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The deal of the century

And that’s not hyperbole, this isn’t some over-heated flackery or PR nonsense.  One Call Care Management (OCCM) will be sold to investment firm Apax Partners.  But that’s just part of the deal.

Apax is also buying PT firm Align Networks from General Atlantic and Riverside.

Terms of the transaction aren’t yet available and likely will not be made public.  That said, I’d guess the whole deal is worth at least $2.25 billion.  

Work comp has made the big time.

I’d expect the new owners to combine Align’s PT operations with the rest of their product portfolio, and do that quickly.  That’s what OCCM has done in the past and indications are current CEO Joe Delaney will continue to run the new, much larger company.

Apax doesn’t have any other recent  work comp investments, so they are going to be relying on  Delaney; he’s gained extensive experience putting together what is now the largest company in the work comp services sector.  That said, the Align culture is a rather free-wheeling one, and combining that with OCCM will be an interesting project.

What he’ll have to work with is the industry’s leading imaging vendor, one of the top two DME/HHC offerings, the one of the top two PT management firms, perhaps the biggest player in transportation, and a couple much smaller ancillary lines (dental and some other stuff).

Total spend in these segments in work comp is about $7.5 billion.

Think about that.  Apax is spending something north of $2 billion to buy companies that have a total addressable market (that’s PE-speak for how much potential revenue exists in total) that is less than 4 times that price.

I don’t know the Apax folks; by all accounts they are savvy investors indeed and have done rather well in other businesses.  I’m just having a tough time wrapping my head around spending that much money to buy into a business with that low a ceiling.

Sure, they might get into group health, or auto, but many work comp companies have tried, and none have made an appreciable dent.

Regardless, the folks at Odyssey (they built OCCM) should be doing the “we won the World Series” champagne celebration thing; this transaction, and the process that led up to it, shows that they are really, really good. I’m sure General Atlantic and the Riverside folks in Cleveland are pretty happy too.

What does this mean for you?

These folks don’t invest unless they are darn sure they’re going to make a very, very good return.


14 thoughts on “The deal of the century”

  1. Joe, do you really think that OneCall/MSC has merged any operations? All companies are still functioning as separate entities, even the companies that were purchased over 3 years ago. While this is a HUGE deal and lots of folks are getting rich. I can’t help to wonder what the client thinks.

    The further away you get from your clients the more transactional you become – what happens to quality and outcomes?

    1. Very interesting but not surprising. Joe, all of your information focuses on dollars but what about what your subject matter is all about…”Managed Care Matters”. Why is there never a focus on how this will impact the Injured Workers and quality of care that you pretend to care about along with the impact on the quality of service to the Carriers and TPA’s. If that is what truly “matters” to you, I would assume and hope you would focus your research on that and provide some outcomes on this “champion” situation. Please keep us updated on what the customers are saying as that would be most interesting. However, a one simple minded general post that just provides data and dollar amounts of acquisitions does not really help anyone without the focus on “what really matters”. So let’s get real Joe and get back to basics and give some real data on what you pretend to focus on. That that is specific outcomes of quality of care along with cost savings. 2.25 billion dollars mean anything to a Injured Worker or a Work Comp Carrier to TPA. Just get some real substance please.

      1. Trish – your comment is uninformed, ignorant, and offensive simple-minded.

        “Not surprising”??? The first billion dollar deal in work comp services, one that combines big specialty companies, bought by a PE firm as its FIRST investment in work comp? Wow, I wish I was as SMART as you Trish, then I wouldn’t have been “surprised”.

        You must have one hell of a crystal ball.

        You obviously haven’t read any of my other 3000+ posts on MCM; the ones that address the patient safety issues of physician dispensing, focus on the very difficult job of the adjuster, call the industry to task for creating opioid addicts, lament the lack of focus on medical issues, and on and on.

        Moreover, your moronic statement “one simple minded general post that just provides data and dollar amounts of acquisitions does not really help anyone without the focus on “what really matters” is breathtaking in its stupidity.

        What “really matters” to you is NOT what really matters to others. There are thousands of employees at these companies, their customers, and in this industry who will be affected by this deal. You want substance? The first to announce the largest-ever transaction is big substance indeed.

        Did you even bother to read the post earlier THIS WEEK about the implications of PE focus on work comp?

        Did you read the closing statement, or are you too simple-minded to think for yourself? What does it imply? Can’t you work that out on your own? Do I need to spell it out for you Trish?

        Finally, do NOT tell me what to right about, how to write it, or what I should or should not be saying.

        You are truly an idiot. Please return to the cave in which you’ve been dwelling and do not return until you’ve gotten a clue.

        1. Class act calling someone an idiot. What a great example you set and how professional. I clearly indicated “not surprising”, so please read the comments more carefully. My reply was specific to this ONE announcement so get off your high horse as you are not the “know all” that your pretend to be.

          1. Well, Trish, that is the about the most nonsensical response you could have written.

            I won’t get into the logical fallacies in your riposte as there are too many upon which to waste my time.

            Stop. You’re embarrassing yourself.

          2. Seems as though the only opinion that “matters” is Mr. Paduda’s. Obviously his insight and knowledge is right up their with God’s.

    2. Unfortunately, or fortunately, whichever way you need to look at it, this is inaccurate. The merging of several platforms occurred several times (the latest in sept).

  2. I’ve been getting lots of calls from PE firms trying to figure out what the ceiling is for all these ancillary service. It’s a very difficult question as I really think that is impossible to establish. All the big carriers and TPAs are aligned with provider networks that they refer to. There is usually some type of financial arrangement associated with these alignments. I see more focus on the larger global networks that cover everything rather than the specialty networks. TPAs and carriers want simplicity, and the advantages of scale. If you cannot get in with the big payers, you can’t grow your networks.

    Physical Therapy, DME, translation, transportation, etc are all things employers are trying to spend less money on…not more. The are employing case managers, UR, adjusters, etc for the specific purpose of reducing the spend in this area.

    I don’t get this investment. I agree with you Joe, the ceiling is low for the price, and people are actively working to lower the ceiling.

    I’m also not convinced that all the PE firms only bet on sure things. Remember all that money invested into the MSP space? It made no sense at the time as the revenues were not there to support it, and the revenues have never materialized to support it. The people who made the first flip got paid, but those holding the bag now won’t make a profit.

    I think the one thing PE firms don’t understand about WC is that there are very few services that payers NEED to purchase. Most of these service providers didn’t exist 10 years ago for the simple reason that they were not needed. I’m not convinced most of these service providers will be needed long term. As the WC business model evolves, sooner or later smart people are going to realize that simpler is better and complexity simply adds cost.

    If anyone in the PE space wants to buy a large LinkedIn group, give me a call. Zero revenues but that just means significant growth potential. And I will accept well less than $1 billion. Hey, you never know. I could end up sitting on a beach next to those people who founded the MSP industry.

    1. Mark, you are much too kind.

      Where’s the transparency that has been promised about all of these financial relationships? It is a curious phenomena that medical costs continue to rise when most everything is supposedly ‘managed’ through all of these huge networks with high penetration and little ‘leakage’.

      This all leads back to a fundamental truth…the ‘savings’ model as a measure of cost control performance is simply ABSURD. When greater ‘savings’ comes from the vendors who can get you to spend the MOST then you know that there is a problem! Not very logical, is it?

      For those of you are inclined to do so, pull some of your ‘network’ EOBRs. Take a look at how medical bills are processed. Do you notice anything that is MISSING on most of those EOBRs? Billed charges…check. Date of service…check. CPT codes and units billed…check. In network and out of network reductions…check. Recommended payment…check. Fee schedule amounts…uh…hmmmm…gee wiz.

      Discounts are often calculated off of state fee schedules but the fee schedule amounts are rarely displayed on the actual BILL REVIEW document. Curious, huh? There is a big difference between perception and reality. ;-)

      1. Les – Are you sure about this? Most bills that I’ve seen from vendor partners via BR entities and clearinghouses in face DO include the FS/UCR amount. Most payers need this data for their own data collection and reporting back to their clientele.

        1. Dear Informed (I see what you did there…nice),

          I stand by my comment and ask for people to check for themselves.

          Although fee schedule data is necessary in order to calculate ‘savings’ it does not mean that it shows up on the EOBRs that pass in front of the adjusters or are sent to the providers with their payments.

          Look in the individual claimant files, not the, aggregate data files.

          In the meantime, I will await the next response from someone named “Credible” or “Trust Me.”

          1. Again, the individual hcfa data transcribed via clearinghouses or bill review entities must have this data for almost all payer profiles, as more and more require it. There isn’t an aggregate billing that I know of that doesnt show individual hcfa data to any payer unless there is aggregate billing required by a specific payer. If such payer doesn’t require that data (fs or xur rate), then they are billed as such. Remember, most vendor partners want to exhibit this ppo savings line as their benefit. To exclude this data doesnt benefit the payer or the value they bring to their customers.

  3. The purchase price (if even close to being an accurate estimate) vs. the relatively low / capped market really makes me wonder if your on to something with them trying to make a play on the group health side.

    I was taking a look at the other Apax holdings and see they own Magna Care, could be some synergy / opportunity there (?) although I think they’re NY only (maybe NJ too). They have lots of other holdings in healthcare but no really focus area that I could discern.

    If they successfully made the push into group health I wonder what that would mean for their WC customers and their claimants (and maybe for the prospects of others in the WC health delivery space).

    We’ve been using OCM for DX testing for a while and frankly they’ve worked out well for us. I might be concerned if they start shifting their focus and priorities to group health.

    BTW – I remember another post a few months back by Trish on the topic of OCM. I don’t think she likes these guys.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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