Dive Brief:

• Sutter Health has entered into a 10-year agreement with R1 RCM to exclusively manage the health system’s revenue cycle management services, the companies announced last week.
• Sutter could save about $400 million over the next 10 years as the partnership aims to address labor costs and rising inflation, they said.
• About 1,150 Sutter RCM employees will be offered “comparable positions” at R1, and the jobs are expected to stay in California, according to a press release.

Dive Insight:

SVB Leerink analysts said in a report that the contract was worth $10 billion for R1 and notched it as a win for the company, which reported revenue of nearly $386 million in the first quarter of this year. The analysts noted that Sutter runs on Epic EHR systems, while previous deals have mostly involved health systems using Cerner.

“We believe this could help R1’s push upmarket to the extent that it opens the door to further Epic deals, which the largest health systems tend to run on,” they said. That could include deals with the Cleveland Clinic and Advocate Aurora Health.

R1 currently manages revenue cycles for Ascension and Intermountain Healthcare, among others.

The company has also been steadily expanding its business over the past two years. The new partnership comes on the heels of R1’s June $4.1 billion acquisition of Cloudmed, which provides revenue integrity and recovery services for providers.

That was the latest in a spate of buys, including patient financial engagement company VisitPat in May 2021 for $300 million. In 2020, R1 bought Cerner’s revenue cycle business RevWorks for $30 million.