Prescription For Success Medical billing services are just what the doctor ordered.

If you've seen a doctor recently, you know health-careproviders are among the most time-pressured professionals. Many areso busy seeing patients, they don't have time to manage thefinances of their medical practices.

"In a doctor's office, everything is either urgent orimportant or both. Billing is merely important, not urgent,"says Merlin Coslick, executive director of Electronic MedicalBilling Network of America Inc., a trade association in Watchung,New Jersey. "The staff tend to not attend to the billing asefficiently as the doctor would like, and doctors come to realizethat by outsourcing billing to a dedicated billing service, it willbe done in a timely fashion."

Given these realities and the financial pressures of managedhealth care, it's no wonder medical billing services are afast-growing industry for entrepreneurs.

Medical billing businesses offer a wide variety of services.Billers enter claims data into a computer, electronically transmitclaims through a clearinghouse to insurers, prepare paper claims,generate management reports, mail patients' statements, postpayments, send notices to patients who haven't paid and suggestways to improve billing procedures. Some billers also sell medicalbilling software or offer consulting services to health-careproviders who want to improve their billing systems.

All types of health-care providers are potential clients formedical billing services, including surgeons, mental-healthpractitioners, optometrists, dentists, physical therapists, homehealth-care services, medical equipment stores and ambulancecompanies. And, because the field is relatively new, the markethasn't been saturated in many areas.

"Although you may occasionally cross paths with anotherbiller," says Coslick, "competition is not a majorconsideration [in this market]."

Marcie Geffner is a Los Angeles freelance writer who reportson small business and real estate.

A Booming Business

Bonnie Nentl, owner of Rapid Return Medical Billing in Brainerd,Minnesota, says entrepreneurs need three skills to succeed:computer know-how, marketing savvy and medical billing expertise.Nentl, 33, worked in a hospital billing department for 10 yearsbefore she started her company in November 1994. A lack of computerand marketing experience didn't stop her from turning ahomebased start-up into a six-figure company with more than 70clients, its own offices and five employees. Her business became sosuccessful that her husband, Tim, 36, came on board full time inJanuary 1996.

The Nentls' employees enter claims data into computers, postpayments and answer patients' and doctors' questions. Tim,an accountant, handles the company's financial records andpayroll, while Bonnie concentrates on marketing. "We couldhave kept the business small and homebased," she says,"but my husband wanted to quit his job, so we made a consciousdecision to expand."

Bonnie started by purchasing a business opportunity fromNational Claims Service in El Dorado Hills, California, for $8,000.She received medical-practice management and claims-downloadingsoftware, marketing materials, video computer training, ongoingtechnical support, medical code books and attended a marketingseminar. She also spent $1,200 for a computer, $200 for a printerand $150 for used office furniture, bringing total start-up coststo about $10,000.

Second Time Around

Robert O'Kelly, 59, decided to start his own business whenhe was laid off from a computer systems programming job at a largeinsurance company. After extensive research, he chose medicalbilling because he had some familiarity with insurance claims andthe start-up costs were manageable. He launched his homebasedcompany, Accelerated Medical Billing, in Las Vegas in July 1994.With just eight clients, he brought in revenues of approximately$45,000 in 1996.

O'Kelly's start-up costs also totaled less than $10,000.He spent $3,500 for a computer with a tape backup system, $1,400for office furniture and fixtures, $980 for a laser printer, $850for a copier and $200 for medical books. He paid $500 for asoftware program and an additional $300 for a two-day trainingprogram offered by the software vendor.

Investing time as well as money before launching the businesswas important to O'Kelly's success. "I took a codingclass [to learn codes used in the insurance industry]. I took a[medical] terminology class at an adult school. I went toCalifornia State University, Dominguez Hills, for amedical-insurance computer billing class. I took another billingclass at a community college, and I took an entrepreneurship courseat the University of Southern California," he says.

Billing software is essential for start-ups in this field."There are dozens of software programs available. The rule ofthumb is, the more you spend, the more unhappy you'll be,"says Coslick. "The people who spend less are the oneswho've done careful research and found you really need to spendonly $500 to $1,000 on software."

Part-Time Profits

The flexibility of working at home part time was one factor thatattracted Diedre Mikkelson, owner of AccuTrac Medical Billing inPoway, California, to medical billing. Mikkelson, 35, left aprosperous mortgage-banking career to stay home and start both afamily and her company in April 1996. "I didn't want ahigh-stress job, and I wanted to be able to stay at home with mychild. I wanted the best of both worlds," she says.

Today, Mikkelson has four clients and revenues of $2,200 to$2,500 per month, working just 15 hours per week. Her typicalmonthly business expenses are about $300.

Medical billing services generally charge a per-claim fee of $2to $3 or 5 percent to 8 percent of the receivables collected. Howmuch each client is charged depends on the services provided andthe type of practice. "If you're billing for aneurosurgeon who does maybe 10 surgeries a month at $40,000 asurgery," Mikkelson says, "you're not going to chargeas [high a percentage] as you charge a psychiatrist who sees 20patients a day, four days a week."

Catching Clients

Newcomers to the billing business often think choosing the rightsoftware guarantees success. Not so, Coslick says: Equal emphasisshould be placed on strong marketing efforts. "Buying softwaredoesn't make you a billing service," he says. "Themarketing side is far more important. If you can't market, youdon't have a business."

Referrals from existing clients count considerably in signing upnew clients, because health-care providers tend to trust oneanother in making business decisions. Getting your first clientwhen you don't have any referrals can be daunting.

Mikkelson jumped this hurdle by marketing her servicesdoor-to-door in medical buildings. "Getting your first clientis the most difficult step," she says. "You're askingsomeone to turn over the collection of the income that supportstheir office and their family to you, and they don't know you.You don't have to be brash or a stereotypical salesperson; youjust have to feel confident in your ability and let that confidenceshow."

Bonnie Nentl landed her first account in just two weeks byconsistently visiting five doctors' offices every day. After amarketing hiatus during which she set up her new office and trainedher employees, she has resumed this strategy. "Once you makeyourself do it, it's not as hard as you may think," shesays.

O'Kelly, who has tried a variety of marketing strategies,has found the most successful ones are following through onreferrals and taking quick action in contacting brand-new medicalproviders. "I joined the Chamber of Commerce, which prints anew members list [regularly]," he explains. "It showedone [durable medical equipment] company that had opened its doorsonly about a month before I saw the listing. I went over there andgot the account."

Medical billing is an attractive opportunity for entrepreneurswho are willing to take the time to acquire some technical know-howand market persistently. "Be serious about your business, betenacious in your quest for clients and have confidence in yourabilities," says Mikkelson. If you've got those qualities,this business just may fit the bill.

Resources

• Directory of Medical Management Software (ResourceBooks, $39.95, 408-295-4102) takes some of the guesswork out ofselecting software for medical billing services. The 158-pagedirectory describes national and local clearinghouses, softwarecompanies for billing centers and health-care providers, otheruseful software programs and industry associations.

• Medical Claims Processing--A Business Report (ResourceBooks, $29.95, 408-295-4102) is a 58-page report that explainsmedical claims processing and describes the benefits of electronicclaims submission for health-care providers. Ten specific examplesof medical billing business opportunities are outlined.

• Resource Books also publishes a bimonthly newsletter, AQCResource Newsletter, for the medical billing industry. Aone-year subscription (six issues) costs $59. For more informationabout Resource Books products, call (800) 995-8702 or(408) 295-4102; e-mail aqcresource1@juno.com; or writeto Resource Books, 175 N. Buena Vista Ave., Ste. B, San Jose, CA95126.

• Entrepreneur Media Inc.'s Business Start-Up Guide #1345,Medical Claims Processing ($59), is a 264-page guide full ofadvice on office facilities and equipment, personnel, legalrequirements, record-keeping and taxes, advertising and promotion,start-up costs and more. Call (800) 421-2300 to order.

• Medical billers who have been in business at least two yearsand have at least two clients can join the International BillingAssociation (IBA) for $450 to $950 annually. Nonmembers can attendthe IBA's educational seminars and conferences. Forinformation, call (301) 961-8680; write the IBA at 7315Wisconsin Ave., #424E, Bethesda, MD 20814; or visit http://www.biller.com

• The Electronic Medical Billing Network (EMBN) offers start-upinformation for new billing services, monthly meetings in the NewJersey area, three hours per month of business telephoneconsultation, vendor referrals, publications and a monthlynewsletter. Membership costs $110. For information, call(908) 757-1211; write to EMBN at P.O. Box 7162, Watchung, NJ07060; visit http://www.webcircle.com/embnor e-mail embn@webcircle.com.

• The National Electronic Biller's Alliance (NEBA) offersmembers a newsletter and discounts on a few medical billingsoftware programs. NEBA also sells a self-study course on medicalbilling procedures and terminology. Annual membership costs $129.For information, call (650) 577-1190; write to NEBA, 2226-AWestborough Blvd., #504, South San Francisco, CA 94080; or visithttp://www.nebazone.com

Business Opportunities

ClaimTek Systems
222 S.E. 16th Ave.
Portland, OR 97214-1488
Phone: (800) 224-7450
Fax: (800) 503-9461
Start-up capital: $1.5K-$7.99K

Infinity Software
27636 Ynez Rd. L-7. #143
Temecula, CA 92591
Phone: (909) 699-9581
Fax: (909) 699-9391
Start-up capital: $495+

Island Automated Medical Services Inc.
5999 Central Ave., #300
St. Petersburg, FL 33710
Phone: (800) 322-1139,
(813) 347-2200
Fax: (813) 347-2519
Start-up capital: $4.9K+

National Claims Service
5000 Windplay Dr., #1
El Dorado Hills, CA 95762
Phone: (800) 207-3711
Fax: (916) 933-3547
Start-up capital: $4.99K-$8.49K

New Ventures!
1351 Tyringham Rd.
Eustis, FL 32726
Phone: (888) 875-4798,
(352) 357-5116
Fax: (352) 357-3067
Start-up capital: $69-$4K

Pacific Medical
9921 Carmel Mountain Rd., #321
San Diego, CA 92129
Phone: (800) 815-6334
Fax: (619) 538-3743
Start-up capital: $1.99K

USA For HealthClaims Inc.
39 E. Kings Hwy.
Audubon, NJ 08106
Phone: (800) 809-0670
Fax: (609) 310-1247
Start-up capital: $4.99K

Contact Sources

Accelerated Medical Billing, 7441 W. Lake Mead Blvd.,#160, Las Vegas, NV 89128, (702) 255-0056

AccuTrac Medical Billing, accutrac@interfuture.com

National Claims Service, (800) 697-1569, http://www.nationalclaims.com

Rapid Return Medical Billing, 1100 Hwy. 210 W., #7,Brainerd, MN 56401, rapidreturn@brainerdonline.com