Friday, September 16, 2011

E-health consultancy Arcadia Solutions rides a growth spurt

By Lori Valigra, Mass High Tech correspondent

Arcadia Solutions, a Burlington-based healthcare consultancy, is expecting high growth and looking for bigger offices following the recent acquisition of Chelmsford-based IT health-care services provider Concordant Inc.

Taking on 55 employees from Concordant brings Arcadia’s ranks to 210 and adds new business in training and support, notably in the ambulatory care market.

“We’ll see a lot of acceleration going into the next two years,” Seth Henry, Arcadia’s founder and president, told Mass High Tech. “Revenue will be in the high $20 millions this year, and we’ll see at least 50 percent growth off that next year, when revenue will be north of $40 million.” He added that the size of the business deals will grow with the addition of Concordant’s services and support. The deal with Concordant closed in May 2011. He declined to give a value to the purchase, saying Arcadia is a privately-held company.

Eric Zerneke, Arcadia’s vice president of sales and marketing, said the company has outgrown its current space in Burlington and aims to move by the first quarter of 2012 to another space in the same geographic area.

“It’s a very hot market in hiring for health IT,” added Henry. He said Arcadia does take on experienced people, but it also trains a lot of people. “We hired 80 people in the last year and 9 in the last month. About one-third to one-half are in the healthcare industry, and others are from other industries or out of college and are trained.”

The federal mandate on e-health and the new health law that will start in January 2010, requiring accountable care organizations that give doctors and hospitals financial incentives to provide quality care to Medicare recipients and keep costs lower, are helping to spur the market for services. But so, too, are more local developments, such as Blue Cross Blue Shield of Massachusetts’ quality performance mandate, Henry said. In 2007, leaders within BCBSMA challenged the insurer to devise a new contract model to improve quality and outcomes and significantly slow the growth rate in healthcare spending.

“The whole delivery model is changing,” said Henry. “Now, the health system must share the risk, know who patients are, what conditions they have, whether they’ve been seen recently, and whether their conditions are in control. Before, they made more money if diabetics were not in control.”

That is also driving the incorporation of information technology (IT) into the medical profession. Getting medical systems in place and training staff to use them is now a lucrative business. “About half of the primary care physicians in the country have some type of e-health system. But only one-fourth have adopted it,” said Henry. Inputting patient records is time-consuming, and a one-size-fits-all approach to training medical professionals to use the systems has proven inadequate. “So that leaves a lot,” Henry said, referring to business that is available for his company to tap. Zerneke said there is a need to evaluate how physicians react to technology and adjust the training and support accordingly.

Compounding matters is a lack of standards and resistance by physicians. “Not enough has been done to help manage the change,” Henry said. The first-year effort to get full adoption of a system takes each doctor an average of 1,000 hours of data entry. “So that’s 15-30 minutes extra work per patient seen, adding more work for doctors,” he said, adding that he expects doctors will see the benefit of being able to assess patients more thoroughly with e-health records. “Doctors are wonderful consumers of data.”

The company also is expanding beyond Massachusetts to focus on regions with what Henry called a “national-regional” model, meaning the company will have a national identity, but cater to regional needs. It will provide about half of the labor to a new region from the home office and hire half locally, to keep services consistent. The first office, in Austin, Texas, will start in the fourth quarter of this year, and four more regions will be added in 2012 in large metropolitan areas with strong academic presences. “These tend to have better health systems,” he said.

Arcadia also is spinning out companies, the first being Azara Healthcare LLC, in August. The company is handling data-driven reporting and analytics for the community health market. It is located in Burlington and has five employees.

Arcadia itself was acquired in 2007 by Minneapolis-based Marquette Technology Companies and its parent company, the Pohlad Family, which owns companies in the financial, retail, automotive, technology, entertainment and commercial real estate industries. Henry said Azara and future Arcadia spinouts will be part of the parent company.