David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Paul Brient, he is CEO of PatientKeeper. Paul, thanks for joining me.
Paul Brient: Thank you David.
Williams: Paul, what is PatientKeeper?
Brient: PatientKeeper was founded about 11 years ago with the observation that physicians had, to a large extent, been left out of the health care IT automation wave. A lot of people were hand wringing and considering physicians Luddites because they hadn’t adopted technology. We founded our company on the premise that perhaps if one set out to build technology that was really focused on the physicians that it might actually get adopted by physicians. It was a fairly simplistic observation and one that was based around the use of the Palm Pilot Professional to solve the problem.
Eleven years later we sit here with a much better and deeper understanding of the problem and its solution. It turned out to be the correct problem statement. The original solution statement was probably a bit incorrect or at least overly simplistic. But it is a true statement now as we have gone to market with our broader solutions that surprisingly enough, if you have software out there that helps the physician save time, helps them practice medicine better, and helps them increase their cash flow they will use and even love technology. Our users are typically people who work in hospital settings; interventionalists, surgeons, cardiologists, orthopedists, those types of specialties where you spend some time in an office, some time in one hospital and often time in a second hospital or even a third hospital that is, in many cases, a competitor with the other hospitals where you practice.
Williams: Why are those the physicians that are most attracted to use PatientKeeper?
Brient: What is particularly frustrating among physicians who have to go to a variety of places is that in each of the places they go, the hospital or practice is fairly automated with systems. There may be three, four, or five different systems that they might have to access to get some of the patient data. The great thing about PatientKeeper is that we give the physician one place to go for all the data about all their patients regardless of the source of that information.
Williams: Now it sounds like the physician is the unit of focus. Is that also where you derive the revenues from or who is the actual paying customer?
Brient: That’s one of the more interesting pieces of our business. About 70% of our revenue comes from hospitals who are purchasing this software on behalf of their physicians to make them more efficient and effective using technology that in many cases the hospital has already invested in. About 30% of our revenue does come directly from physicians, both in parts of the country where physicians control the dollar like in California. Also in large parts of the country physicians will buy pieces of our technology that hospitals can’t provide for them; I’m speaking primarily about our charge capture and revenue applications where there’s an interpretation of the Stark Law stating hospitals shouldn’t be buying those pieces of our suite for physicians
Williams: What’s the tie in from the payer standpoint, either commercial payers or from the public side? Are they stakeholders? Are they customers? Are they users?
Brient: Today not so much. We have been in discussions with a variety of payers and I think there’s a lot of value add that payers can provide to the physicians. There is obviously a fair amount of animosity and distrust between providers and payers but payers certainly hold data that would be very helpful for the physician work flow. Simply knowing the other doctors that have treated a patient is huge and vice versa. A lot of payers want to look at parts of the clinical record in order to make payment decisions and to do care management and we think there is a big opportunity there. It is probably a second or third phase for our company to really go after and engage with the payer.
Williams: You mentioned that when the company was founded you had the observation that physicians had been left out of health IT because people hadn’t really taken into account their needs. I guess what’s happened more recently is there has been a realization that physicians aren’t that involved in health IT and the idea is to put some dollars in their pockets for so called meaningful use. Can you comment on that and how PatientKeeper ties into it?
Brient: Well certainly we’re pretty excited by the realization that getting physicians to use technology is important. On the ambulatory practice side, which is half of the meaningful use piece, I think things are moving along quite nicely. The definition is clear. What physicians need to do to get the incentives is reasonably clear. We’re focused primarily on the hospital side where things are a bit more murky. In particular I think a lot of folks have forgotten that while you can pay the hospitals to put the systems in to do things like physician documentation and order entry, in most hospitals the physicians who are not employed by the hospital have to use the systems. For the most part physician documentation and order entry have been “third rail” software issues. Community hospitals did very very poorly on adoption. If we don’t fundamentally change those technologies they’re not going to be any more successful than they have been in the past just because the government is paying for them.
Williams: When we had talked a couple of years ago it sounded like the way that you were pitching the hard dollar return on investment was looking at improved charge capture. I wonder whether the hard dollar ROI has broadened over time. It sounds like partly maybe by meaningful use, but has it broadened beyond the charge capture side in general?
Brient: Very much so. Our applications have expanded. Charge capture is probably the hardest dollar ROI of just about anything that I’ve encountered, but we save our clients a tremendous amount of money on IT by deploying our system. There is cost displacement around, for example, Citrix licenses and things like that. But also in terms of providing a downtime solution for hospitals. One of the side effects of automating a hospital here is that when the systems are down you can’t really run your hospital very effectively. I think that the meaningful use piece is also a really important component to the hard dollar ROI. We have a different approach to getting physicians to put in orders and write notes and we can do it at a cost that’s about 5X below the traditional costs out there so you can actually make money with ROI as opposed to invest $16 million to get $8 million. You can invest $2 million to get $8 million, which is a much better ROI.
Williams: What have you seen in terms of hospital willingness to spend on your solution? Certainly my impression in ’08 was that hospitals had pulled back a lot and in ’09 it’s still pretty tight. What are you seeing in terms of your top line?
Brient: Well there is a saying that health care lags the rest of the world a little bit. Our experience in ’08 was that the financial crisis kind of hit the rest of the world in the summertime and at least from our perspective, it seemed to wait until mid November to really hit the health care space, but it certainly did and Q4 for us, as it was with many companies, was disappointing. It was still a pretty good quarter compared to the rest of the quarters. We actually did more business for our Q4 than we did for any other quarter of the year, but normally it’s half our year and it wasn’t. Starting off the year we were frankly really uncertain as to what the environment would be. We have been very pleased with the reaction we’ve gotten. Frankly our customer base is buying more from us than we would expect. Our new business volume is down slightly from what we would expect, but overall, we’re tracking to our plan this year, which is not what I had expected for February.
Williams: We talked about physicians and also about hospitals and to a little extent about payers, but can you tell me what’s the impact on the patient if they are being treating by PatientKeeper? What might be different compared to a patient that is not experiencing that?
Brient: There are two primary things that are somewhat hidden to the patient, which is physicians when they’re making decisions about patient care have all of the information that they need about that patient at their fingertips. There are a lot of clinical decisions that are made based on a nusre calling a doctor or a doctor making a decision based on something they may have printed at the bed side. So physicians are making better decisions, but the other very surprising thing is when a physician walks into a patient’s room and the patient asks a question about their recent lab tests or the status of when they’re going to get their CT or whatever and the physician pulls out the iPhone and says: here, let me show you a graph of your blood sugar or let me or that’s scheduled for this evening or whatever the question is, there is a huge ‘gee whiz I’m getting great health car’e appeal on the part of the patient.
It’s probably true because the doctor is making better decisions, but the impact of it almost transcends the reality. As opposed to a doctor walking in with a big paper chart with stuff falling out of it and the patient going: ‘boy, is this 1972?’ Even though the health care could be identical in both those cases, there is a real difference in perception in terms of the technology. It’s kind of like getting on an airplane and the tray table has got a screw missing or something. You kind of wonder about the rest of the plane even though plenty of planes fly with loose tray tables.
Williams: The payers have recognized this issue about lack of adequate information at the point of care for physicians and some of them have come at it from different directions providing their own information. I’m thinking about companies like MEDecision and I’m wondering, do you coexist in that kind of environment or is PatientKeeper basically a superior alternative to those kinds of programs?
Brient: I think it’s mostly coexisting. The care management industry is one that is really interesting to us because in some ways care managers face some of the same dilemmas that physicians have, which is: there is stuff out there, how do I get it? They’re often working across a whole bunch of different obstacles. So the way we would coexist –and we really don’t do this today with the exception of a couple practices in Southern California where they employ their own care managers because they’re at risk– is that we could provide the same consolidated view of all the electronic information up to the minute, up to the second really, to care managers so they could better and more effectively manage care.
We aren’t and we’ll never be a care management work flow vendor because that’s a very specific set of work flows. But in a world where there is a payer that’s interested in doing care management and gets the right permissions, we could provide a link to every patient in the system so they could have the full clinical records at their fingertips.
Williams: I’ve been speaking today with Paul Brient, he is CEO of PatientKeeper. Paul, thanks again.
Brient:October 8, 2009