Up until a few years ago, only the tech world had companies that boasted of $1 billion valuations. Hence the moniker “unicorn” to signify the rarefied zone these companies occupied. Healthcare unicorns were few and far between.

With current frothy valuations, unicorns are now a dime a dozen even in healthcare even though it’s not entirely clear whether they have significant revenue or have earned a profit. The latest entrant in that billion-dollar club is Iodine Software, which leverages AI to properly document what clinical interventions and services hospitals are providing to patients so that they can code and bill accurately and get paid for those services. Founded in 2010, Iodine Software is apparently profitable though like so many companies, its financial details are held close to the vest by executives.

The company announced Wednesday that private equity firm Advent International has taken a “significant stake” in a deal that made the  company a unicorn. No other financial details were revealed. Bain Capital and another private equity firm — Silversmith Capital Partners — remain as shareholders following Advent’s investment.

“This investment provides access to capital for expansion and growth strategies so that we can innovate faster and find more ways to empower healthcare leaders to meet with confidence the delicate balance of quality, efficiency, and system financial resilience,” said William Chan, Iodine’s CEO and co-founder, in a news release.

Later, in an email response to questions forwarded by a spokesman, Chan explained that task of correctly documenting clinical service provided is a painstaking and largely manual process requiring clinical expertise of doctors and nurses. Clinical documentation integrity (CDI) and utilization management teams work with doctors and nurses to make sure that the entire patient journey and experience in the hospital from a clinical perspective is properly documented. If it isn’t, hospitals stand to lose big in what is termed in the industry as mid-cycle revenue – revenue garnered by treating and taking care of patients in the hospital.

“Much of the mid-cycle is rife with tasks that are complex and require clinical judgement from those specialized CDI and UM nurses to ensure that documentation has full integrity,” Chan said. “Prior to Iodine, these tasks have been very hard to automate because of the fact that they require clinical judgement to complete.”

Now Iodine’s AI-powered CognitiveML engine is capable of making clinical assessments because of large amounts of clinical data that has been fed to train the algorithm from many different clinical records, he said. He added that those assessments are based on models that were trained on on 29 million inpatient admissions, 3.3 billion individual clinical observations (for example, lab results, vitals) and more than 1.5 billion medical concepts and other information.

“These assessments thus allow us to automate tasks that would normally require clinical judgement from a human to complete,” he said. “These assessments also allow us to predict various details about the patient’s stay such as approximately how long the patient will stay in the hospital and what the final coded diagnosis is likely to be upon discharge.”

The above seems to have convinced hospital administrators to adopt Iodine’s products — the company claims to have more than 800 health system customers in the U.S, including Advent Health, HCA, Tenet Healthcare, Mount Sinai Health System, Baylor Scott & White, and others. Chan said the company is currently profitable and has seen 40 percent revenue growth from 2020 to 2021, but declined to be more specific.

A solid customer base combined with strong revenue growth are like music to any investor’s ears and presumably played a role in getting Advent International to invest in the company.

“Iodine’s world-class AI innovation engine and strong customer focus underpin the company’s ability to deliver a best-in-class product with highly differentiated value,” said Carmine Petrone, a managing director on Advent’s Healthcare team, in a news release.

Chan said that Iodine has helped hospitals to garner an additional $1 billion in revenue on an annual basis across its entire customer base. That has got to pique the interest of any hospital administrator given how the pandemic has hurt hospital finances. Hospital finances already in a tough spot before the pandemic are now in worse state with news of closures and bankruptcies. So any technology that can effectively stem revenue leakage of any sort will be like manna from heaven.

Not surprisingly, the CDI market is projected to reach $4.5 billion by 2023, up from 3.1 billion in 2018, according to market research firm Markets and Markets. The report found that this market’s “growth is largely driven by the increasing utilization of mid-revenue cycle management solutions to reduce healthcare costs, check the loss of revenue due to medical billing and coding errors, resolve issues raised by the decline in reimbursement rates, manage ever-increasing amounts of unstructured data, and maintain regulatory compliance.”

Still, Iodine has its competitors in the world of AI-powered clinical documentation integrity. When asked about the competition, Chan responded with 3M,  and Nuance, which was acquired by Microsoft earlier this year both both play in the space [Author of this article owns  Nuance shares]. Those two companies specifically leverage AI to help in CDI. BUt there are other prominent players too. Per the Markets and Markets report, they are Optum,  M*Modal, nThrive, Dolbey Systems, Streamline Health, Vitalware, Craneware, Epic Systems, Cerner, eZDI Inc., Flash Code, and TruCode.

While the adoption of digital tools in hospitals had been slow, the pandemic has meaningfully changed the dynamic. Therein lies the opportunity.

“We saw the enormous potential its AI-powered software would provide to hospitals going through digital transformations,” said Yumin Choi, partner at Bain Capital Ventures. “With this strategic investment, Iodine will have the opportunity to reach more hospital professionals, resulting in better care for patients across the U.S.”

Photo: adventtr, Getty Images