CIS Technologies, a healthcare reimbursement and business office management company, has entered into a definitive agreement to acquire Hospital Cost Consultants, a managed-care contract management vendor, for about $15 million.
HCC is a subsidiary of First Financial Management Corp., New York, which purchased the Pleasanton, Calif.-based vendor in December 1993.
Tulsa, Okla.-based CIS will purchase all the stock of HCC for $10 million in cash, plus a guarantee on a $5 million note from HCC to First Financial. That represents nearly double HCC's 1994 revenues of $8 million.
But it signifies the potential growth and investor interest in HCC's niche of software products that keep track of complex managed-care contracts and prepare healthcare providers for an era of upfront reimbursement in return for taking the risk for all healthcare services (Nov. 14, 1994, p. 80; Nov. 7, 1994, p. 60).
CIS was the highest of three bidders for HCC and was bolstered by an infusion of $20 million from Bankers Trust Co. of New York and GE Capital, a Stamford, Conn., subsidiary of General Electric Co., said Mark Emkjer, president of HCC.
First Financial had pumped nearly $4 million into the small company to rewrite and simplify the software products, but its investment still paid off. "They made a very handsome profit," Emkjer said.
The acquisition, combined with CIS' claims processing, electronic data interchange and physician practice management operations, will be marketed to physician-hospital organizations as a comprehensive information management capability, Emkjer said.