Providence’s Tegria spins out new software company

A healthcare software company backed by Providence health system will make its debut Wednesday.

The venture, dubbed Advata, is an amalgam of several entities that have been part of Tegria, a for-profit subsidiary of Renton, Washington-based Providence. When the not-for-profit health system established Tegria in 2020, it included nine healthcare technology and services companies. A subset of those will comprise Advata, which is being launched as a separate entity.

Advata combines six companies, including artificial-intelligence developer KenSci and revenue-cycle management firm Colburn Hill Group, which Tegria acquired this year; MultiScale, a data services and application development company Providence co-founded; and Lumedic, a revenue-cycle management firm Providence acquired in 2019 that later became part of Tegria. In 2020, Tegria acquired majority interests in analytics and machine-learning company Quiviq and revenue-cycle management vendor Acclara Solutions; Quiviq and Acclara Solutions subsidiary Alphalytics also will shift to Advata.

Advata will develop and sell software products, while Tegria maintains a focus on services and revenue-cycle management.

Tegria and Advata are part of Providence’s strategy to diversify its revenue streams beyond clinical care. Health systems have faced financial challenges in recent years as COVID-19 and labor shortages suppressed clinical revenues, said Wasif Rasheed, who is Providence’s executive vice president and chief revenue and growth officer and Tegria’s board chair.

Providence’s operating loss more than doubled from $306 million in 2020 to $714 million last year. Operating revenue rose from $25.7 billion to $27.3 billion.

Providence is Tegria’s majority owner and the sole investor in Advata, Rasheed said. Providence and Advata declined to disclose how much the health system invested.

Advata, based in Bellevue, Washington, will offer software for applications such as clinical decision-support, back-office management and revenue-cycle management to healthcare providers and payers. The six individual companies will shed their names when they integrate into Advata.

Investing in software companies allows Providence to help test, validate and deploy new technologies and services that can then be brought to market, Rasheed said. Advata currently is developing software tailored to hospital operations, for example.

“What’s good for Providence is potentially good for other health systems,” Rasheed said.

Advata aims to scale software products more efficiently by having its own dedicated leader and engineering team, Rasheed said.

Separating Advata from Tegria should help to scale software products more efficiently because the new company will have its own leader and engineering team, Rasheed said.

“The people that you attract into these organizations—how you manage, how you govern, how you invest—are a little bit different,” Rasheed said. “That’s why keeping them separate [and] self-contained, we thought, would be advantageous.”

Advata customers will also be able to develop their own applications on the company’s platform, Advata CEO Julie Rezek said. Rezek joined Tegria to launch Advata last year after working as a global category director for e-commerce at Facebook.

Advata has 150 employees and 30 customers, mostly providers, including Providence, Rezek said. The company expects to generate about 75% of its revenue this year from revenue-cycle management and 25% from population health, she said.