Big news in HIT last week. 3 large transactions - 2 around RCM companies and the 3rd on e-prescribing:


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 Big news in HIT last week.  3 large transactions - 2 around RCM companies and the 3rd on e-prescribing: 
  • Health Evolution Partners goes early stage with its investment in Prematics
  • Medassets boosts its RCM business with the purchase of Accuro Healthcare Solutions for $352.7 million
  • McKesson’s Relay Health purchases HTP, a Web-based suite of RCM products
Health Evolution Partners, a San Francisco venture-capital firm headed by David Brailer, the former federal healthcare information technology policy coordinator, has made an eight-figure funding commitment to an electronic-prescribing venture led by the former heads of the two leading e-prescribing networks.   Health Evolution Partners announced it will provide a “series B” round of investment in Prematics, a provider of Web-based e-prescribing services to multiple Blues plans.
 
Last month, Brailer’s company announced it was setting up Health Evolution Partners' Innovation Network, a $200 million investment arm targeting venture and early-stage companies. Brailer said his firm has placed about $100 million in investments so far, but has not disclosed those bets on other companies. 
 
Brailer would not specify the amount of money being invested in Prematics, but said, “We’ve made a multistage commitment to the company and the accumulative amount is in the tens of millions of dollars.”  Brailer said many venture-capital firms had shunned e-prescribing companies after the dot-com bubble burst in 2000, but e-prescribing regulations and momentum in the market have changed the outlook for some e-Rx companies, and Brailer placed his bet on Prematics.  According to its Web site, in June 2006 Prematics announced it had received “eight-figure” private equity funding from venture capital funds General Catalyst Partners and Foundation Capital.
 
“This was obviously one of them that is tremendously underappreciated by all the capital market,” Brailer said. “Besides having a solution that is completely neutral to doctor workflow, it has two advantages that are tremendous.” The Prematics e-Rx service can be used by any doctor and any health plan, Brailer said. “And when they put it in, the doctor doesn’t pay anything. It’s paid by the plan.”
 
One major stumbling block to e-prescribing has been a long-standing Drug Enforcement Administration requirement that all prescriptions for so-called “schedule” drugs the DEA oversees be written on paper. “That’s all but resolved with the DEA,” Brailer said. “They’ve finally thrown in the towel on that. They have to come along. Physician attitudes are lined up. Consumers get the idea. All the infrastructure is in place for a solution.”
 
In the RCM world, MedAssets announced an agreement to buy Accuro Healthcare Solutions in a $352.7 million deal.  The healthcare group purchasing organization, which went public last year, said it will use Accuro’s health software applications to expand its revenue-cycle management product offerings.  The Accuro earlier this year registered for its own $143.7 million initial public offering although it never completed the IPO. In April, the company bought TPMS, a Framingham, Mass.-based revenue-cycle management service provider.  Of note are the 8.5x revenue and 31.9x EBITDA multiples. 
 
The second interesting deal in the RCM space is McKesson Corp.'s RelayHealth announced the acquisition of HTP.  HTP, founded in 1996, sells a Web-based suite of revenue-cycle management products for hospitals, a claims-processing system for payers and a technology platform it is marketing to regional health information organizations, according to the company's Web site.
 
RelayHealth, a physician Web portal company, was purchased by McKesson in 2006, but gave its name to a new business unit for connectivity products and services during a McKesson reorganization in the middle of 2007 after the acquisition of Per-Se Technologies in January 2007.
 
As financial responsibility is pushed more and more onto patients, determining where the money for care will come from is becoming more important for providers at both the hospital and physician-office level, according to Jim Bodenbender, senior vice president and general manager for RelayHealth. HTP has a product line that McKesson found attractive in that niche, he said.  “Eligibility is becoming one of the most important parts of that process. Everybody is talking about healthcare becoming retail. Solutions like this are going to become more important.”  HTP currently has only limited penetration in the physician-office market, but, again, the Web-based applications afford ready extension to that market where Bodenbender said he sees growth.  “With deductibles and copays becoming a big part of the cash flow that physicians are dependant upon,” Bodenbender said, “we do see a tremendous opportunity in the physician space for this technology.”  
 
This transaction supports my thesis discussed in LifeLines for the Week of 21 April 2008 – “Show me the money”.  Keep a watch out for more to come.