August 9, 2006 11:34 AM PDT

Sage takes a $565 million shot at medical software

Accounting software company Sage Group said Wednesday that its parent company is venturing into the health care field with the $565 million acquisition of Emdeon Practice Services, which makes software for doctors' offices.

Sage said the cash deal is expected to close by September, subject to regulatory approval.

EPS, formerly known as WebMD, makes practice management and patient data maintenance software and services 20,000 small- to medium-size doctors' offices.

Paper-less doctors' offices are gaining in popularity. In February 2005, President Bush called for all medical records to be automated by 2014. Even Microsoft is getting into the act with its July purchase of Azyxxi, a database software that aggregates individual patient records.

Sage had been looking to acquire a company that would allow it to offer software and services to physicians' offices with less than 10 doctors, which is the size of Sage's core customer base, said Ron Verni, CEO of Sage Software North America.

"Physicians will need to start doing practice management--a simplified, unified integrated solution, a common back office and front office. We think we can bring some great strength there," he told CNET News.com.

He added that the health care sector would complement Sage's reach in the manufacturing, distribution, construction, real estate and nonprofit sectors.

Verni said Sage has no current plans to lay off any EPS employees.

"We don't have this particular expertise within our company, so to get 1,800 professionals who are dedicated to it is a great competitive advantage," he said.

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