The deal would be the second in recent months for No. 2 industry player Transcend Services, which lost in last year’s bidding to buy bankrupt Spheris of Franklin.
Smaller transcription services companies including DTS face rising costs to acquire new technologies such as speech recognition software that are needed to be more competitive.
At the same time, such technologies are driving down the prices that clients including hospitals are willing to pay for transcribing notes from doctors.
“The reality is that to continue in this industry that is maturing and becoming more technology-centric, it was imperative that we either invest more in the company or do what we’ve done, which is to find the best possible steward to take the company on,” said Andrew Miller Jr., chief executive officer with DTS.
Similar factors were cited for Spheris’ bankruptcy that led to its sale just over a year ago to No. 1 industry player MedQuist.
“It’s safe to say we’ll continue to see more consolidation in this market throughout 2011,” said Chris Cashwell, senior vice president at Webmedx, the transcription services industry’s third largest player that has its national operations center in Brentwood.
Transcription services companies with less than $15 million of annual revenues are prime targets, he added.
One example of a technology where Transcend is far ahead of DTS is a software tool that pulls information from the doctor’s notes that can be used by hospitals or clinics to improve patient care and processes such as coding and billing for certain procedures, Miller added.
DTS, which was founded 16 years ago, has roughly $12 million in annual revenues from handling work for clients including Vanderbilt University Medical Center.
Transcend had revenues of about $124 million in the past year, which reflects in part last fall’s acquisition of the parent of Heartland Information Services of Ohio.
Miller, who would be leaving after closing of DTS’ sale to Transcend, expects a majority of his company’s 40 corporate employees and all 600 transcriptionists that transcribe notes out of their homes to be retained.
Getahn Ward covers the business of health care and publicly traded companies for The Tennessean. He can be reached at 615-726-5968 or at gward@tennessean.com.
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