Etransmedia ventures into billing for docs with 2nd acquisition

By siliconindia staff writer   |   Tuesday, 28 December 2004, 08:00 Hrs
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NEW JERSEY :Medical transcription company Etransmedia Technologies Inc. has purchased Advanced Medical Billing, a Belmar, N.J., medical billing company. Advanced Medical is a 13-year-old company that handles billing for 13 practices with 125 physicians. Etransmedia CEO Vikram Agrawal said he will keep Advance Medical in New Jersey.

It is Etransmedia's second acquisition. Earlier this year, Etransmedia acquired Transkrit Inc., a medical transcription and medical billing company based in York, Pa.
The acquisition of Advanced Medical will strengthen Etransmedia's medical billing efforts.
"We've been trying to expand into the medical billing business for the last two years," Agrawal said. "That's as big a business as transcription--$25 billion in the U.S."

Practices spend 8 to 10 percent of their realized revenues on medical billing fees, compared with 0.5 to 0.7 percent on transcription, which makes the billing market enticing. The barriers to entering this market, Agrawal said, include understanding the rules of insurance companies, submitting claims and conforming to the Health Insurance Portability and Accountability Act, or HIPAA, which requires patient confidentiality.

The payoffs are greater, too. "The same customer becomes 10 times more valuable to us if we sell billing to them instead of just transcription," Agrawal said. "We're moving up the value chain." After purchasing Transkrit, Etransmedia added two products to its offerings--one for medical billing, and the other helps law firms and medical practices index and arrange documents in a database so they can retrieve and research information.

Agrawal plans to release another product in late 2005--an electronic medical records software that integrates billing and transcription as well as other records kept by physicians and puts them online. Etransmedia now has 39 employees in the United States--18 in North Greenbush--and 430 employees in India who are on the medical transcription side of the business.

Agrawal expects to add 21 employees in the United States by the end of 2005. Seven of them will be programmers to work on the medical records software. "We're still on a very explosive expansion phase," said Agrawal, 29. "Our business grew 300 percent this year."

Etransmedia was founded in 2000 at the Rensselaer Polytechnic Institute incubator when Agrawal was an RPI graduate student. The company expanded within the incubator until it finally ran out of space and moved into the Rensselaer Technology Park in North Greenbush last year.

Agrawal is talking to venture capitalists and banks to raise a few million dollars for future acquisitions. He anticipates making two or three more acquisitions in 2005 with a focus on medical billing companies.

Rich Honen, managing partner of Honen & Wood P.C., an Albany corporate and venture capital law firm representing Etransmedia in the acquisitions, said Etransmedia's business model of growing by acquisition is working.

"What they're really doing is proving out the business model, which is doing acquisitions of small billing companies and using them as independent profit centers and enhancing the overall franchise value of the medical transcription company," Honen said. Agrawal has taken a conservative approach to running the company, raising only the money needed and spending only when necessary, Honen said. "I still have some money left over from what my Dad gave me when I came to the U.S.," Agrawal said. Agrawal moved to Troy from Bangalore, India in 1999 with $40,000. About $30,000 remains in his personal account. After two acquisitions, the company has developed an acquisition template that will make future acquisitions easier.

"I know that they have others on the horizon," Honen said.

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