HealthPrize CEO Tom Kottler explains how we can save lives – and billions of dollars – by helping patients take their prescribed medications.
Read more about HealthPrize & Tom Kottler here.
Follow HealthPrize on Twitter – @HealthPrize
Tom Salemi: Hey, everybody, welcome back to the Breaking Health Podcast. Happy new year to everybody. This is our first Podcast of 2017, and number 51. Thanks to our fabulous host, Steve Krupa of the Psilos Group. Steve, happy new year to you, sir.
Steve Krupa: Happy new year to you. I don’t know that I’ve done really that many things in my life 51 times. So that’s pretty good.
TS: Well, you have stuck to this one.
TS: And I think we’re both shocked that we’ve lasted this long. But it’s been a great ride.
SK: Well, I promised you 52, and now I just got a big bonus and a big signing –
TS: Are you giving your notice here on air?
SK: No, no, no. I thought you said that you’re going to pay me a big bonus for the next year and do another 52. So I’m excited.
TS: That’s right, yeah. We’ll just send you the contract. It actually is in the mail. So just keep checking the mailbox. It should arrive any day now.
SK: Last I remember, you guys bought me dinner or something at the conference, so that worked out fine.
TS: We did? It took us a little while to find a place.
SK: I think so.
TS: Yeah. And we’ll buy you dinner again, guaranteed. I promise. And you’ll get a free admission to the Digital Healthcare Innovation Summit.
SK: Ah, well, there you go. That’s what I’m doing it for.
TS: Great. And let’s get into your guest of today. Tom Kottler. He’s the CEO and cofounder of HealthPrize Technologies. And I don’t know if we’ve really tapped upon a company that’s as focused on pharmaceutical adherence, but it’s an interesting company with a kind of growing platform that you can explain better than I. But tell us a bit about HealthPrize.
SK: Listen, I was looking for Tom for a while – I couldn’t find him, and I met him at the conference – because we do talk a lot about quote digital therapeutics, right, this whole idea that we’ll take software and replace medication with software. But I happen to think that while that’s a very cool idea and it probably will have a huge impact on the way care is delivered over time, the real sort of interesting tool is using the same idea, but combining it with the actual drug. So using the digital therapeutic in combination with a medical therapeutic to help people through either acute incidents, where they’ve got to take the medication to recover from something, or chronic, where medication becomes a part of their daily ritual and managing disease is part of their lifestyle. And to me, that is an amazing and powerful combination if it’s done well. And so I was really glad to run into Tom. When he told me what he was doing, I was like, You need to come on and talk to me because I think this is an important idea.
TS: And he’s had some interesting experience in other areas of healthcare. So he’s coming at this with a lot of experience, including some medtech. He was involved in Advanced BioHealing. So he knows both healthcare and life sciences, and brings a lot of that knowledge to the company.
SK: Yeah, he does. But I will tell you I don’t know anybody who is close – when you get close to somebody, they tell you about sort of their medical experiences. And I don’t know anybody who has had either an operation that required postoperative medications or who is in sort of a chronic state whether they’re managing diabetes or pre-diabetes or high blood pressure or asthma that really feels like they have a good source to help them understand how they should be taking the medications, what precautions they should be taking, and the ability to log adherence to that medication and so on and so forth. Oftentimes, you just get discharged from the hospital. You get handed a script, you go, you fill it, it says take this two times a day, and you do it. But you don’t know what to expect from the side effects that you could be experiencing. You should be taking it with meals, not with meals, empty stomach, whatever it is. And having all that stuff available to you digitally and being able to monitor that is terrific. And the byproduct of that from the pharmaceutical company’s point of view, as Tom will point out when you listen to the Podcast, is a huge amount of increased revenue through adherence on the one hand; and then on the other hand, the ability to make a case that adherence actually reduces complications and medical utilization. And all that coming together is very interesting to me. I think this is a company worth watching.
TS: For sure. And you’re right, some of the numbers he shared in regards to the impact that failure to adhere to medications or to following medications or taking medications is really having on ER admissions and other parts of healthcare. So it’s really, you’re right, it’s a compelling story.
SK: Yeah. Let’s give it a listen and see if it all makes sense. A lot of it makes a lot of sense to me.
TS: Excellent. Well, let’s hear from Tom Kottler, CEO and cofounder of HealthPrize Technologies.
SK: Welcome to the Breaking Health Podcast. I’m here with Tom Kottler from HealthPrize Technologies. Welcome aboard, Tom. Glad you could make it.
Tom Kottler: Hey, Steve. Thanks, great talking to you.
SK: Yeah, no, I’ve been wanting to have you on for a while because we’re going to deal with the other side of sort of the digital therapeutics realm, which is helping pharmaceutical companies with drug adherence. And you’ve got some really good stuff that you’re doing there. But before we get into the company, anybody that looks up your background will notice that this is not your first rodeo, right? So I’m kind of curious about the back story about how you ended up in healthcare, and how you ended up doing healthcare startups as a career.
TK: Yeah, thanks, Steve. And thanks for having me on. So yeah, funny how I got into healthcare. I actually was a lawyer. Started my career in Chicago at a mid-sized law firm, and was a few months away from making partner, and I was a shoo-in to make it. I had all the votes lined up. And I left about four months before my partnership votes with no job because I was afraid that if I’d made it, I would have been a lawyer the rest of my life, which would have been a real shame. So I actually moved from Chicago to Connecticut where my wife is from, and ended up actually working at a smaller law firm in Connecticut, figuring a smaller firm I’d like more. And it turns out I didn’t like that much more either. And I ended up having a client who owned some office buildings and was the largest tenant in two of them, that ran a small clinical trials business. And he was looking for someone to help him grow his business. And he had about ten employees and had a small clinical trial business, did some really innovative stuff in clinical trials. And I convinced him that I knew what I was doing and I could help him grow his business. And he hired me to be General Counsel and Chief Operating Officer. And he and I grew the business from 10 people to 150 people in a year and a half, and sold it for the highest multiple ever paid, still ever paid for a private CRO. And that’s how I got into healthcare. And we sold that business, and I had a contract to stay for 2 years to our Fortune 500 overlords, of which I could handle about two and a half, three months of dealing with their sort of craziness until I realized that was not what I wanted to do. And I fortuitously met two young doctors at our PR firm in Boston, and they were starting this healthcare – they were starting a business using software to help doctors using what were then not even existent hand held computers to code into other sort of repetitive point of care tasks. And I literally met them there for about half an hour, ended up going to lunch with them that day, and the three of us started my first healthcare startup, a company still up and running in Boston called MedAptus. And it was my first healthcare IT company. And in between now and then I started two other companies or was on the initial management team of two other companies: a medical device company in the cell-based wound care business that became known as Advanced BioHealing, which got sold to Shire, and then a company called VeinAid, which is a medical device business that I actually founded, developed, invented the device with a physician friend of mine. In fact, we’re still in the process of trying to sell that business. And then I started HealthPrize.
SK: Very cool. It’s always good to have that –
TK: None of it planned.
SK: None of it planned.
TK: All of that sort of – no.
SK: No, but at some point you had to tell your wife that you were going to leave that wonderful steady income as being a lawyer and go take a risk, which happens to every entrepreneur, right?
TK: She has put up with some – one or two big paydays and a lot of periods with no paycheck. And God bless her soul, she’s still married to me. So there you go.
SK: Yeah. So you’re treating her right. That’s good to know.
TK: You know, that or it’s just too much paperwork to get rid of me, and she doesn’t like paperwork all that much. I think that might be the reason we’re still together, but you never know.
SK: So you’re running through all of that stuff, a lot of science, right? A lot of pharma, a lot of medical device stuff. And you happened upon 2009, I guess, was sort of the beginning of the mobile technology revolution. What clicked in your head that led to HealthPrize?
TK: God, you know, I wish I was good enough that something actually clicked in my head, which would suggest that I somehow decided that the timing was right and it was a good thing to get into. It’s of course nothing’s ever happened to me that way.
TK: You know, when I practiced law, one of the things that was – I was a litigator, and my real specialty was expert testimony, in which I would learn something often to a master’s or sort of low-level PhD level in a matter of months. And so that’s sort of what’s gotten me – you know, I’ve done cell based wound care and healthcare IT and medical devices, and sort of never known much of anything about anything, just had a really curious mind and sort of liked being a contrarian, which is kind of – I did a cell based wound care business when everybody was like, wound care, you gotta be kidding, that’s really a lousy business. And so in this case, it was incredibly fortuitous. I actually was working as a consultant at Yale in the OCR, the Office of Cooperative Research, which is their tech transfer group. I was working with them to build a medical device fund. It was to have been sponsored by the Yale endowment of the Yale Medical School. And I was working with a woman there named Katrina Firlik, who is a neurosurgeon, among other people. And for a bunch of reasons, that sort of project went south. But Katrina and I met each other and liked each other, and oddly enough, grew up in a suburb of Cleveland literally about 300 yards as the crow flies, and never knew each other until we met at Yale. And so we were looking around for a business to start, and we actually were very close to licensing some technology from Cornell Weill Medical School to start a medical device business when I happened upon a guy named James Jorasch who worked at a place called Walker Digital. You may know Jay Walker –
TK: – or heard of Jay Walker. He’s well known for, among other things, starting PriceLine, and he now owns the TEDMED Conference. So James was Jay’s head of inventing for 15 years at Walker Digital, which was an intellectual property think tank in Connecticut. And a buddy of mine worked with James and said, Hey, I know you’re doing stuff in healthcare startups, and James wants to get into that. He’s leaving Walker Digital and starting his own fund and doing some other interesting stuff. Why don’t you have lunch with him? So I said, Sure, why not? So I had lunch with James and we started talking and liked each other. And he said, Hey, so I’m leaving Walker Digital and I’m taking these patents with me around medication non-adherence. And I was like, What’s that? I mean I didn’t even really know it was a problem. Right? Well, you talk to a lot of people, even really smart healthcare people, and they don’t know medication non-adherence is a big problem.
TK: And I’d never heard of it. And James says, Oh, it’s this huge problem, and we’ve had these patents around sort of, I guess, you know, using different ideas of consumer psychology to try and motivate patients to take their medications, and we’ve got a bunch of patents on it. And Jay’s assigning them to me as a sort of, you know, my leaving. He owes me some assets and I’m taking these with me. Why don’t you take a look at them, see if you’re interested? So sure, why not? And he gave me the patent numbers and I went on line when I got home from having lunch with him that day. And I read them and I’m like, God, these are phenomenal patents. I had done some patent litigation in the past, so I kind of knew a little bit about how a good patent is written and how the claims are written. And these guys were expert at it. And I just started doing non-adherence research on line, and I literally stayed up all night, I was so fascinated. And I called him the next morning and I said, You available for lunch today? He’s like, Sure. And I met him again at the same place, same Thai restaurant for lunch, and I just looked at him and I said, I’m in.
TK: This is this massively misunderstood problem. You guys, I think, understood it better than anybody in my 24 hours of learning about it. It’s a huge problem. I expected to find all these really creative solutions being brought to market, and no one’s doing anything. And let’s go for it. And so he and I – and it turns out he knew Katrina Firlik who was the third person, that other woman from – the Yale neurosurgeon. You may know of her husband Andy. He’s a venture capitalist.
TK: And so the three of us got together, spent about 4 months doing some really deep due diligence, probably interviewed 30 or 40 people, spent some reasonably good amounts of money on lawyers to make sure that some of the things we wanted to do were actually going to be allowed, given the highly regulated environment in which we were going to operate. And then September of 2009 we started the company with no real idea of exactly what we were going to build other than using some of the basic ideas in these patents to develop some kind of digital platform to motivate patients to start and stay on their meds. And we spent about a year really becoming experts in adherence, building a significant advisory board, reading every – we read probably a thousand peer reviewed articles and abstracted them, and really tried to understand what the right business model would be. And then we set about going after it once we figured all that out. And that’s how we started HealthPrize.
SK: That’s the cool thing about the modern world, right? You can learn something quickly because the resources are there, right? You don’t have to go to the New York Public Library to figure this stuff out. It’s right there on line. And then you can build a piece of software and start playing around with it, figure out whether or not you can get something to work, right?
TK: Totally. Look, I started my first healthcare IT company in 1999. And just the database alone cost us half a million dollars.
TK: You know. Now we use MySQL. It’s free.
SK: Yeah. You open up a US account and there it is.
TK: Oh, god, it’s unbelievable, right? You want unlimited storage capacity and hosting capacity, it’s, you know, a couple thousand bucks a month. It’s the ability to build and to test and to try at least from the development side of it is inexpensive and only limited by what we can create. Obviously getting people – getting constituencies within healthcare to work with you and pilot and to pay you is a whole different matter. But the building of it has gotten quite easy. And I think that’s part of the explosion in digital health. Now there’s good and bad with that, right? Because there is a lot of junk.
SK: Yeah, yeah, sure.
TK: But there’s a lot of quality stuff, too, that in the prior world never would have come to the market. So it’s certainly a great time to be trying stuff and be part of throwing the spaghetti at the wall and see what sticks.
SK: Yeah. So what is the essence of – let’s sort of get into the product at this point, because you’ve been around since 09, and I know you’re doing some very good work with your customers. Where did you end up? You started to experiment. I’m assuming you brought customers in to see what you were building, and they said, well, try this, try that, and eventually you’ve landed on a set of technology and a set of foundational values that you’re bringing to your customers. So give me a little bit of a sense for what those are.
TK: Sure. So we – one of the interesting things that – we focus on patient engagement and education and sort of development brand loyalty with the idea of getting patients to start and stay on their prescribed therapies for the purpose of generating higher revenue for our customers. But at the end of the day, the real goal is to get patients to get better outcomes. Just a little bit of background on non-adherence. It’s probably the biggest medical problem most people don’t know anything about. The statistics on medication non-adherence are absolutely mind boggling. It’s responsible for an estimated $290 billion a year of otherwise avoidable medical spending in the United States alone, according to the New England Healthcare Institute. It’s responsible according to us and Cap Gemini in a report we just updated for almost 650 billion – so 637 to be exact – billion dollars globally of lost revenue each year to the pharmaceutical industry. It is responsible for 125,000 deaths a year, making the fifth leading cause of death in the United States. It’s responsible for up to 40% of ER admissions and 11% of all elderly or assisted living facility admissions as a result of medication non-adherence. It is just a problem of enormous magnitude for every constituency in all of healthcare. So when we started looking at the problem, we thought that most of the ways that people looked at in the past were wrong. And that is that the lenses through which we’ve seen this problem typically have been the lenses of cost and forgetfulness. And medication non-adherence really is a problem of neither. It is – because you can look at all the research as I said we’ve done in probably greater detail than anybody, and every paper ever done on the cost side shows that you can reduce cost to zero, and you move the bar, just not very far. There’s a really well-done study called the MI Free trial, MI for myocardial infarction, which is a heart attack. And Free because they gave the drugs away for free to the experimental group, covering patients who had – all the patients in the study had been dismissed from the hospital after having a heart attack. Those that got free medications lifted their adherence by 4% over those who did not. For free.
SK: So it’s behavioral.
TK: So free med – yeah, that’s right, and that’s what it comes down to. So our technology is all built around the notion that it’s behavioral. And so we use ideas from gamification, behavioral economics, proving concepts from consumer marketing and loyalty programs to build a really integrated platform that allows our customers, who are principally pharmaceutical companies and pharmaceutical brands, to develop patient support programs that patients engage with, get educated by, and earn points for, points of which are redeemable for stuff, gift cards, charitable donations, coupons, things like that. So we use a lot of stuff that people are used to get outside of healthcare, and brought all these ideas that motivate people outside of healthcare into an integrated platform with the goal of trying to educate patients to get better outcomes.
SK: Yeah. And I just want to sort of reinforce some of the things that you said there. I mean I know of studies actually where they would pay patients and they’d get increases in adherence that were OK, maybe greater than 4%, and then once they stopped paying them, then they wouldn’t adhere. So it’s sort of like there isn’t a valuation, if you will, that we place in the back of our minds on the outcome of being adherent, or at least not enough people do. And then just to go back to your stats, because you went through those pretty quickly – I’ll see if I wrote them down right. You think there’s 290 billion of available spending reductions, and that there’s about 125,000 deaths per year as a result of non-adherence, and about 40% of ER admits are a result of non-adherence. Those are pretty extraordinary numbers, to tell you the truth.
SK: So obviously it’s a problem worth attacking, and there’s been a lot of ways in which people have attacked it, but not with a lot of success. So you are going about it on the behavioral modification side. So tell me some of the tricks of the trade around behavioral modification. How do you get people to change what they’re doing?
TK: Yeah. So let me tell you just a little step back. So one of the fascinating things about what you’re saying is the term behavioral modification. And I would actually argue that we don’t actually change anyone’s behavior. And that actually it’s almost impossible to change someone’s actual behavior.
SK: Ah. You manipulate them.
TK: We are actually in the business – well, we’re in the business of –
SK: You take their own personality flaws, right, and leverage them in the right direction.
TK: Well, that’s right. We find them, we take them as we find them. And rather than trying to change their behavior, we try to educate them to develop good habits. It’s not about behavior modification. That’s a really hard thing to do. What we want to do is educate people to allow them to create good habits within their existing behaviors. And that may sound semantic, but it’s a huge difference in sort of how we look at things versus how other people try to look at things. And actually when I first started the business, I went and talked to two friends of mine who work in healthcare, life science consultants up in Boston. And I used the word behavior modification a lot. And one of them looked at me and he said, Look, I just moved and I found my third grade report card. Actually, he and I went to high school together and Mrs. Reynolds was our third grade teacher. He said, I found my third grade report card from Mrs. Reynolds and I shared it with my wife, and she just started cracking up because she said, You’re the exact same person at age 51 you were in third grade. And he’s like people are who we are. And that’s really true, right?
SK: That’s awesome. Yeah.
TK: So rather than – you know, everyone says we’re trying to change your behavior. Really what you want to try to do, because that’s so darn hard, is you want to work within people’s existing behavioral structures and have them develop – have them get smarter to develop better habits. Which is actually something you can do. And one of the things we find in medication non-adherence is that everybody thinks that it’s some kind of monolithic I forgot or I don’t want to pay for it, both of which are baloney. What it really is, is that everybody’s got a different individual reason why they don’t take their medication, and it depends on who they are, what kind of drug it is, what the drug delivery method is. And so let me give you a quick example. The reason that a 25-year-old gay Hispanic man might not want to take his single day regimen or SDR HIV-AIDS therapy are very different from the reasons that a 52-year-old mother of 3 might be afraid to start self-injecting herself with medication or treat her diabetes because she’s advanced from taking pills to needing insulin. And the psychological reasons, the cultural reasons for those two people are so very different, you almost can’t talk about non-adherence in the same way with either of them. And so we understand all that. That woman, let’s say she’s brand new to injection therapy. It’s got a whole bunch of issues that she’s gotta deal with. She’s taking care of her children. She might be taking care of an older parent. She’s got all these household things she’s probably gotta take care of as the mother of three. And now she’s going from taking oral solids to injecting herself every day with therapy. She needs a lot of really different hand holding and support than does that 25-year-old gay man on an SDR, who really just needs to be motivated to do the right thing for himself, as opposed to worrying about others so much. And so what we recognized was that the psychological reasons that somebody might do something or not do something with respect to their medication is very, very different. And so we’ve built a platform which allows brands to build these unique digital experiences rapidly, effectively and efficiently to understand those reasons and to deal with them and to motivate people. What you find out when – we’ve done this with lots and lots of people; we have had over half a million people through our programs – is that they’re all starving for information and relatively simple kind of support, and what we call a basic “attaboy.” You know, hey, good job, way to go. And because it’s such a lonely thing to be sort of on your medication, focusing on it, worrying about it. Because who are you going to talk to about it? You don’t want to talk to anybody about it.
TK: And so we sort of fill that gap for people. And we make it fun and interesting, and you get points for it. And just the stuff that motivates people generally speaking in their lives is the same stuff we use to get people to stay on their meds. And it’s been very, very effective.
SK: Yeah. I mean you can – we all have sort of the stories of people that aren’t taking their medication, and it can involve sort of confusion about whether they’re experiencing a side effect or not, you know, as you’re pointing out, psycho-social issues, maybe they’re not adherent in other aspects of their lives that just naturally trickles over to the drug side. And it’s sort of like –
SK: – this whole sort of bespoke, if you will, set of issues that you have to address in order to get the right solution for that one individual to be adherent. And obviously, you have – we live in a world today where you can create one to one communications and information transfer. So how did you guys design your product? Why don’t we go through a use case to get a sense for how the product accomplishes some of these things?
TK: Sure, that’s a great idea. So I think – so we’ve developed it over the last 7 years through, frankly, a lot of trial and error, and absolute ton of actual user feedback. And one of the things I find really interesting in healthcare is so few of the things that we build for patients actually have anything to do with the patients in the sense of having them be part of the process. So we’ve had – which is amazing to me –
SK: Yeah, there’s no customer in healthcare. It’s just like let’s just jump this thing, let’s shove this stuff around.
TK: No, no, that’s right. So one of the things we do in our platform is we do weekly surveys and quizzes, and we get thousands and thousands of people doing it, answering our surveys and quizzes every week. And a lot of what we get feedback on is the actual user experience and how easy it is and all that. So we’ve really honed our platform over the last 6 or 7 years with basically patients giving us the feedback to build a better product, a better platform. And let me give you I think one of our – a really great use case and some examples. So if you look at a diabetes patient, they are really bad at staying on their medication. I mean I can give you some statistics which are mind boggling. I’ll give you the one I think which is the most critical, and it’s for patients who are new to injection therapy. So as you know, diabetes is a progressive disease. Most diabetics will start on a single medication, typically Metformin, and the advance to taking two or three pills. And also many of them have comorbidities, so they may be taking drugs to treat their blood sugar problem, but they also may be taking a high cholesterol medication, a hypertension medication; many of them are depressed and might be on anti-depressant medication. The disease as it advances typically will require a patient to go onto some form of injection therapy, whether it’s a GLP1 or an insulin product. And patients who are new to injection therapy, I’ll just give you an example from one drug. I’m not going to name it. But patients, and this is from data from Walgreen’s, who’s a partner of ours, data on almost 400,000 over a 12-month period, after 6 months. Patients new to injection therapy on this particular medication, at 6 months, only 6% of them were still filling their insulin on time. Six percent. And only 16% were still adherent to therapy. Now this is a disease that’s never going away for these patients and at 6 months, the vast majority are no longer taking their medication. All unilaterally taking themselves off therapy. It is a huge problem.
SK: And so I’m assuming that in order to solve that problem, you first have to understand why, right?
TK: That’s right. And it’s hard to do on an individual basis, right, because – so what we did in that case, in the use case, was we – our platform allows for some pretty significant multilayered segmentation. And so we segmented patients into our platform based on a variety of factors. And we had four different segments at the top layer, and then within each of those segments you could be into 2 sub segments. So we had 8 different segments you could be in if you were on this drug when you came into our platform. If you were brand new to injection therapy, and had never injected yourself before with any form of therapy, you went into one segment. If you were new to this drug but injected yourself before, you go into a different segment. So we had all these different segments. Each segment had its own educational curricula set up for a patient in that particular segment. So you got a different cadence of communication, a different content in the quizzes and surveys. And to give you an example, so if you’re a patient brand new to injection therapy, and you had never injected yourself – now these are auto-injectors, not syringes, so they’re quite a bit easier to use, but still scary enough. I mean who wants to inject themselves every day? There were videos available in training you how to stay, how to use your auto-injector. We had built click-to-talk directly from our application from our weather mobile platform into their call center for this medication. So we gave patients brand new to injection therapy a bunch of different ways to get educated, get comfortable. We gave them consistent “attaboys” when they did a streak, so if they had a 5-day streak of injecting themselves properly, they got a reward for getting a streak. And so we did all these simple things that motivate people outside of healthcare to get them to stay on therapy and get educated, and get supported in ways that made them feel comfortable with taking this medication. And in 6 months we increased adherence by 107%.
TK: Yeah. And for patients that – on the other drug that we were working on with them, who’d been on therapy for more than a year, we increased adherence by 57% in 12 months.
SK: That’s great.
TK: So huge lifts by just doing some really basic stuff, but also building a platform that allowed people to sort of deal with their unique personal challenges in a way that seemed like it was very personal to them, but was actually built for a large group of patients.
TS: Hi, everyone, Tom Salemi here. I just wanted to welcome you all back to the Breaking Health Podcast. We had a great break, and we appreciate your patience as we did not put out any podcasts for the last two weeks. But we are back. Steve Krupa is back on track, and we’ll be bringing you many, many great interviews coming up. If you like them sent directly to your inbox, you need the Breaking Health Newsletter, just go to Healthegy.com. That is the word health followed by the letters EGY.com. Give us your email. We’ll send you the Breaking Health Newsletter that will include this great Podcast and others just like it, writes up about the Podcast. So interviews and profiles of the interesting people that we’re talking to. You’ll get them right there in the Newsletter. And then of course finally, great video content from our Digital Healthcare Innovation Summit which took place in November in Boston. Plus, we’ll be providing you some original video content going forward. So why not go to Healthegy.com, sign up for the Breaking Health Newsletter? It’s free. You get a lot of great stuff. Just go to Healthegy.com. Again, the word health followed by the letters EGY.com. Now back to this conversation.
SK: A couple things. If I understand, Tom, your business model, you are building this for and on the behalf of the pharmaceutical companies, that they distribute to the users. So there are a couple of questions. And maybe I’m not right about that. Am I right about that before I move on?
TK: You are, that’s right. That is who we presently focus our selling and marketing efforts on and building these programs for life science brands. That is correct.
SK: OK. Let me start with one question and then move on to another. So explain to me what it’s like. How do I find out that this program is available to me? Let’s say I was about to get in injection therapy. How do I find out the program’s available to me, and then what’s my experience like once I sort of get involved in it?
TK: So you would find out about this through any of various means that the brand is using to communicate already to patients and physicians. And brands have a lot of ways to do that. So it could be through the brand dotcom website. Could be through an email notification if you’re a member of their CRM program already. It could be through the physician, through the rep-doctor-patient channel where they hand out samples and starter kits and things like that that benefit patients. Could be through co-registration with the copay card. As you know, copay cards are basically offered by every brand now, and they all now have to be registered. So we do co-registration with copay cards. So there’s a whole – could be through a WebMD banner ad with WebMD or Healthline. There are a lot of different ways patients can be notified that this program is available. One new thing we have is we’re partners with Walgreen’s and are offering a HealthPrize branded Walgreen’s program being sold to life science companies. And in that case, of course, you get the huge scale of Walgreen’s offering the programs directly to patients that are already taking the therapy. So we’ve got a variety of different ways to get patients to be notified about the availability of the patients, and then just send them to the enrollment page to enroll for the program. Once you’ve registered, you engage with it like you would any other kind of digital platform. It’s web and mobile, so you can access it over any kind of device, whether it be a mobile, tablet, on line, laptop, desk top. And you just log in like you would anything else, and engage. We have a sophisticated communications platform that is controlled by the patient that allows us to send you notifications to remind you to self-report taking your medication each day to get points, to refill on time, to take the weekly and quiz to get points and do all these things. So there’s a whole sophisticated communications platform that allows us to communicate directly with you if you want us to. And you can control whether that’s by email or text message or both or neither. One of the things we believe in sort of fundamentally is that one of the reasons people don’t like taking their meds and don’t like healthcare in general is it’s the one place in their life where they’re not given any choice. They are told what to do. And so everything we do with our platform is built around the notion of giving people choice. Because if they choose what they want to do, they’re more likely to engage with it. And just to give you a sense of our levels of engagement, Steve, our average user in all of our programs logs into our platform almost 5 times a week, spends almost 40 minutes a month on web and mobile with us, which to give you a sense of how much time that is, that’s twice the amount of time an active user in Linked In spends on Linked In every month.
TK: So we spend a lot of time with people. And our average users in our program for almost a year, which is huge. You hear about people downloading an app and using it for two weeks. Our average user is on our program for over 11 months. And so we spend a lot of time with people and get them to engage, get educated, and get comfortable staying on their therapies.
SK: That’s very cool. I’ve always imagined that this is really – I mean I think, honestly, anybody that gets put on a medication, even if it’s just sort of postoperative pain meds, should have the opportunity to engage like this for all sorts of reasons. Misuse, non-adherence, just sort of fear of side effects. And what people end up doing is they end up going on line and typing away at stuff, and then reading things that aren’t really relevant to them, versus having an opportunity really to understand exactly what the drugs are. And then obviously when you get into these chronic medications, this is a very important service. So tell me about your business, whatever kind of data you want to share: number of customers, number of patients, number of drugs that you’re working with today. Just give me a feel for how you’re doing.
TK: Well, we’re doing well. We – our revenue doubled this year from last. We are projecting it’ll double again next year. We are predicting to be profitable next year, which not many digital health companies can say. Our customers include a number of top ten global pharmaceutical companies, some smaller emerging pharmaceutical companies whose names, unfortunately because of my contracts with them, I am not allowed to mention, but I wish I could. There’s some pretty household names in pharma, and we’re growing within them. We do work principally in the US, but we have one customer in particular we are expanding internationally with. We do programs with them right now in Latin America and Asia. And we are negotiating with them to build a literally global platform for emerging markets in about 26 different countries and with about 5 different drug classes for cardiovascular, dermatology and others. And so we’re really just starting to really take off. We’re working in primary care, we’ve done work in hypertension, high cholesterol, a bunch of dermatological conditions, a bunch of work in diabetes. We’re now starting to do a lot more in specialty medications. So we’re really starting to work across brands and across continents, and hope to build a truly global platform because most of the brands we work with are global brands, you know, in the next 12 months. And that’s a big push for 17 is to continue to build out our global infrastructure. So we’re – healthcare is hard.
TK: It’s heavily regulated, it’s very data driven. So you gotta get early customers and pilots and then gather data and go from there. We think we’re really in a good spot. Our data has been amazing across all of our programs. We put it up against anyone’s engagement or data and our list adherence are literally unprecedented, I think which is one of the reasons why, for example, Walgreen’s chose to partner with us. We’ve got some significant partnerships we’re going to be announcing in 2017. And so while pharma is really slow to innovate on the commercial side given their history of getting in trouble there, frankly, and just incredible level of regulation that they work under, we’ve really been able to push forward. And we do expect continued material growth over the next 12 to 24 months as we continue to expand our platform and sell to more pharma companies. And we’re also starting to focus on some of the partners that pharma is now forced to deal with, and play nice in the sandbox, which historically they haven’t. And so we’re in the middle of talking to some significant plans. We are talking to a bunch of healthcare systems about working with them in conjunction with pharma. So we expect to see a lot of sort of collaborative deals between us, pharma, and other constituencies in healthcare over the next 12 months as well.
SK: Sure, sure. Well, listen, we’re coming down to the end of our time. You knew, when I met you at the Digital Healthcare Innovation Summit, I’m like, You gotta come on the show because we’ve been wanting to talk to you for a while. So sort of at the end, I’m wondering, just given your experience as a serial entrepreneur, a lot of the folks that listen are either VCs or entrepreneurs themselves. So maybe I’ll ask you if you’ve got any words of wisdom for your fellow entrepreneurs out there that maybe are just starting for the first time in the healthcare business.
TK: Oh, thanks for the kind words, Steve. I was excited to talk to you. Gosh, I don’t know that I’d be the right guy to ask for anything even related to wisdom. But the one thing I would say is this: I started first healthcare IT company 17, 18 years ago, and it was almost an impossible trudge through the mud to get someone to sort of be open minded about what we thought were great ideas. And I think now it’s like this amazing time for people to solve problems in healthcare with digital tools. The one thing I often – I do sort of dislike about it, however, is I think it just tends to allow for too much hype and not enough actual problem solving. And I think that what I’d say to anybody trying to get in is find an important problem and really focus on that problem. I think we hear too many times, Why aren’t you selling to plans? Why aren’t you doing this, why are you doing that? It’s because we’re focused on solving this problem for this one group of layers in healthcare. And I think that that’s really where people can make a big difference is in trying to look at one problem, dig deeply into it, and try and either solve it or move the bar as far as you can without getting too worried about trying to solve the problem for everybody. Because I think that’s one of the great things digital can do is really hone in on particular problems and try to solve them. And there’s certainly a no shortage of them. And as I look at what I’m doing and what I’m going to do next, it’s a big focus on solving particular problems.
SK: Listen, I think that’s an important point that I don’t want to just skip over. Because the one thing that you get when you’re an entrepreneur is everybody’s got ideas as to how to make your business better. You bring in board members and investors. What inevitably happens is you find that you’re getting pulled off of your core value proposition, right? And so what I try to tell entrepreneurs, which I think is exactly what you’re saying, is if you know you’ve got a solution to a meaningful problem, go in and solve that problem. And then worry about where you go next. But the first goal of a startup is to get their core solution out there and demonstrated that it’s actually doing what’s possible, right?
TK: Absolutely. And I mean look, non-adherence. No one’s going to solve it, but just moving the bar on it and focusing on it deeply for one constituency, just the numbers are big, and there’s so many problems like that in healthcare. You just stick with it, stay with it, persevere, and generate a solid base of data to work on that problem. And I think you can create real value, not just for your business and your stakeholders, but you know, for the healthcare system in general. And that’s really where digital health, I think, can make these huge differences is just that we have a chance to do all those things. But I just think you gotta stay focused on your particular problem and not be sort of – focus is your friend.
SK: Yeah. Well, listen, great conversation. Last thing for you is I know you’ve got a website out there, HealthPrize.com. But give people a sense of where else they can get ahold of you, whether you’re on Twitter of Facebook or – and then any place where they can find out more information about the company beyond the website.
TK: Yeah, so thanks, Steve. I would say go to HealthPrize.com. We do quite a bit on social media as well. I’m on Twitter; I am Facebook. But really our focus is, I would say, our digital outreaches to our website. You can request a demo, download some really interesting white papers, get in touch with us there. I’ll be at JP Morgan if anyone wants to actually get together. I’ve got a little bit of time left, though schedules are filling up.
SK: Hopefully they’ll have the ice rink up this year, right?
TK: Yeah. I actually went the first time about 15 years ago. I think it might still have been at the Fairmount. It has gotten to be an absolute circus, which I just love. I think it’s fun and everyone’s there. Yeah, it is completely crazy. And you’ll see some HealthPrize, a little guerrilla marketing from HealthPrize at JPM this year. So keep an eye out. And actually, Steve, I have a media offer for you, which we can talk about off line as well at JPM. So it’ll be fun.
SK: Terrific. Well, listen, thank you for joining me. Really appreciated the conversation, Tom.
TK: Thanks, Steve. Appreciate the time. Talk to you soon.
TS: Well, that’s a wrap. Thanks, everybody, for coming back to the Breaking Health Podcast. Again, we hope you had a great new year. Thank you, Steve Krupa for taking the time to make the Breaking Health Podcast what it is. It’s a great addition to the Healthegy portfolio. And we hope it’s a helpful part of your life. If you’ve got some insights you want to share, feel free to go on iTunes or whatever program you use, or whatever platform you use to listen to his Podcast. Give us a rating and some comments. We’d love to hear them. Email me directly. That’s the best way to get your thoughts to us if you have some ideas where we can improve, or if you know of some subjects and guests we should have on the Podcast. Email me at Tom@healthegy.com. That’s my name Tom, spelled TOM at Healthegy.com. Again, the word health followed by the letters EGY.com. I am the Content Director here at Healthegy, and would love to hear directly from you. Thanks also to another Tom, Tom Kottler, for sharing HealthPrize’s story. You’ve got a very interesting past. I’m glad you passed up on the law partnership and found your way to healthcare. You’ve done a great many great things. And we’re going to look forward to following HealthPrize’s story as this will hopefully register as another success in your portfolio. So thanks again for taking the time and joining us on the Breaking Health Podcast. Thanks again to all of our listeners, and tune in next week. We’ll have another tale of innovation for you. Take care, everybody.