[00:00:02] Speaker A: Ramping up your business. The time is near. You've given it hard, now get it in Gear.
It's Passage to Profit with Richard and Elizabeth Gearhart.
[00:00:12] Speaker B: I'm Richard Gearhart, founder of Gearhart Law, a full service intellectual property law firm specializing in patents, trademarks and copyrights.
[00:00:20] Speaker C: And I'm Elizabeth Gearhart, not an attorney, but I do marketing for Gearhart Law and I am the founder of Gear Media Studios, a full service podcast studio.
[00:00:29] Speaker B: Welcome to Passage to Profit the road to Entrepreneurship where we talk with entrepreneurs and celebrities who tell their stories about their business journey and also share helpful insights about the successes that they've had. So I am honored to introduce our guest, Matt Seifeld and he is the president now of MedEvolve. It's a very sophisticated software business that does really some kind of complicated things, but it helps institutions who deal with insurance companies to be more efficient, if I've got that right. So Matt, tell us all about it.
[00:01:05] Speaker A: Yeah, it kind of, it goes back to how I started my first software company, right? I'm in an industry of, I call it the North American healthcare system, which has been broken for decades and is continuously being broken. If you think about, we all consume health care, right? We all go to doctors, sometimes we go to urgent care, sometimes we need surgeries, right? Sometimes we need telehealth, right? Every single one of us on this call has consumed healthcare.
The challenge in healthcare is that the consumer is and the provider of services and the payer of services are all misaligned. It's the only vertical, it's actually the only industry where you get this.
So, yeah, I am consuming healthcare. I don't really know what the costs of healthcare are. I don't really know what the insurance company's gonna reimburse me or if they're gonna deny it and play games. And now half of the dollar, right, that usually comes from insurance is coming from us because we all have high deductible health plans.
So you have an industry where your cost to deliver the service and care and collect the money, it keeps going up and reimbursements keep going down.
Who's investing in that?
[00:02:12] Speaker B: It's pretty crazy. And what I find about healthcare that's sort of unnerving is you kind of don't have a choice because you don't want to take any health risks if you can avoid it. I guess there are times when people decline healthcare because they just simply can't afford it. But given the choice of having it or not having it, it's not like shopping for a new car where you have a lot of different options available and you can be informed about it.
[00:02:37] Speaker A: Right.
[00:02:37] Speaker B: You're pretty much beholden to a system and a doctor and a referral network and you have to kind of follow what they say, at least to some extent.
[00:02:46] Speaker A: Yeah. And you do. Right. And so the pressures on margin, on the profitability for healthcare providers is so compressed now that a lot of providers, including health systems, feel their only option is to stop treating certain types of PA patients. And that's happening here down in San Diego. So if you were to come to my town and you were a Medicare patient, good luck finding a primary care doctor. Right. If you were a Medicare managed care. Right. That's your commercial insurance that offers Medicare, you know, as a service, good luck finding a provider. So what, so what's what? Medi Cal I E. Medicaid. Medicaid. You're going to emergency rooms for your care. So. So this whole world that where. Yes. I mean this is what. Nobody wants to talk about this. Right. Nobody really understands that there's this whole under pinning of chaos that is occurring that is putting pressures on the margins for these healthcare providers. All because there's no alignment between the payer, the provider and the consumer. And unlike other countries like Canada or UK who have put controls in place around supply costs, drug costs and reimbursement standardization, U.S. hasn't these drug companies make too much profit. The insurance companies are struggling just like the providers. I think UnitedHealthcare just terminated 30,000 people. What do you think's gonna be replaced by that? It's gonna be AI bots that are gonna deny claims, that are hoping that the providers can't figure out what to do about the denied claims. And then that money's gonna be written off and it's gonna impact the margin. So metavolve where we come in is in. I try to break it down simple. When you go see your doctor and he bills or she bills an insurance company and some of that bill will come to you as a consumer and it gets paid. Did it take a human to get the payment or not? It's as simple as that, right? We don't want humans on the health care provider side to have to get involved in claims adjudication. But the reality is, is that they do. There is a lot of phone calls to insurance, there's a lot of delegation across departments, you know, as to why these claims go unpaid. I'll bet you a lot of your listeners right now have had to call billing offices and Ask for clarification on the bill. I bet they've been transferred to offshore. People who don't understand what they're talking about. I bet they've been frustrated. I hear more complaints about the billing side of healthcare delivery than I do about the provider side. They could have the best outcome of their knee surgery. They could have the best experience with their ER doctor. But when the billing takes over, no fault of the billers, that's when the anger and the resentment comes in.
[00:05:23] Speaker B: That's where the frustration comes in.
[00:05:25] Speaker A: Yeah.
[00:05:25] Speaker B: Well, it's interesting because it doesn't seem like it was always this way, that we had this population of desperate people who are really unable to get care from their physicians. What's changed over the years to put us in this spot?
[00:05:40] Speaker A: Yeah, so it's the reimbursement models really. So when I started my career in 2000, right. A lot of the contracts with the insurance companies was a percentage of charges. So what the doctors could do is they just raise their charges each year and. And they collect more money. So I get 30% of a dollar now. I get 30% of a dollar 20. Right. That was just. It's called fee for service, basically, and that's how it was.
And then Medicare and Medicaid obviously get in and they're like, well, we're not just going to give you raises every year. Right. We're going to standardize fee schedule. So when you do this procedure, this is all you're going to get. So that really started to take hold with the commercial managed care business. Then what happened was you started to see so much of the reimbursement now shifting to the consumer.
So, you know, I personally have a $3,000 deductible. So the first $3,000 that I have consume in health care in any given year comes out of my pocket. So can I pay that upfront? Well, I probably could, but why would I? Especially if the markets are doing good and I could invest that money otherwise. So I'll pay the $100 a month for as long as it takes to get that 3,000. So by the way, that's also putting pressure on revenue cycles. So these providers who used to get a lot more money per visit, per se, and they were getting had a lot less labor cost to collect that money or now it's completely flipped. So in the macroeconomic conditions. Right. I mean, if you think about where we are as a society, everybody is feeling the pressure of care quality. Actually, I should care access to care. Right, Right. And that. That's the biggest fear I have is communities are being disruptive because these hospitals are going out of business because they can't stay afloat. And the states and the Fed can't provide enough to keep business because the costs outweigh the reimbursement. So I always tell people like where are we in five years? I don't know, where's all the money going?
[00:07:29] Speaker C: Like who's getting all the money?
[00:07:31] Speaker A: That's the thing is, is it's, it's being written off as bad debts. So if you think about, I'll, I'll break it down this way. So if I, if I go do a, an mri, right?
You know, for, at Blue Cross. So a patient has an mri, Blue Cross, first of all, did somebody get the prior authorization? Sometimes they do, sometimes they don't. If they don't, boom, it's a write off. That entire $2,000 is now written off. Nobody gets any money. Payer didn't pay and the provider's stuck with the ar. Right. If they do get the authorization and they verify that my benefits include MRIs, then they have to bill the insurance. Now in a perfect world, insurance pays their probably $1,000 and then the consumer has to pay for the rest, right? Depending on their deductible. So the provider's getting their money. But what happens is these payers start to deny claims and some of it's frivolous denials. It's just, I'm denying every claim and I expect you to catch this denial and if you don't catch this now within a 45 to 60 day period, then it's called a timely filing write off. So think about these industry where you have high volumes of claims that are out there with insurance companies. How many people do you think you'd have to have to be able to go through all of those claims to make sure everything's been done correctly to ensure payment.
[00:08:43] Speaker C: So the insurance companies are getting the money, they're taking people's monthly premiums and just pocketing it and not paying the doctors with it like they're supposed to.
[00:08:51] Speaker A: Not consistently. I mean they're definitely there, there, there's too much game going on and again they're taking the premiums and, but the consumer who pays those premiums and the employers who pay those premiums is also now owing a lot of the bill. So now the doctor's kind of stuck because if I, if I lost my job and I just, or I can't pay the $3,000 upfront, then that doctor has to wait for Months. Whereas, you know, again, 20 years ago, high deductible health plans wasn't a thing. So most of the money came from the insurance company and we might have had a little copay. So this is the real problem. And so where technology comes in, so our technology, what it does is when it's deployed correctly in these healthcare provider groups is it measures every human touch it takes to get a claim paid to zero balance. And that data starts to tell the healthcare provider where the problems are occurring within what we call a revenue cycle. So from the time you're scheduled to the time the claim is billed, to the time that the claim is at zero balance, meaning everyone's paid what they're supposed to, we measure all that and we then run that through a generative AI engine that starts to really bring out the correlations and the patterns to identify. Is it a people issue, is it a process issue, or is it maybe a technology issue, Is it a payer issue? I was on with a group this morning who discovered because of our tech, that their dme, their durable medical equipment business line, was being denied by a payer. I shall not name names since January. They went live with our system literally two weeks ago. And had they had our system in January, they would have caught that this payer was denying 25 codes. Now they've now had to write off almost a million dollars in codes because nobody caught it.
[00:10:29] Speaker C: But it's not just a write off. They basically handed it to the insurance company.
[00:10:33] Speaker A: You could look at it either way, right? Hospital's not getting paid, provider physicians not get paid, and the payer doesn't have to pay. So pay keeps the money in their balance sheet.
[00:10:42] Speaker B: Aren't insurance companies though, highly regulated institutions? I mean, it seems to me that part of the purpose of the regulation is to avoid and manage these games that the insurance companies are playing. Is more regulation needed to close all the loopholes?
[00:10:58] Speaker A: Yeah. So one, it's not highly regulated. There are standards that are in place, but the games are being played, sometimes intentionally, sometimes unintentionally. So what happens is that while you may have a contract with an insurance company, right, I do this service, you pay me this. All of the work around trying to make sure that you get paid. What you're supposed to is where all of the waste comes in. That's where the providers are having to touch these claims multiple times. And was it denied? Was it not denied?
I have to appeal it if it's denied. So while there is regulation, right, there's too much ambiguity with how Providers are being paid for the services that they're providing to that insurance company's subscribers. And it needs to be, not only does it need to be more regulated with what the true cost of delivering care and make sure the reimbursement standard is equal to or greater than the cost.
Right. That has to be looked at. And that involves your payers, that involves your drug companies, that involves your supply chain companies.
It's not just a provider and an insurance company. It's everything it takes to run their business.
[00:12:01] Speaker C: So what's the next step then? Can you get everybody together and have them put their data in one big repository and then see who the main congress to do something about it? Or was that just like a pie in the sky dream?
[00:12:13] Speaker A: That's pie in the sky. You and I will be drinking lattes and relaxing on a beach somewhere. But it is. Look guys, it's pie in the sky. Until the pain gets enough for the government to step in and say I have to regulate this, this will continue to happen. I mean, I have an orthopedic surgeon friend of mine, we coach baseball together and he's now decided he's going to have to take a job in Washington State because he just can't afford to live here in San Diego anymore with the declining income that he's experienced over five years. Well, why is that income declining? Well, it's declining because there's just nothing left over after you deal with the insurance companies and the consumers and the higher cost to deliver your career margins are shrinking. The question is what to do about it. What meta vaults. This may not solve it. Actually, it probably won't solve it in this diary is that we've identified that for our clients who can start to reduce the waste. Right. Reduce these administrative touches that it takes to get claims paid correctly. We can claw back a lot of margin for those groups. About 60 to 80% of the touches that go into claims management are wasted touches. They never should have occurred.
Right. So if you have an organization that has a million dollars in labor costs associated with claims management, I could reduce 80% of that cost. That's another $800,000 a year back in the pockets of the providers to then do things with. Right. And those are facts. We have tens of millions of data points now that substantiate the baseline of this industry and how bad it is. And we've now established those as new industry benchmarks for our clients to start to work, to attain. Because this is an again is 20 plus years behind.
I call sophisticated technology. Right I mean, it just is. I mean, look, we. We've got clients who still are on paper.
[00:13:59] Speaker C: Oh, my gosh.
[00:14:00] Speaker A: I mean, seriously. Right?
[00:14:01] Speaker C: Yeah. Who are you selling this to then? Are you selling it to individual doctors?
[00:14:05] Speaker A: It's medical groups, hospitals, health systems, ambulatory surgery centers. Really, anybody that has to bill third party to get paid, to get the majority of payment is, is. Is in scope for us. Obviously. Our, our. We can't sell like just one, one doc at a time. We, we way. You know, so we do have to have some skill there. But we do target, you know, more of the areas that are distressed. I really like the critical access hospitals. Right. The smaller tiers in these communities that are really. If they lose that hospital and they go out of business, that whole community has gone two hours to the next big health system. Right.
I like surgical specialties too. Right. The, the. It's the elective stuff. It's your orthopedics, urology. You know, these are folks who are getting crushed the most because of these reimbursement challenges.
[00:14:50] Speaker B: Let's take a step back a little bit and talk a little bit about the evolution of Med evolve. How did the company actually start and how long between the time you conceived of the company and you got your first customer?
[00:15:05] Speaker A: So Medifolve actually was founded by two orthopedic surgeons in the 90s. They actually saw an opportunity to build a billing platform because they didn't like the systems at the time that were used to build insurance companies.
Then what they did was they realized that a lot of providers don't like to hire people to do their billing. So they created what's called a revenue cycle company. So then they would start doing the billing for other provider groups. That was the company for up until about 2017, which is when they brought me on board to take a look at the business because it was flat and declining.
And the reason it was flat declining was it's a commodity, right. Everyone has a pm, everyone has a rep cycle company. So there's nothing new or novel. There's.
So I came in and took a look and said, you know, I started my own workflow Automation company in 2007 when I left Deloitte, and I built that up over six years. And I'm sure we'll talk more about that later on in the show, and then was able to sell it successfully to a public company in 2012. So I'd already done this before, so I basically redid what I did, right. I created this new workflow system that would hold people accountable for getting claims paid. Timely, by the way, not new, right? There's a lot of people that do this. Like we said at the beginning of the call, you don't have to come up with the newest idea that nobody's doing. Right? There's a lot of competition in this space. So from 2018, I took the company from this commodity organically growing business to a high margin SaaS business, right? Where we're now putting our software on top of anybody's billing system, not just our own. And we're now selling into new markets. The Metavol was selling really only into smaller surgical provider groups. Right now we're selling into health systems and hospitals and large IDNs and global RCM companies.
So part of my goal was to not be dependent on flat or declining revenue. Right? Entrepreneur means I got to go create valuation. So the value of the business. I'm only getting a one times at best multiple on the revenues on the legacy business, but I'm getting five to eight times multiple on the new entity that's really taken this whole company to that next level.
[00:17:17] Speaker B: Matt Seifeld, President and CEO of medevolve, a leading provider of revenue cycle technology solutions. Passage to Profit is a nationally syndicated radio show appearing in 38 markets across the United States. In addition, Passage to Profit has also been recently selected by Feedspot Podcasters Database as a top 10 entrepreneur interview podcast. Thank you to the P2P team, our producer Noah Fleishman and our program coordinator Alicia Mo, and our studio assistant Rishikeb Bussari. Look for our podcast tomorrow anywhere you get your podcasts. Our podcast is ranked in the top 3% globally. You can also find us on Facebook, Instagram X and on our YouTube channel. And remember, while the information on this program is believed to be correct, never take a legal step without checking with your legal professional first. Gearhart Law is here for your patent, trademark, and copyright needs. You can find
[email protected] and contact us for a free consultation. Take care everybody. Thanks for listening and we'll be back next week.
