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Tracking the Trendline Across RCM Transactions

August 30, 2018

Despite promised returns from massive investments in EMR and population health management technologies, care delivery organizations continue to face financial pressure and razor thin margins.  Patient financial responsibility as a share of overall revenue continues to rise, putting pressure on not only collecting this growing revenue stream, but doing so in a way that does not compromise the patient experience.  Taken together, revenue cycle management remains a core focus for healthcare providers, and the desire to maximize revenue from both patients and alternative revenue sources has prompted a wave of revenue cycle management upstarts and transactions since 2017.

 

Themes and Transactions

Patient Financial Responsibility: While patient financial responsibility has been a focal point in the market, the most interesting observation from our 2017 – YTD 2018 data is that this sector is still in an emerging phase: the majority of patient financial responsibility transactions are growth equity and funding transactions versus consolidating M&A transactions.  While a handful of patient financial responsibility vendors focus on self-pay collections from a services perspective, such as CollectRx and HealthFirst Financial, the majority deliver technology that focuses on access management and payment processing.  On the access management side, vendors such as Phreesia (Echo, Ascension, Optum, LLR, Polaris, HLM), DCS Global (Tritium), and HealthiPass (FCA, OCA, Healthx) are integrating the process of registration and payments to streamline the patient engagement experience and drive collections.  Rectangle Health (TA Associates), VisitPay (Norwest, Ascension and Flare), Patientco (Accel-KKR) and SecureBillPay (acquired by ABILITY) focus on enhancing the self-payment process on behalf of patients for the benefit of providers, supporting upfront collections as well as back-end payment plans, and in some cases, integrating patient and payer financial responsibility into a super EOB.  On the M&A front, the most notable transaction was Global Payments’ $700mm acquisition of PM vendor, AdvancedMD.

 

Complex Claims: Complex claims vendors offer both technology and services to drive collections and compliance related to cases reimbursed by workers’ comp, auto, property & casualty, and other non-traditional healthcare payers.  Private equity has seen a flurry of activity in this segment, with multiple vendors undergoing recapitalizations in the last year, including MRA (Riverside Partners), Kemberton (LLR Partners), EnableComp (Primus), Jopari (WestView), and Aspirion (Aquiline).  CollectRx (New Capital Partners) focuses on collections associated with out-of-network care, intersecting the complex claims thesis with patient financial responsibility.  The strong performance of vendors addressing complex claims is a testament to the need to outsource this complex requirement as well as the importance of maximizing revenue from all payment streams in the fight to preserve profits.

 

Coding & Claims: For the sake of this classification, our definition of coding and claims includes technology-based vendors that address connectivity between providers and health insurance payers, on either the front- or back-end of the revenue cycle.  Notable transactions include ZirMed (merger with Navicure to become Waystar), ABILITY (acquisition by Inovalon), Practice Insight (recapitalization with Yukon Partners), and PokitDok (investment from Guardian).  With value-based payment models, connectivity solutions are going beyond the claim by also exchanging medical records and outcomes data in order to facilitate payment in these next generation reimbursement models.

On the whole, we expect the revenue cycle management themes of the last year to remain in high demand for years to come.