TA Associates Makes Minority Investment In MedSolutions

TA Associates Inc. of Boston, Mass., made a minority investment in MedSolutions, which is a provider of medical management services. MedCare and Ridgemont Equity Partners will each retain a part of their stake in the Nashville, Tenn. -based company. Further details of the investments were not disclosed.

PRESS RELEASE

TA Associates, a leading growth private equity firm, today announced it has completed a minority investment in MedSolutions, a leading provider of medical management services. Current investors MedCare and Ridgemont Equity Partners will each retain a portion of their stake in MedSolutions. Additional terms of the investment were not disclosed.

“With the ever-growing cost of healthcare, cost management is increasingly coming into focus”
Founded in 1997, MedSolutions specializes in the cost management of medical services for commercial, Medicare and Medicaid payors. Under a unifying theme of delivering measurable cost savings that are a consequence of improving healthcare quality, the company has expanded its utilization management platform from its original focus on high tech radiology to now review compliance with evidence-based guidelines for a broadening array of medical services, including cardiology, oncology, ultrasound and sleep study management. MedSolutions also offers the PremerusSM Diagnostic Accuracy program for reducing diagnostic error rates to improve the quality and cost of care.

MedSolutions has over 500 employees and is headquartered in Nashville, Tennessee, with call centers in Nashville and Melbourne, Florida. The company provides cost management for more than 27 million individuals.

“With the ever-growing cost of healthcare, cost management is increasingly coming into focus,” said Mark H. Carter, a Principal at TA Associates who will join MedSolutions’ Board of Directors. “TA has always been attracted to healthcare businesses that effectively address cost issues, and MedSolutions does so by reducing inappropriate and duplicative tests, improving patient safety and enhancing quality of care. We are pleased to complete this investment in MedSolutions.”

“We have been acquainted with TA almost since our founding and are delighted to partner with the firm,” said Curt Thorne, President and CEO, MedSolutions. “Beyond financial support, TA brings a wealth of experience in the healthcare sector in general and the utilization management industry in particular. We anticipate a beneficial relationship as we continue our mission to provide innovative solutions that achieve significant costs savings and quality improvement for patients, payors and providers. We are also pleased that MedCare and Ridgemont Equity Partners will remain significant shareholders as their support and contributions have been an important part of the company’s success.”

Spending on healthcare in the United States is expected to soon exceed 20% of GDP. Current U.S. spending on imaging and utilization is estimated at $100 billion annually and is widely recognized as one of the fastest growing elements of overall healthcare spending, as reported in a 2008 study by the U.S. Government Accountability Office. Beyond costs, there are serious patient safety issues related to unnecessary medical imaging. Certain studies expose patients to radiation dosages equal to 1,000 chest x-rays, and the National Cancer Institute estimates that excessive use of CT imaging will induce cancer in 30,000 Americans a year.

“With annual growth in imaging costs exceeding even that of prescription drugs, the radiology benefit management industry is assuming an active role in addressing the urgent issue of rising costs,” said David S. B. Lang, an Advisor at TA Associates who will also join MedSolutions’ Board of Directors. “Ninety percent of commercial health plans utilize such programs to manage the growing cost of imaging, and a 2008 report from the Government Accountability Office recommended adoption by Medicare. Today, MedSolutions has a significant presence within private and government-run health plans, with opportunities for continued growth. With 32 million more people moving into coverage under commercial health plans and Medicaid by 2019, the valuable services MedSolutions provides will be under more demand than ever.”

TA Associates has more than four decades of investing experience, focusing on profitable growth companies. TA’s prior investments in the healthcare sector include Alere Medical, Amann Girrbach, AmeriChoice, CompBenefits, Dr Lal PathLabs, Invitrogen, Millennium Laboratories, MQ Associates, National Imaging Associates, Triumph HealthCare and Twin Med.

Goodwin Procter provided legal counsel to TA Associates. Goldman Sachs served as financial advisor, and Bass Barry provided legal counsel to MedSolutions.

About MedSolutions

Using independently validated savings methodologies, MedSolutions specializes in quality-driven, intelligent cost management of medical services for commercial, Medicare and Medicaid payors. The company maintains management contracts for more than 27 million individuals nationwide. Using robust data, predictive intelligence technology and evidence-based clinical expertise, the company’s innovative solutions extend beyond Radiology Management to other areas of medical specialty, including Oncology, Cardiac Imaging, Sleep, Ultrasound, and MedSolutions’ groundbreaking PremerusSM Diagnostic Accuracy program – the nation’s first solution for reducing diagnostic error rates to improve the quality and cost of care. MedSolutions has been recognized for outstanding customer service and effective call center management by the International Customer Management Institute and for three consecutive years by the prestigious J.D. Power and Associates Award. Visit www.medsolutions.com.

About TA Associates

Founded in 1968, TA Associates is one of the largest and most experienced middle market private equity firms. The firm has invested in over 400 companies and manages more than $16 billion in capital. With offices in Boston, London, Menlo Park and Mumbai, TA Associates leads buyouts and minority recapitalizations of profitable growth companies in the technology, financial services, business services, healthcare and consumer industries. More information about TA Associates can be found at www.ta.com.