Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Practice Management News

Revenue Cycle Management Systems Top Q3 VC Investments List

By Ryan Mcaskill

- It is easy to see that technology is playing an important role in nearly every aspect of today’s health care field. From treating patients to keeping records to the revenue cycle, the latest tech systems are pushing operational evolution and improving the quality of care and cost effectiveness.

Last week, Mercom Capital Group, a global communications and consulting firm, released its analysis of the funding and mergers and acquisition activity during the third quarter of 2014 in health care information technology. The report covers deals of all sizes.

According to the numbers, venture funding in digital health and health IT sectors dropped by 46 percent, quarter over quarter. In Q2, $1.75 billion was spent in 161 deals, and that number dropped to $956 million in 212 deals in Q3. The amount spent in the second quarter is considered “rare,” but the third quarter is still the second highest quarter for funding since 2010. Year-to-date, VC funding totals $3.6 billion.

“Healthcare IT saw another big fundraising quarter in Q3 with almost $1 billion raised,” Raj Prabhu, the CEO and Co-Founder of Mercom Capital Group, said in the report. “Companies from countries outside of the United States, accounted for a record 21 percent share of the funding. While consumer-centric companies attracted the majority of the funding  this quarter, M&A has been a different story with the majority of the deals involving practice-focused companies.”

Consumer-focused technologies received 65 percent of all venture capital investments in the third quarter with $623 million in 140 deals. Mobile Health ($345 million in 82 deals), Telehealth ($101 million in 16 deals) and Personal health ($85 million in 24 deals) were the top three areas of investment.

Practice-centric companies received $333 million in 72 deals during Q3 of 2014, which is down from $1.1 billion in 61 deals in Q2. The areas that received the most funding were revenue cycle management companies with $75 million in eight deals.

When looking at the top M&A transactions during the third quarter, revenue cycle management companies and solutions providers for payers and providers make many appearances, including right at the top. The top three M&A transactions during this time include:

  • $2.7 billion acquisition of TriZetto, a provider of healthcare IT software and solutions that help payers and providers work more efficiently, by Cognizant, a multinational information technology, consulting and business process outsourcing company.

  • $1.3 billion acquisition of Siemens’ health information technology business unit, Siemens Health Services, by Cerner, a provider of healthcare information technology solutions.

  • $235 million acquisition of SPi Healthcare, a provider of healthcare revenue cycle management and physician billing services by Conifer Health Solutions, a provider of business process management solutions for healthcare providers and subsidiary of Tenet Healthcare Corporation.

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