InstaMed: A Thriving Business in Helping Health Care Providers Reduce Billing Costs
InstaMed has been able to grow its business consistently against the prevailing economic pessimism by delivering real value and sticking with a winning formula.
Here’s something you don’t hear much these days: “We’re definitely seeing an upturn in business because of the economy.” This silver-lining sentiment from Bill Marvin, CEO of InstaMed, understates the reality of the company’s growth trend.
“Before the economy started to tank,” says Marvin, “the company was at 10 to 15 percent growth a month, consistently. But now that the economy has turned, we’re seeing 15 to 20 percent growth each month, with a 300 percent gain over this time last year.”
How exactly does one grow a business so consistently against the prevailing economic pessimism? By delivering real value and sticking with a winning formula. In InstaMed’s case, that comes in the form of providing a proven, cost-effective way for health care providers to receive payment from patients and insurers faster and more efficiently.
A Plan of Profitability
As part of its strategy to invest in good company leaders whose companies have a real value proposition, Ben Franklin Technology Partners (BFTP) started working with InstaMed in 2004 when the company was still in the concept and design phase. By the end of 2006, InstaMed had received $500,000 in BFTP funding. “That money was critical to the buildout of our platform and making connections into the health care network,” says Marvin.
Fast-forward to today. The Philadelphia-based company, which employs 54 people, raised additional capital in the fourth quarter of 2008, bringing the total in follow-on funding to $15 million since BFTP’s first investment. To top it off, InstaMed was named 2009 Technology Company of the Year at the Greater Philadelphia Chamber of Commerce Excellence Awards.
“BFTP has been incredibly supportive. We keep them in on everything. As of January 2009, we closed out our entire financial obligation to them. Today they sit as an observer on our board of directors. ”
Saving Money by Improving the Process
Because billing/receiving is such a foundational element in a struggling health care industry, improving the system is an increasingly critical effort. According to Marvin, collecting from a patient costs more than twice as much as it does to collect from an insurer.
“A significant part of this cost is in the process-preparing the bills, mailing them, waiting for the money,” he says. “The cost to collect a bill is 18 cents on the dollar. When you look at hundreds of thousands of transactions, it means serious money lost through inefficiency. That’s where InstaMed comes in.”
InstaMed enables hospitals to automatically collect a patient’s portion of a medical bill as soon as the insurance company adjudicates the claim and determines the exact patient payment responsibility. This enables caregivers to reduce bad debt, increase the speed at which they receive payment and reduce the cost of paper-based billing systems.
A Fundamental Shift in Billing and Receiving
Marvin uses an example from the hospitality industry. “When you check in, the hotel takes your credit card information but doesn’t bill you until checkout, because they don’t know exactly how much you’re going to spend.” In other words, if you use room service or make a phone call or hit the mini-bar, your bill will be higher than if you just spend the night.
“The same is true of hospitals,” he says. “They don’t know exactly what care you’re going to need, or what kind of coverage you have, or how much the deductible is, and so on.” With InstaMed, a health care provider can swipe a credit card, get account authorization, submit the claim, have the claim adjudicated and move the money into the doctor’s account-all in one integrated process.
“This dramatically lowers transaction costs and accelerates the payment process for providers, which really impacts their bottom line,” says Marvin. “Our network and platform represent a huge transformation in the revenue cycle for health care providers.
Tags: finance technology, healthcare, medical technology, software, filed under News, Southeastern PA 