Bootstrapping To $19 Million: Office Ally CEO Brian O’Neill (Part 1)

Brian O’Neill founded Office Ally in 2000 after observing poor business practices in the healthcare industry. Office Ally (covered in Deal Radar early this year) is a health information network connecting patients, providers, and payers. It offers a free practice management system, a free clearinghouse, a low-cost electronic health record ($29.95/month/provider) as well as a patient portal that enables e-visits and the creation of  personal health records (PHRs) and e-prescribing. The company earns revenue by charging insurance companies for the streamlined claims process its technologies enable.

SM: Brian, let’s begin by examining the roots of your entrepreneurial journey. Where does your story begin?

BO: I grew up in Ohio and I earned a degree in computer science before moving to California when I was twenty. I worked for a bunch of defense contractors as well as some Fortune 500 companies. IBM was my last Fortune 500 employer. I started Office Ally in 2000 because I felt the healthcare business needed a lot of help in the business process and management areas.

SM: What experience did you have in healthcare that allowed you to draw those conclusions?

BO: I worked for different companies that would consult me out to companies in the healthcare so that I would see what was happening behind the scenes in those companies. When I looked at their business practices, I saw they were anywhere from twenty to thirty years behind. MRIs and all of our testing tools were great, but managing the business practices were just ancient. That is when I realized there was an opportunity to enter and fix that problem.

SM: What perspective did you have on the problem? Were you placed with clients via IBM and trying to help automate their IT systems?

BO: I had also worked for a large pharmaceutical supplier to chains like Walgreens. They provide drugs as well as Band-Aids. When you got down to the smaller stores, their technology was nonexistent. I was talking to several doctor friends, and I started asking questions about how their business worked. I asked them how they got paid.

They explained that they would mail forms into the insurance companies, which would return a check to them anywhere from twenty to ninety days later. If they did not get a check in the mail, they received a rejection notice. I could not believe that the process was being taken care of through the mail.

After that, I hired some contract programmers to write some software to start sending those claims electronically. Insurance companies benefited a lot as well. Electronic processing meant that they did not have to pay labor costs for people to key those claims into their systems. An added benefit of eliminating the manual data entry was a significant reduction of errors. Doctors benefited because they were going to get paid faster. We also put some checks into the forms the doctors filled out to tell them if they had made a mistake, which would prevent their form from being accepted.

SM: Did you sell the software that your contract coders had written to doctors offices?

BO: I actually offered the software to doctors for free. My first customer was St. Joseph’s IPA in Orange, California. They told all their doctors how they could submit their claims for free electronically via the Internet. They were essentially an insurance company and were the only customer I had for about six months. Then I picked up the second, third and fourth customers rather quickly.

SM: How much was the insurance company paying you?

BO: I received twenty-five cents a claim. For every bill a doctor sent to the insurance company, I received a quarter.

This segment is part 1 in the series : Bootstrapping To $19 Million: Office Ally CEO Brian O’Neill
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