Healthcare Supply Chain Management: Medassets CEO John Bardis (Part 5)

SM: Let’s talk about your actual business model. How do you get paid with your system?

JB: Once we learned that medical supply utilization was a critical element of determining reimbursement for hospitals, we embarked on a process of building the nation’s most comprehensive set of tools to manage revenue cycle for US hospitals and healthcare providers. We did that through acquisition and product builds.

Today we have two sides to our company. One is called spend management, which incorporates group purchasing and procurement technologies units as well as the clinical product utilization consulting service. We also have a $200 million-plus business in medical software and software services for the management of revenue cycles of hospitals. We can produce, through that revenue management business, best-in-class tools that assist the hospitals in streamlining the process for bill collection, patient registration, and correct compliance and coding.

SM: Is it effectively a hospital information system?

JB: It is, but it is all ASP so we use no platform software tools. Everything we do has a high ROI and is a subscription base that sticks to existing platform software systems. We have over 36 different software tools. We sell one or more of those software tools to over 2,000 hospitals today.

SM: What is your total revenue today, and how does that break down between the different businesses?

JB: The Street is projecting us to have gross revenue of $400 million and net revenue of $350 million for 2009. About $215 million of that is the revenue cycle business, and the rest is our spend management business.

SM: You must have quite a bit of competition on the software side.

JB: That is true; however, we have the most comprehensive suite of tools by far. We don’t have the barriers to access that comes into play with our competitors. Their co-op models leads to political struggles at times, as you have CEOs who are owners of another GPO. We have the most tools in the revenue cycle, and we have a sales organization that is routinely inside the C-suite of US hospitals.

We now sell enterprise solutions that include the analytical and empirical value, which includes the reduction of costs associated with our spend management business as well as the improvement of revenue produced by the revenue cycle business. We routinely offer enterprise solutions that have financial improvement guarantees associated with them using both toolsets.

SM: How many hospitals are there in the US?

JB: Approximately 5,000. We are in 3,300 of those accounts. The average account purchases 1.8 of our 36 available software tools. We have an enormous existing market opportunity.

SM: What is the game plan going forward?

JB: We have several focal points. We want to continue to innovate. Today, the largest employee group inside our company is our developer teams. We have a tremendous intellectual capacity inside the company to leverage our toolsets. Everything we build today is done with the notion of being interoperable, integrated and unified. All of our tools talk to each other through the same data sets. That is a major ongoing project that exists today in the company.

We will continue to use our equity and access to capital as a tool to build out through acquisitions according to what we feel is in the best interest of the provider, and what we know can provide financial benefit to the provider.

SM: How do you see yourself against companies like athenahealth and their insurance collection capabilities?

JB: We do that, as well as many other things around complex revenue cycles for hospitals. athena’s focus is primarily with physicians.

SM: Is your collection piece done as a service or as software enabling the service?

JB: We do both. We have the best-in-class claims management product in America and we also have MedAssets revenue services, which is a physical service.

SM: How many people work as part of that services group?

JB: There are almost 350 people in that business.

This segment is part 5 in the series : Healthcare Supply Chain Management: Medassets CEO John Bardis
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