Verata Health, a Minneapolis-based health care software company, has been acquired for $120 million by a pioneer in using artificial intelligence in the health care field.
Olive, based in Columbus, Ohio, plans to use Verata's technology to streamline the prior-authorization process for patients who must seek approval from their health insurance companies in order to have certain procedures paid for, officials said Friday.
Olive estimates that prior authorizations cost the health care system about $31 billion per year.
"The key drivers [in prior-authorization problems] are wasted time by providers and significantly lost revenue" when providers are not reimbursed by health insurance companies, said Dr. Jeremy Friese, who founded Verata Health with Jeff Cowan.
In their new role with Olive, former Verata employees aim to make the prior-authorization process more efficient and less time-consuming. The goals of the merged companies will be to reduce write-offs for uncovered services by 40% and to reduce turnaround times for coverage decisions by 80%.
For patients, miscommunication about prior authorization can lead to surprise medical bills.
Verata brings a technology to Olive's network of 400 hospitals across the country that substitutes artificial intelligence for phone calls and faxes, said Friese, also Verata's CEO. The acquisition expands Verata's footprint while giving Olive a better health care product to sell.
"We connect into patients' electronic health records," Friese said. The technology determines the precise information individual insurance companies require for prior authorization and automatically provides it. This allows coverage decisions to be made 30% faster, Friese said.
Friese, a former Mayo Clinic physician executive, predicted the new venture will improve millions of patients' experiences. In addition, it will help insurance companies.
Olive will keep all of Verata's current workforce, and Friese expects to expand it in his new role as president of Olive's payer market division.
"We were not looking to be acquired," he said of Verata. "We've been business partners with Olive since summer. It became clear that our cultures fit. So [the acquisition] made strategic and financial sense."
Jim Spencer • 202-662-7432