On January 6, 2022, healthcare payment management startup Nomi Health announced it had acquired Artemis Health, an analytics software company focused on employer health plan benefits. The deal, reportedly for $200 million, comes just weeks after Nomi secured $110 million in Series A investment funding.
Nomi’s core value proposition is built around simplifying direct payments to healthcare providers. By eliminating the involvement of billing and claims departments and insurance companies – and their respective co-payments, collections and deductibles – Nomi claims to achieve cost savings of up to 30 to 40 percent.
Addressing the Challenges of the Healthcare Market
The company states that its ultimate intent is to “fix” healthcare, something necessary but only possible for “next generation” companies like itself and Artemis. In short, Nomi perceives health insurers/payers and the administrative structures of most providers as a problem that needs fixing.
Nomi has also launched 200 pop-up clinics and seven laboratories focused on COVID-19 response, a program the company is expected to continue to expand. Data analytics are critical to improving COVID-19 contact tracing, testing, treatment and vaccination programs.
Nomi plans to use Artemis’ advanced analytics to drive further cost savings, initially through the current Artemis offerings and eventually through refinements of its own solutions. Artemis’ analytics capabilities likely position Nomi to disrupt and disintermediate many incumbent processes and participants in the healthcare ecosystem.
Platformization in the Healthcare Ecosystem
The Nomi-Artemis acquisition is but the latest among several recent deals with apparently similar goals: the transformation of focused solutions into multifunctional platforms that can serve broader markets and garner larger market shares. Examples include the merger of mental healthcare providers Ginger and Headspace; clinic operator Carbon Health’s acquisition of remote monitoring startup Alertive Healthcare; and telehealth provider Teladoc’s purchase of Livongo, a virtual care provider focused on diabetes. Consolidation, disintermediation and disruption continue as the wave of “platformization” across financial services and healthcare ecosystems gathers momentum.
Nomi currently has more than 2,000 employees, while the Artemis team is approximately 120 people. Statements from the leadership of both companies focus on the benefits of their complementary capabilities but do not mention operational efficiencies or other synergies. This suggests that Nomi may leave much of the Artemis’ workforce intact. This approach may help minimize the loss of key technical talent, a risk associated with almost all acquisitions that can significantly delay product development and solution integration.
However, even with the technical talent teams left intact, solution integration and consolidation can take longer and be more difficult than anticipated by those leading the acquisition. Nomi must reassure customers of both companies that its investments will continue to be supported and enhanced, even as new solution integrations take centerstage. Success will help limit the customer churn and uncertainty that typically accompany acquisitions of this size.
Presumably, Nomi will also allow Artemis to continue to expand its customer base beyond the captive capabilities it will bring to support Nomi’s business. At the same time, it is apparent that Nomi will look to increase its overall client base by leveraging Artemis’ client relationships. The challenge here will be for Nomi to ensure that Artemis’s data analytics solutions are protected from any bias that could favor Nomi’s direct payment solutions.
Technology Modernization across Healthcare
The need for partnerships represents another challenge for Nomi. The company must build critical alliances to sustain its momentum as an industry disruptor. It must also diffuse threats from larger, well-capitalized incumbents in the sector. The Q4 2021 ISG Index™ reports that 2021 full-year market growth of annual contract value was 18 percent for the combined market of managed services and as-a-service offerings for healthcare and pharma.
No matter how the Nomi-Artemis deal plays out, ISG expects that consolidation, disintermediation and disruption will continue across the entire healthcare industry. According to Bob Krohn, ISG Partner and Healthcare Practice lead, “New players focused on modern technologies will continue to aim at improving efficiency across unnecessarily complex business processes. Results will include improved solutions, major market shifts, the rise of new solution providers and the transformation or sidelining of at least a few current market leaders.”
Stay tuned, and explore the new ISG Provider Lens™ U.S. Healthcare Digital Services study for more interesting and useful analysis.
About the authors
Bill Huber is Global Partner – Digital Platforms & Solutions and a well-known thought leader in the field of technology, sourcing and transformation. In his current role, Bill is the global leader for ISG’s Software Advisory practice, which assists clients in delivering savings, de-risking their software environment, maximizing the business value of their third-party technology investments, and accelerating their digital transformations.
Michael Dortch has been translating the words and actions of technologists into actionable advice for business decision-makers for more than four decades. Among other roles, he has served as Senior Content Strategist at Huawei Technologies USA, Senior Content Development Manager at Ivanti, Senior Product Marketing Manager for cybersecurity at LANDESK, Director of Marketing at Intréis (acquired by ServiceNow), and Senior Product Marketing Manager at ServiceNow. He has also been a senior analyst at Aberdeen Group, Robert Frances Group, Constellation Research, and Yankee Group. In 1990, his book, “The ABCs of Local Area Networks,” was published internationally in three languages by Sybex. In 2010, he was included in the inaugural list of “The Top 500 Analysts Using Twitter” – twice.