Noteworthy M&A Transactions - March 2022

APR 22
M&A and fundraising activity remained active in March, despite broader macroeconomic headwinds. This was especially true from key industry sectors, resulting in compelling opportunities for healthcare investors for the foreseeable future:
  1. Increased Focus on Clinical Documentation Improvement (CDI):  As the U.S. healthcare ecosystem continues to press towards value-based arrangements, and as hospital operating margins continue to be squeezed, Clinical Documentation Improvement (CDI) services and technology have become an increasing area of focus for hospital and health system operators.  CDI aims to “get the medical record right” by appropriately documenting a patient’s acuity level throughout their medical record and subsequently translating that accuracy into improvements in coding and reimbursement. The COVID-19 pandemic only exacerbated the financial and care quality challenges faced by hospitals and health systems. As a result, the high-ROI revenue and quality of care impact that enhanced CDI can deliver, through increased payer reimbursement and improvements in Case Mix Index scores, has focused the attention for both strategic and financial sponsor capital deployment.
  2. Heightened Interest in Solutions Addressing Pediatric Behavioral Health:  The COVID-19 pandemic has brightened the spotlight on behavioral healthcare treatments broadly, with pediatric-focused platforms receiving particularly strong interest. According to a recent study by JAMA, 2016 to 2020 saw significant increases in children diagnosed with anxiety and depression as well as measured decreases in adolescent physical activity.  The isolation and stress of COVID-19 further ignited an uptick in children diagnosed with behavioral and conduct problems stemming from both stress in the home environment and uncertainties surrounding education.  Additionally, the general increase in behavioral health challenges is having a disproportionate impact on working families, furthering the health inequity challenges already faced in today’s system. As a result, investments in platforms focused on addressing the behavioral health needs broadly in addition to platforms with a unique focus on adolescents, have continued to see increased activity.
  3. Investment in Value-Based Care Technology and Analytics:  As payer arrangements continue to trend towards adoption of value-based care (VBC) models, healthcare organizations and their leaders are increasingly looking to implement processes and robust data analytics that enable improvements in patient outcomes while simultaneously keeping costs under control.  Because successful VBC models rely on seamless collaboration across multiple stakeholder groups in an organization, having clean, real-time data and subsequent analytics is paramount to success in VBC arrangements.  Much like CDI, having a “front-end” strategy with enhanced clinical and provider data is critical to success. Lately, a significant focus has turned to finding unique approaches to better track quality metrics for provider groups coupled with providing behavioral analytics to better incentivize and align provider behaviors. Ultimately, with an enhanced front-end data and analytics strategy, individuals across the healthcare ecosystem can make enhanced “mission critical” care decisions that will ultimately improve outcomes while lowering cost.  
Several transactions in March aligned with these key themes:
  • AQuity Solutions, a clinical documentation, medical coding, and mid-revenue cycle software firm, acquired Acusis, a provider of outsourced clinical documentation services to healthcare providers for an undisclosed sum.  The acquisition expanded AQuity Solutions’ scope of offerings to include practice management, tumor registry, medical billing and collection services.
  • Omega Healthcare, a healthcare management outsourced solutions partner supporting the healthcare ecosystem, acquired Reventics, a clinical documentation improvement and revenue cycle management solutions provider.  The acquisition will allow Omega Healthcare to expand its coding and revenue cycle management offering.
  • Brightline Health, a leading virtual pediatric behavioral healthcare company, raised $105 million in a funding round led by KKR & Co. and including GV, Optum Ventures, Oak HC/FT Partners and Blue Cross Blue Shield of Massachusetts.  Brightline will use the additional capital to create greater access to high-quality, affordable care.
  • Optum, a subsidiary of UnitedHealth Group, acquired Refresh Mental Health, a national provider of outpatient mental and behavioral health services, from Kelso & Company for an undisclosed sum.
  • Clarify Health, an enterprise cloud analytics and value-based payments company, acquired Embedded Healthcare in an effort to enhance its value-based care offerings in the behavioral setting.  Embedded Healthcare’s offering includes behavioral health science tools that provide data and incentives to clinicians to simplify value-based contracting and reduce cost of care for patients.
  • Thomas H. Lee Partners acquired Intelligent Medical Objects (IMO) from Warburg Pincus for $1.5 billion.  IMO manages more than 5 million clinical terms and maps to all major coding systems, helping hospitals minimize clinician burnout, reduce unnecessary care and charges, optimize billing and reimbursement and streamline data management.
  • Embold Health, a physician-led analytics company that measures and creates transparency around provider performance, raised $23 million in a Series B funding round led by Echo Health Ventures and Morgan Health, the JPMorgan Chase & Co. business focused on improving the quality, equity, and affordability of employee healthcare.
TripleTree continuously monitors the market to identify the forces and themes impacting the healthcare industry.  Thanks for reading and, as always, let us know what you think!

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