The medical-supply business is a tangled web of manufacturers, distributors, group buyers and individual physicians.
Naples physician Michael Dent plans to bring them together to drive down costs and boost sales with an online marketplace called MedOfficeDirect.com.
The Internet could replace the armies of highly paid salesmen who now visit physician offices. While MedOfficeDirect.com takes a commission for each sale, Dent says it would be less than paying salespeople. Dent is currently finalizing deals with distributors and group-purchasing organizations now that the website is built.
The health care business is a delicate ecosystem of interconnected manufacturers, distributors and buyers. But improvements in technology and data management as well as cost pressures from lower insurance reimbursements are altering that area of the health care business.
However, Dent is no stranger to the challenges of launching a business in the health care field. He is the founder and a director on the board of Fort Myers-based cancer-testing firm NeoGenomics, which posted nearly $67 million in revenue in 2013 and is traded on Nasdaq (symbol: NEO; recent price: $3.25).
“This company could be 10 times larger than NeoGenomics,” Dent says.
Dent, 49, was born and raised in Tifton, Ga., a small town in the center of the state that is a stop for travelers on Interstate 75. After completing medical school in Texas, he moved to Naples in 1996.
Dent says he moved to Naples because it reminded him of the small town in which he grew up. “I always liked Florida. I picked Naples because of the location,” he says.
A specialist in obstetrics and gynecology, Dent opened the Naples Women's Center in 1996 and has grown the practice to 6,000 patients with three partner physicians.
But Dent has an entrepreneurial spirit beyond his own practice and became fascinated by advances in genetic research in the early 2000s. The decoding of the human genome, he reasoned, presented unique opportunities to start a new biotech company. “It was the starting line for everybody,” Dent recalls.
With some investors from Tampa, Dent started NeoGenomics with about $400,000 in 2001 and its shares traded publicly over the counter from the beginning. Initially, Dent controlled 60% of the company and was its president and chief medical officer until 2004.
As the company grew, Dent ceded control and management and now serves on the board. Dent currently owns or controls a 3.9% stake in NeoGenomics worth a total of nearly $6.4 million, according to the latest company proxy statement.
Dent says the key to growing a company is accepting some dilution of ownership and finding the right people to run it. “I'm the idea guy,” Dent says. “I couldn't do it all. In anything you have to know your skill sets. What jazzes me is to create.”
Throughout it all, Dent has continued to see patients at the Naples Women's Center. Still, he's had to cut back on his patient load. “How quickly can you burn the candle at both ends?” he smiles.
Besides MedOfficeDirect.com, Dent is launching a venture capital firm called Inlight Capital Partners. He's seeking to raise $10 million to invest in small technology companies.
Dent started to think about the creation of MedOfficeDirect.com six years ago when he began researching how non-acute medical supplies are manufactured, sold and distributed because he was searching for a better way to buy for Naples Women's Center.
The challenge is that there are hundreds of thousands of items and distributors offered little more than catalogs and salesmen to sell these products to physicians. No one had attempted to create a database of these items and present them in a visually appealing form on an e-commerce site, Dent says. “We had to rewrite the database,” he says.
More than visual appearance, the site's ability to track the buying and selling of thousands of items is a key function. That's because tracking sales lets purchasers obtain rebates from manufacturers. “We'll provide transactional data in real time,” Dent says.
Building the site has been costly and time consuming, Dent says. “We spent a year developing the site,” says Dent, who estimated he's invested about $600,000 in the venture. The total investment in the company now totals about $1 million and Dent is seeking another $1 million in investment capital.
Dent says he's developing partnerships with distributors who handle billions of dollars of medical supplies. He estimates the site's revenue projections are $1.5 million this year, $7 million in 2015 and $27 million by 2018.
The best analogy to the business Dent envisions is Amazon.com, but without the warehouses. “We don't touch the product,” he says. The site is partnering with distribution companies to provide buyers such as physicians, specialty physician practices and group-purchasing organizations an online marketplace for non-acute medical supplies.
To lead the team as CEO, Dent hired Steven Papas, a longtime Jacksonville-based executive who has been on both the distribution and purchasing sides of the industry. He says changes driven by new laws and technology improvements provide opportunities for companies such as MedOfficeDirect.com. “We're simplifying a very complex market,” he says.
Papas acknowledges that stepping into the web of well-established relationships between sellers and buyers of medical supplies could be tricky. To that end, Papas says the company is careful to serve as another avenue for sales. “It's Switzerland,” he says. “We're neutral. We're safe.”
Ultimately, Papas and Dent say purchasing information once cloaked in secrecy will be beneficial for physicians and other buyers of medical supplies. For example, physicians who are solo practitioners might benefit from the same pricing that a group of doctors receives.
“If you have a transparent relationship, you can drive a lot of value to the physician,” Papas says.
Company. MedOfficeDirect.com Industry. Health care Key. Technology can bring order to complex industries like health care.