Case Study: HealthWare Systems Benefits from Alternative Financing Solution
HealthWare Systems is a software company specializing in healthcare revenue cycle solutions located in Elgin, Illinois. Its clients include hospitals and health systems throughout the United States. As one of Coveted Financial’s very first clients, HealthWare has now profited from the company’s financial expertise for over 8 years.
Before working with Coveted, HealthWare Systems sold its enterprise workflow automation solutions as a capital purchase. This tactic proved challenging for sales as hospitals have a finite budget for annual capital expenditures and a wide variety of options for spending. Essentially, HealthWare was not just competing against other software companies, but against every capital expenditure a client was considering (e.g. purchasing new MRI, expanding the parking garage).
Sales were also more difficult because clients were required to pay a larger sum of money up front, meaning it took longer to achieve their return on investment.
Although a software lease agreement could lower upfront costs, hospitals would still consider this a capital expenditure. HealthWare needed another solution.
Coveted created a solution that transformed HealthWare’s former pricing model into a Software as a Subscription (SaaS) model. This was no simple feat as HealthWare’s typical engagement included custom development, transaction fees, support, and other services across the enterprise. Now, HealthWare is able to bundle everything into a monthly subscription fee with NO upfront costs to the client – regardless of the size or complexity of the engagement.
Consequently, sales improved due to the more immediate ROI hospitals now see. As Steve Gruner (HealthWare’s CEO) explained,
“The cost is now spread out over a monthly subscription agreement versus the client having to write us a big check up front. They don’t have to try to figure out where to find that money – they’re finding the money in the savings they’re going to generate almost immediately.”
This solution benefits all parties, including HealthWare’s clients and network of outside investors. As Gruner put it, “Because we’re distributing our upfront costs (the cost of the software, implementation, training, and in many cases transaction fees and hardware) across the life of the agreement, we’re risk-sharing with the client.”
By utilizing this customized finance solution, HealthWare has unlimited flexibility in how it structures its deals.
“And our investors like the program so much, they wind up returning and doing additional deals,” Gruner said.
Additionally, Coveted’s services were essential to HealthWare as the software company grew and expanded its workforce and products beyond Illinois. Doing business in other states introduced new legal issues related to sales tax and employment. Coveted brought its expertise to these areas, so there was no need for HealthWare to hire its own tax attorneys or other specialists.
Gruner said Coveted has introduced HealthWare to many other resources as well, thanks to its extended network of connections.
“They help us with recruiting. They recommended our current accounting firm and that relationship’s been very good. Any time we’ve needed any type of specific expertise in a given area, we’re able to pick up the phone and call Coveted and they can either provide that service or point us in the right direction.”
Of course, the most valuable benefit HealthWare gained since implementing Coveted’s solution is in capital growth, which has enabled the software company to fund itself without relying on institutional capital through a private equity group or venture capitalist.
Gruner absolutely recommends Coveted to other businesses looking to grow without having to sacrifice ownership in their company or control over their organization.