Intuit To Buy Medfusion For $91 MillionIntuit To Buy Medfusion For $91 Million

Intuit announced this week that it will buy Medfusion in a cash transaction worth $91 million. The deal is another sign that small and midsize healthcare businesses are looking to vendors to provide innovative online solutions to help them manage their patients and their business operations better.

Intuit said it intends to combine its business and financial management products for small and midsize firms with Medfusion's online patient-to-provider communications solutions. This could be a unique opportunity for Intuit, which has been building upon its existing Quicken Health products that make it easier for patients to understand their medical bills and pay them online.

"The majority of healthcare providers behave like small to midsize businesses and can be difficult to reach unless the proper sales, distribution, and support channels have been established," said Lynne Dunbrack, program director at IDC Health Insights. "Given the financial incentives under the American Recovery and Reinvestment Act and the pressure to reduce healthcare costs while improving outcomes, financial service companies view the healthcare market as an opportunity to expand their market presence," Dunbrack added.

According to Intuit executives, the acquisition will accelerate the company's healthcare strategy while allowing the company to serve healthcare providers and consumers with solutions tailored to their needs in several key areas, including: enabling more effective and efficient patient interactions online; accessing and managing personal health information; and creating more efficient ways for patients to settle and track their healthcare expenses.

"This acquisition signals an expansion from Intuit's financial base into a broader set of health communications," said Liz Boehm, Forrester Research's analyst covering healthcare and life sciences. "To the extent that Intuit is able to translate its strengths in consumer-focused and consumer-friendly financial design and communications to the healthcare industry, they have an opportunity to set the bar for healthcare clarity and transparency," Boehm added.

Boehm also said Medfusion brings to Intuit a customer base of physicians and patients currently using its platform, and an opportunity to expand its patient-facing footprint in the healthcare provider market.

The opportunity to piggyback on Medfusion's customer base was a prime motivation for the acquisition, Intuit said.

"This transaction expands our software-as-a-service offerings with a solution currently used by more than 30,000 healthcare providers, the vast majority of whom are essentially small businesses," Brad Smith, Intuit president and CEO, said in a statement. "The combination of Medfusion's industry-leading patient-provider communication solutions and Intuit's expertise in creating innovative solutions that improve the financial lives of small businesses and consumers, will help us create new solutions that make the clinical, administrative, and financial side of healthcare easier for everyone," Smith added.

Medfusion already uses Intuit solutions to provide some of its services. It offers an online bill payment solution to its customers using the Intuit Payment Solutions software development kit. Additionally, Medfusion solutions can be offered to approximately 75,000 Intuit QuickBooks medical practices and thousands of healthcare practices that already use Intuit Web sites.

Medfusion also has an electronic health record system, which is one of the requirements for eligible providers to receive the $44,000 per provider payment funded in the ARRA stimulus bill.

"Patient engagement is a key requirement for demonstrating meaningful use of EHRs and thus qualifying for ARRA incentive payments," Dunbrack said.

Dunbrack also said Medfusion's products, while supporting certain financial transactions between consumers and physicians (e.g., online bill payment), also provide clinical features such as lab results and reminders, prescription requests and renewals, and personal health records.

"Strengthening the intersection between the financial and clinical aspects of healthcare will help consumers become more active participants in their care and make more knowledgeable decisions to ideally reduce their costs and improve their health status," Dunbrack said.

The transaction is expected to close during the fourth quarter of Intuit's fiscal year 2010, which ends July 31, and is subject to customary closing conditions.