Can New Mountain Capital Transform Healthcare Payments with AI?

January 10, 2025

The health tech industry is witnessing a significant acquisition by New Mountain Capital, a private equity firm that has announced plans to acquire Machinify, an AI-driven software platform specializing in healthcare payments. This move follows the earlier merger of The Rawlings Group, Apixio’s Payment Integrity business, and Varis. The newly consolidated entity aims to leverage advanced technology, clinical expertise, and data to transform healthcare payments, aspiring to build a seamless foundation for healthcare administration. By integrating Machinify’s AI capabilities into a larger framework, the company hopes to set new benchmarks for payment accuracy and efficiency while driving down overall healthcare costs.

Strategic Acquisition and Merger Overview

New Mountain Capital’s strategic move to acquire Machinify and integrate it with The Rawlings Group, Apixio’s Payment Integrity business, and Varis is expected to create a formidable player in the healthcare payment integrity market. Post-acquisition, the combined entity will adopt the Machinify name, enhancing its market visibility and positioning. While the exact financial terms were not disclosed, the new entity is valued at approximately $5 billion, a significant increase from the earlier $3 billion valuation following the initial mergers in September 2024. This strategic alignment is anticipated to enhance the entity’s technological edge, making it a dominant force in the market.

The merger, subject to regulatory approval, is anticipated to close within the first quarter of the year. Following the acquisition, David Pierre will continue to lead the organization, ensuring continuity in vision and strategy. Prasanna Ganesan, Machinify’s founder and CEO, will assume the role of EVP and Chief Product Officer, bringing his innovative approach to the broader Machinify brand. The legacy sub-brands of Rawlings, Apixio PI, and Varis will be retained, maintaining their distinct identities within the consolidated entity. This structure allows the company to leverage the strengths of each sub-brand while working under a unified technological framework.

Impact on Healthcare Payments

The newly consolidated entity aims to establish itself as the most technologically advanced payment integrity company by leveraging artificial intelligence to identify errors more accurately and swiftly. This capability promises to significantly reduce healthcare costs for all stakeholders involved. Machinify’s AI technology will play a crucial role in enhancing healthcare intelligence capabilities, including data mining, itemized bill review, clinical and coding validation, subrogation, coordination of benefits, and pharmacy payment integrity. This advanced technological framework will not only streamline existing processes but also set new standards for operational efficiency and accuracy.

With a combined workforce of over 2,000 employees, the new Machinify will serve more than 60 health plans, including 13 of the top 20 payers in the industry. This expansive client base underscores the company’s commitment to leading with technology. However, the emphasis will also be placed on human expertise to refine and enhance payment processes. This blend of advanced technology and human insight aims to create a more responsive and accurate payment system, benefiting both payers and providers. By addressing existing inefficiencies and inaccuracies, the consolidated entity seeks to bring a new level of reliability to the healthcare payment landscape.

Machinify’s Technological Contributions

Founded in 2016, Machinify has cultivated a suite of AI-powered applications designed to optimize the healthcare claims lifecycle. These applications significantly improve the accuracy and speed of claims management, facilitating a shift towards more automated payment processes. This technology has the potential to tackle health plan payment accuracy more effectively, reducing errors that can lead to significant financial losses for healthcare providers and payers. The company’s innovative AI solutions make it well-positioned to capitalize on the evolving needs of the healthcare industry, fostering a more transparent and efficient payment process.

The healthcare payments sector is ripe for disruption due to its reliance on outdated management approaches. Health plans are increasingly seeking alternatives to inflexible solutions, driving demand for innovative, tech-enabled payment integrity solutions. The acquisition of Machinify positions the company competitively against other health tech companies like Optum and Cotiviti, both of which focus on payment accuracy solutions. By integrating Machinify’s advanced AI capabilities into its broader framework, New Mountain Capital aims to offer a more adaptive and accurate payment integrity solution. This strategic move is anticipated to set new benchmarks in the healthcare payments sector, driving broader industry transformation.

Enhanced Capabilities and Future Prospects

Machinify’s AI platform will complement the existing solutions of the combined entity, enhancing automation, efficiency, and accuracy within the healthcare payments infrastructure. The inclusion of a highly skilled team of developers, data scientists, and AI experts will accelerate the product roadmap, enabling the company to operate with the agility of a Silicon Valley startup. This dynamic approach is expected to foster continuous innovation, driving the development of new solutions that address the evolving needs of the healthcare industry. By maintaining a focus on cutting-edge technology and skilled human resources, the company aims to set new standards for operational efficiency and accuracy.

The consolidation aims to provide new, flexible, and transparent solutions, catering to the evolving needs of payers, providers, and other stakeholders. The initial merger of The Rawlings Group, Apixio’s Payment Integrity business, and Varis enabled the combined entity to leverage size and scale, driving competitiveness in the fast-growing payment integrity market. This expanded capacity, coupled with Machinify’s advanced AI capabilities, positions the company favorably for future growth. The strategic focus on innovation, transparency, and human expertise is anticipated to drive sustained growth and influence in the rapidly evolving healthcare payment sector.

Commitment to Market Promise

Machinify was identified early on as a strategic fit to bolster the company’s market promise. The new entity aims to simplify the payment process, reduce healthcare costs, and ensure timely and accurate payments. The merger is seen as an opportunity to scale up innovative payment processing capabilities, building on Machinify’s existing AI technology. This focus on advanced technology is aligned with the broader goal of transforming the healthcare payment landscape, making it more efficient and reliable for all stakeholders involved. The company aims to set new benchmarks for operational efficiency, driving broader industry transformation.

David Pierre stated that the newly formed company would continue exploring strategic acquisitions to further enhance its capabilities and market position. Ganesan emphasized retaining all Machinify employees and doubling down on research and development to harness the current era’s rapid technological advancements. This commitment to continuous innovation and strategic growth is expected to drive the company’s long-term success. By fostering a culture of innovation and retaining top talent, the company aims to maintain its competitive edge, driving sustained growth and influence in the healthcare payment sector.

Transformation Potential

The health tech sector is experiencing a major development with New Mountain Capital, a private equity firm, announcing its acquisition of Machinify. Machinify is an AI-driven software platform that focuses on healthcare payments, known for its innovative approach to handling financial transactions within the healthcare industry. This acquisition builds on a previous merger involving The Rawlings Group, Apixio’s Payment Integrity business, and Varis. The newly combined entity aims to revolutionize healthcare payments by leveraging advanced technologies, clinical expertise, and extensive data analysis.

The strategic move to integrate Machinify’s AI capabilities is expected to set new standards in payment accuracy and efficiency. By doing so, the company aspires to create a more seamless, cost-effective healthcare administration system. The vision is to reduce overall healthcare costs significantly while improving the precision and reliability of healthcare payment systems.

This acquisition highlights the growing importance of technology and data in transforming healthcare administration. By merging strengths from various specialized entities, the consolidated company is poised to offer more robust solutions, drive innovation in healthcare payments, and ultimately enhance the overall efficiency of the healthcare sector. The integration aims to build a more robust foundation for managing healthcare payments, addressing long-standing issues, and setting a new benchmark in the industry.

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