Credit Suisse https://www.credit-suisse.com hosted a virtual small group meeting with Jackie Harder, Former VP, Product & Solutions Management at Trizetto (Cognizant).
She ran solution management, product marketing and channel strategy functions for Trizetto Provider during 2012-2016. For the past 5+ years, she has also consulted with nearly all the top medical networks in the country, including Change Healthcare, Availity, Waystar, SSI and others.
For discussion purposes, she notes that CHNG’s Revenue Cycle Technology is generally referred to as Clearinghouse Technology. She does note that there are some very blurry lines between what falls into revenue from RCM technology (under CHNG’s S&A segment) vs. Medical/Dental/Vision Networks, as CHNG is often able to double and triple dip into the dollars associated with moving a claim from a provider to the payer.
According to our expert, CHNG and Availity are the market leaders in terms of the number of payers they connect to. Trizetto, SSI, and Waystar each have thousands of connections as well, but not at the scale of CHNG and Availity.
By the number of unique connections, CHNG is the dominant market player in medical networks, (the company with the most exclusive connections with payers). This market dominance is the result of what Emdeon built back in the late 1980s. In fact, ~29% of medical payors currently use an exclusive clearinghouse of which over 50% use CHNG as their exclusive clearinghouse.
On the provider side, using an exclusive clearinghouse vendor is less common compared to the payers. On the provider side, CHNG is by far the leader in clearinghouse technology primarily in the hospital market but less of a dominant presence (although one of the biggest players) in the physician market.
Within the clearinghouse part of the market, key vendors include CHNG, SSI, nThrive, TruBridge/CPSI. Our expert believes CHNG has ~30-40% of the hospital clearinghouse market, and 15-20% market share in the physician market. Waystar is more likely the market leader after several roll ups with ~25-30% of the physician market share. As for Optum, in the hospital space, our expert believes that their market share is well under 10% (more likely 5-7%). In the physician space, Optum currently does not have much presence, according to our expert.
Our expert does not believe that if CHNG were acquired by Optum/UNH, hospital clients would switch to another clearinghouse vendor just because CHNG would no longer be an independent third party.
However, she believes that the regulators, as part of their review process are likely to pay attention to price fixing (the ability of UNH to access competitors’ data in order to be more competitive with the data included from the CHNG clearinghouses). To that point, the issue of taking data from CHNG clearinghouses is no different relative to what UNH has already been doing previously with previous clearinghouse acquisitions.
Our expert believes that payers use clearinghouse data for modeling/analytical purposes, such as comparing hospitals, analyzing trends in denials management etc. If, as part of the transaction, Optum was required to sign away access to data rights, our expert does not believe it would be a significant detriment to the deal rationale from Optum’s viewpoint.
For more information, ask questions, provide feedback, or news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.