In a long-rumored-but-just-verified deal, OneCall Care Management is buying specialty managed care businesses Network Synergy and MDN from Genex.
Meanwhile, Apax, which also owns OCCM, is buying the rest of Genex.
Current Genex owner Stone Point Capital had been looking to sell the entire company, and they have succeeded, albeit in a deal that looks a bit convoluted at first blush.
The vast majority of Genex’ revenue comes from case management, and some from bill review. The valuation on these traditional, relatively low (or no) growth businesses is much lower than we’ve been seeing for specialty businesses. That said, at the proverbial end of the day, Apax is the one writing the check to buy Genex and its component pieces however different Apax funds may be funding the two deals.
Regardless, the transaction removes a competitor from the market, and prevents an erstwhile OCCM competitor from acquiring two quite small but nonetheless functional entry points into the PT and imaging sectors.
The question is why split CM and bill review off from specialty?
Allow me to theorize. Genex has a thousand or more case managers out there who can be distribution channels for the Align/Network Synergy and OneCall Imaging/MDN product lines. Sounds great, right? Who wouldn’t want a thousand WC field case management (CM) nurses doing that directing for them?
Well, not so fast.
First, field CM is a shrinking industry, with most CM handled telephonically – something Genex does little of. Second, field CMs take direction from the adjuster and/or telephonic CM, and in most cases those in-house folks are the ones directing to specific provider networks.
Third, many payers have picked specific specialty vendors which are not tied to OCCM, and these payers may not want to use CMs that are directly linked to OCCM and their family of specialty network products. The separation of Genex CM from the specialty products gives at least the appearance of neutrality and objectivity, possibly mollifying concerns of payers who don’t want their claimants directed to OCCM providers.
Finally, there’s also a significant-if-not-huge bill review business as well, which provides potential opportunities for retrospective discounting of imaging and PT via the BR process. This is a bit more complicated and may require re-contracting of some or all providers, but retro discounting is hugely profitable for vendors.
All this sounds good, and while complex, do-able. However, the difficulties inherent in the real world make for a somewhat different picture.
First, OCCM is by no means integrated today; some of the companies that were merged into One Call several years ago are still not integrated for billing, sales, or service. This deal adds yet two MORE companies and their different product offerings, operational flows, contracting processes, and reimbursement rules – as well as state regulatory approval and oversight burdens.
For a conglomerate that industry wags sometimes refer to as “Five Call”, the additional work of integrating two more companies while completing work on the current efforts may well be a challenge.
What does this mean for you?
Apax is moving up and down the claim process chain as it looks to get traction both earlier and later in the life of the claim.
But it’s all about execution.
As usual, so insightful Joe! Just amazing following what has transpired. But are there any companies left that JUST focus on PT alone or Radiology alone??
Joe – what is going to happen when interest rates go up and all of this “free” money used to buy these businesses starts to tighten?
Joe: Aren’t you a paid consultant for at least one company competing w/OCCM, Align, or GENEX? If so, any reason not to include that disclosure with your post?
Jeff – Thanks for the question. I disclose or name my clients whenever I talk about them or discuss an issue that reflects on them; e.g. in my post yesterday re MedRisk I noted they are a client.
The post yesterday did not meet those standards; if I noted my client list every time I talked about the work comp services industry it would get rather monotonous and may well be perceived as over-the-top marketing.
Genex owned Network Synergy Group but could not even get THEIR own Genex case managers to use it. The case managers know who the good providers are, and they are going to continue to direct their cases to those providers!
That said, with only about 20% of the workers’ compensation claimants actually being assigned a case manager, the claimant will continue to go where their physician, attorney or friends recommend as they are looking for good care. The networks exist only to reap discounts on business that they had no hand in actually directing care prospectively. It is a nightmare for providers to try to keep their books straight and ensure they get paid correctly based on whatever network is paying the claim – which they do not know until after they have submitted a claim, received a denial, re-billed and the end result is a huge delay in payment. Beyond that they have to deal with offsets from the various payers as different employers are claimed by the same network.
The middlemen only increase the cost of the claim!
Joe – what is your source for this statement from your article:
– “First, field CM is a shrinking industry, with most CM handled telephonically”
Kelly – thanks for the query.
My experience working with many large payers indicates they are using FCM less and less, preferring to use TCM as the costs are more manageable. In addition, the ongoing decline in frequency for LT claims means there’s a decrease in overall claims volume as well. Also, I’ve seen data from large FCM organizations that appear to support a decline in assignments.