ChartWise Medical sees eventual sale to strategic health IT buyer – CEO
Sep 8, 2012 | VIA BLOG | Posted 11:49 PM by Dr. Jon Elion

ChartWise Medical Systems , the venture capital-backed clinical-documentation intelligence (CDI) startup, eyes eventual tech buys and is likely to sell to a strategic, after gaining hospital customers for healthcare information technology, according to founder-CEO Jon Elion.

The three-year-old Wakefield, Rhode Island firm has accepted “in excess of USD 5m” investment and has 17 employees, said Elion, who declined to provide projected full-year subscription revenue. Elion holds controlling interest in the company.

It recently announced accepting an unspecified amount of investment from FCA Venture Partners (an affiliate of Clayton Associates) and FCA is prepared to consider follow-on investment. It has 12 shareholders, including FCA, which owns a minority stake. It holds “a bunch” of trademarks and it opts not to pursue patents, due to concern regarding disclosure of proprietary information, he said.

Management tells ChartWise employees that private equity ownership is precursor to an eventual sale, said Elion, who is both a practicing cardiologist and an entrepreneur. He does not fear competition, nor does he view ChartWise as a “lifestyle” company that represents his “retirement plan.”

Its offerings enable computer-assisted clinical-documentation improvement, with an artificial-intelligence engine that helps users document care and outcomes and ensure proper Medicare, Medicaid and other reimbursements, according to its website.

ChartWise was created by Elion and other former financial and sales executives and engineers from Heartlab, the cardiology imaging and information networks company. Elion founded Heartlab and then sold it for USD 132.5m in 2005 to its former distribution partner Agfa-Gevaert. As reported, during its last full-year before sale, 10-year-old Heartlab had USD 38.3m revenue and 160 employees.

Its immediate priority is organic growth, but it is likely to consider acquiring technology lines from firms that want to refocus entirely on their consulting practices, and it has identified several such potential sellers. Elion and/or Executive Vice President Mary Cooper are proper points of contact for seller approaches, he said when asked.

ChartWise is “in the process” of integrating with “3 or 4” partners’ proprietary electronic medical records (EMRs) and its first such integration is likely to begin with a proprietary EMR product during 4Q12, he said. Its software has been developed with US, as well as UK, Canada and other possible future cross-border markets in mind.

Asked about consolidation in the sector, Elion noted that OptumInsight (formerly known as OptumHealth’s Ingenix) has “a stellar record” in acquiring and successfully integrating companies.

Its largest competitor is 3M; less directly competitive offerings are from FTI, Navigant, Huron and J.A. Thomas. Other sector offerings are from Precyse, Cerner, Allscripts and from from “dozens” of boutique IT firms, he said. McKesson is among its logical future technology partners, Elion acknowledged when asked.

ChartWise advisers include attorney Henry Kates of Reavis Cianciolo and accountant Ed Pieroni of Andsager Bartlett & Pieroni; its auditors are Sullivan & Company; and, it banks with Bank Rhode Island, said Elion.

It was advised in its search for private equity investment by Anthony Rust. The process began with a Rust-produced list of 1,000 investment firms, and was then narrowed to 150 with clear Health IT interest. It interviewed 38 firms, reduced the list to three finalists and then chose Nashville, Tennessee-based FCA, Elion noted.

FCA adviser Lawrence Kloess and investment-team member John Burch have joined Elion’s board, the CEO said today. ChartWise valued FCA executives’ healthcare expertise more highly than capital, alone, said Elion. FCA and Clayton were co-founded by a former HCA president, according to their websites.

by Milt Capps in Nashville, Tennessee

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