Should I Expand into International Markets?
Patient Care Technologies Inc. (#203 on the 1998 Inc. 500 list), in Atlanta, has the hallmarks of a successful international player: an innovative software product and cost savings that have been documented by a plethora of grateful customers. Indeed, according to cofounder and CEO Dr. Mark L. Braunstein, in the company's industry, health-care software, U.S. businesses "almost totally" dominate the world marketplace.
And yet Braunstein's tentative attempts to garner overseas customers -- he had two meetings with Australian companies, for example -- have convinced him that Patient Care Technologies has no business straying beyond America's borders. In fact, the $6.4-million company now routinely rebuffs any international inquiries it receives through its Web site. "We've had inquiries from Asia, but the nature of the product is such that any attempt to market it to a non-English-speaking country would entail significant product development," he explains. "We respond that we're not interested in getting into business in that part of the world. But we always encourage people to get back to us at some point in the future; perhaps our thinking will change."
Patient Care Technologies designs a database for the handheld computer that home-care practitioners use to record what they see and do during visits to patients. The practitioners then transmit that information to doctors, hospitals, and, most important, Medicare, in a form the government finds acceptable for reimbursement.
The amount of reporting that has to be done on each visit is staggering: home-care nurses spend 50% of their time on postvisit paperwork, Braunstein says. "The government's concern is that it not be paying for a home-care visit that wasn't necessary or didn't actually occur," he explains. "You're trying to determine from Washington, D.C., whether a nurse did or did not need to or actually did or did not visit a patient in rural Georgia. What the government created was a rational but enormously complicated and time-consuming paper-based system."
Patient Care Technologies is so focused on alleviating the inefficiencies of the U.S. bureaucracy that it can't find the time (or talent, given the tight labor market) to tackle the inefficiencies of other countries' bureaucracies. "There are, from country to country, not just language differences but also differences in the way health care is delivered, regulated, and reimbursed," Braunstein says.
True, 1% of the company's 500 customers are in Canada, proving that the product can indeed cross borders. But "the return on the investment we've made in the Canadian market has been low compared with our role in the U.S. market," Braunstein notes. That's because, despite its reputation as a health-care haven, Canada is actually a morass of small, localized bureaucracies, with each province writing--and, not infrequently, rewriting--the rules of how health care in general, and home care in particular, is to be delivered and reimbursed. Patient Care Technologies is sticking with Canada, Braunstein says, mainly out of loyalty to a customer that is a big player in the Canadian hospital market.
Overseas work, Braunstein stresses, is "not something we're philosophically opposed to." But for now, there are simply too many big hurdles to make it worth the company's while. "If it weren't for the fact that there are language differences and that our product is very highly wrapped up with language, if it weren't for the fact that health care is heavily regulated by government, and if it weren't for the fact that there's a need for direct sales and training face-to-face, then I'd probably be telling you about the international business we're doing," Braunstein says.
Braunstein can even imagine the company venturing into the export market in another few years. "I'm not saying it couldn't be done," he says. "But because of the high degree of governmental regulation, health care and health-care applications are not necessarily as easily exported as a spreadsheet or a word-processing application." Besides, he adds, the company has only begun to penetrate the U.S. market. "We estimate that no more than 15% of the 10,000 Medicare-certified home-care companies in the U.S. have a product of this type, so it's hardly the case that companies like ours need to look overseas to grow."