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BUYING A SMALL BUSINESS

Personal Pediatrics Wants to Revive the Vanishing Art of the House Call.

First it needs $1 million.
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The Pitch: I worked in a pediatric practice for 10 years. I saw 40 patients a day and spent no more than five minutes with each one. That's what you have to do when you take insurance. Personal Pediatrics offers an alternative. Pediatricians who join our network pay $50,000 for a portable office, including a fridge to transport common medicines, and receive access to a secure website that takes care of administrative tasks and stores medical records. Parents pay an annual fee of about $1,500 per child and get 24-7 telephone access to their doctor and appointments in the comfort of their own homes. Rather than taking insurance, our doctors set their own rates, are paid cash, and keep two-thirds of the annual fee. Our model lets doctors build practices at a fraction of the cost it takes to set up and run an office.


Company: Personal Pediatrics

Owners: Natalie Hodge, 37, and her brother, Ben Black, 40

Location: St. Louis, Missouri

Employees: One unpaid temp

2006 Revenue: 0

2007 Projected Revenue: $300,000

Amount Needed: $1 million to recruit pediatricians, redesign the website, develop better software, and enhance the portable office.

Clients: Pediatricians who want to run a house call practice without a brick-and-mortar office. Hodge has recruited one doctor so far.

Recent Buzz: Mentions in local press, including the St. Louis Post-Dispatch


Investors React

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The idea is intriguing. There's great opportunity for companies to insert themselves between doctors and patients and manage that incredibly chaotic and inefficient process. But Hodge needs proof that it works. She should find six to 12 pediatricians who will test the service for free for a few months. She needs to perfect the model before selling it aggressively to doctors. For now, Hodge should try to raise $500,000 and immediately hire a businessperson who knows how to commercialize a new product. After nine months, she should have a handful of paying customers and some specific data she can use to raise a couple million dollars.

Michael Greeley
Founder and General Partner, IDG Ventures
Boston

A tough sell

I think there's a market for boutique pediatrics to serve working mothers. The retainer is lower than what I've seen in other specialties, which is good, and the website is a good idea--though many large companies already offer online medical record storage. But the biggest problem I see is that pediatricians are already inundated with sales pitches from big pharmaceuticals and medical equipment makers. Trying to sell them anything new is extremely difficult. If Hodge really wants to raise money, she first should approach pediatric associations and try to get support there. Pediatricians themselves might be a source of angel capital.

Winston Churchill
Managing General Partner, SCP Partners
Wayne, Pennsylvania

Where's the business model?

My biggest question is: What's the compelling business model that entices a pediatrician to sign up? Doctors don't make house calls because it's inefficient. Personal Pediatrics needs to show how many patients will sign up in a typical area and how many visits the doctor will have to make. At some point, it becomes a scheduling problem for pediatricians. How do they most efficiently drive from house to house? At this stage, trying to raise $1 million seems too much. The cash she needs now should come from friends and family. To raise money from an angel investor, she'll need more pediatricians signed up.

Ed Esber
Founding Member, Angels Forum
General Partner, Aslo Funds
Palo Alto, California




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