Revenue Cycle Vendor Consolidations Creating Industry Dynamos as Top Ranked Black Book Firms Unite

Navicure, ZirMed, Advisory Board & Optum reach swell after high-profile mergers, setting them up to capitalize on new satisfaction scores.

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Black Book Research

Sep 18, 2017, 19:00 ET

TAMPA, Fla., Sept. 18, 2017 /PRNewswire/ -- The 2017 Top Revenue Cycle Management Software & Services report, published today by Black Book™ named the top-performing companies within various market segments based on the independent feedback of their customers from the user level through senior management.

Notably, among the top-rated RCM companies, six in ten of the end-to-end RCM vendors categories are marrying their capabilities together into two conceivably powerful market commanders.

The report highlights the consistent year-to-year high performance of several vendors serving different market segments of healthcare financial operations management.

Optum360 achieved top honors for the third consecutive year for Hospital Chains, Corporations, IDNs and Health Systems in both RCM Software Solutions and Managed Outsourced Services.

Also, a recently announced Optum acquisition, Advisory Board, ranked first in Hospital RCM Software for Community Hospitals, inpatient facilities with 100 to 200 beds, a third consecutive year honor for Advisory Board's RCM line as well.

Together as one, Optum360 and Advisory Board will possess the stronghold of satisfaction and loyalty from RCM software customers in community hospitals along with hospital chains and systems for both RCM outsourced services and software tools. Optum has topped the competition in outsourced coding services as well.

Navicure grabbed top honors for the second consecutive year in both RCM Software Solutions for Small, Rural and Critical Access Hospitals Under 100 Beds and for a third year in Ambulatory Centers, Physician Practices and Groups.

Navicure announced it was acquiring top-ranked RCM software Zirmed this past week. Zirmed which has been awarded the top RCM Software solution for Hospitals over 200 beds for seven consecutive years, holds one of the longest #1 ranking records held in Black Book's healthcare technology user survey history.

A combined Navicure/Zirmed union gives the new organization the top combined satisfaction scores in Physician Practice RCM software, Hospitals under 100 Beds RCM Software, and Hospitals over 200 beds RCM Software. ZirMed also has a legacy of top scores in Alternate Site Delivery Care RCM and Navicure leads vendors in Patient Payment Systems in all provider settings.

"These vendor consolidations announced lately are undeniably creating a couple of RCM titans," said Doug Brown, Managing Partner of Black Book.

"Uniting topnotch performing revenue cycle management firms will significantly increase the pressure on competitor firms to retain clients," said Brown. According to year-to-year Black Book user survey results, two other market consolidators, nThrive and Change Healthcare which acquired and merged previously topnotch scoring RCM niche firms respectively have declined in client satisfaction scores and discouraging reviews post-acquisitions as a combined organization.

"The reported stumbles aren't in product performance, innovation, reliability or technical issues," said Brown of the 2017 RCM satisfaction and loyalty results. "We reviewed dozens of current year user responses that identify client perceptions that corporate transparency is clouding, turnover is troubling, and customer management is more challenging for the vendors and clients mutually."

One recent example identified in the Black Book survey results is nThrive, the combined synergy of previous client satisfaction leaders Precyse, MedAssets and Adreima. All three smaller companies were #1 market leaders in satisfaction in their niche product and RCM service lines before the mergers. However, now collectively, nThrive has experienced a notable drop in client experience ratings with only one Top 8 showing in the ten categories.

"When it comes to clients experiencing a vendor merger, perceptions are reality," said Brown of the feedback Black Book received.

Likewise, Change Healthcare, which has acquired Altegra and McKesson RelayHealth also scored consistently in the Black Book rankings top RCM outsourcing service performers, failed to place in any top ten of any of the survey categories in 2017 for software or managed services. RelayHealth, which was scored separately from Change Healthcare in the audits completed earlier this month is the exception, with several top fifth place or higher performances independent of the merger with Change and was not identified as Change Healthcare in the surveying.

2014 and 2016 Black Book studies found that more than half of all healthcare IT company mergers fail to deliver the intended improvement in stakeholder value as anticipated. Customer defections contribute to that high failure rate because often, client retention is not given a high enough priority. The unhappiest clients jump ship just after the deals are official, show study results.

The hospitals and physician practices who cannot afford to make an immediate vendor change because of constrained resources are often the most vocal in using Black Book surveys, reports Brown, as sounding boards for issues the M&A companies marketing chiefs are missing or neglecting in communications, stakeholder relations and/or new brand awareness.

Over 40 percent of healthcare IT vendor switchers from Q1 2015 – Q2 2017 relate changes are attributed to emotional reasons caused through the merger. Another 23 percent are swept away by a competitor in the early days post-acquisition when the merger companies are in flux. Among healthcare providers, 12 percent state they directly leave because of poor marketing communications and panic when employees leave the merged company voluntarily or layoffs occur, and when financial instability signals that the merged companies may not be as viable as prior to the acquisitions to vulnerable customers.

In Black Book's experience, companies that do the best job of retaining customers and attracting new ones, adopt the customer's view of the merger as they make important integration decisions and act as the customer's advocate. "Adopting the customer's point of view does not change the fundamental activities required in merger integration," said Brown.

Black Book identified five key initiatives that can improve software or managed services customer retention through in a merger:

1. Position ambitious objectives for HIT client retention, and adopt specific healthcare customer-centric metrics to track performance.

In most healthcare IT mergers and acquisitions, integration centers exclusively on cutting costs or realizing revenue synergies and all metrics and incentives are connected to delivering those synergies. Incentives and metrics should be aligned to ensure customer retention also.

2. Embed consideration of the RCM client experience as an integral part of merger planning.

As with any major change effort, the approach needs to start at the top, with executive sponsorship of the customer perspective and regular review and communication by a cross-functional integration team focused on the customer experience is vitally important. The team also worked closely with the corporate communications staff to manage messages surrounding the merger and keep customers informed through Facebook, Twitter and other social media channels.

3. Identify and accelerate actions to improve the customer experience or increase the value of your RCM offerings to them.

The customer experience team maps out the customer experience from end to end, identifying how customers will be affected at each point and looking for opportunities to delight or at the risks of disappointing them.

4. Healthcare IT marketing leaders need to encourage more corporate communications and to listen.

Customers left in the dark assume the worst. Black Book tracks satisfaction decreases from firms for up to four years after mergers (or shorter depending on if the clients can terminate their contracts). 91 percent of employees that left their jobs voluntarily after a merger (per a 2017 Black Book survey) reported that the marketing leaders at their companies did a poor job in their efforts to improve employee morale or calm client concerns during a merger.

5. Empower marketing, sales and account management staff and give them with the tools and information they need to respond to customers caught up in the merger of vendors.

Merging companies may have different approaches to empowering employees, but satisfied employees make for satisfied, loyal customers.

"While increased M&A activity may be celebrated in many corners of the healthcare technology industry, there is cause for concern since the pre-merger hype does not always live up to the post-merger reality," said Brown. "Mergers aren't easy, and they raise real risks that customers may jump ship."

About Black Book

Black Book™, its founders, management and staff do not own or hold any financial interest in any of the vendors covered and encompassed in the surveys it conducts. Black Book reports the results of the collected satisfaction and client experience rankings in publication and to media prior to vendor notification of rating results and does not solicit vendor participation fees, review fees, inclusion or briefing charges, consultation requirements, and/or vendor collaboration as Black Book polls vendors' clients.

Black Book began polling the client experience of now over 590,000 healthcare software and services users. Black Book expanded its survey prowess and reputation of independent, unbiased crowd-sourced surveying to IT and health records professionals, physician practice administrators, nurses, financial leaders, executives and hospital information technology managers. For methodology, auditing, resources, comprehensive research, Software and Outsourced Revenue Cycle vendor ranking data, see http://www.blackbookmarketresearch.com.

SOURCE Black Book Research