Kareo raises $10 million and will expand offering

We hear a lot about integrating IT into a medical practice’s workflow with the hope that it will make doctors’ lives easier. One way to do that is to provide a service that will help doctors get paid.

Kareo, an online medical billing software company with this goal, closed a $10 million equity investment this month led by Greenspring Associates with participation from OpenView Venture Partners, Western Technology Investment and angel investor Travis Kalanick. Greenspring is a global venture investment firm that manages over $2 billion in committed capital.

Kareo provides a cloud-based service that allows practices to schedule appointments, verify insurance eligibility, send electronic claims and receive insurance payments, bill patients, manage accounts receivables and integrate with certain electronic health records. Kareo aims to make it easier to track and receive reimbursements while cutting administrative costs. The software, which costs an average monthly subscription rate of $200 per doctor, is designed for small practices of one to four physicians.

The clientele focus comes from CEO Dan Rodrigues’ past experience at a software consulting company where he took on a project to build an Internet-based medical billing program. When he left his job to found Kareo in 2004, he set out to create finance managing software for small practices with TurboTax-like ease. “It’s really just maintaining that focus on the small practice, the user experience and solving the problem of making sure they get paid because it’s still a lot harder than it should be today,” Rodrigues said.

If you haven’t heard of Kareo until now, it’s because it has been flying under the radar, Rodrigues said. The company plans to use the newly acquired funding to increase sales and marketing programs. In addition Kareo will improve and enhance its service and support its partnerships with EHR companies Practice Fusion, Quest Diagnostics and WebPT.

Kareo has raised a total of approximately $20 million dollars to date. That includes a past investment of $9.5 million in 2010 from OpenView Venture Partners, a firm that has experience in helping expansion stage companies grow. Kareo has been profitable since 2008 and has increased revenue by more than 100% every year since. The company has 75 employees and expects to be at 100 employees by the end of year.

Later this month, Kareo will introduce its first product enhancement since the recent funding. This will include a new patient portal that lets practices send e-statements and collect credit card payments from their patients in the office and online. Additionally, Rodrigues said Kareo has a strong pipeline of new product offerings that he will announce in the coming months.