Correction to This Article
Earlier versions of this story misspelled the first name of the SureScripts chief executive. His name is Kevin D. Hutchinson. This version has been corrected.

SureScripts to Buy Rival Network

By Kathleen Day
Washington Post Staff Writer
Wednesday, May 2, 2007

Washington Post Staff Writer

SureScripts, the nation's largest electronic drug prescription network, has agreed to pay $500,000 to buy its chief competitor, the companies announced yesterday.

SureScripts, based in Alexandria and owned by the drugstore industry's two largest trade groups, plans to complete the takeover of the electronic prescription unit of ProxyMed of Atlanta, which operates under the trade name MedAvant, by the end of July.

The two networks allow doctors to transmit prescriptions directly to pharmacies. Health-care analysts said the transaction could speed up the use of electronic prescription-writing by doctors, who would not have to choose between two competing firms. Currently, about 20 percent of the nation's more than 500,000 doctors have the ability to write prescriptions electronically, but only about 9 percent are significant users of these systems, analysts said.

Filling prescriptions electronically increases safety by reducing errors caused by bad handwriting and by alerting pharmacists to potentially harmful drug interactions, said Wes Rishel, a vice president at Gartner Inc., a technology research and consulting firm in Stamford, Conn.

SureScripts paid $400,000 in cash Monday and plans to pay the remaining $100,000 after the final contracts have been signed, the companies said.

The result would be a " 'network of networks' that will allow healthcare providers and consumers to electronically connect and securely share information," SureScripts chief executive Kevin D. Hutchinson said in an e-mail.

SureScripts, founded by the drug-store industry in 2001, has about 50 employees. The MedAvant system was created by Walgreens in the late 1980s and sold to ProxyMed in 1997, SureScripts spokesman Rob Cronin said. The deal announced yesterday hinged in part on Walgreens' agreement to waive a $10 million penalty it had required if ProxyMed ever sold the system, he said. Walgreens is one of the drug stores that, through the trade groups, owns SureScripts.

ProxyMed spokesman Sarah Zimmerman said the publicly traded company will retain its three other business lines, which also operate under the MedAvant name: an electronic interchange between insurance companies and doctors and hospitals; the management of a health-care network; and an electronic delivery network of laboratory reports.

"This is a big deal because there's a lot of movement in healthcare to move processes like prescription writing from paper to electronics," said medical industry analyst Todd Weller of the Baltimore investment banking firm Stifel Nicolaus. "Cutting out paper reduces costs and inefficiencies."

The trade groups that own SureScripts are the National Association of Chain Drug Stores and the National Community Pharmacists Association, both based in Alexandria.

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