News Day – A Formula for Health Tech Startup Success


Bill Russell

Tuesday News Day Startup Success

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June 2, 2020: We’re back with another Tuesday News Day! There’s a lot to talk about today as we look at a variety of news stories. For starters, we look at a Becker story about Optum buying naviHealth along with Dr. Eric Bricker’s analysis of naviHealth’s excellent business model. There’s a lesson here for health startups looking to emulate naviHealth’s success. After touching on why Americans are delaying medical care, we explore an article from The Wire China that details how and why American hospitals are expanding into China. As a strategy for diversifying their revenue streams, this article reveals the need for CMIOs to understand different regions if they want to expand their health brands. After China, we return to American soil where we look at how CMIOs in Philadelphia used the same EMR vendor system to share data in four key areas. This article, published in Healthcare Innovations, outlines a model of collaboration between health systems that results in better problem solving ability. Briefly, we look at why Keiser Permanente is considering building its own LTE network and why 5G isn’t the only answer before ending on a Network World article on why the digital divide is a huge challenge for telehealth. Listen as we share the latest from the world of health IT. 

Key Points From This Episode:

  • Bill details naviHealth’s history and business evaluation.
  • Dr. Bricker’s analysis of why naviHealth is successful.
  • What healthcare startups can learn from Nava Health’s business model. 
  • Why a good business model trumps good software. 
  • Half of Americans have postponed medical care due to COVID-19.
  • Why public campaigns are needed to reset patient inflow and restore revenue streams. 
  • How American hospitals are diversifying into the Chinese market.
  • The increased need for tech leaders to understand different regions and health markets.
  • How Philadelphia health systems have collaborated during the pandemic.
  • Why health system collaboration betters medical problem solving.    
  • How CMIOs are positioned to facilitate collaboration; it requires tech knowledge. 
  • The reasons that Keiser Permanente is considering building its own LTE network.
  • Despite the hype for 5G, CMIOs need to consider other tech solutions.
  • The state of the digital divide and its effect on telehealth. 
  • Why low-tech solutions are needed to provide greater telehealth coverage.

News Day – A Formula for Health Tech Startup Success

Episode 259: Transcript – June 2, 2020

This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong.

[00:00:00] Bill Russell: [00:00:00] welcome to this week in health it, it’s Tuesday news day where we look at the news, which will impact health it today. How we’ve got so much going on. We’re going to talk a little bit about the Optum naviHealth deal. We’ll talk about, You know, people coming back to the hospitals. At what rate and what things to look at.

[00:00:19] We’re going to look at American hospitals expansion into China. We’re going to look at CMIOs comparing notes in Philadelphia and some other things. My name is bill Russell, healthcare CIO, coach and creator of this week. In health it, a set of podcasts and videos and collaboration events dedicated to developing the next generation of health leaders.

[00:00:40] This episode and every episode since we started the COVID 19 series has been sponsored by Sirius healthcare. It is their commitment to making this content available that has made the daily episodes possible. Special thanks to Sirius for supporting the show’s efforts during the crisis. I want to thank those of you who sent.

[00:00:56] Over stories for me to cover. It is [00:01:00] extremely helpful. I really do appreciate it. If you find a story that you think I should cover on this show, please shoot me an email with a link to [email protected] if you have a reason you think this story is important, please share it with me as well.

[00:01:12] That is really helpful. Okay. Let’s get to the news. There’s a lot to talk about. All right. We’ll start with Optum buys. naviHealth. So I’m getting this from two places. I’m getting it from a, the Becker’s story, Optum naviHealth five details, and I’m getting it from, a healthcare Z. dr Eric Bricker does these videos and I love them and they keep showing up in my LinkedIn feed.

[00:01:36] I finally signed up for them and I contacted Dr. Bricker and we recorded a show. So you’re going to be hearing from him. In the next couple of weeks. so let me give you a couple of the details here. So Optum bought,  naviHealth. naviHealth is a, company that does post-discharge for Medicare advantage clients.

[00:01:52]it was founded in 2012. they, So founded in 2012 2015 Cardinal health invested, I think they bought like 75% [00:02:00] of the company at a valuation of about $400 million, which is a huge success story in and of itself. In 2018 it ended up with a PE firm and a, the deal that Optum did with naviHealth, values of the company today at two and a half billion.

[00:02:15] So think about that. 2012 to 2020 8 years, two and a half billion dollar valuation. You know, it, it is just really amazing naviHealth. What they do is they develop software to track and coordinate patient care after ditch discharged from the hospital. it also coordinates bundled payments for episodes of care.

[00:02:34]the company manages post acute services for about four and a half million Medicare advantage members. And serves more than 140 hospitals in the CMS. Bundled payments for care improvement advancement, our advanced program. okay. So that’s some of the details. You know, here’s what I loved about Eric.

[00:02:52]dr Bricker’s, analysis he talked about th the reason he feels like this is, this was successful. First of all, you know, and this [00:03:00] actually gets into my, so what the first thing is, this is a big number in and of itself, but this is during the pandemic. And, Optum has the money to purchase naviHealth for two and a half billion dollars are at a evaluation of two and a half billion.

[00:03:12] I think only a billion, billion one or something like that. Change stance. You know, and then dr Bricker sorta broke, broke this down, which I really liked. He said, you know, they, they’ve defined a very solvable problem, which was readmissions. Then they created a business model that really worked for a lot of health systems.

[00:03:28] They went at risk, they went at risk for Medicare advantage population. and how that works is the government gives a lump sum. To the, to the health systems to take care of this Medicare advantage population. If they can reduce the costs, they make more profit. And where a naviHealth came in with the business model was essentially say, we’ll keep a percentage of that profit, but we’re driving your profit up as a whole.

[00:03:50] So that was the second thing. The third thing he talked about was how they had a perfectly. A connected and involved investor investor, and Tom Scully who [00:04:00] served in both bushes, Bush administrations. He ran CMS, a Federation of American hospitals and whatnot. So they had a, an active investor who was very well connected within healthcare.

[00:04:11] That’s how you get to 140 hospitals, four and a half million Medicare advantage members. And then finally, he finally got to talking about the software, data analytics, and, and the software. And it’s interesting, you know, that’s the fourth priority in there. And he makes that point that the software really follows, to finding a solvable problem.

[00:04:33]creating the right business model, having the right people on your board or in your leadership team, and then, creating a model that works. The other thing that they did, which was pretty effective, is they didn’t rely only on the technology. They actually put humans on site. Right? So, and they didn’t rely on the health systems staff to figure it out.

[00:04:53] They put humans onsite who utilize the software to drive those savings. pretty successful model. [00:05:00] Interesting one to follow. And that’s the reason I, do that as a , so what? It’s a, you know, it’s an interesting form formula for health tech startups to consider, and I believe he’s right. I think it is.

[00:05:11] I think that model solvable product problem, good business model at risk or just good business model, a highly connected. A board member or leadership and then the software, the software has to be good. but I think too many tech startups move that software up to number two, even number one. And they think, Oh, the software will win the day and it doesn’t.

[00:05:32]it, it is really about the business model and having the right business problem. Alright. Story number two, I would try to move through these stories. I’ve gotten a little lazy and only doing three or four stories. I’m going to try and do a little bit more today. So Kaiser health news, about half of the public says they have skipped or postponed medical care because of the Corona virus outbreak.

[00:05:52] And in fact, I think that’s all I’m really gonna share from this. If I go to this story, nothing really. I mean, I’m not going to [00:06:00] share with you anything that you don’t already know. They asked the question in the past three months, have you or your family member in your household skipped or postponed any type of medical care because of the coronavirus operate?

[00:06:10] And as you would imagine, you know, close to 50% said. Yes, they have. I think the, so what on this is, I don’t think we’re all just going to be able to sit back and all the sudden these people are going to magically appear on our doorstep. I think we’re going to have to create a campaigns to do outreach.

[00:06:28] We’re going to have to go out and get them back into the pipeline, get them back into the, the, the workflow so that they, schedule those appointments, schedule those procedures, and come back in. So I think that’s going to be a key to restoring revenue. And, and, and restoring the revenue streams quickly, which I think is going to be important.

[00:06:47]next article, and I think this is an interesting one as well. this somehow made it into my feet. I’m not sure how, but it did. It’s from the wire China and the story reads, American hospitals [00:07:00] take the China road. let’s see. It starts with an, a Chinese medical market predicted to be $2.4 trillion, which is.

[00:07:06] Most likely the reason why American hospitals are taking the China road two point 4 trillion, more famed U S clinics team up with private companies to get in on the action.  Okay. So I, you know, this is a, this is a diversification strategy. That’s what’s going on. Let me, let me give you a little details of what’s going on.

[00:07:26]the U S hospitals are coming to China at a time when the government is relaxing restrictions on who can provide medical care. According to a report published last year by Deloitte, the consulting firm, the consulting firm, about two thirds of the country, approximately 35,000 hospitals are now privately managed.

[00:07:43] While few American hospitals make. Detailed disclosures about their Chinese ventures. Analysts say that most of the deals consists of lucrative consulting agreements in which American medical institutions provide support and advice on hospital management and clinical practices. In addition, Chinese hospitals [00:08:00] often pay a hefty licensing fee in order to affiliate themselves with the brand name American hospitals.

[00:08:06] So let me give you a, Let me pull this up in my browser and I’ll give you a couple of the deals. They have a national chart in the middle of this thing. Hospital deals and partnerships. In 2012, Massachusetts general hospital out of Boston, did a partnership with a hospital in Shanghai. bring them in.

[00:08:23] Wa women’s associated with Harvard did a deal with, evergreened health. in China in 2015, there was a consulting and that was a consulting and licensing agreement, consulting, an affiliation agreement with, Mayo clinic out of Rochester and sir run run Shaw hospital. in 2017 in 2018, we saw two significant deals, Cleveland clinic and, another hospital in Shanghai and Mount Sinai health, out of New York.

[00:08:52] And, Thai King. Healthcare in name Xing, was a consulting and licensing agreement. And then finally, in 2019, you had the [00:09:00] UPMC, do a significant deal with Wanda group, and that was, consulting in revenue sharing, as well. So a lot of deals going on. The, you know, the, When I read this article, then that really surprised me.

[00:09:13] We had, been talking about this, for awhile. you know, these are significant deals that diversify the revenue of health systems, and that’s what they’re looking to do. They’re looking to diversify, not be as tied to, the American healthcare market and the reimbursements that are there. these give them another revenue stream.

[00:09:29]you know, these are going to continue to be the norm as countries climb the affluence ladder and seek better care. China is not the only location this is happening in, I think everybody knows that. we’ve seen, some, partnerships in the middle East. We’ve seen, now partnerships in the UK, even, you know, the brands alone represent significant value.

[00:09:48] And so this is unlocking the value of the brand itself. But eventually it will be. things like digital care pathways and solutions that make these partnerships even more valuable. I, the thing I, the reason I haven’t on this [00:10:00] week in health, it is a, you know, I think technology leaders will have to become more depth at really understanding of the different geographies, regulations, and cultures in order to create value for these types of partnerships.

[00:10:11] So that is just something to keep an eye on. I think that’s going to continue to grow. As I said, we are exporting healthcare around the world regardless of how bad you hear it is. the brands are strong. The, the care that people receive in the America. They used to travel thousands of miles to come to America to get the best healthcare in the world.

[00:10:31] And we are now exporting, that, knowledge and that expertise, around the world. So, that’s going to continue. Next story is strengthened numbers. Philly area CMIS see value in collaborating. So let me pull this one up. Take me a second. Here we are, healthcare innovation, which is a, a group that I pull out a stories from.

[00:10:53] This is, David Raths. So strength in numbers. Philadelphia area. CMIOs see value in collaborating, progress by  nine health [00:11:00] systems on data sharing, paying off during the code pandemic. I, I’m going to share this because I believe we saw a lot of collaboration happen during, During the coronavirus pandemic.

[00:11:10] And, I think that’s going to form the foundation for ongoing. collaborations between health systems. And I think this is an interesting one. So I want to read a little bit here. So in early 2018, three, Philadelphia area health systems all went live on the same EHR vendor. With the addition of these three, there were a total of nine health systems using the same EHR vendor in the region.

[00:11:30] We decided the time was right to bring together the CMIOs and assistant CMIOs. For these  nine health systems.  Joel Bettish, MD medical informatics officer at Penn. Bettish said, just within the city of Philadelphia, they could bring together Penn chop, Jefferson and temple.

[00:11:48] You can see how easy it is for patients to have a primary care provider from one health system and see a specialist at another. You added in the spring of 2018 they sent out an invitation to CMIOs and assistant CMIOs with nine [00:12:00] Philadelphia hospitals systems comprising a total of 17 hospitals. Using the same EHR vendor, their first meeting took place in July of 2018 with 20 attendees.

[00:12:09]for a few people in the group. They were meeting people in person. They had been emailing for years. The first meeting was devoted to a, creating a list of topics of mutual interest. All right. So that’s, they got together. Created the list of topics with mutual interests. These topics fell into four categories.

[00:12:25] The first was EHR enhancements that require regional cooperation to accomplish. A good example involves sharing clinical records with each other with each other. We’ve proposed making an agreement that all patients would be automatically opted into free sharing with the rest. Also, communication with each other via direct address.

[00:12:46] Across instances of our EHR and also linking local resources to social determinants of health in our EHR. Benish explained. Another issue was how to get the EHR data from the recently closed large academic hospital Honamin university hospital. [00:13:00] The second category revolved around, currently used EHR features including reconciliation of medication lists with each other, which may sound simple, but it’s surprisingly complex.

[00:13:12] Okay. Let’s get to the third. The third category was the potential use of new features, such as real time prescription benefits and cancel our acts, which means if Penn medicine canceled the prescription and it’s EHR, that information would get transmitted to. The pharmacy, obviously great for, really handling the opioid epidemic.

[00:13:32] And then the final one was collaborating on, regulations. interesting framework, interesting model. I think, I shared the whole model with you because I think it’s a good, good place to start if you have come together as a result of code and now you’re stepping back, it’s, you know, it’s, it’s a good way to think their framework was pretty simple, but, I think, yielded some good results.

[00:13:55]you know, the one question I have is, does it have to be centered around a company EHR? obviously I [00:14:00] think, you know. It, it, it may be centered around the EHR because the collaboration is, are, are just easier. Right. And they, they really don’t rely on complex projects that require hit to participate.

[00:14:12] In many cases. You know, the collaborators are connected directly with the HR providers. They can make requests, they can make little changes here and there, without the use of, of health. It, I think it’s also interesting CMIOs, associate CMIOs, and no technology. A players are at that table, even though an awful lot of it is going to take place across the technology.

[00:14:32] I’m not saying that’s a bad thing. I’m saying that, I think that’s a common thing that we have to be, ready for and understand that it is happening. All right. healthcare giant, Kaiser Permanente considering private wireless LTE network. Let me pull this one up. Here we go. this is interesting to me.

[00:14:52] So, Kristin Klein is in charge of a network strategy for Kaiser Permanente, the nation’s largest nonprofit health [00:15:00] plan with 12 million members, 39 hospitals, 84 billion in revenue. and. he recently completed Cornell university’s 5g for business online program. but when he thinks about how wireless technologies can solve business problems for Kaiser, 5g isn’t the only technology that he’s keeping an eye on.

[00:15:16] So I find this interesting cause what he goes on to talk about is how, There’s a, there’s a spectrum, the three and a half gigahertz spectrum band that has been dubbed the citizens broadband radio, CBRS service CBRS and, you know, people are talking about 5G and they’re talking about wifi and connecting up all these devices.

[00:15:36] But he goes on to say, patient monitoring and critical communications are the use cases that client needs to support with robust networking technologies. Currently, most of Kaiser Permanente connected devices use cables, dedicated wireless frequencies or wifi. We’ve been progressing, Progressing wifi because we’ve, we have to be really good at it and we’re going to have to be really good at it going forward.

[00:15:59] But I [00:16:00] see an impending wave of additional devices and we’re going to have to have an answer to how do we deal with that set of client CBRS. I came at the right time to be a potential answer. he goes on to talk about how CBRS could potentially offer a more secure and more reliable bandwidth within the hospital, given all the challenges that, that are there now.

[00:16:24] Interesting story. What do I like about this story? The thing I like the most about this story is thinking outside the box. I’m not sure about the solution, really, to be honest with you. it’s a little bit beyond my technical pay grade at this point, but it is interesting to consider the limitations of 5G and wifi.

[00:16:40] And I would look at the limitations of 5G and wifi. they hold so much promise. They’re high on the hype site. Our 5G is high on the hype cycle right now. I D whenever anything’s at the, at, at, on the hype cycle, and in peaking, always look for its limitations so that you can plan for and understand when it starts to drop [00:17:00] into the trough of disillusionment.

[00:17:02]and so these other frequencies are interesting to me and offer a, interesting opportunity. how many, that’s not nearly enough stories. Let’s see what else we have here. I, you know, I’m gonna, I’m gonna save all these items. Five telehealth stories. one, two, three, four, five, six, six Telehouse stories on what your appetite a little bit.

[00:17:23]I’m probably gonna do a whole episode next week on tele-health. That’s, yeah, that is absolutely what I’ll do. one of the stories network world, Zeus, Kara Valla. , as the COVID 19 crisis grew areas that lacked high speed internet access, couldn’t benefit from remote tele-health exams.

[00:17:42]COVID, 19, strained critical services. And he goes on to talk about. the digital divide. And that’s the part I’ll share with you before we end the show. no single company has technology or business model to single-handedly close the digital divide industry. Collaboration in small investments in expanding connectivity options [00:18:00] is what will make a big difference in people’s quality of life.

[00:18:03] 3.8 billion people, nearly half of the worldwide population lacks internet access, limiting their access to information, education, and healthcare. According to Cisco’s. Inclusive future report. 2020 gaps in access exists not only in developing countries, but also in rural areas of impoverished communities in the U S Cisco called on tech leaders to direct their energy and resources towards developing solutions focused on global inclusion.

[00:18:29] This means creating broader access to healthcare and social services. Powered by cost effective, efficient technologies that meet local needs. Bringing the internet to underserved populations could lift 500 million people out of poverty and add more than $6 trillion to the global economy. Said Jonathan Davidson, senior vice president, general manager of Cisco’s.

[00:18:48] Mass scale infrastructure. there’s a bunch of interesting stats in this, in this article just talking about, things like, about 20% of the Texas prison system doesn’t have access to high speed internet. [00:19:00] And without it, nearly 40,000 inmates cannot get telehealth services. I think I find that interesting.

[00:19:05]rural health care I find interesting. you know, the pandemic was a global, A global pandemic. So you had a whole bunch of areas that could not benefit from telehealth. We’re going to have to consider this. you know, telehealth is really interesting. I’m hearing a lot of people talking about the solutions they need to put in place in the hospitals themselves, but we’re going to have to keep this idea of the connectivity at the other end in mind as we’re designing solutions.

[00:19:31]we’re going to still need to have some, Some, either low tech or low bandwidth type, solutions that, that we are, considering. So, anyway, that’s what’s your appetite for next week? We’ll do, we’ll do a pretty deep dive into telehealth and see where we’re going. That’s all for the news for this week.

[00:19:50] Special thanks to our sponsors. VMware, Starbridge advisers, Galen Healthcare, Health Lyrics here, Sirius Healthcare and ProTalent  Advisers for choosing to invest. In developing the next generation of [00:20:00] health it leaders.  This show is a production of this week in health it for more great content. Check out the website or the YouTube channel.

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[00:20:23] There’s a lot of ways to get the show. I get my show as well. Several others, and right there on overcast. It’s fantastic. Anytime I go for a walk. I’m listening to a podcast. please check back every day through the end of June as we will continue to drop shows until we get through this pandemic together.

[00:20:40] Thanks for listening. That’s all for now.