Improving Healthcare Communication: Kryptiq CEO Luis Machuca (Part 5)

SM: What are the deal sizes for your sales? How does the money flow?

LM: We have sales that encompass [everything from] extremely large institutions to very small, two-person clinics. Therefore, we have a pricing scheme that is volume based. High-volume customers do get a bit of a price break. GE has a lot of latitude in how they price, and the reason for that is sometimes they bundle their platform with an EMR or with practice management systems, and sometimes they install it on a standalone basis.

The pricing is all over the place, and for the most part, it has been that way up to this point. In most cases we have a licensing model, although with smaller clients coming on board we are starting to see a hosted option. Today we can accommodate either model.

SM: Let’s say that GE is selling to a large clinic. What is the size of that deal?

LM: The mean for that type of a deal is $20,000 to $40,000 for the licensing. There is typically an additional maintenance portion, which is 20% of the deal size. That is what we get out of the deal. GE gets more because we get a subset of their revenue.

SM: How many partners are selling this on your behalf?

LM: Right now GE and SAGE, on a variety of their platforms. We have other agreements that are in pilot stages with other vendors that we have not announced. We have a collaboration with Microsoft, and we jointly sell with Microsoft Amalga. The rest of our sales are either direct or reference sales from partners.

SM: What did your revenue ramp look like between November 2001 and November 2009?

LM: We have almost 35,000 doctors in about 1,700 locations of care who have purchased a Kryptiq product of some kind either directly or from one of our partners. We are fully integrated to twelve different major healthcare platforms. SAGE and GE account for 180,000 to 200,000 doctors on a software product out of the 700,000 who are practicing medicine. Since we have 35,000 of those, you can do the math and see what kind of footprint is left for us to penetrate, which means that we have more platforms to get on.

The first reseller deal happened in 2006. Every year the deal got bigger and more comprehensive. We closed SAGE in 2007. Our revenue increased by 20% from 2005 to 2006, by 40% from 2006 to 2007, and by 60% from 2007 to 2008. This year we will have growth as well, and we have transitioned to a new sales model which includes a lot more hosted options and far fewer license models.

SM: You said that 180,000 to 200,000 of the doctors in the United States are on SAGE or GE. What other major systems do you need to get OEM deals with?

LM: NextGen, Allscripts, eClinical, Greenway, athenahealth, and Epic are the next wave. Those guys really account for 80% of the doctors. The other 20% are on EMRs, which are very specialty-oriented.

SM: Why have you only signed with GE and SAGE if you have been in business since 2001?

LM: There has been a lot of consolidation in the marketplace. The first launch of a product that was commercially available was in 2003. It took us two years to get GE’s attention as an OEM partner. We found that it was more profitable to concentrate on mining the platforms within GE and SAGE rather than expanding to a platform that we did not have. It was a matter of prioritization.

This segment is part 5 in the series : Improving Healthcare Communication: Kryptiq CEO Luis Machuca
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