Get'em while they're hot: on the lookout for the latest and greatest opportunities for 2003

Entrepreneur, Dec, 2002 by Steve Cooper, Mark Henricks, Gisela M. Pedroza, April Y. Pennington, Chris Penttila, Chris Sandlund, Devlin Smith, Nichole L. Torres

This business can be tough, though: Hoover notes there's a shortage of labor who can master the ever-changing technology. Harwell, 37, agrees. "We have very competent people," he says, "[but] it requires special individuals."

In addition to finding talented employees, a key to success is making sure to pitch potential customers on the ease-of-use angle. "Nobody buys a 'home network,'" says Hoover. "What they buy is the convenience that a home networking system provides."

HOT BIZ HEALTH-CARE TECHNOLOGY

The health-care industry is a mess. Providers are struggling to comply with HIPAA, federal guidelines that govern how medical information can be shared. Employers are grappling with 15 to 20 percent health-insurance increases every year, so they're shifting more responsibility to employees. And medical billing is a nightmare.

The good news? The industry has a huge need for technologies to help it run more cost-effectively. Regulation, competing economic mind-sets and sheer complexity have put health care "way behind any other industry in adopting information technology," says Barbara N. Lubash, cofounder and venture partner with the Newport Beach, California, office of Versant Ventures, a venture capital firm that fosters health-care technology start-ups.

The biggest trends Lubash sees are in patient safety (the reduction of costly medical errors) and consumer-driven health plans that give employees the ability to manage their own health-care dollars. For entrepreneurs, this is creating opportunities for software and Web sites that will help doctors and hospitals keep track of everything from drug interactions to incident data, as well as online tools to help consumers and providers manage health care in real time. Other areas include medical imaging, digitizing medical documents, voice recognition software for doctors, and technology that speeds up claims processing.

Entrepreneurs in this field usually have a considerable background in health care, either as health-care IT executives or health services executives, Lubash says, adding that success "depends less on innovative technology than on convincing customers your product offers real value."

The industry is "big, turbulent and crazy, but boy is it fun," says John R. Thomas, co-founder, president and CEO of MedSynergies Inc., an Irving, Texas, company that provides ASP software to more than 100 physician practices.

"The industry average is that 30 percent of claims are denied by payers," says Thomas, 38, who worked in emerging health-care finance before co-founding MedSynergies in 1996. "Our customers are getting 94 percent paid the first time around." The company's annual sales are $11 million, and Thomas expects that to double in 2003. "The solution for the health-care industry today is using technology to reduce the cost of doing business," he says.

Before you jump in, get some industry experience. Make sure your niche isn't too small, show in your business plan how you'll improve cash flow, and surround yourself with key people well-versed in health care. "It's a very complex, tough area to crack," Lubash says. "It's not enough just to know the information technology."