DIvIDEnD - Stephen M. Ross School of Business - University of ...

photo by vineet modhgil
a:
“
tarting a business
S
is like standing next to
a swimming pool,” says Praveen Suthrum,
MBA ’04. “As you’re writing your business
plan, you’re saying, ‘This is how I’m going
to swim — I’ll put my left hand in first, then
my right.’ But once you jump in, it’s a very different
experience.”
suthrum’s experience started during his mBa spring break and
evolved into nextservices inc., a revenue cycle management company.
he co-founded the venture with partners Satish Malnaik,
MBA ’04, and Ragavendra Baliga, MBA ’04, after consulting
for his uncle’s medical practice, identifying problems and recommending
ways to improve the doctor’s bottom line. “it made me
start wondering if there was a bigger opportunity in the area,”
suthrum says.
there was. nextservices now counts more than 60 clients, ranging
from solo medical practitioners to large physician groups. the
company has collected more than $120 million on their behalf, and
suthrum hopes to hit $1 billion next year.
But initial setbacks threatened to sink the original plan suthrum
and his partners floated in 2004. funding dried up. clients shut
down. through sheer determination the team adapted and
advanced, allowing nextservices to not only stay afloat but thrive.
today the firm has 110 employees in ann arbor and mumbai.
THE PREScRiPTion nextservices’ mission is ambitious: “enabling
seamless healthcare delivery one patient at a time.” the company
focuses on certain specialties and relies on the medical knowledge
of its staff. “if you talk to our associates about stomach disease, they
can discuss it like the back of their hand,” suthrum says. “knowing
the language helps when we talk to insurance companies. we can
ensure our clients get paid correctly.”
sophisticated analytics offer another strategic edge. “when
clients ask, ‘how many patients are due for a colon screening’ or
‘what types of denials are we most commonly getting,’ we can tell
them,” says suthrum. “getting feedback helps avoid costly mistakes.”
clients can access such analysis any time through customdeveloped,
web-based software.
the firm offers clients a multipronged approach. the consulting
branch — nextclarity — first examines the inner workings
of the practice. “then we can better adapt our solution to meet
the client’s exact needs,” says suthrum. next the billing arm,
nextclaims, takes over — doing the legwork to ensure physicians
receive correct and timely payment.
suthrum says such services are vital to a client’s short-term
bottom line and long-term survival. with medicare cutting about
21 percent of reimbursements, it is likely others will follow. many
physicians haven’t pondered what these cuts mean. “they must
increase the efficiency of their practice to avoid losing more money,”
suthrum says. again, nextservices’ expertise is advantageous. if an
insurance company decides cardiologists don’t need as many stents
during a procedure — and only will reimburse for what it feels is
appropriate — staff can knowledgably argue the doctors’ point.
forthcoming healthcare legislation may complicate the business
landscape, suthrum notes. more citizens will have access to
coverage, but he anticipates the new system might function more
like medicaid than medicare. “medicare is a better payer. it’s better
organized and more efficient,” he says. “so if washington creates
another medicaid, it means more work and less money for doctors,
which again means physicians would find it difficult to focus on
patient care.” But suthrum is both pragmatic and confident about
new products and services he hopes to provide. “we see a huge
opportunity and are well-positioned to address it,” he says.
SPRinGBoARD it’s been a long road from spring break to successful
startup. and it all began with a well-timed encounter when
suthrum returned to Ross with his burgeoning expertise in healthcare.
evening mBas malnaik and Baliga had been exploring new
ventures that fused the indian and u.s. markets. as soon as they
met suthrum, they had their angle. “we examined the insurance
industry and saw all this technology to make more money from
doctors. we wondered what would happen if we gave those weapons
to doctors. nextservices is what happened,” suthrum says.
the trio set an oct. 1, 2004, launch date — clients or no clients,
funding or no funding. a Zell lurie institute Dare to Dream grant
landed one of their first investments, and a u-m colleague became
their first employee. suthrum spent september going door-todoor
at practices throughout michigan, while malnaik created the
company’s website and Baliga sought investors.
for their first client, nextservices cut a deal to provide three
months of free consulting in exchange for an enthusiastic testimonial.
it worked until the client abruptly closed shop at the threemonth
mark. funding was equally austere. an investor’s initial
$50,000 ballooned to $200,000 within weeks, but then dried up
completely when he opted to back a vineyard instead.
the trio stayed the course and adapted accordingly. eventually
the clients and the funding did come. today suthrum is swimming
comfortably in that proverbial start-up pool. “what we’re doing
now is completely different from what we put on that first business
plan,” he says. “when i talk to someone about starting a business,
i tell them they’re not really going to know. they just need to jump
in and figure it out.” —Amy Spooner
spring 2010 DIvIDEnD 37