Clayton, Dubilier & Rice has launched Agilon Health through the acquisition and merging of Primary Provider Management Co. and Cyber-Pro Systems Inc. Deutsche Bank provided financial advice to CD&R on the transaction while Moelis & Company did likewise to PPMC. And, Keesal, Young & Logan and Moore Health Law LLC provided legal advice to Cyber-Pro. Agilon Health is a healthcare tech and services company.
NEW YORK – October 4, 2016 – Clayton, Dubilier & Rice announced today the formation of agilon health, a new healthcare technology and services platform aiming to accelerate the conversion to value-based healthcare in the United States. The company brings together established value-based healthcare delivery systems, physician risk enabling infrastructure and proven operating talent from across healthcare. The combination of these capabilities and a unique partnership-centric approach offers providers on a national basis the opportunity to successfully transition to risk-based business models.
agilon health empowers providers with the clinical, technological and administrative capabilities to function effectively in a healthcare system undergoing a structural shift to a compensation model based on outcomes, rather than traditional fee-for-service, and to capture the inherent opportunity in bearing global financial risk associated with improving patient outcomes and lowering system costs. agilon health, through its value-based delivery systems, has a strong track record operating in multiple capitated markets, currently managing more than 475,000 patients through a network of approximately 1,500 primary care physicians and 8,000 specialists. Ronald A. Williams, Operating Advisor to CD&R’s funds and former chairman and chief executive officer of Aetna, is agilon health’s Chairman.
CD&R formed agilon health through the acquisition and combination of Primary Provider Management Co. (PPMC) and Cyber-Pro Systems, Inc. (Cyber-Pro). PPMC is a Management Service Organization (MSO) servicing a patient base of more than 450,000 primarily Medicaid members in California. Cyber-Pro, through its subsidiaries, manages approximately 24,000 Medicare patients in Hawaii and sells proprietary clinical and administrative technology solutions to third parties to support health plan and physician risk MSO operations. Terms of the transactions were not disclosed.
“The shift from fee-for-service to a value-based model is a consequential change to the healthcare industry, which should benefit all participants in the system, from payers to physicians and patients,” said CD&R Partner Ravi Sachdev. “agilon health is well-positioned as a constructive change agent to accelerate this industry transition by creatively partnering with physicians on this journey and empowering them with the specialized clinical and payment infrastructure and technology necessary to effectively manage and prosper under the new paradigm, while, at the same time, reducing delivery costs and improving the quality of care system-wide.”
“CD&R has a strong track record investing in business models like agilon health that promote healthcare efficiency, improve clinical outcomes and reduce the cost of care,” said Derek Strum, CD&R Principal. “We look forward to leveraging our business-building skills to help the company continue to innovate in value-based care delivery, attract best-in-class management talent, and make additional investments to solidify agilon health as the partner of choice for physician-centric organizations across the country.”
agilon health’s innovative and flexible solutions produce greater long-term financial and strategic opportunities for physicians and other participants in the healthcare system. The company’s subsidiaries or affiliates contract with insurance companies to receive a fixed percentage of the premium dollar or a fixed per member per month fee and partner with physician organizations to manage care delivery and drive quality and cost for that patient population. Through these risk-based partnerships, agilon health delivers the advanced systems, data analytics and sophisticated clinical models and infrastructure required by physicians to manage patients across the risk spectrum.
Core to the company’s relationships with physicians are its integrated clinical, administrative and financial solutions, specifically built for the delegated physician risk market. Initially developed in 1996, the company’s proprietary technology platform currently includes quality, case and care management functions and a fully integrated administrative platform that includes claims payment, and is particularly tailored for managing the growing Medicaid, Medicare, Duals and Expansion populations, which agilon health currently serves directly in California and Hawaii. The technology platform, which is highly portable to new markets, also supports the management of more than 1.3 million patients for numerous well-known third-party providers and health plans across the country.
“I am excited to partner with CD&R to accelerate investment in the technology platform and unique physician risk infrastructure we have developed to expand our footprint and help transform care delivery nationally at a critical time in healthcare,” said Gerry Ibanez, founder of Cyber-Pro. Mr. Ibanez will remain in a senior executive role at agilon health.
Leveraging agilon health’s well-established existing market positions and significant management talent, the company is in the process of expanding to other geographies based on its unique physician-centric partnership model tailored for local market needs. The growth in risk-based models driven by reimbursement changes, expansion of government lives, and growing physician dissatisfaction is creating an opportunity to re-invent local healthcare delivery markets through creative strategic partnerships with providers. CD&R believes that agilon health is well-positioned to capitalize on these substantial opportunities.
Deutsche Bank, Capital One, ING Capital LLC and Natixis provided debt financing for the acquisition and combination of PPMC and Cyber-Pro. Deutsche Bank acted as a financial advisor and Debevoise & Plimpton LLP and Sheppard, Mullin, Richter & Hampton LLP acted as legal advisors to CD&R. Moelis & Company acted as financial advisor and Latham & Watkins LLP acted as legal advisor to PPMC. Keesal, Young & Logan and Moore Health Law LLC acted as legal advisors to Cyber-Pro.
About Clayton, Dubilier & Rice
Founded in 1978, Clayton, Dubilier & Rice is a private investment firm with an investment strategy predicated on producing financial returns through building stronger, more profitable businesses. Since inception, CD&R has managed the investment of $22 billion in 70 businesses with an aggregate transaction value of approximately $100 billion. CD&R’s previous healthcare-related investments include AssuraMed, Envision Healthcare, Healogics, PharMEDium, Vets First Choice and VWR International. To learn more about CD&R, please visit www.cdr-inc.com.
About agilon health
agilon health serves as a partner to physicians and other providers so that they can be more productive and effective in providing high-quality, value-based care. The company is both a management services organization serving more than 475,000 members through a network of more than 9,500 physicians and a proprietary technology platform that both supports the management of agilon health’s delegated patients and is also offered to third-party provider organizations and payers. The company’s unique mix of technology-based services and clinical capabilities supports physicians serving a diverse mix of patients across multiple geographies, with differentiated expertise managing underserved Medicaid and Medicare Advantage patients. agilon health is also an important partner to payers, other providers and communities, positively impacting access, quality and cost of care for patients. www.agilonhealth.com.