Blueprint For Saving 11 Billion Dollars In Healthcare Costs: MD On-Line CEO Bill Bartzak (Part 4)

SM: You said that your target office is the small doctor’s office, yet you work with insurance companies. Your technology fills the gap between the two, but which one did you target from a strategic perspective?

BB: From 1998 on, insurance companies’ Web sites became more visible and prevalent. We were on the Oxford Health Web site as a solution to convert doctors from paper to electronic. Our main function was to create efficiencies throughout the system of communicating with doctors and insurance companies about the transactions themselves.

As time went on, we learned what the needs of the doctors and the insurance companies were. We have a data-entry product that lets doctors manually enter a claim form. Being on an insurance company’s Web site and co-branding all of our marketing material with our partner insurance companies is a key factor. We signed a deal with WellPoint about 18 months ago. We are way north of 1 million claims. Their expectation was 60,000 claims. If we had met that number alone in the first year, they would have been happy. Last month we did 125,000 claims.

It saves money throughout the entire industry. The key factor to our growth was building our credibility in the industry. That is how we grew.

SM: What did you do to actually penetrate physicians’ offices? Were you knocking door-to-door very early on?

BB: We have never gone door-to-door. We don’t even do on-site installations unless an insurance company has a problem doctor. From the outset, we went to insurance companies because they are the ones paying the doctors. Insurance companies want to pay the doctors faster. From a doctor’s perspective, the way to get them paid faster  is to send them electronically, and from an insurance company’s perspective, they save $5 in processing an electronic claim versus a paper claim. That is a huge driving force for insurance companies to pick a company to work with.

Our biggest challenge was to get to the insurance companies, because insurance companies gave us an endorsement which builds our reputation. If you think of banking, if your bank recommended that you use online banking because it would make you more efficient, and you had a choice of companies to use, and [if] your bank told you which company to use, then you would probably use that company. We spent a lot of time building our credibility.

SM: You said that Oxford Health was the first insurance company you were able to partner with when their systems crashed. How many doctors’ offices did that get you exposure to?

BB: We were implemented in close to 3,000 offices.

SM: How long did it take you to penetrate those offices?

BB: About three years.

SM: Were you still bootstrapping the company during that period?

BB: I met Jerre Stead. He was the former chairman and CEO of Honeywell, Square D, and Ingram Micro. I met Jerre over breakfast once, in 1995 through a mutual friend, Clyde Thompson. Jerre told me that he believed in what I was trying to do and that this vision would change the paradigm. He also understood that it was a vision. He has been a mentor to me over the years. He has taught me the bigger side of business that I did not know about.

Jerre helped fund the company, and he sits on our board today as well. He has been a great partner over all of these years as we struggled to get the company to where we are today. As we were growing he helped put the money into it.

This segment is part 4 in the series : Blueprint For Saving 11 Billion Dollars In Healthcare Costs: MD On-Line CEO Bill Bartzak
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