Phillip Ragon, known as Terry, has quietly built Cambridge, Mass-based InterSystems into a $443 million (2012 revenues) company, selling the guts of electronic health records: databases that can easily ramp up and allow doctors to quickly retrieve patient information. Forbes estimates Ragon is worth $1.5 billion, thanks in part to booming sales of electronic health records. He joins two other health IT entrepreneurs on the Forbes billionaires list–Cerner’s Neal Patterson, and Epic Systems founder Judy Faulkner. Remarkably, he is the sole owner of InterSystems.
Ragon, who keeps a low profile, declined to be interviewed. In 2009, he surfaced in the press when he and his wife Susan, an executive at InterSystems, donated $100 million over 10 years to establish the Ragon Institute of MGH, MIT and Harvard. It is pursuing the development of an HIV vaccine.
Over the past five years, InterSystems’ revenues grew at a compounded annual rate of 14%, with a spike in 2010 following the HITECH Act, which boosted sales of Epic and other electronic health records because of government purchasing subsidies to doctors and hospitals. “We never run a business [thinking] that we need to grow 20% to 30% to be successful,” says Paul Grabscheid, a long time InterSystems employee in charge of strategic planning. He says the company is profitable, and has no debt.
InterSystems’ trajectory has been closely tied to the fortunes of Epic, a leading electronic health records vendor, which generated $1.5 billion in revenues last year. Epic is InterSystems’ single biggest customer. “When we met Epic, all the people from Epic and InterSystems could fit around a conference table. We’ve grown up together,” says Grabscheid.
In several ways, the two companies followed similar paths. Both are rooted in an older programming language called MUMPS, developed at Mass General Hospital in the 1960s. Their founders coded the first products, and turned down outside investors, preferring to maintain control.
An MIT physics graduate, Ragon formed InterSystems in 1978, with some of the proceeds he earned from selling his shares in a medical billing company he co-founded. (It ultimately became IDX Systems, now part of General Electric). He saw an opportunity with MUMPS (Massachusetts General Hospital Utility Multi-Programming System) which was gaining a reputation in health care as a language that could handle doctors’ notes, in addition to numerical information. InterSystems became the dominant seller of MUMPS databases, hawking a standardized version that attracted more software developers. Epic became a customer.
But with the advent of new database technology, InterSystems could no longer rely on MUMPS to stay in business. “We were becoming kings of a small market that wasn’t growing, and didn’t offer much future,” says Grabscheid. In 1997, the company introduced Caché (hidden in French), a competitor to Oracle’s database management tools. Developers could still write in MUMPS, but also in more popular programming languages, including Web applications. It is now InterSystems’ biggest selling product, attracting customers in health care such as Siemens and Sunquest, but also Credit Suisse for its trading platform, and the European Space Agency to map the Milky Way. “When Cerner attacks Epic [on using old technology], it does it based on an out-of-date historical view of the technology that is not accurate,” says Grabscheid.
The company says it’s not resting on its laurels with Caché, and points to a wide base of 30,000 customers that include the Department of Veterans Affairs, Partners HealthCare, and Cleveland Clinic. Over the past ten years, it has released two products that are increasingly in demand because of the push to connect disparate platforms to merge patient information. Revenues from one of its products, called HealthShare, have doubled to $20 million last year, over 2011. HealthShare, for example, provides the backbone for much of New York’s health information exchanges that bridge hospital systems.
You probably won’t hear Terry Ragon extol the benefits of interoperability. “He’s a private sort of guy. You’ll never confuse him with an outgoing sales person,” says Grabscheid.
Zina Moukheiber “Behind Epic Systems, A Low-Key Health IT Company Called InterSystems.” Forbes March 4, 2013