As more hospitals have adopted and upgraded electronic medical records, there has been a push by health IT companies to develop tools that can speed up workflows and also make it faster to find information hidden within unstructured data. M*Modal tackled both those needs with its natural language processing technology, also referred to as speech recognition technology, and dictation software. So what’s the best way to interpret its move to file for Chapter 11 bankruptcy protection this week?
The company’s debts and a battle to retain market share in an increasingly competitive sector each played a part.
M*Modal listed $852 million in liabilities as part of its bankruptcy filing, including about $500 million to a group of lenders and $250 million in unsecured notes, according to The Wall Street Journal
The private equity arm of JP Morgan Chase, One Equity Partners, acquired the business in a $1.1 billion leveraged buyout two years ago.
About 80 percent of the company’s revenue came from transcription services using speech recognition technology in 2013, according to the WSJ article. Its customers include more than 3,800 hospitals, clinics, and physician practices. Last year it began a collaboration with Intermountain Healthcare on a speech-enabled computerized physician order entry app that would allow physicians and hospital staff to order patient medication and other medical functions on iPhones and iPads, a bit like a medical version of Siri.
M*Modal CEO Duncan James said in a statement that the company will use revenues from the business to get it through the bankruptcy proceedings and intends to restructure the company.
“When M*Modal was taken private in 2012, the acquisition was financed with a capital structure aligned with a specific set of assumptions that are no longer relevant. As a result, there is a need to restructure the Company’s balance sheet to better align with changing market dynamics and refinements to our strategy. We intend to use the Court process to significantly strengthen M*Modal’s balance sheet and improve the Company’s financial flexibility by reducing our debt burden and establishing a capital structure that supports our investment in the future.”
A report by investment bank Triple Tree last year noted that as much as 80 percent of relevant clinical data is stored in narrative form in electronic medical records that most data analysis tools can’t access. A HIMSS report showed that the adoption of speech recognition software more than doubled in four years to 47 percent in 2013.
IBM and Nuance are among the larger competitors in the market which also includes Reveal, QPID and Health Fidelity.
There are a few ways that hospitals are enlisting natural language processing software: identifying gaps in care in the patient’s medical history; and to identify where physician follow-ups did not happen. It can also create a faster way to do e-prescribing and exchange patient data.
As M*Modal navigates its way out of Chapter 11 it will be interesting to see how its restructure responds to the changing market dynamics that have challenged the business.
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