Deep-Dive Into Availity's Acquisition of Diameter Health

foreign TF Health what's the future health I'm talking to the who's who of Health Tech and Healthcare Innovation and today we're jumping into availity's acquisition of diameter health and here to tell us all about that big deal is the CEO of availity Russ Thomas and Mary lanton she is the president and CEO of diameter health so congratulations you guys on this deal thank you yeah super excited all right so excited to get into this Russ let's start with you I mean tell us a little bit about what this does for availity because you guys have

been around since 2001. we're on claims data yeah and now you've got this clinical data startup that you've you've Acquired and integrated in so what does this do for a vanity yeah thanks Jess well thanks for having us and uh very excited to be here with you today and uh you know we're we're just like incredibly excited about this uh acquisition of diameter and the um combination of The Talented team of leaders and and talent at uh diameter that's going to be joining the availity team I mean you know you know a bit about availability

right we have a very simple uh role in the world as we see it and that is to you know eliminate right let's use the big word let's let's eliminate administrative waste uh and Health Care let's simplify um the business of health care it's what we've been about now for 20 years and um to get to your question of you know why diameter it's been very clear to me for you know for years and years and years right back to my days in my prior company doing um you know clinical data exchange and driving in

that particular case Pharmacy information that the the intersection of clinical data with administrative workflow um has been woefully absent in healthcare and as a consequence you get a tremendous amount amount of friction and abrasion and disruption in the practice of medicine right Physicians having to stop what they're doing to you know determine if an off has been approved or if a claim is going to be approved or to make sure that it's coded properly or to you know help make sure the right attachment the right data is associated with it and when you really boil

all that down it is you know it is part of this sort of ongoing relationship between providers and health plans you know providers want to practice medicine right it is they they practice it's not perfect um and so you need to get in the bandwidth to be able to practice and of course health plans have an important role to managing cost and expense and utilization and you know all the things that if left unchecken can drive you know health care costs to an even higher rate of growth than we've seen over the last you know

10 or 15 years so um enter into that this relationship that we now have with diameter where you know we are now going to bring clinical data at scale which availity has been moving clinical data for years but now to have diameter and this upcycling capability that Mary will talk about which from my perspective is really the ability to take raw clinical data and refine it into Concepts and data elements and digestible bytes that a health plan can use in a workflow to automate an administrative process with a provider and so again we always go

back to our North Star right eliminate waste waste reduce friction reduce abrasion make it easier for healthcare professionals to do what they're trained to do which is to practice medicine um and that's why we're so excited about it right and and that's why um you know we're we're just thrilled to to have diameter join us all right Mary he set you up perfectly here so explain to us what diameter does because truthfully like so it's like we hear about the the business process side of this that availability has so so much experience so many years

of traction with and now you're bringing in this whole data upcycling thing so when I first read about diameter I mean I'm reading this and it's there's a lot of these API tech companies that are bringing the bringing the claims data sorry not the claims and the clinical data to gather standardizing it firing it whatever you guys are doing over there aggregating all the above so tell us a little bit about what you guys do at diameter so that we can understand exactly which flavor of API tech company you are yeah no rest set it

up perfectly um you know really our mission as a company is to make data actionable um and relevant and usable uh and as you know there's just so much data out there and it's a mess the clinical data we're seeing more and more of it it's not making sense and what we do with upcycling is truly mapping that data and normalizing it validating it and organizing it so that we at the end of it through that Refinery is really usable data that's mapped to standards so that we can actually really speak a Common Language and

you know where we fit with ability availity is this amazing Network both on the payer side and the provider side and it's a perfect you know I couldn't couldn't have picked a better place in terms of we are in the middle um you know we don't have we don't own data we don't have connection we have connections to data but you know people who have the data come to us different clients who come to they have the data come to us and really to help support those different use cases so really the power of coming

together with ability is amazing because they're the supply chain and there's so much data that can bring so much value in terms of after having gone through that upcycling process uh that will make it usable Downstream Russ what was it about diameter in particular because I mean when I look at this space there's a lot of players that do similar things um is it like I mean I I always think of availity you know going back to my Blue Cross days is having that Blue Cross background I know that diameters got sentine funding Optum funny

is it like that common health plan background backing or is it something else that really attracted you to diameter over any of the others that that were kind of out there yeah I think sort of at the highest level it's what Mary described I actually don't think I think so you know look you've been around healthcare for a long time there's a lot of companies that talk about doing a lot of things um we did we had done diligence on a variety of companies in the clinical space that you know put on good power points

which you know turns out is a lot easier than actually executing on this very complicated clinical data upcycling you know standardization rationalization uh process and so we did our homework right we did our background uh evaluation did our homework and ultimately concluded that that you know of all the companies out there who are representing the capability to do what diameter does there are really few and far between that have had any meaningful success in executing on this Mission because it's hard this is really hard right I mean remember providers speak uh you know providers speak

one language payer speak another uh language right it's hl7 on one side and X12 on the other and and there's a lot of disparity between the two and so you know identifying a firm that it could actually take data from the provider and translate it in a consistent efficient um effective way into Data that a plan can actually automate the consumption of into their business processes I'm going to tell you Jess there are not many companies that uh that do that and just like Mary said I think this intersection of our vast Network I mean

availity will transact 13 billion transactions through our Network this year you know we're all claims build through availity at you know close to two and a half trillion dollars right of claims built through our Network this year so we have a lot of data right flowing through our Network we have a lot of Engagement with you know over 2 million providers in our Network so our ability to connect to the endpoints and then connect back to you know the health plans think about us as really a you know a two-sided Network right to do that

at scale um has been proven over and over again now right the objective for us is well let's start making that Network smarter and that's really how I think about diameter right diameter enables us to make our Network much smarter than it is today because we can bring life to this raw you know unstructured uh clinical data that we're able to get out of plans and push back to to are out of providers and push back to plans and then bi-directional right to be able to exchange it in both directions because as well I'm sure

we'll talk about you know what I fundamentally believe is when there's value for a provider there's also value for a health plan right this sort of historical you know push-pull tug of war between providers and plans is it's there to appoint but what we've proven over and over again is this trusted intermediary between plans providers is if I can make a process more efficient for a provider the health plan is going to drive value from that and likewise if I can make a process more efficient for a health plan that's going to make the provider's

life easier and that's really what we are focused on we're not in the business of sort of trying to favor one over the other or make it easier for a provider to to to build something that shouldn't be billed or to charge something that shouldn't be charged or make it easier for a health plan to deny you know a claim our job is really to make it easier for these critical stakeholders in healthcare to do business with each other and uh and again that's why that's what diameter helps us do yeah and just the piggyback

and loopback in terms of I didn't give the nod that's that's truly deserved and required is the reason that we can do this is the company was founded in 2013 when we started in the hie market because we knew that that was where there was access to data at in in high volume and from all different sources um and really Blood Sweat and Tears in terms of we've seen so much data and really spent a number of years understanding that data with a number of clinicians and you know clinical informatics is truly it is truly

what this whole concept and of uplinking is built up um and so it's just years of knowledge that we've been able to scale and I think you know in my past life I've worked with clinical data I think we did a good job but you do it with people um and it's it's a lot of work to map those different concepts um and so I need to stress the scalability of it is so important and I think that's why it's a great partnership give us more data we can push it through but that has taken

a lot of time and you know the team has done an amazing job in building that capability but I think you know purely based on those capabilities I think that's why that's why we're together okay so we have to double click on the scalability word here and I what I want to do though is I want to hear about the future of the scalability okay so it's like I know Acquisitions closing in Q3 sure sure but talk to me about like you know next year the year after year after like the full the full bore

Vision here of what bringing diameter into the world of availity will be able to do because this is like you start seeing you know in the press release the words like interoperability platform and like the you know the largest you know ability to look at both claims and clinical data and it's like the mind starts to reel and you know we've already started wading into the word value so why don't we just add the based care to the end of that and talk a little bit about what having this type of platform Network you know

inability like some total now with diameter included what does this look like you know moving Way Forward into the future and Russ why don't we start with you and then Mary I want to hear your thoughts okay um I'll start I think um I think that all care should be value-based irrespective of the billing model right I mean I think again we've sort of conflated um billing models and Care models in ways that aren't necessarily good for the consumer you know the end user so I don't believe that what we're doing here is um limited

to or specific to you know a value you know a value-based model as those evolve or a fee for service um based model the reality is in in any engagement between a provider um of of care and a patient the ability to empower that provider with as much knowledge as possible about the person they're taking care of is critical right um so you know as I think about it right the future and where we're going it's you know right patient right information right time so that providers can make an informed um decision informed uh care

plan um irrespective of how their administrative staff are ultimately going to bill you know the the the payer right whether payer is a health plan or an employer or a TPA or you know whatever or the individual um so I think look down the road right where where we're where we're going there are almost too many opportunities to impact that care delivery model with quality clinical data whether it's you know let's talk about the ones that we know are problems today right the bane of of providers existence is the authorization process it's cloozy it's uninformed

it's complex it's frustrating it's it's payer specific right if you've done an auth with one payer you've done off one pair so to be able to now you know um automate that authorization workflow through quality data that can be machine engaged with the payers um system is going to drive tremendous uh value to both the payer and the provider from the payer's perspective and Mary will talk about this more casinos that infinitely is to be able to automate that hedis workflow and care plan management and things like that on the provider side right so they're

not having to pick up the phone or they're looking for charge or whatever maybe is going to bring tremendous value to that provider again sort of irrespective of what kind of business model they're operating under so what I think you'll see us do if you know if if our if the bed is a good bet which I believe it is then two or three years down the road you will see us um continue to grow our Network right we talk about our businesses this um sort of the snowball you get it rolling down the hill

and this this um cycle that we have now we're really starting to add new capabilities new features new um new competencies to the network and clinical data is a huge huge part of that so just as we've automated things as simple as benefits determination right which always used to be a phone call or a fax or frankly just you know ignorance I think you I think you have coverage and so I'm going to figure it out after the fact we've automated that right we do literally billions of Eligibility benefits coverage determination transactions to availity every

year now it's trying to move up that value chain into some of these more complex more complex because they're more subjective business cases and workflows that just demand automation Mary chime in here what is that what is the what is that future of this whole platform look like to you I think like you know I love what Russ said here it's not necessarily business model specific to any one type of of payment model which I think is really interesting but I mean from your perspective you know I mean like as you look as you look

ahead at the the joined vision of what's what the new availability with diameter in it is capable of doing what does that look like for you yeah I mean I I think in the here and now the opportunity is amazing and the network will grow um but we're so excited to be in the middle and have access to the data but also be positioned in this Dual side Network to be able to get the data that is more informed and intelligent you know using machine learning and getting it to the point where it can be

used whether it's a pair or provider um and I think you know the the different use cases I think it's agnostic there are so many things that we can accomplish from a clinical standpoint a financial standpoint an opera operational and it's really establishing the network and having the data flow through so it can get to the places where we can make an impact and so I think in its fullest form you will see us everywhere truly in terms of driving um driving value and that can be measured in lots of different ways from a clinical

standpoint from a financial standpoint and efficiency standpoint all right so I I have to ask about this because I feel like you know as you're talking I want to understand what the competitive Advantage is going to be for availability then moving forward with diameter as a part of it I mean already you guys are so big at scale 20 years like I mean just it's incredible and so I'm curious you know Ross I'll ask both of you this but I'm starting with Ross again you know tell me what do you think the competitive Advantage is

moving forward particularly as we do see a lot of tech companies jump into the space the diameter is in and then try to leap over to where you're at and or vice versa so I'll say a couple things one I do believe the rising tide raises All Ships um so I'm thrilled that their competitors in our space they make us better right every day um you know we think we've built something pretty unique you touched on it you know in one of your questions around sort of our ownership model and Equity structure and I do

believe the fact that you know a large chunk of our ownership is our some of our largest customers our health plan customers it really gives us a couple of things that I think are differentiating and you know make us you know even you know big competitive advantages for us one you get a lot of insights into really what's going on Within These large um health plans and sort of how they're thinking and where their models are evolving and that's super valuable you know we've got eight uh you know senior Executives of health plans on our

now 13 person uh board and so it's great to have their feedback and insights as as board members and leaders of their company um it also gives us quite often a place to go um a Sandbox to go test things out right it's a they're you know between our investor health plans and our other Premier Health Plans you know we now have over 30 health plans that are premiered to availity which means they are in you know I'm careful about using the word exclusive so we'll say designated um business relationships with us where you know

the vast majority of all their provider connectivity flows through availity so between those forums I think we have an incredible sandbox to operate in and to to test models and to test use cases that frankly others don't have I think the other thing candidly that's a competitive Advantage for us um and and now it's a for diameter as well is you know if you do look at our Equity structure and you know it's largely health plans but we have private Equity investors in as well you may have seen we recap last year with Novo Holdings

which is a phenomenal investor really a long-term strategic investor for us we got a lot of Runway you know unlike a lot of these companies that you talk about which are you know fairly newly incubated and hugely private Equity backed and or have taken on a lot of debt we've been very smart with the way that we've run our business for the last 20 years very low leverage on the business um very long-term thinking investors so we do things like go to our board with plan that say look last year we made x amount in

ebitda next year we're going to grow Revenue but we actually want to keep even a flat or even take ebitda down because here are the Investments we want to make to grow the business for the next three to five years and get 100 support for that and I think that's very unique for a company you know like ours who've been around for a long time to be as aggressive in Innovation and investing in the future as we are with the full support of our investors and our board to do that I think that's a real

competitive Advantage for us absolutely all right Mary what would you add to that I mean especially because like now it's like you're you're just like upgraded into this family oh I feel upgraded believe me oh my God I'd be like well like I mean by comparison it's like diameter like availability's you're backed by these these big plans 200 million dollars in in you know Capital raised you know from their private Equity funding and like you guys I'm just shy of 30 million is what I read right before you guys got acquired so it's like what

what do you feel is the competitive Advantage stepping forward I mean being you know part of this whether you want to speak to it from you know as you guys grow the diameter Tech within availity or what availity sum total will look like I think it's really both I mean the diameter Tech within ability I think were were complementary um in in the best of ways um and I think the the one plus one equaling 11 I think will really come to fruition and I think that is going to be the competitive Advantage because if

you look at other players out there they're all going to have strengths and weaknesses across that Spectrum um and I think you know it's a self-proclaimed we were a niche player um we are very much in the middle and um we're very strong at that and so we often came against folks who were end to end and now we are part of an end and and help strengthen availity so I think that is the the competitive advantage and from a scale standpoint in what we do I stand behind that you know in terms of just

scale for US is the speed and the quality of the data that's upcycled and that is going to give availability the differentiating factor and there's so much data that we can use to show that going forward um and looking at that impact okay last thing for both of you what's next in the shorter term like I know the deal is going to close blah blah blah all of that stuff but like I mean looking like into the nearer term here I mean I feel like the space this the space that diameter is in in particular

and also I guess for you guys Russ you know hearing a lot about how this this part of the market this data exchange this data upcycling all that Poise to just pop thanks to these information blocking rules that are coming out of 21st century cures act that are about to be implemented I hear like that's like I watched this space everybody's saying I mean the the creation of a longitudinal patient record and making that available to a patient I mean like give us a little bit of uh foreshadowing here on what we can expect coming

out the gate here on this partnership what do you guys think yeah no I love that you said the longitude medical record because we haven't touched on that because that is that is it right that is it I mean we we will be able to what we're able to do today is really take clinical data from multiple sources and put it into one but I could not be more excited to layer in the claims data and truly from a data Integrity standpoint have that right and I think that is what's going to power all the

different value discussions we've had in terms of the impact that is going to be underlying it all and that's why the platform in the network is so powerful but it's really we're positioned you know short-term work you know companies are coming together we have our roadmap and what does it look like in parallel and together but underlying that is absolutely that longitudinal medical record that is fully integrated from a clinical and claim standpoint does that end up going to a patient or no in Your Vision or not there yet in my vision yeah but we

haven't talked about that okay put that on the agenda his eyes lit up and we said longitudinal record but what lights you up I think nothing's right um and by the way I fully support it's got to go to the patient why would you not go to the patient with it I mean aren't we tired of walking into our doctor and I love my you know I go to Mayo for my annual assessment right and I walk in the first thing my doc asked me is you know well how are you feeling like you know

I feel okay right I mean shouldn't the first part of the conversation be look I've got your your record you have your record right into that record I'm a data I'm a data junkie right I measure my own data religiously aware of continuous glucose monitor not because I'm a diabetic because I'm trying to figure out how to optimize my athletic performance by the way I mean wow I can't can't wait to walk into my doctor's office with you know months of of glucose oh I'm sure he can't wait to see you either [Laughter] by the

way it's kind of a passion of mine right now as I get people keep telling me I'm getting older I guess I am um but it's a little bit of a passion of mine too you know I fundamentally believe that we can live longer healthier lives if we know you know if we have access to the right information about ourselves and we put that information to work right so if all I do is take this data and do nothing with it then it's just wasted uh you know it's wasted energy but to take um the

data that I'm gathering on myself and then integrate that you know true longitudinal record right is not just what happens to me on the rare occasion that I'm in the healthcare you know the Health Care System right so what happens to me every day but the intersection of that you know daily collected data and what my doctor knows and what my blood work shows and all sort of stuff it's where the real magic lies and you know one of the problems I have you know I'll be philosophical per second right one of the problems I

have with this uh Health Care system in the U.S is it is a reactive system right we go to the doctor when we don't feel well or when we have an accident or when something happens to us as opposed to proactively engaging in managing our health care every day there's a great new initiative that um that my friend Dave Whitman started this human-powered health uh concept which is really all about learning you know learning everything there is to know about ourselves from a health perspective and then actively managing our health care day in and day

out and what we're doing now with availity and diameters bringing all that you know reactive here's what's happened here's you know here's what the providers should know about us today to create that intersection of sort of that daily management of our health care is where I think we can just bring a tremendous amount of value to people like hopefully all of us on the phone who aren't in the Health Care System every day right obviously what we're focused on now what availity and diameter is focused on now is you know four trillion four and a

half trillion dollars of annual spend in the Health Care System a trillion of that is Administrative and some big chunk I don't care whether it's 25 or 30 some big number right that you measure in the hundreds of billions of dollars is waste so the Tam the addressable market for what availity and diameter are going to do together is huge and my view is you just you're just starting to scratch the surface about where you can start to impact people in their daily lives outside of the Health Care system and so to me that's a

big part of what's next it is a longitudinal record of a patient that can that can get applied in any setting that can be made available to you know my provider in any setting so they can so that I can have a more informed Healthcare experience that's bound to lead to better results for everyone it almost has to because I do believe you know transparency is key uh and that's what's missing in the Health Care system today so it is like I said it's a bit of a passion you know project for me to bring

this data to life in ways that you know my physician and your physician and the people probably don't care for us can actually have an informed conversation with us versus well you know tell me how you feel right I mean you know I feel about the same as I did yesterday the question on how I feel today is how I felt a year ago or two years ago to compare to how how I'm doing today right not how I feel so so that's why I think this ultimately goes um you know I love you remember

um uh Bob lafrano right who was the CEO at Florida Blue probably while you were there Pat may have been there when you were there but I don't know if Bob was there or not but I met with Bob early on in my tenure at availity and I remember I was off on one of my clinical I've been on this clinical bandwagon for decades right I was also one of my bandwagons when Bob about you know clinical data exchange and you got to be able to do this and Bob who is a doctor looked at

me goes Russ let me tell you the three most important things to a provider in order of importance getting paid getting paid and getting paid right and he was a little tongue-in-cheek about it but his point was he goes if providers can't trust health plans to pay them accurately And Timely they're never going to engage health plans on Care Management and better clinical outcomes and all the stuff that frankly most providers think plans don't have any business you know engaging in right so the point of that story other than I just have a lot of

respect for Bob is um we got to fix the basics right there's a lot of basic stuff that I think availity's done a great job up to this point I think Diana has as well now with the combination we can start to get at some of these more complex administrative business use cases that drive a ton of frustration and the one thing I would add to what Mary said is continue to build trust right it's about a longitudinal record that you can trust and you know one of the things that availity has been very cautious

about for 20 years and we've affirmed this now as part of our strategies we don't sell data we don't license data we don't make data available to third parties for commercialization right because and and our competitors do at scale you know we're leaving tens if not hundreds of millions of dollars on the table uh in Revenue because we think that having that trusted intermediary status right where my providers don't sit there wondering well what are they doing with my data right we're very clear what we're doing with your data nothing that you don't tell us

we can do um and we're not asking you for anything that's not being put to work in a use case or a business case that will benefit you as a provider and the health plans you do business with and I think the combination of the technology and the network and the trust is where we really get something special between availity and diameter well I'm fired up I mean I had no idea like okay Holy Grail of longitudinal patient record was gonna just set both of you off like fireworks I love it this is great I

see where the passion Has Come Together as well so that's really exciting well you guys let's leave it there I mean I I don't know how we could we come up with a better way to close this conversation out so I'll just say thank you thank you so much Marion Russ for for coming by and just talking to us about not only the acquisition but the mind-blowing stuff that's really got you fired up about how to take this to the next level very exciting I'm so excited thank you for having us awesome well thank you

guys I mean for more conversations with the who's who of Health Tech as they're changing the way that we do Healthcare very passionately head on over to my YouTube channel it's youtube.com WTF house thanks again Marion Russ I'm Jessica demasa I'll talk to you guys soon take care