Chronic Care Management and Remote Patient Monitoring

A middle market private equity firm (Client) was conducting due diligence on a provider of chronic care management (CCM) and remote patient monitoring (RPM) services. Client engaged HBG for market and regulatory diligence

Background

• Investor (Client) was excited about a new investment opportunity but needed to resolve uncertainty regarding specific market and regulatory issues

• Client had done preliminary work but required third-party support to better characterize the issues and evaluate their impact on the investment

Client request

• Analyze market characteristics and company performance

• Investigate regulatory and legislative issues, and expected impact of upcoming federal elections

• Recommend whether Investor should move forward and if so what growth paths Target should pursue post-investment

Key issues for consulting team to address

• Market characteristics

  • Size and growth by payer, provider and patient type

  • Adoption trends by risk-bearing providers

  • Insourcing versus outsourcing

  • Basis of differentiation

• Company performance

  • Positioning in the overall competitive landscape

  • Differentiation, especially ability to bill CMS directly

  • Value of add-on services

• Legislative and regulatory topics, post-election

  • Medicare expansion

  • CCM outlook

  • Reimbursement trends

Health Business Group approach

• Health Business Group worked closely with the Client and Target to conduct the diligence

• Review background from Target and participate in a demo

• Performed primary and secondary data gathering

  • Mined HBG knowledge base, trade press, competitor websites, market research and analyst reports, conference information

  • Conducted one-on-one interviews with Target’s customers and non-customers

  • Interviewed market experts, providers, health plans

  • Identified a law firm with specialized expertise and worked through key issues with them

• Synthesized findings

  • Developed overall report with and summary findings and implications

  • Developed microeconomic model to assess profitability of Target business under varying sets of options

  • Presented to Investor and provided excerpt for Target

Outcomes

• Demonstrated that Target’s business model and growth prospects were not sufficiently robust to merit investment in base case

• Identified additional downside risk

• Provided feedback to Target regarding opportunities to diversify and shift business model to potentially become more attractive in the future