The healthcare outsourcing landscape is evolving rapidly as financial pressures, technological advancements, and regulatory shifts drive payers and providers to rethink their operations.  

The outsourcing market is far from immune to these trends, and leading service providers are now actively positioning themselves to stay ahead.  

Reach out to discuss this topic in depth. 

Based on industry developments over the past 18 months, here are three critical trends shaping the future of healthcare payer outsourcing. 

1. Mergers & acquisitions: A market in motion 

Investment activity in the healthcare outsourcing sector has surged, driven by financial pressures and technological disruptions—particularly the rise of Generative AI (gen AI). The market remains highly competitive, with firms aggressively building capabilities through acquisitions to fill gaps and strengthen their offerings. 

Private equity firms are playing a major role in shaping the landscape, especially in prone to disruption areas such as payment integrity—a critical function in reducing fraud, waste, and abuse. Notable transactions include: 

• New Mountain Capital’s US$3 billion consolidation of The Rawlings Group, Apixio’s payment integrity business, and Varis to create a powerhouse leveraging artificial intelligence (AI) to improve payment accuracy. 

• KKR-backed Cotiviti’s expected US$3 billion acquisition of Edifecs, aimed at enhancing administrative and clinical data-sharing capabilities. 

• Sagility’s acquisition of BroadPath Healthcare Solutions (January 2025), adding over 30 clients and strengthening its claims processing, provider credentialing, and member engagement capabilities. 

• TowerBrook Capital Partners and Clayton, Dubilier & Rice’s acquisition of R1 RCM (August 2024): R1 RCM, a healthcare technology company specializing in revenue cycle management, was taken private in a deal valued at $8.9 billion 

• New Mountain Capital’s strategic investment in Access Healthcare (January 2025): This investment aims to accelerate Access Healthcare’s transformation of revenue management for healthcare organizations 

For outsourcing providers, these moves highlight the importance of building robust capabilities in payment integrity, care management, revenue cycle management, and digital health—whether through acquisitions, partnerships, or internal innovation. 

2. Growing adoption of outsourcing by healthcare providers 

Historically, healthcare providers have been slow to outsource, but that is changing as rising administrative costs and razor-thin margins push hospitals to seek external expertise. 

Revenue cycle management (RCM) remains the most visible area for outsourcing, with hospitals increasingly turning to external firms for financial operations. Some of the most significant provider outsourcing deals in 2024 (source: Beckers Healthcare) include: 

• Ensemble Health Partners secured multiple RCM partnerships, including full revenue cycle management services for Independence Health System (PA), Carilion Clinic (VA), Tower Health (PA), and Beebe Healthcare (DE). The partnership with Carilion Clinic involves transitioning 780 employees, while Tower Health will shift 675 employees to Ensemble. 

• Conifer Health Solutions, Tenet Healthcare’s RCM arm, expanded its footprint, securing a 10-year contract with five Alabama hospitals and partnering with Adventist Health to manage its revenue cycle services. 

• The Brooklyn Hospital Center (NY) signed a 10-year deal with Med-Metrix, transitioning its entire RCM workforce to the outsourcing provider. 

• UCI Health’s acquisition of Tenet Healthcare’s Pacific Coast Network included a built-in outsourcing contract with Conifer Health Solutions for revenue cycle management. 

Beyond revenue cycle management, outsourcing is expanding into additional areas: 

• Clinical documentation & AI-driven coding – Companies like Suki and Nuance are reducing physician documentation burdens with AI-driven solutions. 

• Patient engagement & call centers – More hospitals are outsourcing patient outreach and scheduling to improve operational efficiency. 

• Prior authorization automation – Firms like Availity are helping providers speed up approvals and reduce administrative burdens. 

For service providers, this shift opens new opportunities beyond traditional RCM. Providers are actively seeking automation, AI, and efficiency-enhancing solutions—making it a prime time for innovative outsourcing firms to step in. 

3. The rise of partnership-driven ecosystems 

To remain competitive, service providers are increasingly forming strategic partnerships to create integrated, end-to-end solutions. These ecosystems bring together diverse capabilities to address the growing complexity of healthcare operations. 

Key partnership trends include: 

• Data management firms collaborating with tech giants – Healthcare analytics companies are working with platforms like AWS and Google Cloud to develop scalable solutions. 

• Service providers teaming up with system integrators – Traditional outsourcing firms are partnering with Big 4 firms  and others to offer holistic, technology-enabled solutions. 

• Health plans working with AI-driven startups – Payers are leveraging AI and automation to streamline workflows and enhance service delivery. 

These partnerships reflect a broader industry move toward comprehensive, technology-driven solutions that combine multiple capabilities to tackle complex healthcare challenges. 

What next for the sector? 

The healthcare payer outsourcing market is undergoing a major transformation, shaped by a surge in mergers and acquisitions (M&A) activity, increasing provider adoption of outsourcing, and the rise of collaborative ecosystems.  

These developments are not just industry shifts—they represent critical signals that service providers must analyze and respond to strategically. 

For outsourcing firms, the key question is no longer “What is happening?” but rather “What are we going to do about it?” 

• How do these trends impact our competitive position? 

• Where do we need to strengthen our capabilities—through investment, partnerships, or acquisitions? 

• What gaps exist in our service portfolio, and how do we address them proactively? 

• Are we aligning with the technologies and operational models that healthcare organizations are prioritizing? 

Standing still is not an option. Service providers that adapt quickly, innovate aggressively, and build the right alliances will be the ones that thrive in this evolving landscape. Now is the time to think critically, make bold moves, and take a leadership stance in the healthcare outsourcing market. 

If you found this blog interesting, check out our Optimizing Pricing Strategies For Healthcare AI Startups: Expert Insights For Payer And Provider Innovation | Blog – Everest Group blog, which delves deeper into another topic regarding the healthcare sector. 

If your interested in hearing more about healthcare outsourcing trends in 2025 and beyond, please reach out to Ankur Verma (ankur.verma@everestgrp.com).  

Chess has seen a remarkable rise in popularity, reaching a milestone on February 1, 2025, when Chess.com surpassed 200 million members, showcasing its growing global influence. This growing interest in the game has not only fostered a larger competitive community but has also opened doors for chess to create real-world impact, particularly in underserved communities around the globe.

Reach out to discuss this topic in depth.

How chess benefits underserved communities

Chess serves as a compelling case study of how a growing industry can drive social and economic benefits for underserved populations. The game requires minimal resources to play, making it accessible to individuals in even the most disadvantaged regions.

Moreover, its emphasis on strategy, problem-solving, and resilience aligns with skills that are crucial in today’s workforce. As chess expands globally—through online platforms, competitive tournaments, and educational programs—it is creating new career pathways, scholarships, and workforce development opportunities.

Unlike many industries that require substantial infrastructure or investment, chess proves that intellectual capital alone can foster economic mobility. From coaching and streaming to content creation and tournament organization, the growing chess ecosystem is generating employment prospects while simultaneously uplifting disadvantaged communities.

Real-world examples of chess empowering underserved communities

SOM Chess Academy (Uganda)

Founded by Robert Katende, the SOM Chess Academy has introduced chess to at-risk youth, helping them develop critical thinking skills, resilience, and a pathway to economic empowerment. One of its most inspiring success stories is that of Phiona Mutesi, who rose from the slums of Kampala to international recognition through chess.

Mutesi’s journey exemplifies how structured chess training can unlock economic mobility. Through the academy, she gained access to education, scholarships, and global opportunities. Her chess skills not only enabled her to travel the world but also provided her with employment prospects and a platform to inspire future generations.

Chess in Slums Africa

This initiative is dedicated to teaching chess to children in low-income communities, helping them develop cognitive skills and access educational opportunities. Many participants have secured scholarships, proving that chess can serve as a gateway to skill-building, personal development, and social mobility.

The Gift of Chess Initiative

A global movement that distributes chess sets to schools, prisons, and refugee camps, The Gift of Chess fosters education, rehabilitation, and inclusion. By providing access to chess, the initiative empowers individuals to develop strategic thinking, patience, and discipline—skills that translate into broader career opportunities.

FIDE’s “Chess for Freedom” Program

FIDE, the international chess federation, has launched an initiative aimed at teaching chess to inmates and refugees. The program has demonstrated that chess can improve cognitive abilities, provide structure, and offer career-building opportunities for those seeking reintegration into society.

How industries and organizations can get involved

The success of chess in uplifting undeserved communities presents a model that industries and organizations can adopt to drive meaningful talent development. Businesses in digital services, education and workforce training can integrate similar initiatives into their core talent strategies, creating sustainable pathways for skill-building and economic mobility.

Technology sector

Companies in the technology industry can incorporate chess-based training into their workforce development programs. For example, Google and Microsoft have invested in coding boot camps and artificial intelligence (AI) training programs that prioritize problem-solving and computational thinking—skills also cultivated by chess. Integrating chess into digital literacy programs can also further enhance critical thinking abilities for tech-oriented roles.

Education and scholarships

Universities and scholarship foundations can utilize chess-based assessments to identify students with strong cognitive and analytical skills. Programs like the Chess-in-Schools initiative have shown that students who play chess perform better in Science, Technology, Engineering and Mathematics (STEM) subjects, making them ideal candidates for scholarships in science, engineering, and technology fields.

Corporate professional development

Organizations across industries can integrate chess-inspired training into professional development programs to enhance critical workplace skills. Strategic decision-making, analytical thinking, and pattern recognition, which are core competencies in chess, are also essential in leadership, financial analysis, and operational strategy. Companies like Deloitte and McKinsey value structured problem-solving in leadership training, while firms like Renaissance Technologies emphasize strategic forecasting.

By incorporating chess-based exercises into talent development initiatives, industries can build a stronger and more diverse talent pipeline, equipping individuals with transferable skills for digital services, AI training, and other knowledge-based roles. This approach drives both business success and economic inclusion.

Chess, cognitive skills, and the future of tech services

The technology services sector thrives on problem-solving, adaptability, and strategic thinking—all skills that chess cultivates. As businesses increasingly rely on data analytics, AI, cybersecurity, and digital transformation, the ability to recognize patterns, anticipate challenges, and make strategic decisions is more critical than ever.

Chess-based training provides a structured approach to developing these cognitive skills, making individuals more prepared for roles in AI model training, process automation, data annotation, and Information Technology (IT) support.

The same cognitive skills honed through chess can be leveraged to upskill impact sourcing professionals, enabling them to take on more complex, high-value tasks in the tech services industry.

Impact sourcing—hiring and developing individuals from marginalized communities—offers a sustainable and socially responsible approach to workforce expansion while providing businesses with a diverse, resilient, and highly capable talent pool.

Everest Group has committed to significantly expanding the impact sourcing workforce—connecting hundreds of thousands of marginalized individuals to new job opportunities.

Through research, enablement tools, and best practices, as well as engagement with enterprises, service providers, governments, and Non-Governmental Organizations (NGOs), Everest Group is leading the charge in advancing social impact initiatives.

Everest Group’s Clinton Global Initiative (CGI) Pledge

In 2022, Everest Group outlined a Commitment to Action to grow the impact sourcing market from 350,000 full-time equivalents (FTEs) to 500,000 within three years.

Remarkably, this goal was achieved in just two years, fueling a new ambition: to scale the impact sourcing workforce to 1 million by 2030.

This rapid progress highlights the power of innovative approaches to workforce development. Chess is more than just a game—it is a powerful tool for empowerment, a catalyst for social mobility, and a means to break cycles of poverty.

The same strategic thinking, problem-solving, and adaptability that define chess can be applied to upskilling impact sourcing talent, preparing them for knowledge-intensive roles in the digital economy.

By integrating these principles into workforce development, industries can create meaningful economic opportunities, drive long-term social change, and cultivate a more skilled and adaptable workforce.

If you found this blog interesting, check out our Where Sustainability Unites: Climate Week NYC, UNGA, And CGI blog, which delves deeper into another topic regarding impact sourcing and Everest Group’s CGI pledge.

If your organization is interested in joining this initiative or signing the pledge, please reach out to Rita Soni at rita.soni@everestgrp.com, Ankur Verma at ankur.verma@everestgrp.com, or Sidhaant Nagpal at sidhaant.nagpal@everestgrp.com.

Is Business Process as a Service (BPaaS) the next frontier in healthcare payer outsourcing transformations?

The urgent need for integrated operations for healthcare payers is skyrocketing , with rising costs and ever-more complex regulatory requirements leading to a demand for more comprehensive, platform-led solutions. Third-party solution providers have struggled to deliver truly transformational impact with their current workflow and analytics solutions, but BPaaS models can be a game-changer , enabling them to drive holistic, scalable, and integrated outcomes for payer organizations.

Watch on-demand Everest Group experts Vivek Kumar, Practice Director, Vaibhav Srivastava, Senior Analyst, and Ankur Verma, Vice President, will cover the transformational benefits , including scalability, cost-effectiveness , and integrated operations provided by BPaaS solutions, emphasizing how payers can futureproof their operations while seamlessly handling regulatory and other challenges today.

During this in-depth LinkedIn Live , we discussed:

– Current enterprise priorities with respect to BPaaS solutions
– Emerging innovations and investments in healthcare payer BPaaS, and how they are shaping the future of such solutions
– How BPaaS solution providers can tap into this growing opportunity

Payment Integrity

VIEW THE FULL REPORT

The healthcare payment integrity market is undergoing a significant transformation… 

In an industry rife with administrative inefficiencies, payment errors, and mounting financial pressures, a recent merger between The Rawlings Group, Apixio’s payment integrity business, and Varis, facilitated by New Mountain Capital, is poised to disrupt the sector in ways that mirror the remarkable growth witnessed in Revenue Cycle Management (RCM) over the past years.  

This merger, valued at over US$3 billion, marks a critical turning point, signaling intensified competition, heightened innovation, and a shift toward more integrated and holistic payment integrity solutions. In this blog, our analysts dive deep into what all of this means.

Reach out to discuss this topic in depth. 

A game-changing merger

The merger of The Rawlings Group, Apixio, and Varis introduces a strong third player to challenge the traditional dominance of Cotiviti and Optum in the payment integrity space. Each of the three merging companies brings unique capabilities: 

1. The Rawlings Group has built its capabilities in subrogation and complex claims management, providing essential services to healthcare payers 

1. Apixio is a player in artificial intelligence (AI)-powered payment integrity solutions, leveraging advanced data analytics 

1. Varis focuses on identifying overpayments, helping healthcare payers reduce financial errors in claims processing 

Together, these companies aim to address major challenges in payment integrity, such as administrative inefficiencies and payment inaccuracies. The merger will not only increase competition but also push the industry toward more innovative, tech-driven solutions. 

Intensified competition: a call for innovation

One of the most immediate effects of this merger is the increased competition it brings to the payment integrity market.  

Buyers have long expressed dissatisfaction with current providers, particularly around their ability to deliver a Return On Investment (ROI), leverage AI and technology, and provide better insights and analytics.  

In a recent survey by Everest Group, enterprises rated these priorities 9.1, 9.0, and 8.8 out of 10, respectively. However, providers’ success in meeting these needs was rated much lower at—4.8, 5.0, and 5.8. 

This performance gap highlights an opportunity for the new entity formed by the merger to raise the bar. By combining the strengths of The Rawlings Group, Apixio, and Varis, the merged company has the potential to meet buyers’ demands more effectively, driving innovation and raising the overall standard of service in the payment integrity market. 

Addressing key market demands

The merger aligns well with the evolving demands of healthcare payers. Three major trends have been identified as critical for success in today’s payment integrity market: 

1. Shifting to pre-payment models: Healthcare payers are increasingly moving toward pre-payment review models to identify errors and fraud before payments are finalized. About a quarter of healthcare payers Everest Group interacted with now have active pre-pay programs, marking a significant shift in the way payment integrity is managed 

1. Establishing internal payment integrity offices: Many healthcare organizations are developing dedicated internal teams to manage payment integrity in-house, seeking support in setting up and running these operations effectively 

1. Reducing partner complexity: To streamline operations, healthcare payers are looking to reduce the number of external partners they work with. Many payers currently manage relationships with more than seven partners, with some overseeing as many as 13. Simplifying these relationships will enhance efficiency, reduce costs, and improve service consistency 

The newly merged entity is well positioned to address these needs, offering a broader range of services that can help healthcare payers streamline their operations and improve payment accuracy.  

As other market players, such as EXL, ClarisHealth, and Optum, respond to these same trends, the competitive landscape is likely to shift rapidly, with innovation and adaptability becoming critical for success. 

Parallels with RCM: a growing market 

The trajectory of the payment integrity market closely mirrors the growth of the RCM sector. RCM experienced significant growth over the past five years, expanding from US$ 8.8-9.3 billion in 2021 to an estimated US$ 12.5-13 billion in 2024, thanks in a large part to substantial private equity investments.  

Similarly, the payment integrity market is now seeing increased interest from private equity, with the sector expected to grow from over US$ 9.5 billion in 2023 to over US$ 14 billion by 2028. 

The payment integrity market also shares the same underlying drivers of growth as RCM, including the increasing complexity of healthcare payments and the need for advanced, technology-driven solutions.  

The merger between The Rawlings Group, Apixio, and Varis is likely to accelerate this growth, attracting even more investment and further consolidating the market. 

Future implications: technology and consolidation: 

Looking ahead, the merger will have significant implications for the future of payment integrity, particularly in three key areas: 

1. Market growth: Payment integrity is one of the fastest-growing segments in payer operations, with a projected Compound Annual Growth Rate (CAGR) of 5.0-5.5% from 2023 to 2028. The newly formed entity will be well-positioned to capture a large share of this expanding market, as it offers a more comprehensive and integrated approach to payment integrity solutions 

1. Consolidation: The merger is part of a broader trend of consolidation in the healthcare payment market, as private equity firms continue to invest heavily in the space. Recent investments, such as KKR’s backing of Cotiviti and Pamlico Capital’s investment in ClarisHealth, highlights the sectors growing importance and potential for disruption 

1. Technology evolution: The payment integrity market is moving away from traditional, service-based models and toward more integrated, technology-driven solutions. The combined expertise of The Rawlings Group, Apixio, and Varis positions the new company to lead this shift, offering a holistic approach that integrates AI, analytics, and automation to improve payment accuracy and efficiency 

As the healthcare industry increasingly adopts new technologies to address its most pressing challenges, this merger is a landmark move. It has the potential to reshape the payment integrity landscape, setting new standards for accuracy, efficiency, and innovation. 

Conclusion: a landmark merger in the making

The merger of The Rawlings Group, Apixio, and Varis is likely to significantly disrupt the healthcare payment integrity market.  

By combining their respective strengths and addressing key payer demands, the new entity aims to drive innovation, intensify competition, and pave the way for future growth in the sector.  

As the payment integrity market continues to mirror the growth path of RCM, stakeholders should closely monitor the evolving landscape and prepare for a wave of transformation. 

For a deeper analysis of this landmark merger and its broader implications for the healthcare payment integrity market, read the full report. 

If you found this blog interesting, check out our blog focusing on Generative AI In Healthcare – A Game Changer Or Another Fad? | Blog – Everest Group (everestgrp.com), which delves deeper into another topic in the healthcare sector. 

If you have any questions, would like to delve deeper into the Healthcare market, or would like to reach out to discuss these topics in more depth, please contact Vaibhav Srivastava, Suyash Choudhary, and Ankur Verma.

The healthcare payer outsourcing market is rapidly evolving, driven by healthcare payers’ need to enhance efficiency, manage costs, meet member expectations, and navigate complex regulations. As the industry shifts toward member-centricity and robust core administrative processes, an integrated platform and operations play, more commonly referred to as Business Process-as-a Service (BPaaS) solutions have emerged as a strong strategic solution to streamline operations. The healthcare payers are demanding modular, contextualized, and scalable solutions that takes care of their specific needs for different business lines such as Medicare or Medicaid. As a result, providers are developing innovative solutions (such as Line-of-Business (LoB) specific or ‘in-a-box’ solutions), robust platform and digital partnerships, and comprehensive consulting capabilities across the value chain to help chart out the BPaaS transformation journey for payers

• Healthcare Payer Business Process as a Service (BPaaS) – Solutions PEAK Matrix® Assessment 2024

  

  What is in this PEAK Matrix® Report

  In this report, we analyze 14 healthcare payer BPaaS solutions providers featured on the Healthcare Payer BPaaS Solutions PEAK Matrix®. The report positions providers relative to each other and evaluates their strengths and limitations. The study will enable healthcare payers to identify suitable providers to transform their business processes and differentiate themselves.

  Scope:

  • Industry: Healthcare
  • Geography: US
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading healthcare payer BPaaS solutions providers, client references, and Everest Group’s ongoing analysis of the payer BPaaS solutions market

  Contents: 

  • The Healthcare Payer BPaaS Solutions PEAK Matrix® Assessment 2024
  • The payer BPaaS solutions provider landscape
  • Providers’ key strengths, limitations, and capabilities

  READ ON

What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers

WATCH THE WEBINAR ON-DEMAND

Generative AI might be the first disruptor to spring to mind in 2024, but there are other seismic trends at play that are affecting industries worldwide. Fundamental shifts are developing, brought on by the evolving role of captives, changes in talent management strategies, and new approaches to data exchange/management, which is leading to changes in enterprise operating models.

In this webinar hosted by Everest Group experts, Manu Aggarwal, Partner, Ankur Verma, Vice President, and Suman Upardrasta, Vice President, attendees understood how enterprises should think about disruptive changes as they go about their transformation agenda. Our panel discussed effective strategies for thriving in the face of disruption and offered their experienced view on the best path forward.

What questions did the webinar answer for the participants?

• What are the trends impacting enterprises across industries, such as healthcare, life sciences, insurance, and banking and financial services?
• What are the primary implications for business, technology, and sourcing resulting from these trends?
• What impact does the adoption of disruptive technologies like generative AI have on the enterprise operating model? What are the common challenges that enterprises are facing as a result?
• How can the operating models be tweaked or changed to help enterprises move from disruption to transformation?

Who should attend?

• CIOs
• CTOs
• Enterprise BU heads
• IT/BPO strategy heads
• Outsourcing heads
• Procurement managers
• IT/BPO department heads
• Global Sourcing managers
• Vendor managers
• Senior marketing executives

WATCH THE LINKEDIN LIVE ON-DEMAND

The Revenue Cycle Management (RCM) sector is undergoing seismic change. With rapid digitization and an evolving future landscape, PE funding and overall M&A activity is dramatically increasing.

Watch this LinkedIn Live conversation with Everest Group analysts Priya Sahni, Practice Director, and Ankur Verma, Vice President, to learn about the changes happening in outsourcing patterns within RCM, as well as the trends to watch out for in the coming months.

Attendees will get a complimentary copy of Everest Group’s RCM report.

During this LinkedIn Live, we discussed:

• What are the key business, technology, and sourcing trends within RCM?
• What’s really driving the PE investments in this space?
• What can we expect from rising M&A in RCM business?

Amid healthcare providers’ ongoing struggles with Revenue Cycle Management (RCM) inefficiencies, a new wave of outsourcing is emerging, centered around value and technology-driven solutions like AI and analytics. This surge in demand is propelling significant growth in RCM operations outsourcing, presenting an attractive opportunity for investors and Private Equity (PE) firms and underscoring its potential for high returns in an economically turbulent environment. Explore the driving factors behind this trend and strategies for investors to capitalize on this burgeoning growth for optimal benefits. Reach out to discuss this topic.

Despite the economic uncertainty, the RCM operations outsourcing market has poised itself as a growth star, increasing at a compound annual growth rate (CAGR) of more than 12% from 2021-23.

New sourcing deals requiring providers to support multiple areas have continued to increase, driven by healthcare providers’ long-standing challenges of lower revenue collection, higher denials, and suboptimal patient experience. These issues have reduced margins and escalated providers’ workloads.

Research indicates that nearly 50% of providers witnessed an overall increase in denials in 2023 compared to the previous year, while patient collections sharply dropped to 47.8% in 2022 and 2023 from 54.8% in 2021.

Recognizing this pressure to optimize revenues, hospitals increasingly turn to RCM vendors that offer expertise to streamline administrative processes and help healthcare providers achieve much-needed financial stability while improving patient experience.

While multiple drivers beyond labor shortages are pushing providers to outsource, a few factors stand out. These include regulatory the push toward digital transformation of operations, enhancing patient experience and value-based care, and aligning with changing regulations as illustrated below:

1. Regulatory push due to interoperability measures: Healthcare providers are increasingly turning to digital solutions to manage revenue cycles effectively while investing in interoperable systems. SC Health System recently invested $40M in Epic EHR Platform to enhance interoperability. Outsourcing to specialized vendors with compliance and digital solutions expertise enables healthcare providers to leverage advanced technology beyond their internal capabilities, increasing efficiency and financial performance
2. Thinning hospital margins: While hospitals have witnessed slight top-line improvements due to pent-up demand, the squeezed margins resulting from excessive administrative spending still require strong cost optimization strategies to improve RCM efficiency
3. Focus on patient experience and value-based care: The healthcare industry’s shift to value-based care prioritizes quality outcomes and patient experience. RCM vendors can play a crucial role by optimizing billing processes, minimizing errors, and enhancing patient communication. RCM providers can contribute directly to improved patient experiences and support providers in the value-based reimbursement mode
4. End-to-end integration through AI/analytics: Hospitals with sizeable investments in legacy technologies are prioritizing platform-based end-to-end integration encompassing AI and analytics to futureproof their systems against regulatory, cybersecurity, or other shocks

Driven by these factors, RCM outsourcing has matured into second-generation deals focused on value creation through advanced analytics/AI, support for platform integration, and data-led transformation, coupled with strong domain expertise.

Shift of the RCM outsourcing market towards second-generation deals focused on advanced analytics, AI, and transformation

Seeing the marketplace potential, firms started investing in the RCM ecosystem over the past few years, and the market is now ripe for a fresh wave of capital infusion.

Is RCM the next big thing? PE investors think so

In 2022, private equity firms took a significant interest in revenue cycle management companies, with RCM companies involved in 21 private equity deals – 18 add-ons and three buyouts.

The following three factors are driving this surge in PE interest:

1. Stable revenues amid economic uncertainty: Due to the factors discussed above, the healthcare industry’s accelerating trend towards RCM outsourcing has resulted in the emergence of fast-growing RCM vendors. For private equity firms seeking predictable returns, especially with economic fluctuation, these vendors with recurring billing models and stable revenue streams have been a key area of interest
2. Increasing leverage of digital tools to drive margin profiles: RCM vendors are actively investing in technologies like artificial intelligence, robotic process automation (RPA), and advanced analytics. These innovations streamline operations, reduce costs, and improve efficiency, ultimately enhancing profitability margins. R1 RCM’s acquisition of Cloudmed in 2022 to advance its revenue intelligence and automation capabilities is one of many examples. PE firms recognize the potential of these tech investments to drive maximum profits in shorter periods
3. Consolidation opportunities: With a fragmented market ecosystem and many companies with specialized capabilities operating independently, the race to become an end-to-end vendor is real. PE firms see the potential to acquire and merge these companies to create powerhouse vendors with broader service offerings and a larger client base, promising rapid growth and scalability. One example is Veritas Capital consolidating Coronis Health and MiraMed Global Services to create a multi-specialty RCM platform providing end-to-end technology-enabled solutions to diverse clients across the US

Below is a recap of some of the private equity activity in RCM from late 2023 through this year:

• Aquiline Partners invested in Health Prime International and bought a stake from GPB Capital for US$ 190 million in 2024
• New Mountain Capital, an existing investor of R1 RCM, offered to buy out the remaining ownership at an offer of US$ 5.8 billion in 2024
• TA Associates made a significant growth investment in Alpha II, a provider of RCM technology solutions to healthcare providers, in 2023
• Eclat Health Solutions, a portfolio company of Gulf Capital, acquired the Health Information Management (HIM) division of Excite Health Partners in 2023
• WellSky, a portfolio company of Leonard Green and TPG Capital, acquired Corridor from HealthEdge Investment Partners to expand its medical coding and RCM offerings in 2023

With RCM vendors accelerating toward advanced technologies like automation, advanced analytics, and AI, the adoption of cutting-edge technology will likely increase further. The potential of these digital elements in RCM processes is highlighted below:

Generative AI’s potential to unlock new revenue streams

Generative AI (gen AI) can disrupt the RCM industry and impact existing business models despite its nascent enterprise adoption. Investors remain interested in this segment even with the potential risks.

Investors and service providers should prioritize and plan portfolio updates in emerging opportunities like prompt engineering services, gen AI model training, and data contextualization. This will help future-proof their offerings portfolio and identify high-value use cases to deliver better services to clients from the existing RCM portfolio.

What key factors should investors consider for an RCM asset?

This influx of investments in the RCM space presents investors with numerous opportunities to kickstart their asset hunt. While a ripe opportunity, they must strategically approach investing in RCM. Beyond the financial and talent profile, investors should assess the following:

Let’s take a look at the major players involved in RCM operations and platforms:

Everest Group Revenue Cycle Management (RCM) Operations PEAK Matrix^® Assessment 2023

Everest Group Revenue Cycle Management (RCM) Platforms PEAK Matrix^® Assessment 2023

The RCM industry is on the cusp of transformation as vendors push boundaries to differentiate themselves in a largely fragmented market. While this provides a ray of hope to all stakeholders, waiting and watching how the market progresses in the next couple of years is essential.

To discuss the Revenue Cycle Management outsourcing market, contact Abhishek AK, Ankur Verma, and Ishita Aggarwal.

See the RCM Platforms PEAK Matrix® Assessment 2023 and the Revenue Cycle Management (RCM) Operations PEAK Matrix® Assessment 2023 to see market trends for RCM platforms and the RCM platform providers in the market.

The payment integrity market is dynamically transforming, continuously adapting and enhancing fundamental capabilities within the healthcare industry. The growing emphasis on ensuring accurate and efficient payment processes is creating various opportunities. Key trends gaining prominence include advances in fraud detection and prevention technologies, using sophisticated data analytics for claims validation, integrating AI to identify irregularities, and implementing predictive modeling to forecast potential risks. The industry is experiencing a surge in collaborations and partnerships among payment integrity solution providers, healthcare organizations, and regulatory bodies to create robust ecosystems that foster innovation. Additionally, there is a notable shift toward leveraging next-generation technologies, such as generative AI, to enhance payment accuracy. This evolution underscores the industry’s commitment to refining payment integrity practices through technology innovation and strategic collaborations.

• Payment Integrity Solutions PEAK Matrix® Assessment 2024

  

  What is in this PEAK Matrix® Report

  In this report, we analyze 18 payment integrity solutions providers featured on the Payment Integrity Solutions PEAK Matrix®. The report positions providers’ market shares relative to each other and evaluates their strengths and limitations. The study will enable healthcare payers to identify suitable providers to transform their business processes and differentiate themselves.

  Content:

  This report analyzes 18 payment integrity solutions providers and includes:

  • Providers’ relative positioning on Everest Group’s PEAK Matrix® for Payment Integrity Solutions
  • Providers’ capabilities and market shares
  • Key strengths and limitations

  Scope:

  • Industry: healthcare
  • Geography: global
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading payment integrity solutions providers, client references, and Everest Group’s ongoing analysis of the payment integrity solutions market

  READ ON

What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers