Okay, good. All right, good afternoon. Thanks everyone for being here at RBC's 2024 Global Healthcare Conference. My name's Sean Dodge. I'm the healthcare IT analyst here at RBC, and I'm pleased to be joined by our, our next presenting company, which is TruBridge. And here on behalf of the company is Chris Fowler, who's the Chief Executive Officer, and Vinay Bassi, who's their Chief Financial Officer. So special thanks for you all, making the trip out to join us today.
Thanks for having us.
Where I wanted to start is just kinda to set the stage, kinda give everybody some context to understand a little bit more what we'll talk to later on. But you've kinda undertaken a pretty significant strategic realignment over the last few years. So revenue cycle is something that you've done for clients, you've been involved in with clients for a long time now, but you made the decision about five years ago to really make that your central focus-
Yeah
... going forward. And so maybe just talk about what you've done there, where the organization is now, and kind of the path forward for TruBridge.
Sure. Yeah, and so, I, you know, first of all, you think about the name TruBridge, it's a new brand for us for the whole enterprise, but it's been the name of the RCM part of the business for the last 15 years. So I think that is significant just from the very top. But, you know, we, we continue to be very focused on the rural and community of the market, and feel like we have a very unique opportunity to provide support there and to help keep the care local, help to keep the healthcare independent and really thriving in the organization.
For us, you know, if you look back over the last 15 years, the evolution of the EHR has really, I won't say it's run its course, but everybody's got one, everyone's got all the pieces, and so now it's about how you continue to adjust that and make it better, more efficient. But where we see the opportunity to continue to be helpful and influential in our end of the market is really on that RCM spot, where we can, you know, sort of similar to the things that we did with the EHR, is bring in the additional skills and resources to make sure that, one, they're getting every dollar that they're supposed to get, or every penny that they're supposed to get, and then also that they're getting it in the time that they're supposed to get it.
'Cause I mean, you know, not different than the large hospitals in the metropolitan areas, all these hospitals are operating on razor-thin margins. So for us, it's about making sure that we're giving them the best chance to stay open, stay independent, and stay successful.
Okay. So the focus is revenue cycle management now. And you've got a couple of different facets to your-
Yeah
... the market that you're addressing there. So some, your traditional, kind of smaller, rural hospitals, but then you also have the ability to kinda go upmarket.
Yeah.
And so maybe just talk about the opportunities in both of those markets and how you're pursuing those.
Yeah, and so it kinda ties into, you know, why we still have the EHR. One of the reasons we have the EHR, you know, we spent 40+ years building a customer base, and we feel like we have the right with our mature service offering on the RCM side, we feel like we have the right to win that piece of the business as it converts. And, you know, kinda zooming back, you know, my perspective, our perspective is over the next 10 years, 10+ years, virtually every hospital provider is gonna be an outsourced model.
Mm-hmm.
Granted, there'll be some outliers by that point, but I think it will definitely be, that will be where everybody is versus the 80/20 that it is right now. So for us, keeping the EHR, keeping that customer base and the relationship with the clients was the fast path to a $300-$400 million opportunity in the RCM conversion there. On the flip side, the reason why we went with the TruBridge brand, back in, you know, 2011, was because we felt that we had matured the service at that point to be able to compete outside of our EHR customer base, but needed a brand to be able to do that.
So we feel like the same things that hold true for us within our EHR customer base are the same opportunities and benefits that we can provide to a Meditech, a Cerner, Athenahealth, Epic hospital, regardless, really, of size. Now, going back to the very first thing that I said, you know, we are committed to the rural community market, and we define that as 400 beds and under.
Okay.
And so for us, you know, $400 million opportunity inside of our EHR customer base, probably a $15 billion opportunity on the 400-bed and under market.
Just to help everybody better understand what you all specifically do, and I think where most people's minds go with revenue cycle outsourcing is like what somebody like R1 does where it's full end-to-end, it's front end, middle, and back.
Yep.
Rebadge in the entire employee base. Maybe just compare and contrast how you're doing revenue cycle versus-
Yeah
... the full models.
Yeah, so the easiest thing to say is, you cut out the front end, we do everything else.
Mm-hmm.
And I can expand on that a little bit, but that's really the headline. Yeah, so we again have the technology that we have a best-of-breed clearinghouse and RCM suite that we have, you know, customers that do their own billing still that are operating that, that has some eligibility technology and prior authorization. So we have some front-end features, but when we look at the outsource model, we're really picking it up at the medical coding. So once the patient has been seen and service is rendered, and then it turns into more of the administrative side, that's where we pick up and take it from that opportunity, from a diagnosis and procedure code standpoint, all the way through collections up to bad debt. We don't do bad debt.
Mm-hmm.
We don't do the very front, and we don't do the very, very end.
Okay.
Everything else in the middle is ours.
And then, going along with the strategic realignment around revenue cycle, so you did have to make some changes to sales force and sales and marketing. So maybe just walk through what you did there and-
Y eah, a couple things. One, we wanted to make sure that we were giving emphasis to that net new market, the outside of the EHR customer base, leadership and dedicated sales force. Obviously, those are gonna be a little more elongated processes, maybe different strategies that are associated because we're trying to build relationships and get in the door. So, dedicated sales staff there. And then on the customer base, on the EHR customer base, you know, our view is that a happy customer leads to a bigger customer and, you know, a longer-standing customer. And so we've really pushed the concept of a client executive that takes the holistic view of the customer.
You know, we, in the beginning of last year, we made a conversion of, you know, 1:75, as far as a client executive to a customer account, to 1:25, to give them a, you know, maybe not as big of an opportunity, but a bigger opportunity to be more impactful with each individual customer. And so again, what we're seeing is their ability to be able to make sure that, you know, they look at all the things TruBridge, for those customers to be able to figure out what's the best strategy for them to be successful.
Okay.
That's really the two approaches that we've taken there.
So if we think about, bookings would be the best barometer of success there, you just reported Q1 last week, and bookings on the revenue cycle side were really good. Maybe just talk about the investments that you've made, the changes that you made, and kind of now the maturation of those or, I guess, the gelling of those.
Yeah. Well, and, and, you know, not to put us on a trend, but it's two quarters in a row that they've been good.
Yeah.
You know, so what we're seeing again, so we're now, you know, almost a year and a half into the new organization that we've got. On the existing customer side, I think the big unlock was the relationships that have to be reformed at that client executive level, which has happened. And then them understanding where the opportunities are for us to inject the services or solutions that we have available. And then similar on the outside, I think, you know, we've got a new brand, we're getting tighter with our message, and I think the market's also coming to us a little bit as well.
Mm-hmm.
I don't think we get to take full credit for the success. I think the challenges are really what's driving the opportunity for us, and the fact that, you know, one, it's getting harder to collect every dollar.
Mm-hmm.
And two, people don't wanna do the work. And that's it. It doesn't matter whether you're in a small hospital in rural Arkansas or whether you're in Manhattan, that people are exiting healthcare. I know the headlines are around the provider side with doctors and nurses, but we're seeing that kind of from top to bottom in the hospital, where there's just a lack of employees to do the job. And so that's where we really have the opportunity to step in and be that backstop for them.
Okay. We spent a lot of time, the last couple of months talking about the impact of the Change Healthcare outage. How has that impacted you all? And I guess we've heard others talk about it as an opportunity to maybe win some new market share.
Yeah, and I would say we're seeing that as well. Again, we had two things that we were able to do, which was really impressive with our team. One, for the clearinghouse business, there's a lot of overlap between shared connections into payers, and there was about 10% of our business that we were riding on the back of Change to submit claims. Very quickly, we were able to divert that traffic either to a direct connection with us and the payer or leverage another partner to be able to minimize the impact to the customer from a claims submission and cash reimbursement standpoint. So that was one impact that, you know, was really more of a speed bump than anything.
I would say kind of the tailwind for us was our ability to stand up a quick conversion for customers who were looking for a different solution for end-to-end claim submission. And again, sticking to our knitting, staying in that 400 beds and under space. But we have seen customers that came and looked at the quick, the quick turn on, the short interim work to be able to submit the claims. And what we've seen is, instead of them going with that, they ended up going with the long-term solution and just made a wholesale change to, to, to our—Sorry for the unintended pun by saying, "Change.
Yeah.
But using us to do their claims submission going forward. So, you know, what does that look like going forward? I mean, obviously, we don't have a crystal ball. I would say that there's probably a lot of hospitals out there today looking at their outside vendors. I'm not naming any names here, looking at it from a cyber standpoint, looking at it from a, you know, what are the mitigations that need to happen, and do you feel good about the partner that you have?
Yeah. You talked earlier about the legacy EHR business, that being important to the organization, also important to the strategy and revenue cycle. There has been some attrition in that base over the years. A lot of it had to do with just legacy platforms that you were sunsetting. Maybe just an update on kind of where that client base-
Yeah
- is now.
Yeah, so I would say, yeah, the attrition that we've seen over the last several years really has been an intentional decision to consolidate to a single platform. And so as we thought about where we wanted to do the work and how we wanted to do the work, and again, going back to that happy customer, we made the decision a couple of years ago that we were gonna put all of our eggs in a single platform for the EHR. And so obviously, when you put a cohort into a buying decision, you're gonna lose some of them, which we have. But going forward, and when we kind of unpack the two and look at the legacy EHR, the one that we're staying with, the revenue run is really flattish-
Mm-hmm
... has been over the last several years, and so we're pleased with the stickiness of that. We continue to make investments into that part of the software for that customer base, for the opportunity to convert them to an RCM. There's also some opportunities for that to be-- we're not modeling it in as anything growth right now, but we're obviously paying attention to what's going on. You know, HTI-1 was a mandate that was supposed to come out at the beginning of the year that we thought would present an opportunity for us. It's been delayed a year, so I think that just delays that opportunity a little bit.
Yeah.
You know, Meaningful Use was one of those where we saw there were vendors that were not able to get certified, which created buying events and opportunities for us. I think that HTI-1 will have the same impact.
There are still buying decisions that are being made. You had in Q1, you said you'd signed a large ambulatory practice. Maybe just talk a little bit about that.
Yeah, so that was a RCM-only deal, where we're doing the service for them. And what was great about that is, you know, we talked about under the Viewgol acquisition, that the ambulatory market was an area that we were interested in, as you continue to see care go outside of the four walls of the hospital. But the Viewgol acquisition, when we press released it, the facility that we signed, I had a board member reach out to me and said: "Hey, your name just came up in our board meeting." And I of course got curious under what context.
They said, "Well, we, you know, our CEO showed us the press release that you guys just signed us." Used that as an example of them not being able to keep up with the increase in labor cost.
Mm
A nd that they've got to make another decision. So shortly thereafter, CEO calls, we get engaged, and we signed a really nice deal that I think has opportunity for us to lead as, you know, a bigger entree into the ambulatory market, as we deliver, which we're turning this one on in a couple of months. So as we're successful with the implementation and the service for them, I think that'll be kind of a bellwether for us going forward-
Yeah
... to see more opportunity there.
Going back to the EHR business, so you said, potentially some opportunities, some kind of exogenous things that'll help drive some opportunities in the future. What's the cross-selling opportunity like now into that base outside of RCM? Are there still a lot of modules and things that you can add into the EHR base?
You know, there's a couple. I wouldn't say it's a huge opportunity right now. You know, we have... there is a regulatory antimicrobial reporting requirement that we're selling right now. We just released an analytics platform-
Mm-hmm
... at our national conference two weeks ago that received some really nice reviews from the customers. So we think that there are some opportunities there. Large modules, you know, time will tell. I think more for us, it's about, you know, again, continuing to keep that customer base happy so that as other organizations are looking for reasons of, you know, how to be more efficient, and the fact that we couple RCM with our EHR, that that's a differentiating model going forward. And so when they're, you know, when there's a situation where I'm thinking about my RCM or I'm thinking about, you know, how I'm not completely satisfied with the EHR, we have an opportunity to be a double win for them, so to speak.
All right. The other, I think the other really compelling element of this story is what you're doing on the offshoring side. So there's significant opportunity to reduce your service costs. So maybe just give us a quick overview of where you're at in that and what's happening on the offshore.
Okay. I'll start, and then I'm gonna tag him in because I know he's dying to-
Yeah
... dying to talk. Yeah, so we kind of embarked on the offshore initiative, probably 18-24 months ago, with a partnered model. Obviously, the acquisition of Viewgol changed our approach to that. As of March 31st, about 25% of our CBO, so our service model, is now offshore.
Mm-hmm
W hich is right on track for where we want that number to be. I think ultimately, you know, over the next couple of years, we see that getting north of 70% of our services workforce being offshore.
Mm.
And it's a balance of the partnered model with our captive that we now have and making sure that we've got, you know, a safety net, for lack of a better term, but we're also leveraging the investment that we made. I'll let Vinay talk a little bit the same-
The margins, because we expect, because of this, our gross margins for the business to improve. Roughly from a saving perspective, it will range from around 45%-60%, 45% on the lower end when we move to partners, and then 60% is when we make it more captive. And because we have started this, at least since Viewgol, it has picked up a lot. The cumulative effect of these savings will more come in the third and the fourth quarter, like if I'm doing X amount in the first month, by the time I reach the twelfth month, I have 11 times the savings. So we do expect, a margin pick-up, more in the second half.
That's one of the drivers for us to capture, but what we are seeing early signs is that margin is flowing in smaller in the first quarter, but it will pick up. But the savings will range in the first half, more from the partners, and as they transition to our captive at TruBridge India, that's where we'll get more savings.
Okay. And so you've got a couple of dynamics going on where you, like Chris, you said, started with a partner, and then you bought a company where you're actually now managing the offshoring internally. There's a pretty significant difference in the economic there.
Yeah.
And so we'll see some kind of shifting of that over the course of the year, in addition to just higher offshore, I guess, penetration.
Yeah.
Then as we think about that kind of carrying into 2025 and 2026, as you add more and more staff there, can you quantify maybe the amount of, like, dollars of cost savings you expect this?
I would say, like if we are, I'll caveat this, this is from a CFO's perspective. I'm in the first innings, and you're asking me how the ninth inning?
Yeah.
I would say high single-digit millions is what it would be my goal to capture the savings, because I expect a few million dollar this year, and then the cumulative effect coming in for the future. So I would say it should be, a single digit, high single-digit millions by 2025, 2026 in the P&L.
Okay. And then, Vinay, you also on your most recent earnings call, laid out some other cost savings initiatives that you all have underway. Maybe just-
Sure
... just walk us through some of them.
So, I joined, just for everyone, I joined on 1st of January, and it's been my, like, four months in. And one of the areas that I looked at was trying to find efficiencies across the company, and this was done more surgically, looking at areas. And what we have found is roughly $8 million run rate of cost savings. Five million of that will be in this year, $1 million in this quarter and Q2, and then the balance. And that's a good portion, as at least the people side, has already been activated, and, and, we'll hopefully start realizing the synergies. This is a mix of driving from two or three areas. One, on a headcount, one, A, would be looking at ROI for the projects we do.
We found a couple of projects where we could partner better than spending it ourselves. That was in our financial management section. That application that gave us some savings and similarly, couple of smaller amounts there. Second aspect on headcount was just right sizing, looking at how our organization is shaped. And starting from my organization, while I'm hiring, I'm also right sizing it and putting investments in the right places, but then right sizing it and then going all the way across. That was a big driver for the people. And on the non-people side, it's just scrutiny on the non-critical vendors, because we had taken some software vendor savings already in the first quarter, where it was done, booked, and I would realize some savings.
But these were non-critical vendors that we looked at it and said: "Do we need it at this stage?" And the answer was no, and we said: "Let's cut it.
Mm-hmm.
And so that was the sum of those two that we feel confident that we'd realize, and it gives us a way of taking a more measured approach of not just cost cutting for the sake of cost cutting, but create an enough cushion for us to invest when needed.
Mm-hmm.
Yeah. And I would, I would say, you know, in his first 100+ days, you know, for me, it's the shift of investments being notional to, to really having that level of scrutiny on it to make sure that we're capturing what we want to from it. I mean, ultimately, we want to get back into, you know, really seeing, or people seeing TruBridge as a growth company.
Mm-hmm.
And so we've got to be super mindful of how we're investing and making sure that the return is there. And I think it's been great to have a partner that's really come in and, you know, scratched beyond just the surface of every little thing that we're investing in.
Yeah.
And again, so, you know, people hear cuts and savings, and all of a sudden, you know, you kind of could go to a bad place. I look at it as much more of a just we're really getting the organization healthy and ready to really grow.
Exactly.
Okay. So we talked about the near-term initiative. So, Chris, making the organization kind of healthy and ready to grow. We talked about kind of the longer-term offshoring opportunity. There's also, I think, a big opportunity for automation-
Yes
... in your business. So maybe just talk a little bit about-
Yeah
How you're using that and the savings you think that could generate?
Yeah, you know, it’s funny, you know, one of the keys I think that I continue to learn with execution is you can’t be great at 10 things all at once.
Mm-hmm.
You got to be fairly, you know, incremental as you bring in change. And last year, we started out with the offshore and the automation together, asking the same people to kind of do the same thing, from an operational, putting it in place. From an innovation standpoint, we've made the investment. We've built some of the bots to be able to do some of the work. Now it's about getting the operations ready to be able to take some of that on and kind of having that, you know, machine turn on. Feel like we're getting our feet under us on the offshore side and continuing to make progress there.
You know, the team is really coming together nicely with how that conversion's happened, and so now we're ready to take on that next step of automation and finding those opportunities within. Right now, focused on the RCM.
Mm-hmm.
I do think that, you know, Wes Cronkhite, who's our Chief Technology and Innovation Officer, having the conversation of it, shouldn't just be focused on the business. It shouldn't just be the business unit, the RCM or the EHR. Vinay should be looking at the work that's being done in his area and going to Wes and saying: "Okay, how do we automate this?
Yeah.
Our marketing officer should be looking for those things. There's a cultural impact as well, of realizing that there are things throughout the organization that bots are perfect for.
Yeah
A nd that and make sure that we're taking advantage of that low-hanging fruit across the board and allow us to kind of build out that organizational, you know, mindset of this is the way we're going about it. So I think, say all that long-winded way to say, I think we're just getting started. Going back to the baseball analogy, we're in the first, second, or third inning-
Yeah
... of this. Continuing to make sure that we're going from the innovation side of it, so the bot creation, all the way to the value at the end. That's the next unlock, is once we've identified the bot can do the work of a cash posting, making sure that the claims are posted properly, that we see that show up in the P&L, from a savings perspective, and then go to the next thing, 'cause that will build the confidence in the team of continuing to do the work.
I'll just add, like, leading by example, my team now, collections, uses bots that Wes has done.
Okay.
So what it does is, it's not just a cost saving, it's a value creation. Because what it gives is, it gives my collectors, I've doubled the collectors team, but it gives my collectors to more call rather than just taking every email and writing it. Bots are doing it. For the first 90 days of overdues, we just send bots the letters and the emails and all that. So that's the view. How I look at it is, yes, there will be some savings, but there will be some savings of what I would have incurred, or I don't get the value. If my collections improve, if my ARs improve, because my people who are today are adding more value. It's the value creation concept.
We have started using it, and hopefully, we'd like to embrace it more in my forecasting as it gets built, to start using more and more of automation, because people are using it. We just have to be very quick to adopt.
That's right. Good. Well, that's a good place to stop. So thanks again, both, for being here.
You bet.
Thank you very much.