SM: If I understand your business, you have direct marketing and selling costs to the insurance companies. Is that correct?
BO: Half of our growth every year is word of mouth. We sign up 1,200 new practices a month, which represents anywhere from 3,500 to 4,000 new doctors a month. Half of those come in off of our contact page on our website.
SM: With that type of sign-up rate, what is your market penetration?
BO: In certain states we have heavy penetration. In Washington we have 63% market penetration. We have high penetration in California and Oregon. We have 330,000 providers using our services. That does not necessarily mean they are an MD. It could be ambulance providers, chiropractors, or psychologists. Even though they are not MDs, they still send bills to insurance companies.
SM: What do you think is the total available market of all the providers you service?
BO: I honestly cannot give you a number. UCLA uses us for their claims and they have 4,700 doctors, but I have no idea how many different offices there are there. I do know the market is huge.
SM: In 2001, how much revenue did you make?
BO: We started making money in June 2001, so we made about $300,000 that year. The following year it went to $1.5 million. In 2003 we did $2.5 million. This year we will come in at least at $19 million, although I have a feeling it will be significantly more than that. We are rolling out new products which expands our business model which gives us some great options. Our base business will make $19 million this year.
SM: How does the federal government’s push toward healthcare reform impact your growth?
BO: We have an electronic health record product, and we have experienced awesome growth in that area. There is a certification called Meaningful Use and the government has not identified the certifying agencies yet, so a lot of doctors are sitting on the sidelines.
SM: Doesn’t your electronic claims filing fall within the government initiatives?
BO: No. Initially they had a clause which stated if you had any HR then you had to have the ability to submit claims electronically. When they did the final ruling, they took it out.
SM: That is ridiculous!
BO: I am right there with you.
SM: How much money would the healthcare system be saving if electronic claims filing was required?
BO: A study by Milliman estimated that the healthcare system could save $86 billion a year if the existing automated claims filing technologies were used. Another study by the American Medical Association estimated that 25% of claims still comes in via paper and that electronic claims submissions could save $42,000 per healthcare provider. It costs $6.63 to process a paper claim and $2.90 to process an electronic claim. Minnesota as a state did mandate electronic claims and expects to save $60 million a year in healthcare costs.