From Shopping Spree to $1.2 Billion Exit: ABILITY Network's Strategic Play in Cloud-Based Healthcare Payment Innovation

As one of the most clichéd topics concerning people's livelihood in the United States, healthcare has once again become a frequent headline in major media outlets in recent years due to various reforms. Studies show that U.S. healthcare expenditure accounts for approximately 18% of GDP, significantly higher than that of other developed countries. Out-of-pocket payments by patients constitute 35% of the revenue for U.S. healthcare providers, second only to Medicare and Medicaid.

However, alongside the rising public interest in healthcare topics in the United States, there has been a proportional increase in the volume of medical bills and the share of out-of-pocket expenses borne by patients, making healthcare payments a source of significant concern for the American public.

Fortunately, driven by the strong demand for convenient payment solutions and lower healthcare costs, the healthcare industry has increasingly established significant ties with the computing sector. Artificial intelligence, big data, and especially cloud computing have become the three parallel pillars of informatization within the industry. The latest report released by the renowned market research firm Gartner indicates that the global cloud services market continues to exhibit rapid growth, with the global public cloud services market reaching $260.2 billion in 2017, a year-on-year increase of 18.5%. This robust momentum is expected to persist over the next five to seven years; by 2020, the global cloud computing market is projected to reach $411.4 billion, while the “cloud computing + healthcare” development model is becoming increasingly prevalent in the industry.

ABILITY Network is a typical representative of innovative payment companies in the "healthcare + cloud computing" sector.

It has been deeply entrenched in this field for nearly 20 years, acquiring data from thousands of healthcare institutions and leveraging it to help healthcare providers and insurance companies deliver better, more efficient medical payment and process management services. With years of data accumulation, ABILITY Network has established the largest secure healthcare network in the United States, currently facilitating millions of medical claims and payment transactions daily and serving 44,000 large healthcare institutions.

From its initial focus on a single data tool, to aggressive M&A-driven product line expansion, to the continuous launch of new products to meet market demands, and finally to its $1.2 billion acquisition by the healthcare big data company Inovalon to vertically integrate its cloud platform, ABILITY Network has weathered many storms during the period of U.S. healthcare reform.

VCBeat (WeChat Official Account: vcbeat) has analyzed the expansion trajectory and innovative payment technologies of this medical cloud services company.

Since its inception, ABILITY Network has focused on providing innovative payment and data management services to the U.S. healthcare market and insurance sector. By connecting payers and providers through its myABILITY® software platform, which operates on a Software-as-a-Service (SaaS) model—where application software is delivered as a service and users subscribe via the internet—ABILITY Network simplifies payers’ online access to claims processing and reimbursement management.

Meanwhile, ABILITY Network has also developed a range of online technical products. Contrary to concerns that a diverse product portfolio might overwhelm users, the granular segmentation of functionalities has been well received by customers, aligning with expected outcomes. Furthermore, ABILITY Network provides comprehensive solutions, with its platform supporting real-time healthcare services from pharmaceutical companies, medical device manufacturers, and diagnostic firms all the way to the patient point of care. Its primary focus areas include streamlined payments, optimized claims processing and reimbursement, and enhanced quality of care management.

Eight Products Under ABILITY Network

For example, for general patients, in terms of medical insurance, the available tool is CHOICE Medicare Eligibility. This system provides secure, real-time queries of patient insurance eligibility and benefits by accessing the Health Insurance Eligibility Transaction System (HETS) database. Users can quickly obtain detailed eligibility status and healthcare benefit information without needing to log in with an ID and password or laboriously read through multiple pages of information for each patient.

ABILITY Network’s other Medicare revenue cycle management tool, EASE® Medicare, is better suited for Medicare payers to help automate Medicare claims management. EASE® Medicare provides secure electronic delivery services for Additional Documentation Requests (ADRs), Recovery Audit Contractor (RAC) appeals, and medical records, while tracking the status of all appeals through an online dashboard. With EASE® Medicare, users can receive alerts for at-risk accounts receivable, conveniently verify eligibility, benefit from automated workflows that correct complex, multi-step claims, and spend less time and money on audits and Level 1 appeals.

IVANS NOW manages all Medicare data entry through DDE/FISS connections. Hospitals, clinics, physician practices, home health agencies, skilled nursing facilities, and DME providers of all sizes can easily and securely manage their MAC credentials, gain support for multiple submitter IDs, and benefit from Medicare claims submission and eligibility verification through built-in EDI tracking capabilities.

In terms of innovative payment solutions, ABILITY COMPLETE®, developed by ABILITY Network, integrates payer eligibility verification with a robust workflow dashboard. It assigns tasks and priorities for patients and payers, and creates personalized reminders and payer-specific instructions to help users manage multiple activities more effectively.

Another payment platform, ABILITY SECUREPAY™, offers a more comprehensive solution, allowing users to choose from all forms of payment. Through point-of-service, online, automatic payment plans, card-on-file, phone, and mail payment options, patients can flexibly select their preferred payment method from any location. On the backend, business office functionalities help operators post, refund, manage, and track payments, improving work efficiency and automating many time-consuming tasks.

In terms of claims processing, ABILITY Network has developed the electronic claims management application ABILITY CHOICE® All-Payer Claims, which enables users to submit, edit, and receive claims information for Medicare, Medicaid, and over 3,000 commercial insurers. Furthermore, the platform offers customized claims solutions tailored to users’ unique needs, allowing them not only to enhance operational efficiency but also to improve cash flow and maximize revenue.

ABILITY Network’s increasingly mature product suite now meets the highest industry standards and has sequentially obtained certifications from the Centers for Medicare & Medicaid Services (CMS), the Electronic Healthcare Network Accreditation Commission (EHNAC), and the Council for Affordable Quality Healthcare (CAQH). Additionally, in accordance with the Payment Card Industry Data Security Standard (PCI-DSS), ABILITY Network has been certified as a Level 1 Service Provider by a Qualified Security Assessor (QSA).

However, it was a long journey for ABILITY Network to grow from an obscure small company into an industry benchmark.

In 2000, a small company named VisionShare was founded in Minneapolis, Minnesota, USA. VisionShare claimed to offer providers a more efficient way to manage and process payments by connecting to Medicare through web-based applications and interfaces. Prior to this, most healthcare professionals had to navigate complex procedures when handling medical bills; in addition to relying on outdated systems, they spent considerable time verifying patient eligibility and checking claim statuses.

Such technological innovations naturally attracted the attention of investors. In February 2011, with investments from Lemhi Ventures and Bain Capital Ventures, VisionShare was renamed ABILITY Network. Since then, ABILITY Network has become a truly technology-driven innovative payment company.

For technology-driven service companies, the core competitiveness lies in leading-edge technical products, with product quality being of paramount importance. Therefore, to maintain the core competitiveness of its flagship products and expand their influence, ABILITY Network began to consider scaling up the company and broadening its business scope.

According to Crunchbase statistics, ABILITY Network completed six rounds of financing from 2004 to 2017, raising a total of $1.1 billion. Buoyed by strong confidence in its assets and technology, ABILITY Network decided to pursue a dual strategy: refining its technology through fundraising and achieving its development goals by acquiring other companies.

Following the launch of EASE Medicare, a revenue cycle management tool for medical insurance, ABILITY Network acquired IVANS, another web-based healthcare service provider, in 2013, marking a pivotal year in the company’s development. In 2014, ABILITY Network secured $550 million in strategic investment led by Summit Partners and launched COMPLETE, a comprehensive payer eligibility verification application. That same year, ABILITY acquired MDOL to expand its healthcare EDI, EMR, and data analytics operations, with MDOL founder and CEO Bill Bartzak joining ABILITY Network’s senior leadership team.

Subsequently, ABILITY Network accelerated its acquisition pace.

In 2015, recognizing the strong customer base of the PC-ACE Pro32TM claims processing system—a primary revenue management tool for thousands of healthcare providers across China—ABILITY Network acquired System Designs to incorporate it into its product portfolio. This move enabled ABILITY Network to serve thousands of healthcare providers nationwide and expand its offerings in the medical claims market. In the same year, ABILITY Network also acquired the OCS HomeCare division of the National Research Corporation, thereby enhancing its analytics software services.

In early 2016, ABILITY Network acquired G4 Health Systems, a company specializing in revenue cycle management (RCM) and health data analytics. In April of the same year, it acquired the software company eHealth Data Solutions (eHDS). In April 2017, to address software services for online employee scheduling management, ABILITY Network acquired ShiftHound, a leader in cloud-based SaaS healthcare workforce management solutions. In July, ABILITY Network further acquired Secure Bill Pay, a leader in the medical payment software market.

In just a few years, ABILITY Network has continuously expanded its product portfolio horizontally through both financing and acquisitions, gradually integrating standalone data tools into a cloud-based healthcare information platform. With a further expanded customer base, it has now grown into the largest secure healthcare network in the United States focused on innovative payment solutions.

As of 2017, ABILITY Network’s high-value technology and differentiated products had gained market recognition. Its financial statements showed that in 2017, revenue grew by 10%, gross margin exceeded 80%, adjusted EBITDA margin surpassed 50%, orders increased by 31%, and the customer retention rate reached 92%.

Following the acquisition of Secure Bill Pay, ABILITY Network has integrated a robust platform that connects payers and providers, delivering services such as streamlined payments, care quality management, and workforce management to over 44,000 healthcare organizations across the United States, thereby simplifying healthcare administration and payment processes.

However, for ABILITY Network, simple product integration is no longer sufficient to meet its development needs. ABILITY Network has realized that if its products are to gain market favor, the company must transition to a more advanced development platform.

Thus, in March 2018, after careful consideration, the leadership of ABILITY Network adjusted its strategy by selling ABILITY Network to U.S. data analytics company Inovalon for $1.2 billion, where it would operate as a subsidiary.

Like ABILITY Network, Inovalon provides big data analytics and solutions for the healthcare industry. With years of accumulated expertise, Inovalon has built deep capabilities across more than 20 data dimensions, including patient demographics, claims data, and electronic health records (EHR), and serves major U.S. pharmacy chains such as Walgreens.

Prior to acquiring ABILITY Network, Inovalon had long sought to onboard healthcare providers to expand its customer base. Through this acquisition, Inovalon gains access to 44,000 healthcare institutions that utilize ABILITY Network’s cloud-based software platform. This transaction will help Inovalon broaden its channels for emergency care facilities, including emergency departments, hospitals, and outpatient centers.

In addition to providing ABILITY Network with necessary support in capital and management, Inovalon will also share its MORE2 Registry, the largest healthcare database in the United States. This will enable ABILITY Network’s platform to cover 30 billion medical cases, 932,000 physicians, 455,000 clinical institutions, and over 240 million patients.

On the other hand, major Chinese internet giants have also set their sights on the field of innovative healthcare payment models, actively deploying “cloud computing + healthcare” strategies.

In March 2017, the National Platform for Cross-Regional Medical Expense Settlement was officially launched and put into operation. Alipay and WeChat also introduced related medical services on their respective platforms, including appointment registration, online consultations, electronic social security cards, electronic health records, bill inquiries, access to laboratory test reports, social security inquiries, and premium payments.

Currently, Alipay’s healthcare initiative has entered its second phase. After users bind and generate their electronic social security cards via Alipay, they can complete payments for both medical insurance-covered and out-of-pocket expenses using their mobile phones during medical visits. The family sharing feature for medical insurance accounts allows users to transfer their medical insurance balance to family members and friends for use. Additionally, the medical insurance spending alert feature pushes every medical insurance transaction record to users through Alipay’s billing statements.

WeChat’s “Smart Healthcare” solution has been deployed across 362 cities in 33 provincial-level administrative regions throughout China. Its core features include appointment scheduling, social insurance inquiries and payments, health checkup services, outpatient payment, and vaccination services.

From this perspective, ABILITY Network’s acquisition of Inovalon resembles a strategic alliance between two industry players. Inovalon leverages ABILITY Network’s platform to facilitate streamlined payments and reduce its reliance on insurance companies, while ABILITY Network gains access to broader healthcare resources through Inovalon. Moving forward together, the two companies share a common vision: to create the largest vertical cloud platform in the “cloud computing + healthcare” sector, with a focus on innovative payment solutions, thereby establishing themselves as the leading enterprise in this field.

(By Ning Chen)