Allscripts and Netsmart combine forces

The health IT market continued its activity this week as Allscripts Healthcare Solutions and private investment firm GI Partners announced the acquisition of Netsmart in a joint venture. The Allscripts’ Homecare software business unit will combine capabilities with Netsmart’s CareFabric healthcare enterprise software and software-as-a-service solutions.

It’s a merger of large companies with significant market share. Allscripts was ranked No. 10 on the Healthcare Informatics HCI 100 list in 2015 and Netsmart ranked No. 52. According to the announcement, Netsmart is currently the largest healthcare IT company serving the health and human services sector, which includes behavioral health, public health and child and family services.

Combined, it will be a company with more than $250 million in annual revenue and more than $60 million in annual operating income, on a pro-forma basis, with a strategic focus on enhancing services, post-acute care, outcomes, compliance and regulatory demands, efficiency and performance, according to the announcement.

The Allscripts unit serves 30,000 home health, private duty and hospice clinicians, and Netsmart serves 450,000 care providers and 40 state systems. 

“We are at scale now so we can leverage our capability into adjacent markets that have similar needs as the human services market that we traditionally serve,” Netsmart CEO Mike Valentine tells Behavioral Healthcare. 

Valentine says homecare is a new area that has been on the radar for Netsmart, and the market will benefit from capabilities such as data analytics. The strategy is to create a comprehensive platform that manages all the services and care delivery "outside the four walls of the hospital and physician practices."

“Creating a software and services platform for caregivers to manage patients through the combined realities of post-acute care and mental health is absolutely essential to achieving the value-based care goal of healthy communities and populations,” said Allscripts CEO Paul Black in a statement.

Allscripts will contribute 100% of its Homecare business, plus approximately $70 million in cash to the joint venture. When the deal closes in April, the combined business will operate under the Netsmart brand and will be based in its current headquarters in Overland Park, Kan.  Valentine will serve as the chief executive.

Netsmart was purchased from Genstar Capital, a middle-market private equity group.