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Private Equity Firm Water Street Healthcare Partners Invests With New Century Health Oncology and Cardiology Benefit Manager-Alg

Posted Dec 16 2010 10:51am

Per the press release, this is the fourth proprietary investment in outsourced services for payers in healthcare.  Most of the investments we see today are on the payer side (where the big money is made in healthcare) and focuses on image algorithmic formulas designed to contain cost.  Water Street also owns another company called Access MediQuip LLC, which is a management solutions company to control costs and access for surgical implant devices, again running mathematical business intelligence formulas to control cost and not sure how they use their algorithms to control access.  Water Street states their investment capital comes from limited partners which include Goldman Sachs, New York Life for a couple examples.  We certainly need such services but over the years that part of the industry has learned how to feed itself and grow with transactions that are for the most part hidden from what the average consumer reads and sees.  Back in July of this year we had this acquisition.

When you look at where the big PE investments come from, it’s all about management and using algorithms for running their business and emphasis on payers.  New Century also lists quality physician incentives so here we are with another way of saying pay for performance basically with keeping cost down with “high performance provider networks” so if you are in oncology or cardiology it now appears you need to be a “high performance” doctor.  I’m just reading this from their website. 

Even the lure of profits doesn’t escape former government directors too such as image Mike Leavitt, former HHS director for the US government.  Tony Blair, formerly of the UK has also left the country and is over here in the US involved with using his expertise and contract to help promote private equity firms, so this is like a virus all over with both corporate executives and former government officials working to promote profits, for the companies and themselves. 

From the website:

“New Century Health’s focus on quality driven oncology cost management enables payers to achieve their goals of evidence based care and quantifiable savings. image Given that the majority of medical oncology and radiation therapy takes place in outpatient settings, New Century Health uses a provider friendly, web-enabled, pathway driven prior authorization platform that reduces variability in cancer care and facilitates management”.

The “Consulting-Algorithm” business is becoming a big focus today.  When you look at most payer solutions, this is what you get, business intelligence software with consultants who guide companies in how to use it and maximize profits and there’s tons of money being spent today in this area in healthcare and this is one of hidden costs as consumers you may not see as it all works behind the scenes with the analysts that are there to drive profits for investors, and hopefully we get better care too, but the drive for profits is the front runner for sure and you do not have to be brain surgeon to figure that out in the world we live in today.  You can almost bet we have some predictive health behavior modeling going on here as investors want the projections of selected groups to determine what cost is going to occur to provide cardiology and oncology services.  On the insurer side, we have Untied Healthcare for example is running formulas right and left to drill down on cost so again being consultants this is another form of analytic intelligence to work with payers to keep the cost down, more algorithms. 

How much is an healthcare cost algorithm worth today?  It looks like some of them reach into the millions.  BD   

Water Street Healthcare Partners, a strategic private equity firm focused exclusively on health care, announced today that it has made a majority investment in New Century Health. Founded in 2002, New Century Health is a specialty benefit management company focused primarily on oncology and cardiology. In a privately negotiated transaction, Water Street and its co-investors committed to expanding the company’s services to a broader base of payers, providers and patients across the United States.

New Century Health integrates and streamlines all outpatient components of care in the oncology and cardiology specialties. Through its proprietary technology platform, New Century connects health plans, physicians and patients to coordinate care and improve quality in a cost-effective fashion. In the past three years, New Century Health has grown its revenues more than 200 percent.

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