Private equity firm Bain Capital snapped up software company LeanTaaS to gain a foothold in the healthcare AI and automation space.
The deal also included a "significant" capital investment to help fuel the company's growth.
The companies did not disclose financial details of the deal. The investment is expected to be completed in the third quarter of 2022.
Existing investors Insight Partners and the Growth Equity business within Goldman Sachs Asset Management will each retain a material stake in the company, which will continue to be led by its current management team, the companies said in a press release.
Founded in 2010, LeanTaaS developed software that combines lean principles, predictive analytics and machine learning to help optimize how health systems use expensive, constrained resources like infusion chairs, operating rooms and inpatient beds.
The Silicon Valley software company's long-term vision is to become the “air traffic control center” for a health system, executives said.
LeanTaaS founder and CEO Mohan Giridharadas described the company's technology as "mathematical magic" that matches supply and demand in health systems and infusion centers.
The company’s software is used by more than 500 hospitals and 130 health systems in the U.S. LeanTaaS has raised $250 million to date, according to Crunchbase.
The deal with Bain Capital Private Equity will push LeanTaaS to the next level of growth, Giridharadas said, while providing it with fresh capital to ramp up new product development and invest in its go-to-market strategy.
"We've had a terrific run at growing. We've established a leading position on operational-driven transformation in healthcare. I think finding a partner who could take us to the next level with the resources, the expertise and the healthcare background was critical for this stage of the journey. Now was the right time for us to drive this partnership," Giridharadas told Fierce Healthcare.
LeanTaaS is a market leader and pioneer in healthcare AI, said Devin O’Reilly, a managing director at Bain Capital Private Equity.
Technology investment in healthcare is accelerating and will continue to be robust over the next 10 years, O'Reilly said. Bain Capital is betting on increased demand for LeanTaaS technology, as the company uses AI, machine learning and predictive analytics to tackle core challenges in healthcare, he told Fierce Healthcare. Those challenges include expanding patient access to health services while delivering care more efficiently, he noted.
"To have this very sophisticated AI and machine learning-driven approach to solving these problems for health systems is compelling," he said.
LeanTaaS' cloud-based solutions include iQueue for Operating Rooms, which is used by more than 2,500 ORs across 47 health systems to improve surgical capacity utilization and improve the patient experience.
The company's iQueue for Infusion Centers is used by nearly 500 infusion centers, with over 10,000 chairs across 105 health systems with a customer base that includes over 80% of the National Comprehensive Cancer Network. The company launched its newest product, iQueue for Inpatient Beds, in 2021.
LeanTaaS has grown 40% year over year in the last two years despite COVID-19-induced pressures on spending, Giridharadas said. The pandemic "shone a bright light" on gaps in resource utilization in healthcare.
"Health systems have realized that they need more sophisticated methods," he said, also noting that a backlog in elective surgeries is driving demand for an analytics-based approach to surgery scheduling and resource management.
LeanTaaS is now eyeing opportunities for M&A to drive its growth and build its tech capabilities, Giridharadas said.
The company's operating rooms product, for example, focuses on "one or two pieces" of the value chain by optimizing scheduling and surgical block utilization, Giridharadas said.
"That are many other companies participating upstream and downstream of that. We haven't done much with clinical AI so we could think about the build versus buy on clinical AI," he said.
Healthcare is at the beginning stages of harnessing "smart hospital" technology, O'Reilly said.
"If you think about all the other departments within a hospital that could benefit from what LeanTaaS offers and even the full extension of the health system out to clinics and outpatient surgery. There's a wide range of areas we can expand into and maybe we can do it organically but if there are companies that are complementary and have the technologies that could be convenient acquisition targets," he said.
Bain Capital is building up its investments in the healthcare and technology sectors. Last year, it teamed up with fellow private equity firm Hellman & Friedman to buy health IT company Athenahealth for $17 billion. The two PE firms picked up the cloud-based electronic medical record company from previous private equity owners Veritas Capital and Evergreen Coast Capital.
Bain Capital also acquired medical equipment parts and services company PartsSource last year. It purchased the supplier from Great Hill Partners in a deal that values the company at about $1.25 billion, The Wall Street Journal reported.
Bain Capital's other healthcare and health IT investments include Grupo Notre Dame Intermedica, HCA Healthcare, HST Pathways, InnovaCare Health, IQVIA, Surgery Partners, Waystar and Zelis.