Category Archives: Entrepreneurs

Looking abroad for healthcare answers

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Serious students of the US healthcare system understand that costs are high and quality is uneven. While there are some incredible components of our system, it’s clear to me that we should look elsewhere for best practices that we could apply in the US. That outlook led to my interest in “medical tourism,” which I spent some time focusing on just before the Obamacare era.

A Harvard Magazine article (Global Health at Home) starts with the same premise, and cites a statement from the World Bank president that “situations of scarcity lead to innovation.” This gets right to the heart of the matter, because in the US high and rising costs are taken for granted, and budgets are not really a constraint. As a result we are not forced to think differently and creatively.

I was a bit surprised that the authors then jump to the conclusion that the solution is global health, which is “premised on taking responsibility for all people in a given location.. and at all levels of income. Philosophically, global health is guided by the words of… Paul Farmer, co-founder of Partners in Health: ‘The idea that some lives matter less is the root of all that is wrong with the world.’ Equity is the soul of global health.”

The authors use the term “Global Health at Home,” to describe their concept of bringing this global health approach, developed for poor countries, back to the US. Their solutions are pretty sensible: a holistic approach to chronic diseases, attention to identifying and addressing the social determinants of health, deployment of community workers, and an emphasis on care at home. These are good ideas but we don’t have to go abroad to learn them and frankly I don’t see that equity is the key lever for cost containment in the US or elsewhere.

I’m thinking about how scarcity has led to innovation in other fields: like how farmers in Israel innovated in irrigation to compensate for the lack of water or how earlier computer programmers developed elegant programming approaches when memory was a scarce resource (unlike the typical bloatware we see today).

What are the equivalent opportunities in healthcare, from both a process and product standpoint? What clever and efficient approaches are being taken for diagnosis and treatment in resource constrained settings? Can we apply them to the US? If we do, are there trade-offs that we need to consider?

What barriers are in place and can or should they be lowered? These may include regulatory requirements, malpractice risks, and payment methodologies.

It’s a topic worthy of systematic inquiry. I assume people are working on it, so if you’re aware please let me know on Twitter @HealthBizBlog

As a sidenote, it’s inspiring that the lead author of the Harvard article is in his 90s and still going strong!

Image courtesy of KROMKRATHOG at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Due diligence in middle market healthcare M&A. The boutique consulting firm advantage

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You’re a middle market private equity firm that’s just signed an LOI with a profitable and growing healthcare company. What started as a proprietary deal turned into a competitive process and you had to stretch toward the top end of your valuation range to win. Now you have a few weeks to complete the due diligence process and close the deal. A boutique consulting firm specializing in M&A for healthcare companies may be your best bet to assist.

What help do you need?

When middle market PE firms hire consultants for commercial due diligence of healthcare companies they usually have a few objectives:

  • To generate insights on topics that are critical to the investment thesis. There are often macro questions, such as the fate of healthcare reform after an election or the speed of adoption of a new technology. Then there are questions about the competitive landscape and specific competitors, and about market demand and the needs and satisfaction levels of key customers. Sometimes the potential buyer also needs an assessment of the management team and company processes. A PE firm can do some of this work itself, but often finds it useful to leverage additional resources and skill sets, such as the ability to extract valuable information from players throughout the industry on an unnamed basis.
  • To gain access to an objective third party that can play the role of a constructive skeptic and thought partner, making sure that investors don’t let their desire to close the deal cloud their judgment. The best consultants have the instinct, gravitas and wisdom to challenge consensus thinking and are willing to point out potential pitfalls in a deal and to counsel against proceeding when needed, even if the potential buyer doesn’t seem to appreciate it at the time.
  • To prepare for a fast start after closing by generating and validating compelling strategic initiatives and tactics.
  • To get as much high quality support as possible in a tight timeframe while staying within a reasonable budget.

What firm to hire?

Premier strategy consulting firms such as McKinsey, Boston Consulting Group, and Bain have strong due diligence practices serving PE firms. There are solid reasons for their success. These firms can:

  • Mobilize large teams of highly intelligent consultants around the world to gather and analyze data. They hire the best and brightest from business schools and undergraduate programs.
  • Leverage their knowledge base and industry networks built from hundreds or even thousands of relevant client assignments. Their proposals often reflect the perspectives and data they have assembled over the years.
  • Produce high-grade graphical presentations, with professional staff dedicated to consistent, visually pleasing outputs.
  • Offer their brand name as a seal of approval, which is reassuring to investment committees.

But boutique firms, typically consisting of 3 to 20 professionals, represent a superior due diligence option for middle market private equity firms. Why?

  • Consultants at boutique firms are often former senior professionals from the big, premier firms. The consultants performing the data gathering and analysis are frequently more experienced than the partners from the big firms, who are mainly selling and managing client relationships while fresh graduates staff the cases. A boutique firm’s consultants don’t need time to get up to speed, which is crucial when the project is only a few weeks long.
  • Boutique firm consultants are generally better than their big firm peers at thinking like investors and board members. Many gain this perspective by serving as board members of PE or VC-backed companies and as LPs in PE and VC funds. This profile makes it more likely that the consultant will approach the work with a practical, focused mindset, crisply addressing the questions that really matter. This differs from the classic strategy consulting project that employs elegant but often theoretical approaches. In select cases a consulting team member from a boutique firm is appointed to the board as an independent director post-closing, something that is generally not possible with a big firm.
  • Certain boutique consultants are entrepreneurial and commercially astute. When appropriate, they highlight opportunities for post-closing business development and partnering to help the new owners hit the ground running. Compared with the big firms, there are fewer constraints on introducing clients to one another and aligning with the PE firm for commercial success.
  • Professional fees for the engagement are usually a fraction of what the big firms charge. There are multiple reasons for this. Boutique teams are smaller and flatter because there are no trainees. Consulting veterans don’t need mid-level managers to watch over them. Everyone on the team pulls their weight; no one is there just to boost the billings. There are fewer fixed overheads like HR, administrative staff and downtown offices to cover, and boutiques are not charging a premium for their brand name. All this means that boutique firms can pay staff as well as the premier firms while still offering compelling value to clients.

I co-founded the company that became Health Business Group back in 2001. At that time most of our clients were former colleagues from my days at Boston Consulting Group who had moved into PE firms or senior management roles at companies. After being on the inside they understood our value proposition. Over the next few years we attracted new business from referrals and networking. Recently, we have been pleased to receive a number of qualified inbound inquiries from our website contact page, which represents a change in how clients find consultants. Middle market PE shops are searching the web specifically for boutique healthcare consulting firms to perform due diligence. After interviewing us and checking our references, they often bring us on board and are pleased with the working relationship and results.

By healthcare business consultant David E. Williams, president of Health Business Group.

Concierge Cardiology: podcast interview with Wayne Lipton

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Wayne Lipton runs Concierge Choice Physicians, which converts traditional physician offices to “hybrid”concierge practices that provide new options for patients and increase physician income. While we typically hear about concierge practices in primary care, the model is expanding to other specialties.

In this podcast interview, Wayne and I discuss the hybrid concierge model for cardiology:

  • (0:11) What is a typical cardiologist’s practice like these days and how has it changed?
  • (1:01) How have the practice changes worked out for physicians and patients?
  • (1:48) Do patients with cardiac issues use their cardiologist as primary care physicians or do they still maintain primary care relationships?
  • (3:06) Within primary care we’ve seen a shift toward concierge models. Why haven’t we seen that in the specialties?
  • (4:22) What is a hybrid model like? Does a physicians have to remember when they are acting as a concierge versus the traditional hamster wheel model?
  • (6:15) Are a lot of the cardiology concierge patients also concierge primary care patients?
  • (8:26) How does a concierge cardiology practice differ from a concierge primary care practices? How do the economics compare?
  • (11:08) What do health plans think of concierge medicine? What is the impact on new models of reimbursement?
  • (13:37) Would a practice that added on a hybrid model be more or less attractive to an ACO? Would the practices want to participate?
  • (15:50) How broad is the opportunity to add this model in cardiology? Are other specialties also ripe?
  • (18:29) How do you implement?
  • (21:35) How does your company get paid?

By healthcare business consultant David E. Williams, president of Health Business Group.

Recreational marijuana is becoming legal. How will the laws be implemented?

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I opposed the ballot question legalizing recreational marijuana in Massachusetts. Nonetheless, the measure passed and it looks like legalization is going to happen. I asked marijuana entrepreneur Rob Hunt, President of Teewinot Life Sciences, to provide the industry perspective on some of the key issues.

Here’s what he had to say:

How does recreational marijuana interact with the market for alcohol? Do you expect alcohol sales to rise or fall? Why?

The adult use cannabis market should have almost no impact on the alcohol market at all. What this market represents is simply an orderly conversion from a long-standing illicit market to a now regulated legal market. It is not as if this new adult use market is emerging from nowhere, it already exists and has existed for years. Now adult cannabis users simply have a safe way to purchase cannabis from licensed retailers who have laboratory tested state-approved products rather than from a criminal enterprise with no safety considerations or government oversight.  

What is the evidence of the impact of marijuana legalization on the black market?

Adult-use legalization will have a very large impact on the illicit market. Using Colorado and Washington as comp sets, the legalization of adult-use almost eliminated the illicit market overnight for adult cannabis users within the state. There is simply no reason for one to put themselves in a potentially dangerous situation when they can go to a local shop down the street that has a larger selection of tested products at a comparable price. Best of all, in a legal market, the money stays in the local community and generates tax revenues for the state and the Federal Government.

Some (including me) are concerned that the availability of edible marijuana products will pose a danger for children but also for adults and pets, especially when they are packaged as candies or treats. Are these concerns warranted?

The cannabis industry is very aware that edibles must be very closely monitored. The trend is to make edibles less potent for this reason and to make sure that labeling and packaging are obvious and accurate and that the exit packaging is childproof. As for making products that are packaged as candies or treats, it is no different than making an alcohol product as a blend with fruit juices or iced tea. Flavor should not be the consideration, education and making sure products are kept in safe places should be a much larger consideration for adults using any cannabis product.

According to published research, about 30 percent of marijuana users have some degree of marijuana use disorder, including dependence and addiction. What is the argument for introducing a product that causes harm in a significant percentage of users?

I think the most simple answer is that the state is not “introducing” a product at all. This product was, is and would continue to be available to anyone that wishes to consume it on the illicit market. The question that should be asked is “If this product is already available to anyone that wants it, would it not be smarter to regulate it, keep it out of the hands of children, make sure it is labeled and packaged properly, has potency information available and is grown using specific standards?” If the answer to that question is yes, which is what the voters recently decided it was, then the next question, to address the concerns of many should be, “With the revenue and taxes that are being produced from this now regulated program, would it not be prudent to reallocate some of those dollars back to education and treatment for those who need it? Furthermore, perhaps should we not allocate some of the money that was previously earmarked for incarceration to rehabilitation?” 

The medical marijuana ballot initiative was passed in Massachusetts just a few years back. Was that initiative mainly a tactical stepping stone by the marijuana industry on the way to recreational legalization, as appears to have been the case in Colorado? 

The two issues are not at all related. Those who need cannabinoid based medications to treat a host of indications had no other options to procure it outside of these compassionate state programs. This was a health question. It is very likely that cannabinoid based medicine continues to move away from the plant and further into the lab. Patients that require cannabinoid based therapies are not concerned with cannabis, they are focused on the complex chemical compounds that the plant produces called cannabinoids. There are to date one-hundred and eleven of these cannabinoids identified. Many of them have been proven to have efficacious qualities, most notably to treat spasticity and for palliative care. As science progresses, new ratios and formulations of cannabinoids will be developed to advance where these medicines will be used to treat the infirm. 

Legalizing cannabis for use by responsible adults is a social justice question. These laws were passed simply to allow adults to use a product that has been statistically shown to be less harmful than alcohol without fear of arrest or incarceration. 

There is a very clear bright line distinction between these two laws and the reasons for their respective introduction. The one thing they both have in common, as evidenced by the percentage of voters supporting each, is that they are sensible policy by comparison to cannabis prohibition.

What did the Massachusetts ballot measure get right, and what are you concerned about?  

It is too early to tell either way. The law just passed and has not made it through rulemaking yet. We will see how it is implemented before we will be able to opine on what is right and wrong with it. 

What do you project as the net economic benefit or harm to Massachusetts? What are the key factors to consider?

As James Carville once famously said “It’s the economy, stupid” This law will create many new local jobs both directly tied to cannabis and on the ancillary as well. More importantly, it will take jobs away from criminal enterprises. Previously revenue derived from the sales of cannabis flowed directly back to Mexican cartels, Canada, or local criminal organizations. Now it will all stay in the Commonwealth. Then there are the taxes. Not just the excise taxes, but the Federal and State business taxes, payroll taxes and others. Lastly, the state will not need nearly as much capital for prisons, policing or other programs reliant on cannabis prohibition. You will also see much of this windfall redirected to support social welfare programs. That is good for all citizens in the Commonwealth.

As for harms, there will be a greater need for proper cannabis education and that will cost money. New state agencies or internal departments will be created to oversee the program and that will have related costs as well. Finally, there will no doubt be capital required to treat some users as there is with alcohol and tobacco.

There is tension between US and state law in places like Massachusetts that have voted for legalization. What are the key issues and what is your expectation for how they will be addressed by the incoming Administration and Congress?

I do not think there is enough room to discuss all the related issues in a short article. Things to consider are: the 10th Amendment to the Constitution, The Supremacy clause, the Rohrabacher-Farr amendment, the power of the incoming Attorney General – Jeff Sessions, How Trump or Pence decide to direct AG Sessions, how people close to the administration who are strongly supportive of cannabis progression, such as Peter Thiel or Congressman Dana Rohrabacher, influence the administration policy. 

But the most important issue to consider when addressing any political question is – What is the will of the people? What do they want? Because ultimately, politics is about winning elections and if a politician believes that an issue is important enough to the voters in their district, then they will not likely take a stand against it if they wish to remain in office. At this point in time, there is no doubt how the voters feel about advancing cannabis policy. Almost 60% of the electorate supports adult use cannabis and that is taken from polling across both sides of the aisle in liberal and conservative states alike.

Anything else you would like to add? 

Please take a look at what is being done on the true pharmaceutical side of cannabinoid-based therapy. I am certain that it will alleviate many of your articulated concerns. When you realize that these pharmaceutical and biotechnology companies are conducting clinical trials and are undertaking all the same steps with the FDA as for any other forward thinking drug development, I am certain that it will illuminate that this issue is about helping patients and not about finding a way to back-door legalization. I am happy to point you in the right direction.   


By healthcare business consultant David E. Williams, president of Health Business Group.

TytoCare: Comprehensive telehealth exam platform

TytoCare hopes to take telehealth to the next level by providing a solution that allows clinicians to conduct remote examinations. Patients (or caregivers) will use a TytoCare device to conduct an exam that can be interpreted by a physician over a cloud-based platform with video conferencing.

The company took a step forward recently by obtaining FDA clearance for its digital stethoscope. The approach looks pretty cool, but clearly it will be a challenge to get the devices out to patients ahead of need and to do so cost effectively.

CEO & Co-Founder Dedi Gilad answered my questions via email:

1. What was the inspiration for Tyto?

I founded TytoCare along with Ofer Tzadik, another lifelong leader in Healthcare IT, in 2012. The story is similar to that experienced by most families when at a young age, my daughter suffered from a series of earaches requiring constant medical treatment. With two working parents, it became increasingly difficult to travel in and out of the local physician’s office on a regular basis. The experience was not easy for my daughter either, waiting for hours in the crowded doctor’s office in considerable pain and discomfort. 

After consulting with my pediatrician, I recognized the strong need for change in the way primary care is delivered today. I collaborated with Ofer Tzadik to design a new medical experience, one that would not only mutually benefit both the doctor and the patient, but also serve to strengthen this vital relationship. The result of this endeavor is TytoCare, a company prepared to lower the load and cost of U.S. healthcare services, improve accessibility to healthcare services even from the comfort of home, and reshape day-to-day healthcare as we know it.

2.      Why a dedicated device instead of using a tool everyone already has, i.e., a smartphone?

 TytoCare’s examination tools and complete telehealth platform work with a smartphone or tablet and include a stethoscope, otoscope, tongue depressor, camera, and thermometer. While a smartphone can only offer video and audio technology, Tyto enables the patient to conduct actual exams of the heart, lungs, heart rate, temperature, throat, skin and ears. This cannot be done with video alone and more importantly, it requires an interface and technological infrastructure that simply wouldn’t be cost effective in a smartphone.

 3.    How will distribution to end users work? It seems like logistics will be difficult. For example, do you expect everyone to have a device in place before they need it?

 To begin, distribution will start with health institutions though a full consumer product is coming in 2017. We expect that consumers will see the value in being able to perform live, remote medical examinations at home, in place of rushing back and forth to the doctor’s office. 

 4.  What is the cost of the home and pro solutions?

 TytoPro will cost $999.00 plus a monthly fee based on usage, and TytoHome will cost $299.00.

5.  More broadly, what are the overall economics of the solution? Is there a financial return on investment? How do you think about calculating that? Is it more appropriate for certain segments of patients or providers?

Certainly, and our work with leading financial institutions has reinforced the financial ROI.

 The incredible benefit of the product is that its applications are endless because it simultaneously empowers doctors and clinicians while unlocking the full benefits of telehealth for patients. TytoHome can be beneficial in many different scenarios – for geographically isolated patients and those who lack easy access to medical facilities; those who are turning to urgent care because they cannot get an appointment in time at their regular establishment; patients with chronic illnesses or other conditions that require monitoring and frequent, tiresome trips to the doctor or hospital; school or traveling nurses; and of course, parents at home with kids.

 6. What is the lifecycle for this solution? Do you expect to upgrade the devices over time? Can that be done through software or will it require hardware to be replaced?

We will likely add additional examination capabilities over time, but the majority of upgrades can be made through software updates.

 7. What else should readers know?

TytoCare is a complete end-to-end telehealth platform that provides a telehealth experience comparable to in-person visits. It truly fills the missing link in telehealth between the in-office professional and the at-home patient by delivering comprehensive exam results – of the ear, nose, throat, heart, lung, stomach, skin – as part of a complete telehealth visit. The exam data can be delivered to a clinician via “live telehealth exams” or through the “exam and forward” function – sending the exam results on to be examined by the clinician later.

 TytoCare can be used anytime, anywhere and by anyone. Patented guidance technology directs and enables anyone to collect the right data so a clinician can make the proper diagnosis. The advanced digital exam tools use clinic-grade technology to capture high resolution images and sounds, allowing for more kinds of remote diagnoses and increased accuracy.

The secure cloud-based platform enables integration with existing HER systems and provides analytics for decision support with health alerts. TytoCare offers HIPAA compliance, and the modular product design also supports open APIs so other examination devices can be integrated within TytoCare.

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By healthcare business consultant David E. Williams, president of Health Business Group.

MedSentry: Adherence for complex drug regimens (podcast)

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Medication adherence is a tough challenge, especially for high-risk patients, whose complex drug regimens often feature more than a dozen pills. MedSentry is rolling out an end-to-end closed loop adherence system for this population. Although it’s not a large group, it is responsible for a disproportionate share of medical costs.

In this podcast interview, CEO Adam Wallen and I discuss the following:

    1. (0:11) Adherence is a big problem in healthcare. What does it mean? What’s the nature of the problem?
    2. (0:57) Are there multiple reasons for lack of adherence?
    3. (4:05) There are a number of adherence solutions in the market. How well do they work?
    4. (7:46) What is the MedSentry approach? How is it different?
    5. (11:57) What evidence is there that this approach is effective?
    6. (13:17) You have focused on the most complicated patients. Will that continue to be your niche as your commercialize?
    7. (14:55) Do you have a scale-up plan?

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By healthcare business consultant David E. Williams, president of Health Business Group.

Scaling up bundled payments: Interview with Loopback Analytics CEO Neil Smiley

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Neil Smiley, Loopback Analytics CEO and Founder

Neil Smiley is CEO and Founder of Loopback Analytics, which supplies tools to providers to manage bundled payments. I asked him to comment on the growth of bundled payments and the role of analytics.

Why are hospitals hesitant to adopt bundled payment options?  What strategies can long-term care providers take to encourage bundled payment adoption on a large scale?

In most cases, a hospital’s financial responsibility ends upon patient discharge.  Bundled payments significantly lengthen the care episode, making hospitals responsible for the costs of downstream care partners.  The shift to value-based reimbursement from our current environment of fee-for-service represents a sea-change for the industry.  Decades of business practices, clinical relationships, payment structures and core competencies are being reevaluated in light of this new payment model.  Such evaluation and reflection takes time, and we are starting to see leading organizations embrace this challenge as an opportunity to develop differentiating capabilities.

Long-term care providers can help accelerate this process through proactive engagement with their hospital colleagues.  Hospitals will need better data from their post-acute care partners to have confidence that they can consistently deliver efficient care and strong clinical outcomes.  The long-term care providers that can demonstrate these capabilities pave the way for hospitals to better understand, trust and rely on the broader care delivery pathway they must manage with bundled payments.

What are the main benefits patients will reap from bundled payments?  

Bundled payments have the potential to significantly improve patient outcomes through better care coordination across providers and care settings.

Under a fee-for-service payment model, there is little financial incentive to help ensure a patient makes a successful transition to skilled nursing after an acute care stay, or ensuring that patient successfully transitions home after leaving a skilled nursing facility.

Under bundled payments, there is now an aligned incentive with providers across care settings to ensure transitions are clinically successful and financially efficient.  Patients are likely to get more help in navigating multiple silos of care, when participating providers are financially responsible for the cost of poor outcomes.

What factors are holding back scalability of bundled payments options?

Broader scalability of bundled payment options will be paced by the availability of accurate and timely data from network participants and workable frameworks for sharing risks and rewards among bundled payment partners.

At the national level, CMS has relayed its intention to aggressively advance pay-for-value reimbursement models, with bundles being a prominent example.  Ready or not, the expectation is that bundles will quickly expand to include additional conditions and broader mandated participation.

At a health system level, first movers that have invested in the tools, competencies and partnerships needed to succeed in bundle configurations will be courting more bundle opportunities to take advantage of their lead in the market.

What is the role of analytics in bundled payment? Can you provide an example?

Advanced analytics are absolutely essential to success in bundled payments.

Bundled payments require that different providers across the care continuum come together to consistently deliver a clinically successful and financially efficient episode of care.  Without deep knowledge of potential partners’ strengths and weaknesses, a bundled payment manager stands a poor chance in creating a winning network.

CMS provides data to healthcare systems, ranging from high-level quality ratings to detailed, individual claims records.  With effective application of data analytics, these sources of information, combined with data from network partners can be used to create the most effective care delivery network possible.

How will analytics advance over the next 5 years? 10 years? How do you measure progress?

Looking towards the future, we expect a pronounced shift from retrospective, historical analytics to prospective, predictive analytics.  The former allows healthcare systems to accurately assess their current and historical states, and is an essential component for improving operations.  The latter allows healthcare systems to avoid costs and adverse clinical events before they even occur.  The availability of real-time health data will continue to grow with the proliferation of digital monitoring devices. Machine learning and predictive algorithms are already establishing themselves in matching patients with appropriate resources based on a diverse set of data markers.  We foresee significant expansion on this front in the coming years.

With so many analytics solutions vendors out there how do you distinguish yourself?

Loopback Analytics puts analytics into action.  Loopback has an integrated technology platform that allows our clients to move from investigatory analytics to data-driven interventions, through a platform  that provides a closed loop feedback system to ensure executed actions achieve the expected impact.

It is only through such an integrated solution that healthcare organizations can be assured that the problem is understood, the appropriate actions executed and impact quantified.

By healthcare business consultant David E. Williams, president of Health Business Group.