Former Viewpointe Chief Lettko Eyes Big Potential at ProxyMed

Though he's only been on the job for a few weeks as chief executive of ProxyMed Inc., a transaction-processing, business-process outsourcing, and cost-containment company, John Lettko sees clear parallels between the industry he left–financial services–and the one he's entering?health care. Lettko, the former chief executive of Viewpointe Archive Services, a check-image archive and retrieval services provider owned by several major banks and International Business Machines Corp., was named head of ProxyMed on May 11. He is a 25-year veteran in the financial and technology-services industries, including 10 years with Electronic Data Systems Corp., where he managed a global staff of 1,200 and was responsible for a $300 million annual portfolio of accounts. While the financial-services industry is maturing, Lettko sees health care as still offering plenty of new opportunities for transaction processing and value-added services. “A lot of consolidation is happening in financial services, but health care is still evolving,” he says. “It looks similar to the early days of banking when ATM networks began to take hold.” While health care can be highly fragmented and regional, which often makes it difficult for even deep-pocketed companies to build national platforms to process claims and payments, Lettko believes the health-care market is finally beginning to implement universal transaction-processing standards. In recent years, after a decade of trial and error, the health-care industry has begun to achieve universal electronic data interchange standardization under the provisions of the Health Insurance Portability and Accountability Act of 1996. “The biggest change has been HIPAA, which is beginning to bring about EDI standards,” Lettko says. “It's an evolution similar to banking where eventually standardization was agreed to and implemented by the industry.” Having just taken over at ProxyMed, Lettko says it's still too early to discuss what changes might be forthcoming for the company, which is the second-largest claims clearing house behind WebMD Business Services. ProxyMed had total 2004 revenues of $90.2 million, compared to $71.5 million in 2003. It's clear, however, that Lettko will have a strong hand in helping ProxyMed diversify. At Viewpointe, a major player in the nascent check-electronification market, and as president of Xpede Inc., a venture-backed application-service provider for the home-lending market, Lettko gained significant experience in growing start-up operations–and making acquisitions. He sees more services converging in the health-care technology market. A potential big opportunity for ProxyMed, which already has a marketing and business alliance with First Data Corp., is implementing new ways to incorporate more card services into processing deals with payers, providers, and employers. Driven by new forms of health-care spending and health-care savings accounts tied to debit cards, industry analysts predict a windfall of new business opportunities for banks, bank-card companies, and processors–with the right connectivity to regional and national health-care payers and providers. At ProxyMed, Lettko is taking over a company that sees mergers and acquisitions as a key strategy in growing market share. Since 2002, the processor has made two acquisitions to diversify its technology and processing operations. In 2002, the company acquired MedUnite Inc., a transaction-processing company with strong connectivity to commercial health-care payers. In 2004, ProxyMed acquired PlanVista, which provides medical-cost containment and business-process outsourcing services for the medical-insurance and managed-care industries, as well as services for health-care providers. ProxyMed, which processes more than 270 million transactions annually, is building out its technology and business base to support a broader range of HIPAA-certified financial, clinical, and administrative transactions. “ProxyMed has just begun to deliver on the potential within the health-care technology market, and I believe we can build this company into the market leader,” Lettko says.