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In my interview with Risepoint CEO Fernando Bleichmar about today’s news, he noted that he had already read Monday's post about 2U, and he didn't push back on my arguments. The old Online Program Management (OPM) model is stale, he said, built for enrollment, marketing, and the bottom of the funnel, for a market that was wide open and isn't anymore. He has never much liked the OPM label because it describes what the category did a decade ago rather than what it has to do now.

For context, Risepoint is now the dominant OPM provider. 2U is diminished, Coursera has explicitly de-emphasized degrees, and most of the consolidation of the past few years has run through Risepoint itself: Academic Partnerships, Learning House, Wiley University Services, and as of this morning, Keypath Education's North American business. And this is the company making new bets.

From today’s press release:

A Risepoint spokesperson confirmed that the Keypath operations will come under the Risepoint brand, likely by the end of this year.

Bleichmar argues for the deal with a coherent logic. Risepoint's regional university partners require support that extends past the initial enrollment funnel. This need is most significant in healthcare. Risepoint has achieved scale in healthcare (particularly nursing), but clinical placement has been a recognized weakness. The North American unit of Keypath addresses this gap. Bleichmar noted that the company learned more about the connection between clinical placement and student retention during the acquisition process.

Risepoint has a specific theory about the market and is taking action based on it. We will have to watch how the company integration and revised messaging and services play in the market, but the choices made already distinguish the company from the subject of Monday's report, with the investment in revised offerings. The following sections describe the primary factors behind the acquisition and the elements to monitor.

The original OPM bargain was straightforward. A university wanted to develop an online program and no ability to recruit at national scale; a vendor had capital, marketing infrastructure, and a willingness to take the enrollment risk in exchange for a share of tuition. The core of the business was marketing, recruitment, and enrollment support. That focus made sense in a market with relatively few online programs, and throughout the 2010s the OPM assumptions worked well enough that nobody had to think too hard about it. Plenty of demand and not much supply.

The current landscape of online programs is completely different than that of the early to mid 2010s. Nearly every institution now has online programs—there is an abundance of supply and a fight for demand. Cost of acquisition has been rising for years as more institutions bid on the same keywords, and a vendor whose core competency is buying attention at scale is selling something that gets more expensive and less differentiating every year. Add to this the price pressure for lower tuition and a more direct tie to job placement. This is a market with revised needs, and needs that go beyond marketing funnels.

Bleichmar described that Risepoint has been increasing its offerings based on new institution needs, although these changes are not well understood by the market. The company has increased services aimed at market positioning and public relations, evaluation of which programs a university should be offering, connections to employers, and technology that compensates for institutions with constraints on hiring and internal investment. At the same time, institutions (particularly regional universities that are the core of Risepoint’s client base) still need capital investment and revenue-sharing options.

Based on the interview, Risepoint’s stated competitor is not another vendor, but rather in-house operations. The institutions that come to realize how much has changed in the market and with fast-moving technology markets provide the core business opportunity for Risepoint.

And one of the biggest changes today, of course, is the rise of generative AI. Bleichmar's argument is that a central need right now is getting institutions past a search-first, SEO-shaped understanding of how students find programs, and separately, working out where AI belongs in operations. This includes unglamorous applications like fraud scoring, which has become a real problem in online enrollment.

I'd go further than he did, because this is a pattern I keep running into. Too many institutions and even EdTech vendors believe they have or are developing an AI strategy while still operating on 2024 assumptions about AI. A focus on chatbots without understanding agents and harnesses and student behavior.

The risk, therefore, is that institutions and OPMs apply AI inside the old frame, as more speed and efficiency in the same processes, rather than rethinking what new processes are needed.

While the healthcare markets that both Risepoint and Keypath serve are some of the most AI-resistant in terms of the labor market, the point is that modern service providers need to help institutions navigate this changing world, both rethinking marketing and enrollment while also providing greater support in serving existing students.

While the acquisition of 20-plus university partnerships and increased scale in healthcare programs are important, the company messaging emphasizes that the placement network is the real reason for the acquisition.

Finding clinical placements is a major constraint on growing healthcare programs. It is a logistical and regulatory challenge. Marketing does not solve it. Preceptor shortages, site relationships, and state requirements are the responsibility of the university. It is not easy to build relationships with nearly 15,000 sites and more than 28,000 preceptors. This is an acquisition of a capability, and it differs from the moves this market made during the 2010s.

What is not clear to me, however, is what the acquisition of relationships specifically means. Keypath has used InPlace as a key part of their solution stack. InPlace “simplifies the student placement process for universities, hospitals, clinical sites, and employers,” meaning that this vendor is a key part of those relationships (and technical integrations and management) described in the press release. How unique is the Keypath usage of InPlace software and clinical relationships in this regards?

The deal also concentrates a vertical. The OPM-supported nursing market in the US has already been concentrated. Risepoint held a large portion under the previous Academic Partnerships and Wiley logos. Keypath held another significant portion, albeit smaller than the other two. Risepoint combines these three legacy partnerships and puts a large share of OPM-supported nursing inside one company. Bleichmar says the expansion into speech pathology and counseling also broadens its healthcare portfolio. It also adds clinical social work and pharmacy. This creates depth in one sector where risks are correlated. Accreditation friction, state approvals, faculty shortages, and for-profit competition affect every healthcare partner simultaneously. Increased scale and program risk.

Bleichmar said that there was not a unique reason for the acquisition to take place now. Risepoint’s healthcare portfolio and need for better placement services already existed, and the demand for healthcare program support continues to grow.

While I agree with this description, I suspect there is another reason based on an acquisition target of opportunity with Keypath.

Sterling Partners took Keypath private less than two years ago for roughly US$172 million. The sale this morning involves only the North American business—the Australian operation remains within the Keypath ownership and brand. Sellers in a strong position usually avoid breaking up an asset, and I believe Risepoint purchased this at a good price from a company that had a strong need to sell. Risepoint made a bet, but not a massive bet.

From my view, Keypath has been stable but lacks innovation. Its placement capability was its strongest feature. The biggest opportunity appeared to me to be a sale to a strategic buyer with the capital to invest, and Risepoint fits that description. The ownership and valuation of Keypath likely helps explain the why now question based on my understanding.

2U and Risepoint describe the same market with similar language. They both say the old model is stale. They agree that universities are buying differently and the funnel-first playbook has stopped working. Their responses are different, however.

One of these companies has a thesis about what today’s market needs and one apparently does not. Having a thesis is a precondition for being right, but it is a separate thing from being right. In this OPM / online services market, however, it is a more interesting place to start.

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