Matt Scantland is principal and co-founder of CoverMyMeds of Columbus, OH.
Tell me about yourself and the company.
My partner Sam Rajan, who’s a pharmacist, and I started CoverMyMeds to address prescription abandonment. We learned about the problem when we built a prior authorization system for a health plan.
The idea for CoverMyMeds came to us when we looked at the fact that from the perspective of a doctor, it really doesn’t matter how good the prior authorization process is for any one health plan. It’s just one of dozens that the doctor needs to navigate. The idea of CoverMyMeds was, let’s create one-stop shopping so that the doctor can use one process to submit a prior authorization for any drug to any health plan.
Your Inc. 5000 numbers are pretty impressive with $19 million in 2013 revenue and 73 employees. Did you plan for that or did you just happen to hit on a niche that took off?
We’ve been thrilled with how things have gone. We’re growing over 100 percent a year since we started. We’ll do about $50 million in sales this year and have about 130 employees.
I wouldn’t say it’s any genius on our part. The prior authorization process is just incredibly painful for everyone that’s involved. The doctors and also the health plans have been looking to improve this process for decades. Working for them, we were the first to be able to create an electronic process that scales.
It seems you would have competition from someone like Surescripts if business is that strong. Do you have competition?
Surescripts launched a product at the beginning of the year that’s a little bit different than ours. Whereas our process works for any payer, whether the payer participates electronically or not, Surescripts is launching something that works just with payers that connect to Surescripts.
So far, because the PA process has not been something that’s electronic in the past, the value proposition of our service has tended to be much stronger for the participants, where with one integration in the electronic health record or in the pharmacy dispensing system, the PA can be submitted to any payer. We also lead the industry in connecting electronically to the payers, but the process works across the board.
It’s a fascinating business model that drug companies to pay for the service, which they fund from the revenue of what otherwise would have been unfilled prescriptions. Nobody who uses the service pays for it. How do you get the word out to doctors and pharmacies that it’s available and it’s free?
Being free helps. [laughs] You’re right, the drug companies and now the health plans pay for our service. This is a business that has what we call network effects, which means that the more people that use it, the better it gets for everyone.
We have a huge pharmacy network. Almost every pharmacy in the country, including the big chains, uses our service. When they initiate a PA, if the doctor’s office isn’t already a user, we invite them to become a user. Over time, we’ve built that physician network to more than 100,000 distinct providers. It creates that viral process that allows us to grow quickly as a network business.
You’ve connected electronically to EHRs and pharmacy systems. Is that work finished?
That’s really the future of our company, but it’s pretty new. We started in the pharmacy, which is where the PA process begins today. All over the country, the first time anyone tends to think about the prior authorization is after a claim rejection in the pharmacy.
Today, we’re integrated into almost every pharmacy in the country, right inside the pharmacy management system. We’re looking to do the same thing in the electronic health records, although that’s a new area for us.
We announced a partnership with DrFirst, where we’ll make the PA process available at the point of prescribing. We’ll also connect those pharmacies into the DrFirst system so that PAs initiated in the pharmacy can be sent to DrFirst’s doctors electronically. We’re also working with most of the other electronic health records, so I’m trying to do that same type of an arrangement. We’ve come up with a financial model where we can actually pay the EHRs to do that work. One integration is something that works across the board for every payer.
You offer APIs and also widgets for web pages of both health plans and manufacturers, which is pretty smart to get people to have access to your service through the other sites of the companies that you work with. How much technology is involved in what you do?
CoverMyMeds is really a software company. We don’t do any actual PAs ourselves. Instead, we provide the tools that let providers automate their process in a self-service way.
We provide the APIs. That’s been the main driver of our growth for both the pharmacy management systems to do the integration and then also for the electronic health records. All of those systems can integrate using NCPDP standards or a REST API that can reduce the work effort needed to actually do that integration.
It will surprise people that there’s a company in a very specific, almost obscure niche that has grown so large and is still growing. Do you think you’re under the radar?
Yes. We absolutely are under the radar. But when you look at prior authorization, this is a problem that happens 200 million times a year. This is daily life in a pharmacy or a doctor’s office — 200 million patients that get their claim rejected and potentially will go untreated if this prior authorization process isn’t handled.
While it’s under the radar, it’s really contributing to that $350 billion or so problem of medication non-adherence. In a lot of ways, automating the PA process is the missing value proposition in e-prescribing. It doesn’t make a lot of sense to have an electronic prescribing process if the doctor is just going to then go deal with a fax or a phone call with the health plan. This has become something that’s much more top of mind as life goes on here.
A lot of software startups are trying to find a pain point they can resolve without competing with big companies like EHR vendors. What advice would you have for them?
Listen to customers and solve a big problem. Ideally, do that in a way that doesn’t involve taking a dollar from someone else.
What has really worked well for CoverMyMeds is that this is a way to remove administrative waste from a process without cutting reimbursement to a doctor, pharma company, or health plan. Because it’s truly a win-win for all participants in the market, we have alignment and the help of large companies to make this thing get big.
Your website says you have a chef that creates lunch for employees every day, which is a kind of a Silicon Valley move, but you’re in Ohio. What’s it like working there?
[laughs] We think we’re one of the best places for technology and business people to work in Ohio. We consistently are winning these best workplace awards.
As a software company, we’re nothing without the people. We look at both how do we give a lot more value than our customers expect, and then also how do we give our employees a lot more than they expect? That as a result of that has let us get some great people and then they stick around with us.
As companies grow, there’s always that decision about what comes next – do you acquire somebody, do you get acquired, do you roll out other offerings. Where do you see the company going from here?
Prior authorization seems like a very niche thing. It kind of is, but at the same time, it’s also right at the intersection where a doctor is making a decision about the tradeoffs between the cost of a treatment and its efficacy. We think that that’s a fundamental problem in healthcare.
We have built both the network and the connectivity and then also the relationships with pharma, payers, pharmacies, and providers. We think we can help doctors make more intelligent consumption decisions. We think is a very large opportunity, starting with drug, but helping to get to more personalized medicine in terms of prescribing, and then also other procedures as well.
Because of the growth of the size now, we have a lot of interest from the financial and strategic partners. We’re always willing to listen. We think this is a very big standalone company on its own.
What else could be done with the network you’ve created? You have an athenahealth-type model.
That’s right. We look at athena as a great big brother of the direction that we’re looking to go.
There are very obvious applications. First of all, we’re fundamentally solving the first step in patient adherence, which is get the patient on their drug. The next challenge then is keeping them on the drug. That’s an adherence angle that many of our customers are asking for help with. That’s something that that both pharma and health plans are interested in. We think there are interesting collaboration opportunities there.
The other thing that we’re very focused on right now is helping the electronic health records make this PA process something that happens at the point of prescribing. Right now, if you think about e-prescribing, what you basically have is a shopping cart. The doctor orders a drug and the patient may or may not end up being able to actually get that drug. We think that putting this PA process at the point of prescribing allows it to move from what’s an exception process to something that’s much more decision-supporting for the physician. We’re very focused on helping the doctors and the EHRs achieve that.
Do you have any final thoughts?
I’d really like to thank the HIStalk community and you guys. You’re a huge part of my daily reading list. I don’t think there’s a more credible and important intelligent source as HIStalk in the whole industry. I’d just like to hear from people about what they think.
We’ve been thrilled with how things have gone. In a lot of ways, this business looks a lot more like a consumer Internet company than a traditional enterprise software company because of that network effect. We’re solving something that for a frontline healthcare person is a huge struggle. That’s been one of the most fun things, really, something that truly can impact hundreds of thousands of providers that make their life better. We just celebrated that 10 million patients have now gotten the drugs they needed that they wouldn’t have otherwise. At the end of the day, that’s what keeps us coming in in the morning.