Veritas Capital, Elliott Management Acquire athenahealth in $5.7B Deal | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Veritas Capital, Elliott Management Acquire athenahealth in $5.7B Deal

November 12, 2018
by Heather Landi, Associate Editor
| Reprints
Click To View Gallery

Private equity firm Veritas Capital and hedge fund Elliott Management will acquire athenahealth, the Watertown, Massachusetts-based electronic health record (EHR) and practice management vendor, for $5.7 billion, according to an announcement released Monday.

Veritas and Evergreen Coast Capital, a subsidiary of Elliott Management, will pay $135 per share for the health IT company, which represents a premium of approximately 12 percent over the company's closing stock price on Friday. The deal also represents a premium of approximately 27 percent over the company's closing stock price on May 17, 2017, the day prior to Elliott Management Corporation's announcement that it had acquired an approximate 9 percent interest in the company.

The deal concludes a six-month acquisition process and a tumultuous period for athenahealth and its leadership. Elliott Management, the sometimes-activist fund run by billionaire Paul Singer, has put pressure on athenahealth leadership to take the company private or explore a sale since the hedge fund acquired a 9-percent stake in the company in 2017.

Following the deal’s closing, Veritas and Evergreen expect to combine athenahealth with Virence Health, the GE Healthcare value-based care assets that Veritas acquired earlier this year. The combined business is expected to be a leading, privately-held healthcare information technology company with an extensive national provider network of customers and world-class products and solutions to help them thrive in an increasingly complex environment, the companies said in a press release.

Webinar

Driving Success at Regional Health: Approaches and Challenges to Optimizing and Utilizing Real-Time Support

Regional Health knew providing leading EHR technology was not the only factor to be considered when looking to achieve successful adoption, clinician and patient satisfaction, and ultimately value...

“After a thorough strategic review process, we have decided to enter this agreement with Veritas, which we believe maximizes value for our shareholders and accelerates our goal to transform healthcare," Jeff Immelt, executive chairman of athenahealth, said in a statement. Immelt was appointed to that position after company founder and CEO Jonathan Bush stepped down back in June. “Combining with Virence will create new opportunities for collaboration and growth. Operating as a private company with Veritas's ownership and support will provide athenahealth with increased flexibility to achieve our purpose of unleashing our collective potential to transform healthcare.”

This past May, Elliott Management made an all-cash takeover offer to buy athenahealth, at a valuation of $6.9 billion. The investors sent a letter to athenahealth’s board proposing to acquire the company for $160 per share. In the letter, the investors criticized leadership at the electronic health record (EHR) vendor for failing to make the changes necessary “to enable it to grow as it should and to create the kind of value its shareholders deserve.”

The story continued to take turns throughout the summer, particularly following the resignation of CEO and President Jonathan Bush in June. Bush’s resignation came just a few weeks after Elliott Management’s takeover bid, and just a few days after reports surfaced that the athenahealth chief had allegedly assaulted his ex-wife more than a decade ago, and also created a “sexually hostile environment” at the company.   

Following the news, various companies, both inside and outside of healthcare, were brought up as possibilities to buy athenahealth, including the Kansas City-based EHR giant Cerner Corp. According to a report in the New York Post  published in early September, Elliott Management was cited as the favorite to win the athenahealth takeover bid, reporting that Cerner and UnitedHealth declined an opportunity to acquire the health IT company.

The transaction is expected to close in the first quarter of 2019, subject to the approval of the holders of a majority of athenahealth's outstanding shares and the satisfaction of customary closing conditions and regulatory approvals. The athenahealth Board of Directors has unanimously approved the merger agreement and intends to recommend that athenahealth shareholders vote in favor of it at a Special Meeting of Stockholder.

The combined company is expected to operate under the athenahealth brand and be headquartered in Watertown, Massachusetts. The company will be led by Virence chairman and CEO Bob Segert and an executive leadership team comprised of executives from both companies. Following the completion of the transaction, Virence's workforce management business will become a separate Veritas portfolio company under the API Healthcare brand.

Athenahealth got its start in the health IT space as a developer of practice management systems for physician practices and has steadily expanded its suite of network-enabled services for revenue cycle management and medical billing, electronic health record (EHR) systems, patient engagement, care coordination, and population health services. The company ranked at No. 13 on the Healthcare Informatics 100 list for 2018, with $1.2 billion in revenue.

For the past 20 years, the company’s culture was driven by its outspoken CEO, Bush, and many athenahealth customers have said they like the strong culture and the company’s service business. It remains to be seen how this deal with impact new and existing customers.

In an interview back in June, Erik Bermudez, senior research director at Orem, Utah-based KLAS Research, said he had spoken with a number of key athenahealth customers about the potential for new management. “What I heard is, because of athenahealth being who they are and because of the strong culture that they have built, they are less worried about athenahealth than they would be if it were another company. And, they indicated that it might be a good thing.”

He continued, “It’s been a public company and it’s really hard to serve two masters, Wall Street and customers and other stakeholders. Customers I talked to indicated that a sale would bring in new ownership and perhaps bring in a different set of priorities, and that could really help athenahealth get back to their roots and back to the culture they had when they began. I think there’s still a lot of excitement, and there’s some hesitancy as well.”

In Monday’s announcement about the deal, Ramzi Musallam, CEO and managing partner of Veritas Capital said in a statement, “athenahealth is a market leader and a natural and strategic fit with Virence. Virence and athenahealth have differentiated and complementary solutions, deep relationships with their respective customer bases and a shared culture of commitment to innovation. We look forward to leveraging our expertise in the sector, as well as the capabilities and solutions across both companies to provide superior value to customers, and create exciting growth opportunities for both sets of employees as Bob and the team build the future of healthcare IT.”

Veritas, a government and technology focused investor, has been adding health IT companies to its portfolio in the past few years. The investor bought Truven Health Analytics from Thomson Reuters for $1.25 billion in 2012 and then sold Truven to IBM Watson for $2.6 billion in 2016. Veritas acquired the healthcare business (now known as Verscend Technologies) from Verisk Analytics for $820 million, in 2016. The investment then bought GE Healthcare’s value-based care division for $1 billion in April 2018, followed a few months later, in June, with Veritas-backed Verscend Technologies buying Cotiviti, a provider of payment accuracy and analytics driven solutions, for $4.82 billion.

Bob Segert, chairman and CEO of Virence, said in a statement about the athenahealth deal: “We are excited by the opportunity to partner with athenahealth, one of the largest and most connected provider networks in the nation, to drive outcomes that matter the most to our customers. athenahealth and Virence have complementary portfolios and highly-talented people, and this combination expands our depth and reach across the continuum of care. I'm looking forward to combining our mission-driven cultures to create an even stronger healthcare IT company.”

Elliott Management Partner Jesse Cohn said, “We are pleased to support this transformative transaction combining athenahealth and Virence, which we believe represents an outstanding, value-maximizing outcome for athenahealth shareholders.”

 Upon completion of the transaction, Elliott's private equity subsidiary, Evergreen Coast Capital, will retain a minority investment stake in the combined company. Evergreen Managing Director Isaac Kim said, “We look forward to taking part in this unique opportunity. Under Bob's leadership and with Veritas' strategic oversight and strong track record of value creation, we believe the combined company will be a true leader in healthcare IT, ideally positioned to improve outcomes and reduce the cost of care.

 


The Health IT Summits gather 250+ healthcare leaders in cities across the U.S. to present important new insights, collaborate on ideas, and to have a little fun - Find a Summit Near You!


/article/ehr/veritas-capital-elliott-management-acquire-athenahealth-57b-deal
/news-item/ehr/allscripts-sells-its-netsmart-stake-gi-partners-ta-associates

Allscripts Sells its Netsmart Stake to GI Partners, TA Associates

December 10, 2018
by Rajiv Leventhal, Managing Editor
| Reprints

Just a few months after Allscripts said it would be selling its majority stake in Netsmart, the health IT company announced today that private equity firm GI Partners, along with TA Associates, will be acquiring the stake held in Netsmart.

In 2016 Allscripts acquired Kansas City-based Netsmart for $950 million in a joint venture with middle-market private equity firm GI Partners, with Allscripts controlling 51 percent of the company. With that deal, Allscripts contributed its homecare business to Netsmart, in exchange for the largest ownership stake in the company which has now become the largest technology company exclusively dedicated to behavioral health, human services and post-acute care, officials have noted.

Now, this transaction represents an additional investment for GI Partners over its initial stake acquired in April 2016, and results in majority ownership of Netsmart by GI Partners.

According to reports, it is expected that this sale transaction will yield Allscripts net after-tax proceeds of approximately $525 million or approximately $3 per fully diluted share.

Founded 50 years ago, Netsmart is a provider of software and technology solutions designed especially for the health and human services and post-acute sectors, enabling mission-critical clinical and business processes including electronic health records (EHRs), population health, billing, analytics and health information exchange, its officials say.

According to the company’s executives, “Since GI Partners' investment in 2016, Netsmart has experienced considerable growth through product innovation and multiple strategic acquisitions. During this time, Netsmart launched myUnity, [a] multi-tenant SaaS platform serving the entire post-acute care continuum, and successfully completed strategic acquisitions in human services and post-acute care technology. Over the same period, Netsmart has added 150,000 users and over 5,000 organizations to its platform.”

On the 2018 Healthcare Informatics 100, a list of the top 100 health IT vendors in the U.S. by revenue, Allscripts ranked 10th with a self-reported health IT revenue of $1.8 billion. Netsmart, meanwhile, ranked 44th with a self-reported revenue of $319 million.

According to reports, Allscripts plans to use the net after-tax proceeds to repay long-term debt, invest in other growing areas of its business, and to opportunistically repurchase its outstanding common stock.

The transaction is expected to be completed this month.

More From Healthcare Informatics

/news-item/ehr/study-links-stress-using-ehrs-physician-burnout

Study Links Stress from Using EHRs to Physician Burnout

December 7, 2018
by Heather Landi, Associate Editor
| Reprints
More than a third of primary care physicians reported all three measures of EHR-related stress
Click To View Gallery

Physician burnout continues to be a significant issue in the healthcare and healthcare IT industries, and at the same time, electronic health records (EHRs) are consistently cited as a top burnout factor for physicians.

A commonly referenced study published in the Annals of Internal Medicine in 2016 found that for every hour physicians provide direct clinical face time to patients, nearly two additional hours are spent on EHR and desk work within the clinic day.

Findings from a new study published this week in the Journal of the American Medical Informatics Association indicates that stress from using EHRs is associated with burnout, particularly for primary care doctors, such as pediatricians, family medicine physicians and general internists.

Common causes of EHR-related stress include too little time for documentation, time spent at home managing records and EHR user interfaces that are not intuitive to the physicians who use them, according to the study, based on responses from 4,200 practicing physicians.

“You don't want your doctor to be burned out or frustrated by the technology that stands between you and them,” Rebekah Gardner, M.D., an associate professor of medicine at Brown University's Warren Alpert Medical School, and lead author of the study, said in a statement. “In this paper, we show that EHR stress is associated with burnout, even after controlling for a lot of different demographic and practice characteristics. Quantitatively, physicians who have identified these stressors are more likely to be burned out than physicians who haven't."

The Rhode Island Department of Health surveys practicing physicians in Rhode Island every two years about how they use health information technology, as part of a legislative mandate to publicly report health care quality data. In 2017, the research team included questions about health information technology-related stress and specifically EHR-related stress.

Of the almost 4,200 practicing physicians in the state, 43 percent responded, and the respondents were representative of the overall population. Almost all of the doctors used EHRs (91 percent) and of these, 70 percent reported at least one measure of EHR-related stress.

Measures included agreeing that EHRs add to the frustration of their day, spending moderate to excessive amounts of time on EHRs while they were at home and reporting insufficient time for documentation while at work.

Many prior studies have looked into the factors that contribute to burnout in health care, Gardner said. Besides health information technology, these factors include chaotic work environments, productivity pressures, lack of autonomy and a misalignment between the doctors' values and the values they perceive the leaders of their organizations hold.

Prior research has shown that patients of burned-out physicians experience more errors and unnecessary tests, said Gardner, who also is a senior medical scientist at Healthcentric Advisors.

In this latest study, researchers found that doctors with insufficient time for documentation while at work had 2.8 times the odds of burnout symptoms compared to doctors without that pressure. The other two measures had roughly twice the odds of burnout symptoms.

The researchers also found that EHR-related stress is dependent on the physician's specialty.

More than a third of primary care physicians reported all three measures of EHR-related stress -- including general internists (39.5 percent), family medicine physicians (37 percent) and pediatricians (33.6 percent). Many dermatologists (36.4 percent) also reported all three measures of EHR-related stress.

On the other hand, less than 10 percent of anesthesiologists, radiologists and hospital medicine specialists reported all three measures of EHR-related stress.

While family medicine physicians (35.7 percent) and dermatologists (34.6 percent) reported the highest levels of burnout, in keeping with their high levels of EHR-related stress, hospital medicine specialists came in third at 30.8 percent. Gardner suspects that other factors, such as a chaotic work environment, contribute to their rates of burnout.

"To me, it's a signal to health care organizations that if they're going to 'fix' burnout, one solution is not going to work for all physicians in their organization," Gardner said. "They need to look at the physicians by specialty and make sure that if they are looking for a technology-related solution, then that's really the problem in their group."

However, for those doctors who do have a lot of EHR-related stress, health care administrators could work to streamline the documentation expectations or adopt policies where work-related email and EHR access is discouraged during vacation, Gardner said.

Making the user interface for EHRs more intuitive could address some stress, Gardner noted; however, when the research team analyzed the results by the three most common EHR systems in the state, none of them were associated with increased burnout.

Earlier research found that using medical scribes was associated with lower rates of burnout, but this study did not confirm that association. In the paper, the study authors suggest that perhaps medical scribes address the burden of documentation, but not other time-consuming EHR tasks such as inbox management.

 

Related Insights For: EHR

/article/ehr/hhs-studying-modernization-indian-health-services-it-platform

HHS Studying Modernization of Indian Health Services’ IT Platform

November 29, 2018
by David Raths, Contributing Editor
| Reprints
Options include updating the Resource and Patient Management System technology stack or acquiring commercial solutions

With so much focus on the modernization of health IT systems at the Veteran’s Administration and Department of Defense, there has been less attention paid to decisions that have to be made about IT systems in the Indian Health Service. But now the HHS Office of the Chief Technology Officer has funded a one-year project to study IHS’ options.

The study will explore options for modernizing IHS’ solutions, either by updating the Resource and Patient Management System (RPMS) technology stack, acquiring commercial off-the-shelf (COTS) solutions, or a combination of the two. One of the people involved in the analysis is Theresa Cullen, M.D., M.S., associate director of global health informatics at the Regenstrief Institute. Perhaps no one has more experience or a better perspective on RPMS than Dr. Cullen, who served as the CIO for Indian Health Service and as the Chief Medical Information Officer for the Veterans Health Administration

During a webinar put on by the Open Source Electronic Health Record Alliance (OSEHERA), Dr. Cullen described the scope of the project. “The goal is to look at the current state of RPMS EHR and other components with an eye to modernization. Can it be modernized to meet the near term and future needs of communities served by IHS? We are engaged with tribally operated and urban sites. Whatever decisions or recommendations are made will include their voice.”

The size and complexity of the IHS highlights the importance of the technology decision. It provides direct and purchased care to American Indian and Alaska Native people (2.2 million lives) from 573 federally recognized tribes in 37 states. Its budget was $5.5 billion for fiscal 2018 appropriations, plus third-party collections of $1.02 billion at IHS sites in fiscal 2017. The IHS also faces considerable cost constraints, Dr. Cullen noted, adding that by comparison that the VA’s population is four times greater but its budget is 15 times greater.

RPMS, created in 1984, is in use at all of IHS’ federally operated facilities, as well as most tribally operated and urban Indian health programs. It has more than 100 components, including clinical, practice management and administrative applications.

Webinar

Driving Success at Regional Health: Approaches and Challenges to Optimizing and Utilizing Real-Time Support

Regional Health knew providing leading EHR technology was not the only factor to be considered when looking to achieve successful adoption, clinician and patient satisfaction, and ultimately value...

About 20 to 30 percent of RPMS code originates in the VA’s VistA. Many VA applications (Laboratory, Pharmacy) have been extensively modified to meet IHS requirements. But Dr. Cullen mentioned that IHS has developed numerous applications independently of VA to address IHS-specific mission and business needs (child health, public/population health, revenue cycle).

Because the VA announced in 2017 it would sundown VistA and transition to Cerner, the assessment team is working under the assumption that the IHS has only about 10 years to figure out what it will do about the parts of RPMS that still derive from VistA. And RPMS, like VistA, resides in an architecture that is growing outdated.

The committee is setting up a community of practice to allow stakeholders to share technology needs, best practices and ways forward. One question is how to define modernization and how IHS can get there. The idea is to assess the potential for the existing capabilities developed for the needs of Indian country over the past few decades to be brought into a modern technology architecture. The technology assessment limited to RPMS, Dr. Cullen noted. “We are not looking at COTS [commercial off the shelf] products or open source. We are assessing the potential for existing capabilities to be brought into “a modern technology architecture.”

Part of the webinar involved asking attendees for their ideas for what a modernized technology stack for RPMS would look like, what development and transitional challenges could be expected, and any comparable efforts that could inform the work of the technical assessment team.

 

 

 


See more on EHR

betebet sohbet hattı betebet bahis siteleringsbahis