Artificial intelligence is poised to be widespread in hospital revenue cycle operations in just the next three years.
And that provides a big opportunity for Change Healthcare's end-to-end AI solutions, according to Neil de Crescenzo, president and CEO of Change Healthcare.
Two-thirds of doctors report using AI in some revenue cycle capacity today, and nearly all expect to be using it in three years, a Change Healthcare survey found.
"As providers begin to use AI more strategically, there is an opportunity for significant financial, operational and clinical gains, including improving the end-to-end revenue cycle, claims accuracy, denial reduction, clinical insights, and level of care prediction," de Crescenzo said during the company's third-quarter fiscal 2021 earnings call Thursday.
"These trends will continue to increase demand from payers and providers for Change Healthcare's platform of integrated solutions and services," he said.
Despite these tailwinds, Change Healthcare saw its software and analytics revenue drop 4% year over year from $387 million to $372 million during its third quarter ending Dec. 31.
Network solutions revenue was up 28% to $193 million from $151 million a year ago, and revenue for technology-enabled services totaled $222 million, down 8% year over year.
Change Healthcare exited the third quarter on a mixed note. The company reported revenue of $785 million in the quarter, down 3% from $808 million during the same period last year. The company's top line missed Wall Street estimates by 0.1%.
Revenue was negatively impacted by the COVID-19 pandemic, partially offset by new sales volumes, company officials said
The Nashville, Tennessee-based healthcare technology company reported a profit of $110 million during the quarter and adjusted earnings per share of 34 cents. That beat Street estimates of 30 cents per share. The company posted adjusted net income of $106 million or 33 cents per share in the third quarter of fiscal 2020.
The company exited the quarter with cash and cash equivalents of $137 million compared with $167 million in the preceding quarter.
Optum deal and positive market trends
In early January, UnitedHealth Group's Optum unit announced plans to buy Change Healthcare for $13 billion, or $7.84 billion in cash plus about $5 billion in debt. That transaction will be completed in the second half of 2021, executives said.
"We are excited by the opportunity to unite two technology and service companies focused on serving health care. The combined capabilities will more effectively connect and simplify core clinical, administrative and payment processes, resulting in better health outcomes and experiences for everyone at lower costs," de Crescenzo said.
"We share a common mission and values, and importantly, a sense of urgency to provide our customers and those they serve with the more robust capabilities this union makes possible," he said.
Underlying market trends for the business remain positive on multiple fronts, he said, including federal rules being implemented surrounding interoperability and price transparency as well as continued advances in value-based care initiatives, including the Centers for Medicare & Medicaid Services' (CMS') new Medicare direct contracting model.
During the quarter, the company launched 13 new products spanning medical network, decision support, data solutions and interoperability solutions to help payers comply with the CMS patient access and interoperability rule, de Crescenzo said.
In November, Change Healthcare launched social determinants of health analytics, a national data resource that will enable health systems, insurers and life sciences organizations explore how geodemographic factors impact patient outcomes.
The company also entered into an agreement with Carnegie Mellon University’s Delphi Research Group to roll out Delphi's enhanced COVIDcast real-time COVID-19 indicators. The addition of Change Healthcare's de-identified COVID-19 claims data helps researchers track and forecast pandemic patterns, the company said.
Change Healthcare also sold its Capacity Management business for $67 million.
"The sale aligned with our strategy to concentrate on the primary areas of our business that achieve the best outcomes for our customers through the power of the Change Healthcare platform," de Crescenzo said.