CTW

October 31, 2003, Vol.1, No. 15

The opportunity created by the Health Insurance Portability and Accountability Act (HIPAA) has driven three years of rapid growth for Electronic Data Interchange (EDI) provider Foresight Corporation, including a 250 percent increase in revenues and improved profitability.

Enacted in 1996, HIPAA is best known for mandating health insurance portability and new patient privacy forms.  But Foresight President and CEO Bob Fisher found that the greater impact came in the processing of transactions between health care providers and payers.

"Healthcare is now 17 percent of the gross domestic product and administrative costs are 40 percent of that.  HIPAA's goal is to reduce these overhead costs by creating a set of transaction standards for health care payers and providers," Fisher said.

Fisher and his Foresight team monitored the progress of HIPAA since its inception.  "HIPAA tried to standardize everything.  A healthcare claim definition is more than 800 pages.  That makes it extremely difficult to verify whether a claim is HIPAA compliant," Fisher said.  In 1999, Foresight leapt into the market with InStream™. 

"InStream has the unique ability to look at any data stream of HIPAA transactions and make immediate judgment as to whether they are HIPAA compliant.  It pulls out bad claims on the fly," Fisher said.  "If a hospital is sending 1,000 claims and two are non-compliant, the insurer often rejects the entire batch - this process normally takes 33 days. With InStream, we can reduce that to eight days and speed payment."  The result is increased cash flow for providers and reduced settlement costs for payers, according to Fisher.

InStream has driven Foresight's growth in the past year.  High-profile deals were signed with WebMD, Anthem, Premera, and Aetna, along with a partnership with Sterling Commerce that made InStream Sterling's HIPAA solution.  And, although the deadline for HIPAA compliance has formally passed, Fisher sees still more opportunity in the market for Foresight.

"Many payers and most providers are still not HIPAA compliant," Fisher said.  "Providers need to show a good faith effort to become compliant in order to keep getting paid.  And more HIPAA standards are coming."  Meantime, Foresight has added new capabilities and new solutions for HIPAA users.  "We are enhancing InStream and also our popular CommunityManager™ service, which is used to help payers test and manage communities of providers to assure their compliance."

Fisher founded Foresight in 1990 to develop tools that defined EDI standards between buyers and sellers.  "EDISIM® was our flagship product since 1991, there are more than 6000 users today," Fisher said.  "It is the most popular product in world for defining EDI usages and carried us for years.  It was never very expensive, making Foresight more famous than rich in the early years.  That's changed and Foresight is a very exciting place right now."

Foresight, which is privately-held, had early funding by a set of local angel investors with venture capital investment added in 2000.  Fisher said that the company's strong cash position negates the need for further funding for the time being.  They are "keeping an eye on" the public markets, but don't see a good opportunity to go public right now.    
    
Foresight Corporation

Back to Portfolio News