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FAIR ISAAC ACQUIRES DIVERSIFIED HEALTHCARE TO BEEF UP MEDICAL BILL REVIEW CAPABILITIES

As part of a move to enhance its medical bill review solutions and customer service benefits for workers' compensation payers, Fair Isaac Corp. has acquired Diversified HealthCare Services. Diversified -- a provider of medical bill review products and services for the workers' compensation insurance industry, will be integrated into Fair Isaac's Healthcare and Insurance market unit.

As part of a move to enhance its medical bill review solutions and customer service benefits for workers' compensation payers, Fair Isaac Corp. (San Rafael, Calif.) has acquired Diversified HealthCare Services, Inc. (San Ramon, Calif.). Diversified -- a provider of medical bill review products and services for the workers' compensation insurance industry, will be integrated into Fair Isaac's Healthcare and Insurance market unit, which also currently markets medical bill review solutions.

According to Sean Downs, vice president, healthcare and insurance solutions, Fair Isaac, the company was actively seeking to acquire a medical bill review product provider. "Medical bill review is an important product line for Fair Isaac," Downs explains. "The largest segment of our revenue comes from workers' compensation and auto medical bill processing."

Although both companies market the same types of products, Diversified "is especially proficient in the public entity and third-party administrator space," says Downs, who acknowledges that Fair Isaac wasn't as strong in that area. Fair Isaac was also attracted to Diversified's strengths in the service area. Diversified, Downs notes, "has the systems and people to execute service at a higher level than Fair Isaac."

Moving forward, Fair Isaac hopes to integrate its software applications with Diversified's to achieve a best-of-breed approach within the next 18 to 24 months. "There are some components of Diversified's products that are unique," Downs says. For instance, Diversified's Claims Examiner Portal allows adjustors to see claims handling and bill review activity. Fair Isaac "hopes to contribute its strengths to the product integrations, as well. Those include Fair Isaac's rules engine and decision management technology," says Downs.

Although the terms of the acquisition have not been disclosed, the deal will represent approximately $20 million of revenue for Fair Isaac's fiscal year 2004.

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