Rachel Schreiber
Hello and welcome to the Spark, a view of innovation in healthcare. I’m Rachel Schreiber, your co-host, and in this episode we’re speaking with Seth Joseph, founder and managing director of Summit Health Advisors, where he and his team are strategic partners with some of the most innovative digital health companies, health systems and health investors. He’s also a contributor at Forbes and is active on social media. I’m joined by Stuart Hansen, CEO of Avaneer Health.
Stuart Hanson
Thanks a lot, Rachel. Welcome to the Spark. Thank you so much for coming and having this discussion with us. I’m really looking forward to spending the next 15, 20 minutes or so learning a little bit more about your perspectives because you’ve talked to a lot of companies and you’re in a really interesting space. I think you bring a very consultative approach and a multi-client, multi-discipline approach to our discussion.
Before we dive into your thoughts on what’s slowing down healthcare, what could be different, all that fun stuff, I always like to ask our guests first to share a little bit of their why, their personal why in terms of why they spend time in healthcare.
Seth Joseph
Well, thanks, appreciate it and wonderful to be here. So my spark and why healthcare — I’ll start off with first, why not healthcare? I come from a family of nonprofits, public and nonprofits. My father was Peace Corps. My brother was a Peace Corps volunteer. As it happens, my sister-in-Law is a Peace Corps volunteer. My brother-in-Law is a Peace Corps, former Peace Corps volunteer. My family is all nonprofits. I was the relatively black sheep who following college, decided that I want to do well while the rest of my family is doing good. My first real gig was in sales for the real-life version of the fictitious company, Dunder Mifflin, which listeners recall as The Office. True story. I mean the name of the company was Corporate Express. So literally about as bland as you can get. We were a B2B contract stationary company selling paper and toner. That was my job out of college and I am a believer in the idea that there are no boring things, only boring people. But what I discovered about myself was while I could do pretty well at that job, it really didn’t hold much meaning for me.
Stuart Hanson
I didn’t expect a Dunder Mifflin reference. I got to be honest. Star Wars I know might come up with you, but that was unexpected
Seth Joseph
Star Wars and Dunder Mifflin. Hopefully that resonates with the listeners. But it just didn’t hold much meaning and it didn’t have any impact. I didn’t connect with it personally. And so I went back to business school and decided at that time I needed to be in an industry where hopefully I could do well, but also I felt that I could do good in the world. I found a great opportunity at CVS Health, wound up moving over to Surescripts and as Surescripts was sitting in the really fascinating place at a fascinating time back in the early 2010s where of course there was the EHR incentive program, but the precursor to that was an e-prescribing incentive program. And I recall early on there that CEO was meeting with ONC, the office of the national coordinator and asking a question of our team and it was, Hey, do we see any impact of these e-prescribing incentives to get doctors to adopt and utilize e-prescribing and digging through the data?
Seth Joseph
It was a bit unclear and I was really determined to find an answer to that question. And of course we did find it and we found it in a really powerful way. And so to me, when I get excited about healthcare technology, it’s not about the technology itself, it’s about the impact that it can have. And certainly the idea that policy could drive that impact, drive adoption — that was something that resonated with me. And so certainly is a part of my focus now where in addition to Summit Health Advisors where I write as a contributor to Forbes covering the intersection of healthcare technology and policy.
Stuart Hanson
When we first started asking our guests that question, we expected a lot of variety, but you might win the variety prize so far, the unexpected prize so far. That’s really cool. I think doing good is at the core of everyone’s reason to go through the slog of trying to impact the healthcare industry, probably mostly that’s applicable at the physician and care provider side, obviously of course. But that’s a really interesting backstory.
Seth Joseph
I’ll just cut in and add. I wish I’d thought to say, geez, I should have gone and become a doctor or a nurse or a physician assistant or a pharmacist didn’t have the aptitude or the mindset to go down that path. So for me, it’s been on the business side of healthcare, but hopefully contributing in small ways to doing good and having a positive impact in folks’ lives.
Stuart Hanson
Yeah, I think I probably didn’t have the aptitude either, but I like to tell people I didn’t go into healthcare providing because my father worked in anesthesia and he was on call three days a week and gone most weekends, and I don’t particularly love blood and guts. And so I was quickly turned off by the challenges and the impact that those great care providers suffer through to do what they do. So similar, but I probably also didn’t have the aptitude or the study habits to get through med school.
So anyway, enough about me. Let’s talk more about you, Seth, Surescripts and the interesting projects with clients that you’ve worked with I would love your perspective on clearinghouses, pharmacy networks, HIEs, QHINs, TEFCA. There’s been all of these efforts, some for-profits, some government mandated, et cetera. They’ve all had measured success, but a lot of challenges would just love your broad perspective on any of the above.
Seth Joseph
What I’ve seen and certainly what I believe is that technology networks and platforms create value by bringing together and connecting different constituents together to create massive value in healthcare. I think if we look at the challenges we have in healthcare, they generally relate to the fact that there’s a tremendous number of different constituents in healthcare that they tend to be disconnected from one another and we don’t have good ways or we haven’t had good ways of connecting them and allowing them to communicate, interact, and to do so in real time electronically in standard ways. And so there’s tremendous promise of these networks. My experience is that the ones that I think tend to do best tend to be purpose-built, use case specific, and focused early. And I think Surescripts is a great example. I think Avaneer is a purpose built from what I know and on its way, so I’m really excited.
Stuart Hanson
I think Surescripts is probably the best example in healthcare that is easy to think about. And it was a very specific part, a very specific small segment of the healthcare industry and very specific data flows and use case. And I do think that’s important.
Seth Joseph
Absolutely. We work with a lot of networks, marketplaces and platforms in healthcare, and the challenge is never the vision. We can have different, broad use cases or different ideas of connecting different constituents together and the power that can create or the savings that can it can lead to. The challenge is that different constituents tend to have different interests, different priorities and different incentives. And so what I’ve found is, and I think Surescripts is a great example of this is the narrower you can start, the better job you can do at figuring out the intricacies of what it takes to create value for connecting two different constituents, what it takes on each different side to create value, what their hard and fast rules are, what their needs to have are versus where they can be flexible, and then what their priorities are, the sort of operational context that is going to deliver value, because it’s not easy if you’re seeking to connect two different constituents together.
They’re just going to operate in different ways. Payers might think in terms of quarterly earnings and yearly results. Doctors are trying to get work done and save patient lives today. And so figuring out an interaction in a way they can successfully interact together requires being sensitive to and attuned to their respective needs. It doesn’t mean that you can’t solve problems, it just means that the narrower you start on a given use case and transaction set, the more you can optimize that experience to deliver value on both sides. And then as you do that, you kind of earn the right to expand into other categories or additional use cases.
Stuart Hanson
Any specific thoughts in terms of how that translates to, we’ve seen a lot in the news lately with the ONC announcements, the first QHINs and progress in TEFCA defining their path and rolling that out. Any specific insights you have relative to that that you’d like to share?
Seth Joseph
Sure. I think the intent of TEFCA is very noble and it resonates. It is an intellectually worthwhile endeavor. And yet I’m also personally skeptical of how much value can be created by stitching together these different clinical networks because they’re still based on outdated technology infrastructure that are being forced together by regulation, which means that they’re not going to be as easily focused on optimizing for individual use cases that pass through their pipes. They’re going to have to take all comers. And so what I can envision happening and which I’ve written about is you wind up with networks that process low quality messages to each other, and that leads to some innovative opportunities on top, but you’re just going to have a lot of low value messages being passed back and forth because the really innovative novel entrepreneurs, founders, technology companies, leaders are going to realize that different constituents have different needs and there’s opportunity to optimize in specific narrow areas and to really deliver a ton of value that can’t be realized through TEFCA alone, which is the equivalent of sending USPS mail from one location to another.
And I just think there’s opportunities to innovate outside of that.
Stuart Hanson
I think the hope would be that there’s always the risk of unintended consequences when something’s mandated and companies focusing on compliance or adherence to something that’s been published as opposed to necessarily trying to jump to “how can I leverage this for value?” We’ve seen that time and time again, not specifically attributing that at all to the efforts underway with the ONC right now, but I do think that’s always a risk. I think the hope would be that it creates at least a spark or a catalyst for some of those specific use case or purpose-built driven applications to get to some scale. And hopefully TEFCA can move the needle in terms of enabling some of that.
Seth Joseph
Absolutely. And I will have a smile on my face when I am proven wrong. I will think it’s good for healthcare if TEFCA delivers the value that ONC and CMS are looking for.
Stuart Hanson
Awesome. Thanks for sharing that. What about other industries? There’s so many people draw analogies from other industries, but what are you seeing other industries do that you think healthcare should learn more from or could learn more from?
Seth Joseph
Yeah, I’ll offer a couple of takes. I think one, there’s been, I think investors and some founders who come from other industries are really starting to think about how to leverage product-led growth. And so I think we could look at Slack for instance, as an example of a company that got its roots and started off through a product-led growth approach in terms of go-to-market in that Slack was freely available for small teams, and it was a tool that served a very specific need. It allowed people to collaborate and communicate in real time, and it put forth effectively zero barriers to adoption. And the belief of the company was, if we get people starting to use our product, there can be ways to create a freemium type of approach where once the product has taken hold in an organization, if they want enhanced benefits or they want broader use additional capabilities, there are ways to generate revenue from that.
Seth Joseph
And I think there are enormous opportunities for healthcare with that type of approach. I think we need to be realistic that HIPAA is going to be a rate-limiting step, and it’s true that organizations tend to make decisions in healthcare, but there are also instances of ways in which product-led growth has already demonstrated success in healthcare.
We can look for instance at the idea of iPhones and smartphones in hospital settings. The iPhone was not, I can’t imagine, I would love to be proven wrong here and have a CIO demonstrate to me that they had a plan that they were going to go and develop a plan to integrate iPhones into their IT environment prior to the iPhones launch or prior to it becoming a problem for them. But the reality is CIOs were forced to deal with the presence of technology within their environment. And so it is an idea that has merit. I think I’m personally excited for the opportunities here. I think it requires creative thinking.
And then I think we could look at consumer facing platforms like Airbnb, Uber, Touro, as platforms that connect available goods or assets or even people that are currently untapped or underutilized with where that demand exists today. And I think if we think about large, whether it’s payers, whether it’s health systems, IDNs, hospitals, et cetera, the way the industry has kind of developed over time, it’s developed in very much an institutional manner. And oftentimes we’ve got institutions with excess capacity and or excess assets, and there may be really creative ways of matching those underutilized assets, whether those are literal assets or people’s services capabilities, et cetera, with where that demand is manifesting. And so I think there’s really interesting and novel ways to think about that and novel opportunities.
Stuart Hanson
Interesting. Yeah, I think the first example that you gave where a technology got more or less forced on the industry, it just sparked a thought in my head over the requirements of how quickly the industry had to adapt to covid in terms of telemedicine, in terms of Zoom and online conferencing and teams and all the tools that popped up that really happened overnight. They weren’t planned. They were already capabilities that existed, but really the industry got put in a position to adapt to those.
The industry really did adapt to that because it was urgent and it was necessary, and that just shows that the industry has got the capability. Before I turned over to Rachel to ask a few questions, what do you think needs to happen at scale for the industry to really break down the data silos that exist in healthcare? Like we’ve talked about some of the initiatives around that, but is it seeing more examples start from a very purpose-built specific use case and gain traction and expand from there? Or is it some magical innovation on top of some of the government mandates? Or what do you think is going to drive the change that really is needed to improve that data and the underlying experiences for all the stakeholders?
Seth Joseph
It’s an interesting question. I mean, I’m an optimist here. I’m an optimist in general, and I like to think I’m a data-driven optimist. I think we’re starting to see that. I mean, we do see instances of interoperability. There is Surescripts in the prior authorization world. On the pharmacy side, there’s CoverMyMeds who’s done extremely well on the medical side. There are companies who are building out incredible prior authorization solutions, just as an example. But we’re also seeing organizations like Evidation Health who is connecting people and fitness, their wearables and their healthcare data and allowing those people to control that data, but also to opt in and share that data, of course, via their consent with research organizations, with the pharmaceutical organizations, maybe medical device academics, academic researchers, et cetera. And so I think if we think about different sources of data and data more creatively, we might start to recognize, well, there is a lot of interoperability or data sharing that’s starting to occur.
And at the same time, to go back to your point, I think in clinical interoperability or health information exchange as a verb, there are still data silos. And I think there are opportunities to take more use case driven approaches. The example I would use is referrals. A referral for cardiology is different, a referral for oncology, for surgery, for whatever instance it might be for rheumatology, there are going to be different patterns. And so the more we can think about meeting or building connectivity between constituents that are more purpose-driven, I think the more success we will have. And I think we’re starting to see that. I’m personally optimistic and think we have a tremendous amount of innovative creative people working on these types of problems. So generally encouraged.
Stuart Hanson
Same here, hopefully data. No, that was great. That was great. I’m a data-driven optimist as well, so it all resonated with me.
Rachel Schreiber
They kind of have to be start a company.
Stuart Hanson
It’s true. It’s true.
Rachel Schreiber
So Seth, when you look at where healthcare needs to go and how we need to scale and interoperate and the patient-driven needs that we have, what do you see some of the barriers that are impeding healthcare and how can they become overcome?
Seth Joseph
Yeah, I’m going to probably give a different answer here than maybe others would give around regulatory environment or technology limitations. And I’m going to say just it comes down to fragmentation, misaligned incentives and a lack of trust. Those are the biggest barriers, and those are systemic. If we think about them in my close to 20 years in the industry, I’ve yet to come across anybody who I speak with and I think, “Oh, they’re in it for the wrong reasons.” Generally, everybody I come across seems to, maybe they express it in different ways than I do, but they tend to be focused on trying to improve the healthcare system, whether it’s for systemic purposes, populations, individuals, they may have a personal connection or reason, but they’re all trying, and people in medicine are trying. The challenge is we’ve got tremendous fragmentation, and within that fragmentation, we’ve got misaligned incentives.
And so we could look at, for instance, prior authorization, the problem of prior authorization or the challenge, the pain of prior authorization for a doctor looking to practice medicine when she gets a prior auth required to care for her patient. That’s incredibly frustrating. And it’s coming from a nameless, faceless organization, and it’s the, I don’t know, whatever it is, 20th prior authorization she’s gotten this week or this month. And it’s frustrating for her and her patients when all she wants to do is deliver care. And at the same time, if we step back from that, we can realize that well, maybe the health plan deals with tens of thousands of different providers and those tens of thousands of different providers practice medicine in a huge variety of different ways. It’s impossible. There are studies, it’s impossible for them to possibly keep up with the best and latest evidence-based medicine, and that’s the health plan’s job.
That’s what they’re hired to do, whether directly by a member or indirectly through an employer or an exchange or what have you. It’s their job to try and drive evidence, evidence-based care. And so there is a conflict there, and it’s a conflict because of different incentives. And it’s also exacerbated by the fact that this nameless, faceless health plan doesn’t have an individual relationship and a meaningful one, a human face-to-face relationship with the doctor. And so to the doctor, it’s a nameless, faceless organization. It’s frustrating. And at the same time for the health plan, they’re dealing with tens of thousands of doctors a day, and there aren’t good tools to solve for that at scale. And so to me, I think what is needed is better tools, better communication, better technology to solve for these types of problems and to do so at scale. And perhaps not surprisingly, I think a huge of the answer here is network thinking and platform business thinking to figure out where there are opportunities to build businesses that create value for solving two-sided problems where you can figure out how to align incentives, how to deliver value on both sides, and give them tools so they can communicate in more real time and in ways that make it feel as if they’re actually coordinating and collaborating with each other and not fighting.
Rachel Schreiber
It’s really interesting because as we’ve been building our network, it’s bringing the two parties in the same room where they can actually talk to each other and see each other’s perspective, and then together come together with a solution.
Seth Joseph
Oh, I think that’s so important to do. I’m so pleased to hear that Avaneer is doing that. And it’s a part of what I think played a huge contributing factor in SureScript success that they scheduled time, they held forums where the different constituents could come together at a table, look each other in the eye and have difficult conversations about how do we make this work together? Well, why does a pharmacy might say, well, this doesn’t work for me because of X, Y, and Z reason. And those reasons can be valid, and also reasons that have no meaning to the provider side. But if we actually get those two sides sitting together, they can recognize we’re all people here. We’re all trying to do our jobs and do what we are charged with. And there are ways to work together to find areas of collaboration and opportunities to find a middle ground.
Rachel Schreiber
Yes. Oh, fascinating. Would love for that to happen in prior auth.
Stuart Hanson
I think that yeah, for sure. Prior auth is a tough one, right? Yeah. I think the other thing that’s implied behind what you said, Seth, is these are people on both sides. Even behind the nameless, faceless payer or to the payer, the nameless, faceless, one of 10,000 physicians, they’re both actually trying, they both actually want, they’re in healthcare doing a tough job because they want to do that good. And what we found is when you get those people in the same room and they’re like, oh, man, I didn’t know my trying to do good caused you so much pain, help. Let me do more good for you as well. And they really do typically come together. I’m sure you saw that at Surescripts as well, to try to come up with a better way that doesn’t inflict pain on some others as they’re trying to do good for the ultimate patient.
Seth Joseph
Absolutely. I think what we’re discovering here, because I think the fact that, Rachel, you brought up this point that Avaneer brings different constituents together, raises a really critical point that it’s difficult to appreciate the others’ side until you actually are sitting down at a table with them and having a conversation. And maybe that’s part of what it takes, working through this face-to-face, figuring out solution technology solutions or connectivity and workflow solutions that can work and can be acceptable to both sides. And then once you’ve done that once, the really neat thing is if you design a and it works for both sides, now you can scale it. And that’s of course the really neat thing about technology.
Rachel Schreiber
Any other questions around that topic?
Stuart Hanson
No, I’m good. I think that we’re completely mind meld here. Now, have you break out your Star Wars T-shirt here in a minute, but no, I feel like we drilled that one in. Thank you.
Rachel Schreiber
All right. So then in what ways do you see the organizations that are satisfied with the status quo, like the processes, the workflows, the tech, and how are they going to be left behind when innovation as innovation continues and healthcare continues to evolve?
Seth Joseph
In short, I think organizations that fail to keep up or innovate will likely, as you put it, be left behind or perhaps just be non-existent. It’s really tough because organizations, doctors are practicing medicine, pharmacists are practicing pharmacy. They are dealing with patients and organizations. Most healthcare organizations, at least on the delivery side, are organized and constructed around those things. And so when you’re dealing with patients every day dealing with real world problems and not much about the business is changing, it can be difficult to see that something is coming or difficult to believe that something is coming. And yet history is replete with examples of things that were impossible to believe until all of a sudden they happened. Human beings didn’t fly for the hundreds of thousands of years we existed until the Wright brothers proved that we can. And Stuart, you gave a great example earlier. You were talking about the pandemic at the start of the pandemic. It was, at least in my reading, it was impossible to believe that a vaccine could be developed in anything less than four to five years because it had never been done and it was done.
And so that’s pretty incredible. I think progress is uneven. It oftentimes takes longer than expected, especially in healthcare. But I think we all need to keep an eye on the future. That doesn’t mean maybe to be pollyannish or believe that every new innovation is going to lead to tremendous value, but it does mean, I think being aware and thinking about innovation and how it might affect the organization.
Rachel Schreiber
It’s been a really interesting conversation. So as a wrap up, what key phrase describes the vision of what you see for healthcare?
Seth Joseph
Connected and collaborative?
Rachel Schreiber
Yeah, that’s good. That would create, that create a significant improvement in healthcare. So thank you for joining us today and sharing your perspective on healthcare innovation. And I keep up with your posts on LinkedIn and appreciate the articles that you’re publishing on Forbes as a contributor. If people want to follow you on LinkedIn and X, they can just find you by searching for Seth Joseph, you’re easy to find and go to summit health.io. Thank you for joining us today, Seth, and keep up the good work.
Stuart Hanson
Yeah, thanks a lot. So much. This a lot of fun.
Seth Joseph
Thank you so much. And likewise.
Stuart Hanson
Awesome. Thanks a lot.
Seth Joseph, founder and managing director of Summit Health Advisors and contributor at Forbes, believes the challenge in healthcare is not vision, but that different constituents have different priorities and incentives. “We need to build businesses that create value for solving two-sided problems where you can align incentives and deliver value on both sides.” Joseph believes healthcare leaders and innovators can lead this charge by taking a lesson from companies like Slack, Airbnb, and Uber.
Seth is a Forbes Healthcare Contributor and Managing Director of Summit Health Advisors, the leading boutique advisory in network effects and platform business strategy in healthcare.
Seth is a recognized expert on the intersection of healthcare and technology, particularly the unique opportunities for and challenges of scaling network effects in healthcare markets. He spent close to two decades leading strategy for innovative digital health companies, including CVS Caremark and Surescripts, the first true healthcare platform, and is passionate about helping investors and healthcare operators leverage multi-sided platforms to help physicians and care extenders improve the quality and cost of care.
Seth is a sought-after speaker and author on topics including digital health, healthcare strategy, and the impact of federal policy. His articles have been published in multiple journals including Health Affairs, JAMIA, AJMC, and other various healthcare media.
