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- [00:00]
A
This is Scott Becker with the Becker Healthcare podcast. I'm thrilled today to get a visit with Nick Warfield. Nick is a leader in the revenue cycle space. I got to meet Nick or was introduced to him because his firm and he do a brilliant report on what's going on in the revenue cycle, management, sort of banking area, finance area, deal area and so forth. And so we wanted to visit with Nick today, tell us a little bit about him, tell us a little bit about his firm and what they do and also what trends are watching in the revenue cycle world. Nick, Nick. That's a long introduction. Tell us a little bit about what you all do and about your career. I know you're with Zigler, but tell us about your career and yourself.
- [00:38]
B
Absolutely. And thanks Scott for having me. My name is Nick Warfield, I'm a director at zigler which is 115-year-old investment bank focused solely on the healthcare industry and we provide M and A and capital raising advisory services for middle market healthcare clients across the healthcare IT and services landscape. And, and over the last 10 years or even before that, we've really built out a strong track record in the RCM space advising tech and tech enabled services companies at the forefront of innovation to address various pain points for providers whether that be on the front end with such advising SEI Solutions which is a patient scheduling company to R1 a few years ago or even more recently advising HBCS which is insurance reimbursement and self pay solution to BendMetrics last year and to ultimately round out their end to end RCM solutions. So really cover MA and capital raising broadly across RCM and excited to share some of the trends that we're seeing with you guys today.
- [01:42]
A
Some things that people don't know about Nick and about Ziggler is Nick started his career at Allen & Co. And Allen & Co. For people that don't know that name is the most famous name in the world of investment banking in the media sector forever and just host this huge conference and really well guarded place. Zigler I knew of originally out of the Milwaukee office and just brilliant, brilliant investment banking firm and terrific, terrific people, very centered, a great, great place. And Nick is also a terrapin which we'll talk about later. But Nick, tell us what are the trends you're watching in the MA world in revenue cycle? What's going on in that world?
- [02:22]
B
Yeah, so a lot to be honest. So across the RCM industry we've seen a lot of activity whether it's on the M and A Front or even on the investment side as well. First, we've heard a lot of providers have really grown tired of managing various point solution relationships and the complexity involved with integrating these solutions together and as a result has led them to recently shift to more focus on end to end solutions to address their entire spectrum of RCM needs in somewhat of a simpler manner. This preference has really caused the RCM vendors to respond and has led to significant consolidation across the RCM vendor landscape in order for them to effectively sell into these provider organizations and align with the needs of these providers that they're serving. So a ton of consolidation just to kind of build out the end to end platforms is one thing that we're seeing.
- [03:18]
A
And talk about that for a second though, is that larger firms buying smaller firms or people with one solution merging with somebody else with a complementary solution or some of both. What do you see there? Because your point on point solutions, I mean actually people might not know this started your career at one part of your early career at University of Maryland. And so you saw this from a health system perspective. But more and more health systems don't want to buy a million different point solutions. So what does that M and A look like? I'm sorry, what are you seeing there?
- [03:46]
B
Yeah, so I mean it is a lot of larger organizations trying to round out platforms. So I would say earlier, you know, one of the examples that I mentioned was hbc. Last year we sold a business called hbcs which is an insurance reimbursement and self pay solution on the RCM side focused mostly on midsize hospitals. So probably NPR is a little bit below a billion or so. But we ultimately sold them the medmetrics, which was trying to round out their broader platform stack and then ultimately saw the opportunity to expand into the self pay world, so brought that under their umbrella to really form that full end to end solution. I think that's something that is really starting to entice providers. As I mentioned, the providers are seeing the challenges with signing up one point solution to address each and every one of their needs. What they really want to do now is streamline that whole process and operate with one RCM vendor that can address all of their pain points. Instead of having to manage different relationships across the spectrum and handle different contracts, different manager relationship managers, et cetera. So I've definitely seen some consolidation on that front as some of these large organizations try to round out their platform.
- [05:11]
A
100% and then talk to us about. In addition, you were mentioning that as one sort of trend, there's another trend you were starting to talk about in the RCM field that I cut you off on. Talk about that too, if you don't mind.
- [05:22]
B
Yeah. And something else that we're seeing is as providers continue to struggle with some of the macro trends in this industry, whether it be on the growing denials rates or the increasing workforce challenges that people are seeing across health care, they've really been forced to reevaluate their RCM capabilities and continue to push outsource vendors to deliver further ROI on top of what they're already delivering. One of the ways that vendors have looked to do this is the adoption of AI and automated solutions that optimize complex tasks and reduce labor costs effectively. You know, we've seen a ton of investment in this space lately with capital flowing into AI solutions and established players across the firm. Whether it's smaller companies that are popping up and trying to address some of these needs, or even some of the larger folks out there, you can see some of the more recent deals, whether it's Axis Healthcare, they've acquired a couple or merged with a couple of AI solutions under the new Mountain Capital Investment to really build out their innovative solution suite. So there's been a ton of investment in this space. I know R1 just raised a bunch of money to kind of build out their AI solutions as well, but this is something that I think the industry is really starting to focus on. AI obviously is a buzzword that everyone across the industry is using, but I think in healthcare this is something that I truly believe AI has one of the more practical use cases within RCM as it's a large opportunity to automate some of the high volume repetitive tasks that historically have been done fairly manually. So I think AI obviously is a trend that you're hearing across every industry. Healthcare is not excluded from that. And RCM I think is personally, I think is one of the more likely candidates to see some innovation through AI.
- [07:17]
A
And in the revenue cycle area, in the administrative area, but particularly in revenue cycle, you're seeing a lot more, a lot earlier that people were sort of doubling down on it before other places because exactly what you talked about, large automation, lots of repetitive tasks and hard to hire for those tasks too. So you ended up with a lot of movement in AI and large language models and so forth in revenue cycle. When you look at the rest of this year, next year, do you expect a very robust RCM market in terms of deal activity?
- [07:49]
B
Yeah, I do. And this is just kind of the continued trend within this space. I mean, we've seen a lot. It starts with some of the money and where it's coming from. I think a lot of, especially on the private equity side, are hungry to put some capital to work after a somewhat slower M and A market over the past few years. And they've seen AI and some of these automated solutions as an. A great opportunity to innovate the space and has really flocked to this industry. And I think that'll continue to drive some of the record levels of M and A that and investment that we're seeing in RCM over the past couple years. And I think that's starting to lead to some premium valuations in the space as well. But, but I'm excited about the next couple quarters here. I think there's a ton of opportunity, whether it's on, you know, like I said, developing some of these technologies as they continue to raise money and kind of build that bring some automation and AI solutions to the RCM industry. And I think there's ways where that will continue. And then also there's a number of other trends here that I think people are starting to dive into with technology. Right. So technology, for instance, I think opens up a couple of different markets as well within rcm. So, for instance, the ambulatory side I think is getting a lot of focus of recent just due to some of these new technologies that have opened up some of the lower market there. Traditionally, RCM was very heavily focused on the health systems and the larger, I guess the larger entities. But now as one, private equity has started to roll up some of those ambulatory side providers, one that obviously provides an opportunity for solutions to be sold into that market. But AI and some of the leaner technology companies can now look to those smaller market providers as well to help innovate as a lot of those industries or a lot of those providers typically will handle a lot of the RCM tasks in house. Where now we're starting to see technology being able to kind of help them out to automate some of their RCM functions and ultimately help them on the financial end.
- [10:05]
A
Thank you. And you've been at ziggler for about 10 years now. Congratulations. What a fantastic career. That's great longevity for an investment banker. That's actually a fantastic. I mean, what a great career so far. Talk about sort of your career and any advice to other people developing careers. Give us two seconds on what advice you might give to other people in their emerging career years.
- [10:26]
B
Yeah, so I think, you know, really understanding the evolving landscape within RCM is important and Being able to adapt to that over the last, you know, over my career or so, you know, we've seen RCM go from being in house and on prem work for a lot of these providers to then moving over to US based source vendors, then ultimately somewhat offshoring models. And now, you know, the development of AI is taking that and evolving that into a, you know, just everything is now technology based. So it's truly one of the more innovative fields in healthcare, in my opinion. And really being able to understand and adapt to that innovation, I think is key. So being able to dive in and learn as much as possible about the space while also being open to seeing kind of where the puck is, you know, maybe moving in the future, I think is key for anybody who's, you know, really starting a career out within healthcare and RCM specifically. But I think that's something that's very important is try to be open to adapting as the industry is constantly changing.
- [11:28]
A
Nick, I couldn't agree more. And that's a hard skill set, this flexibility for so many of us that are motivated and not that flexible. But you're absolutely right is really an important part of the skill set and mindset. Nick, I want to thank you so much for joining us in the backwards healthcare podcast. I love the work that Zigler does. I love your report. Thank you so much for joining us today.
- [11:48]
B
Appreciate the time. Scott.