SALT LAKE CITY – Officials at AdvancedMD, which provides practice management and medical billing software for physicians, figure they’ve doubled in size and profits each year for the past four years. They also figured they wouldn’t have the resources to continue that growth in the future.
Enter Francisco Partners. The San Francisco-based private equity firm acquired AdvancedMD on Jan. 17.
“Francisco Partners invests in companies that are right where we’re at now,” said Michele Hilton, AdvancedMD’s CFO. “This is a prefect fit for us.”
AdvancedMD offers physicians billing and scheduling solutions as well as AdvanceEMR, a flexible electronic medical records management system, with the goal of integrating these practices with hospitals and physician networks while also maintaining their independence. Lane Peterson, the company’s vice president of marketing, says many hospitals and healthcare networks want to work more closely with outlying physicians, but can’t quite match up their IT capabilities with what a small doctor’s office might have.
“Hospitals are looking for ways to work more intimately with physicians, but there’s a fundamental disconnect in technology,” he said. “Also, physicians want to work more closely with hospitals, but at the same time they don’t want to give up control.”
By aligning with Francisco Partners, Peterson said, the company will have more capital on hand to develop new products and expand its customer base.
John Trzeciak, a healthcare adviser to Francisco Partners, will take over for Jim Pack as CEO. A 20-year veteran of the healthcare IT field, Trzeciak co-founded Health Systems International, Inc., which helped develop and maintain the Diagnoses Related Groups (DRGs) for Medicare and which has since been acquired by 3M. More recently he served as interim CEO for LYNX Medical Systems and Dairyland Healthcare Solutions.
According to Peterson, AdvancedMD began looking at potential suitors as much as a year ago, as it became clear that they’d need more capital than they could provide on their own. He said the company was approached by 15 or 20 other companies before a deal with Francisco Partners was reached.
“Excellent value in products and services tailored specifically to the needs of the physician revenue management market has resulted in a solid track record of growth,” said Ezra Perlman, a partner at Francisco Partners. “We intend to leverage this success with additional resources so that AdvancedMD can accelerate its growth and solidify its leadership position.”
AdvancedMD boasts about 8,000 clients. Last fall, the company announced it was expanding its marketing efforts to management service organizations (MSOs), independent physician associations (IPAs) and physician hospital organizations (PHOs).
Francisco Partners has invested more than $3 billion in equity capital over 50 technology companies, and currently has $5 billion of capital under management.