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Technology is expected to change the face of healthcare in the next few years. With several recent acquisitions in the healthcare industry, let’s take a quick look at how these are expected to completely transform certain healthcare operations using the best that technology has to offer. Technological innovations like artificial intelligence have been a gamechanger for healthcare in the last decade or so. But the recent deals involving giants like Microsoft and UnitedHealth Group are expected to accelerate that process considerably.
Optum’s Acquisition of Change Healthcare
Let’s begin with Optum’s acquisition of Change Healthcare. In a survey conducted by Change Healthcare before this deal, it was found that nearly two-thirds of healthcare providers in the US are using artificial intelligence at some point in the revenue cycle. Almost all those who participated in the survey expect to be using AI in some capacity in the coming years. Quite likely, Optum – a part of UnitedHealth Group, saw this as an opportunity to strengthen their focus on improving population health, patient outcomes, and revenue cycle management amongst other things.
Optum is paying a whopping $13 billion to make Change Healthcare a part of OptumInsight, a business that aims to deliver revenue cycle management, data analytics, advisory and research, and tech-related services to healthcare entities. Optum was the primary reason behind UnitedHealth Group’s revenue crossing $277 billion last year.
Optum’s decision of acquiring Change Healthcare is based on the latter’s use of analytics and data-driven solutions to transform the healthcare industry by improving patient, financial, clinical, and administrative outcomes. Also, Optum has already penetrated the provider as well as payer market in healthcare. This is an exciting venture that will bring two service-based companies that aim to serve healthcare, on a common platform. With their combined capabilities, they will be able to deliver better health experiences and outcomes at a much affordable cost. The acquisition is not expected to be too much of a challenge as both the companies have similar values and missions. Additionally, this union shares a sense of urgency to not only serve their direct customers but also those that their customers serve.
UnitedHealth has been the largest health insurance company in the US for a few years now. It is not only experiencing success as a health insurer but also as a provider of medical care. With Optum, it is now emerging as a big pharmacy benefit management player. Moreover, it has now established several urgent care centers, doctor practices, and surgery centers in different parts of the country. The data that they have access to, through their role in provider, payer, and pharmacy markets gives them the leverage to apply AI and influence the healthcare delivery ecosystem.
Microsoft’s acquisition of Nuance Communications
We will now shift our focus to the acquisition of Nuance Communications by Microsoft. The deal will see Microsoft pay the AI technology company $19.7 billion in cash. After LinkedIn, this is the second most expensive acquisition deal that Microsoft has been involved in. The direct impact of this acquisition is expected to enhance the transcription and voice recognition capabilities of Microsoft. Nuance’s biggest and most successful speech recognition products are all SaaS products developed on MS Azure. So their familiarity with MS frameworks is not new.
This deal to acquire Nuance Communications is seen as a part of Microsoft’s endeavor to provide cloud offerings that are specific to the healthcare industry. Cloud for Healthcare launched in 2020 was again a part of the same initiative.
This is what Satya Nadella, CEO and Executive Chairman, Microsoft, had to say about this deal, “Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI. AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate the growth of Microsoft Cloud for Healthcare and Nuance.”
According to a statement released by Nuance earlier this year, it is currently working with nearly 90% of hospitals in the US. So this acquisition comes across as Microsoft’s well-planned strategy to gain unrestricted access into the healthcare industry. This move also reinforces the tech giant’s plans to empower the healthcare industry to deal better with pandemic-induced disruptions, with cloud offerings. What this move also does is it takes Microsoft forward like other digital giants that have healthcare initiatives. And many experts also believe that competitive pressure from the likes of IBM, Google, and AWS amongst others is a highly probable reason that made Microsoft take the plunge.
But Microsoft is trying to steer away from any competitive battle by making it amply clear that its main objective with this deal and others that it may be involved with in the future will only be to lead on the healthcare front. If that’s what it is going to do, then it will vindicate its claims of taking a unique path to other tech companies like AWS and Google.
Microsoft’s plans to invest in AI adoption in healthcare picked up steam due to the opportunities brought to the fore by the pandemic. And Nuance, being one of the biggest exponents of healthcare AI, was an easy choice.
It’s still early to predict who will take a bigger share of the pie amongst the tech giants but with Microsoft entering the race, it sure has taken an exciting turn. Now it remains to be seen which of these companies will make the next move to gain a competitive advantage in this battle to make the most of healthcare-technology opportunities.
We believe that this is just the start of tech-healthcare collaborations. There has been a steady uptick of such acquisitions with more tech giants entering the healthcare delivery landscape. This is a healthy trend indeed!