The company that William Mortimore started in his Muskego basement in 1987 has grown into an international firm with 560 employees worldwide and $90 million in revenue last year. That company, West Allis-based Merge Technologies Inc., which does business as Merge Healthcare, develops medical imaging and information management software and services. Merge creates software for medical equipment manufacturers and for health care providers, including imaging centers, hospitals, radiology departments and specialty practices.
Merge develops picture archiving, communication systems and radiology information systems. The company’s software combines patient images into a single electronic record.
The company strives to improve information management for health care providers, enhancing the quality of care that their patients receive.
"We’re on the information management and distribution side of health care," Mortimore said.
More than half of the company’s business is done with end-user health care providers. Many of Merge’s customers are smaller and medium-sized hospitals that are less appealing customers to the company’s competitors.
"We’re primarily selling to people that are not as financially viable for the large vendors to be in," Mortimore said.
Serving smaller hospitals requires a different business model that plays to Merge’s strengths, Mortimore said. Larger health care providers have their own information technology (IT) departments to solve their software and computer problems. However, smaller hospitals rely on their vendors to provide them with trouble-shooting assistance.
"The smaller end-user has more problems than the larger end-user," Mortimore said. "The money is made or lost not on installing the original program, but on how long and how much it takes to support the actual customer."
Merge has a support center to solve its customers’ problems. Merge’s software is even equipped to detect problems that its customers are having and send a message to Merge about the problems. The company’s support center staff can solve the problem over the Internet, sometimes without the customers even knowing there was a problem in the first place, Mortimore said.
The company created that support center capability to enable it to serve customers worldwide, he said. That was necessary because the company could not afford to send its employees all over the world to solve its customers’ problems.
"We do about 40 percent of our business outside the United States," Mortimore said. "We tried to build this business with a different business model, more IT focused in its thought process, but respectful of the medical community. We really built the company from the ground up, building on IT principals for clinical medicine."
Merge is a high-tech success story for southeastern Wisconsin’s transitioning economy, providing jobs for 80 local employees. The company had a big year in 2005. The firm moved its headquarters from 1126 S. 70th St., West Allis, into the Summit Place office complex at 6737 W. Washington St., West Allis.
Merge also doubled its size in 2005 by acquiring Toronto-based Cedara Software Corp. for $387 million in stock.
Traded on the Naasdaq stock exchange under the ticker symbol MRGE, Merge’s stock value increased 12.54 percent in 2005 to $25.04 per share.
The company has plenty of opportunities to continue to grow its business, Mortimore said.
"The market for what we are doing is not fully penetrated yet," he said.
Only about 35 percent of the hospitals and imaging centers in the United States have electronic imaging systems, Mortimore said. The remaining 65 percent still use film imaging systems. Those are potential customers for Merge.
"You’d be amazed, in this digital age, but the bulk of health care (providers) are still using film," Mortimore said. "There’s still plenty of sales opportunities yet for the next reasonable period of time before we get to penetrate the replacement market. And some of our early adopters are already ordering replacements."
In addition, medical communications technology is so complicated there are many different niches available for firms like Merge to fill, Mortimore said.
"It’s so complex, nobody can do everything well," he said.
This year, the company expects to continue growing and to have more than $100 million in revenue and 600 employees around the world. The biggest challenge for Merge will be in making sure the company operates efficiency as it gets larger, Mortimore said.
"(But) market opportunities will not be a challenge," he said. "There’s plenty of opportunities yet, because health care is so far behind in doing this."
A major problem for the health care industry is the lack of an effective system for providers to share information about a patient’s medical background, Mortimore said. If a patient seeks care from a hospital that has never served that patient before, that hospital will have no information about the patient’s medical history. If the patient is not able to provide that information, doctors might not know everything they need to know to provide proper care, he said.
"I think the biggest concern in health care is not finding a new set of drugs or better equipment, as exciting as that is," Mortimore said. "If you can’t put the information at the fingertips of the health care professionals, they can’t do what is necessary. We’re putting our money in the wrong place."
Mortimore said a secure system should be set up for health care providers to use to obtain a patient’s complete medical history from other providers. The system would benefit patients, he said, and Merge could benefit by creating it.
The U.S. Department of Health and Human Services estimates that a national health information network could reduce health care costs in the country by $140 billion a year by improving care and reducing duplication of medical tests.
President George W. Bush has called for the development of local health information networks, which would enable a physician to obtain information about a patient’s medical history. The local networks would be able to communicate with each other in a national network of local and regional systems.
"Obviously, it’s a business opportunity for us if it succeeds," Mortimore said.
Merge plans to remain headquartered in the Milwaukee area, even though most of its employees are elsewhere, Mortimore said. The company has about 300 employees in Toronto and dozens in Boston, Cleveland, China and Europe.
Finding qualified employees in the Milwaukee area has been a challenge for the company, he said.
"Frankly, there’s more talent in Toronto than there is in Milwaukee," Mortimore said.
Many cities with strong high-tech industries have top-flight universities and large corporate financial resources, Mortimore said. Some of those cities, such as Boston and the Twin Cities, also are the seats of state government.
In Wisconsin, those attributes are largely split between Milwaukee and Madison.
"If you can connect Madison and Milwaukee, it would be better," he said.
A true entrepreneur, Mortimore is frustrated about the lack of entrepreneurial spirit in the Milwaukee area.
"Most of the funding for this business came from Chicago," he said. "I couldn’t get anyone here interested in what we were trying to do."
Mortimore said he regrets that none of his employees have left Merge to start their own firms.
"That mentality just isn’t here (in Milwaukee)," he said.
Merge Healthcare
Founder, chairman and chief strategist: William Mortimore
Chief executive officer: Richard Linden
Headquarters: 6737 W. Washington St., West Allis
Web page: www.merge.com
No. of employees: 560 worldwide, including 80 in West Allis
2005 revenue: $90 million
Mortimore’s Predictions
- The creation of local, regional and national patient data bases will provide opportunities for high-tech medical information companies.
- More smaller hospitals will switch to digital imaging system from traditional film systems, creating more opportunities for Merge Healthcare.
- Second-generation medical products will be in demand as the first-generation products break down or become outdated.
- Excellent customer service will provide returns on investment for companies.
