Healthcare AI Due Diligence

Summary

A prominent global private equity firm engaged me to conduct technical due diligence for a potential investment in an AI-powered healthcare technology company. This target company specialized in AI-driven solutions for healthcare, including Risk Adjustment, Quality Improvement, Member Management, and Clinical Intelligence.

My assessment focused on evaluating the target’s technological capabilities, product strategy, and operational effectiveness, particularly how AI and machine learning materially improved coding accuracy and efficiency, the predictive power of their clinical intelligence product, and the extent to which AI/ML was genuinely leveraged in their offerings.

The review also covered the company’s product roadmap, the integration of past acquisitions, the multi-tenant SaaS nature of their platform, and their competitive standing in the market. My objective was to provide the private equity firm with a comprehensive understanding of the target company’s technology, intellectual property, product vision, automation capabilities, security posture, and talent.

Case Study: Technical Due Diligence for a Strategic AI Investment in Healthcare

Client: A prominent global private equity firm.

Engagement: Technical Due Diligence in support of a potential investment in an AI-powered healthcare technology company.

Project Overview

The private equity firm was considering a significant investment in a company specializing in advanced AI and machine learning solutions for the healthcare sector. We partnered with them to thoroughly evaluate the technical landscape and inform their investment decision. This engagement provided a comprehensive assessment of the target company’s technological capabilities, product strategy, and operational effectiveness.

The Investment Target

The target company developed AI-driven solutions primarily for healthcare, with products spanning areas such as Risk Adjustment, Quality Improvement, Member Management, and Clinical Intelligence. Key aspects of their technology stack and operations that were of interest included:

• Product roadmap and delivery capabilities
• Performance of their Risk Adjustment product (accuracy and completion)
• Multi-tenant SaaS nature of their platform
• Integration of past acquisitions
• AI and Natural Language Processing (NLP) capabilities
• How AI materially improved coding accuracy and efficiency
• Predictive power of their clinical intelligence product
• Extent to which they were genuinely leveraging AI/ML in their offerings

Further areas of inquiry included the design and training of their AI models, the proprietary nature of their AI stack versus reliance on third-party technology, data maturity, and the sophistication of their internal data science and AI/ML team.

Diligence Objectives

The primary objective of the technical due diligence was to provide the private equity firm with an independent, expert assessment of the target company’s technology, intellectual property, product vision, automation capabilities, security posture, and talent. This assessment helped the client:

• Validate the robustness and scalability of the target company’s platform and its ability to support future growth
• Evaluate the effectiveness and maturity of the company’s AI/ML capabilities and their competitive differentiation
• Identify any significant technical debt, security vulnerabilities, or integration challenges
• Assess the strength of the product and engineering organization and its capacity for innovation
• Understand the company’s data strategy and its ability to leverage data for AI model training and product enhancement

This comprehensive technical review equipped the private equity firm with the critical insights needed to make an informed investment decision, understanding both the opportunities and potential risks associated with the target company’s technological foundation and future roadmap.