Commentary & Analysis
Apex: An Industry Incumbent that is Innovating with Technology
According to McKinsey & Company, industry incumbents must face the digital disruption and determine what they can do differently to survive or even thrive in the future. McKinsey’s rules apply to a wide variety of industries, but this article highlights how Apex Revenue Technologies is facing the digital disruption with technological innovations.
By Barb Pellow
Published: October 13, 2016
- Keen insight into the healthcare industry enabled Apex to thrive in a function that is sometimes deemed a market commodity.
- One of the first steps in Apex’s evolution was helping healthcare institutions redesign their statements to make them more understandable to customers.
- With over 20 years of insight, the company saw an opportunity to solve the market challenges by delivering relevant messaging that fit patient’s financial experience needs and preferences.
- Apex’s management team had the rare acuity to make a preemptive move, and this foresight enabled the company to get a jump on its competitors when it came to better serving the healthcare market.
- 2016 marked the 9th consecutive year that Apex was included in the Inc. 5000, the most prestigious ranking of the nation's fastest-growing private companies.
What must your business do today to remain competitive tomorrow? With the acceleration of new digital technologies, the answer to this question is far from simple. Fortunately, the September 2016 issue of McKinsey Quarterly included an article entitled An Incumbent’s Guide to Digital Disruption that offered some great tips. The article stressed that incumbents don’t need to become the victims of disruptive technologies. According to McKinsey, industry incumbents must face the digital disruption and determine what they can do differently to survive or even thrive in the future. Incumbents need to develop a sharper insight, challenge their own stories, and be willing to disrupt long-standing—even implicit—beliefs about what it takes to be profitable in a given industry. McKinsey’s rules apply to a wide variety of industries, but this article highlights how Apex Revenue Technologies (St. Paul, MN) is facing the digital disruption with technological innovations.
About Apex Revenue Technologies
Apex Revenue Technologies provides healthcare technology solutions that cover a broad range of electronic payment, print, mail, and patient engagement services. Apex’s cloud-based software promotes patient financial engagement, streamlines patient billing processes, increases revenues, and reduces the cost to collect from patients.
Brian Kueppers, Apex Founder and CEO, recognized future trends in healthcare, formulated a strategy aligned with those trends, and reorganized his business to deliver innovative services (print, data, and digital) that enabled healthcare providers to improve revenue cycle results while strengthening relationships with patients. Combining healthcare industry insight with organizational actions opened up a tremendous opportunity for Apex to thrive in a function that is sometimes deemed a market commodity. Kueppers explains, “When I founded Apex in 1995, we primarily focused on print solutions and were known as Apex Print Technologies. Over the years, however, Apex has grown into much more than a print provider—we have transformed into Apex Revenue Technologies. We focus on developing state-of-the-art technologies and innovative solutions for our customers that deliver measurable business results.”
Leading with Innovation
Kueppers launched Apex from his basement by brokering printing for healthcare institutions. He recalls, “Healthcare providers at that point were looking to outsource the printing and mailing of patient statements, and I thought I could be a player in that market.” Kueppers soon realized that he wanted to control production, so he started his own printing company. He also partnered with a data processing firm to blend variable data with print.
Over time, the healthcare industry began undergoing a variety of changes. Kueppers notes, “Changes in U.S. healthcare stemming from the Affordable Care Act have contributed to a 68% increase in out-of-pocket costs for individual patients since 2009—and a less predictable cash flow for healthcare providers. Payments are delayed because patients question a statement’s accuracy, are confused by their bill’s presentation, or are surprised by their high out-of-pocket costs. Furthermore, 41% of patients have trouble paying their bills.” Healthcare providers typically respond to non-payers by sending the same bill four times, then turning it over to a collections agency. On average, agencies collect on just 15% of the bills they pursue, and 15% of overall healthcare billings are eventually written off as bad debt or charity care.
One of the first steps in Apex’s evolution was helping healthcare institutions redesign their statements to make them more understandable to customers. Next, the company expanded its services to offer healthcare providers as well as patients online access to statements. Healthcare institutions could view statements before they were placed in the mail stream with a tool called “myEasyView,” and patients could view and pay statements online with an offering called “mySecureBill.”
Kueppers continues, “Our initial movement to electronic document distribution gave us confidence that we could make money from non-traditional revenue sources. With over 20 years of experience processing patient billing data, we know that patients have different needs and preferences when it comes to paying for healthcare. We saw an opportunity to solve the challenges that healthcare providers were facing by delivering relevant messaging to patients with well-designed communications that fit those needs and preferences.” In 2013, Apex began development of its Apex Connect platform, which has developed into a dynamic communications and analytics system. According to Apex President Patrick Maurer, “You need to understand the patients like you’re treating a disease. Our system was built internally and it takes data from patient files, behavioral data, and other sources. The Apex Connect platform can segment the data into unique patient profiles to match the goals of healthcare organization with patient needs to improve outcomes. It contains messaging libraries that dynamically target distinct patient segments to achieve desired results, then delivers those messages at multiple patient touchpoints throughout the revenue cycle. The results are tracked and easy to monitor with dashboard analytics, enabling continued improvements and maximized results.”
Maurer described a successful campaign for a Chicago-based healthcare company using 30 variable messaging campaigns. The results included a $12 million increase in cash yield, a 4% increase in first-cycle payments, a 17% increase in the use of payment plans, and a 16.4% reduction in debt for balances of $250 or less which helped drive $1.7 million in additional revenue. Maurer elaborates, “We’re often tasked to print cheaper as a printing company, but how can you compare saving a penny on the cost of producing a statement to offering better messaging that can deliver millions in additional revenue?”
Innovation: Making the Move
Apex’s management team had the rare acuity to make a preemptive move, and this foresight enabled the company to get a jump on its competitors when it came to better serving the healthcare market. Kueppers had a clear vision of customer preferences, the role of technology, regulation, cost drivers, and the basis of competition and differentiation. He identified a private equity firm that had skills and expertise as well as funding, and he invested in the right technology infrastructure to build out a new value-oriented model for Apex. It was equally important to bring in the right technical talent and implement a tech-savvy sales team that could articulate the company’s unique value proposition.
Disruptive Technology Delivers Results
Apex’s ability to execute a strategy by leveraging emerging technologies has not gone unnoticed. In 2013, Apex Revenue Technologies was recognized with the George Mitchell Payments System Excellence Award by NACHA. George W. Mitchell, former Vice Chairman of the Board of Directors of the Federal Reserve, was an early proponent of electronic payments. The George Mitchell award honors an individual or organization that has shown superior leadership in the development, implementation, or advancement of electronic payments. NACHA stated, “Apex has shown true technology leadership in the healthcare industry. Through its efforts, Apex is helping promote ACH payments in an industry with some of the most complex billing requirements of any consumer-facing industry, including privacy regulations, complex service descriptions, insurance splits, and coding conventions.”
In 2015, Apex Revenue Technologies was the recipient of the Minnesota High Tech Association’s Tekne Award in the Software—Small and Growing Companies category. This award specifically honored the Apex Connect software platform based on its ability to help healthcare providers apply a modern approach that engages patients by matching financial communications and payment options to patient needs for better financial results.
Perhaps most importantly, the ability to deal with disruptive technologies has yielded bottom-line results for Apex. The company was ranked number 3,729 on Inc. Magazine’s 2016 annual Inc. 5000 list with a three-year sales growth of 82%. 2016 marked the 9th consecutive year that Apex was included in the Inc. 5000, the most prestigious ranking of the nation's fastest-growing private companies.
Apex recently installed a Xerox Impika device. Apex prints 14.5 million envelopes per month and 20-25 million impressions. Prior to acquiring the Impika, the company was using cut-sheet technology (DocuTechs and DocuPrints) and producing statements on preprinted shells. The implementation of inkjet technology enabled the opportunity to migrate to a whitepaper workflow and seamlessly integrate color messaging.
In September 2016, Apex Revenue Technologies joined forces with Nashville-based LetterLogic in a deal that will expand its footprint on a national basis. According to Brian Kueppers, this agreement will enable Apex to more effectively reach a broader geographic market. Both companies handle sending billing statements to patients for its clients, primarily healthcare systems and providers. Kueppers elaborates, “Apex’s revenue is now more than $60 million and LetterLogic’s revenue is nearly $40 million. Looking to the future, the combined organization will have annual revenues topping $100 million as well as a tremendous potential for additional growth.”
The Bottom Line
To succeed in the printing industry, incumbents must be able to effectively seize the next wave of technological innovation. Apex’s management team was able to identify new trends, develop new ideas, and reorganize its infrastructure to bring these new technologies to market. The company also demonstrated an ability to confront today’s digital disruption by focusing its resources on activities that address customers’ needs, promise higher profits, are technologically feasible, and make it easier to stand out in the substantial healthcare market. The key message for the printing industry is that market focus blended with the right investments will yield business results!