Yet another business combination has underscored the current trendline of consolidation in the health IT market.
This time, Sansoro Health, a Minneapolis startup focused on interoperability and EHR integrations through APIs, has joined forces with clinical integration and compliance company Datica Health.
The combined company will retain the Datica name and is headquartered in Minneapolis. Sansoro Health CEO Jeremy Pierotti will take on the chief executive role of the new company and former Datica CEO Travis Good will move to the position of chief technology officer. Financial terms of the deal were not disclosed.
“There are staggering hurdles to bringing advanced digital health solutions to market,” Pierotti said in a statement. “We know the complexity of health data exchange and compliance, and our products streamline development and management of cloud-based applications. Our combined company offers a complete, scalable platform to meet these challenges and enable data-driven healthcare in the cloud.”
In many ways the path of Sansoro and Datica have been largely parallel. Both were Midwestern companies founded in 2014 and 2013, respectively, that have raised roughly $15 million in private funding.
They also both use cloud-based software to attack an overarching problem for their clients, simplifying the process and managing the risk for sharing, integrating and harnessing patient data.
While healthcare organizations are increasingly moving operations to the the cloud, the problem of patient data provides unique issues in integration and compliance.
In fact, a 2018 survey conducted by Datica found that a majority of healthcare IT executives considered cloud migration a top priority, but were also concerned about compliance, security and privacy.
“One of the biggest challenges companies face today is the increasing complexity of compliance and regulatory requirements,” said Massachusetts eHealth Collaborative CEO and Datica board member Micky Tripathi.
“When you talk to any CIO in any setting, one of the things they’ll tell you is that they spend a disproportionate amount of time on compliance, which leaves less time for true innovation.”
With the increased scale and capabilities through the merger, Datica will be able to better serve their existing customers like Johnson & Johnson, Propeller Health and Voalte, while reducing complexity with a more robust platform.
A report from investment bank Berkery Noyes tagged the growth in health IT M&A volume between 2017 and 2018 at 19 percent. Strategic acquirers – meaning companies in the same industry – made of 75 percent of that M&A volume.
This year has been no exception to the rule. A few major health IT M&A deals in the first half of 2019 include the merger between DocuTAP and Practice Velocity to create Experity and the acquisition of clinical communications company Uniphy Health by Harris Healthcare.
The consolidation in health IT is part of the larger trend of consolidation across the healthcare industry due to competitive pressures ranging from the shift to value-based reimbursement, smaller provider margins and increasing administrative burden.
Photo: Natee Meepian, Getty Images
