Henry Schein buys Exan Group … and what that means for the dental software industry

Some of you may have noticed the recent press release about Henry Schein acquiring a majority interest in the Exan Group. Exan develops and markets axiUm, the practice management and electronic dental record system in use at about 45 dental schools in the US. Henry Schein, on the other hand, owns Dentrix, with about 40% of the market the leader in the same product space, mainly in private practice. Henry Schein is no stranger to acquisitions, having grown its software and technology portfolio over the years essentially by buying other companies. Acquiring Dentrix in 1997 proved a particularly strategic move. Over the years, Dentrix has become one of the crown jewels in the Henry Schein holdings. Exan was started about 25 years ago and has business segments in dental schools, large group practices, private practice, and hygiene schools and programs. Over the past 15 years, it has grown into the dominant vendor of electronic dental record software (EDR) for dental schools.

I was not aware of this impending partnership, but it is nevertheless interesting to think about how it could affect the dental software industry, specifically the segment focused on dental schools:

  • With the purchase of Exan, Schein “owns” the dental school market overnight. While there are some other software offerings suitable for and in use in some dental schools, the barrier to entry in the dental school market has always been very high. Now, it is higher. The number of customers in the US is simply not large enough to realize superior returns, unless you are close to a monopoly position. From a business perspective, Exan is now even more entrenched in that market than before.
  • Exan’s enterprise product portfolio, including axiUm, complements Dentrix’s enterprise offerings quite well. Over the last decade or so, Dentrix has significantly strengthened its software offerings for large dental care settings. Having “a leg” in the dental school market rounds out Dentrix’s presence in that space (large group practices and the Indian Health Service being some other examples). Clearly, Schein sees potential for growth, both in the US as well as internationally.
  • In terms of product innovation, I am hoping that some of the more recent improvements in usability, software architecture and other aspects in Dentrix products carry over to the Exan product line. In talking to axiUm users both at our dental school as well as across the country, it is obvious that usability is not one of the application’s strong suits. My weekly experience in using the product with students routinely exposes usability and workflow design flaws, both minor and major. Dentrix, on the other hand, has made an effort in improving usability across the board in recent years, which will be especially evident in upcoming products.
  • I’m hoping that positive changes in software engineering and change management will follow. axiUm is largely a robust product, but it is also very complex. In consequence, implementing even minor version upgrades is no trivial undertaking. I cannot tell you how many times database changes in axiUm that were either poorly or not at all documented broke existing functionality, especially reports, at our school. Other schools are no exception.
  • One very positive result of this partnership should be increasing clout for dentistry with respect to the HITECH Act and Meaningful Use regulations. As many of you know, dentistry and many other healthcare providers were not really written into the original HITECH legislation. However, both Schein and axiUm have Meaningful Use-certified products which are now being implemented according to the CMS’s EHR Incentive Program. This will enable dental schools as well as other dental care providers to participate in the Medicare/Medicaid incentives for electronic health record adoption. This should make dentistry more a player in how electronic health records are used in general in the future.
  • I also see some potential for informatics innovation diffusing from dental schools to Dentrix. Quite a few dental schools, many of them part of the Consortium for Oral Health Research and Informatics, are experimenting with diagnostic codes, standardized medical history forms, risk assessment and quality assurance. These are welcome developments since they are focused on how we can use electronic data to improve oral health, not on how we document care so we can bill and don’t get sued. In talking to Pam Reece, the Director of Enterprise and Specialty Solutions at Schein, the other day, I learned that the company is working on a caries risk assessment module for Dentrix Enterprise. If so, it might be a great opportunity may be to translate some of the academic advancements in this domain to broader practice.
  • I am not quite sure how this move will affect the growing call for integrating medical and dental data, which my colleagues made so eloquently in their new book. (Rumor has it that a second edition of this book is in preparation.) Clearly, there is a strong move in the country towards interoperability of health records, health information exchanges, and looking at care in a more holistic fashion than we have done to date. It would be interesting to see what Schein’s/Exan’s plans are for connecting to the electronic medical record industry at large.
  • Last, I have always wished for a closer connection between the EDR systems that dental students use in school and what they will encounter in practice. Well, it looks like I got my wish! Time will tell how Schein leverages its new position in dental schools with regard to marketing to graduates.

I’m going to stop here since this blog post has been going on for too long already ;-) . I’d be interested in hearing your thoughts on this new development.

Best!

Titus

P.S. Disclosure: I don’t have any formal or contractual relationship with either company mentioned in this blog post.

– Titus Schleyer, DMD, PhD

Assoc. Professor and Director, Center for Dental Informatics

http://www.dentalinformatics.com/members/Titus+Schleyer

 

 

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