Duluth, Ga.-based Navicure and Louisville, Ky.-based ZirMed have revealed plans to combine their revenue cycle management offerings under one company.
Less than a week after the announcement, Becker's Hospital Review caught up with Navicure President and CEO Jim Denny and Tom Butts, chairman and CEO of ZirMed, to discuss the private transaction, which the companies expect to close in the fourth quarter of 2017, and what it will mean for healthcare organizations.
Note: Responses have been lightly edited for clarity.
Question: What prompted the merger?
Jim Denny: There's a lot of provider consolidation going on in the industry — hospitals are merging, health systems are merging, acquiring hospitals, and physician and ambulatory practices are consolidating. The purpose of that is obviously to get scale as it relates to pricing power with payers and the ability to develop the necessary infrastructure to be competitive in the transition to wellness from fee-for-service, to respond to regulatory changes and the like. As these organizations get bigger, they get more complicated and more complex ... Big provider organizations are looking for fewer vendors to work with. They want more feature functionality from fewer sources. We do a great job in the ambulatory space. ZirMed does a terrific job in the acute and post-acute world. So it made perfect sense to put the two organizations together so we had a single place for provider organizations to go if they wanted a solution effective for all their RCM needs whether it's in the ambulatory setting, the acute setting or post-acute.
Tom Butts: As we looked at going through a process and combining the two organizations, it obviously became a real positive the fact we're able to take two organizations that were best-performing RCM platforms in the industry — the two organizations have received awards from KLAS and Black Book over the last seven to 10 years and have consistently been the top-performing organizations in the revenue cycle space. So the beauty here was we were able to combine the two organizations to create really a truly exceptional business ... The large health systems today want to have the most modern technology that gives them visibility across the entire enterprise, and what we have is an integrated platform that gives them ... analytics, visibility and tools that service physicians [and] specialty care. They've got a platform that works across the entire enterprise, and we think we've got a winning combination there between the two organizations.
Q: How will the merger benefit hospitals and health systems?
JD: What's great about this combination is we have so much that's similar between the two organizations [such as rankings], great cultures, great focus on workflow tools that deliver results and great client service. The driving force behind the organizations' mission is helping providers get paid. We focus on the outcome. And one of the ways both organizations have been successful is we have tons of data we get through the course of processing claims, remits and other transactions. And we both use that information to help decide what new products we should build to enrich our analytic tools and provide real guidance and insight to our clients. So if you think about combining the data across the entire enterprise in a way that has not been able to be done before and assembling that data ... I think it's a truly unique situation or opportunity for enlightenment that we bring to the marketplace.
TB: Having the visibility of all the data really helps us get organizations and providers paid. But ... we [also] know there's a significant challenge organizations have today. We know across the United States there's about an $80 billion uncompensated care challenge our clients have, and we're able to leverage that data and really use machine learning we have in our predictive tools to make sure we capture all the charges and underpayments and coding variances and all the different nuances that are in the complex revenue cycle today and make sure we get organizations paid. And as a combined organization, we are delivering today for our clients hundreds of millions of dollars in net cash and savings. So when you look at the challenges health systems have today, this is a compelling solution for them to make sure they're successful financially.
Q: What does the merger mean for healthcare RCM?
JD: When you think about all the providers that are on our systems together, we have a huge opportunity to move the market forward with new products and services. And because of the size of the organization now, we have that many more resources to apply to product development [and] to analytics. So we are going to be delivering great new products and services to a sizeable chunk of the market.
TB: With the combined organizations, it really gives us a critical mass today to reach more health systems and providers with our solutions, and we've become a true alternative now to the legacy RCM vendors that are in the marketplace. We believe we're going to replace a lot of the legacy vendors that are unique to certain segments of the market where we can provide end-to-end RCM coverage on a modern platform. So we've become a real alternative in the marketplace.
Q: What are the goals of the merger?
JD: The highest priority is to continue to maintain the drivers for our success ... and combining the companies in a way that expands the product offerings to both client bases, cross-selling products from one to the other and unifying around new product innovation.
TB: [Also], we want to be able to make a difference to our clients. Our job is to get them paid and to get them paid efficiently. And we want to grow the business, we want to reach more clients in the respective market to help them be successful.
Q: What are next steps?
JD: Business as usual until we close and then moving thoughtfully to combine the organizations.