Tech entrepreneur Charles Koo holds a doctorate from Stanford University in computer science, engineering economic systems and project management. In 1999, he founded iMedica Corp., a Mountain View, Calif.-based electronic medical-records company that initially targeted the physician small-group market.
Koo says he still will sell systems to one- and two-physician buyers, but the company's marketing focus these days is on midsize group practices of five to 25 physicians.
"I've got so many different scars, in small to medium to large (practice sizes), they all have their problems," Koo says, but he notes the small-group and solo markets are particularly tough.
"First, you have to reach them," he says. "The PC magazines get to all the computer geeks, but they're not geeks. The trade magazines don't reach the lower end, so you have to have feet on the street. You have to pound on doors, one at a time."
And that's the first problem, getting time to see them.
"These doctors, the onesies and twosies, are the businesses themselves," he says. "When a patient comes in that's critical, they have to drop everything, including a meeting that you scheduled two months ago with a plane ride to come in."
Then there is the issue of cost. For what Koo describes as "a bona fide, enterprisewide system," the cost per physician runs from $7,000 to $10,000 for the software license alone and around $15,000 to $35,000 per physician for the total package, including training.
"It's not something you're going to reach into your wallet and pull out," Koo says. "That's why it takes a lot of sophisticated selling." And repeat sales calls.
"Everyone asks a lot of questions," he says. "Nobody's going to make a decision on the spot."
Four years ago, a sales cycle from first contact to closing a sale would take maybe nine months, he says. Today, even with heightened interest and lower sales resistance, "If I were to guess, it's four months, to say the least."
A vendor, if it wants to sell nationally, needs to position its sales force within regions to reduce travel costs and improve efficiencies. But even flying out of regional sales offices to call on just one or two doctors "may not be justified if you have to make three or four trips to make one sale," Koo says.
Finally, there is the question of customer service and tech support. A small-group practice can't afford to have a full-time tech wizard on staff, and frequently no one in the office has technical expertise, so the EMR company has to provide a certain amount of very basic hand-holding.
Koo remembers receiving a call from a physician reporting that a 2-week-old system had suddenly quit.
"The doctor actually hired his 17-year-old nephew to 'streamline the network,' and after he did the system stopped running," he says.
"Even a simple thing like the printer doesn't work, they call you when they didn't have paper put in. That's killing us, but at the same time, you can?t charge for that. They don?t want to pay for the IT charge."
Koo says a firm could raise prices to cover the higher expenses of penetrating the small-practice market, but then the limits of what a physician can afford become a factor. "Everything said and done, it's pretty bad economics," he says.
Koo calls Central Utah Multi-Specialty Clinic's plan to serve as a reseller of site licenses intriguing (See story on p. 4).
"We can do that," Koo says.