Premier Inc. acquires Medpricer

Oct. 30, 2019

Premier Inc. has acquired Medpricer, a technology-based solutions company that helps optimize healthcare provider savings across purchased services contracts. 

Medpricer is a software-as-a-service (SaaS) provider of technology solutions that enable hospitals and other organizations to analyze, benchmark and source purchased services contracts independent of any existing group purchasing organization (GPO) affiliation. 

Medpricer’s spend management platform uses machine learning to validate, compare and onboard purchased services suppliers; track and measure spend by category, supplier and facility; benchmark contracts terms to ensure competitive rates; set and manage specific savings targets; and manage contract compliance.

“In even the best run organizations, purchased services are often managed in disparate departments lacking centralized data or oversight, making them difficult to aggregate for volume-based discounts,” said Susan DeVore, Chief Executive Officer of Premier. “Getting at this largely untapped source of savings is vitally important, yet most healthcare providers are managing these contracts using home-grown solutions with a limited view across all of their contracts. Medpricer gives us a scalable technology platform and data-driven evidence designed to gain control over purchased services spend – regardless of GPO affiliation. Combined with Premier’s market-leading, categorized purchased services spend data and our sophisticated performance improvement technology suite, we believe we will be uniquely situated to become the one-stop-shop for healthcare margin improvement.”

Purchased services are those provided by a third-party vendor to accomplish routine, continuing and necessary clinical and non-clinical functions, including revenue cycle management, marketing, lab testing and environmental services. According to research, purchased services account for up to 30 percent of a typical healthcare provider’s non-labor expenses, and represent a total addressable acute care market of approximately $160 billion.

These services often fall outside the scope of national group purchasing contracts. As a major area of spend, understanding purchased services trends is crucial to healthcare operations, but accessing external data on pricing trends is limited without assistance from an outside partner. Gaining transparency into this area is a central pillar within a total cost management approach to improving margins.

Users of the Medpricer end-to-end lifecycle cost management platform and expert services typically save an average of approximately 24 percent on their existing purchased services contracts and reduce their time to RFP by 40 percent. Across Medpricer’s customer base, the company reports saving healthcare providers more than $700 million in purchased services spend.

Premier funded the $35 million acquisition with borrowings under its existing credit facility. The acquisition is not expected to materially impact financial results in FY2020 and is expected to be modestly accretive in FY2021.

Medpricer’s current employees are expected to continue operations from their existing northern California office, or remotely. Current CEO Chris Gormley will continue to lead the business as part of Premier’s Supply Chain Services segment, ensuring Medpricer has the resources to continue its mission of helping healthcare providers reduce costs and improve the quality of their purchased services.

Premier has the release.