Providence St. Joseph to Buy Wisconsin Health IT Consultant Bluetree

Providence St. Joseph Health, a large network of hospitals and clinics headquartered in Renton, WA, said Thursday it plans to acquire Bluetree Network, a consultancy that specializes in projects involving electronic health records software.

Providence did not say how much it will pay to acquire Madison, WI-based Bluetree in a news release announcing the deal, or disclose any of its financial terms.

The deal is significant because it highlights how the healthcare industry has come to value consultants who have experience installing and optimizing electronic health records (EHR) software.

In recent decades, many of the nation’s leading hospital systems have spent millions of dollars to implement EHR software, which replaced paper records at many sites. These digital tools allow clinicians and other staff to document patient information, bill for care, and perform other tasks

The list of leading EHR software vendors includes Athenahealth, Cerner, (NASDAQ: CERN), Meditech, and Epic Systems, which is based in Verona, WI, a few miles south of Bluetree’s headquarters.

Bluetree is an Epic spinout. Ted Gurman and Reggie Luedtke, who both worked at Epic previously, co-founded Bluetree in 2012. Another ex-Epic employee, Jeremy Schwach, joined Bluetree in 2013, and leads the company as CEO.

“By joining Providence St. Joseph Health, Bluetree will be able to help even more health care organizations maximize the power of technology,” Schwach says in a prepared statement. “By tapping into the Providence St. Joseph Health platform and their thousands of dedicated and talented providers, we will be able to increase the speed by which we bring new innovations to our clients.”

The deal is subject to certain closing conditions, according to the release. If it goes through, Bluetree would operate as a separate subsidiary of Providence St. Joseph Health, the organization says.

Though it was not involved in the deal, Epic’s presence looms large over it. In addition to being the place Bluetree’s co-founders got their start in health IT, the company has focused on working with healthcare providers installing or upgrading Epic software at their hospitals and clinics. Bluetree now brands itself as “an Epic consulting and strategy company,” according to the release.

Providence St. Joseph Health, which operates 51 hospitals and estimates it covers 2.1 million patients across several US states, is one of Epic’s largest and most high-profile clients, along with the likes of Kaiser Permanente, Johns Hopkins Medicine, and the Mayo Clinic.

The healthcare IT landscape is dotted with other consultancies that specialize in implementing patient records software developed by Epic and its competitors. One of the largest is Nordic, which has grown at a brisk pace since serial entrepreneur Mark Bakken launched the firm in 2010.

Another, Vonlay, which was founded by former Epic employee Aaron Carlock, was acquired by Huron Consulting Group in 2014 for $34.5 million. The deal was one of 33 exits by Wisconsin-based startups Xconomy tracked in a report published earlier this year.

Other Madison-area healthcare IT companies co-founded by one or more former Epic employees include CenterX, Health eFilings, Moxe Health, and Redox, which in April raised $33 million as part of a Series C funding round.

Meanwhile, Providence St. Joseph Health’s list of startup acquisitions continues to grow. Earlier this year, it agreed to purchase Seattle-based Lumedic, which is developing blockchain-based software aimed at improving how providers bill for care and manage reimbursements from insurers. Another recent acquisition Providence made was its 2016 purchase of Medicast, a developer of telehealth software based in the San Francisco Bay Area.

Providence also invests in early- and mid-stage businesses through its VC arm, Providence Ventures, which announced a new, $150 million fund earlier this year.

Jeff Buchanan is the editor of Xconomy Seattle. Email: jbuchanan@xconomy.com Follow @_jeffbuchanan

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