Qualifacts raises money to bring its digital health records to more health care providers

You probably have heard about hospitals adopting electronic health records for patients. But what about mental health institutions or substance-abust facilities? Qualifacts, a provider of cloud-based electronic health record software, is expanding in this direction, thanks to recapitalization it announced today.

Qualifacts provides an online service called CareLogic Enterprise, which enables behavioral health institutions to manage operation, clinical, and financial workflows such as patient intake, authorization, and billing.

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Behavioral health is a huge market, with more than 18,000 facilities across the country, said David Klements, Qualifacts’ chief executive, in an interview with VentureBeat. However, behavioral health institutions’ workflow is different from that of hospitals, and the market is not historically well served by electronic health record vendors.

Under the the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Affordable Care Act (aka Obamacare), both office based doctors and hospitals are adopting EHR. Behavioral health providers adopt EHR for the large incentive programs tied to it. And that’s partly why EHR startups like Qpid, CareCloud, Practice Fusion have taken off.

There are two reasons for a mental health institution to use a cloud-based product for EHR: money and time.

“Specialty behavioral health care providers don’t have a lot of money to spend on electronic health records and they don’t have a lot of experience implementing enterprise wide systems. So software as a service is the perfect solution for a customer base like that,” Klements said. “You can implement it quickly. It’s more configuration driven as opposed to customized. It’s inexpensive relative to buying servers and licenses.”

Qualifacts now serves more than 260 behavioral health organizations around the country, the company claims. It charges organizations every month based on the number of users.

Direct competitors include Netsmart and Credible.

The new funding is on the range of $25 million to $150 million, which was led by Great Hill Partners and existing Qualifacts management. Great Hill bought the majority of the business. Management co-invested alongside Great Hill.

Qualifacts will use the new funding for product development and for sales and marketing.

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The company was founded in 2000 and is based in Nashville, Tenn. It launched CareLogic Enterprise in 2009. Qualifacts has 140 employees.