Less is more: Why Matt Holt is betting $30B on simplifying health tech
Health tech could be getting a new heavyweight — though the deal is still in its early stages.
Last month, it was reported that Matt Holt, former managing director and president of private equity at New Mountain Capital, had left the New York firm to form a new venture that would combine its five health-tech portfolio companies in a deal worth more than $30 billion.
An anonymous source familiar with the deal said the creation of the new company – which will apparently be named Thoreau after essayist and naturalist Henry David Thoreau – has not yet been finalized, but steps are being taken to move the process forward. Medical City News. Sources said extensive investigation, analysis and financing work is still ongoing.
The five New Mountain-backed startups Holt is discussing acquiring are Datavant, Machinify, Office Ally, Smarter Technologies and Swoop. Anonymous sources close to the deal told the outlet that the new entity, called Thoreau, is backed by London-based alternative asset manager ICG Strategy Equity.
Holt, New Mountain, ICG and all five startups fell Medical City News'Requested comment.
While Thoreau has yet to reach a deal, experts believe the move represents a significant bet on scale and consolidation in the health tech sector.
Five startups, one platform
This is not the first time in recent history that multiple health technology companies in Johor Bahru’s portfolio have been consolidated.
In May, New Mountain created Smarter Technologies, one of five companies folded into Thoreau, by merging three separate platforms it had acquired: SmarterDx, Thoughtful.ai and Access Healthcare. The company was founded to compete with established revenue cycle management companies and try to beat them at their own game.
Smarter Technologies' primary customers are providers and health plans, including large health systems such as Novant Health and McLaren Health Care. Providers use the startup's platform to automate administrative tasks such as prior authorization, patient intake, and billing, while payers use it to improve their claims processing and utilization management.
Machinify is one of Thoreau's other startups that also focuses on payer and provider workflow automation. The startup uses artificial intelligence to speed up utilization management and prior authorization decisions, reducing the need for manual reviews. Office Ally, on the other hand, provides small providers with EHR and practice management tools designed to simplify billing and administrative tasks.
Datavant brings a data-centric dimension to Thoreau as it provides a platform that helps healthcare organizations securely connect and share data. The platform connects clinical and claims data to support research and operations among providers, payers and biotech companies.
Thoreau's last startup, Swoop, wasn't designed specifically for health care. It sells payment and invoicing technology for small and medium-sized businesses.
Even with uneven customer overlap, New Mountain is evaluating whether merging the companies into an end-to-end health technology platform spanning payers and providers will create real strategic value. Together, these five startups have the potential to cover a wide range of healthcare operations, from administrative automation to secure data integration to payment processing.
With a valuation of over $30 billion, Thoreau immediately became one of the largest health tech platforms ever launched by a private equity firm.
If the new entity merges as envisioned, its sheer size and scope would put it in a different category than most private equity-backed health technology businesses. By spanning payers, providers, data exchanges and payments, the platform can ultimately compete for customer relationships in a way that few companies can. At the same time, bringing together disparate businesses of this scale carries execution risks that even a large player like Optum has spent years grappling with.
Integrating capabilities in healthcare
It's unclear how the new entity will be structured. Joe Widmar, director of healthcare M&A at West Monroe, said it could operate more as a standalone company or retain elements of a traditional private equity fund, but either way New Mountain appears to view the merger as a move to create a more comprehensive and scalable player in the healthcare technology space.
“I think this reflects a bet on the capabilities of data and AI platforms as a way to accelerate value creation for businesses in adjacent businesses within the industry. The formation of smart technologies is a more sector-specific move in this direction,” he explained.
Vidmar noted that Solo appears to be a broader evolution of the same strategy — this time aiming to expand AI and data capabilities across multiple domains.
The underlying bet, he added, is that once organizations like Thoreau reach sufficient scale across various industry functions, the true value of AI in healthcare can begin to be realized.
Widmar noted that Thoreau's different business units bring many capabilities to the table, and most healthcare organizations are in desperate need of a platform that balances access to advanced tools with a simplified technology environment.
“That said, it remains to be seen how effectively Solo will achieve this balance. Defining a clear integration model and go-to-market approach across its combined businesses will be an ongoing challenge,” he said.
Integration as strategy
Another industry expert, Morgan Cheatham, partner and head of health care and life sciences at Breyer Capital, said he sees Thoreau's strategy as part of a broader trend toward health technology consolidation.
Cheatham points out that as Thoreau formed, it became an example of the importance of distribution in health care.
“New Mountain's portfolio is interesting because it touches every major stakeholder in healthcare, whether it's payers, providers, life sciences or employers. So to see Thoreau bring together leading companies in these different categories to focus on each stakeholder is an indication that we can expect to have more interoperable systems in the silos that exist today,” he declared.
While healthcare startups can succeed with the help of one stakeholder, such as providers, that success often doesn't translate to payers or the life sciences space, he said. Cheatham sees the value in creating systems that communicate across these silos, and while it's no easy task, he's optimistic that Thoreau can find ways to bridge these gaps by building solutions across multiple departments.
He noted that Thoreau's founding reflects another larger trend: The largest companies in health care tend to be those operating at the intersection of multiple markets or stakeholders. Standalone companies thrive in certain niche markets, such as therapies with unmet need, but integrated platforms are increasingly able to provide more value in the fragmented healthcare landscape, Cheatham explained.
Simple is better than complex
Another analyst, Zachary Klein, health policy and market access strategist at Avalere Health, noted that unlike traditional private equity investments, which typically focus on asset value and profitability, Thoreau is likely betting on the value of integration and a streamlined user experience.
“Thoreau's mission is designed to capitalize on current legislative and regulatory attention to health care inefficiencies. Each of these subsidiaries' missions addresses at least one driver of inefficiency – interoperability and infrastructure, patient and customer identification and engagement, payment and cost management, operations and EHR,” said Klein.
To be successful, Klein said, Thoreau needs to show that health technology can offer integration and simplicity without losing quality and accuracy.
He also highlighted the fact that New Enterprise's namesake, Henry David Thoreau, was best known for his writings about simplicity, abandoning modern excesses and challenging consumerism.
“Holt's Thoreau seemed to embody this ethos in his business—eliminating noise and fragmentation by consolidating multiple subsidiaries into a comprehensive entity, each performing tasks based on the specific needs of health technology,” Klein declared.
Holt named the venture Thoreau, seeming to suggest that in the fragmented health care market, less is more. There is some irony, though—Thoreau championed minimalism and freedom from material possessions, and if all parties sign on the dotted line, this new entity will become a health care giant with a strong focus on profit.
Photo: ChatGPT
