Interview with Jim Pack, CEO of AdvancedMD

In our continuing series of interviews, we spoke with Jim Pack, CEO of Draper, Utah-based AdvancedMD ( AdvancedMD is in the software-as-a-service (SaaS) space, which has been doing extremely well, and we thought it would be interesting to hear about the company and how it is using the Internet to provide medical practice management for physician's offices. Physicians have been notorious for being slow adapters of technology, so we were interested in hearing how AdvancedMD has been getting good adoption of the company's products.

Techrockies: What is your software used for?

Jim Pack: AdvancedMD provides web-based practice management and electronic medical record tools for physician's offices and for third party billing services--revenue cycle management. It is web based, with zero footprint, and access with a username and password from anywhere in the world. We've been doing this since 1999.

Techrockies: It sounds like the company has been around for awhile?

Jim Pack: We were funded by a couple of VCs in internet heyday, back when anything that said dot com was being funded. Even when dot com's were being shunned, our venture capitalists were behind the company, and downsized the company and committed more resources to the product. Now, in the last three years we've seen an almost 100% annual growth rate from a new resurgence in acceptance of solid business models, based on web technologies.

Techrockies: Who uses your product, and why?

Jim Pack: We have two primary customer types. One is a small medical office, a one to five doc physician practice. They use our product to schedule patients, to post payments, and track insurance payments. They use our products to track receivables from insurance companies and patients. It does management and reporting, and electronic medical records, including notes and transcriptions. It scans physical documents, and provides medical record components. The product does all of the scheduling, billing, as well as clinical functions. That's our first set of customers. Our second set of customers are third party billing services, who outsource for a doctor's office that doesn't want to do insurance and billing themselves. Those third party billing companies use our product to extract the most dollars from insurance firms and payers, and also in some cases also provide patient billing.

Techrockies: Physicians are notorious for being slow to adopt technology. Can you talk a little bit about how adoption has gone for you?

Jim Pack: Definitely, physicians are starting to see the light. Several years ago, there were challenges because high speed Internet was not currently available in the doctor's office. There was also concern about the security of information, since it's medical information and sensitive. Some physicians were concerned about security because someone could steal information. There has been a dramatic change over the last couple of years. Almost virtually all doctors have high speed Internet in their offices, whether that's through DSL, cable modem, so access to the tools is no longer a challenge. Also, we've seen dramatic acceptance of online banking, and bill pay, so the emotional barriers have by and large gone. So now, they are looking at technical reasons versus client-server. Client-server, which is where you have a server in your office, means you are responsible for maintaining, upgrading, and fixing that server when it's broken. With a small office that does not have an IT person, when the server is down, it causes chaos in the office. It's almost a cliche. With a web-based model, without a server, you don't have to worry about upgrades, enhancements, or availability. Is the power on, and do I have Internet? Internet access seems to be more reliable than power. We're finding adoption really quite good. Traditional objections are dwindling--that's not say everyone is swarming to web-based products--but we're finding triple digit growth. Some of what is driving that now is if you look at what happened in Louisiana. The hurricane took out the entire town, and the office--and all those medical records in the desk are gone. Offices with web-based products still have all that billing data, and can ask insurance companies for information, and continue to have business even as they continue to rebuild. If you have a web-based product, which is managed and secure, with someone professionally managing and securing the product, it doesn't matter what kind of disaster happens. Doing it yourself you have a substantially lower security level.

Techrockies: Do HIPAA requirements make it harder or easier for you to sell your product?

Jim Pack: It makes things easier. It's intrinsic in our offering, because HIPPA connectivity services are built into the architecture, and it doesn't cost any more to the doctor. If you compare the level of HIPPA security of our product versus a server in the broom closet and a backup tape on the front desk--we have our servers at a Tier 1 ISP with 8 levels of physical security, many levels of monitoring and access, they can't even compare. Using the web, done right with an application server has substantially greater HIPAA compliance. Some things, like a designated HIPAA security officers, we can't address. But things like if you have a backup and restore procedure they follow and verify, are some of the things we can address. There are fifty security regulations in HIPAA, and thirty-one of those as a web-based purveyor we can do for the doctor. A typical client/server application can only do ten. So they get much further along HIPAA by using AdvancedMD than trying to load software.

Techrockies: Let's talk a bit about your venture capital experience. Having raised money during the boom/bust, would you have gone that way again?

Jim Pack: That was really interesting. Yes, money was available for neat new products, plus we had a reasonable business rational. We weren't buying eyeballs, we were providing real services for doctors. That's why our funders continued to support us through that nuclear storm, because of our honest and true value. We had real dollar paying customers. Since that time, we have raised another round, about a year ago. A third venture capital firm gave us expansion money. We're now on our own, and don't need additional capital.

Techrockies: Which was the third firm?

Jim Pack: The first were Dominion Ventures and Windward Ventures, the third firm was Prospector Equity Capital/ Hunter Capital.

Techrockies: Thanks for telling us about your company!


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