Health Business Blog

One reason Internet shopping got established and grew as quickly as it did is that online shopping sites have enjoyed a built in tax advantage over traditional retail stores. In particular, purchasers have generally avoided having to pay sales tax on their goods. That differential was the result of technology getting ahead of tax laws. It wasn’t an intentional policy. And yet it’s had a salutary effect on the US economy by allowing an innovative form of commerce to take root. Now that the industry is maturing states are moving fairly quickly to equalize tax treatment of online and offline sales. Big players like Amazon are going along, because they are now at the point where they want R&D facilities in places like Massachusetts, and where they have the scale to justify more distribution centers closer to their customers.

Unfortunately the situation in telehealth is the opposite. The existing regulatory framework is based on in-person consultations where patient and provider are in the same jurisdiction. It didn’t occur to policymakers 50 years ago that broadband communications would allow the “virtual presence” of physicians from afar. Those rules should be changed. Slowly it will happen as pressures build to contain costs and allow new delivery models.

Since legacy rules hamper rather than facilitate the emergence of a useful new technology, perhaps it’s reasonable to look to other mechanisms to nurture telehealth’s growth with financial incentives. Here are a couple of ideas:

• Rather than charging a comparable co-pay for eVisits and in-person visits, payers could charge a lot less or nothing for online visits
• Payers could also pay a premium for physicians and other providers to use telehealth, such that they have a financial incentive to get over the hump

As with e-commerce, this might cost someone something in the early years. But the payoff comes down the road, as telehealth technologies enjoy faster and wider adoption than they would otherwise. It’s a facile comparison, but online visits started around the same time as e-commerce,  yet e-commerce has become mainstream while telehealth remains a novelty.

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Earlier this month athenahealth announced its intention to purchase Epocrates for about $300 million. The deal is being touted as a way for athena –which sells cloud-based billing and EHR services– to boost its awareness among physicians, over 300,000 of whom use the free Epocrates mobile app. Historically, Epocrates has monetized its users by selling advertising to pharmaceutical companies. That market is in decline, and athenahealth is the white knight riding in with a new business plan.

In this podcast interview, athenahealth SVP and Chief Marketing Officer Rob Cosinuke explains the rationale behind the deal and lays out athena’s three-phase plan for integration:

1. “Sidle up” to the Epocrates brand for awareness, bask in the brand’s “love halo,” and generate leads for athenahealth offerings
2. Invest in the core Epocrates app and expand its utility so physicians will love it even more
3. Integrate Epocrates and athenahealth functionality to generate transactions on athenahealth’s national health information backbone

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David Williams interviews athenahealth's Rob Cosinuke Play Now | Play in Popup | Download

I first worked on e-visits more than a decade ago when I consulted to Healinx, later called RelayHealth, on the development of its business model. The appeal of the webVisit was pretty clear even then, and early studies showed that electronic interaction with a physician’s office was effective, less expensive and more convenient, especially for established patients. Interestingly, webVisits seemed to keep patients out of the ER by providing easier access to physicians. Electronic visits have caught on slowly, though and in 2013 are still treated as somewhat novel.

A new study in JAMA Internal Medicine compares e-visits with in-person visits for suspected sinus infections and urinary tract infections. (I don’t have access to the article so I’m referencing the Reuters story about it instead.) Rates of follow-up visits for the same condition were identical for the in-person and the e-visit groups, which “suggests that misdiagnosis and treatment failure weren’t any higher with e-visits.” Overall costs were lower: $93 v. $74.

Interestingly, almost everyone in the e-visit for urinary tract infections received an antibiotic prescription compared to about half in-person. That may indicate overprescribing of antibiotics, which is a problem.

It’s interesting that there was more prescribing in the e-visits. Perhaps it’s the nature of UTIs that this happens. Looking at the broad spectrum of e-visits I would expect the situation to be reversed. When someone makes the effort to go into an office and see a physician they expect to walk away with something to show for it. That’s usually a prescription but could also be additional lab testing, which may or may not be needed.

Therefore I would be hesitant to generalize the findings from UTIs to e-visits as a whole.

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American Well is a pioneering telehealth company. Four years ago, when the company was just launching its first commercial deployments, I interviewed CEO Dr. Roy Schoenberg. Recently I interviewed him again and asked for his views on the progress of telehealth since 2008, impact of the Affordable Care Act, how physicians and health plans are reacting to American Well, and what it all means for patients. He also contrasted the US market with Australia and New Zealand, the first permanent overseas markets for the company.

The audio for this podcast can be accessed here.

David Williams: This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Dr. Roy Schoenberg. He is CEO of American Well. Roy, thanks for joining me today.

Dr. Roy Schoenberg: Thank you, David. Good morning.

Williams: It’s been a few years since we last caught up. Can you describe what progress you’ve made since we last spoke?

Schoenberg: A lot has happened in the health care industry. Everybody’s looking at the political arena where the health care industry is seeing a tremendous transformation.  Other dimensions of health care including the recent embrace of technology and the changing ways in which health care is delivered have also set the stage. We have so many issues including access, supply of physicians, reimbursement, and the way people are getting their health care benefits.

We have seen significant change in the way that people along the entire spectrum of this industry are looking at how technology can be used to actually acquire health care services. This has been led by the biggest stakeholders in the health care business, which are the health insurance companies. Over the last couple of years they have taken the lead in changing health care delivery.

There are a lot of different things that we can do to let patients know what they need to do for themselves and how to get more involved in preventive care. Along the same lines is the understanding that we don’t have enough health care services available in many parts of the country and that using ubiquitous technologies like the Internet in order to disseminate and redistribute is going to have a significant impact.

We have been at the right place at the right time and as you could imagine that has had a tremendous transformative impact on our business itself.

Williams: Could you comment on what has happened from the federal government level, and what impact you see from the HITECH part of the stimulus and also from the Affordable Care Act?

Schoenberg: With the Affordable Care Act you’re going to have anywhere between 34 to 36 million people who have been underinsured or non-insured now having proper access to the health care system.   That is happy news for a lot of people but the reality is that the supply part of the health care system hasn’t really significantly changed and it’s already been very strained.

As a result of that even the federal government, which usually takes longer than private commercial industry, has taken seriously the notion that we need to fundamentally change how we perceive supply and demand. One of the things that we have seen in the last couple of years in a variety of areas is new opinions by the movers and shakers of Washington, but also from the legislators at the state and the local level. They are saying, ‘We need to revisit the notion of the use of technology.’

This became most prominent starting in the last year from legislation that was passed in a variety of different states –I believe 16 to date.  It says explicitly that telehealth needs to be a reimbursable form of care delivery. State medical boards have literally had a 180-degree change in the way they see the validity of telehealth and telemedicine as a conduit for care delivery.

More and more opinion papers coming out of Washington both by legislators as well as by regulators are talking about the fact that it has now become imperative for us to enlist technology.

We are seeing increasingly that many people are thinking of telehealth and telemedicine as such a transformative tool. There is a lively discussion around what the regulations should be and how we can make sure that the use of this technology is going to be on the safe side of care delivery rather than on how the Internet has traditionally been abused by Internet pharmacies or for those kinds of interventions that are absolutely inappropriate.

We’re seeing a flurry of embrace at a variety of levels. Some of it is inquisitive; some of it is very decisive. We are seeing that the industry from top to bottom has decided to move forward on the use of these technologies.

Williams: Let’s talk a little more about access. You’re describing having another 35 million or so people in the system placing demands on providers and the use of technology to work on expanding supply. If we look at the example of electronic medical records, one could make the argument that use of that technology actually decreases supply because it reduces the available capacity of some providers as they adopt it. How is it that telehealth has a different and better effect?

Schoenberg: I want to make a distinction between two terms because people usually think of telemedicine and telehealth as the same thing. Telemedicine has been around for about 20 years. It is used to connect physicians across geographies in order to deliver care for patients.

In a rural area a patient can use telemedicine to see an oncologist that comes from a highly reputable tertiary medical center in an urban area. That in itself creates efficiency, but it does not increase the supply of medical services. It just allows consultation and immediate care to happen more readily.

Telehealth on the other hand is the use of technologies to bring health care services and available physicians into the hands of patients wherever those patients are.  Patients can directly tap into the telehealth system, find an available physician and connect with them. What that means is that we have physicians out there that have the opportunity to be in front of a patient right now as we’re having this interview.

There are numerous physicians that are not in front of a patient right now even though they could be, whether it’s because of cancellations, because they live in a specific place, or because they don’t want to practice five days a week. Increasingly many physicians are lessening their clinical hours, maybe because they are young mothers, or they are physicians who are on the retirement path. In any one of those cases technology allows us to tap into those physicians and say, “If you have an hour right now, we can actually use that time from your home to care for patients that need to see you.” What that means and what we have seen across the board is that we have the ability to bring back into the grid many of those lost opportunities and literally put them in front of patients that need to be seen.

Now we need to think about telehealth also as a way not only to overcome geographies, but also to overcome other barriers of access. It’s not only in the islands of Hawaii, or rural North Dakota, or Upstate New York.

Many patients live in metropolitan areas, but they are elderly patients, they have many different medical conditions that make it very difficult for them to leave their home. Usually these patients fall off the grid because they don’t get followed up. They don’t show up as needed in front of the different physicians.

We can use telehealth rather than force them to show up at the gates of health care. We can use telehealth to bring health care to them. That is another example of how access to health care has remarkably changed just by the fact that technology can extend the health care system into where the patients are.

These are just two examples. But as you said, electronic medical records  –which are absolutely necessary to change the accountability of care that’s being delivered– don’t really change the availability of the service themselves.

Telehealth on the flip side is truly redistributing the available supply and sometimes the supply that went off the grid and making it available to patients. That’s why it is perceived as such a radical change and a radical improvement in the availability of the entire system to its end consumers who are the patients.

Williams: Since the last time we spoke, there have been some other services that have sprung up that are going at the same problem in a different way. For example, ZocDoc allows physicians to increase their income and improve their mix. What’s the connection between what ZocDoc is doing and what you’re doing if any?

Schoenberg: In a way ZocDoc, the older kind of minute clinic and what we do are really different solutions for the same issue. Patients are struggling to get a hold of health care professionals to get care and we all help to fill that need.

What ZocDoc is doing is pretty remarkable. They say, we know that there are cancelled appointments, we know that there are holes in the schedule of physicians and we want to make sure that if there are people around in that physician office or in that geography that need to get in front of a doctor, we’re going to bring that opportunity to their attention.

What ZocDoc is doing is facilitating filling up a physician’s calendar where there are options for seeing patients.  It brokers those open appointments to patients over the web and they have done a terrific job in every way. I think physicians are very happy with it and patients are very happy with it.

That helps if you live in a place where there is a physician with an open appointment. Unfortunately in many of the cases, it’s not the physician you need, you need to see a specialist, or you live too far, or you have difficulty coming out of your house or traveling, or a variety of different issues. You therefore cannot wait for an appointment that’s going to happen in three days even if it’s from ZocDoc.

While they are brokering opportunities of in-person encounters, we’re using technology to allow you to see the physician from wherever you are. It’s different solutions for the same issue and realistically they complementary offerings.

Williams: When we spoke last time, you were starting your first major implementation in Hawaii. Now I imagine you’re looking out the next five or ten years. I’m wondering how you see the market for telehealth as you’ve defined it and in particular do you have a sense of how larger the opportunity is for the telehealth market in the United States?

Schoenberg:  We’re very careful not to make prophecies about where telehealth is going to be. But one thing that we can do is extrapolate from the change in our business that happened over the last couple of years. Five years ago we started as the crazy people who proposed that health care could be delivered meaningfully through technology in the state of Hawaii, a state that suffers from major geographical barriers for the delivery of care.

Today we’re looking at our client pool, the biggest health plans in the country, the federal government, national pharmacy chains, large behavioral health systems, very large employer groups and these have diversified so rapidly. Some people will not have the appreciation for how slow the traditional health care system moves. This industry, which is in every way a health care industry derivative, has moved at the pace of consumer technology. That is an incredible difference from any other thing that we’ve seen in health care.

Not only are different people using telehealth and enjoying it, but the people that govern the money flows are increasingly getting to the point of saying, ‘Well, this needs to be part of regular health care.” Usually the people that drive that would be the insurance companies that govern most of the dollars flowing in the health care system, and they are saying at this time, ‘We are going to incorporate telehealth increasingly as a part of our plan of benefit product.’

What that means is that down the line, telehealth will become part of your medicine cabinet. When you are at home and you have a health care issue, the first point of entry into the health care system will be right there where you are. You will be able to walk and use your iPad or you iPhone or your browser in order to tap into the health care system and begin to understand how you should acquire services.

It is clear that not everything you need is going to be delivered to you through telehealth. Clearly if you need surgery or if you need an injection, or whatever it is, that’s not going to happen through a browser, but I believe what we will see rapidly is that health care will be available to us at our home through this technology. It will then either solve all of our issues or advise us about what would be the prudent next step of acquiring a physician from a system that usually tends to be painful to interact with and often costly.

Williams: One topic that has gained some momentum since we last spoke is physician quality and patient experience. There has been some more published information about what the quality is of various physicians or physician groups. There is an increasing interest in how traditional care settings compare with less traditional mechanisms of delivering care including minute clinics, or onsite clinics. Has American Well done anything to make a comparison of its services with those that are offered in more traditional ways?

Schoenberg: It’s difficult to compare the scope of services that you deliver through telehealth versus the ones that you deliver in person.

Nobody is looking to reinvent health care. The relationship that we have with doctors and the trust that we have with doctors is fundamental for our ability to receive good care and to follow up in the instructions that we receive in order to care for the issues that we have.

Understanding that we need to preserve those things rather than introduce alternatives to them has been at the foundation of the technologies that we brought into the market. First of all we want to make sure that your interaction with a physician is going to be intimate.

We do not believe that an exchange of an email with Dr. Joe Schmo is a clinical encounter. We even don’t believe that telephone interaction with a physician is sufficient. For the most part you need to have a full intimate interaction, seeing and talking to the physician.

The second thing is that the health care professionals you interact with cannot be the people you don’t know. When we deploy our systems, we’re using them to connect patients with physicians that were otherwise made available to them by their insurance company.

If you forget technology, when you need to see a physician, you go into the directory of whatever health plan that you belong to. That’s how you find the list of physicians that have been checked and credentialed, followed for quality of care, licensed properly and board certified.

What technology should do rather than say, “Well, there is a pool of unknown Dr. Joe Schmo’s who say they are physicians and you’re going to get to them through the Internet,” is to make sure that the people you interact with are going to be the same people that you would otherwise schedule appointments with.

The level of accountability for the care that’s being delivered over technology shouldn’t be any different than the level of accountability that happens when you are seeing someone in person. The information presented to physicians before they see you has to be complete and exhaustive. They need to understand the rest of your medical record before they start treating you because that’s very important to direct their care.

We need to make sure that the care that they give you is properly documented so that they feel accountable. We want to make sure that the care that they deliver to you is going to be known to the next physician that you’re going to be seen by in order to preserve something called continuity of care, which is remarkably important for quality, but also for the efficiency of the system.

This also cannot be a gadget-type intervention that you find over the web. It has to be tied to the way that you get health care services. It means it has to be tied to your insurance product. You need to pay a co-pay for it like you do when you see a doctor. It needs to be introduced to you and explained to you by the same people who tell you how you can acquire medical services. The only way to make sure that the quality of service that you get over telehealth is good enough is to make sure that telehealth is an extension of your traditional health care system rather than a new alternative.

Williams: It was interesting to see that your first deployment outside of the US was in Australia and New Zealand. Could you comment about why that region of the world was first and what’s different there compared to what we see here in the United States?

Schoenberg: The first time we deployed the system outside of the US was actually for a period of time during the earthquake in Haiti. We allowed physicians from a top medical center in Boston to be available through the system to the medical personnel on the ground there who needed help performing field surgery and everything else. That was really the first time we crossed the border of the United States. But from commercial deployment standpoint, you’re absolutely right.

Australia is our largest overseas deployment. It’s the same in the sense that Australia is not unlike Hawaii in many areas. They have a lot of rural geographies involved.

There is a really desperate need for distribution of medical services. There are many areas where patients have to literally take a plane and fly for hours before they see the right kind of health care professional or even any kind of health care professional.

In that sense using technology that makes access to downtown Melbourne the same as it is in Central Australia has been on the mind of regulators and the government, and everybody else there.

The other dimension that is very interesting is that they have fast forwarded the thinking that we’re seeing here in Washington in 2012 to the point that the government has already embraced very far reaching rules about how imperative it is for the country as a whole to embrace these technologies.

The government has stated in a variety of different ways and in different kinds of domains that reimbursement for physicians for seeing a patient through technology should not be any different than reimbursing a physician for seeing the patient in person. It’s just that maybe the technology is the only way in which this patient can see the physician, and since the physician has to deliver the best care they have through the limitations of technology, they’re not doing anything less than seeing the patient in person.

One thing that is unique about Australia is that they are the best example of a national agenda for embracing telehealth that we’ve seen anywhere. We were fortunate to be the ones picked by the people that run telehealth in Australia to actually realize that. Interestingly enough, we do see that happening in other parts of the world, not necessarily just in places that have geographical issues. The United Kingdom is embracing similar rules in order to revamp their National Health Service.

Other countries are following suit, and I think luckily we are at the point that Washington is picking up on it. We’re going to see that remarkable change happen right in front of our eyes in 2013.  I’m happy to go on record in saying that is going to be a transformational year for the health care industry because of the use of telehealth.

Williams: I’ve been speaking today with Dr. Roy Schoenberg, CEO of American Well. Roy thanks so much for your time.

Schoenberg: Thank you so much, David.

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American Well is a pioneering telehealth company. Four years ago, when the company was just launching its first commercial deployments, I interviewed CEO Dr. Roy Schoenberg. Recently I interviewed him again and asked for his views on the progress of telehealth since 2008, impact of the Affordable Care Act, how physicians and health plans are reacting to American Well, and what it all means for patients. He also contrasted the US market with Australia and New Zealand, the first permanent overseas markets for the company.

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David Williams interviews American Well CEO Roy Schoenberg on telehealth [ 25:30 ] Play Now | Play in Popup | Download

The audio for this podcast can be accessed here.

David Williams: This is David E. Williams, cofounder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Steve Zaleznick, Director for Consumer Strategy and Development at HealthPocket. Steve, thanks for joining me.

Steve Zaleznick: My pleasure, David.

Williams: What is the unmet need that you’re addressing with HealthPocket?

Zaleznick: The most fundamental unmet need is that when people are faced with extraordinary numbers of choices of health plans that the result does not go well. One example from a recently published article in Health Affairs indicated that only about 5% of Medicare prescription drug part D beneficiaries were in the least expensive plan.

There’s a huge opportunity to help people sort choices and make decisions that work better for them. The second largest need is that insurance distribution is expensive, and helping to reduce the cost of distributing the health insurance and getting people to the right plans will help solve some very significant needs in the marketplace.

Williams: Dealing with health insurance is very complicated. How do you actually achieve these goals?

Zaleznick: One of the concepts that we’ve been using in building our website healthpocket.com is that you shouldn’t need to have a PhD in health economics in order to make a good choice for health insurance. The fundamental premise is that we can support the site with a large amount of data, but make it much clearer to individuals and allow them to sort based on various preferences..

We’ve got quality scores in which there is a rating process looking at health plans. It also lists prices, and there’s also an analysis of out-of-pocket insurance risks and obligations. Depending on each person’s situation, it’s going to be a very individualized decision. Our process is to allow people to sort based on the criteria that matter most to them.

We’re early in our process, our website went live in beta early November. We’re going to continue to build on those principles about allowing the individual to sort according to his or her preferences.

Williams: What kind of information does an individual need to provide in order to be able to use the site effectively?

Zaleznick: The fundamental principle of our business is that the individual needs to provide as little information as they want to provide. It’s important for us that the people get information back from us without us asking for identifying information, for example, address, phone numbers, and things of that nature.

Insurance is very geographically based, so zip code is the first criterion to allow the sorting process to begin. Then if the person is looking on the Medicare side, if they’re able to enter prescription drugs that they know they’re going to be taking in the upcoming year it allows some additional sorting to take place.

On the individual side, fundamental things, like birth dates, whether they’re smoker, and gender matter for the pricing. You can get into the system by answering these questions if you’d like to. More answered questions gets more detailed pricing information.

Williams: What you’re doing sounds like it must be related in to insurance exchanges, both the public ones under the Affordable Care Act, and also private ones. Can you explain what the relationship is between HealthPocket and those other kinds of models?

Zaleznick: We’re very complementary to public exchanges. Our idea is that we’re going to show everything available, get unbiased data and allow sorting by preferences to take place within that. This will also be happening in public marketplaces for those plans that are carried by the exchanges.

Our process is to try to simplify this as much as possible, to be very consumer friendly and to offer complementary services that work effectively for people making that decision.

A private exchange can mean anything. It’s an ambiguous term. The thing that would differentiate us in every respect is the objectivity. The fact that we have taken a position not to represent or to broker any plans product.

We think of ourselves more as a high technology/media type company, where we’re going to show everything and allow the results to fall out however the consumers who are using our site want them to fall out. It’s a very open marketplace and it often yields very interesting results over a period of time.

Williams: Medicare Part D has a clear kind of user that I’m sure you have in mind. Is that in fact the target user or are there other segments that you would be addressing primarily?

Zaleznick: It is a very clear target now, and even after the open enrollment period ends, the numbers are about 10,000 people aging into Medicare on a daily basis. It is absolutely a key target to what we’re doing. We also have on our side individual health insurance, which right now is the traditional market of people who would buy health insurance on their own for themselves and their families.

We have a small business piece that is helping employers up to about 100 employees and their workers select insurance. That will continue to be an important segment. It’s the segment that also will be moving into the insurance exchange environment in 2014.

We’ll also build within the site information to help people who are eligible, to select a public benefit plan such as Medicaid, which also is an area where a lot of people are automatically assigned to a managed care plan. We believe this is an opportunity to be helpful to people in that selection process as well..

Williams: Talk a little bit about your business model.

Zaleznick: It’s straightforward to build a consumer experience that we believe is needed in the marketplace and will be appreciated by people who use the site. It is built on a promise that we can help millions of people save billions of dollars and we fundamentally believe we can do that.

The revenue model is advertising based and with the commitment that we’re making to our users to separate the revenue from any of the data or the recommendations, or the sorting technology.

As I’ve mentioned earlier, we want the recommendations to fall wherever the consumers want them to fall and the advertising will be a separate portion of what we’re doing on the website. Our fundamental goal is to create a consumer experience. Then we’re going to layer on the revenue based on the model that we’ve created.

Williams: Can you provide some tips for a user if they want to go on your site and try it out? What would you recommend somebody to do?

Zaleznick: For example on the Medicare side, you would want to know your prescription drugs and obviously your zip code. The system attempts to identify what the zip code is, but you may need to change it or enter it.

If you’re thinking about a better Medicare plan, for example a plan with prescription drugs, you would still enter your information so it would be the zip code, the drug name, and then the dosage. When you finished doing that, the pricing will come out.

You can sort two ways and then do a comparison by changing the quality, and then sort by premium or use both of those criteria. If you are reasonably healthy, then you would underweight the maximum out-of-pocket given the fact that it’s not likely you’re going to come up against it.

If you are serious user of medical services, you’ll also weigh very heavily the maximum out –of-pocket cost. It can be somewhere from $3,000 to $6700. It’s a material amount of money that you want to take into consideration.

When you go into plan details, after you have narrowed down your search to two or three choices that look most logical you’ll also want to confirm that key physicians that you want to continue to see are in network and also inspect other kinds of plan details. Lastly, you will narrow it down to one choice. What we highly recommend is that you hit the contact button and that will send you to the plan or a representative that is offering that specific plan to answer any kinds of question and to finalize the acquisition of the insurance coverage.

It’s a relatively speedy process as you had mentioned at the beginning of our discussion. The underlying coverage is complex and it’s important once you’ve done the sorting process that the policy is really what you want and something that you understand.

Williams: How do you expect the site to evolve? Certainly it sounds like you’re working on the user experience now and then intend to layer on some advertising over time. What else could we expect if we come back a year or two from now?

Zaleznick: Our ambitions are high so we expect to continue to improve the customer experience to find new and improved data, which will allow us to do that. The goal is to help people not only acquire health insurance, but to use it most wisely.

I’m sure you know, but the trend is very clear in terms of putting deductibles and other kinds of payment obligations onto consumers. The issue has been not only do you acquire the plan, but have you use it over the course of the year.

The really interesting change in health care reform is that it’s going to be taking what we’ve learned how to do with Medicare, which is a one-time annual enrollment period in which the coverage is guaranteed and move that into the individual market.

So we’re going to take everything we learn from Medicare and make it ubiquitous throughout the marketplace. The end result in looking where the data is going to take you is somewhere on the order of 50% of the American population that is going to have to make these decisions on an annual basis.

It’s important that they do this well. There’s a lot riding on the ability of people to make selections and be comfortable with their choice.

Williams: Where do you get your data and how do you keep it up to date for all the plans and all the geographies?

Zaleznick: I have the pleasure of working with some extraordinarily talented engineers and developers who know the stuff well. There are sources, some of it is from the government, some of it is from non-profits, some of it is from commercial data sources. They are out there, there’s a lot of work to free up the data. It’s very complex in terms of how you sort it and how you normalize it.

Our goal at the website is to take something that is highly complex and involves massive amounts of data and to try to translate that into a good and reasonably simple experience that the consumers will find valuable

Williams: I’ve been speaking today with Steve Zaleznick. He’s Director for Consumer Strategy and Development at HealthPocket. Steve, thanks so much.

Zaleznick: You’re welcome, David.

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HealthPocket is a new website that allows consumers to compare all health plans in their area. A key market segment is Medicare Part D drug benefit recipients who tend to have many, many choices and seldom do a good job of picking the right plan. HealthPocket attempts to make it easy to compare plans. In my quick tests it did a decent job, although the site has a ways to go before it’s really useful. HealthPocket is like Kayak in the travel industry in that it does not broker transactions directly but merely acts as an unbiased clearinghouse for comparative information.

In this podcast interview, HealthPocket’s Steve Zaleznick talks about the unmet need HealthPocket addresses, the company’s business model, relationship of HealthPocket with health insurance exchanges, and the relevance of the Affordable Care Act.

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David Williams interviews HealthPocket's Steve Zaleznick [ 14:43 ] Play Now | Play in Popup | Download

The audio for this podcast can be accessed here.

David Williams: This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Jonathan Schwartz; co-founder and CEO of CareZone. Jonathan, it’s nice to speak with you today.

Jonathan Schwartz: Thanks very much, David. It’s a pleasure to be here with you.

Williams: Jonathan, what gave you the idea to create CareZone?

Schwartz: The idea for CareZone came from my personal life as well as from my partners’. We both have parents who are a little frail and we both have families who run into issues now and then.  The question for us was how do we do this, where is it that you get organized and where do you connect with the people that matter?  The idea came from  trying to solve a personal problem

Williams: Who would you say is the target audience for what you’re doing? Is it people just like yourself or is it a broad group?

Schwartz: It’s  for anybody who finds himself/herself caring for somebody else, which is a polite way of saying “It’s for everybody on Earth”. In some way or another, you’re going to find yourself either caring for your parents or caring for a spouse or caring for a child. We focus on the second syllable in the word “healthcare.” It’s what happens with your family when you find yourself taking care of your dad. You need a place to write down his WiFi password, his bank accounts, and you want to make sure it’s available to your brother, but you also want to keep track of the phone numbers of his neighbors.

It’s for all the things that surround caring for somebody. Who are the people who need this type of service?  It’s the people who are comfortable with smartphones and tablets and know how to log in to something like Facebook.

Williams: You are trying to reach a broad population. Can you give a specific example of somebody who benefited from using CareZone and how they did that?

Schwartz: The service is entirely private. There are no ads; it’s a freemium service. Our mainstream product is a free product. You just go to carezone.com, identify the person you’re taking care of and then you have  an account.

I  find it best to talk about my own experiences rather than talking about other users. In my own experience, I had a child a little over a decade ago who like most children had fevers, some developmental issues and things that my wife and I wanted to keep track of.  We had a physical therapist for some set of applications and there was no place to start keeping a journal along with a digital archive beyond something like Dropbox or another kind of storage service. There was no way that would just make it easy to keep track of an individual.

The notion behind CareZone is when you create an account, you’re creating it on behalf of the person you’re caring for and then we structure how you store information.

It also allows you to keep track of medications, which didn’t matter to us with our child, but now is a very prominent part of my care for my father. For the day-to-day care of my father, my brother and I need a safe place to write down  all this information. It includes everything from care-giving instructions to instructions for the person who comes  a couple of times a week to help with his medication or to help with the bathing.

It  becomes a personal resource, a place that’s always at the back of your mind. There’s  a lot of information that you want to manage and that you want to keep track of. More often than not, it ends up in the upper right-hand drawer of your desk.

My belief is that our data center is safer than your desk drawer. It’s also easier for other people to connect into that account in the event that you want to share information. We’ve connected babysitters and we’ve connected other caregivers when it comes time for folks to care of their parents. Both of my parents are in their ’80s now and I wanted a way to make sure I have a safe place for my dad’s online accounts and passwords. These are things that I wanted to make sure I didn’t lose.

I also wanted a way to keep a journal with him. He’s actually involved and  telling me about how an exam went at the hospital.. The way CareZone works is you invite in helpers but, first and foremost, you create an account for the person  you’re caring for. You then determine if you want to invite your brother, sister, and wife, who then all have access to it.

As updates are made, all of those folks are kept informed in a very lightweight way. It’s not necessarily something you would go in and use every day, but when a time and occasion arises, it’s there for you.   It also gives you the comfort of knowing this is private information and that no insurance company or no advertiser is going to get access to it, while at the same time  it is a place to help keep things organized that only pertain to the care of a loved one. We tend to live somewhat segmented lives and CareZone  fills the niche surrounding caring for somebody.

Williams: You used a few interesting words such as private, personal, share, and safe when talking about different sorts of relationships. I imagine that the type of relationship you would have with your father and what you would share with him would be broader than if you’re dealing with a babysitter.. Does CareZone help people to sort out those types of relationships  and do they have to keep track of what information goes where?

Schwartz: It’s very binary. The target audience for us is someone who’s unlikely to be listening to a podcast. It’s more likely going to be a babysitter or a caregiver that you hired plus your family. There are two levels of security for every account and they’re password protected.

The items are either available for everybody to go look at or they can be locked away. When they’re locked away, the individual who opened the account always has access to the information no matter what. You can simply say, ” I only want the following three people to have access to this document.”

Let me give you an example:

With my father, we’ve got passwords for his accounts. I don’t need the caregiver to check on his bills or to have access to do that. That item is locked away and it’s only available to me and my brother and my dad. That’s the kind of granularity that is very simplistic ,but we’re not targeting folks who are in the IT industry. We’re targeting folks who have families and other priorities not necessarily figuring out permissions.

Williams: You’re announcing some new features this week. Can you tell me about those features and why they’re coming out now?

Schwartz: We actually launched on Valentines Day this past February, and our first priority was to  make sure that we had solved the problem in the nuclear family context.. For example, if it’s just you and your sisters and you’re taking care of your dad. How do we do a good job of enabling you to store the right information and make it really simple and easy?

There’s an email address that comes with every account. Whatever information is sent to that email address goes into the account. It’s always there in the background, always available for you. What we heard from users was that the  nuclear family context is important and that every family is a member of a community one way or another. When they had decided that they wanted to share with 10 or 15 people, it was hard to do from within CareZone because CareZone was all about the private context, not about the community aspect.

When we had access to the iPhone platform and access to a contact list of folks that you’re already interacting with and we similarly had access to a telephone service and a whole variety of public infrastructures. This allowed us to put together a simple mechanism to help eliminate the phone tree. If you’ve ever been a part of a phone tree, you know they’re very time consuming. We wanted to give you a simple way of saying, “Here’s 10 people I want to let know that mom got out of surgery, that she’s doing great and she’s in Room 12G, and if you want to send flowers, please do it here.”

It will save time for the person who is charged with caring for somebody to not have to do that manual communication. Telephone calls have a sense of immediacy to them and they tend to be responded to and listened to in a very different way than email. We just give people another mechanism for communicating.  With our phone tree, once you hit send, you’re then taken to a status page that shows you who is getting the message and who hasn’t got it yet.

It’s just another service helping to establish peace of mind so we enable folks to worry less and help more, which is the tagline of the company.  Another service, which is similar in philosophy is this idea of reaching out beyond your core family. We are going to be unveiling a calendar this week .It’s the first calendar designed around somebody else. We’re comfortable with our Outlook calendars or Google calendar, but that’s ours. Where would you put a calendar for your mom where items are still shared? Instead of  “who’s attending this meeting?”, which is what most business calendars are focused on, ours will be more around the idea of, “Somebody needs to take mom to the hair dresser and nobody signed up to do it”.

The calendar highlights items that haven’t been assigned to make it easier to look at the calendar events, whether it’s going to a clinic or getting to a piano lesson, and then coordinate among all the individuals that are helping you in that account to make sure that gaps are managed and completed.

Those are two  good examples of ways that we’re reaching beyond just the nuclear family and helping families that are part of communities  to engage with those folks, but still in a private and secured way. You don’t want to let everybody know how mom’s doing when she got out of surgery.  You don’t want to let your 600 Facebook friends know about it. It just gives you a private mechanism to communicate.

Williams: Those are exciting and interesting features. I assume you also have a road map for other things that may come down the pipe later on. Anything else you might share about how you see this platform evolving over the next few years?

Schwartz: There are two ways that we’re really looking at evolving it. One of them is a result of looking at the account owners we do have. We recently heard from a user who had 43 profiles set up, so 43 loved ones, as you would see it in the application. We were thinking 43, that is a lot. It turns out that the individual is a professional and she’s trying to manage the profiles of a bunch of special-needs children and wanted a private place to do that. Each child has a separate set of parents and each of these accounts helps them interact with the other parents, but still enables them to have a singular place to go store information and make sure a journal is kept or notes are kept.

We’re looking to continue to build  services for families, and also for the professional market place. All the things that are happening outside of the hospital are interesting to us. That goes to the professional world as well as at the personal one. We want to do as good of a job as we can at being useful.

We want to make sure that people have safe access, easy-to-use technology that’s very rational and easily understood, and  still provides them with a tremendous amount of utility.

Williams: What can you tell us about the number of users that you have and how the growth is going?

Schwartz:  In terms of number of users, we’re still under a million, but the thing that we’re more focused on rather than the raw number of users is the rate at which the growth is occurring. That is accelerating. It’s not just the first derivative (for the math heads in the audience), it’s the second derivative that you really pay attention to.

That’s happening in part because if you think about caring for somebody, it’s not viral in the same way that a social networking site would be, but families tend to be interconnected. If you’re taking care of your dad and you’re talking to your sister about it, your sister might actually need it for her husband. .  We’re seeing this kind of social propagation effect on the market place.          We’re really happy with the growth rate. The market is not limited. It’s a pretty big market for us to go after.

We’re focusing currently on  customers that speak Spanish and we’re obviously going to be localizing for every language that our users care about. Right now, we’ve got users in easily two-thirds of the world, everywhere you can imagine, customers have registered and created accounts.. But unfortunately, it’s limited to English and Spanish, which doesn’t really help our Hong Kong and Chinese customers, but we’re working on it.

Williams: I’ve been speaking today with Jonathan Schwartz. He is CEO of CareZone. We’ve been talking about the company and some of the new features that are launching this week. Jonathan, thanks so much for your time.

Schwartz: Likewise, David. Thanks very much for the opportunity.

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Last time I sat down with Jonathan Schwartz was in Middletown, CT in 1988, when he counseled me on how to make the most of my upcoming summer internship with McKinsey & Co. After that our paths diverged. Jonathan eventually went on to become CEO of Sun Microsystems. Now he’s co-founder and CEO of CareZone, an online family resource for caregivers.

CareZone differentiates itself through its emphasis on privacy and its view of the user as the customer. That’s different from most online services that focus on meeting the needs of advertisers and data miners. In this podcast interview Jonathan describes CareZone and explains its new broadcast feature (to distribute voice updates to extended families and track who’s heard the message) and calendar (to share a schedule and assign tasks, such as taking a patient to the doctor.)

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David Williams interviews CareZone CEO Jonathan Schwartz [ 14:00 ] Play Now | Play in Popup | Download

The re-election of President Obama dramatically increases the chances that the Affordable Care Act will be fully implemented. It also demonstrates the power of data and analytics to drive results and to improve over time. Karl Rove helped get George Bush elected by pioneering the use of consumer data to finely segment voters, but in the last two elections the GOP has been far eclipsed by the Democrats who have built on what Rove did and took it much further.

Sasha Issenberg explains on Slate (A Vast Left-Wing Competency) how the Democrats quickly caught up with Rove and then surpassed the GOP techniques in a way that provides a sustainable advantage. The Democrats have taken a more scientific, experimental approach from the social sciences that yields better results, while Republicans lack folks with the same academic pedigree and disciplined approach.

“The asset that Karl Rove and his team built during the Bush era, with consumer data—that was good and valuable, but it’s static data,” says Cyrus Krohn, a former Republican National Committee e-campaign director and founder of the political-tech startup Crowdverb. “The Democrats have figured out how to harness dynamic data on top of static data.”

Health information technology are proceeding slowly, and are not nearly as useful at this point as the tools used in elections, consumer marketing, finance and many other parts of the economy. Health care was slow to get into the game, but the stimulus law started to move things along when Obama was first elected, and results are starting to come.

Interestingly, national health IT coordinator Farzad Mostashari makes a similar point, when he addressed a post-election crowd yesterday.

“It was something of a relief that data matters, that science matters, that predictions can be based on evidence,” he said, adding that there was also “relief in seeing a truce in data.”

“We sometimes see this in our corner of the world, where the preponderance of the evidence, the 92 percent of studies, can be positive and show benefits, but if there is uncertainty and differences,” others can play up a narrative of opposing realities, Mostashari said.

I sure hope the data analyst nerds’ big contribution to election victories will serve as an example for those in health care who are looking to move the ball forward and the public at large who now see what data can do.

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