The target, a pediatric clinic, offered a desirable service mix, location, and staffing model for potential expansion, but its panel size and revenue cycle management practices caused concern. West Monroe’s comprehensive assessment and recommendations paved the way for finalizing the deal.
Understanding the target’s challenges and improvement opportunities
Neighborhood HealthSource (NHS) operates three clinics in North Minneapolis and is interested in expanding its reach further north, while also capturing a greater share of the pediatric population in this region. North Metro Pediatrics (NMP), a local pediatric clinic located in the northern suburbs, was an ideal partner based on its location and service mix. The acquisition would allow NHS to expand into Minneapolis’ northern suburbs, an area that is core to the clinic’s mission.
NMP’s panel size, the number of unique patients for whom it provides care in a year, was significantly below industry standards, indicating a need to grow its presence. A healthy panel size is a sound indicator of a clinic’s market penetration. Additionally, NMP does not deploy standard revenue cycle management practices and lacked the expertise to leverage the data and insights it was tracking to improve claim aging and reimbursement turnaround time.
NHS asked West Monroe to assess the target’s operations and clinical delivery and generate a report that would inform its acquisition decision.
A holistic assessment of the target’s financial, business, and clinical operations
West Monroe provided a team with a blend of healthcare experience and mergers and acquisitions expertise. The team assessed NMP’s performance on key healthcare capabilities across the business, including front office, back office, point of care, and administrative operations. From this assessment, the team identified risks and key considerations relevant to the underlying investment thesis.
A green light, with a target integration date of January 1, 2020
Based on its industry benchmarking, interviews, and analysis of the target clinic’s operations, finances, and clinical delivery, West Monroe supported the investment thesis to acquire NMP. West Monroe’s assessment provided visibility into operations and uncovered important considerations that, if addressed correctly, will ensure a smooth acquisition and integration.
Expansion into the northern suburbs of Minneapolis, paired with the increase in government subsidies by transitioning NMP into a FQHC (the first in an area with a considerable uninsured population), solidifies the case for NHS to proceed with the acquisition.
“West Monroe’s pro bono contribution to this review effort was critical to staff and board members arriving at this decision. It was very reassuring to us to have an expert second set of eyes on this project and has certainly resulted in an increased sense of confidence in our decision.”
Steve Knutson, Executive Director, NHS