Streamlining Healthcare: AdvancedMD CEO Eric Morgan (Part 8)

SM: Where are you now in terms of revenue, growth and profitability?

EM: For 2008 we will have in excess of $20 million. We are operationally profitable. We are self-sustaining, which means we do not expect to have additional working capital coming from investors for day-to-day operations. We will keep the door open to receive additional funding to support strategic acquisitions. We are running the business to be both profitable and cash flow positive.

SM: If I put on my strategy consulting cap on and look at your business, one of the big things I would consider doing is buying up on-premise software companies which have large client bases and converting them to your SaaS model. Is that something you have considered?

EM: I can’t comment too much on an exact approach. Would we be better off with a growth strategy which involved buying market share? We must consider that if we did that, we would ultimately be in the on-premise software business because it would take years to migrate them.

SM: Are there smaller SaaS providers that have a significant client base?

EM: Not really. To be honest, we would be more likely to make acquisitions to expand with product offerings consistent with our SaaS model. As you could imagine, our challenge will be both our value proposition, our philosophy and the DNA of the company. It is all built around SaaS. I spent my entire career in the on-premise world, so I am a little bit concerned about mixing it up too much.

The question then is, are we are better off being the leader in the SaaS space and growing organically or are we just going after practice management market share? That is a fundamental question about our strategic value proposition and model. There is nobody on my radar screen now, although I won’t say that it would never happen. I could see something happening if it gave us another SaaS product like electronic medical records.

SM: I would love to talk about electronic medical records.

EM: There are a variety of functions and components on the clinical side. When you are in the exam room and everything the doctor has is on the computer, including his notes and your medical history, these are electronic medical records. Most doctors in the country do not have that. It can be anywhere from 10% or less, but let’s assume 15% or so have that type of a system. The real growth opportunity in this marketplace is going to be there.

We see a tremendous opportunity to expand our market share as well as sell into our existing clients in that regard. We are now in the build versus buy partner discussions as we determine the best way to go after that.

SM: Are there SaaS players in electronic medical records who you think might be compatible with your solution?

EM: Yes, there are. There are hundreds who claim to have electronic medical records. Our perspective on that is that there will be a tremendous shakeout in that market for the next two or three years, which will provide a great opportunity in terms of acquiring assets and penetrating the market.

There are a ton of startups in this space. I get a call every other week from some little company that a doctor started which has a great product but which cannot get the traction to get another round of VC funding. VCs are not willing to invest in early-stage companies in this market for a variety of reasons, including market saturation. It is very hard to predict who the winners are going to be.

We are also integrated with the top web-based ERM integrators today, and we are learning a lot about that business through the integrators. We are learning a lot about that business through our integrators.

SM: Are you selling any type of ERM today?

EM: No, but when a customer wants ERM integrated with the practice management, we do those integrations. We are pre-integrated with some of the big EMRs. If they have a customer who wants to add web-based practice management and billing, they can do that seamlessly with us right now.

SM: Great story. Thank you for your time.

This segment is part 8 in the series : Streamlining Healthcare: AdvancedMD CEO Eric Morgan
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