For MedHub Inc., less is most certainly not more.
The company, which sells software to help hospitals manage their residency programs, has made its mark by offering a more robust, far-reaching system than its competitors. With those added features comes a bigger price tag, but that still hasn’t deterred a number of big-name hospitals from ditching their old systems and switching to MedHub, Chief Executive Peter Orr said.
In recent months, MedHub has scored several notable wins, adding clients including Duke University and Kaiser Permanente Northern California to existing customers like the Cleveland Clinic, and upping its client total to 16. But that’s not what has Orr excited.
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“While the new contracts are nice, the bigger story is the last five major contracts we have landed since October 2009 have been switches from our competitors’ systems,” he said.
For Orr, the key buzzword to selling is “enterprise.” The company markets its system as being “enterprise-wide,” meaning it handles all areas of a teaching hospitals’ residency program. Given the numerous specialties and sub-specialties found in medicine, some teaching hospitals have more than 100 different programs — such as internal medicine, surgery, pediatrics and plenty more.
Often, those different specialty programs are run like their own separate “fiefdoms,” Orr said. It’s in knocking down the walls between those fiefdoms and cutting duplicate administrative work that MedHub brings value to customers, according to Orr.
Not just a buzzword
Enterprise is more than just a buzzword to Lori Smith, assistant administrative director of graduate medical education (GME) with the Cleveland Clinic. After using an in-house developed system for about seven years, the Clinic went live with MedHub in 2008. Of all the residency management software the hospital reviewed, MedHub was the only one to take an enterprise-wide approach, Smith said. “That was important to us because we have a centralized GME department that oversees all of our programs,” she said.
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MedHub’s software tracks residents’ schedules, work hours, medical procedures performed, conferences attended, test scores, education and other information. But just as importantly, it manages programs’ Medicare reimbursement processes, and that’s a big deal to teaching hospitals that can pull in as much $150 million per year in reimbursements to help cover residents’ salaries and other expenses.
With such a strong focus on the entire enterprise, MedHub doesn’t pursue business with organizations that have fewer than 200 residents. But that tight focus also limits the company’s customer base — Orr estimates that there are only 100 to 150 teaching hospitals with 200-plus residents in the nation.
Nonetheless, with around 10 percent to 20 percent market share, MedHub has plenty of room for growth in the U.S. market, which is largely controlled by competitors New Innovations Inc. and Advanced Informatics’ E*Value. New Innovations, for example, looks to have acquired hundreds of national (and international) clients over the last decade.
The Cadillac
After using E*Value for the previous six years, The University of Iowa Hospitals switched to MedHub last year. Even though MedHub’s system costs twice that of its previous vendor’s, the “seamless” approach MedHub takes to sharing data across departments makes it worth the investment, said Kelly Breffle, director of GME operations. “MedHub’s the Cadillac of (GME) systems,” she said.
Orr hopes to increase MedHub’s market share by 5 percent to 10 percent per year in the U.S., but with such a limited number of potential domestic customers, international markets could take on increasing importance in the coming years. To that end, MedHub just reached an agreement with its first international customer, a health system in Doha, Qatar.
In just the first half of this year, MedHub expects to double its sales from all of 2009. And that’s no small feat, given that the company’s sales cycle can stretch for years with just one client. The five-employee company could also double its number of workers in the next year.
MedHub is “completely self-funded and profitable” so it has no need for venture dollars, Orr said. For now, an exit strategy isn’t even on his mind. “We like what we’re doing and we’ll continue doing it,” Orr said.