Providence spins out new analytics software firm combining KenSci, Lumedic, 4 other companies

Providence has spun out a new analytics software firm that combines the capabilities and technologies of six companies to focus on population health and revenue cycle management solutions for providers and payers.

The new venture, called Advata, will sell software products to provide clinical decision support and back-office management.

"Advata is an advanced software analytics company with a suite of healthcare products with the aim of improving patient outcomes, reducing costs and optimizing revenue," Julie Rezek, Advata CEO, told Fierce Healthcare. "Previously, these six companies worked independently to solve critical problems in healthcare. Now, as Advata, this new company brings together a team of experts to focus on solving healthcare's biggest problems using responsible AI to transform healthcare."

Roughly 20% to 25% of American healthcare spending is wasteful, according to a 2019 study published in the Journal of the American Medical Association, which represents about $760 billion per year.

There's an opportunity to leverage analytics and artificial intelligence to tackle inefficiencies in the system, Rezek said.

"Data obviously exists in these healthcare systems. But actual insights are lacking to manage those inefficiencies. That's truly where our value proposition comes in. What we're trying to do is set new standards for advanced data analytics using AI to improve smarter healthcare operations, reduce costs, recover revenue and provide better patient outcomes," she said.

Advata, which launched today, includes a subset of companies that had been part of Tegria, a for-profit subsidiary Providence launched in 2020. Tegria combined nine of Providence's existing investments and acquisitions including revenue cycle management company Lumedic; Bluetree, an Epic consulting and strategy company; and Quiviq; along with Meditech consulting firm Engage IT; Navin, Haffty & Associates; and Community Technologies.

On the revenue cycle management solutions side, Tegria also combined MediRevv, Acclara Solutions and Medical Specialties Managers.

Advata is the strategic integration of artificial intelligence company KenSci; revenue cycle management firm Colburn Hill Group, which Tegria acquired this year; MultiScale, a company Providence co-founded; Lumedic; data analytics startup Quiviq; and Alphalytics, a subsidiary of Acclara Solutions that will also shift to Advata.

"These six companies have years of experience with responsible AI or machine learning. We're not a startup that is just coming out of the woodwork. We have years of experience that we're bringing together in a strategic manner. The connective tissue across all six companies is based in data and advanced analytics," Rezek said.

Advata and Tegria operate as separate entities with Tegria focused on services and consulting and the new company focused on software products.

Providence is the sole investor in Advata, but financial details about the investment were not disclosed. The company has about 150 employees and 30 customers.

KenSci anchors Advata's foundation of software solutions, along with Quiviq and MultiScale, Rezek said. Colburn Hill Group, Alphalytics and Lumedic bring "deeper revenue cycle management expertise, amplifying the breadth of technology capabilities" that Advata offers, she said.

Rezek also pointed to Advata's partnership with Providence as giving the company a leg up in the analytics space.

"Our partnership with Providence is a key driver of innovation, testing and driving healthcare insights back into our solutions. We can use Providence as our alpha and beta customers to learn more and to be smarter and better in terms of how we scale and commercialize what we do," she said.

Advata will focus its analytics insights on the most expensive and complex areas of healthcare, like the emergency department and operating room, executives said. 

Advata's analytics solutions are primarily focused on population health and revenue cycle management.

"Our advanced analytics and machine learning applications can enable care to be proactive and operations more efficient. For example, being able to identify patients who need palliative care because there's a risk of mortality. That results in better care for the patient and better results for the organization by making smarter care decisions," Rezek said.

Providence has made a number of acquisitions in the past few years to beef up its technology and services capabilities. By forming new separate companies for revenue cycle management, software and healthcare consulting services, the health system is strategically trying to diversify its revenue from relying on just clinical care.

Providence wrapped up its 2021 fiscal year with higher year-over-year volumes but ultimately fell well beneath 2020's operating income and net income. The Catholic system reported a net operating loss of $714 million in 2021, more than twice the $306 million loss it saw in 2020.

Despite a nearly $200 million year-over-year improvement in net nonoperating gains to $1.23 billion, Providence also saw its net income dip to $812 million from the prior year's $1.12 billion.

"Providence has been on a journey to transform health care through innovation, and Advata is a culmination of this important work," said Rod Hochman, M.D., president and CEO of Providence, in a statement. "It represents our belief that when you pair data science with responsible artificial intelligence, machine learning, automation, and other technological advancements, you can better support clinicians at the bedside and in clinics, improve patient outcomes, and decrease overall healthcare costs."