The companies are not disclosing the terms of the transaction, but they have said that the combined company is valued at more than $1 billion. The deal comes six months after Bain Capital provided LeanTaaS with growth capital and acquired a majority stake in the company.
The transaction creates the largest AI-powered provider of hospital optimization software in the industry, said LeanTaaS COO Sanjeev Agrawal in an interview. He pointed out that now is a good time to bring together two big players in efficiency software, as health systems are facing severe financial pressure and battling a labor crisis.
LeanTaaS chose to acquire Hospital IQ because of how well the two companies’ products complement each other, Agrawal explained. Massachusetts-based Hospital IQ is focused on staff optimization solutions, while LeanTaaS is more focused on asset optimization — LeanTaaS sells software to optimize capacity for operating rooms, infusion centers and inpatient beds.
“[Hospital IQ] is bringing a complementary set of capabilities for workforce and staffing optimization. So for a medical appointment to happen, both the asset and the staff needs to be available. If you think about optimizing both, it makes our joint solution even more powerful,” Agrawal said.
With hospitals across the country struggling with staffing levels, LeanTaaS knew it needed to provide workforce optimization software. Instead of developing this software on its own, the company thought it would be a smarter choice to bring on Hospital IQ, Agrawal said. He compared the deal to Google’s 2006 acquisition of YouTube. At the time, Google had Google Video, but the company recognized that YouTube had a much more developed platform that it could invest in.
The newly combined company will benefit from Hospital IQ’s distribution partnerships, Agrawal added. LeanTaaS has historically used a direct salesforce, but Hospital IQ has existing partnerships with various healthcare technology providers, such as Oracle Cerner, Siemens Healthineers and Altera Digital Health (formerly part of Allscripts).
The deal will allow LeanTaaS to accelerate hiring plans and grow its customer base, Agrawal declared. For example, LeanTaaS currently has about 150 health system customers, and it just gained about 40 new health system customers from Hospital IQ, he said. Together, the combined company will also provide software to 600-700 hospitals, he added.
“There are roughly 1,200 economic buyers amongst the health systems out there. Already, we’re roughly approaching 20% of the market. To get to 30%, 40%, 50% or 60% of the market is a primary goal. [Hospital IQ’s] channel relationships are direct relationships and will accelerate that,” Agrawal said.
Both LeanTaaS and Hospital IQ are aligned in the vision that hospitals are in dire need of analytics software to optimize their assets and workforce, Agrawal said. He pointed out that when it comes to healthcare AI, much of the attention is centered on clinical AI. While solutions focused on improving cancer treatment and diagnostic accuracy are undoubtedly important, he argued that AI focused on hospital operations also deserves great attention.
Agrawal thinks optimization software plays a crucial role in solving some of healthcare’s biggest problems. For example, healthcare workers are quitting in droves, so hospitals need tech to best leverage the staff they do have. Patients often wait months to see specialists, and optimization software could bring those wait times down. That’s why the newly combined company’s mission is to bring optimization tech to more providers across the country, he said