In this latest executive interview, Mike McSherry speaks with me about how his past successes in consumer tech and an entrepreneur-in-residence opportunity at Providence prepared him for tackling patient engagement in the healthcare industry.
During our conversation, Mike recounts how he and his team explored 70+ startup ideas with Providence stakeholders – patients, nurses, physicians, executives – before settling on the Xealth concept. As veterans of the industry are aware, the idea of a centralized, vetted app marketplace for providers to activate patients has been attempted a few times since the mass adoption of smartphones.
I have followed this area closely for years – my first real startup attempt was a prescribable app platform in the early days of mHealth (RxApps) – but to date, none have actually found a successful business model. The reasons for these failures (for lack of a better word) are many-fold, and each attempt needs to be examined in its own context to truly understand what arrested progress. That said, one consistent fact emerges: this is a complex model that requires buy-in from multiple healthcare stakeholders and adoption from two notoriously difficult to engage populations (patients and physicians). And as the concept of digital therapeutics continues to gain traction, the need for a viable “digital formulary” becomes that much more critical to the industry.
So why do Mike and his team think they’ll be successful where others have failed? You’ll have to watch the video to hear their rationale for what makes Xealth different from previous solutions – I make sure to press him a bit on the topic since it’s our view here at Chilmark that this type of offering is critically important to integrating these new digital tools into care provision workflows in an effective way. Patients / consumers of health care are increasingly accustomed to the self-service, mobile-enabled options offered in other critical aspects of their lives, and a truly modern digital health ecosystem is incomplete without providing an option to utilize that for positive behavior change.
We’d love to hear your thoughts or feedback on this interview in the comments!
AI-Generated Transcript:
John Moore III: [00:00:00] Welcome back to the Chilmark Research Channel. Today we are broadcasting from Hymns 22, and I am going to be interviewing Mike McSherry, the CEO and co-founder of XLF. But before we jump into things, please remember to subscribe to our channels so you receive updates when we post new content. And if you like what you see here, please leave us a link or comment. So to start things off, Mike, I know that you come from a background of tech entrepreneurship as many people in this building do, but you took time [00:00:30] in between to actually learn, really embed yourself in health care. So what drove you to take that leap to get into health care, but also embed yourself in Providence to actually really learn more about all the different nuances of being at the frontlines of care delivery?
Mike McSherry: [00:00:44] I’ve done several tech startups, XLP being my sixth company I’ve co-founded, and I sold my last company, Nuance, and though it was in the mobile space, but I got exposed a little bit to Nuance’s Dragon Business and their health care business. As I was [00:01:00] leaving Nuance contemplating my next startup, I’d also joined the board of a hospital system in Seattle that merged with Providence. And so I met the CEO of Providence and he convinced me to think of doing a health care startup. And so as I was contemplating different paths, I’m like, Well, what better way to learn the industry than being inside of an organization? He invited me in to be an entrepreneur and resident with my former executive team, so gave us a green light to think of different problems in health care. I jokingly call it the free range [00:01:30] year and we cycled through 70 different ideas illegal, immoral, nobody will pay for, won’t work. And eventually we came to understand some of the problems and dynamics of the hospital operation and realized that would be a big opportunity of a business. So we incubate it inside of Providence and then spun it out.
John: [00:01:49] Okay. So what did you learn? Just I mean, you said that there are all these other projects that you went through that ended up not being viable for whatever reason. But beyond that, what else did you learn about how the health care system works that’s inspired [00:02:00] you and driven what you’re doing with self?
Mike: [00:02:02] Well, certainly understanding how how clinicians, doctors, nurses, mas, I mean, they carry the workload of the health and safety of this country on their backs, especially as we’ve seen during COVID. And so you get inspired by that. And yet you also see all their manual processes and they’re laboriously, you know, kind of level of efforts where digital and technology automation does not help them or is not quite come to them yet. A lot of it is economic and business model [00:02:30] and other incentives, but in the case of Providence, we realized we could help them solve a problem and that this is a wide scale problem for other systems. So big enough opportunity for us to carry it forth as a business and endeavor and raise money and grow business off of that opportunity.
John: [00:02:45] Okay. So let’s talk a little bit about what XLF does. Everybody’s been trying to figure out how to incorporate mobile health and apps into the daily lives of patients, but also have that work well with the hospital systems. So tell me a little bit about how [00:03:00] you are addressing that issue and what some of the unique problems are that Zelle addresses that maybe a haptic or some of these other attempts to do this in the past weren’t able to actually accomplish.
Mike: [00:03:09] So let me back up regarding the mobile I co-founded, Boost Mobile, which is now dishes nationwide prepaid service. I also co-founded a company called Swype, a touch screen keyboard that was put on several billion phones. And so tremendous mobile experience. And we thought bringing some of that mobile capabilities and Denver technology to the [00:03:30] health care consumers, the health care patients in a more seamless, beneficial and kind of ability for them to take action on healthy daily habits and lives would transcend a better care model and better care quality. So with that insight, we saw that there were a range of different digital apps and tools and devices and services and content that was largely being verbally referred to the patient or go to the App Store and download that app, or here’s a brochure about that [00:04:00] app, or here’s a photocopied piece of paper on your rehab exercises. And we thought just digitizing all of that and letting the clinicians easily prescribe that asset to a patient, deliver it to the patient in a seamless, consistent manner, and then track if the patient read it, watched it, what that app is saying around there on a onesie or there be behavioral health screenings or their glucometer readings or their CPAP device data, just bringing all that back in the workflow for the clinician [00:04:30] to interpret change care plans understand dynamics of is this working for the patient are doing need to do different care protocol.
Mike: [00:04:37] So that’s what we built is a seamless mechanism to prescribe any digital asset to a patient and then track the patient’s usage and engagement of that. And we don’t choose the tool the hospital system deems what what tool might be appropriate via a maternity care app or diabetes management app or the Lyft ride to get the patient to the procedure on time or [00:05:00] the meal delivery for post-op recovery if someone doesn’t have a caregiver at home. So we’ve integrated 60 different things for our hospital customers, but we put it in a seamless workflow that saves it is cost of money, activates the patient more readily, and brings all the monitoring of that activity back into the clinical workflow for analytics and interpretation. Better care delivery. So that’s what we built.
John: [00:05:24] Okay, fantastic. So I don’t know if you know this about me, but I actually did have a mobile health startup before I joined Chilmark Research. [00:05:30] It was premature. This is back in the early 20 tens and I was trying to do something around mental health space where people could have a live journal, where they track their symptoms and whether or not they’re adhering to different parts of their treatment, not just their medication regimen. But it was too early for the market at that point. Everybody was focused on the air deployment at that time, and they’re just trying to deal with the change management of that. However, I have noticed that there’s still hasn’t been a huge uptake of mobile health within the health care system yet. And so I want to get your take [00:06:00] on is that because of a resistance to these new technologies and letting go of some of that control of the patient encounter, or is it just a lack of maturity? And, you know, now that we’re a little bit more of a mature market, you’re starting to see more adoption of these tools.
Mike: [00:06:13] Great question. I think there are a couple of things. So when we were incubated inside Providence, we saw the rise of digital health. There’d be apps that would help manage X, Y, Z, and the payers and employers have far more and direct to consumer consumers going to the App Store and downloading something that helped [00:06:30] them in their weight loss or their nutrition management or their stress and anxiety. Those different channels have adopted digital health more rapidly than hospital systems, friction of EMR integration, business model incentives, etc. When we work with the hospital system, we manage their digital health formulary and their formulary does not necessarily overlap directly what what a payer employer might have. Payers and employers look for prevention methods. They, they focus on chronic [00:07:00] care management. They try to.
John: [00:07:01] Keep people out of hospital systems. Livongo specifically.
Mike: [00:07:04] Yes. And hospital systems will focus on procedural efforts. They will almost always adopt a maternity care app. They will almost always do surgical prep and the pitot recovery on that and digitizing that pathway, increasingly they’re doing behavioral health. But when you get into like broad based chronic care, the hospital systems don’t have the financial incentive to prescribe something and then get paid to monitor against and who’s paying for that. [00:07:30] So what needs to happen is a little more alignment of the payer reimbursement around chronic care and the clinical hospital operations. Because one thing that we do have is 4 to 10 x higher adoption when it’s that doctor recommending something to a patient than the employer recommending some something to their employee base or the payer even suggesting like, John, you really need to manage this and people don’t trust insurance. Why are you trying to give me do this? But if the doctor says that people will more readily [00:08:00] accept entered here, especially when they know that clinician is looking over their shoulder at the data stemming from that app or tool or program to know if the patient is being adherent to that. So there’s a little bit of a sentinel guilt factor that that creates a greater adherence concept when when the clinician is the one recommending that to the patient.
John: [00:08:19] Yeah. So I mean, obviously the patient provider relationship is the most trusted within this ecosystem that we’re talking about. Nobody trusts the payers necessarily have their best interests in mind other than cutting costs [00:08:30] and making sure that they’re not going to get sicker. Yeah.
Mike: [00:08:33] That said, they’re doing good things. They are.
John: [00:08:34] And but we don’t trust them as consumers.
Mike: [00:08:36] That’s right. No, that’s that’s true. And they focus on prevention, which ultimately should be the goal of all of us, better, healthier lifestyles. And if they’ll pay for healthy, fresh foods and if they’ll pay for these preventative measures to prevent a surgical operation, that’s net net a good thing. So that’s what we need to find is a little more balance between what what payers might might incent their members to do [00:09:00] and what hospital systems want their patients to do and better care and maintenance and healthy lifestyles.
John: [00:09:05] I think payers also need to do some more to regain that trust of patients because there are a lot of great payers out there that are doing really good, innovative things. But there’s just this backlog of mistrust.
Mike: [00:09:14] Yeah, well, the whole world is bleeding because now payers are getting to more clinical care delivery and there’s more virtual first primary care and that’s encroaching upon traditional hospital and care delivery models. So as as the world matures, you’re going to start seeing more blending of payer, [00:09:30] provider or risk taking, capitation, etc..
John: [00:09:33] What have you learned about the adoption or the uptake of some of these solutions that you maybe weren’t expecting hospitals to be as interested in as they have shown to be?
Mike: [00:09:41] Well, because we prescribe and then monitor the usage of that, we’ve got different analytics so we can in prescribing something, we can do a manual click. John, I’m really sorry you’re not feeling well. I’m going to prescribe this app to you and you’re going to look, I’m going to be able to monitor you remotely and see if there’s any negative signals whereby [00:10:00] you might need to change your meds or whatever. And if the clinician has that face to face recommendation with the patient, 80 plus percent engagement rates, adoption deployment, you know, adherence to it, if it’s on an automation routine where like, oh, every time we see someone with this diagnosis, let’s push something to them. And the clinician is not specifically having that conversation with the patient, then you start. Dropping off 20, 30% on some things. So automation, which reduces workload and burden, etc. [00:10:30] is great. You can meet mass market, everybody fits a conditional profile, but you’re going to have a drop in the acceptance and take rate and an adherence rate. So that’s kind of one level of discussion. Maternity care, adoption, you know, a pregnant mom engaging in an app to track the baby’s fetal development and, you know, massive, massive uptake. A pregnant mom is an engaged mom and the health and welfare of that that child smoking cessation. You’re going to tell me to quit smoking again? [00:11:00] But still, we’ve like ten x the number of smoking cessation enrollments. Ten X is massive, massive, massive. Yet it’s still in single digit take rates. It’s not like 80% pregnant patients adopting something. You know, you got 2% conversion of the smoking cessation. Another one is advanced directives. You know, having an advance directive on file DNR. It’s it’s important end of life, you know, not not getting to the invasive procedures and a massive cost savings for the health care industry. It’s a tough it’s a tough, tough discussion. You [00:11:30] know, for a primary care clinician, an appointment like John. Let’s talk about your mortality. Yeah, you really need to fill out these forms, bring them in next time.
John: [00:11:38] There’s no standard to start that conversation these days.
Mike: [00:11:40] Right. So we automate that every time someone comes in for an annual wellness visit. They’re over age 65. Don’t have an ID on file in the EMR. Hey, John, you’re coming in Tuesday next week to see Doctor Steve. It’d be really important for you to consider having advanced directives on file. Here’s educational material, here’s links to download the forms. We [00:12:00] really hope you take the time and effort to bring these in on Tuesday. And so we again I think we 15 X the number of advanced directives on file in the EMR and when the when the patient comes into that appointment the clinician knows in the encounter notes like John you downloaded the forms did you bring them in or John you watch the video, did you do you have any questions? Where should we start this conversation? So just to automating some of the repetitive burdens of of some of this low hanging fruit, [00:12:30] you know, smoking cessation, advance directives, these are like manual processes and like, oh, let me get those photocopies out of this file. You bring it home, you fill it out. Like if you can just automate a lot of this stuff, that’s helpful. And the administrative side of care, that’s also significant burden, time savings and net benefit to a patient in as much as like a care disease management protocol or, you know, following the correct surgical procedure steps before you come in for the day of surgery, etc..
John: [00:12:56] Okay. So I guess wrapping up, is there anything [00:13:00] else that you’d like to share about what you’re doing with health or what excites you about health care in general, what you’re seeing here at hims that’s piqued your interest or surprised you?
Mike: [00:13:08] Well, I came into health care to make a change, and I want to do so at scale. And we’re now working with over 20 hospital systems and these are the largest ones in the country. And, you know, I want to be ultimately the benchmarking of digital health effectiveness, knowing what apps, what tools, what programs on what intervention, routine or protocol produce the most effective results for patients. [00:13:30] I mean, I jumped into, you know, I had success in some past companies. I wanted to make a change in health care, improve the health, welfare and society of the US population. So that’s what I’m pursuing. My hospital customers are great partners. I am in fact presenting in an hour with the Duke on a number of the case studies that we’ve done with Duke Health on engaging patients, we’ve reached 100% of their patients with different digital assets tools like some of.
John: [00:13:57] It’s really impressive.
Mike: [00:13:58] Some of it’s patient education, some of it [00:14:00] is covered awareness, some of it’s how to schedule a telehealth appointment and, you know, teach all their patients how to do telehealth in this times of COVID. But Duke has been a fabulous partner. And so that’s something that if you’re free in an hour, come up and hear the presentation with their chief digital officer and myself.
John: [00:14:16] So actually building off of what you’re just talking about, one of the things that we were speaking with someone yesterday about is this need for better digital literacy in our country. So it sounds like that’s something that you’re also working to address.
Mike: [00:14:27] Yeah. And we have sent out material that [00:14:30] is sort of targets, the different patient populations with their level of educational interest in that product. You know, it it speaks to the level of depth in that material is like deep oncology level data that gets really, really in depth or is it more generic grade school educational level material? Some of our hospital customers have rural populations, one one even said we have an average of fourth grade [00:15:00] reading level across our population like, holy cow, we don’t even have a patient education vendor, we do video. And so video is really good. I mean, but that was tragic. That was sad for me to hear. I had never even kind of contemplated that. So how you reach a patient population that’s meaningful and engages them and speaks to them on the. Level that they’ll understand the health, the benefits, the consequences of not taking care of some of their their health care needs and [00:15:30] preparation and and healthy lifestyles and maintenance. We’ve bridged into a lot of social determinants of health. We’ve done a number of meal delivery programs for patients. Post bariatric surgery. How to get started on a healthier eating lifestyle. Post Surgical Operation. When you don’t have a caregiver at home having some fresh meal delivery for you to to start off on a recovery plan and pathway. We’ve done transportation. We’ve done a number of product recommendations. And and so I think that’s [00:16:00] what we can facilitate is bridging a digitally facilitated health, not that meal delivery is digital health, but we help digitally facilitate that. That is for the benefit of patient care, but it still needs some technology and automation and clinical recommendation logic, which is what we provide for hospital systems to enable better patient care.
John: [00:16:22] Fantastic. That’s a really good mission. It sounds like you guys are on the right track. So in closing, is there anything that you’d like to say [00:16:30] to our audience about how to get in touch with you or to reach out Zillow.com?
Mike: [00:16:34] Thank you very much. I appreciate everything. John, as always, great to talk with you. And I would love to work with your hospital systems and the number of vendors that you think would be appropriate for a better patient care. Thank you.
John: [00:16:46] All right. Well, this has been an interview with Mike McSherry, the CEO and co-founder of XLF. Thank you for joining us today. If you like what you saw here, please remember to subscribe to our channel and throw the video like. Have a great day.
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