We've long warned our clients that their single biggest risk in the EHR journey is picking a vendor who will not survive the inevitable market consolidation.

While the story of the sale of Sage Software to a private equity fund is not a consolidation of PM/EHR vendors per se, there is much warning in the story.

• In 2006, the Sage Group bought what was then the Medical Manager company for $565 million.  Now, that same business is being sold for $320 million.  Not a good sign.
• In the midst of a healthcare IT boom, Sage's 2010 revenue was actually lower than the revenue was in 2006 when it was acquired from  Emdeon.  Also, not a good sign.
• Though Sage is profitable, that profitability is shrinking.  That is three.

The purchase by the private equity group is being rationalized by the value of the large Medical Manager installed base.  While there is something there, we question the value of that.  It is not that hard to switch a customer off a legacy PM system in a move to a better platform that has a clearer path to the future.  Maybe the smart money guys have a good plan to turn this around, but Sage/Medical Manager practices have to at least take this news as a word, or three, or caution.