Frontier Extends Reach Into Healthcare, Revenue Cycle Management with Aviacode Investment

September 14, 2015

Frontier has long been interested in healthcare information systems, with portfolio companies focused on everything from health and data management software to online clinical research networks to various segments within Revenue Cycle Management (RCM). This last segment has been increasingly attractive for us, as the industry is expected to grow to $10 billion by next year and continue to increase 12 percent year-over-year.

Many factors are converging to make this area ripe for growth and a good investment opportunity:

Most immediately, U.S. healthcare providers and payers face the Oct. 1 deadline for compliance with ICD-10 medical codes. The industry is facing a shakeup similar to what IT companies faced with Y2K—namely fear, uncertainty and doubt. However, Aviacode is incredibly well-positioned to offer its outsourced coding services and technology solutions to a host of new customers that need help weathering the storm. Medical coding impacts how providers both document care and receive reimbursement, and if caught unprepared, can wreak havoc on a practice’s revenue cycle and cash flow.

Second, the Affordable Care Act (ACA) of 2010 is reaching full implementation. As a result, providers are beginning to feel the results of value-based reimbursement models, the need to document and report quality of care and health outcomes, and a focus on proactively managing health for their patient base, rather than focusing on a fee-for-service. RCM directors are expected to up their game by training staff, finding new technology solutions and increasing internal efficiencies. Outsourcing and enabling technologies will become essential as they work to maximize operational efficiency, adhere to increased regulation and ultimately improve outcomes for their patients.

Finally, patients are assuming more responsibility, not only for their own healthcare, but also in shouldering part of the overall risk traditionally born by insurance companies and employers. High-deductible insurance plans are growing in popularity, leaving patients more incentive to shop for quality care and reasonable fees, and in many cases, pay for a greater portion of those fees. Provider facilities will need to be more customer-service minded and better able to communicate overall fees and services, and the patients’ responsibilities for those fees—both how much and when. Collecting a greater portion of revenue from patients is a delicate matter, but certainly one that increasingly affects provider revenue.

Clearly the healthcare industry is ready for an upgrade to technology-enabled services that will shape future best practices, while maximizing revenue opportunities now and for the long term.  Frontier Capital will continue to look for more quality investments to fuel the change.