Outsourcing: Jason Beans, Founder and CEO of Rising Medical Solutions (Part 4)

Sramana Mitra: I guess, what I’m trying to understand is – one of the case studies I know inside out is the Athenahealth story. Their business model is actually very simple. They work on behalf of the physicians, and they have all these rules engines for coding and everything, and they do collections on behalf of physicians. They service the physician constituency, and they take a percentage of payments.

Jason Beans: Right. We’re on the exact opposite side [from them], more often than not.

SM: Yes, it sounds like it. They are trying to represent the physicians. You’re trying to represent the insurance companies.

JB: More often than not, yes. Yes, that’s true.

SM: So, you see Athenahealth in lots of transactions, right?

JB: Yes, we’ve seen them.

SM: How does that interface? Whom are you paying? What are you paying them? If Athenahealth represents the physician in the middle of all of this, are you then working with Athenahealth, or are you still working with the physician?

JB: We usually try to go directly to the physician, if possible. If [the physician] has [Athenahealth] as a representative, we can work with them. But usually, we try to keep [in] direct [contact] with the payer instead of these billing agencies. Sometimes we’ve already paid them, and they’re trying to fight for additional collection to get their percentage. Usually, it’s something that we’ve already contracted for at a certain rate with the doctor, so it will go back to him. I wish it were a simple answer, but it varies all the time.

SM: To service these clients, what is the structure of your operation? How many people, human call center agents, do you need to do this business at this point?

JB: I mentioned the 50 technology people. We’re about 200 people strong, so I’d probably say 20 in sales and general administration, overhead, and finance; maybe 25 to 50 in technology, and then 125 doing the call center service, the labor part of our service.

SM: I see. And your revenue level is $20 million right now?

JB: We’re running at about $26 million.

SM: That’s pretty cool. With a couple hundred people, including 125 call center agents, you’re doing $26 million. That’s good revenue per agent, right?

JB: It’s pretty good. It’s one of our focuses. We still have so much money going into building the technology that our revenue per employee … we’re nowhere near Google. As we automate more and more, our revenue per person will increase over time. It’s one thing we watch pretty closely.

SM: How did you finance this company? Did it require a lot upfront investment in technology before you started making money.

JB: Yes. It took a while. I started it on my own. It’s a typical story – credit cards, sold my house, liquidated everything I owned. So, it took a lot longer than I thought it would, but just because it’s so intensive as far as servers and software and developers that the infrastructure costs took a while to catch up with the profitability, or the operating profit.

SM: You started it in 1999?

JB: I did.

SM: How long did you finance it yourself?

JB: I went about two years without paying myself. We’ve shown a profit most every year, but some may have been almost break even. I think there was one year we did not, but the third year, I paid myself $25,000 a year. It took me seven years to make as much as I had before I started the company. It took a little while to catch up.

SM: And you didn’t raise any outside money?

JB: No. We did get an SBA loan, a small-business loan – Low Doc – $150,000 at one point, to buy equipment. But that was it.

SM: That’s great, Jason. Yes, it takes time, but you have control over the company. You own most of the company, right?

JB: Yes. I will not go below 51% until I’m ready to leave.

SM: That’s great. Tell me a bit more about where you go from here. What growth rate are you seeing now that you have your bearings? You know what you’re doing. You are profitable. You have reached a certain critical mass. What kind of growth rate are you seeing? How fast do you think it’s going to grow? What is the market size you are looking at for this kind of business?

JB: A lot of our businesses have been in a few niches of the insurance industry. We have probably 2% to 3% or the workers’ compensation market. It’s available. There’s still growth there. We have a small percentage of the auto market, and we have a very, very, very small percentage of the group health market. That’s where we see a large opportunity for growth, if we can take our products there. I expect, given our current client set and current products, that we could probably to get to about $100 million. Then it would be difficult to grow, or it would be for low margins.

On the group health side, if we can morph our products, it’s 17% of the gross domestic product. It’s unlimited. I won’t see any lack of opportunity in my lifetime. Our focus right now is to try to use our current client base to develop products more aggressively and offer things either consumer driven or otherwise into the group health market.

As for growth rate, I call it “hunting whales,” meaning that we close a very large account and then we’ll have to digest it. We grow in stair steps; it’s not growth in a straight line. It’s more like step up; we’re scrambling; we’re hiring people; we’re building out technology for a client. Then we’re waiting for the next thing. As we get larger and get a better sales force, that’s [going to be] more predictable. I’m trying to sustain 20% growth annually. I’m happy if we hit 20% growth annually. I’m not happy if we don’t, under the current model. I’m hoping to get the products built out someday so that we can do one of those trajectories that you’ve seen with one of the all-time great companies. We’ll see if we get there.

This segment is part 4 in the series : Outsourcing: Jason Beans, Founder and CEO of Rising Medical Solutions
1 2 3 4 5 6 7