Mike Long: How the Healtheon/WebMD Venture Inspired Others

Mike Long is the CEO of Essence Group Holdings Corporation, a health insurance and software company. He will sit on the Three CEOs Panel at the upcoming Health 2.0 Fall Conference. For more posts from the conference speaker interview series, click here

Matthew Holt: You were the chief executive of Healtheon, which later became WebMD, or merged with WebMD, and became one of the dominant players in this space. Just to start, many people know about the relationship between Kleiner-Perkins, Healtheon and that between John Doerr and Essence Group Holdings and Lumeris. But could you tell us a little bit about the goal of Lumeris, what you guys are trying to do?

Mike Long: In somewhat many respects the learnings that came out of the Healtheon/WebMD venture have really led to the founding of the EGHC group, which holds Essence Healthcare and Lumeris as the two primary operating companies. And because Healtheon/WebMD had a very ambitious mission if you follow this history, I mean it was well documented, and its intent was to use transferring information and connectivity to bend the cost curve and improve clinical outcomes. And it was a very ambitious mission.

Some very interesting companies were created through the Healtheon/WebMD initiative, and beyond WebMD a number of successful public companies and quite a few private companies spun out of Healtheon/WebMD. But if you look at the math it was a little over trillion dollar industry when we launched Healtheon/WebMD, and it’s a $2.6 trillion industry now. So we failed in our mission to bend the cost curve of healthcare.

And so about six years ago John Doerr and I and some others decided to try a new initiative with a similar objective but of course the landscape of healthcare had changed. There were some very positive trends around the availability of digital information which was fairly scarce in ’99 and 2000. Basically only the health plans had digital claims databases and providers still had very limited digital information certainly not on the national scale.

Of course in 2006 we weren’t fully aware that there was a trend where healthcare costs were going to contribute to breaking the balance sheet of the country. And as this healthcare cost had been accelerating at three to four times the GDP growth of the country. So rather than launch Lumeris initially, which is our technology company for enabling accountable care solutions — we actually built our own accountable care delivery network.

So we built an accountable delivery system and we established a population of about 40,000 people. We took responsibility for delivering and managing their healthcare and reduced it, and that’s what Essence Healthcare is. We used it as a laboratory and we set almost five years measuring result of applying capital and technology and learnings to population’s health.

And then two years ago we evaluated the results that we were achieving in four major areas one is improving clinical outcomes, two is reducing cost at the population level, three is improving the patient experience and satisfaction with the system, and we added a fourth measurement criteria of physician satisfaction because we believe strongly that physician aren’t particularly happy as a class. It hasn’t turned out the way they had hoped in practicing medicine.

So we established those four criteria after about almost five years of experimentation. We felt that we had developed technology and learnings that other companies who were interested in accountable care would be interested in. So we capitalized Lumeris separately and launched it in the marketplace last year. And so that’s the background of the company and how the company came to be.

Matthew Holt: Great, so there are two pieces to this, right? One is the issue of the technology and what are the requirements and what did you find out after this experimentation?

I want to talk about sort of the rolling it out nationwide, but just focus on what are the technology requirements that you have to put together so that people can do this correctly?

Mike Long: We’ve spent six years modeling accountable care and breaking it down into what we call 22 core competencies. And this is around managing those costs, financial and economic and clinical outcomes.

So when you break it down into these 22 competencies, that gives you a road map to where you need to apply capital and technology. And using a Silicon Valley view of the world, if you can reduce a problem to capital and technology, and I would attribute that as certainly a John Doerr philosophy, then it’s solvable. And so once we broke it down into 22 competencies, we then think technologically enabled each one of those competencies inside of what we call a white cloud architecture.

And so obviously leveraging the latest and greatest in cloud computing because we are talking about massive data integration on a very large scale and then once you integrate the data probably you apply intelligence to that data and how do you get it to the best decision maker in the healthcare value chain at the right time, right place, right time, right purpose and right person?

So that’s basically what we do, is we convert this massive increasing digital store of data in healthcare into decisions. And the decision makers we have identified about 25 personas ranging all the way from obviously the patient, the caregiver for the patient in many cases to the primary care physician to the chief medical officer, to the health plan, to the CFO of hospitals. I mean just checking four or five of the 25 personas that essentially log into our platform and it’s obviously HIPAA-compliant and secure and we then, we position the data inside of a workflow that is particularly relevant to the kind of decisions that makes it drive these improved outcomes.

So the underlying technology, it can only be done with cloud computing, it cannot repurpose client server computing and there is a lot of what we call black cloud computing out there where a lot of client server applications are being receded to take advantage of the leveragable date storage and shared system software, from a shared services environment, but it’s really about collaborating around the data how you move the data through the network and manage access to the data in a secure way, but also apply a decision support and care coordination against the data.

Matthew Holt: All of the 22 the underlying architecture and the unlike system, the white cloud and the 22 applications that you build, they were all done from scratch, you didn’t acquire somebody else’s applications to do that?

Mike Long: No what we did was we built the architecture first, we call it the accountable delivery system platform and because we needed an incredibly open architecture, and that open architecture needs to assume that our platform can work with any existing applications in healthcare. I mean healthcare — we have to engage the healthcare system the way it is as opposed to the way we might idealize it by the software laboratory.

So what we’ve done with our 22 competencies which tend to kind of organize, self organize into about four disciplines around accountable decision enablement, enhanced secured delivery, cultural and financial alignment because behavioral economics is so critical here and then what we call administration and operational services. And we then many of these — some of the key this 22 competencies we felt there was not a best of breed brief offering in the marketplace and we built it ourselves and implemented as a application service in our architecture.

And then we’ve gone out and partnered with other companies who actually had a best of breed application and in many cases — and we have enabled it inside of our architecture because our goal is not to rebuild what may already exist that is highly applicable to accountable care, it was to fill the gaps to provide the architecture and the flexibility and to fill the gaps so we needed to fill the gaps and because time, time to value here is critical for the country. I mean we have to solve this problem as quickly as the industry can.

And then we also find with customers that they have an inventory of applications either that they built themselves or they acquired through vendors. And then they put the commitment to it that they look to us to see if we can leverage it and extend its life. So we incorporate in-house software, third party acquired software along side the applications that we had built inside the architecture.

The goal was to get a solution that solves the problem as opposed to putting another proprietary piece of software in the market that’s really driven by the vendors’ goals as opposed to the industry’s goals.

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