Publicly traded IT and physician office services vendor PracticeXpert, based in Calabasas, Calif., announced the sale of its transcription business unit to Atlanta-based Transcend Services, a medical transcription services organization, also publicly traded, for an initial payment of $40,000 with a potential of up to $500,000 in payments based on future earnings over the next three years, according to the seller.
In addition, PracticeXpert announced it intends to enter into a joint marketing agreement with Transcend in which the two companies will market their services to the other's customers. PracticeXpert sells physician office billing and electronic medical records systems and services, with a focus on outsourced medical billing, but acquired its first medical transcription business as recently as March 2004 "as a complement" to those business lines, said Michael Manahan, executive vice president for funding, acquisitions, strategic and investor relationships.
Transcend, which uses speech recognition in its technology platform, will provide better service to PracticeXpert's customers than it could provide itself, said Manahan, who conceded the highly competitive transcription service business was not what it seemed from the outside.
"We thought at the time it was quite similar to the outsourced medical billing business, but it is quite different," Manahan said. Physicians become invested in their medical billing service providers, Manahan said, but not their transcription providers. "It's more of a commodity business. You can change transcription companies at the snap of the fingers. Now we've got such significant competition coming out of India, it's a challenging market. It's difficult for us to compete for customers on price.
"The deal is not a big deal for either company," Manahan said. "Our transcription services were a fairly small segment of our business, but really it's more of a strategic issue. It takes us out of that line and allows us to focus and affords us a tremendous opportunity to bring our products to Transcend's customers."