ClaimsNet.com Inc. (CLAI.OB)
2005 Interview with:
Don Crosbie President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
Internet-based claim processing solutions for the healthcare payer industry, including distinctive, advanced ASP technology.

 

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Claimsnet.com management team has been able to turn things around by focusing on business basics, which has resulted in a 60% year-over-year growth in revenue and close to a 20% reduction on expenses



Technology
Healthcare Claims Processing:
(CLAI-OTC: BB)

ClaimsNet.com Inc.

14860 Montfort Drive, Suite 250
Dallas, TX 75254

Phone: 972-458-1701




Don Crosbie
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
April 7, 2005

BIO:
Don Crosbie
Chairman, President and CEO


Don joined Claimsnet In October 2002 from Xactimed where he was President and CEO.

Xactimed is a claims processing and clearing house company serving the hospital 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 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 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. More information on Claimsnet can be found at the Company’s web site at http://www.claimsnet.com.

CEOCFOinterviews: Mr. Crosbie, will you give us a background on the company, and what is on the horizon?
Mr. Crosbie: “Several years ago, this was a dot.com company that did an IPO, but never had an aggressive business plans for revenue or profitability. I joined the company a few years ago to try to turn it around; we have had some success. It has been a combination of drastic cost reductions and real focused effort on sales, which has resulted in a 60% year-over-year growth in revenue and a 60% reduction in expenses. We are continuing to make progress in bringing the company to profitability based on revenue growth and continued expense control.”

CEOCFOinterviews: What do you provide to your customers?
Mr. Crosbie: “We provide a bridge between the doctors offices, or the healthcare providers, and healthcare payers. We are a claims clearing house that allows electronic communication between the parties for the submission of claims and the explanation of benefits. We are removing paper from the relationship, providing for a much more accurate and complete transmission of data. This allows everyone to gain from efficiencies, both in accounts receivable and administrative cost.”

CEOCFOinterviews: Why can’t the doctor’s offices communicate directly electronically with the payers?
Mr. Crosbie: “The reason for that is primarily a matter of critical mass. There are 650,000 doctors and 3000 payers. For an individual doctor to communicate with multiple payers is very difficult. It also means that on the payer’s side, there would be hundreds of thousands of connections. Therefore, there needs to be an intermediary, which is the health are clearing-house industry. We essentially aggregate claims, edit them to make sure they are formatted in a way that the systems of the payers can receive them."

CEOCFOinterviews: Was ClaimsNet the first to do this on the internet?
Mr. Crosbie: “We were the first to do this through the Internet back in 1998.”

CEOCFOinterviews: Will you tell us about the industry in general?
Mr. Crosbie: “There are over six billion medical claims filed annually. That includes claims from hospitals, doctors’ offices, pharmacies, and labs. Fifty percent of the industry are still filing paper claims, which adds to cost and errors. There is a big effort to move towards electronic filing of all claims with a higher accuracy rate.  This is where the industry is going. This results in both timely filing, which is in many times mandated by the various states, quicker payment for the doctors and less overhead cost for the payers because of reduced manual intervention in the handling and payment of claims.”

CEOCFOinterviews: Where do the HIPPA regulations fit in all of this?
Mr. Crosbie: “The HIPPA (Health Insurance Portability and Accountability Act of 1996) regulations have mandated two primary areas, both privacy and secondarily, format. That was a big push a year or two ago, and there are still more rules coming out in standard formats, which help everyone in the communication between the various parties.”

CEOCFOinterviews: To whom do you sell your services?
Mr. Crosbie: “We sell our services primarily to the payer side of the healthcare industry, such as insurance companies, PPOs, HMOs, and TPAs. The reason they like what we do is because we deliver accurate, ready to adjudicate, claims to them in a format they can accept.”

CEOCFOinterviews: How does that work?
Mr. Crosbie: “There is good cooperation between clearing houses because not all clearing-houses have direct connections with all payers. We are connected to approximately twenty other clearing-houses, in addition to multiple connections with healthcare providers.  It operates almost like the backbone of the ATM business where you can go to any ATM machine in the world, get money out and have it deducted from your account at the other end. A network behind that allows for the paperless transmission of those transactions.  This is essentially what needs to happen in the healthcare industry.”

CEOCFOinterviews: How do you encourage people to use what you have?
Mr. Crosbie: “It is a competitive industry. We have the latest technology, which is an application service provider model that does not require any purchase of hardware or software on the part of the customer. We are very flexible and adaptable to the various environments that you find both in the doctors’ offices and with payers. We can implement very quickly with minimal up-front costs. This is what they find attractive. They also find attractive the fact that the claims that we submit to them, pass through our edit engine at the ASP level, and that means that the claims are accurate and complete in their data format when they are sent to payers.”

CEOCFOinterviews: Are you paid per transaction?
Mr. Crosbie: “We are paid based on the volume of claims submitted.”

CEOCFOinterviews: How do you increase your customer base?
Mr. Crosbie: “We increase our customer base because we have an aggressive marketing and sales campaign to payers. We continue to point out the benefits of what we are able to provide and how we can lower their costs. There are numerous features and functions built into the system that allow for customization for each individual payer regarding their specific requirements.”

CEOCFOinterviews: Most of your cost is in the process of increasing your customer base, and after that, it is profit!
Mr. Crosbie: “It is a volume based business and the more volume we get, the better off we are from a company standpoint. The more volume we deliver to the payer community in an electronic format the happier they are."

CEOCFOinterviews: What do you need to continue to grow your business?
Mr. Crosbie: “Additional revenue. We have gone through and made many adjustments over the last few years to drive the company to break-even and then to profitability. We believe we will do that this year based on increasing revenue and productivity from the existing staff. That is what we are doing as an organic growth strategy. As well, we are looking at many other opportunities in our industry where we can maximize the revenue from each customer.”

CEOCFOinterviews: Is the trend away from paper, progressing as it should?
Mr. Crosbie: “It has always been slower than what it has been forecast to be. That is just the way it is; it is the same with checks and direct debit efforts in the banking industry. I think with the additional impetus given by the current administration in Washington there is a lot of attention toward this now and that should play well into what we are doing.”

CEOCFOinterviews: Is reaching potential investors a focus for you?
Mr. Crosbie: “We do not spend much time on it primarily because of the condition of the company. We have had several rounds of private funding, which has caused us to focus on those investors, but we do think that once the story begins to evolve further along the way investors will start to take notice and we will be looking at opportunities to communicate with a larger group of investors.”

CEOCFOinterviews: A large part of our readership just happens to be investors; what thoughts would you like to leave them with and what should they know about ClaimsNet.com?
Mr. Crosbie: “What they should know is what we have done in the last couple of years and that is evident from the analysis of our results. What they should look for going forward is continued revenue growth while expenses stay reasonably on a flat line at least for the next few quarters. As we get to profitability, we will continue to invest in market growth and other opportunities to continue the top-line growth.”


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“We provide a bridge between the doctors offices, or the healthcare providers, and healthcare payers. We are a claims clearing house that allows electronic communication between the parties for the submission of claims and the explanation of benefits. We are removing paper from the relationship, providing for a much more accurate and complete transmission of data. This allows everyone to gain from efficiencies, both in accounts receivable and administrative cost.” - Don Crosbie

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