7 August 2018
Digital healthcare’s Game of Thrones
In April 1995 in Darlinghurst in Sydney, a presentation was taking place in the boardroom of one of the most successful medical healthcare ad agencies of the day, CWFS.
It was a plan to build an information network in the Australian healthcare system that would serve all points of the system. Present was one of the two largest global business publishing houses at that time. Both the publisher and CWFS had in mind a series of acquisitions that would put together pieces of a distribution puzzle that would build this network.
Magazine Australian Doctor, the number one medical newspaper, was one of those acquisitions. Another, was an emerging consumer information company, doing things not dissimilar to what Tonic Health Media and Healthshare do today, which is supply key pieces of health information for GPs to pass on to their patients.
But the prize acquisition was a start-up desktop script-writing program called MedicalDirector.
The architect of this plan was one of the smartest and most charismatic medical agency characters to have graced Australian shores, a Brit called John Cahill. Cahill had acted as an early commercial mentor for Dr Frank Pyefinch, the then young and energetic developer of MedicalDirector. And Cahill’s agency had already organised a stake in the company.
Cahill had a wry smile that always put you just a bit on edge. He was mischievous in the extreme. His smile could mean you were about to be promoted, or fired.
Cahill had that wry smile on his face when arrived at the key slide in his presentation deck.
The deck, by the way, was photo slides which had cost nearly $1500 to produce (that’s 10 minutes for free on Powerpoint today), being projected on a carousel projector that inevitably got stuck at one slide and burnt it up. That’s just to give you a sense of where technology was up to back then. To give you another sense, Google did exist, but only as a start-up in a garage somewhere in California, and no one had heard of it yet, let alone had any sense to what it might do one day. Back then, in distribution and network terms, Microsoft was still king.
That key slide was the master network and distribution outline of a future healthcare information landscape. And all points eventually passed into and out of a central node. That node, of course, was GPs. MedicalDirector was the prize acquisition because it was electronic and Cahill had realised that all data, information and billing essential to the Australian healthcare system, was one day going to pass through this single point.
Today, Cahill spends his time flying between New York, Europe and Hong Kong as the global CEO of one of the largest healthcare agency groups in the world, McCann Health. Soon after that presentation, CWFS was acquired by McCann in Australia. Cahill got busy managing that new direction in his life, and the global publisher I worked for was sold locally to Reed Elsevier, the owner of Australian Doctor. Reed Elsevier thought, at that time, that Cahill’s ideas were nonsense, so the vision went into hibernation.
Today, only the names of the players on that slide would be all you need to change. But it is happening now.
In his book, The Master Switch – The Rise and Fall of Information Empires, Tim Wu explains that controlling distribution has been at the heart of every major Western business empire, from the development and control of the railways and shipping in early America, to the rise of telephony and its control by the Bell telephone company which morphed into AT&T.
The only thing that Cahill didn’t contemplate, because the technology had not even been envisioned, let alone invented by then, was the enormous impact that doctor-to-consumer and consumer-to-consumer digital connectivity might have. That is the sort of network effect impact and power of information distribution and flow that we see in Facebook, Google, Amazon and Apple.
In healthcare today, the rail traveller, the person at the end of the phone, the person listening to the radio or watching TV, is the patient. But access to patients digitally –like rail, telephone, radio, and TV access to consumers in the early days of these industries before they consolidated themselves into monopolies – is currently chaotic.
But that is changing. The future of distribution to patients is very clear now, and the GP will be the hub, with an interoperable and networked patient management system that talks to everything, including patients.
So what is a network effect? And how might that happen in healthcare with a GP at the centre of it?
The simplest example of a network effect is the telephone system. When a network effect is in play, the value of a product or service increases according to the number of others using it. Two telephones in a network are not very powerful. A billion linked up telephones is something quite different. The more users, the more value.
Where is this happening now in healthcare in Australia?
Ask yourself where the major points of interaction are occurring between the most important hub in leveraging healthcare outcomes, the GP, and the outside world. And think more of digitally talking to pathology, hospitals, specialists and the government for payment. Think of digitally having a more effective relationship with your patient.
In its fetal form, it is on the patient management desktop – mostly Best Practice or MedicalDirector. Between them, they own about 87% of GP desktops, a good chunk of other specialist desktops, and quite a few allied health desktops as well.
At one point in time, MedicalDirector, which is likely now second in market share behind Best Practice (but not far), owned fully 90% of all GP desktops. But then MedicalDirector was sold to a fast-talking dotcom called Health Communication Network and corporate dysfunction took hold.
Dr Pyefinch left to start again and do what he had always wanted to do in keeping GPs at the centre of his vision. He started again with a competitor, Best Practice. What was once the obvious single future hub, MedicalDirector, now had a fight on its hands. Today, that fight isn’t coming just from Best Practice and the enigmatic and determined Dr Pyefinch.
There are other very interesting players in this Game of Thrones emerging.
Some names you might recognise are Pen CS, HealthEngine, Healthshare, Whitecoat, Precedence Health (with MediTracker), Tonic Health Media, Medical Media (once Medical Channel) and MediRecords.
To add a bit more flavour to the scene, mix in a couple of players that aren’t corporates at all, but in terms of digital are definitely important and interesting players: The Australian Digital Health Agency and the various state-based e-health agencies, and GPs Down Under, SMACC (Social Media and Critical Care) and a few other emerging and influential social media groups.
As in Game of Thrones, and as Wu outlines in his book, while the power of distribution is in its pre-pubescent phase and still up for grabs, things are very chaotic. To consolidate around the GP in the manner required to win this game, some of these players will need to make alliances and some will breach trust. And like Game of Thrones, you suspect some are in it more for the power and the money and others, more for the greater good of their community – in this case, the health of the country via the wonders of digital connectivity, mainly to patients.
I suspect the winners will end up being a mix of both. And already we have seen some small and promising empires built and seemingly already destroyed, Telstra Health being the most visible example to date.
Let’s have a quick look at some of the players. Apologies if I miss anyone out.
Pen CS is the leading software for extracting clinical and billing information from the patient management systems. It emerged in the last 10 years out of a pack of start-ups trying to resell de-tagged patient data by descending, virus-like, on the major patient management systems and taking what they wanted in terms of data – within the constraints of privacy laws, and usually with the approval of the GP.
It is a likely alliance partner in the game as it is really the lesser animal in a symbiotic relationship – the egret cleaning parasites off the back of a patient management zebra or buffalo, rather than the main game controlling distribution.
How does Pen CS help the PMS and the GP?
It’s a question that remains unanswered in the minds of some GPs and is the source of much discomfort over the brand, over the past few years. Pen CS says its product provides the ability for practices to do analysis of things such as population health, chronic health, other vital clinical data, generating reports that assist “practice staff implement and drive process change to improve patient health outcomes”. Which it does do.
But often that data extracted is never actually seen by the GP or the practice which it is extracted from. Pen CS is the major system used by PHNs for doing analysis on their regions, which you imagine does come back in some good way to the GP in that region. But there have been several irate GPs who believe that the data extraction and use from their practices was never properly explained to them. And of course, some of this data is on-sold to corporates, mainly Big Pharma.
Pen CS is maintaining that its Toolbar product is widely installed on all GP desktops although, at the time of going to print, TMR could not get an estimate of the share of desktops and usage. But the power of that distribution was enough for fast-growing health information group, Tonic Health Media, to do a distribution deal with Pen CS and put its decision-support information into the Toolbar product.
This is just a microcosm of power and money that might be involved in “access to GPs”, and through GPs to patients. Tonic did this deal for distribution.
This is a highly agile and innovative group founded by a very successful serial entrepreneur, Gavin Solsky, and his digitally savvy partner, Rami Weiss. Their starting point was definitively improving health via the power of digital connectivity. It started life as a Q&A site for patients and healthcare consumers, where they could ask questions and they would be answered by enrolled health professionals. But it faltered quickly because some health professionals, GPs in particular, weren’t interested in participating. That is the GPs’ daily bread and butter, so why would they join an online group and do it for free?
So Healthshare pivoted. The first pivot was to develop a comprehensive range of patient information data, using the major expert sources of this content, and do a distribution deal with MedicalDirector. When a GP is doing a consult, a widget from Healthshare polls the consult and looks for any patient information that might be useful to the GP and prompts the doctor in the corner of the screen to see if they want to use it. If they click on it, depending on which sheet it is, Healthshare gets paid and the GP’s time is saved and the patient’s experience is better.
Healthshare then went outwards with its consumer reach. They have very clever search engine optimisation and directory people working for them that garners a lot of consumer health traffic. The company has developed what is possibly Australia’s best specialist directory for consumers and GPs. It makes more money by connecting these consumers and GPs to specialists. Again, it obtained distribution more widely for this idea through being on MedicalDirector, and soon, the cloud version of that product, Helix.
Healthshare ultimately wants to put enough utility into its patient app that it captures the patient channel and patient distribution. But that is a big dream. And the company will probably need an ally in that dream with more distribution clout if it wants to achieve it. But who knows, this is a very clever group.
The current leader of the pack in access to patients and distribution to them is probably HealthEngine, founded by GP, Dr Marcus Tan. Tan is both committed to better healthcare for all Australians and is a madly driven and smart entrepreneur. He has taken what started as a somewhat dubious idea for a national directory of doctors and turned it into a powerhouse of patient activity through its app and online portal, the main utility of which so far has been booking appointments.
The company boasts more than one million active patient users connecting to more than 8000 healthcare practitioners – some are not doctors, of course. Tan recently secured the largest funding round of a medical start-up in Australian history, with a cool $27 million coming in from one of the world’s largest VC firms, Sequoia Capital. Like Solsky and Weiss, Tan is smart. But he also has built a large distribution hub through his app, and he has a large war chest to help him, go faster than others.
Whitecoat is another player in the healthcare directory space which has risen to prominence recently on its deals with some of the large private health insurers to provide directory services, ratings and pricing of specialist services.
We are mentioning the company mainly because people talk about it so much, largely because it gets good media coverage. But good press and consumer distribution are very different things. Although it has a high profile because of its deals with the big insurers, it is hard to take seriously. Despite all the puffery that comes out of this group, you need to look at the statistic that counts, which is consumer use.
Compared with HealthEngine, Whitecoat has seven times fewer users, and in terms of page views the comparison is almost embarrassing. It has only 7% of the total traffic of HealthEngine. HealthEngine is the undisputed leader in health directories. Even if Whitecoat claims to have more traffic or usage through the major insurers, these statistics are telling.
Whitecoat is now probably too far behind both HealthEngine and even Healthshare. Whitecoat is emblematic, possibly, of the chaos that precedes the emergence of a network effect and a dominant player. It feels like white noise.
Best Practice and MedicalDirector
Which brings us to the current major contenders for rulership of the currently many kingdoms of health information.
If you are still wondering why Best practice and MedicalDirector are the major contenders, then think about what might happen if Best Practice succeeds with its current strategy of building the best patient app in the country, which will talk to all the patients it has access to through its GPs and practices. If it worked immaculately (it won’t) and in one week locked all those patients into GPs who use the system, that would be 12 million patients. If I were Marcus Tan and HealthEngine, that would worry me just a little.
But as with all dynasties, there are problems of legacy in both the major houses which aspire to rule the kingdom. Best Practice has not really started in earnest on a cloud version of its desktop software. And despite what you might think, building cloud architected software is not a walk in the park. If you are serious you start from scratch and build ground up. You might want to make it look like the old desktop for familiarity’s sake, but it’s almost impossible.
MedicalDirector has a cloud version in market, so perhaps it now has the jump on Best Practice it needs. And MedicalDirector has a contract with Primary Health Care that attempts to ensure that Primary, with its 2000 or so GPs, continues to use its product and converts them to Helix.
But does Helix work? Will it be able to scale up to meet the needs of an organisation such as Primary? There has been much speculation around whether the new cloud version of MedicalDirector is up to the task of genuine seamless interoperability and whether it is scalable. And breaking that sense of doubt isn’t easy.
Enter MediRecords, a third, and until now, a bit player in this drama. MediRecords is a start-up conceived and brought to market by two long time ex MedicalDirector employees. It was backed by the likes of Macquarie Bank and a few other major healthcare players on the promise of the cloud. And it works.
MediRecords is the ground-up, purpose built, fully operational cloud PMS suite, including its own operational patient app for doctors. It works well enough to be winning large contracts with very high scaling standards. For example, 450 users in one system. This is making it a highly attractive option for corporates with lots of users contemplating their next iteration of technology.
At this point, I’m obliged to say that I own shares in MediRecords – 0.03%. And I recently joined the board. So I’m biased and you can’t believe a word I say. Or so say some people. It’s part of the chaos.
It feels unlikely that the house of MediRecords will rule the kingdom of distribution in healthcare, but it is now some sort of player in the game.
But it also feels like the major families, Best Practice and MedicalDirector have some thinking to do. And possibly some alliances to form. Be that with HealthEngine, Healthshare, Whitecoat, the major insurers, the government groups, or MediRecords.
There is much at stake. In billings these patient management systems see billions pass through them each year. If the government, through agencies such as the ADHA, is to succeed, it must break bread with these major families.
It’s a fascinating world of intrigue: entrepreneurs, charlatans, technologists and governments vying both for good and for power.
And it’s one that all GPs are set to be playing a starring role in.