Stephen Malik of Cary, NC founded patient portal vendor Medfusion, sold it to Intuit in 2010 to create Intuit Health where he served as president until June 2013 , and announced last week that he has purchased his former company back.
You’ve said you were looking for healthcare IT investments and decided that your former business was the best one. Having looked around, what other kinds of business in healthcare IT did you find that really were or really weren’t appealing?
I’m a limited partner in multiple funds. I’ve got an opportunity to look at both entry-level, growth stage, and a little more advanced than that. Of course, a number of these VCs are looking to do more in health IT. As you know, it’s a hot area these days. About time, right? Especially around here. Pharma has been so hot, so it’s nice to have HIT take the lead flag.
I’ve looked at a lot of them and had some support from analysts. It’s been great. Inevitably in these meetings 30 minutes in, they all want to start talking about patient engagement strategy, how critical that is to Obamacare working and ACOs, etc. I agree with them that it’s critical and the next wave of opportunity to help improve people’s health and reduce cost.
At the same time, their traction was in most cases 13-14 years behind where we were with Intuit Health. I’ve been on that journey. I know how hard it is to change behavior, both for the staff of the physician’s practice and also for patients.
Having developed a secret sauce over a long period of time that’s working well here, I was concerned for them, in many cases, that both gaining adoption as well as the challenges of selling in the medical space, even though there’s a lot of consolidation these days with hospitals buying practices … You’ve been in the space a long time. You know there’s still an awful lot of five-doc and under practices that require a huge effort to get them to adopt IT in terms of the initial sales and marketing efforts you have to put into it. Distribution has been the biggest challenge for most of them.
That’s why for me, being able to get the old Medfusion — currently Intuit Health — back and take advantage of 8 million-plus patients and 100,000 secure communications a day plus … that engine that’s already going is a great distribution channel to use startup-type methodologies to put solutions on our platform and see how the market responds to them, to build an agnostic solution that goes beyond just the tethered portals that are mostly the checkbox that a lot of folks in the industry are choosing right now. I get that. It’s an easy answer. It comes with their EHR/PM.
But frankly, when we look forward, as we look at the larger community type plays that are becoming more and more predominant, all of them have multiple IT systems. Being able to have an agnostic solution that can work across various ambulatory, acute, pharma, lab, etc. solutions in places where a consumer actually wants their data, and being able to leverage on top of that applications and innovation that is teeming in the space right now. Then pick the winners and go in a little deeper with them in terms of what’s available with integration. We think that’s a winning strategy.
To answer your question, if I was going to put X millions of dollars into some startup, to be able to build a platform that’s robust enough to allow them to have distribution seemed like a really good opportunity for me to apply the relationships I’ve built over all these years in the space. Also to invest, but to make a broader bet than just individual potentials that could turn into something.
Usually when someone buys their old business back from an acquirer, it signifies some difference in opinion of how the acquirer ran the business and often involves paying a fire-sale price to restore it to its former glory after the big business has decided it wants to move on to something else. What are your thoughts on the business moving from Medfusion to Intuit and now back to you?
I have nothing but praise for Intuit. I learned a tremendous amount being involved with a Silicon Valley software giant. It’s plenty of hard work and process that goes into making their products delightful. Anyone who’s used TurboTax, Quicken, or QuickBooks knows it works great for them. They get the value of out of there and they solve problems. To be able to add that knowledge and experience base to my previous history, I’m thankful for that, thankful for the contacts, thankful for the training, and thankful for the investment.
They put a tremendous amount of money into our product to focus on scalability, reliability, privacy and security. It’s the kind of investment you make when you own TurboTax because you can’t afford to have problems in that arena with a smaller BU. All of that puts us in a great position to move forward.
Surely there are some parts of the larger organization that don’t move as quickly. Even my first week back, I’m reveling in the ability to make decisions a little more quickly without bringing in as many people. Thankfully I think that what they did was give is a great platform to move forward. We’ll be a lot more entrepreneurial and focus on innovation moving forward. I’m looking forward to that.
I’m happy not to be flying to California at the rate I was and participating as a corporate officer. Certainly running a BU requires some participation in corporation events that while important to the team you’re playing on, don’t allow you to spend as much focus on your own business unit. I’m glad to be freed of those responsibilities.
All in all, I think they set us up well for success moving forward.
Intuit wrote down $46 million when Allscripts bought Jardogs. What could Medfusion or Intuit Health done to be less reliant on a single customer that was large enough to at any point buy or build their own portal product and finally did?
They acquired someone, so yes, versus building it. I wouldn’t say we’re as reliant on Allscripts as people would like to think. We’ve done very well in other segments.
There are a number of EHRs that have more flexibility and openness in being able to write to their APIs or to integrate with them. Look at Jardogs. They were successful without Allscripts’ help in doing a guerrilla-type integration. Our ability to execute in the marketplace, while Allscripts continues to be a good partner … as of the moment, we’re officially their preferred solution. We have a tremendous number of doctors that are mutual clients. We’re very strong in the areas where they’re very strong. I don’t see that necessarily going away all that quickly. They have such a large base, it’s going to take many, many years for them to bring those solutions up to speed and be able to handle those kinds of volumes.
A big part of our experience is that when we started to put a lot of utilization through the system. That’s where the kind of investment that Intuit made really benefitted us. Keeping up a multi-tenant, SaaS-based solution that has tremendous volumes going through it is an engineering challenge that goes beyond having snazzy features.
I think it’s a good business move for PMs and EHRs to have their own solution, but the large market trends are definitely in favor of an agnostic solution. When we go out and look at larger communities — the ones that are doing the acquiring and growing and eventually the ones that will be ACOs — on average, they have over 45 different IT systems. I’m willing to bet, obviously, that patients don’t want to go to 50 different portals. To be able to provide a consolidated, easy-to-use experience for the patient across any doctor that they go to, I think plays a different role than just a tethered solution to an ambulatory answer, for instance.
What do you see as the long-term future for patient portals?
Obviously I’m making my bet on the fact that I think the community is going to want to have their website with their brand that they’re able to consolidate and allow a patient and family … most families have one person who manages the healthcare for the family. If they’re a nuclear family, they’d like their kids, their spouse, and any other care they’re doing all consolidated. I think the future is all about “do it for me.” One of the big challenges with the solutions that only work for one doctor is that you’re still entering information a lot. In today’s rapidly more and more digitized world, it makes a huge difference for a patient to be able to get a chart summary, to have all of their history there, and then be able to consolidate that across all their doctors.
You asked me about interesting companies that I looked at. There are a plethora of very interesting solutions around discharge management, care coordination, disease management, etc. I think they’re part of that future. I think what’s going to happen is that innovation is going to come into our space like it has in financial services and others that have digitized before us, and I believe the consumer is going to want one place to go for all their health information. They’ll want it portable. They’ll want to leverage the trusted relationship they have with their doctor. I think docs are going to say, OK, you have diabetes, this is my preferred diabetes app. I’d like to essentially prescribe that app.
From a “do it for me” perspective, folks like us will add value to those applications with one place you log in, tying into sensors and other kind of data that’s going, and then consolidating that information and sending the pertinent information with alerts back to the providers on the back end. We’ve seen that kind of innovation in other spaces. To be frank with you, I don’t know if that’s 2020 or 2016, but what I’m going to try to do is make that happen sooner rather than later.
Are you going to use the Medfusion name?
We’re having a contest with our employees and with customers. We’re going to evaluate the right name for the direction that we’re heading into. I’ve said a couple of times that I love the name Medfusion, and for all I know it may be the one that bubbles to the top, but I’m going to use this opportunity to make sure we’re appropriately branding ourselves for the direction we’re heading. I’d love to have an answer for you right this minute. You were right, I’m not really answering. [laughs]
Any final thoughts?
I gave you such verbose answers I probably answered one or two of the questions you were going to ask [laughs]. I appreciate the opportunity to talk to you. You’ve got a site that everybody in our space looks at. You’ve done a great job with that. It’s certainly one I check out on a pretty regular basis.
I think we’re going to have more news for you. I wouldn’t have come back to do something little. I’m intending to really try to accelerate the business and stay ahead of some of the trends that are out there.