SXSW 2018: 5 Questions With Xealth CEO Mike McSherry

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Xealth SXSW 2018

As consumers, we frequently experience the challenges of our healthcare system, from accessibility issues to difficulty understanding our insurance to confusion over treatment and options. But our healthcare providers face their own set of stumbling blocks as they work to improve patient outcomes while keeping up with appointments, paperwork, and patient care.

With its connected digital prescribing platform, Xealth hopes to make a physician’s job a little easier—and in turn, improve the consumer experience and, ultimately, our health. Xealth allows a physician to seamlessly recommend a full treatment plan for any patient—including educational content about a condition, support groups, medical devices, and even at-home care, meals, or transportation. By tracking patient activity and usage, Xealth also helps HCPs understand what’s working, what’s improving outcomes, and how to keep people engaged in their healthcare.

Xealth CEO Mike McSherry (his Twitter bio: “Startup guy in Seattle – improving healthcare for both docs & patients”) will be speaking at SXSW on Friday, March 9, as part of a panel entitled “A New Kind of Investor: Hospitals & Startups.” We caught up with him to learn more about his digital health platform and his strategy for growth.

Xealth CEO Mike McSherry

Xealth was born out of your role as Entrepreneur-in-Residence at Providence Health & Services. What was it about your experience there that made you want to get into healthcare and launch Xealth?

I had a strong background in web technology and mobile startups, so when I sold my company Swype to Nuance, I was left wondering what to do next. I had joined the board of a local medical system here in Seattle, and it merged with Providence Health & Services, one of the biggest hospital systems in the country. The executive leadership at Providence invited me to think about healthcare. And I took a moment to think: what do I want to be doing 10 years from now with my life- solving healthcare problems or making ad tech better?

I decided to pivot and take my team (the four members of Swype’s executive team) and resources into healthcare. We were brainstorming healthcare with no background in healthcare, but to do any startup, there’s a little naivety and hubris. You think you’re smarter than the average bear- and look at healthcare- everybody’s got something to say about how broken the system is. We assumed we were smart guys and would be able to solve it. Now, once we were in it, we realized that there’s far more complexity and the normal rules of business don’t always apply.

Being inside a hospital system was definitely key to our success. This is my sixth venture-backed startup, and every single one of them was essentially a joint venture or funded by strategic money from a large partner in that ecosystem. By aligning with a large hospital system and solving a problem for them, we demonstrated that the platform works—and then other customers followed.

You describe yourself as a serial entrepreneur and have a history of raising an impressive amount of capital for startups. What, if anything, has been different about raising funds for a health startup? And what are the challenges you must overcome in order to establish credibility in the industry?

We did face some challenges, some of which were timing-related. We were out raising money when Trump was elected. His comments about the ACA added a lot of risk to the market in investors’ minds. No one knew how the market would be affected, and it kind of stymied the market for a period of time. Any venture capitalist is optimistic and wants to place future bets, but he or she is also looking at risk scenarios that open a window to delay or say no. So for us, at the time we were raising funds, there were broader risk scenarios in the market that delayed the process that might now have otherwise occurred.

Another thing to consider is that healthcare is such a big industry that there are dedicated healthcare investors- from medical devices to insurance side to hospitals. Segmenting down whom you should talk to is a process. We took a lot of turns along the way to finding our partners at DFJ, and then we were also able to get our first four hospital customers to invest as well.

I knew we were building a product they really valued if they also wanted to invest in the company. That definitely gave us credibility for talks with future investors. Providence and UPMC are two of the country’s top systems and known for their scale and innovation. I have a history of aligning with the right investors, partners, and joint ventures who bring credibility to the table and help to convince the rest of the industry that they should be looking at this solutions and adopting it as well.

Xealth is described as a digital prescribing platform, making it seamless for doctors to curate a more well-rounded treatment plan for any particular patient, which could include educational content, adherence tools, monitoring software, etc. Do you have data, or plan to track metrics, that indicate that this results in positive patient outcomes and decreases readmissions and other health system costs?

Let’s start with the product by taking a look at medication. Ten years ago, doctors used to write a prescription on a piece of paper, and you’d take a piece of paper to a pharmacy, and the pharmacist would fill it and give you the medication—now that’s all digitally enabled. But in healthcare there’s still a disconnect between the physician and health tech—a doctor’s handing you a brochure or writing a recommendation down on a piece of paper.

Xealth logoWith Xealth, the physician can prescribe articles; videos; pre-op educational pathways; post-op rehab plans; apps for managing diabetes, weight loss, behavioral health; cancer care survivor groups. We’re prescribing Lyft rides for transportation to surgical recovery. We’re prescribing meal delivery services. Really, we can connect the physician and then the patient to any digital service that facilitates patient care. For example, Providence has over 40,000 patients using CPAP machines, but the doctors don’t have a way to monitor if a patient is using it. We now provide that data to the physician to let them know if a patient is using the machine.

That brings us into metrics and outcomes. We’re a little early on outcomes, but we know that our email communications have a great open rate (80%) because we provide a seamless connection between the patient and the physician. The subject line will say, message from Dr. John Smith, and it’s sent immediately following the visit with that clinician; the patient knows it’s appropriate to his or her care.

Getting back to the CPAP utilization, we’re currently tracking over 40,000 patients and providing that data to physicians. Providence’s analytics team is just starting to go through that data and look at how usage affects things like readmittance rates. So we’re bringing data elements into the fold for research and analytics that allow us to drill down to costs and outcomes.

At UPMC we just launched educational material on a trimester basis for pregnant women- we have nine pieces of communication that will go out during the course of the pregnancy of more than 40,000 women. That’ll result in hundreds of thousands of digital patient engagement metrics, telling us, does the engaged patient have better outcomes and satisfaction than an unengaged patient? What content is most effective? We’re just now in the stages of rolling this out, so it’s going to take some time, but we will track the studies against cost, engagement, life expectancy, you name it.

Ultimately the data will help us to tweak and improve Xealth and the service it provides. When a clinician is meeting with a patient, we’re a giant, targeted, recommendation algorithm of what’s appropriate for any given patient—given their clinical data, psychographics, demographics, their eligibility with insurer and employer, their open rates on email versus SMS, their appointments scheduled versus missed, etc. And because we’re monitoring activity, we also have a hand in intervening and notifying the care team if a patient is at risk of disengaging or not complying with the recommended care. Over time you’ll see a much deeper algorithmic analysis capability, and I would assume it will eventually include genomic and biometric data as well.

Let’s talk about your customers. Are you customizing solutions specific to a health system’s challenges? Or is anything you develop with a partner turnkey, and integrated across the entirety of the Xealth platform for all customers?

We are not experts, nor could we even hire enough people to be experts in every single area of healthcare. Medical leaders at the hospital systems define their priorities for us and identify the vendors that they think are appropriate for their treatment programs. However, now that we have integrated 20 different vendors into our system, and we’re seeing a lot of cross proliferation. What we launched at Providence, UPMC wants to launch. We’re signing new customers, and they’re selecting the vendors they want to launch on Day 1.

When any vendor gets integrated into our catalog, it’s essentially available to the next customer that we sign on, but we still work with customers to learn about the vendors and solutions that are important to them. Then, we customize the configuration details- Do they want the physician to see a daily view of usage or weekly? Do they want two email reminders to go to a patient who hasn’t completed a task or three? It’s all about configuration and how the customer wants to adjust notifications to the patient or to their team. I want to be the de facto marketplace for clinically relevant digital services.

How will you ensure a consistent brand experience for both HCPs and patients as you continue to integrate vendors, content, and solutions?

Primarily, Xealth is a brand for HCPs. There is some brand recognition for the physicians, so I do want Xealth to be known as the tool and platform that solves the clinician’s workflow experience. But for patients, it’s a white label service, so a patient gets a recommendation for a Phillips device or a Medtronic device or a Weight Watchers program—not for Xealth. Xealth is the engine that delivers the information and tracks the data.

For the patient, it’s always embedded in the patient portal of the health system or whichever provider is being used. If a doctor prescribes an Uber for a patient to get to an appointment, Xealth is authorizing the ride and taking care of the payment so the patient gets a free ride and it’s coordinated with their appointment time. The patient’s experience is with Uber. On the monitoring side, we’re showing the HCP the arrival time against the surgical schedule.

Because we are collecting analytics, over time we think we’re going to help segment what’s appropriate for which patients. We’re integrating data and service in weeks when it normally could take years. This is so important for our future health because when you think about chronic care, most hospital systems have a one-size fits all approach right now. But many services that treat chronic conditions, such as weight loss programs or behavioral health therapies, are improved when you look at how they work for various genders, ethnicities, geographic regions, etc. We’re just going to be the tool that automatically recommends the appropriate care for that particular patient.

What are your steps for growing Xealth in 2018 and beyond?

First, I’m leveraging my existing customers. Providence and UPMC combined will probably put us in front of about 30,000 doctors that prescribe services to patients, and we’re now reaching hundreds of thousands of patients. I want to grow that in time, and after some technical implementations we’ll be reaching millions of patients. Through leveraging existing customers, we can gather data and metrics for things like clinician happiness and patient usage which will definitely lead to new customers.

Second, is signing new customers. I’m in contract negotiations with several other large health systems and the more systems that ask their vendors to integrate to the Xealth platform, the closer we move to become the most-integrated marketplace. So, we’re focused on new hospital system sales, solving their problems, and leveraging the data to help demonstrate value for future customers. We’re at 20 vendors now—when we get 30, 40, 50- then there will be very few vendors that are relevant in patient care that are not already in Xeath. We’ll consistently be positioned to better service the next system that partners with us.


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