Healthcare Information & Media (“HIM”) Industry Overview & Trends Driving HIM M&A August 2012 “[Patients] seek health information from media companies more than from government, healthcare companies, and consumer companies combined.” - PwC, 2012
Healthcare Information & Media
(“HIM”)
Industry Overview & Trends Driving HIM M&A
August 2012
“[Patients] seek health information from media companies more than from government,
healthcare companies, and consumer companies combined.” - PwC, 2012
Healthcare Information & Media (“HIM”) Universe Defined
Content
Professional
Consumer
Distribution
DTC Advertising Healthcare
Spectr
um
Information & Media Spectrum
HC Social Networks
Waiting Room Media
Directories
Patient Education
Diagnostic Games/Awards
Digital Disease
Management
Doctor Reviews
Personal Health Magazines
Data Analytics
Practice Management
Tele-health/V-consults
Smart Monitors
Electronic Health Records
Appointment Scheduling
Digital Health Management
Electronic Medical Records
DTP Advertising Old CME
Prescribing Data
Research Data
Management
Clinical Collaboration
Provider Collaboration
Professional Journals
Physician Reference
HCIT Consulting Services
UGC Publishing
Lead-generation
Remote Monitoring
2
New CME
$0
$1
$2
$3
$4
$5
2006 2008 2010 2012 2014 2016 2018 2020
US National Healthcare Expenditures (In Trillions)
Hospital Care Physician and Clinical Services Prescription Drugs Other Health Services
Retirement/Nursing/Home HC Net Cost of Private Health Ins Gov Health Activities and Admin Structures & Equipment
Dental Services Durable/Non-Dur Med Equip Research
Healthcare Spending Will Continue to Accelerate
Source: U.S. Department of Health & Human Services
Growth in healthcare spending is primarily being driven in the hospital care, physician & clinician
services and the prescription drugs segments
3
Key Trends Driving M&A
in the HIM Economy
1. Clinical Intelligence Is Driving Information Materiality
2. Marketers Roles Are Being Redefined By Outcomes Focus
3. Accountable Care Legislation Stimulating Pay-For-Performance
4. Legislation Driving EMR Adoption And Workflow Integration
5. Capital Overhang Fostering Healthcare Business Model Evolution
4
Clinical Intelligence is Driving Information Materiality
Drivers
Data driven customization is dividing
customers into revealing micro-segments
Data liquidity arises from the emergence of
intelligence across a continuum of care
Liquidity & customization has lead to
predictive intelligence
• data + analytics = information
GOAL: Audience Ownership
5
Selected Clinical Intelligence Deals
Buyer Target Target Description Price Year
OptumHealth Connextions CRM and analytics driven
consumer insight company $325 2011
PerkinElmer ArtusLabs Cloud computing infrastructure $15 2011
PerkinElmer Cambridge
Soft
Knowledge management in a lab
setting (SaaS) $205 2011
Oracle ClearTrial Clinical trial software (planning to
payment, SaaS) 2012
PerkinElmer Labtronics Electronic lab notebook (SaaS) 2011
Aetna Medicity Health information exchange $500 2011
Aetna Payflex Consumer focused digital HC
expense management $202 2011
Predictive intelligence has created a new level of data
materiality as Healthcare companies compete for the
opportunity to message and affect behavior
Marketers Roles are being Redefined by Outcomes Focus
Drivers
Changing Pharma landscape is forcing a
reassessment of multi-channel marketing mix
• 17 Brands ($34B in retail sales) will lose patents
over the next 2 years
Predictive Intelligence has created opportunity
to message and affect behavior
• Patient education
• Adherence
• Lead Generation
Fogg Behavior Model
Selected HC Information Deals
6
Buyer Target Target Description Price Year
Dowden
Health Media
Priority
Integrated
Marketing
Multichannel marketing targeting
Payers and Providers 2011
Menlo
Ventures Lumos Labs
Subscription based neuroscience
games/exercises for consumers $33 2011
Remedy
Health Media
Intelecare
Compliance
Mobile medical adherence,
prescription compliance 2011
Medivo WellApps
Mobile & online symptom tracking
applications for patients with
chronic illnesses
2012
Vista Equity
Partners
Essential
Learning
Interactive e-learning solutions
for behavioral health issues 2012
InVentiv
Health
SDI Health's
Promo &
Audit
Business
Analytical physicians surveys
for Pharma 2012
Sharecare Real Age Online health measurement tool 2012
Source: www.behaviormodel.org.
Accountable Care Legislation Stimulating Pay-for-Performance
Drivers Selected ACA Driven Deals
Pay for Performance
Implications:
Soaring demand for and valuations of:
• comparative data companies
• digital practice management companies
• integrity service companies
Focus on Patient outcomes is driving Payer
and Provider information needs to converge
7
Buyer Target Target Description Price Year
Harris
Corporation
Carefx
Corporation
Provides focused, data
aggregator that partners with
existing EMR
$155 2011
HMS Holdings Health Data
Sights
Payment integrity
services to Payers $400 2011
Verisk
Analytics
Bloodhound
Technologies
Payer-focused hosted claims
editing and analytics $82 2011
Verisk
Analytics
MediConnect
Global
Provides proprietary systems
and services that facilitate the
aggregation and analysis of
medical records
$349 2012
Experian Medical
Present Value
Eligibility verification,
credit scoring services,
and claims software
$185 2011
McKesson Portico
Enables Payers to design,
build, service and deliver
value-based reimbursement
to Providers
$90 2011
SAI Global Compliance
360
Payer/Provider cloud-based
regulatory compliance and risk
management SaaS
2012
General
Dynamics Vangent
HIE, EMR, data analytics,
business-process
outsourcing
$960 2011
Legislation Driving EMR Adoption & Workflow Integration
Drivers
Meaningful Use legislation has driven
growth the EMR industry
The tipping point of the materiality of
information has been reached
• Driving consolidation in EMR and across the entire continuum of care
Selected Practice Management Deals
8
Buyer Target Target Description Price Year
Cerner Resource
Systems
Electronic, point-of-care
documentation services for LTCs 2011
Quadramed
NCR
Healthcare
Solutions
Distributor of kiosks &
tablets for registration 2012
Automatic
Data
Processing
ADP
AdvancedMD
EHR and practice
management SaaS $205 2011
Nuance Transcend Transcription & clinical
documentation services $321 2012
McKesson peerVue Workflow and communications
solutions 2012
CSC iSOFT International EMR & revenue
cycle management $188 2011
Lumeris NaviNet Real-time healthcare
communications network 2012
Passport
Health
STAT
Tech’s Enterprise scheduling 2012
$1,919.0
Und* Und* Und*
$3,970.0
$213.0
61
1 5
2
19
16
0
10
20
30
40
50
60
$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
$4,000.0
HealthInformation
Management
PersonalHealthRecord
Mobile Health Telemedicine RevenueCycle
Management
ServiceProviders
HIM M&A 2011
US$ in Million 2011 Total No. of Deals
Capital Overhang Fostering Healthcare Business Model Evolution
Drivers
Competition is heating up: private equity
players, flush with cash, are chasing
digital/SaaS • Typically favor platform/bolt-on strategies with
operating leverage
• $100 billion of which is nearing the end of its
investment horizon
• Low % of digital revenue can make a 2-3x
multiple impact on price
Selected Private Equity Deals
Capital Overhang of US PE Investors by Vintage Year
9
Buyer Target Description Price Year
InVentiv
(TH Lee)
Ingenix, i3
CRO Clinical development business $400 2011
InVentiv
(TH Lee)
Kforce
Clinical
Research
Outsourcing solutions to
pharmaceutical, biotech and
medical device companies
$50 2012
The
Riverside
Company
Avatar
Internat’l
Patient satisfaction and
Physician engagement surveys 2011
Avatar
(Riverside)
HR Solutions
Internat’l
Management consulting firm
specializing in employee and
physician engagement
2011
T-System
(Francisco
Partners)
Practice
Management
Associates
Medical billing 2012
T-System
(Francisco
Partners)
Clinical
Coding
Solutions
Medical charge management and
auditing services 2012
API
Healthcare
(Francisco
Partners)
Concerro Cloud-based SaaS for HC staffing
& scheduling systems 2012
Gateway EDI
(Apax) NHXS
SaaS that helps medical practices
manage physician reimbursement 2012
Digital Health Ecosystems ARMS RACE
Employers
Commercial
Medicaid
Med
Devices
Biotech
CROS AROs
ACOs
Hospitals
Medical
Professionals Associations
Politicians
Policy
Regulators
PBMs
Pharmacies
Organized
Groups
Providers
Payers
Medicare
Pharma
Generics
Large
Pharma
Politics
Patients
$$$
Consulting Business
Comprehensive Pharma
management consultancy
Pharma Ecosystem Case Study
THLee’s Strategic Vision. Create an organization that relieves the pain points of Pharma.
Corporate Timeline:
May 2010
Joe Massaro appointed CFO, previously
worked as MD at Liberty Lane Partners,
former SVP of Global Business Services
at Fisher Scientific International
inVentiv Health taken
private after acquisition by
Thomas H. Lee Partners
Sept 2010
Acquires Kforce
Clinical Research
for $50M
Jan 2011
Paul Meister appointed CEO,
founder/CEO of Liberty Lane
Partners, former Chairman of
Fisher Scientific International
Jan 2011
inVentiv acquires the Campbell
Alliance Group, a healthcare related
management consulting firm, for
$400M
Jan 2011
inVentiv acquires i3 clinical
development businesses of
Ingenix from OptumInsight for
$140M
May 2011
inVentiv acquires
PharmaNet Development
Group, a clinical
development services
company, for $600M
Mar 2012
Clinical Business (50% of rev)
Clinical trial staffing
Drug development service
provider
Pharmaceutical, life science
and device staffing
Kforce Clinical Research
Commercial Business
Providing people, tools, and
technology to support the
successful commercialization of
pharmaceuticals, biologics, and
medical device or diagnostic
products
11 Source: inVentiv Health Strategy Team
Today
Value
estimated
at ~$2B
Full-service brand identity consultancy
Education and communications for advocacy
Clinical trial staffing solution
Global PR and marketing
Full service healthcare ad agency
Digital healthcare ad agency
Multifaceted creative services company
Brand perception company
Canadian full service healthcare ad agency
Provider of live/on-demand event services
Ad agency known for creating experiences
Patient relationship marketing programs
Commercial Business holdings detail:
Ad agency focused in oncology/immunology
Full-service communications/events
Patient educational information
Analyzes claims data to reduce costs
Patient medication use and risk management
Patient access and reimbursement services
Customized sales solutions
Sales team recruitment
Specialized medical education
Digital ad agency selling accelerator
Non-personal healthcare marketing
Pharmaceutical service and support
12
Pharma Ecosystem Case Study
Provider Ecosystem Case Study
athenahealth’s Strategic Vision: Driving value to doctors through the last mile.
By combining the information collected across a multitude of providers with athenaRules and then
leveraging the analytics provided by Anodyne, athenahealth has created a platform for comparing
payer performance and utilizing predictive analytics
Corporate timeline:
1997
Co-founders
Todd Park and
Jonathan Bush
purchased a
small practice
and incorporated
as athenahealth
Developed
athenaCollector:
a billing and
practice mgmt
tool
2000
Expanded the
technology with
athenaClinicals
2006
Company
valued at $76M
Aug 2007
Sept 2007
IPO’d on
NASDAQ
Aug 2008
Acquired Crest Line
Technologies for $7.7M,
later re-branded as
athenaCommunicator in
2010
Acquired Anodyne
Health Partners for $30M
from VC’s, later used to
build out analytics
business
Acquired Proxsys for
$36M, later re-brands as
athenaCoordinator
Oct 2009
Jul 2011
Acquired MDX
Medical/Vitals
for $3M
Sept 2011
Today
Company
has ~$2.8B
market cap
Source: athenahealth Strategy Team
13
Provider Ecosystem Case Study: athenaNet – “The Hedgehog”
athenaCollector
• Physician billing and
practice management
athenaRules
• Patented billing Rules Engine
enables client performance
benchmarked across athenaNet
athenaCoordinator
• Order transmission and
patient registration
Anodyne Analytics
• Data visualization tools and
insight into client’s practice
performance
athenaClinicals
• Electronic medical records
integrating Provider and Payer
intelligence
athenaService
• Over 1,000 people who
interact with clients at all
of the key steps in the
revenue cycle
athenaCommunicator
• Order Transmission
insurance pre-certification
and patient registration
“Driving Value
to Doctors
through the
last 10 feet”
- Jonathan
Bush
14
Payer Ecosystem Case Study
UnitedHealthcare’s Strategic Vision. Create a Patient & Primary Care Provider-centric experience
that utilizes information to transition from a fee for service to pay-for-performance environment by:
Optimizing care quality
• focus on the holistic health of the consumer: prevention, wellness and disease management
Reducing costs
• integrate information systems across care providers and pay-for-performance payment structures
Corporate timeline:
Q1 2011
OptumHealth acquires
care mgmt company,
INSPIRIS, from a
consortium of VC’s at
an undisclosed amount
United rebrands itself
to match its market
facing businesses,
thereby creating the
Optum segments
Mar 2011
Optum introduces the
Health Cloud Platform
May 2011
OptumHealth acquires
state and federal care
service, Logistics
Health Inc from
Gundersen Lutheran
Aug 2011
OptumInsight sells it’s
i3 clinical development
business to inVentiv
Health for $140M
Jun 2011
OptumHealth acquires
business process and
technology outsourcing
company, Connextions,
from New Mountain for
$325M
Sept 2011
OptumInsight acquires toxicology
and clinical research consultancy,
GlobalTox, from MTE Consultants
for an undisclosed amount
Today
15 Source: UnitedHealthcare Strategy Team
OptumHealth
• Care Solutions
• Behavior Solutions
• Financial Services
• Collaborative Care
• Logistics Health
OptumRx
• PBM services
• Mail order and specialty
fulfillment
• Claims processing and
retail network/rebate
contracting
Payer Ecosystem Case Study
OptumInsight
• Provider solutions including financial performance improvement,
compliance, clinical workflow and accountable care solutions
• Payer solutions including network performance, clinical quality,
operational efficiency/payment integrity and risk optimization
• Government solutions including program integrity, health
management/population analytics and data warehousing/
business intelligence
• Life Science solutions including market access/optimization,
strategic regulatory services, risk management and patient
insights
16
Payer Ecosystem Case Study: Health Cloud
HIPAA compliant tools:
Optum Care Suite
Healthcare Scheduling Exchange
Dashboards & Hosting
Optum Care Population: Condition specific
Patient registry analyzed for health intelligence
Foundation for an Accountable Care Organization Patient Centric, Outcome Focused
Healthcare Scheduling Exchange (HSE):
Provider referral & secure Patient messages
Optum Care Pathways: Establish care plan
across Provider continuum; access to EMRs
Optum Care Coordination: Track &
document care w/ multiple Providers
Optum Care Quality: Aggregate & analyze outcomes from
Payer claims, Provider records, and Patient reports
17
Payer/ACO Ecosystem Case Study
18
Aetna’s Strategic Vision: Create a Health 2.0 Accountable Care Organization using data and
mobility solutions.
• Stay Current: adapt healthcare management options to the changing habits of society.
• Remain Flexible: Maintain a wide array of options for all sorts of clients.
Corporate Timeline:
Nov. 2010
Joeseph Zubretsky and Meg
McCarthy are appointed
Executive VP’s; Mark
Bertolina becomes CEO.
Acquires health care
analytics company
ActiveHealth
Management for
$400 million.
May 2005 Jan. 2011
Enters into a strategic
partnership with leading
pharmacy CVS Caremark.
Acquires Health
Information Exchange
company Medicity for
approximately $490
million.
Jan. 2011
Jun. 2011
Acquires 3rd party
administrator Prodigy
Health for approximately
$600 million.
Acquires health plan
administrator Payflex
for approximately
$202 million.
Jul. 2011
Acquires Healthagen,
developer of iTriage,
top rated mobile
health app.
Dec. 2011
Today
Aetna’s market
cap is ~$14.2B
Source: Aetna Strategy Team, SEC filings
Payer/ACO Ecosystem Case Study: Convergence
19
Industry observers are seeing a path to convergence of Payers and Providers
Lora Lindsey
Healthcare Information & Media
Passionate about connecting People and Ideas
in Health Information & Media (HIM)™
Email [email protected]
Mobile 646.734.8375
Skype Lora.Lindsey1
Twitter @HIMBanker
LinkedIn www.linkedin.com/pub/lora-lindsey/0/185/225
Pinterest www.pinterest.com/HIMBanker
Crunchbase www.crunchbase.com/
For More Information
Over the course of her career, Lora has been
involved in the execution of over 44 deals
including: 12 M&A transactions, 16 equity
financings, 10 debt financings and 6 other advisory
assignments:
• Vice President, Media IB, Bear Stearns
• Associate, Healthcare IB, Goldman Sachs
• Analyst, Lev. Finance & Media Lending, BofA
• Volunteer, US Peace Corps
Asset classes underwritten include:
• Debt: leveraged loans (middle market),
syndicated loans, sub-investment grade bonds,
distressed workouts (chapters 11 & 7), converts
• Equity: public equity (large, small, and nano
cap), PIPES, private placements, alternative
investments (venture and private equity)
Securities Industry Registration: Series 79
BBA, University of Washington
MBA, Columbia Business School