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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 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 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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