San Francisco-based McKesson Corporation and Nashville-based Change Healthcare Holdings have announced the completion of their previously-announced agreement to create a new health IT company.
The new company is named Change Healthcare and combines substantially all of CHC’s business and the majority of McKesson Technology Solutions (MTS), according to officials.
As Healthcare Informatics reported last summer, according to the announcement at the time, the new company will have total annual revenues of $3.4 billion. What’s also noteworthy is that the deal to merge McKesson's IT unit into a new company with Change Healthcare does not include its Enterprise Information Solutions (EIS) business, a division of McKesson that provides core hospital information systems such as Paragon.
There were rumors that McKesson might sell its acute care IT business since the company sold its ambulatory electronic health record (EHR) assets to e-MDs back in March 2016. This move signaled, according to some industry professionals, that McKesson could be looking to exit the acute care space as well. That speculation ramped up when media reports last year cited inside sources at the company that McKesson was weighing a separation of its IT unit. When McKesson announced the formation of the new health IT company with Change Healthcare, it also said, it was “exploring strategic alternatives for its EIS business,” but noting, “EIS is reported as part of our McKesson Technology Solutions segment.”
Meanwhile, last October, McKesson EIS announced the latest release of Paragon. The new release of the McKesson EHR solution, Paragon 14.0, includes a number of innovative enhancements for pharmacy, lab and operating room management in order to improve clinician and financial workflows, according to the company.
By uniting the majority of MTS’ businesses with CHC, the new company “will inspire a better healthcare system through a broad set of complementary capabilities that will deliver wide-ranging financial, operational and clinical benefits to payers, providers and consumers. From an interconnected and integral position at the center of healthcare, the new Change Healthcare will be a collaborative catalyst for accelerating its customers’ and partners’ paths to value-based care and better engagement with consumers, officials said in today’s announcement.
The new company will be jointly governed by McKesson and Change Healthcare and is expected to generate in excess of $150 million in annual synergies by the second year following the close of the transaction, the press release last summer stated.
“Over the last several years, our industry has experienced a continued shift toward value-based care, requiring an increasingly consumer-centered approach to healthcare,” Neil de Crescenzo, CEO, Change Healthcare, said in a statement. “Change Healthcare will be distinctly positioned to leverage its data, analytics and forward-thinking insights to bring new innovative solutions to payers, providers and consumers as they strive to achieve the best healthcare outcomes as efficiently as possible in this new environment.”