1Mby1M Incubation Radar 2014: H2S, Chicago, IL

H2S Inc. is a start-up software technology company that offers PatientDox, a document exchange SaaS platform for the health care sector. It allows health agencies and their referring physicians to send, receive, track, and e-sign time sensitive patient documents so that providers can be reimbursed for services on time. Incorporated in January 2013, the company is in pre-revenue stage looking at closing five pilot projects over the next month in Illinois and California.

H2S was founded by three health care professionals, Luis Montes, Michael Stamatinos, and Sam Perlmutter. A physical therapy doctor and a management graduate, Luis Montes had worked for over 12 years in rehab operations and mobile device sales and manages the operations and investor relations at H2S. Michael Stamatinos had worked for over 6 years in orthotic and prosthetic services sales and manages marketing and sales operations at H2S. Sam Perlmutter, a mechanical engineering graduate and a PhD in Neuroscience, had for over five years led product development projects at research and medical institutes, and at H2S, he led the initial product development and design.

Their medical careers and over 1,000 hours of conversations with more than 200 home health agencies made them sensitive to an acute pain point in the home health care industry. They found that a large number of health insurance claims are denied just because of the inability to obtain the signatures of physicians on Medicare forms. This results in cash flow issues for the health agency.

PatientDox has been designed to empower physicians and home health agencies to exchange documents safely and accountably without delay so that they can focus better on patient care. Its main value proposition is that it will improve the velocity of billing, account receivables, and cash flow. It will not only reduce claim denials and the time spent in reviewing and signing forms but will also streamline the tracking of forms.

The initial focus for PatientDox is the home health care market. The founders’ personal industry connections and 60-day free pilot offers have helped in gaining traction.

Companies like Informedika, Box/DocuSign, UpDox solve a similar problem but in different verticals in the healthcare market. PatientDox’s direct competitors in the home health market segment include SutreSign and DoctorAlliance who according to their research have secured less than 5% of the market.

PatientDox is available on a subscription fee of $150 per month per home health agency plus $0.25 per physician signature. According to Luis, the total available market (TAM) for the home health care market segment is estimated to be $160 million. There are over 500 million documents that need to be signed every year by physicians for home health agencies and over 16,000 home health and hospice agencies in the market. In the future, H2S will be targeting other sub-acute care providers such as skilled nursing facilities, rehab hospitals and providers, orthotic and prosthetic clinics, hospitals, and medical equipment companies. The total market size including future target healthcare segments is estimated to be over $1 billion.

Luis says the integration of PatientDox with other major electronic health record (EHR) companies will give them the leverage they need to scale their business. PatientDox is currently ‘software agnostic’ and can be used with any EHR as long as customers can create a PDF from their system. However, ease of use for the customer will be better with full software integration. In the home health care market, there are five EHR vendors that own about 80% of the Home Health EHR software market. Once their product has been independently validated, H2S plans to develop strategic partnerships with these EHR companies and use them as distribution channels.

The company has been 100% bootstrapped. They have invested $27,000 in software development and injected a total of $40,000 in the company. They plan to start private consulting services in the area of sales, marketing and business development for the sub-acute rehab market space in order to continue financing the development and growth of PatientDox.

Currently, they are trying to raise funds through friends and family. They are also in conversation with some mature angel investors with previous track record in early stage start-ups. However, Luis says their main goal is to bootstrap and get to a solid level of validation above $500,000 before receiving any major investor financing.

For now, they do not have an exit strategy and are completely focused on listening to their customers and creating value through products like PatientDox.

This segment is a part in the series : 1Mby1M Incubation Radar 2014