Neil Smiley is founder and CEO of Loopback Analytics of Dallas, TX.
Tell me about yourself and the company.
My wife and I live in Dallas. We have three children, all grown with now kids of their own. I have a computer science degree from Dartmouth and spent the first 15 years of my career in management consulting, first with Accenture and then EY. Then in 1997, I got the entrepreneurial bug and decided to leave consulting and start a company called Phytel. It is a software as a service platform company that, over a number of years, we grew to serve about 30 million patients. Phytel, along with another company called Explorys, was acquired by IBM as part of their launch of the Watson Health platform in 2015.
Loopback Analytics, where I serve as CEO, spun off that effort in 2009. The company provides a cloud-based platform we call EpisodeInsights. It enables health systems to proactively identify at-risk populations, match those patients with the appropriate services, and then evaluate the impact of those interventions on outcomes. The platform allows provider organizations to selectively and securely share data with network partners across care settings to coordinate care beyond their own walls, certainly outside of facilities they own. The key there is protecting data that should not be shared and sharing data that should.
How do you differentiate the company in a crowded population health management and analytics market?
We don’t go to market as just an analytics play. Instead, we’ve focused around specific solution areas where we feel like we can have a meaningful impact. Then, we’ve developed the specific competency within those verticals — specialty pharmacy, behavioral health and high utilizers, and then this area of bundled payments. When we go to market, it’s typically not to sell, “Here’s some analytics. Why don’t you go plug it in and see what it can do?” We come as a value proposition built around our return on investment, specifically around one of those verticals.
How do you address specialty drug use as a significant driver of cost?
There’s an interesting trend that’s happening. Our primary customers are large health systems. For a long time, they have been banned from managing limited distribution specialty pharmacy, which is the leading edge of innovation. Folks are concerned about how much these new meds cost and whether they’re worth the money. We equip health systems with a framework so they can establish real-world evidence around what they do and leverage the fact that they have a much better opportunity to coordinate all aspects of the patient’s care — particularly a complex patient who’s on some specialty therapy — and differentiate how well they can do that relative to potentially other distribution channels.
We see big pharma as being under increasing pressure to provide real evidence that there’s value. Pharma would like to do that, but struggles. How do you set up a measurement framework that you can believe in and all the parties can agree upon? This is where our company is going — providing a foundation for managing value-based care reimbursement models.
Some drug companies are hinting that they are willing to go at risk in getting paid only if their drug delivers the desired outcome for a specific patient. Are those companies showing interest in using provider data to monitor the process?
There’s a couple of problems to solve. One is that absent some kind of independent arbitrator, our role is as a data custodian. We can pull in data from a number of different sources that’s needed to complete that picture, but not be beholden to any one aspect — pharma, the health system, or in some cases, drug distribution centers. How do you provide a degree of independence so that as we’re looking at the efficacy of an intervention, it can be evaluated objectively? It’s interesting.
We’re seeing something similar with medical devices. Manufacturers are interested in engaging with health systems, potentially going at risk and getting into the clinical outcomes business rather than selling a widget and saying, good luck with that. It’s a requirement that for them to continue to defend their margins, they have to be able to point to the value that they’re creating.
We take data availability for granted these days, but these conversations couldn’t have happened five or 10 years ago
That’s absolutely right. Even today, how to share that data is a sensitive topic. People are obviously and appropriately sensitive about sharing protected health information, because if there’s a breach, that’s not good for anyone. The key role that we play is not to put all the data together and share it indiscriminately like it’s in one big pot. Instead, we very selectively share data around populations that individuals or stakeholders have in common, but then be able to protect the data that doesn’t need to be shared. If you don’t have that sort of governance structure, all the technology in the world isn’t going to help you.
Hospitals and skilled nursing facilities have mostly ignored each other and didn’t share data. What benefits are they seeing when they work from a common pool of data?
It’s a relatively recent phenomenon. Until there are financial incentives for these parties to come together, there’s just not a business reason to do so. It’s really the emergence of ACOs. We’re intrigued with this relaunch of bundled payments with the BPCI Advanced that CMS announced a few weeks ago. These provide the financial incentives for stakeholders to get together. Previously, they’ve each done their own thing, leaving a patient to be their own general contractor.
We see a tremendous role for us to come alongside the health system that wants to form a network with the best quality providers and hold them accountable for quality of care, but also the economics of the care that they’re providing with aligned financial incentives. If you’re doing a great job, you stand to profit from it, but if you’re not doing a good job, then it’s going to cost you. I’m excited about the emergence of these new models. They are going to pave the way to a higher degree of care coordination than has existed in the past.
Is that kind of vertical interoperability going to be more important than expecting competing health systems to share patient information?
Folks are increasingly aware that the social determinants of care play a significant role in terms of patient risk factors. Clinicians, for the most part, have ignored these characteristics.
We’re doing an intriguing project in North Texas. We have the largest health systems, many of which are competitors, getting together with the criminal justice system, jails, and the outpatient mental health services. They are knitted together through our platform to impact a difficult problem, which is unmanaged behavioral health issues with high utilizers who, up until now, were bouncing between the jail and the emergency departments in a way that is unsatisfactory, both for them and also for the community. With these kinds of formerly intractable problems, there’s a real opportunity, with the right kind of precise data sharing, to begin to make an impact that just wasn’t possible before.
What lessons did you learn from Phytel that you can apply to Loopback Analytics?
One of the things that allowed Phytel to take off was providing a return on investment guarantee. We basically said, we have the data flowing through the platform. We can ensure that a physician who’s now being held to pay-for-performance or trying to manage their practice more effectively by using targeted analytics and getting patients the care they need can benefit via to their bottom line. It was doing well by doing good. You have to connect the dots. It helped, of course, that we were doing all this at a time when population health was becoming more mainstream, so we rode that wind as well.
This continues to be one of the key challenges of anyone who is trying to innovate in healthcare. We still have a predominance of the fee-for-service reimbursement model, which often pays people to do things that aren’t helpful to patients. We have to pick around the edges still, finding those intersections where we can provide better outcomes, make providers more money, and reduce cost. If we can’t do all three of those things, then we have to stand down until reimbursement models change.
Your hit a home run with your first swing of your entrepreneurial bat with Phytel. How would you assess today’s health IT business climate with regard to innovation?
I don’t have a crystal ball, but I will say that if you’re trying to launch a health IT initiative on soft dollar benefits, it’s a lot harder. If you can find the intersection where there’s a compelling return on investment, those are the kinds of initiatives that I would get more excited about. Healthcare is entrenched and isn’t as nimble as a lot of other industries that I worked with in my consulting days. You have to have something compelling to interrupt somebody from their current set of priorities. Typically, it has to make financial sense for them to change.
Do you have any final thoughts?
Healthcare is in the middle of historic transition from volume-based to value-based care. The pace of change is uneven and messy. I don’t have a completely rosy picture that it will all be up and to the right. Perverse incentives still work against the goals of better outcomes and lower cost. Thankfully, what started out as this small niche play a few years ago is steadily expanding as value-based reimbursement models become more pervasive.
We’re particularly excited about the relaunch of bundled payments by CMS as BPCI Advanced. Initiatives like that provide an opportunity for providers to make more money by doing the right thing and improving the care system. It’s a rare opportunity to get visibility, specifically data of full episode claims, to inform their network design and prepare for broader adoption of value-based payment models. I would certainly encourage health systems and physician group practices that have an opportunity to at least apply and get their data. We’re putting a lot of effort into that.