Investor Newsletter August 2022

KLAS Market Insights

How Has the Pandemic Affected Provider Organizations’ Satisfaction with Their Technology?

Ever since the pandemic started over two years ago, KLAS has analyzed how it is impacting provider organizations’ overall satisfaction in different areas across the healthcare industry.

Unsurprisingly, between 2019 and 2021, provider organizations report increased overall satisfaction with telehealth technology (e.g., video conferencing platforms), which has been leveraged heavily to accommodate pandemic stressors. However, there is a slight drop in satisfaction scores for 2022. It is likely that organizations appreciated this technology in the early stages of the pandemic, as they needed solutions to quickly address immediate needs. Although these solutions may have initially sufficed as emergency stopgaps, organizations are now examining their options more critically and determining what solutions would work best for a go-forward enterprise solution.

In the acute care EMR market, organizations report increased satisfaction in 2020, though their satisfaction reverts to 2019 levels in both 2021 and 2022. In this market, the way customer organizations speak of their vendor is different today than it was during the initial stages of the pandemic. In 2020, organizations often appreciated their vendor’s efforts to resolve problems that were new to everyone, whereas today, those organizations are impatient that their vendor hasn’t yet resolved long-term challenges related to the pandemic or problems that existed before the outbreak.

The markets that have seen a decrease in provider satisfaction between 2019 and 2022 include nurse and staff scheduling, specialty ambulatory EMRs, and remote patient monitoring. Vendors in the nurse and staff scheduling market are grappling with increased demands from customer organizations, who are experiencing ongoing staffing shortage and expecting software solutions to alleviate pain points. Meanwhile, organizations report that specialty EMRs are not as much of a priority for them, since they are spending time, energy, and resources on products that are central to delivering basic patient care. Another reason for decreased customer satisfaction in these areas could be vendors’ delayed development of ancillary products.

KLAS will continue to evaluate customer satisfaction across all our measured markets and revisit long-term score trends as the pandemic becomes less of an existential threat and more of an everyday concern to which the healthcare industry must adapt.

The KLASifieds

Digital Health Investment Symposium (DHIS) 2022
September 13–14, 2022
Stein Eriksen Lodge | Park City, UT

Investment Insights: Company Valuations

By Mike Davis

The valuation of companies is taking a hit in this turbulent economy. Several companies are having to re-assess their market valuations. As the valuations of companies decline, several financial impacts will occur as a result. It will be harder for companies with negative EBITDAs (either stagnant or declining) to find new capital sources. Companies that need short-term capital to survive are more likely to become targets of private equity (PE) firms. If struggling companies are public, the PE firms will (1) use take-private transactions to save companies that supplement other products in their portfolio or (2) become a good foundation for expanding into target market investments. Struggling companies may also pursue payment-in-kind debt financing from PE firms to address the impact on interest payment. 2022 will be a year of significant merger and acquisition activity for companies that have not grown their client base or revenue over the last 12–24 months.

KLAS Report Highlights

Emerging Technology Reports

Each week, dozens of new companies are knocking on the doors of provider organizations and health systems to present their latest innovative solutions. KLAS publishes 90+ individual reports annually that provide early performance data on these solutions designated as emerging, disruptive, or innovative.

To view the KLAS reports library, visit our website.

Market Specialty Reports

KLAS publishes 75+ specialty reports annually, providing market insight based on customer perceptions of and experiences with the vendor/consultant solutions they employ. KLAS also validates industry trends, emerging technologies, purchase decisions, and market energy. Interested in KLAS report purchase options? Contact the KLAS Investment Advisory team at investorservices@klasresearch.com.

Telehealth Performance 2022: What Is the State of Telehealth Post-Pandemic?

At the onset of the pandemic, telehealth solutions became critical for healthcare organizations to maintain appointments, offer safe care, and increase patients’ access to care. Now, with many patients still wanting to use telehealth (see recently published report on the patient perspective), provider organizations are at a crossroads as they evaluate telehealth’s value and long-term use, especially if the US government’s emergency telehealth use policy isn’t renewed past summer 2022. This report examines how well vendors facilitate a quality customer experience and what outcomes customers have achieved, particularly as they have overseen patients’ involvement with the technology (i.e., accommodating patients’ differing devices, connection bandwidths, and levels of digital literacy). Vendors are divided into two groups based on the type of technology they offer: virtual care platforms and video conferencing solutions.

Recently Released and Upcoming KLAS Specialty & Emerging Technology Reports

Cardiology Structured Reporting 2022:
Which Vendors Are Holding Ground in This Volatile Market?

Healthcare organizations have steadily invested in cardiology solutions despite the COVID-19 pandemic, and structured reporting continues to be top of mind in their search for a vendor to unify cardiology modalities and imaging overall. Over 25% of the 183 interviewed organizations are actively planning to replace their current vendor or would do so if given the option, leading to a dynamic, volatile market where no one vendor consistently leads in customer satisfaction. This report (1) examines the breadth of customer-reported structured reporting adoption and customer satisfaction to help organizations determine which vendors can best meet their needs and (2) provides an update on customer satisfaction with hemodynamics solutions.

CMS Payer Interoperability:
2022 Vendor Guide

To enable patients to securely transfer their data from payer to payer as their coverage changes, new mandates dictate that CMS-regulated payers must be able to securely exchange patient data. Several technology vendors are available to help health plans and state agencies comply with these interoperability requirements, providing capabilities such as patient access APIs, provider directory APIs, and payer-to-payer data exchange. This vendor guide is intended to help health plans and TPAs understand the vendor technology options; it includes those vendors known to KLAS as of July 2022.

Enterprise Imaging Guidebook 2022:
A Comprehensive Guide to Developing an Enterprise Imaging Strategy

Since 2017, KLAS has hosted four separate summits on enterprise imaging (EI), each time bringing together healthcare executive thought leaders to discuss EI issues and define guidelines. The insights gleaned from these summits represent the combined wisdom of some of the industry’s top EI experts. This white paper summarizes the discussions from the most recent summit—held in May 2022—and also pulls in findings from previous summits to form a succinct EI guide intended to help provider organizations on their enterprise imaging journey.

Imprivata Digital Identity Platform 2022:
Benefits & Challenges of Deep Adoption

Amid a changing workforce and mounting security pressures, healthcare organizations recognize the growing need for a holistic approach to managing digital identities. The development and adoption of HIT solutions capable of enabling a holistic strategy are in an early state, with most organizations leveraging multiple vendors to manage things such as identity, access, and compliance. Previous KLAS research found that Imprivata—whose single sign-on solution has a large healthcare footprint—is currently the only vendor to offer a broad digital identity platform. Building on that research, this report explores the potential benefits and challenges of deeply adopting Imprivata’s offerings. Insights come from in-depth interviews with 6 organizations identified by Imprivata as “deep adopters” as well as from 15 organizations within the vendor’s broader customer base (referred to in this report as “general adopters”). Other vendors will be evaluated as their solutions expand to offer broad capabilities.

Optum/Change Healthcare Merger:
Customer Insights 2022

In January 2021, Optum announced their intentions to acquire Change Healthcare. The merger remains unfinalized, however, as the US Department of Justice blocked the deal in February 2022 due to anticompetition concerns—such a merger would give UnitedHealth Group, Optum’s parent company and the nation’s largest insurer, access to rivals’ sensitive data. The legal proceeding is ongoing and scheduled to go to trial August 1, 2022. This report shares Optum and Change Healthcare customers’ reactions to the merger and their perceptions of its impact. Between March 2021 and April 2022, KLAS interviewed 48 individuals from 46 unique organizations; of these respondents, 9% are Optum customers, 56% are Change Healthcare customers, and 35% are customers of both vendors.

Security & Privacy Consulting Services 2022:
Who Exceeds Expectations in This High-Performing Market?

Cybersecurity attacks are on the rise, and healthcare organizations are especially at risk. Security vulnerabilities can lead to financial penalties imposed by OCR, damaged organization reputations, and the increased risk of patient safety and data being compromised. To reduce vulnerabilities, organizations often bring in outside consulting firms that specialize in enhancing security and data privacy measures in healthcare. This report examines several such firms (and one cross-industry firm) to determine who is effectively reducing risk, engaging closely with clients, and exceeding expectations.

Forcura:
First Look Report 2022

For post–acute care providers, there is a premium need for the streamlining of the patient referral process, digital management of required patient documents, eSignatures on orders from physicians, secure messaging between the home office and nurses in the field, and analytics tools that drive efficiency gains. Home health agencies and other post–acute care customers will find all of these things in Forcura’s suite of offerings. This report seeks to validate customer adoption and satisfaction across a number of categories.

Intelligent Locations INTRAX (Hardware & Software):
Emerging Technology Spotlight Report 2022

Healthcare organizations aim to utilize RTLS solutions to optimize operations, reduce overhead, and improve patient safety through the accurate tracking and monitoring of assets and people. Intelligent Locations offers RTLS software and hardware that combines tracking technology and AI within its system. The product can be used for various use cases, including asset tracking, patient tracking, staff safety, environmental monitoring, and contact tracing. This report examines customers’ experience and satisfaction with the INTRAX solution and hardware.

The MDClone ADAMS Platform:
Emerging Technology Spotlight Report 2022

Clinicians and other providers face the challenge of accessing accurate digitized data to improve research on most effective clinical practices of patient care while protecting patient privacy. An effective care plan requires a collaborative effort of clinicians providing care, researchers who understand the data, and a leadership team who is able to identify areas of improvement. The MDClone ADAMS Platform democratizes data for all users while protecting patient privacy by using synthetic data. This report seeks to validate MDClone’s customer experience.

To make a purchase or find more information on KLAS reports, contact the KLAS Investment Advisory team at investorservices@klasresearch.com.

Market Activities Impacting Investments

PE Activity Slows from 2021 But Take-Private Transactions Hold Steady

A PitchBook report compares 2021 PE transactions to first-half 2022 transactions. Take-private transactions remain on pace with 2021 metrics as distressed firms offer enticing PE opportunities.

PE Clubs for the Mass Affluent

Traditionally, the PE asset class has been the domain of banks, pension funds, endowments, and other institutional investors that have the wherewithal and patience to make big-ticket commitments for years at a time. But now, another class of investors is making its presence felt: the mass affluent. KKR and Blackstone are recruiting this class of investors.

RBC Capital Market Thoughts on PE M&A Deals for 2022

A report by RBC discusses how PE activity for M&A transactions will result in mega-deals in 2022. One contributor commented, “There were a significant number of entries and exits, with ongoing strength in industries such as healthcare and technology, but what was remarkable about last year was the breadth of strong dealmaking across the entire industrial spectrum.”

Rescue Financing Reemerges for PEs

PE firms are renewing their appetite for alternative financing tools that can strengthen a company’s financial position per a PitchBook article. Payment-in-kind (PIK) loans, a hybrid between pure debt and pure equity, are one of the rescue financing products that have experienced a resurgence recently. PIK debt allows borrowers to defer interest payments, which can be paid via the issuance of more securities rather than with cash.

Several Newly Public Companies Worth Less Than Their VC Investments

A Pitchbook report identifies that health insurer Oscar is now worth about half of its VC capital raised. Fellow insurtechs Root Insurance, Hippo, and Metromile are also worth far less than their venture backers invested.

Universal Language Translators Will Improve Healthcare Services 

Limited English proficiency (LEP) is an independent driver of health disparities and negatively impacts other social determinants of health. Language interpreters may not be readily available to some care providers in their markets. If the person needing healthcare does not have a family member that can translate for LEP patients, diagnosing and delivery of care can be a challenge. This emerging technology insight evaluates emerging translator solutions.

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