MedAssets acquisition to expand its offering in revenue cycle management

Healthcare Purchasing News, Sept, 2003 by Curt Werner

Every day, in hopes of slowing the growth rate in supply costs, U.S. hospitals make financial and purchasing decisions that are based on accurate data. These hospitals are, of course, saddled with some of the most perplexing and trying judgment calls ever as they bow, but hope not to break, under nearly unprecedented economic pressure from a variety of places. This makes the data used to arrive at these daily decisions extremely valuable and essential to the survival of the health care system.

Now, MedAssets, whose St. Louis-based MedAssets HSCA group purchasing organization subsidiary has quietly gained a reputation for innovation, has acquired an information systems company that it believes will enable the GPO to offer customers a way to get ahead in the information war, make better decisions and save money. In a transaction that closed in mid-July, MedAssets acquired OSI Inc., an Atlanta-based concern that provides a proprietary revenue cycle management solution designed to assist hospitals in improving their revenue cycle operations. OSI has in the past had trade relationships with companies such as Premier Inc., McKesson, the North Broward Hospital District, Trinity Health, Siemens and others on both the provider mad supplier side. The company says it has consulted on more than 800 charge masters since its founding in 1986. Terms of the deal were not made public.

According to MedAssets, the OSI Systems' solution, which will initially be made available to hospitals in January, helps hospitals correct billing errors and identify missed revenue by a "tracking what MedAssets president John Bardis feels is the root problem--the charge master. "The idea is to give the provider the ability to be sure they get the product they want at the price they are supposed to pay," he said during an interview at last month's meeting of the Association for Healthcare Resource and Materials Management in San Diego.

OSI Systems ensures that the charge master is in compliance with Medicare and other payer guidelines and then continues to keep it current and complete by synchronizing it with a proprietary "master" charge master on an ongoing basis over the Internet. OSI Systems' solution also provides the opportunity to audit the patient billing system, identify data and process problems upstream and then fix those problems, which also aids in improving hospitals' back office processes and the margin from existing operations. "This system provides hospitals with transparency in the area of supply purchasing," Bardis said.

The acquisition and resultant offering to hospitals is part of MedAssets' efforts at delivering solutions for two key financial challenges healthcare providers face: controlling rising costs of care and enhancing cash flow. "If we don't suppress the growth rate in areas like supplies, we won't have the margins to suppress medical malpractice and provide quality care," he said.

"We set out to be a company that provides innovative solutions to the revenue and expense problems that healthcare providers face every day," Bardis added. "MedAssets, with OSI Systems, can help providers improve their financial performance from existing operations quickly and without new investment in costly IT platforms. America's healthcare providers are struggling to cope with rising costs of patient care and the increasing demands of providing for an aging population. We provide practical solutions that help reduce and control rising supply costs and improve their revenue cycle results. This is further proof of our commitment to improve the overall financial health of our customers."

OSI Systems' product suite currently includes three solutions to enhance net patient revenues: CRM.Net for strategic pricing and rate modeling, BPI.Net for ensuring charge description master accuracy, completeness and compliance, and CCA.Net for identifying potential missed charges on a pre-bill basis.

Customers of MedAssets may choose a complete cost and revenue solution for maximum impact through MedAssets HSCA and OSI Systems respectively. Healthcare providers may also choose the solutions independently from the subsidiary companies.

According to MedAssets HSCA, its data management solutions for supply costs and OSI Systems revenue enhancement data management tool suite are legacy independent and interface with existing operating systems. The company says its complete cost and revenue solution systems, offered through the two subsidiary companies, "hover" over existing systems, can be implemented and operating within months.