The St. Louis Post-Dispatch reported yesterday that Ascension and TowerBrook Capital Partners will invest $200 million in Accretive Health, a Chicago-based medical billing and debt collection firm. Ascension is a Catholic hospital system, and was the first customer for Accretive in 2004, when it was a start up. The deal also gives the investors the option to acquire a majority stake in the company.
Accretive shares climed 40 percent on the news.
As the Post-Dispatch reports, the agreement ends a period of uncertainty for the company, which stood to lose the Ascension business altogether. Under the deal, Ascension will make Accretive the exclusive provider of billing and collection services.
insideARM wrote extensively about Accretive several years ago, as the company was first tied (as an investor) to the 2009 debt collection arbitration scandal associated with the National Arbitration Forum, then vigorously investigated in 2012 by the Minnesota Attorney General for collection practices within Fairview Health Services.
In 2014 the FTC announced a settlement with the company over patient information security concerns, and issued a closing letter noting that it would not pursue enforcement actions related to debt collection that led to Minnesota AG Swanson’s investigation. The letter noted that the FTC was declining to recommend an FDCPA case against Accretive, as it could not find evidence that the firm had violated the law.
This is a positive sign for the ARM industry for two reasons. First, it is good to see the private equity world again show interest in the ARM space. Second, it highlights the value of ARM companies working in the healthcare sector.