In a deal that adds a host of services to its online benefits shopping, management and enrollment platform, Benefitfocus announced mid-August its acquisition of Benefit Informatics Inc., a benefit information management company specializing in data analytics, forecasting, financial analysis and data warehousing.
“Benefitfocus hasn’t been an acquisitive company in the past, even though this is our second this year,” said Shawn Jenkins, president and CEO of Benefitfocus. “But Benefit Informatics was looking for a way to unlock the payer market for their software and analytics services and we hungered for a way to provide the kind of historical and financial data available through their technology to our payer customers.”
What the leaders of both companies envision is providing better and actionable information to help payers and employers better manage their healthcare costs on an ongoing basis. Using data it collects from TPAs, employers and health plans on utilization of care and expenses, Benefit Informatics’ analytics tools allow users to drill down to the individual member explanation of benefits level.
Using this information, employers can monitor plan expenses and can receive alerts for high claimants, trigger diagnoses and improperly coded or paid claims. With this information, employers are able to take greater control of their healthcare expenses whether they work through a payer or are self-insured.
Having this kind of detailed data that would allow employers to make informed decisions about controlling health care costs hasn’t been generally available in the past, according to the Healthcare Performance Management Institute.
“In reality, the funding mechanism chosen by any given plan sponsor should be a function of available data being turned into information and business decisions made that are prudent and founded on knowledge,” said Scott Haas, vice president at Wells Fargo Insurance Services USA. “Being fully insured or self-insured should not be a decision driven by the size of an employer group, but rather the chosen risk transfer method based on consideration of all facts related to the group’s own situation.”
While it was the data analytics capabilities of Benefit Informatics that was the main draw for Benefitfocus, the deal was further sped along due to the fact that the two companies served different slices of the market. While Benefitfocus has concentrated on payer customers, Benefit Informatics has leveraged its analytics expertise for the benefit of third-party administrators and large self-funded insurance plans.
“We had very little overlap in our customers,” noted Philip Kurtz, president of Benefit Informatics. “They had a much larger customer base than we did, but what was really happening is both companies were approaching the middle from two different sides: Benefit focus from the payer side and our company from the TPA side.”
Under the terms of the deal, Benefit Informatics will continue to operate with its current management team and employees from its Tulsa, Okla., headquarters. It brings to the table nearly 2.7 million consumers using its services, which include 50 payer organizations and more than 5,500 businesses and health plans. This will add to Benefitfocus’s base of more than 11 million consumers and roughly 330, 000 employers that regularly use its online benefits platform.
