Business and technology consultancy West Monroe Partners is acquiring a small Chicago company that provides software and consulting services to health insurers.
Invoyent, which folded into West Monroe last week, advises health insurers on claims processing and using data analytics to help price health plans. The staff of approximately 30 will double the size of West Monroe's team in the hot health care consulting market to 60.
“We are going to be taking that to market aggressively,” said West Monroe CEO Kevin McCarty in an interview. “This isn't allowing us to go attack a new market; it allows us to serve the market we're already in and lead larger, transformational programs.”
West Monroe, which booked $127 million in revenue last year, spent about $9 million, or what it paid for Etherios, a company that specializes in Salesforce integration, McCarty said. The high demand for health care consulting means “you have to pay a premium.”
This is the fourth acquisition in three years for West Monroe, an outgrowth of once-mighty accounting giant Arthur Andersen. Aided by its employee stock ownership plan, the firm is pursuing a “10-10-10” strategy for annual revenue growth, McCarty said: 10 percent growth through new-graduate hires, 10 percent through experienced-professional hires and 10 percent through M&A.
There's “a land grab” in the professional services world these days for health care consulting firms, said Robert Brown, managing director at Lincoln International, a Chicago-based investment banking firm. (Lincoln International recently hired West Monroe for a software implementation project.) As health insurance companies, hospitals and doctors continue to wrestle with the effects of the Affordable Care Act, they turn to consultants for guidance. That is driving consolidation in the consulting industry as larger firms snap up health care boutiques.
“Health care is going to grow whether the economy is going to grow or not,” Brown said. “This seems to me to be a deal that makes a great deal of sense for them.”
"Consulting firm picks up health care IT boutique" originally appeared in Crain's Chicago Business.