Douglas Kegler – Founder & CEO, CollaborateMD

Douglas Kegler, CEO, founded the company CollaborateMD (formerly XGear Technologies) in 1999 just before publicly launching the industry’s first Internet-based practice management and electronic medical billing software, ClaimGear.

In the mid-90s, Doug saw that the healthcare community was in dire need of an improved practice management and medical billing solution. With years of experience as a computer programmer and software engineer in the healthcare sector, he knew that a better solution existed.

Kegler had begun writing several DOS and Windows-based dental and medical billing programs in 1989, but found a common problem with system built by software companies: medical practices and billing companies had to install, maintain, and support their own servers, databases, and connections with the clearinghouse or insurance companies, which greatly increased costs. Moreover, software in the medical field was cluttered with hundreds of menus, making them difficult to navigate, impossible to maintain, and altogether too expensive for practices with less than 25 physicians.

As his interest in finding a better solution turned into a determination to design and develop the software himself, Kegler paid the bills with a “day job” that was still supporting a Windows medical billing application written in Pascal for a large billing service company in Syracuse, NY. Meanwhile, the rise of Web applications throughout the banking, trading, retail, and media industries in 1997 intrigued Kegler, and undoubtedly served as the catalyst that drove him to choose the speed and flexibility of the Internet as the foundation on which he would later build his software.

Still in the brainstorming phase, Kegler solicited feedback from both a well-known neurologist who had used a medical billing program Kegler wrote in 1993 called Quicfa, and his Syracuse-based billing service client. Both expressed interest in the idea but shared hesitations about transferring data over the Web due to concerns about security.

Kegler turned away from creating a browser-based application in early 1998, fearing it would be too slow, as most users were on dial-up modems at the time. Instead he chose a Java client/server application which enabled him to maintain the software, database, and clearinghouse connections from his company. Making these changes would enable his customers to focus solely on medical billing, practice management, and patient care. The system would be designed with intuitive screens and easy-to-navigate menus, making week-long training sessions a thing of the past.

Continuing into 1999, Kegler worked non-stop on weekends and nights to design and develop his Internet-based system. As he neared completion of his first beta version, he contacted his two previous clients from Syracuse, NY, who both agreed to test the system.

Kegler distributed a press release in May of 1999 informing the healthcare sector he would soon release the first Internet-based medical billing software. The official version publicly launched in January 2000. The Syracuse-based neurologist liked the system so much that he signed up as a client, and is still a client today. Once the system was built, Kegler realized he needed to make it affordable to billing services and practices of all sizes. He established a low set-up fee to cover implementation and a low monthly fee to cover the costs of system usage, software updates and maintenance, customer support, and clearinghouse fees. The end result was an easy to use, affordable, accessible, and online medical billing and practice management solution for the healthcare industry.

Tell me about your early career.
When I was still in college (1989), I wrote a billing program for a dentist in a small town next to mine. This work helped me get my first job after college working at a company that sold and supported a server-based practice management software system. This job laid my foundation of knowledge for the medical billing industry.

How did the concept for CollaborateMD come about?
My wife and I were on our flight to Ireland for our honeymoon, and this is when I came up with the idea for the company. In my original concept, the company would not only provide the revenue cycle management software but also perform the revenue cycle services too. But after further thinking, I realized it would take a lot more money to hire staff to perform the services side of the business, and decided only to do the software side.

How was the first year in business?
The first year of business was exciting and stressful at the same time. We had just bought a home, we had an 18-month-old, and had twins on the way. Throw in starting a business out of your house and needless to say, there wasn’t much time for sleep.

What was your marketing strategy?
Since the beginning, we have always utilized the Web for our marketing and growth. Back in the early 2000s, not many companies like mine was using the Web to advertise, which was both a blessing and a curse. Customers liked the SaaS pricing model, but were not sure about trusting their data in the “cloud.”

How fast did the company grow during the first few years?
The company didn’t grow too fast, regarding dollars in the early years. My first-year revenue was in 2000 was $2,800, and it took five years to reach $1 million in 2005. It took another ten years to reach $10 million in revenue.

How do you define success?
I define success by satisfied and happy customers first, then satisfied employees, and last, growing revenue and profits.

What is the key to success?
The key to success is creating a product that doesn’t exist yet or improving a product that hasn’t been improved in a very long time. In my case, medical billing software had been around for 20+ years already, but I saw the challenges in the current products and realized I could overcome a majority of disadvantages by creating an online version of the same product.

What is the greatest lesson you’ve ever learned?
Always tell the truth and trust your gut. I don’t mean I would lie to people previously. I mean that sometimes I wouldn’t provide them with my true feelings about a situation. For example, when a vendor or associate would say, “We should do this or that,” I would smile and say “We can look into doing that,” even though I really didn’t think it was something we should do. A better reply to the person would be, “I appreciate the input or idea, but I don’t think it’s the best fit for the company because of X.”

What are some quotes that you live by?
“Every cloud has a silver lining.”

Tell me about one of the toughest days you’ve had as an entrepreneur.
The toughest day I’ve had is when I found out the person trying to raise investment money for me in the early 2000’s was providing false revenue numbers to prospects. After I found out, I was worried I would lose my first round of investment money and have to lay off my three employees and move my office back into my house. Luckily, after I told the investors what he did and provided the actual financials, they decided to keep their investments with my company.

When faced with adversity, what pushes you to keep moving forward?
I have a very positive attitude and believe that everything will work out in the end. But, that doesn’t mean I haven’t had any stressful or high anxiety days!  Those happened many times over the past 17 years. I just took a breadth and told myself we will be okay and made a plan to get through the diversity.

What advice would you give to young entrepreneurs?
Listen and always take input from others, whether in person or from reading articles. You don’t have to use the advice or input, but the more you are informed, the better decisions you can make. But most importantly, as the leader, you need to be able to make decisions! No one wants a leader that is wishy-washy and can’t make a decision.