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Bostech's software aims to rein in lab-test costs

October 15, 2011

Patching together a part of the nation’s broken health care system is proving to be good business for local software firm Bostech Corp.

The Zionsville-based company grew sales 60 percent in its third quarter over its second quarter, when it launched a new software-as-a-service product that helps medical labs manage their disparate computer systems from a Web portal.

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Sales of hc1.com have been so strong that Bostech CEO Brad Bostic thinks the company can double its sales this year and next. He declined to say how much revenue Bostech has now, but said that kind of performance would make Bostech a $10 million-per-year firm.

Bostech’s timing is good. Because the federal Medicare program and private health plans are pushing hospitals and doctors to enter payment contracts that reward them for keeping costs low, the health care providers are demanding from the medical labs more information on what and why they’re spending for tests.

At the same time, because Medicare and private health plans are cutting payments to hospitals for follow-up care induced by preventable errors—which can be caused by delayed or inaccurate lab data—hospitals are also interested in seeing labs cut down their error rates.

But to Bostic’s knowledge, no firm has yet launched a subscription-based software—which requires no upfront equipment purchases—to help the nation’s 215,000 medical labs do those things.

“We’re in kind of a blue ocean,” said Bostic, referring un-self-consciously to the 2005 business book “Blue Ocean Strategy” by Chan Kim and Renee Mauborgne. “We know there’s this huge wave of demand out there.”

Medical lab veteran Ken Cerney couldn’t find anything quite like hc1.com as he launched his lab company, Indianapolis-based Know Error Systems, in April 2009. But he knew he needed a product like it to get test results back faster to the physicians who ordered them.

His scientists and lab analysts had to pull information from multiple computer systems that operated Know Error’s testing equipment to produce a report for the physicians. That was taking, on average, 45 minutes per report, Cerney said. But hc1.com centralizes all the information into one place, and now Know Error’s analysts can generate a report in about five minutes, he said.

“It enables us to increase our capacity, number one, and let’s face it, our labor is very expensive on our scientist and analyst side,” Cerney said.

Hc1.com also allows Know Error to report lab results in a form that can feed directly into electronic medical record systems operated by the hospitals and physicians the lab serves. That was hard to do before, Cerney said, because few hospitals and physicians use the same electronic medical record system.

“Probably the biggest difficulty is connecting to your customer,” he said. “You can hire a full-time IT staff and use one-to-one connections. Hc1 enables us to connect to Bostech. And Bostech manages my entire connectivity from there.”

Troy Reiff, the chief operating officer at St. Vincent Seton Specialty Hospitals, has been pushing the labs his hospitals work with to use hc1.com. The system generates instant reports that show a lab’s turnaround time, which physicians in the hospital are ordering the most tests, or which patients continue to be tested multiple times a day even though their results keep coming back normal.

Having that information can help Reiff and other hospital managers reduce needless testing—a growing issue now that excessive lab testing could eat into hospitals’ payments from health plans, Reiff said.

As many hospital employees as needed can have logins to hc1.com, and have reports tailored to the information they most need to know to do their jobs.

“We will know more in real time, where as now it will be weeks or months” before reports on lab performance are available, said Reiff, who is a registered nurse. “It really gives the ability to put information in the hands of front-line staff, front-line leadership, and ongoing dashboard monitoring up to people at my level.”

Bostech has boosted its staff to 35 people, most of them at its headquarters along West 96th Street, just north of the Dow AgroSciences campus. A year ago, the company secured some training grants from the state of Indiana, promising to boost its work force to 80 by the end of 2013.

Bostic started the firm in 1997 as an information technology consulting firm. He then focused Bostech on developing software, called Chain Builder, that helped companies in the retail, energy, manufacturing and distribution industries link together their various computer systems or to link those computer systems to cloud computing networks.

In 2006, Bostic co-founded ChaCha Search Inc. with local entrepreneur Scott Jones and served as the company’s president for three years. But now his attention is back full time to Bostech, where he thinks the hc1.com product can soar.

“It’s like [customer relationship management] for health care,” Bostic said as he ticked through slides on a flat-panel screen on one of the bare walls of his office. “It allows you to know everything about everyone that you work with.”•

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