Web lures medical firm
By Eric Hubler
Denver Post Business Writer
Nov. 7 - The real world isn't an easy place to do business. That's why Arapahoe County-based Medix Resources Inc., originally a medicalstaffing company, is joining the race to cyberspace.
The company's shift into the business of providing medical information to doctors and hospitals over the Internet stems from founder John Yeros' desire not to be in the right place at the wrong time - again. In 1988, Yeros, then a Denver stockbroker, left the securities industry after watching a client he calls "not a rocket scientist" open a successful medical-staffing business in St. Louis. (In fairness to the client, Yeros describes himself that way, too.)
Yeros rented an office, hired a nurse and called his new company International Nursing Services. It expanded to eight sites in four states, listed shares on the Nasdaq Small Cap market and, by 1997, reached $25 million in annual revenues.
"In the early '90s there was a pretty big boom and we raised some money and made some acquisitions," Yeros says. By 1997, however, the medicalstaffing industry was tanking as investors wearied of its scalpel-thin profit margins. National players were folding or seeing their shares fall so far that their revenues dwarfed their market capitalizations, and International Nursing's shares went along for the ride to oblivion, plummeting from a high of $7.94 in 1996 to 5 cents at one point last year. The company was banished to the Nasdaq OTC Bulletin Board in July and remains there. The reason for the move wasn't the low share price, but new Nasdaq rules requiring $2 million in tangible assets, which, as a service company, International Nursing couldn't meet. Friday's close was 45 cents.
"It was obvious (the boom) was probably over, and as a $25 million revenue company, our shareholders were never going to get the kind of benefit that shareholders of a public company should get," Yeros says.
Internet to the rescue, he hopes. International Nursing last year bought a small California company called Cymedix Lynx that was working on software that would transmit information such as insurance eligibility, drug interaction warnings and referral authorizations among doctors' offices, hospitals, labs, pharmacies and HMOs.
The idea is to boost efficiency at health-care providers by eliminating the torrent of phone calls and faxes that plague them. Medical outcomes could also be improved because doctors would, for example, stop writing prescriptions for medications that the patient isn't covered for, forcing the patient to go home from the pharmacy empty-handed.
"We had enough foresight to see that the Internet and health care hadn't really gotten together yet, and there was a move to go in that direction," Yeros says. Shortly after closing on its purchase of Cymedix in January 1998, International Nursing changed its name to Medix Resources (in the process giving up a nifty ticker symbol, NURS). The Cymedix Lynx subsidiary remains in Thousand Oaks, Calif., and its handiwork is referred to as "the Cymedix.com software product suite" or "the Cymedix.com product portfolio." Does it work? Hard to say, because it can't really prove itself until a critical mass of health-care providers agree to use it.
"Anybody that wants to be on the system is going to have to get the software," Yeros says. And even though the software is provided free, "it's going to be a major effort, whether it's us or somebody else, to be able to provide software to connect everybody."
The Cymedix software has two key endorsements, however: the pharmacy unit of WellPoint Health Networks, the country's largest managed-care company, is testing it and has an option to take an equity stake in Medix if it likes what it sees; and a Long Island, N.Y., medical management company called Advica Health Resources said Monday it will incorporate the Cymedix software into its own Web-based "iHealth" system.
Medix still places about 100 temporary medical workers a day through offices in Texas and Colorado that go under the names National Care Resources and TherAmerica, for annual revenues of $10 million. But it sold or closed staffing offices in New York, California and Colorado. Yeros wouldn't comment on the fate of the remaining staffing operations, but it's clear the company's attention is elsewhere. It's bringing on nationally prominent directors, including Dr. David B. Skinner, CEO of New York Presbyterian Hospital. Late last month, Yeros had himself replaced as CEO by John Prufeta, a New Yorker involved with several health-care companies there. Yeros remains president and board chairman. |
