McKesson has announced an agreement to buy Portico Systems for a reported $90 million, a deal that will combine the two companies' offerings around care management and network management and position McKesson for anticipated shifts in the healthcare market.
The acquisition of Portico, which focuses on providing systems and software to health plans, will allow McKesson to offer a suite of products and services to providers and payers alike as they look to create the new payment and care delivery models expected to blossom under health reform, including value-based reimbursement and network management for products offered on health insurance exchanges.
According the Ned Moore, CEO of Portico, the companies had been engaged in off-and-on partnership discussions about how to strategically address changes in the market, including value-based reimbursement, the increase in complexity of payer and provider systems and the shift of risk to providers under new models like ACOs.
"If you look at it from a high level, McKesson has a lot of expertise in the clinical side, along with a lot of tools to support claims. Those are two big pieces that are coming together on the reimbursement puzzle," said Moore. "The piece that we add is the network view – the overall management of the provider network."
A special focus for the two companies will be helping provide the information capabilities needed to effectively manage accountable care organizations – both companies expect to leverage the network management tools from Portico in an ACO setting.
Or as Emad Rizk, MD, president of McKesson Health Solutions, said in a statement, "The ability to create new products that use value-based reimbursement to align payers and providers on achieving the right outcomes is a key strategic imperative. Portico will further enhance McKesson's ability to help organizations efficiently navigate and manage increasingly complex delivery systems."
The combination should also help provide services to insurers who are looking to participate in the direct-to-consumer insurance market that will develop with the implementation of state health insurance exchanges in 2014, as required under the Affordable Care Act.
According to Carolyn Wukitch, senior vice president of McKesson Health Solutions Products, while there is still much uncertainty about how the individual exchanges will operate, Portico's offerings will allow them to actively court insurers looking to play in that market.
"I think where we see the biggest value in that market is around provider networks. How do you develop those networks in a way that is effective and efficient? That is a value in the Portico assets," she said.
While neither company announced the agreed sale price, holding company Safeguard Scientifics, which holds a significant stake in Portico, issued a press release tagging the purchase price at $90 million. Of that total, $5 million will be contingent on Portico attaining certain performance milestones.
"Portico has become a leader in provider network management by offering solutions that streamline key business processes and optimize payments for the health insurance industry," said Kevin L. Kemmerer, executive vice president and managing director of the Technology Group at Safeguard and a member of Portico's board. "We believe that this acquisition allows McKesson to broaden its product portfolio in order to address changing market needs."
The acquisition is expected to close sometime in the third quarter, pending regulatory approval.
Moore said Portico's roughly 140 U.S.-based employees will continue to operate from the company's Blue Bell, Pa., headquarters and its office in Beaverton, Ore.