University of Michigan spinoff Cielo MedSolutions sold in health care records deal
(This story is being updated.)
A Washington, D.C.-based company that provides a wide range of services to health care companies and other industries said late Thursday that it had purchased Ann Arbor-based health care records startup Cielo MedSolutions.
Cielo MedSolutions was sold to Washington, D.C.-based The Advisory Board. Pictured in this 2008 photo (l-r): Christopher King, senior vice president of product and operation; co-founder James Price; and CEO and co-founder David Morin.
File photo | AnnArbor.com
Cielo, which spun off from the University of Michigan in 2006 and has about nine employees in Ann Arbor, sells a software application that helps doctors keep track of patient care needs, authorize prescriptions electronically and comply with regulations imposed by payers.
The Advisory Board (NasdaqGS: ABCO), which has about 1,110 full-time employees, delivers services and consulting to a network of some 3,000 member organizations such as hospitals and health systems. The company has a market capitalization of $761 million.
Investors in Cielo included Ann Arbor-based nonprofit Altarum Institute, Oakland County-based Automation Alley and the Michigan Pre-Seed Capital Fund, a statewide investment vehicle managed by Ann Arbor SPARK.
The acquisition can be viewed as an endorsement of Cielo's primary product, called Cielo Clinic, which is particularly important because the health care records industry has been overwhelmed with various software solutions.
In a flooded market, doctors sometimes hesitate to adopt electronic medical records technology for fear of making a costly mistake.
But The Advisory Board has the financial muscle and is well positioned in the health care industry to pursue customers. The company plans to take Cielo's software and combine it with an existing application it provides, called Crimson.
"We are very excited about the acquisition and the opportunities to incorporate Cielo into our work," said Robert Musslewhite, CEO of The Advisory Board, in a statement. "Hospitals and physicians look to us as their solution for physician performance, and since patient registry is a key tool that they use, the addition of this functionality to our portfolio will greatly enhance our ability to serve member needs in this terrain."
It was not immediately clear how the acquisition would affect Cielo's office on Green Road on Ann Arbor's north side, but Cielo CEO David Morin said in the news release: "I—along with the entire Cielo team—am thrilled to join forces with the Advisory Board to enhance our impact on physician practice across care settings. We are excited about the large market opportunity ahead of us and the new ways we will work together to help members provide greater value in patient care."
The deal comes less than three months after Cielo received a $1.3 million federal grant to coordinate with the U-M Health System to develop a web-based clinical management program. That new system, which will be based on the company's Cielo Clinic product, will be tailored with input from primary care physicians.
Skip Simms, interim CEO of Ann Arbor SPARK, credited Cielo's leadership for the company's success.
"As is in the case in all good investments, you’ve got a good management team and I think David proved himself to be a very good not just manager and operator but a good entrepreneur who stuck through the tough times and the challenging times that the company went through, who worked hard and did what was necessary to make the company successful," Simms said.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Oksana Posa
Mon, Feb 7, 2011 : 7:19 p.m.
To "Cash" You are not being argumentative but naive and tea party-ish. The taxpayers' money are not doled out in the back room somewhere. There's a transparent and competitive process, which you are welcome to explore on your own. Financial assitance in most cases have a payback clause. I looked up for you the return on MEDC recent activity. They got 4% return on the loans they co-signed with companies in credit crunch in 2009. <a href="http://www.michiganadvantage.org/Access-to-Capital/Default.aspx" rel='nofollow'>http://www.michiganadvantage.org/Access-to-Capital/Default.aspx</a> When a start-up succeeds or an existing private company doesn't go under as a result of State business-friendly policies, taxpayers win in many ways: jobs are created, taxes are paid, and more grants, loans and programs are made available to apply for. Why fix what ain't broken? This is not to say there weren't plenty of flops in these programs over the years. John Engler has intiated many tax-credits, under Dems they turned into handouts. The cost was high but effect minimal. So, I have a better direction for your inquisitive mind. How to prevent the abuse and inefficiency of Federal and State subsidies & incentives, make them flexible, accountable and overall profitable to taxpayers. I truely hope the new Governor, who has an extensive venture capital expertise will look into these issues.
Peter Marsack
Sat, Feb 5, 2011 : 2:13 a.m.
i have met with dave morin on occasion and he is an intelligent and productive leader. congrats to him and the cielo team.
Cash
Fri, Feb 4, 2011 : 9:12 p.m.
I'm real curious about the whole process. This is a for profit company, correct? And they will compete with other for profit companies? Is this fair competition when taxpayer funds were used to assist this one, but not others? I am not being argumentative....honest. I think I just do not understand the process.
Oksana Posa
Fri, Feb 4, 2011 : 7:36 p.m.
I took a class on intrepreneurship from James Price at UofM Bus School, back when he just founded Cielo. He used his new venture as a test case on how it should be done. I also met David Morin, a former journalist, who was very generous to us, students, with his time and advice. They both and, I'm sure, the third founder, whom I don't know personally, took personal financial risks, worked as hard as any start-up intrepreneur does, and utilized the Michigan resources, like SPARK, that are available to anyone with vision, expertise and work ethic. Congratulation to the Cielo team and to the State of Michigan! Oksana Posa, MBA2006
Nathan Bomey
Fri, Feb 4, 2011 : 7:15 p.m.
@ Trepang674 I've got a request into the University of Michigan's Technology Transfer Office to see how the university will benefit from this deal. It's likely that U-M had a small equity stake -- that is, an ownership piece -- in Cielo. If so, the university will reap some proceeds from the sale. The Tech Transfer Office's policy is to reinvest all proceeds into more U-M research.
Ponycar
Fri, Feb 4, 2011 : 7:07 p.m.
I'm not sure but I'm guessing that the point of the $1.3M was not to create jobs but "to develop a web-based clinical management program" which could help make the health care industry more efficient (thus saving money) and ensuring better patient safety. Just a guess though. The government is really crappy at picking and choosing where and how to create jobs so I'd prefer they stay out of that business anyway. Besides that, it was a Federal grant. If they were trying to create jobs, They shouldn't care what State the jobs are created in as long as it's in the U.S.
Trepang674
Fri, Feb 4, 2011 : 7:03 p.m.
Great success story. Hope to see more of this out of the Spark office and U of M...cause this is university income at some point in this process "spun off of U of M" so this means they have a financial stake. And the returns most likely go back into U of M's secret fund or general fund...on to the books somewhere....and tuition go up? Don't understand this - is U of M a profit center? producing money and opportunties for the well connected smart guys? Congratulations to David Morin and the Cielo crew to plow through the govt hurdles to get to the pot of gold.
Nathan Bomey
Fri, Feb 4, 2011 : 5:05 p.m.
@Cash, It was nine employees in November, but I want to confirm that figure before reporting it as an exact figure today. It obviously could have changed.
Cash
Fri, Feb 4, 2011 : 5:38 p.m.
Did it?
Cash
Fri, Feb 4, 2011 : 4:57 p.m.
"Cielo, which spun off from the University of Michigan in 2006 and has about nine employees in Ann Arbor" Um, they don't know exactly how many? Is it 9? Is it 5? Is it 6? That is odd. ".......after Cielo received a $1.3 million federal grant " Wow, that's a big price for us, the taxpayers, to get a Michigan return of "about 9" Michigan jobs.