Understanding healthcare’s AI deal advantage

The technology is already being used in areas like automating manual tasks to enable doctors to spend more time with patients, improving outcomes in clinical trials and getting higher quality reads from medical images.

PE firms and strategic buyers like what they see and are jumping feet-first into the dealmaking pool to take advantage of the exponential improvements expected to come.

Clearer image
AI is proving to be advantageous when it comes to medical imaging. The technology can get quicker, more accurate and detailed reads, which makes doctors’ jobs easier and improves the quality of patient care. Streamlined workflow with the help from AI can reduce manual processes and increase productivity from medical professionals. These technologies are becoming vital, as a rising number of hospitals are reporting radiology technologist shortages and technicians are complaining of musculoskeletal disorders due to workload and repetitive motions.

In August, medtech provider Zimmer Biomet Holdings (NYSE: ZBH) said it is buying OrthoGrid, a company that focuses on AI-driven surgical guidance systems for total hip replacement. The deal includes OrthoGrid’s AI-powered, fluoroscopy-based surgical assistance platform.

Surgical guidance systems rely on CT-based imaging which results in a backlog of CT exams and that can slow down operating room workflow and efficiency.

Fluoroscopy-based surgical guidance looks to fix this by using real-time X-ray imaging to help guide procedures and improve surgical accuracy and safety. Unlike CT scans, fluoroscopy-based systems do not require preoperative preparation, allow real-time navigation with up-to-date images and provide convenient bedside access to motion imaging, OrthoGrid says.

OrthoGrid’s software system uses real-time image analysis and automated measurements of certain body parts. In addition, surgeons can tailor OrthoGrid’s technology to their own needs.

In another deal announced in July, GE HealthCare (Nasdaq: GEHC) reached a deal to buy Intelligent Ultrasound Group’s clinical AI software business. The target uses AI-driven image analysis tools that are designed to make ultrasound more efficient.

“I really believe that we are at the start of a wave of AI making a profound difference to medical imaging, and especially ultrasound,” said Intelligent Ultrasound Chief Operating Officer Nick Sleep.

“I think we will eventually get to a place where providers may be committing malpractice by not leveraging AI Tools,” says Akerman Partner Jordan Cohen. “Especially in radiology, where every year it’s becoming clearer that certain radiological tasks, like reading certain scans, it can do as well or better than human radiologists. There’s going to be a question of ‘Did you run my scan through an AI platform to help you?’ If you didn’t, why didn’t you?’”

Results driven business
AI will also transform clinical trials, Mintz Partner Karen Lovitch and chair of the firm’s health law practice says. “That’s going to be one of the more effective uses of AI because these applications allow you to predict how long it will take you to get a drug to market, or even if you’re going to make it to market.”

In July, EQT said it is buying a majority stake in CluePoints, an AI-powered data provider for clinical trials. CluePoint’s software is aimed at improving outcomes for pharmaceutical and biotech companies and contract research organizations. As scientific breakthroughs and advancements in technology and data are accelerating in healthcare, demand for data and analytics software is expected to grow, according to the two companies.

“The industry is experiencing momentum due to growing research and development spend, increasing data complexity in clinical trials and a focus on patient safety and data quality driven partly by regulatory scrutiny,” the company said.

“CluePoints is a prime example of how data, machine-learning and AI can be leveraged to improve real world outcomes – in this case pharmaceutical drug development,” EQT Partner Kirk Lepke said.

Union Square Advisors Director Alexander Despo says AI is needed to automate data so scientists, doctors and researchers can focus on developing drugs. “You need AI to do that,” he says. “You need software to pull that data, automate as much as you can. Data businesses are really important when you think about real world data and having the right data to feed your models. You can come up with evidence to speed up your trials.”

Numbers don’t lie
With the advancement of technology in the healthcare industry, there is a vast amount of data available that needs to be pulled and organized. This is where AI comes in.

In June, Arcadia, a data platform for the healthcare industry and backed by Peloton Equity and Vista Credit Partners, acquired CareJourney, a provider of healthcare data and AI-powered analytics and insights.

The acquisition combines Arcadia’s healthcare data platform and workflow tools with CareJourney’s cost, quality, and benchmark data. CareJourney obtains Medicare, Medicaid, Medicare Advantage and commercial claims data so payers, providers and employers can use them to improve performance.

The combined company will help healthcare organizations by offering them data so they can find things like navigating alternative payment models and improving patient and financial outcomes.

In March, healthcare data provider Veradigm acquired healthcare AI company ScienceIO. The target uses AI for record linkage, information extraction, summarization and predictive analytics while preserving patients’ privacy. Veradigm says the acquisition will allow it to extract more accurate insights from data while advancing its AI services.

“If you’re looking to drive efficiencies internally and you’re looking to increase margins, technology is critical,” Despo says. Mergers and Acquisitions