Matrix Medical Network, a company used by insurers to assess the health of members, has a new majority owner after private-equity firm Frazier Healthcare Partners agreed to shell out $418 million for it Monday.
Frazier, which has most of its investments in pharmaceutical companies, will pay $418 million to Providence Service Corp., the parent of Matrix. In return, Frazier will own 60% of Matrix, the two groups said Monday. The deal is expected to close by the end of this year.
Providence bought Matrix less than two years ago for about $400 million from private-equity firm Welsh, Carson, Anderson & Stowe. Monday's deal values Matrix at about $537.5 million, according to Providence.
Health insurers hire risk-assessment companies like Matrix and CenseoHealth to document the illnesses and conditions of their enrolled members, usually at home. The firms send nurse practitioners or other clinicians to check a beneficiary's vital signs, verify drug prescriptions and identify physical-safety risks. They also analyze a health plan's claims data to figure out which members have high-cost chronic conditions.
The goal is to get a sense of a patient's health status, which insurers then code to get a risk-adjusted score. If someone has a higher risk score, indicating they are sicker, insurers receive higher payments. Medicare Advantage insurers use these types of in-home risk assessments frequently.
But in-home visits have been hit with a lot of criticism over the past few years. The Medicare Payment Advisory Commission has warned the assessments do not always lead to follow-up care in a physician's office. An investigation from the Center for Public Integrity and whistle-blower lawsuits also said the assessments offer little value to patients and big financial returns for health plans, which have faced allegations of exaggerating members' diagnoses to obtain higher payments.
Last year, Matrix notched a $22.1 million profit on $217 million of revenue. One unnamed health insurer represented almost a third of the company's revenue, according to last year's financial documents.