The next in our series of posts sharing key takeaways from panels at the Healthcare & Life Sciences Private Equity and Lending Conference is authored by our colleague Nesko Radovic and Lou Brothers of RSM US.
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Healthcare IT Investments: Data Analytics, Remote Patient Monitoring, Tech-Enabled Services & Other Innovations – 5 Key Points
By Nesko Radovic and Lou Brothers
Value-based or performance-based care offers incentive payments to providers for the quality of care and the related outcomes. For investors targeting this healthcare sector, effectiveness of IT systems is key to planning, achieving, measuring, and reporting those results to ensure proper billing.
At the Annual Healthcare and Life Sciences Private Equity & Finance Conference in Chicago earlier this year, we spoke to a panel of experts who provided important considerations and key points required to make successful healthcare IT decisions.
Experts included Scott Brown, Partner at The Edgewater Funds, Ravi Ganesan, President of Core Solutions, Inc., and Karthik Sashan, Chief Executive Officer of Neuro Alert. The panel was moderated by Matt Hartzman, Chief Information Officer at RedMane Technology LLC.
Here are five key points from the panel discussion:
1. Highly adaptive platforms are necessary. The rate of regulatory change and payment mechanism change is high, so having products that can quickly enable new features, functions, and reporting is critical. Technical debt and effort spent on routine maintenance is a foregone business opportunity, negatively impacting long-term revenue growth.
2. Reducing human labor is critical to improving EBITDA. Most healthcare back-office operations are routine or “nearly routine”, permitting robotic process automation (RPA), or adaptive artificial intelligence (machine learning (ML) to drive efficiencies.
3. Decision-making processes should be aligned with value-based care incentives. Rather than working one way with patients and an orthogonal way in the back-office for billing, the entire patient engagement and treatment protocol should be aligned. The right systems and platforms, leveraging ML, can help. By combining ML with electronic health records these technologies can even reach into the front office to help guide practitioners in evidence-based care decisions, alert them to data and research they may not have seen, or catch potential safety issues such as duplicative treatments or medication interactions.
4. Investors who have operations and technology capabilities or partnerships will outperform financial investors and win more bids. Healthcare companies are looking for expertise and insight to help them transform – so an investor who can help with that is much more attractive. Options include an executive bench who have successfully transformed other companies, technology providers who can enable RPA and ML to lift efficiencies, and operations providers who can set new patient engagement models. Of course, investors and their partners need to know the sector and have credentials in the healthcare sector, with a track record showing that they can make the right investments in growing in this dynamic industry with its complex web of relationships and interactions.
5. Due diligence is key to minimizing risks in any technology platform or product. The key parts of the risk assessment should include: (i) confirming issues related to technology debt; (ii) confirming that the user experience for provider and patient is relatively optimal; (iii) reviewing the roadmap for achievability and sufficiency; (iv) reviewing the architecture for adaptability and flexibility; (v) reviewing the use of AI, ML, or RPA. And, of course, any review needs to examine PHI and HIPAA compliance, potentially alongside PCI, CCPA, and other compliance areas. A good strategy for deal teams in fast-moving processes is to tie any prior period security issues that may be discovered to escrow releases or buy-out payments, thereby protecting the investment without delaying the deal.