SaaS platform AIHealth aims to stop financial embezzlement in clinics
In early 2018, 42-year-old Amit Vyas stumbled upon a very unusual problem in San Jose, South Bay, California, USA.
Every time he went to the doctor, he noticed that the insurance and the payment were handled by the secretary. The secretary would also handle the supplies for the doctor. This observation was the germ for an idea: why not build a technology interface for doctors that would track supplies?
Amit went on to build just such a solution while working in a large tech company. In pitching the software to a couple of doctors in the Bay Area, he was intrigued when he was told that they did not want a software to track inventory, instead, they wanted a platform to track their cash.
It is a well-known fact that every clinic across the world faces the threat of monetary embezzlement, which doctors generally turn a blind eye to. In the US, embezzlement is considered nothing short of fraud as it is the loss of insurance money for the customer, a loss of the doctor's image, and also a loss to the insurance company in paying out.
AIHealth Founder of Amit Vyas
For addressing a global concern
“The scene is sometimes straight out of a movie: individual employees in clinics effortlessly embezzle the money. The question is how do they succeed at doing it and how can it be stopped. It was to address these concerns and solve a huge and common problem for doctors that AIHealth was born in November 2018,” says Amit, a graduate of the University of Mumbai and the business school in Berkeley.
Amit met his co-founder Sailesh Davuluri through a mutual contact in late 2018. Sailesh had worked in the Bay Area for 25 years in a technology corporate, and both of them connected over this need to develop a SaaS product that would address embezzlement.
The entrepreneur briefly explains the process of insurance processing as it unfolds in most clinics and other doctor outfits. After the treatment is completed, the doctor designates their secretary to take the insurance details of the client and then bill the insurance company for the treatment.
Herein lies a common issue: the details of the insurance are with the secretary, who can effectively use the insurance policy number to create fake visits of patients and can then encash all the cheques that reach the clinic.
In most cases, doctors empower their secretaries to collect and deposit cheques on behalf of the clinic. Clinic employees have also been found to write false cheques for supplies by forging the doctor’s signature.
According to a 2017 Hiscox Embezzlement Study, 5.1 percent of all embezzlement cases in the US were in the healthcare industry, with a median loss of $437,106 per incident.
Practices are projected to lose between five and 10 percent of revenue to fraud every year, and 85 percent of perpetrators are first-time offenders. Incidents of embezzlement, on an average, are discovered between eight and 24 months after they are committed. Additionally, 17 percent of thefts go undetected for more than two years.
Due to embezzlement, the US medical practices lose more than $25 billion annually, according to estimates by the Medical Group Management Association (MGMA). In an MGMA survey of 946 medical practices, 83 percent reported being victims of embezzlement at some point in their operations. On an average, doctors lose $120000-$425000 in a year to embezzlement.
A SaaS solution to stay alert
To address this global issue, AIHealth has been built as a cloud-based software that enables doctors to track all forms of payments. The doctors download the AIHealth app which integrates all the billing software and gives them live updates on how many patients have visited the clinic and how many have used their insurance.
Essentially, the system figures out financial anomalies when the same insurance number is used multiple times. Whenever there is a payment trigger from the insurance company, the software is enabled to alert the doctor that the same insurance number had been charged, say, a year ago and is being triggered again. It thus alerts the doctor to check if the same patient has indeed visited the clinic multiple times.
“This allows the doctor to effectively stop embezzlement. They are able to keep completely informed of daily treatments and payments. This system essentially acts as a check by tracking all forms of payments made by patients and insurance companies," explains Amit.
This has proved to be a big business opportunity across the world. The platform has been successfully pitched to 600 clinics in California. The company was able to reach out to a large number of medical practitioners through Armaghan Onsori, a friend of Amit and a supply channel partner for doctors.
Today, AIHealth is focused on reaching dentists and their clinics. “We have a huge market of doctors in the country that we can address. Dentists alone comprise a 200,000 market in the US,” says Sailesh.
AIHealth competes with the likes of EasyClinic, Clinicea, Practo, and Visual Doctor.
The startup did not wish to disclose its revenues and personal investments since it's the first year of its operations. It definitely looks set on the path to success, with two large POCs worth $100K. If successful, these will go to countries and regions, including India.
“We see this business as a major disruptor in the healthcare industry in the US as it is able to pinpoint actual and potential incidences of embezzlement,” says Murali Chirala, CEO of FalconX, which has selected AIHealth for its incubator-cum-accelerator initiative.
(Edited by Athirupa)