Streamlining Healthcare: AdvancedMD CEO Eric Morgan (Part 5)

SM: Let me change the course of the conversation a bit. I would like to understand the genesis of this company. How did it start and what did it take to get to this point?

EM: It was started in 2002. There was some nucleus of intellectual property that was purchased from a previous company. In taking that product and technology, a decision was made to move it to a SaaS model.

SM: Who started the company? Who is the entrepreneur behind it all?

EM: There were actually some VCs who purchased the assets from a previous entrepreneur who had this idea during the Internet bubble days. There really is not an easily identifiable entrepreneur. The VCs came in and took some of the management team, brought in an interim CEO, and then hired a new CEO who ran the company for five years. The chief architect for the web-based software is still here. His right-hand engineer is here as well.

SM: So the company was recapitalized and purchased by these VCs who focused on getting the product right. Is that an accurate assessment?

EM: That is an accurate assessment.

SM: In my notes, I have written that until a few years ago AdvancedMD was getting just 40 leads a month. It seems as though the service has taken off in the past few years.

EM: Over the past four years we have grown at a very good clip, averaging 50% growth. The company grew once it got the product right and once the web marketing piece was figured out. When you have 3,000–4,000 addressable offices and are doing cold calls one at a time, it is like trying to drink the ocean.

SM: When you look at the 700,000 physicians in the US, what percentage do you think is using some technology-based solution to deal with billing and insurance?

EM: A very large percentage. You do not see too many doctors today who do not have some technology to handle scheduling, billing and practice management. It is going to be very high, well over 90%.

Just like the evolution of CRM that we saw a few years back, the lion’s share of that is premise-based. That creates fundamental issues when the billing and collections process is such a moving target.

SM: So what you are saying is that the customer base moving towards your technology is moving from a premise-based software solution to a SaaS solution?

EM: In most cases, when somebody comes to us they have already had a solution of some kind and it is premise-based. They have fundamental frustration with that capability.

SM: I can’t imagine they would have the IT support available to manage a premise-based solution.

EM: Correct. They will have a bad experience with a system crash, data loss, or a system upgrade and that will be a big catalyst for them to open up and reconsider. It is interesting that there has been an evolution in the lifecycles of medical billing. There have been several generations.

In the early days much of it was outsourced. The notion of having client server-based solutions hosted on premise has been around for a while. Many of them are fairly old already, and it is time for them to move on. We bring in a much greater collection rate on our billing process. We have a less than 4% rejection rate on first-time submissions versus an industry average of 25%.

This segment is part 5 in the series : Streamlining Healthcare: AdvancedMD CEO Eric Morgan
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