Providence forms for-profit tech, services company – Modern Healthcare

Providence forms for-profit tech, services company – Modern Healthcare

Renton, Wash.-based Providence on Monday launched Tegria, a healthcare technology and services company.

Tegria, which will operate as a for-profit subsidiary, combines nine companies that not-for-profit Providence has developed or acquired in recent years, with a focus on companies that provide services related to healthcare consulting and technology, revenue-cycle management, and software technology and platforms.

Bringing together the nine companies, which are a subset of the companies that Providence owns, marks another step in Providence’s pursuit of diversified revenue streams.

The health system has set a goal to earn $1 billion in revenue from nonclinical revenue sources by 2023 to support patient care.

“Ultimately, to survive on patient-care revenue alone … may or may not happen,” said Dr. Rod Hochman, Providence’s CEO. “Why wouldn’t we diversify our portfolio?”

Providence isn’t disclosing how much annual revenue it expects Tegria to generate, a health system spokesperson said.

The COVID-19 pandemic pushed Providence’s already thin operating margin into loss territory in the first half of 2020, with the health system reporting a $221 million operating loss in the six months ended June 30, or a 1.8% loss margin, on $12.5 billion in revenue. That’s compared with a $250 million operating gain on $12.6 billion in revenue, a 2% margin, in the prior-year period.

In Providence’s move toward creating a technology and services company, the health system partially is “taking a page” out of UnitedHealth Group’s strategy, Hochman said, looking at what Source…