August 16, 2005 1:23 PM PDT

Linux entrepreneur tries again

Larry Augustin, the chief executive who presided over the spectacular boom and bust of computer maker VA Linux Systems, is dipping his toe back in the corporate waters, but this time he's focused on software.

Augustin is now CEO of Medsphere, a company that sells software designed to let hospitals manage patient records, pharmacy orders, medical procedures, billing and other responsibilities. That may sound like a dramatic departure from his last executive post, but the open-source philosophy is a unifying thread.

Medsphere's product, OpenVista, is based on software developed by the Department of Veterans Affairs during the last 25 years for use at more than 150 hospitals and 1,500 other medical facilities. Co-founder and Chief Technology Officer Steve Shreeve obtained the software from the government through a Freedom of Information Act request, and it's now in the public domain.

"It is our intention to build an open-source project around the core of that public domain code," Augustin said in an interview. However, the company also plans to sell proprietary software modules--for example, the original VA code can't handle billing, so Medsphere plans to build an extension to handle that, Augustin said. "Right now that stuff is not open source."

The core of OpenVista itself is public domain, which means that, like open-source software, it may be seen and modified by anyone, but unlike open source, has no copyright, said Quandt Analytics analyst Stacey Quandt. "One of the benefits of open-source software is that the code is protected under copyright, which grants permissions under a license to copy, modify and in some cases redistribute the software," she said. And, she added, "It remains to be seen whether all the source code of the...public domain software that MedSphere is using is available."

Medsphere sells annual subscriptions that cover software service and maintenance, and it also charges fees for those who need help installing OpenVista. Founded in 2001, the Aliso Viejo, Calif.-based company has about 50 employees, most of them programmers or service staff who help customers install the software. The software is in use at seven medical facilities so far, the only publicly announced one being Midland Memorial Hospital in Midland, Texas.

That's a comparatively sedate business life compared with the one Augustin had a few years ago.

VA Linux Systems held its initial public offering in 1999, with a stock price rising 698 percent from $30 per share to $239 on the opening day of trading. However, selling Linux servers proved difficult, and the company scrapped the business in 2001 to focus on a proprietary software product.

Augustin left VA Linux Systems, now called VA Software, in 2002 and in the intervening years has been a venture partner at Azure Capital Partners. He joined Medsphere earlier this year.

Medsphere's software is built using a programming language called MUMPS--the Massachusetts General Hospital Utility Multi-Programming System. Originally developed in the 1960s. MUMPS is a vintage language, but it's still widely used. "It's the Cobol or Fortran of health care information technology," Augustin said.

Medsphere has modernized the software somewhat, updating it to run on Linux servers, Augustin said.

 

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