always, is "how will they integrate," said Brown. He's inclined to be optimistic. "We've seen Nuance do it more (with past acquisitions), but we've also seen MedQuist do a pretty good job so far" with the transcription firm Spheris, which it plucked from the bankruptcy heap last year.

 

All and all, Brown expects to see continued jostling in this increasingly important sector. "There's plenty of competition on the transcription side, but it's just fun to see some more synergies creating some more competition on the speech recognition side," he said. "Hopefully that raises the bar for the entire industry."