MedData Inc., provider of billing and collections services to health care providers, is acquiring Cardon Outreach LLC, which manages patient eligibility, claims and collections services for clients.
MedData, a subsidiary of Mednax Inc. (NYSE: MD) and based in Brecksville, Ohio, will pay $400 million for Cardon Outreach of Woodlands, Texas, and the deal is expected to close within 30 days. Cardon Outreach’s expected 2016 Ebitda is $36 million.
Ann Barnes, MedData CEO, calls Cardon Outreach a market leader in “revenue-cycle management services,” which refers to managing patient accounts from their initiation through claims and billing to payments and collections. The deal will help MedData provide more services that reduce costs and optimize operations for clients as health care reimbursement models evolve, she says.
As hospitals face more challenges related to Medicaid coverage expansion and increasing financial responsibility given to patients, the added services of Cardon Outreach will provide growth opportunities for MedData through cross-selling, says Roger Medel, Mednax CEO.
MedData has more than 5,000 physicians as customers, while Cardon Outreach has more than 800 hospitals and other health care clients. Cardon Outreach’s services include screening patients and enrolling them in Medicaid and other programs, accounts receivable services, appealing payment denials, and collecting payments from patients. MedData is a self-described “technology-enabled services organization” with a list of services similar to Cardon Outreach’s, including billing and collections for insured and uninsured patients, and eligibility and enrollment services for Medicaid patients. The companies combined will have nearly 2,000 employees, and each company will retain its brand and current offices.
The Affordable Care Act, also known as Obamacare, continues to drive M&A deals as health care providers try to become more cost efficient. Two recent examples: In June, health-care equipment maker Royal Philips NV announced that it was looking at acquisitions in the health-care informatics market, where technology and data is used to manage patient care. And in May, IMS Health Holdings Inc. (NYSE: IMS), a health care information and technology services company, acquired Privacy Analytics Inc., which scrubs patient identities from health data, from Facit Business Trust in Toronto.
Cain Brothers was Cardon Outreach’s financial adviser on the deal and Houlihan Lokey served as co-adviser.