Hospitals are looking for a way to collect everything they’re owed, and a newly formed company in Irvine hopes to grow by helping them.
Healthcare software maker CentraMed Inc. was created late last month when Irvine-based Analytix On Demand Inc. bought Integrated Revenue Management Inc., a Carlsbad healthcare consulting firm that works in what’s called “revenue cycle management,” or helping hospitals and other healthcare institutions get paid.
Terms of the deal weren’t disclosed.
CentraMed bills its software as a way for hospitals to add 2% to 3% to their bottom lines. It’s cloud-based, and allows hospitals, doctors and insurers to view clinical and financial data in order to help them identify and collect bills, according to Chief Executive Vik Torpunuri.
Torpunuri said Integrated Revenue Management has assisted more than 100 client hospitals in recovering more than $1 billion in revenue.
CentraMed was formed in a bid for a growth push in a key segment of the healthcare technology market.
Growing Market
Sales of software for revenue cycle management, consulting and other several other functions, are expected to grow from $37 billion to $59 billion by 2014, according to Jack Duffy, founder and executive vice president of Integrated, and now CentraMed’s vice president of strategy.
The idea for CentraMed grew out of an existing business relationship, said Roger Lindsay, CentraMed’s executive vice president of sales and marketing.
Integrated had previously provided “subject-matter, expert-based consultancy” to help hospitals get paid, Lindsay said. Analytix had worked with Integrated on a partnership basis for several years.
“After working together, two, two-and-a-half years, it became very apparent that it made sense to marry the companies,” Lindsay said.
Increasing revenue collections, and healthcare reform-mandated “meaningful use” of electronic health records, “are strong indicators that the industry is at a crossroads of a radical transformation,” Torpunuri said.
Healthcare
CentraMed continues to develop software to support clients as they deal with the federal healthcare bill signed into law in 2010, Torpurnuri said.
The company plans to double its current employee count of 60 within 18 months, Torpunuri said.
CentraMed is privately held and doesn’t disclose sales or profits.
Hospitals with 200 to 1,000 beds make up CentraMed’s primary customer base, according to Torpunuri.
“Hospitals are desperately in need of technology upgrades,” he said. “They’re cash-strapped but they really could use technology.”
There also are plans to start expanding the software to doctors’ offices and health insurers.
CentraMed considers companies such as MedAssets Inc. of Alpharetta, Ga.; Washington, D.C.-based Advisory Board Co.; and MediAnalytics Inc. of Emeryville in the Bay Area as its traditional competition.
It views companies such as Irvine-based Quality Systems Inc. as working in a different segment of the market.
Quality and other electronic medical record software companies “become sources that feed our platform,” Lindsay said.
CentraMed won’t be using a direct sales force to sell its software, sales chief Lindsay said. Instead, it will be “more of a partnered effort with” companies that sell hospitals supplies.
CentraMed is “about to sign a deal with a very large supplier of medical supplies to hospitals” that will bring it into about 450 hospitals, Lindsay said.
Torpunuri founded Analytix and served as its chief executive. Kathleen Craig, cofounder and chief executive of Integrated, is an executive vice president of the combined company.
CentraMed will keep its headquarters here and maintain Integrated Revenue Management’s former office in Carlsbad.
