This is a transcript of the podcast interview I did with Peter Wilensky from ZixCorp.
David Williams: This is David Williams, co founder of MedPharma Partners and author of the Health Business Blog.
ZixCorp is a leading provider of e prescribing and secure email services. Peter Wilensky is the company’s VP of Corporate Communications and Investor Relations. He’s a lot more on the ball than your typical corporate mouthpiece. With degrees from Harvard and Wharton and a close relative who ran Medicare and Medicaid, he’s got deep knowledge of health care, technology, and business.
Peter and I discussed the challenges and benefits of e prescribing, the role of health plans in paying for it, and the relationship between e prescribing and electronic health records.
Peter, tell me a little bit about ZixCorp.
Peter Wilensky: We have two core businesses. One is email encryption, which is really how the company was founded, back in the late ’90s. And initially, we focused the email encryption on health care for HIPAA compliance, so we’ve been a health care IT focused company, really, almost since the inception of the company.In 2003, we acquired a startup called PocketScript, which was an e prescribing vendor, and then entered the e prescribing space, which is our second core business today. And both of them run as a managed service, hosted in our SysTrust certified data center in Dallas. They’re both a high volume of sensitive transactions that we manage on behalf of our users, and that’s kind of what links the two businesses together.
David: And the platform, the client is a mobile solution? Or is there a desktop component or service..?
Peter: Yes. There’s both, actually. We view both businesses as platforms. One’s the data center. Specifically, with e prescribing, it is the real time connection to the doctor at the point of care. So our typical deployment would be giving a doctor the handheld, and also there’s a browser version that the office staff uses so that they’re able to efficiently work with the system as well.
But mobility is a very important aspect of providing that information. When they’re in front of the patient, in the exam room, thatâ€™s really how you get the value from e prescribing. We actually started with Blackberries…
Because anywhere the doctor was –he could be in the office, out of the office, at home– would be great. We found, however, that Blackberry basically ran over a cellular network, and then you always had coverage issues.
David: Yeah. Inside, especially.
Peter: Exactly. One exam room to the next, even one part of the exam room to the next, could have bad coverage. And if doctors didn’t get a connection right when they wanted it, they were likely to put the device down. So we’re now all WiFi, on a PocketPC based handheld, and that way we completely address the coverage issue, it’s faster; and those are important aspects for the doctors to keep using the device.
David: And when the physicians use the device, are they mainly writing out new prescriptions, or what about renewals? Is that what the desktop is for?
Peter: The desktop helps facilitate the renewals. Most of the doctors would write new prescriptions from the device. The patient comes in, they can pull up eligibility, which gives them their formulary. We can pull up a dispensed drug history for interaction check, and you can send it right to the pharmacy.
A renewal works slightly differently, depending where the request for the renewal comes from…If it’s the patient in front of the doctor, and they’re just going to renew it during the visit, then the doctor can pull up the medication history and basically click the same drug and send it, and that’s that simple. You can do that from the handheld.
A lot of renewals would actually come either from the pharmacy or someone calling into the doctor’s office. That would most likely be a charge nurse at a desktop, who can pull up, electronically, the record, if it’s the same prescription, same form factor and all that, can click “yes, ” and he or she approves it. The doctor gets a signal at the bottom that says, “Nurse so and so has approved this refill. Do you approve?”
And the doctor can just click “yes.” So, rather than doing a chart pull and reviewing everything, it’s a couple seconds. Most doctors, I think say, “If a charge nurse reviewed it and OK’ed it, then I’m probably going to OK it.”
David: Yeah. And the renewal, though, is coming from, it’s a phone interface, right? So the nurse still has to listen to it?
Peter: It may or may not be. If it comes into the pharmacy, the pharmacy can send it EDI. So the same EDI that sends a prescription to the pharmacy can receive a request from the pharmacy, pops right into the application, and the nurse can click through and just hit it, and it goes right to the doctor’s handheld. So it can all be electronic.
David: Now, I understand that a lot of the so called e prescriptions actually have a fax component in them somewhere.
Peter: They do.
David: Is yours a faxed solution?
Peter: We do both. So if there is an EDI connection, we work with a partner, SureScripts, which you’re probably familiar with as a connectivity partner for vendors like us. If they’ve established an EDI, we’ll send it EDI. If they don’t, then it will go by fax.
David: And what’s the proportion of faxes to electronic these days?
Peter: It varies by location. Really, it seems like certain regions kind of come up together.
Peter: So I believe there are certain regions, probably Massachusetts, who are heavily EDI. Other locations are a probably a majority faxes and kind of working toward that all the time. And as you probably know, if the whole thing’s electronic and you still have faxes, then you have transcription errors, and you lose a lot of the potential efficiency.
David: I know CMS has taken a dim view of e prescribing uses faxes and has proposed a new rule recently. Are you involved with that? What’s your view on whether that’s a good idea or not?
Peter: We think it’s a good idea, because, again, if it’s more efficient, both for the doctor and the pharmacist, everyone’s better off, more likely to be safer because fewer transcription errors or other sources of error. So we think it’s a good thing. We weren’t involved. My guess would be that someone like SureScripts or the retail pharmacy industry was really driving the change, but we support it.
David: What’s the adoption rate for e prescribing?
Peter: Our model is to first approach the insurance companies, or the payers, and get them to sponsor, on behalf of the doctor, the use of e prescribing. So we never approach the doctor and ask them to pay. It’s always free to the doctor.
Peter: So once we approach a payer and they say ‘I’ll pay for 500 doctors or 1, 000 doctors’ then we work with those payers to identify who the highest prescribers are on their patients. And then we approach the doctor. So, we get the list started from the insurance company. When we get those lists we have a telesales staff that will try to set up appointments for a separate field staff that just calls on the doctors. When we get in front of them, we get about 50 percent sign up. We have 3,200 physician users.
So we have a pretty good ratio. And then, of the people who go through and complete the training, we have about 60 to 70 percent that become active users and regularly use the device afterwards.
Peter: We don’t actually think physician adoption is the big issue; it’s funding. That’s really the issue. Our model is approach the payers. They, from the purely economic benefits, have the lion’s share of the economic benefits. And we think it’s only fair for them to kind of pay the freight there. And so, for us, if the funding issue were solved, I think adoption would really take off.
David: Right, OK. 3,200’s a respectable number, but it’s still a pretty low percentage of the overall physicians…
Peter: Yeah, so we target the highest prescribers, which are generally primary care. There are 131,000 primary care physicians that are office based in the US.
And so, yeah, 3,000’s a pretty small portion of that.
David: What do you find, in terms of the pattern of adoption? You’ve got a lot of people who probably have access. And then some are going to be writing all their prescriptions, or virtually all. Some are going to be writing one or two and drop off. Are there ones, also, in the middle, and how do they tend to shift around?…
Peter: We find that most people who adopt adopt pretty much all the way. We look at 70 or 75 scripts as a key benchmark, or milestone for a doctor. Once they’ve written 70 or 75, we think they’re hooked. So there’s a learning curve. There is a change in workflow that’s involved. That’s where, to the extent that there is, a lot of resistance comes from doctors, because the highest prescribers are generally more established. They’ve been doing it for 15 or 20 years a certain way, and convincing them that it could be better a different way is sometimes a challenge.
Once we can get them these 70 to 75 scripts, then they’re pretty much hooked. We found once they’re there, they’re writing the vast majority. If they practice in multiple locations for whatever reason, they’re in the hospital and they didn’t want to use it there, then maybe those prescriptions would be written by hand. But most of our doctors primarily office based, and they write the vast majority of theirs electronically.
David: And what happens if there is a prior authorization requirement? Does the system kick out a form for that, or…?
Peter: Yeah, it can kick out a form. We work with the individual payer, depending on how they want to do it. In Massachusetts we’ve worked to develop a prior authorization form, and we’re working with other ones to see how they want to approach it. Ultimately we’d like to get to an electronic prior authorization, which would kind of work integrated into their back office systems. But we’re not really there yet, and mostly because the insurance companies aren’t there yet.
David: You talked about a lot of the benefits accruing to the payer. Can you describe maybe what the benefits are, and why they accrue to the payer, as opposed to somewhere else?
Peter: It’s particularly the economic benefits that accrue to the payer. There are really two sources of economic benefits. One is lower drug spend, and the other is patient safety benefits. On the lower drug spend, what the application does is when you’re in front of a patient, and you know their specific formula already, when a doctor goes to prescribe a drug, we can show alternatives that are maybe higher up on the formulary, and therefore a lower cost, both to the plan and to the patient, or generics, as another example.
Many doctors, when they’re presented with that information, will say, “Oh, sure”. Cheaper for the patient, they’re more likely to take it, they’ll go ahead and select a generic drug that obviously is going to end up saving the insurance company a lot of money. Or, I said, being more compliant with the formulary. In Massachusetts, they have about 3 or 3.5% savings on their drugs spend per doctor who uses e prescribing versus those that don’t use e prescribing. And also a $20 to $25 savings from the patient’s point of view in their co-pays.
From various other studies, and math we can do based on information we get from the payers, we think there’s a $4 to $5 per click savings for the insurance company when you factor in that they continue to get the savings on the refills. The other real source of savings is on patient safety.
One of the things that we can check in the prescribing process is an interaction with another drug, or allergies, or things like that. Again, in Massachusetts, which is our most established program, in December there were 8600 alerts where a doctor actually changed the prescription based on the alert. That’s on a basis of about 2000 doctors, so it’s a little over four per doctor per month, in terms of these changes.
There are various estimates on what a severe ADE, Adverse Drug Event, could cost, but I think the Institute of Medicine estimated $2000 to $2500 per instance. All 8600 probably wouldn’t have been that severe, but we know that if we’re preventing an adverse drug event that could result in a hospitalization or surgery, ultimately that’s going to end up saving the insurance company money for not having to pay for that.
We’ve also found with e prescribing that there’s a higher fill rate and compliance with their drug therapies. Therefore, over time, healthier patients cost their insurance companies less if they’re really taking their medicine.
David: Why would there be a higher fill rate?
Peter: I’m not exactly sure. We’ve seen it…, but we don’t know why. I don’t know if there’s a certain amount of patients that just lose their scripts, and that’s why they don’t fill it. Obviously if it goes right to the pharmacy, that’s not an issue.
Peter: If it’s a convenience factor that they want to go there, and it’s a half hour before they can pick it up, they say forget it. But here, it’s already filled when they get there. It could be those kinds of things, but we’re definitely seeing a reported higher fill rate.
David: Electronic health records are getting a lot of attention. When people talk about e health these days, that’s mostly what you hear about. Pretty much every EHR would incorporate e prescribing. How does that play into your plans, or your business model?
Peter: We look at it in two ways. First, there’s the near term. That’s three to five years. We focus particularly on the smaller end of the market. We don’t think there’s going to be a significant penetration of EMR’s, EHR’s, in the one or two doctor practices. They don’t have the time, they don’t have the infrastructure. You know, IT staff. They don’t have the money.
It’s significantly more expensive. For us right now, there’s kind of a greenfield. Most of the people who do e prescribing don’t do e prescribing on the small end of the market. So we think we can offer a lot of benefits to doctors and insurance companies, and get a good share of the market before the EMR really starts the penetration on the low end. Longer term, everyone will probably end up on an EMR or EHR.
We can integrate with anybody, but we’ll evolve, and continue to offer additional features, which maybe will be consider an EMR, EHR over time. Or, we’ll just partner with people, and integrate, and be able to trade information. So even the EMRE/EHR vendors who say they offer e prescribing, in almost every case, it’s a “jack of all trades, master of none”. So they’re e prescribing application is inferior to those of us who are really standalone e prescribing and are really focused on that. So we think there’s continued value we could add even just partnering with them.
David: Have you been doing partnering actively today?
Peter: Today we haven’t. Today we’re focused on just getting to doctors, and trying to get it out there as much as possible. Over time, it’s something we continue to look at, and we’ll evaluate opportunities. Right now, it’s not a key part of our strategy.
David: What’s the state of play in terms of being able to present a patient specific formulary?
Peter: We have partners with PBMs through RxHub, which is a consortium, originally started by the three major national PBMs. Others have joined over time. So the primary mechanism… we have some direct connections to insurance companies, especially if they’re their own PBM, as well that we can show. So if the information’s available, we can obviously show it. I’m not sure what the percentage of times we’re able to show it. A lot of it is finding a match for the patient. The match is defined by five specific fields. It’s first name, last name, date of birth, gender, and zip code to uniquely identify one patient. So if you don’t have a match –somebody misspelled it, or one of the data fields is missing– then we may not get a match when there’s really a match to be found. The other aspect is if they’re with an insurance company, or have Medicaid coverage, or are not covered at all, that’s not part of this consortium, then we wouldn’t be able to locate them.
David: But if you find a patient, you can present the formulary?
Peter: We can present the formulary, right, and the dispensed drug history. I believe we’re the only one that is also working with SureScripts to present pharmacy dispensed drug history. So we get, for the PBM, to show claims based dispensed drugs, and then we can show from the pharmacy. And there’s a large overlap. If you paid cash for a drug, or it’s not covered by the insurance company, the pharmacy would have the information that the insurance company doesn’t have.
If it’s mail order, it may not have it. The retail pharmacy may not have it. So we think going to multiple sources gets the most complete dispensed drug history to show the doctor, which obviously benefits everybody.
David: What’s the role of the pharmacist in all of this?
Peter: So, I think the pharmacist obviously benefits from, especially when it’s EDI.
It saves them time. There are fewer call backs, fewer potential errors, call backs for legibility, call backs because there’s a higher likelihood it’s on formulary or they’ve already prescribed a generic and so I think it makes the pharmacist’s job easier. Obviously, we need pharmacies to be connected and able to accept and process electronic scripts. I believe that the pharmacy chains, the major chains, have a much higher percentage than the community pharmacies, so if there’s a role for the community pharmacy, it would just help kind of build out the infrastructure so that everyone could get online and working.
David: Right. But in terms of taking an active role, like in patient counseling or anything like that, does it tie into the prescribing, or it just gives them more time, and they don’t have to be calling back..?
Peter: Exactly. It gives them more time to spend with the patient.
Peter: So, e prescribing, it’s not good for answering questions of “How do I do this? What do I have to watch out for?”
So I think there’s still a major role. And as you said, to the extent they have more time to spend with their patients and less calling doctors’ offices, I think they’ll benefit.
David: What have you found in terms of the physician acceptance? It sounds like the physician appreciates being able to give something to the patient that’s going to match their formulary and save them time and all that. But compared to just sort of scribbling something on a pad and then letting somebody else deal with all those issues, that’s been one of the complaints.
Peter: Yeah. So I think, initially, a lot of people think, “It takes me a half second to scribble something completely illegible on a pad, and they’ll figure it out.” Although, that’s really kind of, I won’t say short sighted, but it doesn’t really think of the whole process, because someone’s going to call back.
Peter: And a lot of times, even the nurse or the front office will have to go back to the doctor and say, “What is this?”
So it is good for the doctor, overall. What we found, really, is doctors who kind of take the plunge and use it, they love it. They say, “We’re never going back.” It’s Stone Age to be writing it on a pad of paper, when it can be so easy, and it gives you the added benefit of knowing that there are these safety checks going on, because a lot of doctors, if you rely on the patient to give you their medication history, they know that’s unreliable.
Peter: In particular practices we’ve seen other benefits. Pediatricians, for instance, say they love to kind of have a cool factor, where their patients appreciate the fact that it’s going electronically.
It’s kind of an ease of use and a knowledge of a safety net that, for doctors, once they’ve adopted it, the thought of, “I can scribble it in a second, ” is really some of the resistance we would get up front. Once they’re using it, then I think most of them say, “I’m never going back.”
What we’d like to do is go approach other payers in a given market and say, “Here, we have this capability to both save you money and improve the safety of your patients.”
“If you would pay just for the scripts for your members… So we don’t want you to subsidize anyone else, but I think it’s only fair for you to contribute for the scripts for your members.” We think that’s a viable model, and we’re working on, basically, in markets where we are, approaching other payers in those same markets, who then don’t even have to sponsor the deployment of the device. It’s already been taken care of. All they have to do is pay to play, right?
David: At the scale where you are now, a big player, like Massachusetts Blue Cross Blue Shield, they’re not so worried about if somebody else is going to get some benefit, because they’re going to learn about it. But there is kind of a free rider problem, it sounds like.
Peter: There is. Now, I think there’s a lot more value added functionality we can show to our customers.
David: Like what?.
Peter: We provide basic functionality. The doctor can use it for any patient that comes in, but there’s certain value added information we can show the doctors that will benefit an insurance company. Massachusetts was an anomaly, I would say. They have always been kind of leading edge. And from the very start, Blue Cross Massachusetts partnered with one of their biggest competitors, Tufts Health Plan and then added another one, Neighborhood Health Plan, over time. We’re not going to compete on e prescribing. Let’s make everyone safer. We’ll compete on other aspects; and they’ve been kind of forward thinking in that aspect.
Blue Cross of Illinois was another one that’s kind of taken that same approach. They say, “We’ll pay to get it up and running. We want all the other payers…”
In the model I was talking about, you pay for your own members, and we’ll help build the infrastructure. And I think that’s a model that’s going to be successful as well. It’s relatively recent, so we’re really just getting it deployed, but it’s another model that I think is a way to go.
And I think these collaborative approaches make a lot of sense, because you want to get the broadest coverage, be able to show information on the broadest amount of patients that you can, and that requires participation from all the various payers in a given market.
David: What about patient adherence?
Peter: Until there was e prescribing, there was no electronic record of what was prescribed. You can get what was dispensed. If you have an electronic record of what was prescribed, you can look for the delta, and that identifies areas of non compliance.
Peter: So we’ll be able to give a message to a physician, or to a patient or to a health plan, to say, “David didn’t pick up his insulin, and therefore is probably not being compliant with his therapy.”
There are other things… Prior authorization we discussed earlier. Online disease management program enrollment, so certain indications or certain prescriptions will trigger, “Let’s send you information and get you into a disease management program for, say, diabetes.”
Those are things that we’re working on.
David: When you start to talk about things like adherence and compliance, certainly the ears of the pharmaceutical industry perk up as well.
David: Is there a potential role of working both with health plans and with pharma companies?
Peter: Historically, the pharma companies and the health plans are a little at opposition on a lot of issues, so right now, we’re focused on the health plans. I think, as you say, pharma would definitely benefit. I mentioned earlier, we’re seeing a higher fill rate on our electronic prescribing, so they ought to be happy with that.
At the same time, by providing doctors information on different drug therapies, that is maybe a counterbalance to all the direct to consumer marketing, so maybe they’re not quite as happy about that.
Peter: Because of that tension, maybe, between pharma and insurance companies, we don’t want to get in the middle of that, at this point.
So, I think there’s a benefit, but I don’t know how much that will work. People have said e detailing, for instance, is maybe something we could do. That’s something we haven’t wanted to get into yet. Down the road, there are all kinds of possibilities.
David: I’ve been speaking today with Peter Wilensky, ZixCorp’s Vice President for Corporate Communications and Investor Relations. Take care.