JACKSONVILLE, FL – Studies suggest that as much as 35 percent of medical charges submitted by doctors to insurance companies for reimbursement are denied.
“That’s the work you do for free,” says David Smith. And for small-practice physicians, he says, who are “outgunned and outmanned and out-dollared by the insurance companies, that’s too much.”
Smith, CEO of PSS World Medical, a Jacksonville, Fla.-based distributor of medical products and inventory management systems to non-hospital-based physicians and elder care providers, is banking on a new partnership to help physicians sort out the complicated world of medical billing. On July 2, PSS announced that its has made a $22.5 million equity investment, approximately 5 percent of current outstanding shares, in athenahealth, Inc., a Watertown, Mass.-based provider of, among other things, revenue cycle management solutions. In addition, PSS’ Physician Sales & Service branch will be marketing athenahealth’s Web-based practice management, billing and electronic medical record solutions to the physician market.
“It’s a very nice fit between the two companies,” says Smith. He adds that athenahealth offers “a dummy-proof way for physicians to enter what they do on a form the insurance companies can’t deny.”
Athenahealth, founded in 1997 by Todd Park and Jonathan Bush, numbers 583 employees and competes with vendors like GE Healthcare, Sage Software and Misys in the highly competitive physician practices market. Company officials filed on June 22 a request with the Securities and Exchange Commission for a proposed initial public offering of common stock, through which it hopes to raise $86.25 million to repay debt and fund working capital and general corporate purposes. The company lost $9.2 million last year and had an accumulated deficit as of March 31 of almost $68 million, according to its filing with the SEC.
The company is now in its “quiet period” and is therefore unable to discuss ongoing business.
Smith says the nation’s non-hospital-affiliated physicians have seen their incomes decrease by as much as 10 percent over the past five to six years because of the complexities in billing and reimbursement. He estimates that a PSS-athenahealth solution will reduce insurance denials from 35 percent to 5 percent or 6 percent, and thereby boost doctor income by 50 percent.
“PSS and athenahealth have joined to deliver an innovative and low-cost revenue cycle solution to alleviate the complexity of insurance companies’ reimbursements to physicians,” Smith said in the press release announcing the deal.