Quality Systems, Inc. (QSI) announced earlier this week that it will acquire CQI Solutions, which develops surgery information systems. CQI will become part of QSI’s subsidiary, NextGen Healthcare Information Systems.

Installed at more than 100 of the nation’s premier hospitals, New Braunfels, Texas-based CQI has developed surgical suite solutions for more than 15 years. Its patient scheduling and surgical information systems will be sold both independently, as well as part of an integrated solution within the NextGen Inpatient Solutions portfolio, which includes NextGen Inpatient Clinicals and NextGen Inpatient Financials.

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“The acquisition of CQI complements the NextGen Inpatient Solutions portfolio, enabling us to expand our reach to include surgery facilities and to meet a critical need in the hospital sector for an integrated offering,” said Steve Puckett, executive vice president, inpatient solutions at NextGen.

CQI offers a range of solutions, including hospital-wide patient scheduling, patient tracking boards, clinical department procedural costing and charge capture, complete surgical services management and electronic charting. These tools provide department managers and hospital executives better insight into their operations.

Executives say CQI software provides increased efficiencies in patient throughput, resource allocation, clinical documentation, materials management, charge capture, reimbursement and management reporting. Previously, NextGen Healthcare and CQI demonstrated their ability to design effective solutions for joint clients.

Piper Jaffray analysts Sean W. Wieland and Mohan A. Naidu see the deal as a good way for QSI, with its roots in the ambulatory and dental markets, to expand its inpatient offerings. They note that its inpatient solutions generated about $18 million in revenues and $5.4 million operating profit in 2011, and that the CQI acquisition "should give the company good calling points within the hospital for cross-sell and boost growth in the segment."

However, they write, "while we see the opportunities in this acquisition, we believe internally developed, integrated solutions provide a greater competitive advantage, for example, Epic."

They point out that, thanks to mergers such as those with Sphere Health Systems and Opus Healthcare Solutions (in 2009 and 2010 respectively), QSI's inpatient portfolio "is comprised entirely of acquired companies, which usually pose integration risks."


Still, "with the target small hospital segment poised to increase adoption, we believe there is opportunity for a integrated solution and this acquisition would make sense if integrated without major risks."

[See also: NextGen helps hospital adopt IT for underinsured.]

“We are pleased to extend our portfolio to meet these cross-departmental needs, demonstrating our commitment to the community and rural hospital marketplace," said Puckett. "With the additional integration of our award-winning ambulatory solutions, our inpatient and ambulatory clients are now collecting critical data across the care continuum, helping them meet requirements of quality of care initiatives and current business drivers such as meaningful use, where clients have already earned in excess of $5 million in incentives.”

“CQI is excited about its new partnership with NextGen Healthcare,” said John McCarthy, president and co-founder of CQI, who will maintain responsibility within NextGen Healthcare for sales of surgery solutions. “Joining forces today will enable us to deliver a full suite of solutions to our hospital partners."