R1 acquires Phare Health to transform CDI and coding

In a groundbreaking move set to redefine mid-cycle healthcare revenue management, R1 is acquiring Phare Health, a leading AI-native healthcare technology company. This strategic acquisition is poised to enhance R1’s capabilities in automating inpatient coding and pre-bill clinical documentation improvement (CDI), delivering the industry’s first fully integrated mid-cycle automation designed to capture revenue more accurately and strengthen financial performance.

A leap forward in AI-driven CDI and coding

Phare Health, founded by a team of healthcare and AI experts from Google DeepMind and other prominent institutions, brings a transformative approach to tackling complex inpatient coding cases. Unlike traditional systems, Phare’s AI engine reads both structured and unstructured data from the EHR to create a comprehensive fingerprint of the patient journey. This holistic approach enables context-aware coding decisions, backed by a full evidence trail, ensuring accuracy and compliance.

“As a doctor, I’ve seen how the payment rails underneath healthcare are so complex and full of friction,” said Martin Seneviratne, co-chief executive officer at Phare Health. “But as an AI researcher, I’ve seen how the latest generation of AI tools can make those rails more efficient, transparent and fair. At its core, this is a problem with translating between clinical and billing languages, and that’s how we approach it. We built a fit-for-purpose AI system that can reason over the full medical record and translate encounters into billing codes.”

By integrating Phare Health’s innovative CDI and coding technology with R1’s market-leading DRG validation solution, R1 is set to deliver the most compelling AI-native clinical intelligence solution in the market. This integration will not only enhance coding accuracy but also streamline mid-cycle workflows, improve documentation quality and enhance coding precision.

“R1’s DRG validation is widely considered the most robust coding accuracy safety net in the industry,” said Lee Kupferman, co-chief executive officer at Phare Health. “We will build on that foundation by leveraging AI to drive accuracy earlier in the billing process. Together, we aim to deliver end-to-end automation that simplifies workflows, reduces denials and reimburses providers with far greater speed and accuracy.”

Key benefits to healthcare providers

• Enhanced coding accuracy and coverage: The combination of R1 and Phare Health technologies will extend coding accuracy by offering greater clinical coverage. Healthcare providers can expect the most comprehensive accuracy across both inpatient and outpatient claims, reducing errors and improving financial outcomes.
• Integrated CDI solution: The acquisition combines an AI-native CDI solution with powerful coding accuracy functionality to deliver a more complete and accurate documentation process that improves reimbursement outcomes for clients.
• Comprehensive documentation and compliance: Together, R1 and Phare Health will translate full medical records into accurate, compliant coding, solving a longstanding challenge in the industry. This comprehensive solution is set to revolutionize how healthcare providers manage documentation, coding and compliance.
• Maximizing pre-bill intelligence for the mid-cycle: R1’s market-leading intelligence and deep coding expertise, combined with Phare’s AI-native technology, enable accuracy to move further upstream into the pre-bill stage to validate claim integrity and boost approval rates.
• Autonomous coding and revenue capture: Phare Health has developed advanced autonomous coding capabilities, allowing R1 to offer clients faster, more accurate coding with less manual intervention. Case studies show that Phare Health’s technology can find significantly more revenue per discharge when adding CDI to R1’s coding accuracy solutions. This will empower healthcare providers with a transformative, market-leading solution for optimizing revenue capture.

A vision for the future of revenue operations

R1’s acquisition of Phare Health is not just about enhancing current capabilities – it’s about setting a new standard for the future of healthcare revenue cycle management. By leveraging cutting-edge AI, R1 aims to comprehensively streamline the revenue cycle and move closer to real-time adjudication of medical claims.

“R1 is a pioneer of technology-enabled end-to-end revenue cycle solutions and innovation,” said Joe Flanagan, chief executive officer at R1. “This acquisition combines Phare Health’s AI-driven clinical documentation improvement (CDI) and autonomous complex coding technologies with our DRG audit and coding operations. We’re going to build a comprehensive pre-bill coding audit solution with the industry’s most comprehensive rule set and broadest client base. Together we will deliver the first full automation of mid-cycle workflows and processes.”

R1 will integrate Phare Health into the R37 innovation lab to accelerate the development of next-generation AI applications for the revenue cycle. This partnership marks a pivotal step in unifying and automating the full spectrum of revenue cycle management workflows.

A new era of efficiency and accuracy

For healthcare providers, the benefits of R1 acquiring Phare Health are clear. Enhanced coding accuracy, integrated CDI solutions, and comprehensive documentation and compliance capabilities are just the beginning. This strategic move further positions R1 as a leader in AI-driven healthcare revenue solutions, offering providers the tools they need to unlock clinical and financial value.

As healthcare revenue operations continue to change and evolve, R1’s commitment to innovation and excellence ensures that providers can navigate the complexities of revenue management with confidence. The future of AI-powered healthcare revenue operations is here, and with R1 and Phare Health leading the way, it’s a future defined by much greater efficiency, accuracy and transformative technology.