HIStalk Connect Interviews Steve Cashman, Founder and CEO, HealthSpot

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Tell me a bit about yourself and HealthSpot.

We’ve been seeing trends with the Affordable Care Act and all the newly insured people that will be coming into the healthcare landscape leading to physician shortages. I’m a tech guy from other industries, but what I know about is using technology to solve problems. 

When you sit down and you look at healthcare, you can see the rate of urgent care growing with many new high-cost scenarios. Telemedicine is going to help us bring better continuity of care along with more flexibility for physicians.

I started researching telemedicine and came across a lot of companies that raised money to do online care, such as American Well — these companies that for the last five to seven years had been hyping Skype-like telemedicine visits. It puzzled me why there wasn’t adoption of that type of technology from payers, from doctors, and from consumers. I started looking for the answers to that question.

When you go to the doctor and you talk to him about different online healthcare options, they’d say, well, that’s great, we can see each other, but I can’t do a lot for you via video. The doctor needs your blood pressure; wants to look in your ear, nose and throat. I started thinking about how do you make telemedicine practical to a doctor?

A doctor should think of telemedicine as a tool, just like he thinks of a stethoscope or any other piece of equipment that they use. It’s a tool that can be used to get the job done. Intrinsically I felt like any MBA student – frankly, any high school math student — could go through and show you the efficiency that could come with telemedicine. One doctor’s reach can extend to a lot of places. You really have to focus on how you get people to use telemedicine as a tool to make their job better.

With HealthSpot, I started working with doctors and trying to find out what remote services meant for them in terms of saving money. For example, I asked them about upper respiratory and ear infections and all these other kinds of illnesses that are being sent to urgent cares. What do you need? What type of technology do you need and how would you like it to work?

From that research we created the HealthSpot kiosk or the HealthSpot station. The medical equipment needed to do a remote visit is still quite expensive and it needs to be hooked up through an FDA medical device status system. The doctor on the other end needs to know he or she is really getting your blood pressure, your vitals, and your pulse-ox. We created HealthSpot as a tool for doctors to say, hey, I can sit right here where I am today, but I can bring my capability to a lot of places.

Our vision is to create a very high quality, very rich environment while using the same tools a doctor uses today, but empowering them through IT technology. We built HealthSpot for providers to have a new tool in their arsenal and it’s gone very well. We’ve got a lot of health systems using it.

The other piece we looked at for research was to start focus groups in healthcare, which is what you do a lot in the consumer businesses that I come from in the AV market. You look at the consumer’s experience when they take a new iPad out of the box or buy a new Samsung Galaxy or they go to the Verizon store and walk out with their phone. It’s all about that experience. That’s what we’ve tried to wrap up for HealthSpot – the best consumer experience possible.

But you also have to make it applicable. When you start looking at the misuse of urgent care or emergency departments, when you start looking at readmissions, specialist follow-ups, bundled payment and accountable care and all these things, you can take HealthSpot and apply it to most of those things. It’s an incredible tool for doctors and solves a business problem for these large health systems and other groups, including payers. That’s basically what we do.

 

What are you seeing in terms of adoption?

Over the last 12 months, we’ve been live with about a half dozen health systems across the country. Most of them have two to three units out there that they’re using, first to get standard protocols, operations, and stuff going.

Depending on how the HealthSpot station is being used, it affects what the daily utilization rate is. Some of these health systems are using them in their urgent cares for overflows when they get backed up. We have seen as many as three to four patients in an hour, meaning that you could see 30-40 people a day if you had it opened all day with that type of foot traffic. Most of the time, we’re seeing six to 10 people a day, but we’re only being used in a lot of peak hour situations.

We’ve recently contracted over a few hundred units to be deployed in 2014 in retail pharmacies and some other venues. That’s when we’re going to see a real, true implementation of what we envisioned for HealthSpot. That is when it will no longer be used as a stopgap, but as a platform instead. That’s when we’ll see the ultimate efficiency.

We have about a dozen out there. We’ve got orders for a few hundred. We’ve got about 10 to 20 health systems in the pipeline. We’ve got top retailers ready to roll them out.

When you think about utilization and when you look at urgent care and you add up all the overhead of the doctors, nurses, and facility, you need about 26 appointments a day to break even, even with the inflated rates you get in urgent care for billing. When you look at HealthSpot, if you put one in a retail pharmacy or an employer’s site, you get that overhead shrunk down to just our kiosk and a medical attendant there. You then only need about six appointments a day. You go from a 26 a day appointment overhead to a six a day overhead. You’re also allowing a doctor to be seen across 10 locations, for example, versus 10 doctors in 10 locations in other healthcare settings. You get a lot of operational efficiency with HealthSpot.

 

Are you placing HealthSpot kiosks in malls and like other high foot traffic retail environments or are you focused on providers, pharmacies, and medical environments?

The original vision was to replace Minute Clinics, Take Care clinics, etc. Retail clinics have failed. Between Walmart, Walgreens, CVS, Target, you name it, those guys have spent about three to four billion dollars on their retail clinics today. They have only 1,600 out there out of 16,000 pharmacies in America. Every one of them loses money operating those. None of them are getting the heavy foot traffic they need to counter that overhead.

They’re disconnected from healthcare. If you walked into a CVS or Walgreens today and said, hey, I want to see a doctor from Mayo Clinic or Cleveland Clinic or Hopkins and a specialist follow-up or a dermatology appointment or behavioral health, they can’t offer any of what a telemedicine visit could, where you’re seeing a high-quality doctor. With retailers, you’re seeing the person they have employed there. Our vision is that we absolutely go after the retail model and we’ve contracted a large number of retail units for 2014. Where we wanted to start with was going after the health system and making sure that doctors see HealthSpot as a tool. We want this to enable. 

Imagine walking into any pharmacy in town and being able to see one of their doctors there. They can treat you at a fraction of the overhead, 60 percent less overhead than they could at urgent cares, for example. You get that type of convenience with that type of formula. If you need a referral to go in, you’ve got that copy of your care from HealthSpot and the records are all bound up. Being in a pharmacy also makes a lot of sense. College campuses and all of those venues are where we’re focusing on.

But once again, what health systems like to do is bring a HealthSpot station internally. They like to put in urgent care in an emergency department where it solves an immediate problem. They like to get their doctors acclimated to using it. Think about where the ATM machine started. Think about where we would be in online banking today if the ATM machine hadn’t happened. Fifteen years ago, you were in an environment where you always used a clerk to get money or to get anything. And then it wasn’t.

It’s how you get consumers to adopt it. They weren’t just conveniently going to go on some random website to try things. They tried an ATM, they got their statement a month later, it showed they took 40 bucks out, and they trusted it. It was the first time they used something besides a person to get access to finances. Our HealthSpot kiosks represent the same thing. It’s a semi-manned model and it’s trusted, so the next step is rolling out these retailers. We want to create access to low cost, high quality access to care.

 

Can you provide more details on the cost differences between a HealthSpot station and retail clinic inside of a CVS?

When the average retail clinic builds out a store, they take 350 square feet. HealthSpot takes 40 square feet. That’s a lot of cost overhead. So 350 square foot versus 40. Then you look at the cost of that. On average, retailers spend $250,000 to build it out and get permits and all that.

In our units, there is a $15,000 implementation fee to install. Then you look at the ongoing overhead. With two nurse practitioners to be open seven days a week, eight hours a day, they owe about $400,000 of office overhead and payroll and everything to run that. We need a medical attendant at about $30,000 to $40,000 a year. So $400,000 versus $40,000 a year in overhead. Then you go on to the scopes and then you get your next problem.

Those are the real facts on the overhead, so it’s a dramatic cost difference. The second problem is a marketing awareness problem. It also deals with who the doctor is. If you look at CVS or Walgreens, they have about 2,000 nurse practitioners on payroll. None of those have any established businesses or credibility.

 

So the retail clinics are investing in marketing.

They’ve got to market that solution out to the general public. But what we do is, we would partner with Tenet in Dallas, for example. They’ve got millions of customers around Dallas that are coming to their urgent cares and coming to their family practice doctors. All of the sudden you have a marketplace for this service. HealthSpot brings foot traffic through that marketing exercise and adds the credibility.

What happened when Minute Clinic opened is they said, hey, we’ve got a nurse practitioner in there. Every doctor in town thought that was competing with them. When a consumer would say, should I go there if you’re closed on Saturdays or you’re busy that day? The doctor’s going to say, “Oh, I don’t know if they’re any good. I don’t know what their standards of practice are.” That created a lot of credibility issues with them.

The marketing issue comes down to a lot of brand presence. When you understand consumer marketing, you see there’s a lot brand value. When a person in Ohio sees that a HealthSpot station is run by Cleveland Clinic, it’s a form of brand validation. It’s the same reason a lot of employers are run by health systems. They’re outside clinics. They know it’s a quality experience that’s there. There’s a lot of market triage capability.

 

Let’s say you drop a HealthSpot kiosk at a mall and promote seeing a Mayo Clinic doctor. How do you deal with the EHR challenges?

We’re PHR, patient health record. We actually maintain a copy of the record for the consumer. They can exchange that with the doctor they see via CCD.

The nice thing is, unlike urgent care or whichever doctor you pick to see that’s licensed locally, you don’t have to fill out all the medical history forms. You don’t have to do that because we’ve got that in the PHR and we extend that with the doctor you choose. He can get right into seeing you and then you get your record out afterwards.

 

One of my favorite healthcare business quotes is “hospitals are cost structures in search of revenue streams.” HealthSpot is attempting to disrupt a large cost structure system. How does that fit with devices like the Scanadu tricorder?

Our vision long-term is to be in your living room, just like we are today on Skype. The way I do it differently is I’ve taken a look at how the consumers adopt stuff. When you look at the market segment, there’s a ton of people, Medicaid, Medicare Advantage, everything under the Affordable Care Act. Those people can’t afford a $30 co-pay and skip appointments. The tricorder’s great, but at the end of the day, you don’t offer medical advice. You’ve also got to work it with the Medicaid and with the medical laws, whether it’s considered a side of care for reimbursement.

We are pushing the envelope in getting medical boards to allow you to get care with a nurse on the other end via telemedicine in more than 50 percent of the states. You have to be able to convince those medical boards that the living room with a tricorder is going to beat the standards of care that they have when I’ve got $10,000 worth of medical equipment that’s FDA approved in a kiosk, and they still aren’t comfortable with it.

This isn’t about whether we can make a DVD player for $35 and rent movies for a buck at Redbox. This is how do we move an industry that has a regulatory reimbursement consumer physician adoption model that today, I could have $10,000 worth of healthcare and telemedicine gear hooked up over an FDA gateway and I can still go into many states and they say, no, that doesn’t meet our medical board requirements. 

That’s great that you can create a tricorder. I can take the $30 camera off this TV and bundle it up into an otoscope and slip it somewhere in a lot of the cases that are on cell phones. It doesn’t meet the needs of the medical boards, the regulatory boards, consumer and physician adoption. And so why Chase Bank, the first people that adopted online care, were the people that used the ATM especially frequently to deposit cash checks and stuff.

We’re going to build a brand for our kiosk via HealthSpot. We’re going to build consumer trust and physician trust. When the adoption term starts to swing with the medical board for regulatory for reimbursement towards a living room, I’ve already got a doctor not working across the country for your next offers. I’ve already got consumers that trust when I go to a HealthSpot that works. The technology’s good. I get a quality doctor. I start to move across that.

It’s the hype cycle of adoption that you see. Why did the first MP3 players take off versus the Apple iPod? You could have done MP3s for eight years. And then Steve Jobs came out, brought it all together in a nice package. The music industry finally adopted it with digital rights management, so that it was legal versus illegal with Napster for music. There wasn’t a tech problem. It was a business, regulatory, and consumer adoption problem. That’s the same thing we’re dealing with with healthcare. That’s why I would say their hands are tied.

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