The official announcement was released a bit ago, and there aren’t many more details than we shared yesterday.
I would note that there are several allusions to the new entity being the ‘market share leader‘; in a subsequent conversation with Nina Smith-Garmon, senior vice president and general manager of the bill review business, she opined that Mitchell will be the market leader with “thirty percent plus” share after the deal closes in thirty days.
This may well be the case, although my sense is Coventry is not far behind – and may be about the same in terms of bill volume. That, and Medata is coming up fast after adding PMA, TriStar, Healthcare Solutions (Procura, not Indiana), and BerkshireHathaway HomeState to their client roster – and more than a couple of ex-FairIsaac staffers as well over the last twelve months.
Paul Glover et al are pushing hard with Stratacare; their acquisition of Bunch will likely lead to at least one current Ingenix customer switching to their platform.
Just before I was about to post this, I got a call from Nina Smith-Garmon, of SmartAdviser, who mentioned several times the strategic aspects of the deal. Here are the top takeaways.
1. Mitchell will attempt to convert all current PowerTrak customers to SmartAdviser.
2. Ingenix’ new IMBR platform is history; neither Ingenix nor Mitchell will continue development of IMBR.
3. Mitchell bought the First Notice business as well as the bill review business; contrary to earlier speculation (mine and others’) the state fee schedule development business did not change hands.
4. Most of the PowerTrak employees will ‘come over’ to Mitchell, Smith-Garmon said only a handful will not make the transition. (no indication on whether they’ll end up back at UHG or on the street)
Ms Smith-Garmon’s comments notwithstanding, I don’t know exactly why Mitchell made the acquisition (beyond the press release), but can make a pretty educated guess. And yes, it has to do with top line growth, adding share, and the strategic importance of the business. But at a more granular level, it really comes down to the struggle for new business.
First, a little history. Mitchell Medical has long been the dominant player in the auto claims IT systems business. Back in April of 2008, they bought FairIsaac’s bill review business, a deal that pushed Mitchell into the work comp business (FI also has technology for the auto claims industry).
FairIsaac had purchased the bill review business unit some years before from HNC (formerly CompReview). Mitchell’s current workcomp bill review application, SmartAdvisor (SA) is the latest version of the ‘old’ HNC platform, which in turn was based on the ‘older’ CompReview technology, acquired by HNC in 1999. SA’s rules engine, Capstone, is reputed to be pretty user-friendly in that it can be manipulated and ‘programmed’ at the business analyst level. This capability enables clients to modify rules instead of relying on programmers at the vendor, speeding up the process and possibly reducing cost as well.
Mitchell has had some modest success in growing the business, but of late has not been able to win its ‘fair share’ of deals. The only publicly-announced sale this year was a deal with Rhode Island’s Beacon Mutual in April; Smith-Garmon also noted Mitchell also closed American Family.
Companies have to grow organically (by selling more services to new and existing customers) or through acquisition (buying competitors that come with a ready list of existing revenue-generating customers). If sales aren’t coming, and you want to hold onto that sector, then you’ve got to buy a competitor.
It’s a smart move, as it not only generates instant revenue, but it also eliminates a competitor.
What does this mean for you?
Fewer bill review IT providers is actually a good thing. There isn’t enough revenue to go around, at least not if you want to develop and refine a solid, comprehensive, well-designed and stable application. This will help Mitchell, and Mitchell’s competitors as well.
Oct
20
