Sep 21, 2019 · 15m · top-founders
1519 Health Records Company Hits $23m ARR Serving 6000 Health Customers
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this podcast interview, DrChrono co-founder and CEO Michael Nusimow details how the company pioneered mobile electronic health records on the iPad, scaled to $23 million in ARR across 6,000 medical practices, and combined SaaS software with revenue cycle management to achieve sustainable growth.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 23.8% of the talking time here. How this is scored →
Nathan as informed peer 4.0 Guest teaching 3.2 Guest disagreement 0.2 Nathan pushing back 1.4
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 6:50 Reconciling pricing math with actual ARR
Michael calmly corrects Nathan's assumption that 6,000 providers at $6,000 per year translates directly to $3M per month, noting discounting and tiered RCM structures.
Hardest push from Nathan ▶ 6:36 Nathan challenges revenue arithmeticNathan directly challenges the discrepancy between stated pricing and total revenue run rate, refusing the unsegmented provider figure until the math is resolved.
Biggest teaching moment ▶ 2:29 Defining ambulatory clinic workflows and RCM monetizationMichael educates Nathan on what ambulatory healthcare encompasses and details how revenue cycle management monetizes insurance claims.
Nathan holds their own ▶ 7:07 Synthesizing blended ARPU and revenue splitNathan swiftly breaks down the two-thirds SaaS versus one-third RCM split to deduce the true average monthly revenue per account across the 6,000 customer base.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Executive Summary and Key Metrics Overview | 3 | 1 | 0 | 0 | Nathan delivers the executive summary and key operational metrics before inviting Michael to introduce Dr. Chrono's core iPad EHR platform. The interaction is fully cooperative with no friction. | |
| Ambulatory Focus and Revenue Cycle Management | 6 | 6 | 1 | 4 | Nathan presses on the revenue mix and attempts quick mental math on ACV and customer counts. Michael clarifies why standard seat pricing does not cleanly multiply into total ARR due to practice tiering and the RCM revenue share model. | |
| Growth Trajectory, Fundraising History, and Debt Financing | 4 | 4 | 0 | 2 | Nathan drills into growth rates and distinguishes between equity and venture debt financing. Michael shares historical industry context on federal Meaningful Use subsidies spurring EHR adoption. | |
| Headcount Distribution, Unit Economics, and Churn Dynamics | 5 | 5 | 0 | 1 | Nathan probes unit economics and net revenue retention benchmarks. Michael explains involuntary gross churn resulting from small medical practices consolidating into larger health systems. | |
| The Famous Five Rapid-Fire Questions | 2 | 0 | 0 | 0 | Standard rapid-fire closing questions covering business books, CEOs, sleep, family, and reflections on early career moves. The dialogue is friendly and straightforward. |
Statements from this episode (15)
Nusimow: DrChrono holds DEA certification for mobile controlled substance prescriptions
“We're certified with the DEA to send such powerful prescriptions through the iPad and iPhone.”
DrChrono Takes a Cut of Clinic Insurance Collections for RCM
“Our upsell where we generate the revenue is by taking a percentage of the revenue that we help the doctor and clinic earn from the insurance company.”
Nusimow: DrChrono software licenses average roughly $6,000 per provider annually
“For the software side an average software per provider license would be roughly around 6000 dollars a year.”
Nusimow: Only about 700,000 of the 1M US MD holders practice medicine
“There's about a million people with an M.D. In the United States, and only about 700,000 of those M.D.s who, you know, people in the U.S. Who have a medical degree actually practice medicine today.”
Nusimow: DrChrono is at approximately $23M in ARR
“No, we're probably at around a twenty three million dollar ARR rate right now.”
Nusimow: DrChrono RCM generates one-third of revenue from 10% of customers
“The RCM business, which is about a third of our revenue and has been growing really fast, that's only about 10% of our customer base.”
Nusimow: DrChrono Ended 2018 at Around $15M ARR With 50% Growth
“We've been growing at about 50% year over year, so I believe we ended the year last year with about around fifteen million in ARR.”
Nusimow: DrChrono Added Around $2.5M in Debt to Supplement Equity
“I think we've used some venture debt along with our seed round and with our series A round. So that's something we're able to use to kind of supplement the, that equity financing, probably another two and a half million in debt as part of those rounds.”
Nusimow: Physicians bought 10% of initial 300,000 iPad pre-orders
“Way back in April, 2010 when the iPad first launched, there were about 300,000 pre-orders for the iPad. And it was limited to, like, two iPads per household or customer. And about 10% of those, 30,000 of those were sold to physicians.”
Nusimow: Under 3% of US doctors used EMRs in 2009-2010
“You know, in circa 2009, 2010, less than three percent of doctors in the US were using any kind of EMR.”
Nusimow: US Meaningful Use program paid $30B for EHR adoption
“And there was a set of government incentives called Meaningful Use that paid out thirty billion dollars over the last 10 years to really just giving incentives to doctors to start using EHR tech like Dr. Crono and others”
Nusimow: Medicare estimates 85% of providers use EHR technology
“Medicare puts that somewhere around 85% of providers are using this tech.”
Nusimow: DrChrono achieved negative net churn in eight of nine quarters
“For the last I think it's been around eight of the last nine quarters, we've had a negative net churn, so we've been able to expand our user base beyond what we've churned.”
Nusimow: Involuntary churn accounts for 60% of DrChrono's gross churn
“You know, for us about 60% of the gross churn that we do have is what I'd call involuntary churn which is, you know, a practice shutting down, providers leaving a practice.”
Nusimow: Small-practice ambulatory providers dropped from over 60% to 40%
“When we started the company 10 years ago, probably 60 somewhere between, you know, more than 60% of providers were in these smaller one to five provider groups. And today or at least in 2017, I've seen data that, you know, that's more of a share of about 40% o…”