Medical Collection Agency Acquisitions Help Software Developer Sell Product

Five years ago, many newcomers to the medical receivables management and collections space thought they could be successful by applying the strategies that worked well in retail and credit card receivables management to healthcare ARM work.

iVolution Medical Systems, a Westhampton, NY-based health care systems firm, is taking a different approach. The four year old company, started by former Wall Street consultants to the health care industry, entered the medical receivables space by acquiring experienced billing and collections companies. First there was Professional Healthcare Billing Services (PHB) of Palm Springs, California in March, and then Continental Collection Services of New York, earlier this month (“iVolution Medical Systems Acquires Continental Collection Services,” May 13).

Despite the regulatory uncertainty surrounding the health care industry, iVolution co-chair and chief financial officer Vince Pipia told insideARM that the medical billing and collection industry is ripe for consolidation.  He said iVolution, which has about 15 employees and under $2 million in annual sales, hopes to grow the business by buying more companies with the help of Universal Capital Management, a publicly traded business development firm.  

“We think (medical billing and collections businesses) are all good cash generators, and they have a coveted relationship with physicians,” Pipia said.

Specifically, it’s that relationship that Pipia wants to capitalize on to provide integrated billing and collections services to health care providers as they transition to health care information systems.  Electronic medical records, billing, e-prescriptions and instant messaging are among the solutions offered by the company.  

“Billers are the gatekeepers that control the doctors’ money,” Pipia said. “Being responsible for the transaction, we can introduce technology to them. Our goal is to build and grow medical billing to cross-sell technology.”

In the year since iVolution introduced its products to the market, Pipia said some of iVolution’s technology is gaining traction among its pediatricians. Likewise, iVolution’s billing and collections clients are enjoying the benefits of its free instant message technology.

“Our billing clients are starting to take to it nicely,” Pipia said. “It keeps nurses and office managers off the phone. If medical billers have a question they can put it on the chat system and get an answer right away.”  

Since conversion to electronic medical records was dubbed as the one change that the entire health care industry agrees can boost efficiencies and lower costs, dozens of companies have been working to develop technology solutions. Still, only 8 percent of health care providers operate fully functioning electronic medical record systems, Pipia said.

“Most EMR (electronic medical records) are expensive,” Pipia said. “The ones that are not are very much one size fits all. That’s why adoption was never widespread.”

Pipia said iVolution’s software can be tailored to meet the needs of different medical specialties, staff can be trained easily and the software is available on handheld laptops that allow physicians to record patient information and bill from the same platform.

Kaulkin Ginsberg Analyst Michael Klozotsky said he expects more ARM industry consolidations and acquisitions as some company owners look to exit the business to avoid regulatory changes that will come with health reform. However, the health industry’s desire to use more health information technology and the Obama administration’s commitment to helping fund the transition leaves a wealth of opportunity for companies that can help health care providers comply with new technology mandates, he said.

“They (health care providers) are looking for integrated solutions that increase efficiency through one product or a suite of products,” said Klozotsky. “There’s both a need in the industry and incentive and motivation from the legislative and budgetary level.”