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This just in. Indian BPO firm FirstSource Solutions has acquired MedAssist Holdings, a US-based provider of revenue cycle management to the healthcare industry, for $330 million. Firstsource has informed stock exchanges that the company has entered into an agreement with the US company. NDTV Profit reports that FirtSource plans to raise a debt of $275 million to fund the acquisition, while the rest will come in from internal accruals.

MedAssist, headquartered in Louisville, Kentucky, has 1,400 employees and is a pan-American provider of revenue cycle management services to the healthcare industry. This includes eligibility services, receivables management services and post-default collections services for healthcare providers. The company has over 1,000 clients including hospitals, large physician groups and alternate site providers. MedAssist's revenue for year ended December 31, 2006 was $99 million.

The deal offers synergy to Firstsource. The Mumbai-based BPO already has a presence in the US healthcare BPO space on the payor side (insurance company end). The current acquisition will help FirstSource enter the provider side (hospitals end) of healthcare BPO services. Currently, hospital care in the US amounts to about $700 billion and administrative costs are estimated to be 14 per cent, or $100 billion, which is considered a huge opportunity, according to the statement by the company.

Besides, revenue and cost pressure on healthcare providers is increasing. Hence, providers are increasingly outsourcing multiple elements of their revenue cycle to increase revenues (by reducing uncompensated care) and contain cost. MedAssist has presence in this provider segment, consisting of over 5,000 hospitals nation-wide.

Firstsource also stated that there would be no change in the management of MedAssist and all employees would continue in their current jobs.