Healthcare fintech M&A expected to boost patient experience
Consolidation in the healthcare financing technology market is increasing, driven by the need to streamline payment processes, and the emergence of a new driver – the consumer – and perhaps most urgent, the financial stress caused by Covid. Experts agree that this activity will continue and prove to be a net positive for the industry.
In a phone interview, Sarah Calkins Holloway, Senior Partner at McKinsey and business leader of revenue excellence, said that overall, it’s an exciting time in healthcare finance, with several large mergers and acquisitions occurring between companies. Recent Transactions – Like Cedar that raised OODA Health to start billing for $ 425 million and R1 RCM agrees to purchase VisitPay For $ 300 million – there are a few more drivers involved, including a desire to enhance a patient’s financial experience and increase payment collection.
There are many reasons why financial participation and a patient’s financial expertise are a priority for health systems. First, the patient’s experience with billing and payment impacts how patients view their healthcare experience as a whole, putting the facilities’ reputation at stake, Holloway said.
Second, the emergence of high-discount health plans has increased consumers’ investment in what they are held accountable for and how, Kent Ivanov, VisitPay co-founder, and CEO, said in a phone interview.
“From my point of view, what it entailed is for both consumers and service providers to manage this new dynamic with the consumer as a driver,” he said.
As the latest pusher in the group, consumers want more transparency in the payment process as well as smoother, just like the experience they are accustomed to in other industries, Robert Mittendorf, head of healthcare at technology-focused investment firm B Capital Group, added in an interview. Over the phone.
Then there is the provider side. Service providers are being financially affected by the Covid-19 pandemic and so collecting payments – efficiently and cost-effectively – is essential. They are looking to streamline administrative processes, such as managing the revenue cycle, while dealing with the pressure on their margins, Drew Ungerman, McKinsey’s senior partner and leader of North American healthcare practices, said in a phone interview.
All of these factors have created an environment that not only supports but also encourages unification.
“The consolidation that’s happening is trying to create a more and more seamless end-to-end solution for healthcare providers and industry participants with a limited number of platforms they need to run their businesses,” Ivanov said.
This trend is evident when looking at R1’s acquisition of VisitPay. It’s clearly an R1 tech game, Ivanov said, as VisitPay supports R1 service offerings with a tech platform that not only automates billing but also processes like patient intake and pre-service estimates.
Acquisitions such as R1 and VisitPay also shed light on just how quickly players need to move into the healthcare fintech market.
B Capital’s Mittendorff said it might be too late for healthcare finance companies to create technology assets from scratch because to control the market, they need those technological assets now. Therefore, it makes sense for companies to merge or acquire the assets they need to provide comprehensive services.
As this M&A activity combines complementary offerings and technologies, integrated platforms are put together, which will improve both the patient and provider experience.
“We think the implications [of the consolidation] “Primarily helpful,” Mckinsey said Ungerman. “First and foremost, for the patients, who we believe will experience a healthcare financial journey that is simpler, more intuitive, and more technology-enabled … [it is also beneficial] For service providers. We believe that as these companies improve their technologies and improve their algorithms, service providers will see higher sets of care provided. ”
However, these benefits will come from fewer players given that all experts agree this consolidation trend will continue in the near term, with some, like Mittendorf of B Capital Group, saying it will continue into next year.
“What you see is the first wave [of M&A activity] In this area of healthcare fintech.
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