Interview: Joe Reinardy, Founder, CEO, CenterX

This interview was originally featured on HIStalk.

Joe Reinardy is founder and CEO of CenterX of Madison, WI. 

Tell me about the company. 

CenterX is what we like to call the nation’s next e-prescribing network. We’re building what we speak about internally as e-prescribing 2.0.

When we talk about e-prescribing 2.0, we’re referring  the e-prescribing that has been adopted in the United States over the last 2-4 years. E-prescribing 1.0 is largely the sending of electronic prescription messages from a doctor’s office to a retail pharmacy. If a patient goes to the doctor’s office, the doctor orders a prescription for the patient and says, “Which pharmacy do you want to go pick this prescription up from?” The patient can say, “I want to go to Family Drug Store on Main Street” and the doctor can look up the address electronically and send an electronic copy of that prescription directly to the pharmacy through the Internet rather than writing it on a piece of paper and giving it to the patient and having the patient act as courier of that piece of paper to the pharmacy.

In the last several years, the government has incentivized doctors to adopt e-prescribing. They have done so quite a bit. It’s gone from an insignificant adoption rate in about 2008 to about 44 percent of doctors reporting using e-prescribing in the last year.

CenterX wants to take that adoption and the use of that technology and turn it into something more clinically meaningful. Something that reduces the cost of healthcare and shares relevant information with the various providers of care for a given patient. In the next generation of e-prescribing, what we really want to do is close the feedback loop.

Today the status quo is that doctors send messages to pharmacists, but they don’t get any feedback about whether or not their patients are taking their medications, whether the patients can tolerate the medications, or whether the patients are getting better. The CenterX network simplifies the financial model around e-prescribing and closes that feedback loop. A doctor gets information about, did my patient pick up their medications, are they getting better, or do I need to pick up a phone and call them and ask them why they’re not taking their meds?

Closing the feedback loop is a powerful concept. A lot of companies are trying to innovate at the far end of the loop, the patient end. Companies like AdhereTech, Scanadu, andProteus, for example. Are you trying to provide the signaling, routing, and transfer infrastructure for all these different kinds of data?

Yes. We would welcome data from anywhere that you can get it. Ultimately what the doctors find useful is knowing exactly what the patient is taking, when, and why or why not. If he can get as close to an actual feedback mechanism that says this pill was ingested by this patient at this time, that would be the ideal situation.

If there are device companies that are coming online and that they’re able to make progress with pharmacies or with health plans and selling their tracking products, those are products that can provide very useful data to us. We act as an aggregation point for a lot of these companies and types of data they create.

Has CenterX exposed APIs to make all of that happen?

Yes. We’ve exposed APIs exposed to receive any kind of data.

You mentioned that you have a different pricing model than Surescripts.

Surescripts and the other companies in the space charge anywhere between $0.25 and $0.30 per prescription. They penalize patients, doctors, and pharmacists per prescription. This is called transaction-based pricing.

Our model is fundamentally different. We charge a flat monthly fee and share the cost among everyone that’s involved: providers, pharmacies, and payers. Prescribers pay just $5 per month for unlimited transactions. We are in many cases two or even three orders of magnitude less expensive than the status quo. Our pricing model encourages participants to use new technology and to use new message types, such as refill requests, cancellations, adherence notifications, and missed notifications.

I can see why pharmacies and payers would be willing to pay, but why would PCPs? 

We bring value to PCPs in two forms. We bring value in immediate release to the doctor’s financial ledger every month as soon as they sign up for our network and start using our network. As soon as they’re paying their monthly subscription fee, we are having a real impact their budget constraints.

Firstly, refill request messages, when a patient has filled their script or already filled their scripts three times and they need a new prescription to extend the treatment of whatever drug they’re on, whatever medication they’re participating in. They need to notify their doctor that they need a new script. That’s what’s called a refill request in the e-prescribing world. Those refill requests have been allowed or permissible on the prescription network or other e-prescribing network for years, but their adoption rate is very low.

Last year, fewer than five percent of refill requests went electronically through an e-prescribing network, as opposed to being delivered via phone or fax. So for a $5 per month subscription to our network, we can get rid of the faxes, we can get rid of the callbacks and get those things electronically into the EMR. The other thing that having an electronic refill request provides that doctor is an accurate and discrete type data list of the medications that they’ve written for this patient in the past and that they’ve taken.

The other problem we help alleviate is prior authorization faxes. We can provide the messaging and routing to expedite that process dramatically. The top six drugs account for 10 percent of all drug costs. Not 6 percent of the drugs — six specific medications. Each of those six medications has what’s called a prior authorization, a paperwork process that takes anywhere from six to 20 hours to complete. You have very expensive meds that are important to patients that the patients can’t start treatment on, for sometimes up to a week if that paperwork process hasn’t been filled out.

We automate their prior authorization process. It’s electronic prior authorization process. It saves hours per week per doctor. For a $5 per month subscription fee, they’re getting rid of their refill faxes and they’re getting rid of the callbacks, the hours that they’ve spent working on prior authorization just to make sure that their patient qualifies for the treatment that they need.

Can providers use CenterX in conjunction with their existing network provider or is it a mutually exclusive switch?

CenterX is not mutually exclusive of SureScripts or any other e-prescribing network. We do not, however, share data or traffic with other networks. We provide a different level and layer of support.

We provide a comprehensive solution that for some clients meets all of their e-prescribing needs. But for most of our clients, we need to grow our network in their communities and demonstrate our capability as an excellent service provider before they can risk single-sourcing their e-prescribing services. Typically, we start working with a new client by finding which e-prescribing services that client is not currently using. In that way, we sit right along side other e-prescribing solutions.

How did you get into this business?

I have a BS in chemical engineering from Michigan Technological University. I worked as an engineer in product design, manufacturing process design, and operations for Kimberly Clark for five years, including brands such as Huggies, Depends, Viva, Scott, and Kleenex.

I wanted something that made me feel more engaged with the customer, an opportunity to do something every day that I thought needed doing. I supported Epic’s first standard implementation of e-prescribing for one of the larger healthcare organizations in the world. Not long after that, I was asked to lead the e-prescribing team as CMS issued a mandate to eliminate computer generated faxes for scripts.

I ran the e-prescribing department at Epic for a number of years. Over that time period, I oversaw the connection of 200 of Epic’s customers to the e-prescribing networks that were available in that timeframe. I saw it was a marketplace that was underserved and was really still struggling just to get a business model off the ground that I thought would be obsolete by the time it was successful. I decided that I would leave that job and started an e-prescribing network.

When I left Epic to start CenterX, I turned to my best friend for help. Our roles have evolved as we find new team members. I wrote the first version of our Web services, but most of what I had written has been revamped by our software architects, who are true computer programmers and mathematicians.

Today I provide technical guidance from an experiential basis. I have years of experience implementing and supporting standards-based interfacing, specifically in e-prescribing. I guide our developers to deliver a robust NCPDP and HL7 standards-based architecture. I’m primarily in charge of strategy. Chris, my business partner, manages the day-to-day operations and is responsible for client relationships.

I often say that I’m an engineer and not an entrepreneur. CenterX is a startup by necessity. I believe that effective change in the e-prescribing industry must come from an independent, organically grown company. I don’t see myself ever leaving CenterX to do the small scale startup thing again. I have developed tremendous respect for the difficulty of entrepreneurship. I enjoy it, but I think e-prescribing has a lot of opportunity for improvement. I could spend my entire career advancing that industry while maintaining that satisfactory sense of direct client engagement that I wanted in 2006.

Tell me about the company. 

We are a privately-held company. We started the company on November 11, 2009 in Wisconsin.

I say “we.” At the time, I was otherwise not employed in any meaningful way and a business partner joined me with the LLC. He had a full-time engineering job working for a large paper company, but it was basically the two of us. We filed the LLC paperwork and worked out some of the details of the business plan. 

We had the technology portions of the business plan worked out, but we didn’t know how to get from idea to reality. It’s pretty tricky to try to negotiate contracts with doctors and pharmacists at the same time who are serving the same patient population.

We spent about a year working on the business plan and writing the first version of the software that runs our Web services. After that first year, we started selling, pitching our product, our solution to a number of perspective clients. We received some very useful feedback that said, “This isn’t quite plug-and-play for us yet, but it’s interesting. Don’t throw it away – we would be interested in talking more.”

At that time, we decided we should go out and get some money. We raised from friends and family somewhere under $200,000. We are now 12 employees. We have not had to go back for any additional funding. We can feed ourselves today.

Any final thoughts? 

There’s a better, cheaper, faster alternative to the e-prescribing monopoly.

Interview: Josh Stein, Founder, CEO, AdhereTech

This interview was originally featured on HIStalk.

Josh Stein is founder and CEO of AdhereTech of New York, NY. 

Tell me about yourself and the company.

I graduated from Washington University in St. Louis in 2006 with degrees in economics and finance. Long story short, instead of going into finance, I decided to enter into the world of startups. I worked for various early-stage consumer and tech companies for four years, then in 2010 I began my MBA studies at Wharton. I graduated from Wharton in 2012. AdhereTech is a company that I founded while I while I was an MBA student.

What were the other startups? Were they related to AdhereTech?

The other relatively well-known companies that I worked for were FreshDirect, PlaceVine, and Lot18. None of these startups were healthcare related. This is my first time in healthcare.

How did you get into the medication adherence business?

Both of my parents are in healthcare. My dad is a doctor and my mom is an occupational therapist. Years ago I asked them about the biggest problems in healthcare. That’s when they opened my eyes to issues of medication non-adherence.

In response, I came up with the idea of a pill bottle with a timer on top – very simple. That sat in my list of business ideas for about a year until I started business school. In business school we did these activities called innovation tournaments, where everyone in a class submits an idea into a big list. The ideas on said list are then voted on in a crowd-sourced, bracket-style tournament. Thankfully, my idea for the timer cap did pretty well.

Then I thought, let me do a deep dive and see if this is a viable idea. I saw that other smart pill bottles, so I basically designed AdhereTech around the perceived downfalls of existing products. I wrote a business plan and worked with the University of Alabama – Huntsville to build a working prototype. By the time I graduated in 2012, we had all that in place, and I recruited an incredible team.

Then I joined Blueprint Health, a healthcare accelerator program in New York, which is absolutely fantastic. After many months of hard work, we built a working prototype, won some competitions, lined up some trials, and put the pieces in place for potential partnerships. We have a really solid team, great advisors, and promising opportunities lined up in the coming months.

What does AdhereTech’s pill bottle do that the rest don’t?

There are three main differences between AdhereTech’s bottle and most similar products in the space. First is usability. AdhereTech has a wireless chip that automatically connects to the cloud and allows the product to be used anywhere, whereas most others use a hub model that requires user setup and restricts usage to a certain radius around the hub. Second is accuracy. AdhereTech measures the open and close of the cap plus the contents, whereas some others only measure whether a device was used. Third is access. AdhereTech is using a HIPAA-compliant open API, whereas some others utilize a closed system.

During the optimal dosage time, the bottle pulses blue. That’s the time the patient should take the pill. If a dose is missed, the bottle flashes red and beeps. At the same time, the patient will get a phone call or text message.

What happens if you don’t pick up the phone?

We’re still designing that system, but it will call you every X minutes. That would vary based on the disease and the patient’s preferences. This is fully configurable.

More of the diseases that we’re targeting, such as HIV/AIDS or cancer, demand immediate notifications to ensure adherence, especially when compared to something like hypertension. However, we have to make sure not to upset the patient. We don’t want this to be something that annoys people, so we’re very cognizant of that issue.

There are different pill shapes and sizes and some are square, some are rectangle, some are capsules. How does your technology work?

The bottle transmits two pieces of data to the cloud and this data is sent whenever the bottle is opened or closed. First, it sends a timestamp of the open and close of the cap. Secondly, the bottle also has a patented capacitance sensor built inside which sends a capacitance measurement of the contents. This allows AdhereTech to track the number of remaining pills at any given time and determine how many pills were removed.

Our server then compares this information – how many pills a patient took and when he/she took them – to the patient’s recommended dosage schedule. If a discrepancy is identified, such as missing a dosage or incorrect dosage consumption, our automated system will then intervene via a phone call or text message.

What’s your distribution model going to look like?

We haven’t finalized our distribution model, but we have a few options, and these vary depending on the exact business model that we pursue. Our ideal business and distribution model is to integrate with drug manufacturers and pharmacies so they can do all of the setup for the patient. Additionally, we could also send the bottle straight to the patient, but this would require the user to set up the bottle. We want to avoid that because it requires the patient to do something even if it’s as simple as pouring the pills in. Bottles could also be given to patients as they are discharged from the hospital.

How about FDA approval?

We need 510(k) approval. We will be a Class I medical device. We’ve already begun the process of engaging with FDA consultants to help us realize what we have to do. There are already reminder devices out there, so we are confident that there is a pathway paved for us.

When will you sell it to the general public?

We’ll be starting trials in the fall with a variety of clinics and hospitals. We’re hoping to start a major trial with a big pharma in early 2014 and release to the general public by late 2014 or early 2015.

Who else is involved in the company? I see two other pictures on the site. 

Those are my two co-founders, both of whom are brilliant and great at what they do. John is AdhereTech’s CTO. He has dual degrees from Yale and joined the team after graduating with his masters in computer science. Mike joined the team a little later, but is undoubtedly a co-founder. He has an undergrad from Bucknell and a master’s from Ohio State, both in mechanical engineering. Mike spent the past three years designing jet engine parts at GE and overseeing certain aspects in manufacturing process. I couldn’t have found two smarter, harder-working professionals to work with.

Where are you located?

We work at the Blueprint Health offices in Soho in New York City. The Blueprint Accelerator program was incredible. I can’t say enough fantastic things about it. Now we’re also part of a new accelerator called Startup Health.

Interview: Andrew Farquharson, Managing Director, VentureHealth

This interview was originally featured on HIStalk. 

Andrew Farquharson is managing director and co-founder of VentureHealth.

Tell me about yourself and VentureHealth. 

I’m a venture capital investor and entrepreneur focused on healthcare investing and company building. I began my career in life science when I graduated with a BA from UC Berkeley, and went right into the research side of Genentech. After Genentech, I went to Harvard Business School and founded my first company there. I returned invested capital back to investors. I didn’t make a killing, but learned a lot.

After that, a friend and I took over a company called Operon that makes synthetic DNA and built it up into the world’s number one provider of DNA. At Operon, I ended up running the entire demand side of the business: sales, marketing, customer support. My friend Nathan Hamilton ran operations, R&D, and reinvented the way they make DNA. We ended up selling that company for a $150 million in June 2000 without taking any venture money.

After that, I became an angel. As an angel, I realized that one of the challenges is getting access to the very best deals; getting access to venture-quality deals. I joined a small venture fund and then I met my current partner Mir Imran. Mir is one of these rock star innovators in the biomedical space. He’s founded about 24 companies and has returned billions to investors. He invented the implantable defibrillator, among many other things, which has generated over $200 billion in revenues. Not bad. Mir is one of these guys where 80 percent of the things that he does return money for investors. He’s very good at what he does.

VentureHealth was not an idea that came out of nowhere. When we were raising our second venture firm, a number of folks wanted to co-invest with us because of our previous successes. Mir had lots of success. There are many healthcare professionals who would like to get involved in healthcare startups, but don’t know how to do it. Those are the folks who initially began reaching out to us.

Our initial response was really kind of uncertain. Investing is very risky, and we didn’t want to encourage people to partake in investments they didn’t understand. But as we kept chatting with high net worth individuals, we realized that there’s a large pool of financially sophisticated folks who want access to venture capital deal quality deals in healthcare, but who don’t know how to do it and don’t have a time to figure it out. We help them get access to venture quality deals in ways that were consistent with SEC guidelines.

Then the JOBS act came along. The future is going to become very interesting. The future is going to allow groups like ours to expand our investor base and publicly disclose when we’re raising capital. We can’t do that yet. The SEC is being thoughtful and measured in how it goes about regulating the JOBS Act. 

For right now, everything we’re doing is within the confines of the current law and the current regulations, which is why we’re doing what we’re doing with accredited investors we personally vet who really understand the risk. But if and when the SEC begins to actually implement the JOBS Act, we’re watching that carefully and we plan to respond appropriately once the doors are wider open.

Could you provide a quick summary of the JOBS Act and what it means for angels, accredited investors, and the general public?

The JOBS act will allow potentially hundreds or thousands of investors to invest, a true crowd of individuals who have much less money to write much smaller checks and get involved in a venture capital deal or any kind of startup deal.

But we’re not there yet. The SEC is still ironing out the details. It’s something that the SEC wants to move slowly towards that because they really want to make sure folks who invest know about what companies are doing and they understand the risks of investing capital. The SEC particularly wants to protect individuals against fraud, which we agree with.

For VentureHealth, we see the JOBS Act having an immediate impact on high net worth individuals as soon as  the next 12 or 18 months. We’re going to be thoughtful about how we begin to open up to a true crowd.

Right now, VentureHealth is only focused on accredited investors?

Exactly. Healthcare equity crowd-funding is very new. There are companies mushrooming up trying to make equity crowd-funding platforms real. One of the most successful that’s focused on the consumer space is called CircleUp. If you’re an entrepreneur raising money yourself, you should probably have a look at CircleUp’s model just to understand what they’re doing. They’re venture backed. They’re doing deals every month. Like us, they’re focused on accredited investors for now, but are trying to open up to the general public when it becomes legal.

You’re not taking any cash from the startup.

That’s right. The VentureHealth portal takes no cash from startups. That approach may be attractive for entrepreneurs, but does not necessarily make sense from an investor’s perspective.

This can be counterintuitive until you think through the incentives. We’re compensated along with the investors like any venture firm. In the case of VentureHealth, the individual investors make the decisions. The money flows from them. They’re the ones who own the equity through a fund structure. If the company returns cash to investors, we participate as members of the general partner. 

In contrast, if you’re a broker-dealer, you make money every time cash flows into a startup, so your incentive is to drive as many transactions as you can regardless of quality. Whereas for us, the incentive is to only take deals if we’re going to ultimately make money for investors. We’re aligning with the investors to try to find companies that are going to have successful outcomes as opposed to just driving a whole bunch of deals.

What separates VentureHealth from AngelList?

AngelList is a successful, creative approach to crowd-funding at high volume. AngelList has allowed lots of startups to put their wares up on the website and allowed lots of individual investors to look at those deals. It enables connection between the investors and startups. AngelList does not have a model, as far as I know, where it makes money by charging the startups or the investors.

I think they’re providing a really valuable service to everyone. As an angel myself, I appreciate what they do. I think they’re a great company and they’re well off. But what we do is very different. We curate our deals and only select investment opportunities that meet our criteria. As our exits this year reflect, our approach seems relatively robust. We curate our deals and will post far fewer than AngelList.

Conversely, AngelList does not try to protect investors from bad deals, just like Kickstarter doesn’t either. It’s really up to the investor. Investor beware, which is the case with many robust marketplaces. In the case of healthcare investing, however, investors often don’t have the clinical, regulatory, and business perspectives to bring an opportunity into the proper focus. 

I think that there’s a lot of value in their model, but the model does require a lot of understanding on the part of the investors. That does not always translate well into healthcare.

Our model is simple. We do our best to protect our investors, unlike AngelList and Kickstarter and most of the other equity crowd-funding platforms. Another way of saying this is we try to find the most attractive opportunities run by the best entrepreneurs. Our assumption is that, over time, this will prove successful for everyone.

What stops you from taking all of the best deals for yourself?

We manage about $72 million right now, which is really small money in the big picture of things. Our fund is not going to be able to fund all healthcare innovation. Far from it. We sit back a little bit and think about what’s happening in healthcare.

A lot of life sciences venture funds have been failing. The supply of venture capital dollars for life sciences innovation is, shall we say, challenged and at the same time there’s a strong demand from accredited investors who are not traditional angels and don’t know how to source or invest in these deals.

You’ve mentioned life sciences explicitly a few times. Is VentureHealth only focused on life sciences such as pharmaceutical and biotech or are you also looking at software, hardware, services, wellness, PRM, and medical devices? 

For us it all begins with clinical outcomes. If we can see a way to really dramatically impact clinical outcomes, then we begin to get excited. That said, our history has been medical devices, and we have recently been moving assertively into biopharmaceuticals.

How big is the team curating deals?

The answer is a little complicated. There are three of us who are co-founders of the portal — Mir Imran, Talat, and me. We all had a lot of experience making and curating deals. But there are another 30-plus people inside InCube Labs — who are great friends of ours  — who actively work in forming companies and doing research. In a sense, we get a free ride from a much larger group of people, primarily PhDs. They’re from pharmacology, engineering, protein science, material science, implantable sensors, Wi-Fi technology, and even guys in social media and web development.

Interview: Greg Jacobson, MD, Founder, CEO, Kai Nexus

This interview was originally featured on HIStalk.

Gregory Jacobson, MD is co-founder and CEO of KaiNexus of Austin, TX. 

Tell me about yourself and the company. 

I am an ER doctor and co-founder and CEO of KaiNexus. At KaiNexus, we’re making improvement easier by improving the process improvement process. It’s a mouthful, I know [laughs].

The problem that we initially discovered was that it’s really hard to connect all of your staff to implement process change. For example, I was in the emergency department when I worked at Vanderbilt. How do you get the 200, 300, 400 staff, nurses, techs, transporters, and physicians to all be able to engage as a group and to identify process problems and design and implement solutions? It’s really hard. KaiNexus was born out of the idea that we can provide a collaborative platform that’s optimized to help healthcare organizations engage a broad spectrum of users to improve processes.

This is your staff – your most valuable resource. Let your staff help your organization. They know what needs to be improved on. Let them do that. Empower them to do that.

Can you describe the product?

It’s completely Web based. We have an iOS companion app. It is enterprise-wide software supporting thousands of employees, but also works with teams as few as five or 10 people. It’s really scalable and adaptable.

We do a lot of our work based on information workflows. Every part of the organization can work differently, and they can do what they’d like within the system. KaiNexus manages what we refer to as daily improvement, a.k.a. ideas, suggestions, small little observations from daily work. KaiNexus also manages improvement projects and more complicated things that need multi-disciplinary teams, for instance.  It also manages improvement events, oftentimes referred to kaizen events or rapid improvement events.

There is extensive reporting, allowing senior leaders and quality folks to monitor how improvement work is going in their organization.

Let’s say I signed up to use KaiNexus as a hospital with 1,000 employees who I want using it.  What does the process look like in terms of the setup and getting started?

It’s easier for an organization to get up started than you’d think. We made everything in a way that doesn’t need much or any IT help, so we can build your website in a matter of minutes. We have built a very easy to configure collaboration platform for your organization. For instance, setting up strategic initiatives and categories and building projects or improvement events is simple and intuitive.

We support importing large numbers of users from an Excel spreadsheet that can be pulled out of an HR system. This is not a multi-week, tens of thousands of dollars installation with servers and such. There’s actually no installation at all in the traditional sense, and setup is very easy. We typically start it off with a smaller group like the senior leadership and quality department and then deploy throughout the organization in six to 24 months, depending on the size of the organization.

Does it also support a crowd-sourced model where staff suggest ideas that can be voted up / down, or is it more of a top-down approach where management has identified a few key initiatives to push?

It’s a little bit of both. There’s a crowdsourcing element to it, but it’s not a Facebook for your organization. We think social media is not a great place to do productive work, but there are elements in social media that are great for doing real work.

Having visibility, transparency and accountability, and allowing people to engage and give their opinion, that’s great. But I think that making it a popularity contest for ideas detracts from making it a productivity network. Popularity contests are great for making new products, for instance, but not for improvement work.

So yes, there are social media elements, such as letting people engage in a system from the bottom up. There’s also the other side of things, with the ability for department leaders and management to challenge their department or multiple departments to implement strategic initiatives. But it’s not designed with a Facebook or traditional crowdsourcing mindset.

Does KaiNexus integrate with EHRs in any way? I would imagine that with quality improvement if you’re recording clinical metrics you might want to get that data from the EHR.

What we want in KaiNexus is an environment that doesn’t need to draw a lot of heavy integration to function. You don’t have to put in patient identifiers to do process improvement. A lot of this boils down to simply saying, "Hey, we had a patient where X happened." 

It’s not necessarily an incident reporting tool at this moment. We have future versions planned where we’ll be integrating incident reporting, either by developing our own elements or integrating with some of the more popular incident reporting tools out there. Not integrating with EHRs allows us to keep our prices down.

KaiNexus has been around for about four years. Do you have case studies on how it has helped quality improvements?

Yes. We started out as an academic research project in 2005. After about three years, it became evident that we had developed a collaboration methodology that while born from manufacturing and automotive improvement work, worked in healthcare too.

So by 2008 or 2009, we had licensed my research out of Vanderbilt and started the company. We went live with our beta in 2011. We now have just under 20 organizations using KaiNexus.

We have a number of white papers and customer stories on our website. We have a number of use cases on how organizations are using KaiNexus. We just finished a new one on how KaiNexus supports the Baldrige Performance Excellence Program improvement journey as well. There is also a great ROI white paper where we have aggregated the estimated improvement impact across all of our customers. It allows an organization to estimate how much benefit they will get by implementing KaiNexus. The numbers are pretty amazing.

Healthcare is ripe for improvement. There is so much work that needs to be done. The government, senior leadership, medical advancements, and insurance / payment reform are all parts of the solution. It’s amazing how much improvement knowledge is not being harvested from the people who actually deliver medical care. This is a part of the solution that organizations so often forget about. It’s the low hanging fruit, so obvious it is often overlooked.

What is the pricing model?

It’s per-user pricing. The more users, the lower cost per user. We are very competitive on the question of price.

Is it a SaaS model?  Monthly subscription?

Yes. We also allow organizations to pay for discounted annual usage, too. There’s a lot more information about pricing on our website.

Any final thoughts? 

I don’t think anyone in healthcare doesn’t understand that healthcare is going to look a lot different in five to 10 years than it does today. Huge changes are coming. A lot of those changes directly relate to reducing cost while improving quality. The organizations that are able to figure out how to improve quality and decrease cost the quickest are the ones that are going to emerge as the most successful in the next decade.

It’s going to take a lot of work. In order to really do that, in a very practical, manageable way, we built an improvement platform that helps makes it easier to do exactly that. If a C-level executive is really serious about leading their organization in the next decade, they have to figure out a practical, actionable strategy to engage staff to make change happen. Change doesn’t happen by itself. They need a system to help manage that change.

We need to focus on big picture solutions that are real and practical. Figuring out how we can do process improvement more effectively is a great problem to be solving.

Computers are Eating Healthcare

This post was originally featured on HIStalk. 

"Software is eating the world" – Marc Andreesen, Andreesen Horrowitz

This quote is predicated by a handful of key assumptions and has a number of wide-reaching implications. First, let’s review the assumptions.

1. The hardware renaissance continues. Processors and sensors, packaged in systems-on-a-chip (SoCs) will proliferate into most physical goods wherever there’s perceived value to compute.
2. These computers will run modern, extensible operating systems (Android) as opposed to closed, proprietary operating systems (automatic door sensors at grocery stores).
3. All of these computers will be connected to the Internet at all times. Thus, every physical device in existence will have effectively unlimited computing power at all times.
4. Internet connections will be sufficiently fast. It doesn’t matter which end of the pipe does the computing. Thanks, Google Fiber.

If we take all of the assumptions above as inevitable truths, then we can make profound predictions about the fates of a number of healthcare and healthcare IT industries. Every projection below is based on the same underlying premise: companies that develop and sell analog, proprietary technologies will incur higher costs than companies that use commoditized hardware / software components and cloud computing. Those higher costs will be passed onto customers. Ultimately,"your margin is my opportunity."

Every sleep diagnostic clinic in the world will be dead in 10 years. This is particularly ironic because sleep clinics have been booming for the past few years. The entire business model of sleep centers is predicated on buying expensive diagnostic equipment and charging per night of diagnostics. They have enormous overhead: rent, employees, and the equipment itself. Every year, at-home sleep diagnostic tools are improving. They will allow patients to diagnose issues in the comfort of their own homes. Soon we’ll see an online rental market take root to allow patients to rent or share sleep diagnostic equipment. There’s no need to outright purchase any sleep diagnostic equipment, and capitalism dictates that a rental / sharing economy will emerge in place of ownership.

Take the paragraph immediately above, copy it, and change every instance of the word "sleep" to "kidney." There’re quite a few technologies that enable at-home renal dialysis, but the giants that own the dialysis clinics have lobbied CMS and Medicare to make it difficult to reimburse at-home renal dialysis. At-risk, ACO and PCMH delivery models are coming. These reimbursement models, coupled with cost pressures, will eventually force changes in billing rules for blood transfusions so that patients can do conduct renal dialysis in their own homes.

Intra-hospital proprietary hardware, which which includes devices such as vitals monitors, anesthesia monitors, telemetry machines, Dictaphones / microphones, communications devices, large MRIs, etc. In each of these examples (and many others), smaller, natively digital commoditized devices are driving prices down. Most of the legacy technologies can be reproduced in "good enough" fashions at a fraction of the cost using a processor and intelligent software. This concept is the basis of Eric Topol’s "the smartphone physical." The legacy vendors in most of these spaces are enormous and are powered by ruthless and sales and marketing machines. They won’t go away any time soon, but they’ll slowly wither.

Telemedicine undermines one of the major assumptions of humanity of the pre-Internet era: geographic relevance. Certain kinds of care, particularly complex care such as surgery and ICU, will need to be rendered in person. Huge portions of healthcare don’t require this. Cost pressures and supportive reimbursement models will allow telemedicine to blossom in time.

Ultimately, proprietary hardware and software solutions are symptoms of bloated cost structures. It’s reasonable to assert that many of the legacy, analog vendors will embrace the transitions I’ve outlined and accept the new world order in which software has eaten the world. But history dictates otherwise. Accepting the new reality often entails a complete organizational shift in strategy, hiring, operations, execution, and cost structure. Few business leaders can lead those kinds of paradigm-shifting transitions.

P.S. If you’re a CEO of a company in the surviving / winning end of any of these industries, email me. I’d cherish the opportunity to interview you as part of the HIStalkConnect interview series.