In August 2014, healthcare performance improvement company MedAssets signed an agreement to acquire healthcare analytics and intelligence company Sg2 for approximately $142 million. Now nearly a year later, Mike Nolte, president and COO of MedAssets, describes how the combined entity is working together to cultivate a broad, analytics-driven performance improvement company.
Question: What motivated MedAssets to pursue the Sg2 acquisition?
Mike Nolte: The primary strategic focus for us is to continue building our analytics business. Today we have a number of solutions that support software for both our spend and clinical resource management businesses as well as our revenue cycle management business. We have data and analytics offerings that we use in pursuit of those efforts, but we also recognize the value of building a deeper analytics offering for our customers.
Sg2 brings us that connection and provides us a foundation for what we aspire to deliver in the future. Today, Sg2 delivers demand forecasting, clinical and strategic intelligence and consulting expertise to provide a valuable lens into national, regional and local trends and opportunities across the full inpatient and outpatient healthcare continuum. What also made Sg2 compelling were the front-end decision making capabilities. They can identify, in a specific geography: patient volumes, primary referring physicians driving that volume, the focus of market participants and more. For example, with Sg2, providers can identify volumes associated with a particular service line to anticipate how growth, both for themselves and for their competitors, is likely to evolve. With that insight, among other uses, they can develop growth strategies, seek opportunities to invest or prevent leakage from their network or “system of care.”
Q: How has the integration of the two companies worked since the closing of the acquisition?
MN: It is still an ongoing process. Sometimes an acquisition's value comes in the form of cost savings, but Sg2 was not acquired with that in mind. Our intent from the beginning was to build a platform to drive growth. We are methodically integrating and exploring increasingly valuable, complex opportunities.
We started with building relationships with customers on both sides of the business and looking at how to best coordinate sales and create optimum opportunities for delivering customer value. We are also now starting to look at consulting work. Finally, we are most recently beginning some of the more complex, product focused integration, such as using the Sg2 platform to deliver analytics offerings that combine strategy and operations focused data. Maybe just as importantly, through this whole process we are remaining mindful of how the two company's cultures will work together.
Q: How has MedAssets benefitted from the acquisition?
MN: In my role, I get sales calls from a variety of vendors all of the time, but the most interesting calls are the ones where I learn something. What Sg2 has helped us do out of the gate is get us into great conversations. We come to the table with strategic market insight from Sg2, and this opens up more valuable customer discussions.
Additionally, the combination of analytics and strategic insight to help healthcare organizations make important service line decisions is gaining traction. Today, MedAssets can lay out a full performance improvement agenda for our customers. We are in the early days of building true combined offerings, but with Sg2, we have the ability to unlock data and empower health systems in strategic and operational decisions to improve performance today. We are beginning to be able to link the "where to go" of strategic choice to the "how to go," of operational excellence and this, we believe, will be quite powerful.
Q: What do you see for the future of combined companies?
MN: The best outcome would be for us to grow a successful and material analytics business that delivers compelling insight as both a standalone, valuable business as well as the core of our high ROI services to our customers. For example, the real value of a piece of software often isn't the workflow or user interface, it is the content delivered through it. One aspiration is to deliver that content, across a variety of operational and strategic needs, through the Sg2 technology platform and turn that market insight into more meaningful and more rapid execution for providers. Today, we have robust analytics tools, great software solutions and a variety of consulting offerings, including proprietary cost and reimbursement solutions. Now, with Sg2’s forecasting abilities and strategic intelligence tools, my belief is we can accelerate our customers and our own success with a very differentiated combination insight and execution.