“We’ve moved forward five years of technology solutions because of the need to be at home,” said Greg Moerschel, the managing director of BPOC, a Chicago-based private equity firm focused on the healthcare industry, in an interview. According to Moerschel, M&A activity is coming from four key areas:
• Revenue cycle companies, which provide back-office services related to chasing claims and dollars for healthcare providers, including adjudicating, processing, coding and credentialing: This is the most mature segment within healthcare IT, but it is still highly fragmented. Because everyone already has a revenue cycle solution, companies in this area are consolidating and replacing existing revenue solutions.
• Care management, including companies that help providers manage risk, manage networks and offer price transparency. This area is increasingly attractive for acquirers as federal regulators and consumers demand more pricing transparency from providers and payers. “I think we’ll see more and more of this in the next three to five years,” Moerschel says.
• Consumer health, including telehealth, where companies improve connectivity between consumers and providers: This is the area that has advanced the most within healthcare IT in last 12 to 18 months. Before the pandemic, healthcare tried to deliver more flexible access —which younger generations in particular demanded — through urgent care sites. The pandemic accelerated the flexible access trend with widespread adoption of telemedicine. Adoption of new consumer health IT will be slower for the older population, but the cost savings for payers and providers is compelling and will continue to drive the trend. In-home patient monitoring is also a factor.
• Artificial intelligence applied to research and development for drugs and medical devices: This area includes patient acquisitions for clinical trials and predictive analytics examining potential health outcomes in certain patient populations and value-based care. Analytics can examine prescription data, medical claims data and demographics to help determine with some certainty who will get sick and who will not. This area has also been accelerated by cost pressures and access to new sources of data from many mediums.
For more on healthcare M&A, see: