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With The Healthcare Industry In Constant
Growth And Providers Wanting To Be Paid Faster And Reduce Administrative
Costs, Claimsnet.com Is Positioned To Help With Their Internet-Based Claim
Processing Solutions
Healthcare Technology
Internet Software & Services
(CLAI-OTC: BB)
Claimsnet.com Inc.
14860 Montfort Drive, Suite 250
Dallas, TX 75254
Phone: 972-458-1701
Donald B. Crosbie
Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – May 9, 2008
BIO:
Donald B. Crosbie
Chairman and CEO
Don joined Claimsnet In October 2002 from Xactimed where he was President
and CEO.
Xactimed is a claims processing
and clearinghouse company serving the healthcare market. In the year he was
at Xactimed the company experienced a dramatic turnaround, with revenue
growing 150% year over year and significant losses turned to an operating
profit.
Prior to that he was with Blue Wave Systems,
where he was CFO and President of North American Operations. Blue Wave
Systems was a high-density DSP board supplier to the telecom infrastructure
market, including media gateways and 2 ½ and 3 G wireless. Don joined the
company in September 2000 with a corporate strategic direction to identify
and complete a sale of the company. This was accomplished in July 2001 with
the sale of the company to Motorola for $125 million.
Prior to Blue Wave Systems Don
was President, COO and CFO of an internet start up company in the free
ISP/media rich advertising space; CEO of Rheumatology Research
International, a Site Management Organization performing clinical trials for
pharmaceutical and biotech companies, in pre FDA approval trials for new
arthritis drugs; Founder, Chairman and CEO of ComVest Partners Inc., an
institutional research boutique with an emphasis on networking, wireless,
voice and remote access; and Executive Vice President and Chief Financial
Officer of InterVoice Inc, a high technology provider of customized voice
response systems.
Company Profile:
Claimsnet.com inc. is a leading
provider of Internet-based claim processing solutions for the healthcare
payer industry, including distinctive, advanced ASP technology.
Headquartered in Dallas, Claimsnet offers systems that are distinguished by
ease of use, customer care, security and measurable cost advantages.
CEOCFO: Mr. Crosbie, what is the current
vision for Claimsnet?
Mr. Crosbie: “The current vision is to
grow the company both organically and by acquisition. By organically we
obviously mean that we want to continue to add customers as we have done in
the past number of years. In addition, we also want to make a number of
acquisitions, one of which we have done and just completed in the middle of
February.”
CEOCFO: Is
there a trend toward consolidation in the industry?
Mr. Crosbie: “There does seem to be. We
know a number companies, even some smaller than us that have been purchased
by larger companies. Therefore, there does seem to be some consolidation,
some of it driven by technology requirements and government regulations and
that have to be maintained to continue to serve the industry.”
CEOCFO:
Claimsnet was the first company to introduce real time health transactions
processing over the internet; what do you offer today and what might you
want to offer in the future?
Mr. Crosbie: “What we offer today is a
number of things, number-one we offer electronic data interchange of claims
from providers to payers and within that framework we also do a lot of what
we call in this business ‘editing’ or ‘scrubbing’. This means that we are
looking for data completeness of the claim and either imposing data into it
if it can be done or sending the claim back to the provider so he gets to
correct the claim before it is delayed at the payer side. What we are doing
for the provider is making sure the claims get to the payer quickly, and for
the payer we are providing them claims that can be auto-adjudicated without
manual intervention. On the other side we are transmitting back to the
providers from the payers what is called electronic remittance advices
(ERA’s), telling them what they are being paid for and how much they are
being paid. We are also doing things such as eligibility verification, paper
claim handling, and re-pricing of claims according to contract terms.”
CEOCFO: Is
there much still being done by paper these days?
Mr. Crosbie: “About 40 to 45% of claims
are still paper. It is quite a large number and like anything else we always
thought the paper would go away but it does not although the percentage that
is being handled in paper is less.
CEOCFO: Are
your clients both providers and payers?
Mr. Crosbie: “Our clients are both
providers and payers. For us the greater percentage of revenue comes from
the payers.”
CEOCFO: How
do you get your clients and why are they choosing Claimsnet?
Mr. Crosbie: “We have a direct sales
force. We did not have one for the past several years, however we just added
two sales people three weeks ago so we have a direct sales force that is
approaching both the payer community and the provider community. We have a
number of relationships with adjudication software vendor companies who
recommend us to their clients for clearinghouse services and several
independent sales relationships.”
CEOCFO: Are
many of the payers doing it in-house and are they looking to outsource?
Mr. Crosbie: “A lot of it is done in an
outsourced basis. If you think of the industry itself, you have
approximately 800,000 providers and 4,000 payers. No one company has all the
connections. This creates the demand for the clearinghouse industry and
within that industry clearinghouses exchange claims with each other
depending on who has the connection or the most direct route to the payer.”
CEOCFO: How
do you guarantee security?
Mr. Crosbie: “We operate under HIPAA,
which deals with private health information, so we have all the requirements
of the HIPAA rules that have to function within the framework of our
company. Secondly, increasingly anyone in our business has to be accredited
by EHNAC, which is located in Maryland and is an organization to ensure that
all electronic claims are handled in an appropriate and secure manner. We
also have business agreements with all our customers and vendors relative to
private healthcare information and of course in the transmission of the
claims electronically it is all done within the framework of encryption and
security software.”
CEOCFO: How
big of a percentage of claims are submitted incorrectly?
Mr. Crosbie: “Up to 30%." By this we
means without complete data; they might be missing a diagnostic code, payer
ID number, a provider ID or tax ID number, any number of things that are
important for the completeness of the information required on the claim. We
typically see in the industry about 70% of the claims can be auto
adjudicated, but with our customers we have up to about 98% which is a
significant benefit when you consider that those claims that cannot be auto
adjudicated need to be handled manually and the average cost in the industry
is $20.00 to $25.00 dollars to have someone deal with the claim manually.”
CEOCFO: How
does a provider start using your system?
Mr. Crosbie: “He enrolls on our website
and then sends us a test file and if that goes through without difficulty we
are on our way in about fifteen to thirty minutes. He does not buy anything
from us, he does not have to download any software, all he needs is his
practice management system, a browser and an internet connection. For the
provider, once set up, it is as simple to send it to us electronically as it
is to print claims to paper.”
CEOCFO:
What is your revenue based on?
Mr. Crosbie: “Our revenue is based on
claims processed. We have a per claim charge or per transaction charge which
can vary depending on the type of transaction.”
CEOCFO:
There was a focus on revenue growth in 2007; how has that worked for you?
Mr. Crosbie: “2007 as you might have
seen from our results was a relatively flat year by comparison with the
previous year. However, we expect 2008 to be a lot better in the revenue
growth comparisons.”
CEOCFO:
What is the financial picture like for Claimsnet today?
Mr. Crosbie: “We are still in a net loss
situation although that is substantially reduced from what it used to be. We
are very close to profitability and with a leverageable system that can
handle increasing numbers of transactions without a commensurate increase in
cost as volume goes up it will allow break even and eventual profitability.”
CEOCFO: Why
should potential investors be looking at Claimsnet, and what might people
misunderstand that really needs to be focused upon?
Mr. Crosbie: “One of the things that we
have had to deal with is we are a start-up company but with a history; this
company was started in 1996 and became a dot.com IPO in 2001 with all the
commensurate things that went along with the dot.com boom. It had a history
of losses and not a very sound business plan although it had very good
technology. In the last four or five years we attempted to focus on the sale
of that system developed by that technology and have to grown from there.
Therefore, we are in a new business plan and new environment and a new
growth story.”
CEOCFO:
What should people reading this interview, remember most about Claimsnet?
Mr. Crosbie:
“There is still a lot of growth taking place in the healthcare industry. The
claims are growing in their numbers and complexity. People want to be paid
faster and more efficiently and they are trying to reduce the administrative
costs associated with the processing of claims. We are helping them do that
and we think there is a good opportunity going forward of continued growth
both organically and by acquisition.”
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