Kareo, a startup that provides small medical practices the tools they need to run their business, has pulled in $55 million in funding to accelerate expansion in doctors’ offices across the country.
Montreux Equity Partners, a late-stage health tech fund, led the round, with participation from Silver Lake Waterman as well as all previous investors including Greenspring Associates, OpenView Venture Partners, and Stripes Group.
Kareo helps doctors and healthcare providers manage all aspects of running a practice, from online scheduling and patient communication to electronic health record management. Launched ten years ago, Kareo is currently being used by over 30,000 physicians and medical professionals who are caring for a combined 40 million patients.
“We’re really helping practices cope with the transition that’s happening right now to a consumerization of healthcare,” says Kareo founder Dan Rodrigues. “Patients are starting to pay a larger portion of their medical bills, and as a result they’re becoming a bit more savvy and demanding about the quality and cost of the service.”
Kareo is focused on small healthcare practices that employ fewer than ten physicians. Their clients span over 50 medical specialties, including family practice, anesthesiology, cardiology, and physical therapy.
“The backbone of the healthcare system is really these small, one- to nine-physician practices, but the technology and software solutions that they’re using are really old and frustrating,” says Michael Matly of Montreux, a doctor by training who spent many years working at Mayo Clinic. “Physicians now spend so little time with patients because there’s so much administrative burden in running the business.”
Kareo’s electronic health record is free, and the company charges $300 per doctor per month for its billing software. Physicians can choose to outsource all of their billing to Kareo for a percentage of the practice’s collections each month, which averages around $2,000 per doctor.
According to Rodrigues, 50 percent of healthcare providers work in practices with fewer than ten physicians. This adds up to a target market of around 750,000 medical offices in the U.S. alone.
Kareo is already serving 5 percent of this market, Rodrigues says, and bringing in well over $50 million in annual revenue. The company will use the funding to expand its U.S. footprint and build out additional products and services to make doctors’ lives easier.