Podcast interview with Humedica CEO Michael Weintraub: Part 2 (transcript)

This is the transcript of part 2 of my podcast with Humedica CEO Michael Weintraub and VP Corporate Development/Marketing Allen Kamer. You can read part 1 here.David Williams: I know Anceta has been in the works for a while, and that they've made some progress, but perhaps have struggled a bit. Why did they want to work with you, what did you offer that they were unable to do on their own?Michael Weintraub: They have been working on this for a while, because from a leadership perspective, they were early. They were on this topic for five years or so, because many of the opinion leaders in health care are AMGA member organizations. They've been expert at the application of information to drive efficiency and effectiveness, but it's not something that all 330 of their organizations do equally, because it's a pretty significant investment from a portability perspective. Importantly, they're all about collaboration; they have disease-focused collaboratives that they run all the time. They just had a hypertension collaborative, they are rolling out a diabetes collaborative, which is our first disease area for them.When they talked to us, it was clear that we had a very common mission and vision.  Some large organizations are trying to stretch to do this, but it's a very significant investment. Hence we raised $30 million in 2008 from three Blue Chip venture capital firms in the Boston area, Bain Ventures, Northbridge Venture Capital and General Catalyst, organizations I've known with or who have funded previous companies of mine.  Leerink Swann, where we spent some time hatching and incubating this idea, is also an investor.  What Anceta and AMGA saw in us is a pure play – an organization whose sole mission was 100 percent aligned with their objective, as opposed to something that was a stretch or another division.Williams: How does what you do relate to recent Federal policy moves? I'm thinking particularly about ARRA/HITECH as it relates to meaningful use, Regional Extension Centers that will be funded starting next month, and then maybe also comparative effectiveness.Allen Kamer: We are exploring a variety of grant opportunities right now, related to the comparative effectiveness research, and with our partners, both BBN Technologies and Anceta, as well as some of the participating medical groups from the AMGA.  We will explore and seek grants from the comparative effectiveness research activities that are ongoing.Williams: Do you expect, with meaningful use and the greater use of electronic health records, that you're going to be able to broaden your database, or does Anceta pretty much give you what you need?Kamer: We definitely see the onboarding of electronic health records as a good thing overall. With the laying of the piping we believe the data that flows through it will be highly valuable. We will be the faucet that can bring it out and deliver the true value of the investment. We are very busy and focused with Anceta and AMGA members right now, but ultimately over time, we think EHR adoption will benefit us and others in the industry.Weintraub: Anceta and AMGA is certainly a strategic partner and collaborator of ours.  Having said that, we're focused on the health care market and the provider market at large.  The fact that Anceta has such coverage is very significant.  The other important thing to note is that EMR penetration in the provider world is roughly 20 percent.  We can have an interesting debate as to what the usage percentage is versus the penetration rate, meaning purchase decisions, but it's roughly 20 percent.  It is significantly higher than it was five years ago.  There are all kinds of forecasts on what that percentage will be five years from now, but it's really a bi-modal curve.AMGA members have a 90 percent EMR penetration rate, because they're typically medical groups with 100, 250, 1000, 2000 doctors.  If you take a look at small medical groups, 50 doctors and smaller, it's actually a very small single digit EMR penetration rate.  We're focused on where EMRs have been implemented, or are being implemented.  Similarly, on the hospital side, there are roughly 5,000 plus hospitals in this country, and roughly 3,000 of those 5,000 are part of a chain, a larger aggregation of hospitals, ranging from small hospital chains to very large 100-150 hospital chains.  We're focused initially on collaborating with hospital systems, because from a leverage perspective, they typically have a common EMR or two, not always, but it's not about 100 hospital and 100 EMRs, so there's some technology interface leverage and data acquisition leverage for us.We're focused on the top 25 to 50 hospital chains in this country as our initial buyers as evidenced by the first few we've done business with, and eventually we'll talk to individual hospitals as well. But for us to get the initial heft that we're looking for and accumulating data so that we can have a census-like view of health care we're focused on specific regions and hospital systems in those regions. So it's not just Anceta. It's Anceta as the key ambulatory partner, and integrated delivery networks, and many of the large hospital systems out there.Williams: It's interesting to hear the degree of involvement on the provider side. I would have guessed that there was more balance at the outset between the customer types. I know you mentioned that you're 100 percent aligned with AMGA or Anceta, but when I heard the description of Minedshare, it sounded to me as though it could also position you longer term to be more of an arms dealer.With the benchmarking comparisons within and among hospitals, that same kind of information going to health plans or other payers might set off a bit of a race that would lead the benchmark levels to have to rise in order for the providers to stay in business.Weintraub: That's a great point.  By the way, on your earlier point about balance between markets, did you mean outside of the provider market?Williams: That's what I meant, yes. I meant different customer types.Weintraub: A quick note on that before I shift to your payer point. We're focused on the providers 100 percent because that's where the data lives, and without the data, there is nothing else we can do with any of the other markets. We know that having valuable capabilities and assets that motivate the providers to do business with us and bringing meaningful value back to them is the only way to have long-term sustainability of the supply chain, and that is absolutely near and dear to our hearts.We certainly intend to broaden, starting in 2010, and start doing work with the life sciences market once we have volumes of data that are large enough to allow for the analysis that matters to them in a deidentified HIPAA compliant way.  So it’s a staging issue. We happen to be a point in time where we are heavily provider focused. We will always be incredibly focused on providers because they are the foundation for this business through the perspective of the asset formation required to claim the other markets.  Relative to the other markets, we're certainly moving into the government, as well as financial services and life sciences in 2010, and we started hiring leadership and capacity and capability with that in mind, and have started talking to those early customers, as we speak.Relative to payers, however --a market I know quite well from my PharMetrics days and my MedStat days-- I talked to several large payers over the past 6-12 months and I validated a couple of things:  number one is they'd love to get their hands on this information, and they find it to be incredibly valuable; number two is that they know me well enough as a colleague that they also agreed that if they were me, they wouldn't do that right now.  We can put up all kinds of technology and process safeguards in place with respect to the granularity of the data we share --and we are not in the business of sharing information that names names. I don't mean just HIPAA, that's obvious, but I mean providers, perception becomes reality. And it becomes emotional.And since payers negotiate with providers for rates and economics, I don't think we can be on the leading edge of blazing that trail. My strategic belief is that over time the kind of information that we have will form the basis for dialogue and communication amongst those stakeholders, and at that point, I'm ready, willing and able to be that invaluable asset that allows them to open talks at a fact-based level. But I don't want my providers, for a moment, worrying as to whether we’re the arms dealer arming the payers when it's time for rate negotiations.  So while it's a very fertile market, we need to be true to our mission and watch the evolving stages of the broader macro-economic health care market.I just don't feel we can go there right now. We're looking to create a trusted brand with the providers, and we're looking to monetize that data, in safe, secure, de-identified HIPPA-compliant ways in other markets.  I do think the payer market represents a third rail that is not worth getting into at this moment in time.  But do I believe that it’s an agenda that will change over time, not because I drive it, but because the health care industry will drive it?  I do.  And we'll be watching and following that closely.Williams: What's the role, if any, for personal health records?  I'm hearing certainly data is coming from electronic health records, and that may have most of the same data.  But is there a role for patient-generated information, or information that extends beyond the traditional electronic health record boundary?Weintraub: There is a role for that information.  We keep getting more and more inquiries regarding a variety of opportunities, such as for clinical trials. And the list goes on. Those are all on the list, but from an entrepreneurial perspective, and optimal allocation of capital, we want to pick three things and do them really well before we take on the next three. So time is our friend here. We'll have more assets, more data, more capabilities, and then we'll consider those other opportunities under other markets. But I don't want to boil the ocean, and be a mile wide and an inch deep in the formative years, so we're really focusing on the main thing is the main thing.Williams: What might things look like in say five to seven years if you achieve your growth plan?  How big of a company are we talking about?  What kind of an impact?  I know it's probably hard to say exactly what areas you'll be in beyond the ones we've talked about, but what's the vision for that time horizon?Weintraub: You've been talking to my investors, haven't you?Williams: I know some of them, but no, have not talked about this!Weintraub: Well, obviously it's a small matter of execution. But what's our business plan?  Our business plan is to build a formidable data asset. Whether that data asset is 50 million lives, 35 million lives, 100 million lives, depends on that small matter of execution. But for us to have the kind of impact we would like to have, we would like to have a database that is geographically and demographically representative of the U.S. Census, broadly speaking, and we used the number of 50 million lives.It doesn't mean we're going to stop there, because the more data you have, the more you can slice it while maintaining the kind of statistical anonymity that you want to maintain.  We would like to have a database that is significant enough that we can (a) analyze the top 60 to 100 diseases with confidence, whatever life sciences market across all disease and therapeutic areas across multiple treatment settings, and we would like to be in as many, if not all, the major hospital systems and chains out there, who have one of the top 5 EMRs.We would like to be in a large number of AMGA and Anceta sites, as well, contributing to that population, and we would like the data asset to be a sought-after clinical information resource by the Federal government. We'd like some of the other markets that we're not yet talking to or considering in the areas of consumer driven health and other areas to really be on the corporate development short-list for us of things we're thinking about.  We'd like to be the leader in clinical informatics and the de facto leader in a market that we think is moving at a rate that is absolutely supportive of our goals: evidenced-based health care, clinical effectiveness, meaningful use, all of those terms are accelerating.We think there's going to be a little bit of what I'll call a 'wait and hurry up', as opposed to a 'hurry up and wait.'  We're seeing a lot of organizations now worrying about getting basic plumbing decisions in place, and in some cases, taking advantage of legislation and the stimulus money to make decisions to switch to longer term EMR decisions.Clearly, the plumbing has to be in place for us to then take advantage of the information flowing through.  We're focused, we're aggressive, but we recognize that it's a long-term game. We'd like to be working with each of the top five EMRs on the inpatient side and on the outpatient side, that occupy well north of 50 percent market share, and providing invaluable information and analytic resources to those sites that use those EMRs as a complementary tool to them.You'll be seeing more news from us in the coming months. I think you've seen us note the various partnerships we've formed with Anceta and AMGA, Leerink Swan, BBN.  We've just launched a scientific advisory board with some phenomenal members that we're proud and privileged to have as part of our organization, and we'll be kicking off that focus, as well, to get their guidance and expert advice moving forward.We look forward to keeping you posted as we move forward.