Health-Care Software Firm Thrives with Executives Based in Various States.

By Robin Frames, Albuquerque Journal, N.M. Knight Ridder/Tribune Business News

Oct. 20--CORRALES, N.M. -- A software company helping health care companies simplify their administration is thriving with the firm's CEO in Corrales, two other executives based in Los Angeles and Denver, and the main part of the company in Dallas.

Physmark's founder, physicist and meteorologist Jacob G. Kuriyan, says he thinks his company functions quite well with some of its key players in different parts of the country.

Moreover, he believes encouraging executives to settle in New Mexico could help new businesses relocate to the state because a company will often follow the CEO.

Kuriyan spends most of his time in New Mexico, with visits to the Physmark operations in Dallas twice a month for several days.

His vice president for sales, Prasad Rege, lives and works in Los Angeles, spending "most of his time on the phone and the Internet," Kuriyan says. And Ron Zarlengo, chief financial officer, manages Physmark's books from his Denver office.

The firm also has what Kuriyan describes as an offshore support company called Nu-Mark Software in Bangalore, India, staffed by 20 employees.

Much of the company's work is spent giving demonstrations of its software, and Kuriyan says a number of programs, known as cyber seminars, are being used increasingly to create an Internet conferencing structure. It allows him to be present for discussions and to answer questions from his offices in Corrales.

Kuriyan also explains that Physmark is a subchapter S company, whose owner gets taxed personally instead of the company.

"This means that we pay taxes to New Mexico, not Texas, California or Colorado," he says. "New Mexico benefits much the way it would if our entire company were here."

He says he opted to live in New Mexico for its lifestyle despite the fact that Texas doesn't have a state income tax and Physmark would save all its tax payments if he lived in that state.

Currently, Physmark looks throughout the country for its clients, coming to the rescue of health care providers and payers who have been struggling to revamp their administrative computer systems, virtually on the eve of government compliance deadlines.

The Health Insurance Portability and Accountability Act, or HIPAA, calls for uniform transaction standards that allow different computer programs to talk to one another; stronger security and privacy for patients; and universally recognized identification numbers for all patients, providers, health plans and employers.

Firms can be overwhelmed by the magnitude of HIPAA's disruption to their business and by the cost that can easily run into the tens of millions of dollars for large firms. Physmark offers a new software product called HIPAA Appliance, which simplies the work.

"Their other practical options," says Kuriyan, "are either to create new software themselves by using a translator for their old legacy systems or to outsource the entire HIPAA responsibility to a clearinghouse." Legacy is a general term for older systems from the 1960s and 1970s, Kuriyan explains.

"We discovered that a quick HIPAA fix wouldn't let our clients recover their costs. So we decided to give companies more long-range benefits at no extra cost."

The result was a new, parallel, front-end system that not only communicates with a company's old program but will accept developments and additions. "It serves as an investment in the company's future," Kuriyan says.

"That new system also has Internet capabilities and a data repository that can be easily accessed, both features that old legacy systems lack."

Kuriyan says competition is needed in the medical marketplace.

"Already in California patients can look on the Internet to see which hospital has the best record," he says. "They certainly don't want surgery in a hospital with a 22 percent death rate."

He says many old mainframe systems date from a pre-Internet world, making communication between them and the Web both time-consuming and expensive. The new Appliance system's ease of retrieving data saves provider and payer staff time and money by letting patients themselves obtain information on claims, authorization and premiums, via the Internet.

"Let the patient determine how and where money is spent," Kuriyan says. "We could be on the verge of a whole new way of doing business in health care."

He adds that the outdated computer systems many providers and payers use "are so antiquated that often you can't track errors. Many fraudulent practices now abound without detection."

HIPAA has several compliance deadlines, stretching into 2005, which are expected to keep companies such as Physmark busy for several years if not longer, Kuriyan says.

"Since HIPAA compliance work began, our marketing opportunities have at least doubled. With the new Internet and data-mining capabilities we are providing to clients, we find that suddenly there is more interest in all our products."

Kuriyan says Physmark is debt-free and is doing very well financially. However it is a privately held company and does not make financial statements public.

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(c) 2003, Albuquerque Journal. Distributed by Knight Ridder/Tribune Business News.