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Germany’s Long Road to Online Medical Care Gets Coronavirus Jolt

Germany’s Long Road to Online Medical Care Gets Coronavirus Jolt

(Bloomberg) -- Two weeks before the World Health Organization classified Covid-19 as a global pandemic in March, CompuGroup Medical decided to make its video-conferencing software available to physicians for free.

The timing proved prescient. Within about eight weeks, license registrations rose from a few hundred to more than 80,000, allowing more patients to engage in online consultations with their doctors from the safety of their homes.

The sudden surge in demand for a product that had generated little excitement for six years highlights how doctors and hospitals are clamoring for technology that lets them interact remotely with patients. In the age of social distancing , it’s a vital tool to keep the health-care system running while reducing the risk of infection.

“Video consultations, and digitalization overall, have gained an entirely new status,” CompuGroup Chief Executive Officer Frank Gotthardt told shareholders at the company’s annual general meeting on May 13.

Gotthardt created CompuGroup 33 years ago to help his wife, a dentist, manage bills and patient data. The idea promised massive efficiency gains in a country that spent 390.6 billion euros ($430 billion) on health care in 2018. The system praised as among the world’s best, but faulted for being the most bureaucratic. Progress has been slow since then because data protection in Germany historically trumps technological progress. With the coronavirus changing the way people interact in almost every social and professional setting, doctors are increasingly taking note.

The company expanded its offering in January with the acquisition of Italian software maker H&S. The added tool allows hospitals to monitor vital signs of patients who do not require to be hospitalized, proving invaluable as the pandemic brought medical care in large parts of Italy to its knees.

It’s been tough slog for CompuGroup to gain the recognition it now enjoys. Annual revenue hovered between 30 million euros and 90 million euros for at least a decade, the company moved headquarters three times, listing and de-listing its shares, only to become more widely traded again from 2007.

Investors who bought CompuGroup shares in late March for less than 50 euros apiece turned a 50% profit in less than two months. Gotthardt, 69, still holds about a third of the stock, making him a billionaire.

The company is now headed toward 1 billion euros in revenue in two to three years, Chief Financial Officer Michael Rauch said in an interview, supported by the pending 225 million-euro acquisition of hospital management software from Cerner Corp., its biggest deal ever.

“If we do two or three more such deals in the coming years, we will hit the 1 billion euro mark faster than expected,” Rauch said. “I firmly expect that for 2023 at the latest. We have the ambition to grow fast.”

The company has changed its legal form to make it easier to raise fresh money in preparation for more deals. Rauch aims for the operating margin to be close to 30% five years from now. The software license that CompuGroup made available for free a few months ago will remain so until June, though pricing after that has not yet been determined.

An even bigger prize could lie in patients making their medical data available to practices, hospitals, pharmacies and insurers, in turn allowing the recipients to share the information to avoid duplication, detect potentially harmful drug interactions and improve therapies. Field tests in Germany are currently underway.

CompuGroup argues that already now, infection hot-spots and medical complications suffered by victims of Covid-19 could probably have been identified faster had it been possible to analyze patient data on an anonymous basis. But implementing such systems can take years and runs up against Germans’ desire for data protection. It’s a challenge illustrated by the country’s plan for an electronic patient record, a chip card announced about 20 years ago and finally being introduced early next year.

“Acceptance of telematic solutions has been disappointing in the past, but that could now change,” said Baaderbank analyst Knut Woller.

©2020 Bloomberg L.P.