One interesting aspect of Southern California's technology industry is its diversity of companies, and the number of startups across the wide industries here. While digital media and Hollywood gets a lot of the attention, a less often seen side are the companies providing services and products to corporations. Recently, we spoke to Joel Portice, co-founder of Enclarity (www.enclarity.com), a venture backed firm based in Aliso Viejo to hear about how the company is applying data cleansing techniques from the financial industry, and applying them to the healthcare industry. The firm has received two round of funding from Ignition Partners and Bain Capital, with its most recent round being a $10M Series B investment in January. The interview was conducted by Ben Kuo.
What is Enclarity, and what are your markets?
Joel Portice: What Enclarity is about, is leveraging technologies that have been proven in financial services and consumer services, into the healthcare industry, for the purpose of improving business processes and operations processes for healthcare payers in the pharmaceutical space. A number of us came out of the financial services area through Fair Isaac Corp., and also have a mixture of background from large health care payers such as UnitedHealth Group and Healthnet. We brought these competencies in order to improve operational processes of the payer community and pharmaceutical companies, specifically focused on the problem of bad provider data. We improve the data through automated cleansing and augmentation. A good analogy is that we're the credit bureau of the health care industry. We do that by polling data -- claim information, specific data about providers--and use advanced analytics and scoring from the consumer and financial services space in order to identify the most accurate and reliable provider information. That information is integrated into customer systems, and improves claims processing, online web directories, decision support capabilities, and the only way to effectively do that is to apply the credit bureau model.
Who are your customers, and is data quality really that big of an issue for them?
Joel Portice: Our core focus at this iteration is health payers. Four of the five top health payers are our customers, and we have contracts with 30 of the 40 tope health plans. Four of the top ten preferred providers (PPOs) are also customers. The bad data comes from multiple sources--manually entered data, data pulled in from different networks that networks use for contracting with providers, and data pulled in from other types of static, public and private sources. That data become corrupt because there are multiple people and processes touching it. What we've done is set up an ASP hosted model, in which we automatically pull data down and cleanse it, and return it. We process about 500,000 records an hour. It's very fast, and the purpose of the speed is to ensure that processes and operational processes at the payer are not disrupted. Our main customers are the health plans themselves. The reason it's such a problem, is that the bad data accounts for inaccurate claims processing, and ineffective correspondence with providers. There is a $26 billion dollar a year problem alone of sending checks to the wrong doctor.
How did the company come about?
Joel Portice: The company was founded by myself and Sean Downs. We had been dealing with the issue of bad provider data throughout our careers. Both in the health care side--for me, a I had a startup back in the early 90's I sold to UnitedHealthGroup, and I was at Fair Isaac where we were primarily working on pattern recognition for fraud detection. Fair Isaac is known for its FICO scores. Sean has been on the property/casualty side, and saw the same problems with those carriers as well. At Fair Isaac we saw this issue, and that the solutions rested less at a healthcare It approach--aimed at wellness and clinical management--and that the answer really relied on financial services technology. We broached it with the executive team at Fair Isaac, and determined then that they needed to pass on the opportunity, because it was not in their core business--and they were right--and because the CEO was more focused on quarterly earnings. So we then left and started the company with a Series A with Ignition Partners up in Seattle, and recently in the last year did a Series B round with Ignition and Bain Capital.
How did you connect with your investors?
Joel Portice: We found Ignition because Sean was an entrepreneur in residence with them after he left Fair Issac. He had been an EIR with Ignition, and we'd bee talking with Ignition about their portfolio companies that we had been looking at. Then, we decided to do this and they funded us. The Bain opportunity came when about a year ago, we were pursuing an acquisition to acquire a competitor of ours. We raised about 3 times capital needed to complete the acquisition, but due to some due diligence decided not to proceed with the acquisition. Bain was still showing interest and wanted to be involved, so we decided to do a Series B to include Bain.
Where are you now, and where are you headed with the business?
Joel Portice: We are continuing to focus on our core primary businesss, and the market for us, which is payers. Our focus, frankly, is to win the payer space this year. After that we see ourselves starting to spread out to the pharmaceutical space, which is a secondary market for us. We do generate revenue now and have customers in the pharmaceutical side, primarily through partnerships. One partner is Fair Isaac -- we provide the intelligence and data inside of their direct to physician pharma marketing, and we do that with another company with surveillance data out in Philadelphia. It's a very logical extension into the pharma and biomed space, which you will see us doing in a much more aggressive way by Q4 of this year.
It seems like your business has ramped up pretty quickly, when did you start?
Joel Portice: We launched in the first quarter of 2005, and we have ramped quickly. We've been able to because the market has received us very warmly and quickly. That tells us that one -- the business problem is real, tangible, and it needs to be prepared. Second, that the system works--when you launch software as an ASP service and it works, that is even better because we're able to show demonstrative value and benefits to customers almost immediately. We've bought on top tier health plans and continue to penetrate second tier and third tier plans is really about the fact that a) it works and b) the problem is real. This can't be fixed the old way, which is to send us a file, clean it, and send it back, which takes 4-6 weeks, and then you have to figure out what to do with the file. Our approach is to be fast, accurate, and integrated. By focusing in on the customer need and what the business needs to deliver on it, the market responds very well.
Finally, how big is the business now, and how many employees do you have?
Joel Portice: We have 32 full time employees, and 60 contracted employees. Our main corporate office is in South Orange County. Our data center and technology is in Minneapolis, Minnesota, with sales all around the country.