Netsmart acquires Defran Systems

In another move that signals the continued consolidation of systems vendors specializing in behavioral health and human services, Netsmart Technologies (Overland Park, Kan.) today acquired Defran Systems (New York, NY). Financial terms were not disclosed.

The acquisition of Defran Systems is significant for Netsmart because, under the guidance of founder and CEO Fran Loshin-Turso, Defran and its Evolv family of products have carved a significant niche not only in behavioral health services—notably to small and medium sized organizations—but also among the nation's tangled web of  state and local social services, child and faimily services, intellectual and developmental disabilities (I/DD), and other human services agencies and providers in 41 states.

For Netsmart, the appeal was clear: “Defran’s strong client base in social services, child and family services, and I/DD services are an ideal addition to our collaborative client community,” said Netsmart CEO Michael Valentine, who cited Loshin-Turso’s “deep understanding of the communities we serve” in naming her a senior vice president of Netsmart.  She will lead a new business unit focusing on agencies and providers of social, child and family, and I/DD services.

“States are focusing on better ways to manage high-cost patient populations, which include those with behavioral health and intellectual and developmental disabilities,” added Kevin Scalia, Netsmart’s SVP for corporate development. He noted that while Netsmart has “a strong position” in this marketplace, which extends into child, family, and social services, “Defran has an even bigger position there at a time when this community has to be integrated into the larger healthcare ecosystem.”

Scalia noted that Defran’s Evolv-CS—an EHR that incorporates case, clinical, and financial management capabilities—will continue to be developed and supported as a “cloud based” Netsmart product , filling a price-performance gap where he said that Netsmart’s enterprise level products “don’t scale down.”  He suggested that new variants of the Evolv-CS product will aim at smaller providers and private practices where deployment costs and scale remain key concerns.   

For Defran Systems, which will give up its name, but see its Evolve-CS product and support staff continue forward with Netsmart, it is clear that financial logic played an important role. “Many small EHR vendors will not be able to make the investment required to help their clients meet the Meaningful Use States 2 and 3 requirements,” said Loshin-Turso, who added that “Netsmart’s clear vision and the ability to execute on that vision will provide our clients with the long-term sustainability they need for meaningful use and other fast-evolving initiatives and requirements at a time a great changes in the healthcare ecosystem.”