More on Operations

Advisory Board CEO says company will only add more services under Optum

Robert Musslewhite says the company will be focusing on analytics, best practices, research and broadening its portfolio.

Beth Jones Sanborn, Managing Editor

It's been roughly two months since the split-up and sale of Advisory Board's education and healthcare businesses became official. It was one of the most talked about mergers of 2017, with the Advisory Board's education business going to Vista Equity Partners Management for about $1.55 billion and UnitedHealth's Optum paying $1.3 billion for its well-known healthcare operation.

"What this transaction showed is that sometimes there are opportunities to put both parts of the business on a better path looking at them separately," said Advisory Board CEO Robert Musslewhite. "And I think that's what happened here."

[Also: Advisory Board sells healthcare business to Optum, education business to Vista in $2.5 billion deal]

Musslewhite said it became apparent two years ago that better paths for both businesses were needed. He said they could see they had two great businesses that were increasingly serving two different markets and with different needs. The education business, in particular, was seeing tremendous growth very quickly.

HIMSS20 Digital

Learn on-demand, earn credit, find products and solutions. Get Started >>

"It increasingly felt like there would be an outcome down the line where letting each business find its independent path and the right partner was going to be the right answer," Musslewhite said.

[Also: Optum's acquisition of Advisory Board seems destined for success, but caution required, consultant says]

Numerous conversations took place with many potential partners, par for the course with such a complex transaction that first involved the splitting up of the two businesses, shared systems and internal resources, and then the search for two buyers. In the end, Optum placed the highest value for the company on the healthcare side and Vista on the education realm.

Musslewhite said Optum did a lot more than just offer the most money for the deal. Optum brought its own roadmap to the table, which included analytics, data and consulting capabilities, knowing that those were things already on Advisory Board's roadmap as well. 

"They saw the potential of taking our existing work with members and enhancing it," Musslewhite said. "That wasn't true in all of the conversations."

Now that Advisory Board is knee-deep in the integration process with Optum, Musslewhite gave a look at what to expect in the future. 

Optum plays across a wide spectrum of healthcare, which meant merging with them offered the opportunity to expand research and launch best practices programs, the kind Advisory Board already offers providers, into other segments like life sciences and payers. Optum's wealth of data and analytics could filter into Advisory Board's research business to substantially enhance its work for providers.

"If you look at health systems today, they are in a lot of different businesses and the lines between parts of the business are not so clear. A lot of the capabilities that our members need to develop or acquire or build out increasingly stretch beyond the traditional acute care enterprise. So we need to be equipped to work with them across that continuum as well."

Musslewhite said the Advisory Board leaders and employees focus a lot on best practices and insights and that becoming part of Optum will enable both organizations to broaden those services. 

In terms of actual products, very little overlap exists, though Musslewhite said there are certain opportunities exist to pull some technologies together moving forward, but it's a bit early to know how that will take shape. 

In general, the Advisory Board will keep its brand and tap into Optum's data and capabilities. The consulting operation, which is largely in the provider space, will merge into the new model as well since Optum's consulting business is concentrated more in other segments. The research business, however, will remain independent. 

"I'm sure there will be things we have to learn," he said, "and they learn a little bit about what makes us tick." 

Musslewhite couldn't say if there will be layoffs or position eliminations while the integration work is ongoing. 

Twitter: @BethJSanborn
Email the writer: