Automating healthcare claims for providers

Chris:

I'm excited about today's podcast because it is our first podcast here at persimmon with one of the healthcare startups that we work with, and that is CEO and founder of  DocVocate Hanes Singh. We're going to talk about his journey in startups, a bit about what claims are and why they are important and a tip of an iceberg of problems for providers, and also Hanes's learnings and advice for healthcare entrepreneurs. Hanes Welcome to the podcast. We've been working together for about two years now with DocVocate. For our  audience, can you please introduce yourself and kind of the shortest elevator you have in your back pocket around doctor get kids, we'll go more into that later.

Hanes:

That's as to thank you, Chris. And thanks for having me today. It's exciting for us too ,because we've been working together for a couple of years. And it's been fun to see how persimmons come together. Congratulations, we'll put that together as well. Hey, saying the California kids and goals want to be an entrepreneur. Just a quick bit on  DocVocate . And as I come from a family of physicians, my brother's an orthopedic surgeon, my wife is a pediatrician. So I've really had come to understand the physician experience and, you know, combining my Silicon Valley roots with watching how how painful it can be for providers and patients to understand their insurance, let alone utilize it and, you know, pay for health care. You know,  DocVocate was born out of that, and what  DocVocate really  is, is we believe that the ultimate, we live in a self driving car, you know, I guess version of healthcare payments, where we all don't even think about the payments too much. We just go and get our health care and the payments are handled in the background, and much like swiping a credit card at the grocery store. And so you know, that's our vision, we're working towards that. So we're bringing automation to providers first, and helping them kind of collect revenue. And from there we have a broader vision to help the entire system.

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Chris:

Awesome, I think we'll unpack some of those automations and a little bit. Now our audience is healthcare, innovators, wherever they are, they could be inside of health systems, inside of payers, or startup founders like you and our mission is to help them succeed by learning about other innovators' journeys. And I'd like to start by talking about your journey. And I think it's fascinating. You studied bioengineering and computer science, then studied and went into law. And now you're an entrepreneur, an entrepreneur within healthcare. Tell us about your journey from engineer to lawyer to an entrepreneur and what motivated you along that path.

Hanes:

It has been quite a journey and I like to joke that with my family and friends that knew me back then that I'm much more like the younger generation today when I was younger. I was wanting to learn more and I took a gap, I took as you took time, between undergrad and loss and law school which now is the preferred route. So I did you know I have a unique journey from the beginning. For me, when I went to college, I was very self aware that I didn't know what I wanted to do. My father was an engineer. And I didn't really,  I knew what he did, but I didn't, I just did what he did, and not what even what other engineers did. So I just, I was self aware enough to pick a major, I love technical stuff, I have the technical mind and interest. So bioengineering was really just a way to say I want to learn a lot, it was the most sort of unit intensive and broad technical major at the time at Berkeley. And so from the very beginning, I was setting up this sort of multi, multi discipline path, I think, it just turned out that I was in school during the.com era. And so I was lucky enough to join an early stage startup in 1999, late 98, and 99, I left school actually, before finishing to join that startup. And, you know, kind of quintessential.com, we're pizza boxes in an apartment, just, you know, staying up late at night, building a website out. That experience was about a year and a half long before we came back to school. And that experience, really, I think, laid the groundwork for where I am today, honestly, at the age of 19. I loved it , I loved every aspect of it, and how you had to kind of do more than just kind of one thing. But I was also humbled and learned that I didn't know anything about fundraising. And we got involved in some patrol cases where we were just young and getting taken advantage of. And so I thought, Okay, I have a technical blind and technical skills, I need to pair that with understanding the system. If I want to be an entrepreneur that stands on my own two feet, I need to have a diverse skill set. And so from their work does it like you said, as a computer scientist for two, three years, and then set to go to law school to become an IP attorney and a patent attorney. So it has the technical angles tied to innovation. I thought I'd work as an attorney for two three years and pay off some loans and then move on back into the tech industry. And somehow two, three turned into 9-10 pretty quick. And so while I was working in, I got lucky to represent Apple and some other large companies. It's one of those major cases against Samsung that believes the iPhone. And once I got into that IP world, I you know, took to it. And finally, ultimately, at the back end of that I went in-house at a tech company, a fin tech company called 0, X-E-R-O, Xero. And I was really, really lucky to be part of that growth story. And then I reconnected with Softworks and SAaS and was going to be part of their global leadership team and saw how they built this business that got into payments a bit. It was at that time that was 2014 to 2017. And it was in that window that that FinTech background, got me looking into the revenue cycle. So I always got home and talked to physicians and I did my day job. I'm in the FinTech world. That's really the combination of how the revenue cycle interest kind of happened. Yeah, so that's even supporting DocVocate. I borrowed, have taken some pieces of my entire journey. So at Xero, they did such a great job of working with accountants and accounting firms that, you know, we call them Xero evangelists. They're the if the accounting firms that use the software love it, they'll sell the small businesses for us. And I've taken a piece of that. And so DocVocate, in the name, we're advocates for doctors, right? And so we want to have the trust relationship with physicians that we are the first tech company that is really there for you working with you. And we genuinely are that as well. So anyways, it's a bit of the journey and at the end, and how it all kind of came together where I was able to then leave them and now a recovering attorney, and went full time on DocVocate in 2017.

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Chris:

Yeah, that's great. Yeah. And some episodes of that journey. Sound familiar? I was the same way. When I went to college, I didn't know what I wanted to do, I settled into an interdisciplinary major, and it was playing lean startup with my life since then, until I evolved into to this point, but build, measure, learn each version of myself. And here we are. So you are also an active healthcare and entrepreneurial advocate yourself here in Oregon. And I would love to know what your thoughts are; big picture and the current state of healthcare, and how it needs to progress.

Hanes:

That's a broad question in general in the sense that we like to joke with other founders now that we know that healthcare is sort of 15 different economies in one and areas in one and so, but there are some I will say there are some underlying threads across healthcare as big picture I'd say that, you know, if you look at the moving parts in health care, one thing is for certain that there's more people, you know, and there's more treatments and more and  more ways that we can help people with new treatments. And at the same time, there's more and more economic pressure on the system to deliver all this new cool stuff that's expensive to create more people and faster and at a higher volume. So just right there, you have this tension that's been building up for a long time, the cost of health care plus the increased ability to help people. So how do you reconcile that? Then you layer in all the global economic and political complexities of today like, all the healthcare systems are different, yet, we're really living in a singular global economy and currencies and cryptocurrencies. Now, there's even more pressure on delivering, you know, within the context of your governmental regulatory framework as well. So I tend to look at it if you just take a high level of health care, it's the cost of it, it's the delivery of the actual thing. And as the regulatory economic environment, sits on top. And so with that being said, I think the general path for healthcare is the only thing that can reconcile all that complexity, really, or most of it is technology, right. And that's the only thing that can deliver more for cheaper over time. And so that's not even in our area. If you look at the clinical AI stuff in the US, there's a lot of pathology, pathologists are being replaced with clinical AI, parts of Radiology and being supplemented or made more and more efficient by AI that can read images. So there's already parts of the clinical side that we're seeing the real effect of that now, finally, which is awesome. And then, you know, our area's administrative side, I mean, nothing worse than you can even understand them the clinical side, because that's the actual delivery of healthcare. But it's really frustrating that just giving someone insurance and having to pay for them, like that's causing all this manual waste, and loss of ability to deliver care to people, that just feels totally unnecessary, honestly. And so, in, you know, drilling down on our world, there's a lot of aspects of why that's the case and the complexity of the system. Ultimately, I think that will be ultimately like self driving cars, once again, will be solved with technology and AI that could move all this big data and complexity in a way that makes it easy for us and more transparent or fair. So yeah, I think you know, half the time, in a shorter answer. It's automation that brings all these complex pieces together, and makes it easier for us to work.

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Chris:

Right? No, that makes a lot of sense. And, yeah, I want to dive deeper into DocVocate And exactly among one of those lines, which is one of those 15 or more segments of healthcare revenue cycle management. But as a prerequisite for our audience, I'd like to talk a little bit about fee for service, the prevailing business model in the US, and specifically about claims. So for our audience, what is a claim? And why is that important?

Hanes:

Yeah, I mean, honestly, that's, that is the unit of measurement, I think, for our system. So you know, the claim is basically a representation of a specific episode of care, you could say, or a specific event to health care events, So I go to get knee surgery, there can be more than one claim that comes from that. But let's just say I go to get the surgery, then coming out of that knee surgery claim is going to be a coded, a coded, I guess, you could say file that gets sent to the insurance company saying, Okay, there's 99213 code that's associated with the visit, the implant that we put into Hanes as the as a different code, right, the action of clipping his cartilage, that might be a different code. So there's diagnosis codes, but there's all these these procedure codes and all that kind of shipped off to the insurance company, what we effectively just call a claim. Within that, also, there's financial terms, there's going to be a mount that's built, okay, I as a knee surgeon, I did all these things on Hanes’s knee as the and here's the six codes that go with it. And with those codes, this is the amount that I'm expecting to get paid per our contract with Aetna, or whoever. So that's all carried in that claim. And then it gets, you know, that way, then with the claims, it's sort of a bi-directional living thing. It's not like a single thing. And so like I send the claim a claim file on a way insurance company makes a decision, okay, the six I'm going to pay these four, I'm not going to pay this one, I'm gonna pay half of this one. And that comes back into a response which is also kind of part of this claim lifecycle that gives you a sense and the reason why it's so important is that it's containing all the reasoning and the data and everything around wise how much something is costing and whether actually, you know, coverage actually happens or not. So, so much is controlled by that in terms of not just what the physician is gonna get paid and what the payers are paying out insurance company, but also ultimately, what you and I owe out of pocket for that procedure is all dictated in this little tiny claims world.

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Chris:

Yeah, got it. And so I guess at a high level and make sense as a consumer as a patient, I have an agreement with my insurance provider that I'm going to get these benefits If I use one of those care delivery benefits, then my provider is going to go ahead and build that insurance company on my behalf. And they're going to get reimbursed, I'm going to get my benefit. However, we know that that process doesn't always work as seamlessly or transparently as it should. What can go wrong in that process?

Hanes:

Yeah, I mean, what the simplest thing is that if you look at these diagnosis codes, there's 100,000 of them. And if you look at the procedure codes, there's less but still, in the 1000s of these various codes are very granular and very specific. So on one hand, you have a lot of different ways that you can present a claim for the exact same procedure. So there's a subjectivity to it, that the providers themselves have to make a determination. And then their billing teams on one hand, on the other hand, in our country  we have 4000 plus different health plans. Right. And so each health plan has different coverage. And all that, then the folks that are administering, let's just say, once again, Aetna, they maybe they have 150 different health plans around the country, just to throw a fake number out there. And it has a system of making coverage decisions that are granular for each one of those 150 plans, for example. So you're talking about variability and how the claim is created, and the variability on how it's actually adjudicated on the side. And that's that, you know, is one primary reason where you have this quagmire of lack of standardization, you can say others actually handled it.

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Chris:

Right. And I'm very interested in what seems like at the highest level, almost perverse incentives for payers and providers, providers, of course, want to get paid more, and payers, or at least what seemed from the outside, want to get, want to pay less. So their incentives are almost the polar opposite of each other. And I may be wrong in categorizing that in such simplistic terms, but my question is, how do payers and providers collaborate, communicate and compete, when, at least from my understanding, they have almost opposite incentives?

Hanes:

So it's a very fair base framework that you lay out. I think you know qualifier, of course, is that you know, on both sides of the fence, if you will, there's always going to be, you know, a vast majority of providers, in our experience, extremely honest. And I actually get into that we did all these surveys early on with DocVocate and compensation actually doesn't, isn't the one-two or three in the list of complaints for providers. We were not walked into that on that site. But of course, there are some that are and some that do overbill, there are cases out there, and that they need to be regulated. On the payers side, the same thing, there's folks that are more profit-driven, and folks that are more community-driven, of course, it's got so much on that landscape, too. But you're correct in that in this ecosystem, from the beginning to now they are sort of put up, you know, it hasn't been a zero-sum game of lobbing grenades over the fence like yours, I claimed I'll play it. No, we're not, then, That's me. I think everyone in the system agrees that's how it's been by and large. And, you know, but like, ultimately, I think, this data, if we fast forward to 2022, I think there is, there are many payer that are trying to say, hey let's get more coverage for people. But we have what I said earlier, we have to do it within cost, like we can't, as an insurance company, we can't just generate three times the premiums from our folks and then pay everyone and just you know, right? And then the providers are saying, hey, look, you can even pay us the same in some cases, you can pay us a little less. Their biggest complaint is the administrative nightmare. Actually, believe it or not on the provider side, in our country, there's physician burnout. People don't want to go to med school, the graduation rates, lower people, but we have we've had a nurse shortage forever in the pandemic has made that worse. Right. So think about it. I mean, like, when we were younger, Chris, like going to medical school was where it's at. It's like, so many applicants will take it now like the applicant numbers have dropped the quality of the applicants. Everything is you know, struggling because people don't necessarily want the life of going into your 30 racking up a bunch of debt, working really hard coming out getting paid less, but then spending 40% of your time on administrative stuff when you weren't trained. It's just in being sort of controlled by the system and actually, so that's where we got passionate about the provider side of things. You know, the payers are large corporations, by and large, they take care of themselves by naturally the corporations be more impersonal and profit-driven. on the provider side, they are individuals, you know, and they have lives, they're worried about the quality of life, they don't have the capacity to deal with the complexities. And so, yeah, I think that that gives you a little bit of the lay of the land and you know, we reasoned with DACA kids positioned on the side of providers, they don't have resources, they don't have the resources, the payers do, so maybe it's more like a grenade and then like a larger bomb is being tossed over the fence. And we're trying to level that playing field and our, our base philosophy. But yeah, and I think you were kind of asking about the fee for service and I could talk about payment models, but I'll pass back to you to make sure that I'm heading in the right direction for you.

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Chris:

No, you definitely are, and let's circle back to those different business models, but maybe dive deeper into some of those pains that providers are facing. So it could be on the revenue side, it could be on just the administrative pain side, how does DocVocate help solve those problems?

Hanes:

Yeah, and so certainly the framework right for everyone, on the provider side, you've got impatient, you've got these larger enterprise organizations like a Kaiser, or these are like a UCLA or Stanford health system, all the way down to like an individual that can have their own practice, about my own mental health practice, right? And everything in between. So one thing I'll say is that obviously, as you go to the larger organizations, the providers are more salaried, like Kaiser, all the providers are salaried employees in Kaiser. So DocVocate, we're 100% focused on the outpatient provider segment, which is actually more than 50% of our healthcare system, believe it or not, and that includes surgery centers includes very large organizations, but they're just awkward, they read the rent differently. On the info just for one second, on the inpatient side, on the let's just use Kaiser. As another example, the physician's journey and experience is very different, right? And I'd say that there are some great things about, say, my brother's surgeon at Kaiser, so I know a lot, you know, pretty well through him there, and my wife was there for a bit too. There are pros, or that's, you know, well-controlled. And in their case, they actually do move a good amount of administrative hassle for a lot of providers. But on the flip side, they're salaried. And they're sort of kind of, you could say they feel control whether or not or not, they just feel like I'm limited in what care I can give the patient because Kaiser has certain rules and frameworks and economics behind what they're doing. And so that feeling of being, you know, controlled in a world where the gig economy and everyone's moving more to small businesses and controlling their time and what they do, and their profession. A lot of those providers struggle with that. And we're, frankly at DocVocate aren't helping with that today, right? That sort of impatient Health System thing. So moving into DocVocate outpatient side, now, the then out if the three of us were physicians, and we wanted to start our own surgery practice, right? This pain, now the administrative pains become large, we need to set up our own payer contracts with 30 different insurance companies, we need to hire a billing team, either in-house or outsourced, we can negotiate the deal with the malpractice insurance. I mean, we just need to be able to hire staff and manage staff and we have to pick an EHR to bill it and pick a billing platform. I mean, there's just so much that goes into it. And 9 out of 10 providers tell you we're not trained in any of that. We are clinically trained, we're not business trained, we don’t know what's going on. And so what happens is where we're coming in and saying, Okay, look like we're gonna solve all of that. But the biggest piece of that is, follow the money, right? How much revenue can we generate if you look at a physician practice, one of the number one expenses is going to be what they do to collect from insurance companies that just collect revenue in general. So, so what we do is we, you know, we come in, and if you're a large provider group, we say, hey, look, we, it's all about automation, and we want to be your revenue cycle, automation partner. And we have some software tools that can help. We also have experience and knowledge and space to give you more generalized advice. So sometimes we started off with the consulting arrangement where we get to know their business, every provider is different. But ultimately, we're software providers. And we provide a tool that staples onto their current set system. So we don't, we're not coming in saying change your base system change it. You have this nice little clean layer that can interpret your claims data and find where there’s gaps in revenue and make your work. Allow your team to be more efficient for you. And collecting revenue, and make the whole financial process more transparent to you. We have analytics dashboards and all that. So all of a sudden, as a provider, I'm like, alright, I've got DocVocate here, they can answer all my questions, any question I have, for the most part. And also they can make me reduce my bills a bit and they can I can see where all the movements are in the financial aspects really, really clearly. So that's kind of where we sit in that whole world.

Chris:

Got it. Yeah. And when you're talking about innovation in terms of helping reduce the administrative pain or helping more claims get paid. What are some of those common technical challenges in the new practices that are inundated with these choices of systems and this broader ecosystem of building companies or clearinghouses and insurance companies? What are some of the common big, technical or non-technical challenges that those providers face?

Hanes:

That's a great question. I think in the outpatient segment, you really got to focus on their billing teams, whether the billing team sits in-house, externally, let's just say either-or because the other providers aren't actually working with insurance companies there. There are the billing teams that are doing it. And so I think the biggest challenge, let's just say it’s an in-house team, you're 100 person surgeon, you've got a team of 50 people collecting revenue for you. I think the challenge is two fold. If you're the providers with the leadership team, it's like, what is that team exactly doing? And how do I even understand or follow what they're doing? It's a visibility problem, which leads to an advantage. What's the famous saying, you can only manage what you can measure something like that, right? So it's very difficult to manage you can't measure so there's a visibility challenge, there at the highest level, then for the actual folks collecting revenue there becomes this. You can only be as efficient as the system they're working on allows them to be. So when I mentioned earlier that there are all these 4000 health plans, and they're sending you these different responses. If I don't have a system that helps me filter and triage all these responses from disparate health plans and payers, then I'm doing things manually, right? You're looking at claims one by one. So the system is kind of what we look at a technological system that a billing team works with is the foundation to the entire collection operations. So if you're building a house with concrete, if the concrete is not there, you know, that foundation dictates within a house you're gonna build. And I will go a step further. The reason I'm personally in our team is so passionate about automating And this segment is I would argue that the financial and revenue cycle aspect is the foundation for the entire healthcare system, all the way through, you know, even more than the clinical stuff is that you gotta have that stuff in order. So I'd say that the biggest, you know, broads, broadly speaking, like, how do I interpret all this information that's coming to me as a billing team? Payment? That's the biggest thing.

Chris:

Okay, yes. And where do you consider DocVocate? In the stage of deploying your big ideas. So at persimmon, we often categorize the startups that we work with by what stage they're in, whether they're at the beginning, showing proof that an idea has a value at all, or they're establishing that they can be viable, by getting customers to pay for it and proving to yourself that you have that product-market fit. Or once you've done that, lastly, just growing attaining scale, by going after a market with more considerable energy towards the same marketing and sales and bringing whatever that solution is to customers at scale. Where do you consider DocVocate in its journey?

Hanes:

That said, you know, there's a little bit behind the scenes, but I'm happy to report that I think we're squarely in that growth phase. Now, we really took our time to go through those first couple of phrases that you mentioned. And that sort of patients, which we can talk about later, in terms of maybe some advice to other healthcare entrepreneurs, but that patients, and building through those earlier stages, is now starting to pay off. And that our growth and scaling journey is a little bit smoother than it might have otherwise been. But yeah, we're actively scaling now. And to give you a sense, we made our first sort of major leadership hire in the business development sales side about nine months ago. And we just added a director, a director of revenue, who's phenomenal. Also, both are phenomenal leaders, but our director of revenue about two months ago, she's going to be overseeing the sales and customer success aspects of the business. And so those are clear indications that is ready to go. And it's been good, it's been a good handful of months of being in this mode. And so we're feeling good about product-market fit, we just got to grow. And that just means that, that we look at our roadmap and everything around making sure that the customer experience onboarding is good. Customer Support can be nimble, and effective, but too scalable, that kind of stuff. And, you know, we're doing so much stuff, of course, we're doing all the other things, multiple products, and multiple products. Another thing you mentioned, I believe, and if we've gone from one to three products now and got a clear roadmap of four or five and so we're not just a point solution. And so yes, it's a really, really exciting time now and fingers crossed it goes well.

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Chris:

Right, Yeah, it's been an exciting journey together from a partnership perspective, from a learning perspective for us. And then also just a fan of you Hanes and watching your evolving success has been, you know, great, great to be on the passenger side. Now, for the healthcare entrepreneurs that we have that are just about to start their own big idea Do you recall in your journey when you knew or you prove to yourself that you had something of value that you had something interesting to work on? And, you know, just some of those decision-making criteria where you said, Okay, this is the one it's time to lock in and start.

Hanes:

Yeah, you know, it's in a way, it's a tough question. I think, One thing I'd say who's in, you know, a lot of those within founding a company and going through, especially in this kind of slow build that can I've done it with you, sometimes you'd have to do with healthcare so complex, you can't just build something and have it scale. So few have done that. But, you know, it depends on where you're at. I'd say, in our case, in my case, pretty early on, before we even put pen to paper on the first MVP. I did a lot of customer discovery, met with, you know, 20-30 different practices, surveyed 200, providers met with payers and EHRs, and started mapping all that together. And I think what's carried today, for me throughout the entire ups and downs of this journey, is early on, I knew we were working on the right problem, or we were just rowing in a direction that was things had to ride. So I'll give you a quick example, early on, well, pre-pandemic, but 2015 2016, I was just chatting with people. People like this kind of need with automation, but it's healthcare, and these are all processes. Anyone could adopt automation. And what is AI, they thought it was like a robot, you know, and all that right. And now through this process, I'd say just early pandemic, there was some understanding that automation is gonna hit and through the pandemic, it's like now every revenue cycle department is looking for automation, they know the difference between machine learning and natural language processing, right. So just like but for me, I guess there's a window that like that's going to happen, and we're working on a big problem. And so even if there's some pain in like, you know, adjusting exactly what our solution is going to be, I never wavered and knowing that we're working on something that mattered and kind of moving in the right direction. So that was the foundation of the whole thing. And then, kind of more specifically with our platform, I'd say, this is not gonna be super-specific. But like, I think there's this time, like, you want to have a learning mindset, no, generally speaking, is accepted with software, you got to meet customers, you got to learn customers, you got to document all that kind of stuff. And that's great. But that can also be really tiring, it can be really, it can really bog you down, because early on, and definitely your customers know way more about their experience in this space than you do. And you run into a lot of like, Oh, I think I figured it out. And then someone shoots you down? I think so. And so you keep this more of a learning mindset. For me every call, you know, you got to always keep learning, but there's a sort of this tipping point where a larger percentage of your customer calls becomes you teaching them about the industry. And you kind of see the questions coming before they come. And you're like, wait a minute, like, and you get obviously a more positive response to what you've built. And I'd say for us to be me, it was probably only about a year and a half ago, where I was like, alright, like, I've done enough of these customer calls and demos and interactions where 95% of what they're gonna say I could tell early in the call and, and they're getting value from the call. And then I just tell them their reaction, they looked at our product and like that, there's been a lot of thought and, and you've done your homework and building that. And that's when you're like, alright, you know what, I think we got something and it would take a long time for someone to redo that, like walk the virtues to redo it. So that was about a year and a half ago, I kind of was like, I had three or four calls like that one day and I was like, I guess we got something here. Yeah.

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Chris:

Right. Yeah, yeah, that's a great framing. I know, We here at Persimmon, we come from the school of Steve Blank and Eric Ries, so customer development and lean startup and get out of the building. But I haven't heard someone frame it in the way that you have that when you're going through that kind of customer development, customer discovery. When you realize that it's flipped and you're teaching them and they're not teaching you then you probably know what you have. And I think that's a great nugget. So speaking of nuggets, you build something new and promising within healthcare from scratch, and that has taken incredible vision and grit, and the process by you. But it also can't be done alone. And you have to think as a new entrepreneur, how do you build a team? And what do you need? And when? And I would love to know if you have any advice to share with our audience as to how to find those missing pieces and what you were looking for?

Hanes:

Yeah, you know, it's in a way, that’s a great question. There’s an aspect of it, of course that's a little a bit accustomed to what type of solution like, you know even if you think outside or outside of healthcare even like if you're building a chatbot o right versus like a workflow automation tool versus it. The mechanics were required a little bit different but I'd say it regenerates generalizing within healthcare. I think there are some commonalities and so. You know, In an early stage team of course there's a technical aspect to it. Right? In an early-stage team, of course, there's a technical aspect to it, right? There's gonna be the sales and marketing aspects of what you are understanding the market. I should say, aspects of an early-stage company, and then you know, there is identifying customers and getting the customer's voice, right? And so I think the very first step, as a founder or a founding team, the very first step is becoming self-aware about what skill sets do we have on board? And what skill sets are not on board? It's very different to be a developer founder. In my case, I don't know what I am some weird mix of that. And, so what skill sets do you have on the team? What experience can you network to do to, you know, lean into? And so one of the things I like this example, I learned the hard way is that like, I'm actually not that great of a market analyst. Okay, it turns out going to Google and just putting search terms reading for a couple of hours. It's not like sufficient market analysis, right. But if I had to do it again, I would personally pair myself and our early team with a great business analyst that can understand and break down the market, and all that and break down competitors and all that stuff early. And do that. So yeah, I mean, when I look at an early stage software company in healthcare, it's, you have subject matter expertise - Is it claims, clinical? or whatever area you're in.  Do you have technical expertise?  Do you have someone that has business acumen as an analyst and understanding strategy in economics of, you know, the economics of what you're trying to build and do? Right? Building a model and all that stuff, right? And then can someone that can do competitive analysis, what exists out there? And putting all that together? Like, am I going to build something now that someone else is going to build in 18 months? Versus am I going to how do I think about both a technical and business mode. Right? So if that's your framework, those are the core skills you really need to look at, and, you know, and would you look outside, I think, really, really early on just founding, you want to have those skills in your founding team, and then going to outsource bits of that. I think as much as you can and then of course you get to this point you're saying okay now I have a sense of MVP, like, I've talked to enough customers in our team, wherever that is just kind of I've looked at to analyze the market, I've done that, I've they've got build in the tech team in some form. If I have a tech founder great, if I don't, you're probably not going to go hire W7, W2, or 3 even to start your company. So I'm a big fan of looking outwards, to companies, you know, Like Leapfrog, like Persimmon. And then like other folks that have the experience of working people just like us over and over and over. And you can in one phone call, you can learn about a lot of things you cannot make, and you can avoid mistakes early on. And you can save your power to kind of build your MVP. So I think that's the way I look at it is those three core tenants are was the market, understanding the market and the kind of competitors who are talking to your customers, understanding the scope and metes and bounds, and MVP, what it would take to build that and then having a tech partner that can actually can help you, you know, figure out the budget and timeline to get there. I think it's, that's right there. And if you can do that, with at least as little pain as possible, you'll learn so much to give yourself a chance to take the next direction from there and say.

Chris:

Yeah, no, that makes a ton of sense. Hanes and, yeah, as far as identifying your own gaps, whether they be internal on your own team, or the partners that you're working with, for example, with technology, and how do you conceptualize and get to the point where you have an MVP? Now, of course, you know, but what we find is that a lot of entrepreneurs underestimate the challenges of getting to market. So the truth is that having an MVP isn't the end of the journey, but rather that new beginning in which you get to validate and iterate, but most importantly, get your first customers. So do you have any advice for healthcare entrepreneurs that maybe have not gotten to the MVP phase yet on how to think about going from zero to one, not just in terms of design and MVP, but in terms of zero customers to even one or multiple customers?

Hanes:

Yeah, this may be a little untraditional. But one thing I can share about healthcare for sure is that it's very relationship-driven still. And, I don't see that changing in the short any short term. So I have I have many amazing uncles. One of them one of which, tends to drop some nuggets, we all have a couple of uncles that give you the, aunts and uncles that give you that good advice that somehow your parents get the…

Chris:

straight shooter 

Hanes:

Yeah, right. So he taught me when I was young, like, Hey, listen to warm intros, make the world go round, right? And I think that applies more so in healthcare than anywhere else. And so I think when you're early on, focusing on the relationships, and getting warm introductions to possible customers, is the best through your network, or one way or another - building the relationships. And I think that's critical because that's a skill set you need to develop, to have to grow your company anyways. So you're not going to, most healthcare software companies aren't gonna just like building something. And people like that’s so cool. And, put out a proper website and do some SEO, or Google AdWords and like, everyone starts buying it,  that's, that hasn’t really been a successful path for most healthcare startups. So if you're doing something, and you know, if it's relationships, you’ve got to build that skill set, you got to build that network up a little bit anyway, you might as well start early. And when you get a warm handoff to the customer, whether it's a health system with more red tape, or it's a solo practitioner, small billing company, or whatever it might be that warm introduction, where it's relationship-based. They're gonna give you more of their time, and they're gonna give you more genuine feedback, which is what you really need early. Yeah, and then once you've done one or two, you've made enough of those, then you'll also probably know, efficient pathway to get. I want to call it more cold interest, but the pathway to get to once you've met one Orthopedic Group, now you have a little network, maybe you understand that better, you can figure out how to walk into the next one, and say, Hey, I've worked with so and so I understand your experience, you can empathize with them more, and then you can do it, you know, customers three through five become a little bit easier to to get. 

‍Chris:

Yeah, that makes a lot of sense. And I think that that's one thing that holds for even outside of healthcare, but who within healthcare is just hacking your way to those first early adopters, evangelists, customers, and then using that as a beachhead to scale into more output, there's no that I've heard, easy way to get that first customer.

Hanes:

No, I mean, one thing, we haven't talked about fundraising, which is another challenge but like for early-stage entrepreneurs, but one thing I will say that a repeat is now like, I guess I'm not enough experience, but not as much when I talk to more experienced founders, you can see that, once they've gone through the journey, once you build a set of relationships and experiences, and then you understand which school to go to. It's like, when I was starting if someone gave me the advice I just gave her now which is going to your network right? I would be like, Okay, if my customer’s a doctor, I'm gonna go to a doctor to speak to another doctor, right? They just, you just whatever I mean, who I know, in my network that knows doctors, right? That's your first gut. But then you don't really like I didn't understand the fundraising ecosystem. But it turns out investors are fantastic ways to get in front of folks. So like, if you think about in the investor ecosystem, you're a venture capitalist, you're seeing, I don't know, 1000 pitch decks a year and you you're meeting so many people, and then you're investing in X number of companies, and you're sitting on their boards, you're sitting there and you're introducing them to people, you're effectively at the ultimate relationship connector. That's just one example. Right? And as a viewer, investor, what are you trying to eat, you're trying to eat Bounders you're trying to figure out you know, and so most really good investors. And if you go to a bet fundraising department, I have watched some DC training sessions and stuff, they train VCs to say, Hey, listen, even if you're not investing in someone, build a relationship, be useful, make introductions, so they're being trained to make introductions to you. So finding the right investors in the ecosystem that you're trying to build in, in building a network there. That can be a one-to-many connector to customers and other people, marketing firms, obviously, engineering firms, and stuff. So I think that's one example of you starting to know where to go to make the most efficient connections as well.

Chris:

Right, right. And do you have any more tips on the investment side for healthcare entrepreneurs that are at that early stage or their friends and family and they're looking to get external money, it could be seed-stage Angel, or it could be they're ready for venture on how to position your company or when to position your company or how to bash how to navigate yourself into investors that you don't have on your contacts list?

Hanes:

Absolutely, Precede, like early kind of MVP stuff, the one rule of thumb is, to the extent you can do that with as little capital as possible. I mean, there are some types of businesses, you can't write them, it just takes a certain amount. But if you can get to an MVP, or some kind of proof that gives you something about it works with customers, the stuff we talked about, limit the amount of dollars self-fund, you know, some of that if you can, you know, get investment from your personal network, or from, you know, the easiest to get money, that's also smart money. So, you know, to the extent that you can get money from an angel investor that's in your space easily, that's better than just a random check. Because it's smart money. That's great, right. But early on, I think, you don't want to spend a whole ton of your time chasing down money. And you also don't want to get to the habit of overspending. Like it can be a kind of a blessing and a curse. Someone just raised a couple of million dollars early, and especially as a less seasoned entrepreneur. The tendency is to be like, Okay, let me look at my budget. Now I have a certain Well, I am gonna just hire a marketer, you start to overspend and over and lose focus. So I would say early, early stage, if you can minimize, simplify the fundraise, there's that now, once you evolve from there, and you say, Okay, now I'm moving on to the seed stage, or I need to raise a bit more to build this product to help to actually start to build a little more of a team, then I mean, I think at that point, you know,  it's a complex ecosystem out there, there's a lot that goes into it. I would just say that there are pitfalls. There's a lot of pitfalls out there. And so to the extent you've become educated at understanding the difference between a venture capital investor, seed investor, strategic investor, you know, every major corporation has an investment wing now, a family office, like it took me a while to figure all this, I wouldn't learn that the vocabulary and vernacular of the investment world, what are they, what's that you have to put yourself in the investor's shoes and understand what they're trying to get out of it. And that'll facilitate your conversations. That's one guy, once you get into that stage, that's one piece of advice. Second piece of advice is don't ever take any, you know, investor conversation personally, I've seen so many founders and myself, you know, are human beings, they don't seem willing, so much rejection, you can take without it kind of bugging me or making me feel bad. But the best analogy I've heard with investments or founders is speed dating, it's like, just a picture, you're in a speed dating environment, not taking each interaction personally. And it's sort of a matchmaking game. And eventually, you will build a network and you'll find someone who sees your vision aligns with you well, and genuinely, like, you know, wants to help. And so there's a little bit of like, you know, understand the process. So you're not like you're talking to the right kind of folks. Don't take it personally. And then the last thing I'll say, is, you got to learn, like, I was late to the game on this, personally, I went into this as like, I'm building my business, I'm an expert in claims and our revenue cycle. the fundraising process is about taking money in to help support what I'm doing here, right, and maybe getting some advice, high level my business. But what I didn't realize is that similar to being connectors, they're a wealth of knowledge. And so like, let's just say like your, you get a 45-minute call zoom call scheduled with a potential investor, right? Typically speaking, when you do enough of them 10 minutes in both them and you know, that they're whether there's even a chance that you've ever actually worked together, right, whether it's best and a lot, it can be a tendency for founders early on to just like, turn off once they're like, Well, this is this, you know, like speed dating apps in there. This is automatic next to it. And so I would quite against that strongly, because the idea is that you have 35 more minutes on this call. And that investor has seen a lot, and they may not be right. But then you go, you learn to go into that mode of asking questions. And even if they know you're doing that, they like that, too. And they're doing the same. They're asking you questions, learning about the revenue cycle, things that right then becomes a bilateral education session, and more. Investors are always educating themselves. Many founders are not educating themselves, right? They're so in their world. And I just learned, I built a network, I learned so much about MySpace and things outside, just talking to investors in the last two years. And so yeah, that would be like three. There's no like, you know, secret sauce is getting your money from here. There's no like one size fits all answered, but it's don't get bogged down, learn a heck of a lot, and definitely learn the vernacular and their perspective, because a VC call is very different than a family office call. Right. So those are some three things that are afforded.

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Chris:

Yeah, that's great. And I think that accelerated learning you can get from those kinds of stakeholders in the ecosystem can be great is just, you know, don't just take the rejection but as you say, ask why not and what do you think is worth investing in the same space I'm in and that will help you iterate yourself until maybe become that or maybe you just know how to address that in your pitch up front. But I think that's great advice. So is there any other advice that you have for healthcare entrepreneurs or innovators that we haven't covered?

Hanes:

Yet? And I mean, I think the only thing I think that comes to mind is what we've started off with, with health care being this complex ecosystem. And I think when I talk to folks in their own area, I've noticed that folks that don't get caught up in their own just understanding their sliver of health care. I would say that if your health is chronic, no, yes, know your area, I'm building a clinical tool, you know, for this than the other. But always thinking like understanding the broader system. And systems is like a really, really important thing in health care, and making relationships and being curious about something that's going to inform a lot. So you might be building something clinical, but if you don't understand how epic works and epics and save 70% of the hospitals then right, and you don't understand what drives epic and their partnership ecosystem as one example, you might end up picking the wrong strategic move, right? Because you didn't understand the other forces that are impacting your area. So I think something that's really unique and, and early in the journey, the earlier you could do more of that discovery and meet people and research. I think that's really critical. And then kind of a corollary to that is because of the complexity and all the dependencies, within this crazy thing, I like to call it the jungle, right, this jungle that is healthcare. I think that if you have to be patient, in a lot of cases, because in healthcare with that complexity comes with we all know investors will tell you, it's not easy to sell into healthcare, that customer acquisition cost is high. It's heavily regulated with HIPAA and all that stuff. So more than other areas, you have to I think more often than not come in with the long game in my mind, you know, there aren't really any quick flips, or too many in healthcare. So those two go hand in hand. Right? Are you curious with the broader thing? Are you gonna have the patience to learn to put those pieces together? And then are you going to give yourself the requisite time to see this thing out? I mean, that's, I think those are the two things that are somewhat, you know, at least that might apply to 80% of the healthcare entrepreneurs.

Chris:

Right, Yeah. And I think you're exactly right about that, Haynes. One example we come across commonly is, for example, in the remote patient monitoring side, there may be brilliant researchers, or people that can manufacture devices, that are medical devices or new wearables, but they don't understand how they can actually be used, right. So they don't understand the software that it may take, in order to be able to get that monitoring either to a patient or their caregiver or to the physician that needs to make a better decision. They may not understand the ecosystem of actual adoption and care collaboration. So who is going to really use that information within a health system? Oftentimes, it's not going to be the physician because they're too busy. And then third, is touching on revenue management is okay, what is the incentive for physicians to look at this at all and providers to support those programs? Are they going to get paid? Is there a building code for this thing? And if so, what evidence does your device need to be able to provide you in order for them to be able to bill? And I think so what you said is right on, we went to Vive, one of those big startup healthcare innovation conferences in March, and there were so many new devices. And they had amazing technology of how they were going to make the actual remote monitoring of patients just more seamless and organic, which is, we believe one of the keys to adoption, but saw a lot of question marks in the middle as to how it was actually going to get deployed within a health system, or how it was going to be adopted and paid for. And I think what you said is right on when you understand more of those ecosystems, you're gonna have way less blind spots, and as you said earlier, gosh, the foundation is the bottom line, right? Is, how do people actually get paid and incentivized? It really motivates the whole system today. So yeah, and hence, I'll probably ask some big picture questions too. But I just want to say that I've appreciated so much of your time and you know, your partnership with DocVocate. I really believe you guys are on track for great things. I probably know more than we could necessarily disclose in this fall, but it's all super exciting, and a huge believer and fan of you. So I really appreciate your time.

Hanes:

Thank you, Chris. And likewise, you know, leapfrog has now been with us for two years, and it's been the best two-year run for the company. And there's been a lot of ups and downs, even in the last year has been coming in and been a massive stabilizing force for us. From resourcing up to resourcing down to just being with us herself, all the leadership has always been accessible and responsive. And I think, for us, from someone in my shoes, especially me personally, as a solo founder, but even for any founding team to have, you count, you count your blessings when you find partners like that, that we look forward to. We've been growing together. And I think as we go through our growth phase, we look forward to doing that together for you guys for the years to come.

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Chris:

Awesome, Well, thank you, Haynes. I appreciated having you on the show. And I'm sure our audience will as well. One big picture question. We've learned a lot about the complexity of claims transparency, perverse incentives, manual work, and problems with heterogeneous technologies and policies. And you could take out your crystal ball, what would a better future state look like for patients to receive better quality of care and for providers to be paid for delivering that care? Fairly and more easily?

Hanes:

I'm glad you asked that, because I mean, let's chat. We haven't even with the founder of staff about having to understand the system. It seems it makes it sound like it has to be that way. Or sometimes it's a good thing or it's a necessary evil in our system. And I think, as entrepreneurs and as folks like yourselves, that are supporting entrepreneurs, it's important to have that, you know, that disrupter vision in front of mine internally, we call it the 2030 George Jetson vision of healthcare right heard of those of us that are old enough to enjoy the Jetsons. Yep, and, and so that vision effectively for the revenue cycle is, patient goes to see the physician in any context, that interaction is recorded. Right? That recorded interaction is then automatically using AI turns into a coded claim that we talked about right? Then that coded claims automatically with AI saved, maybe providers, with the payers AI is all just kind of boop, boop, everything's kind of handled, and coverages, the firm's, and payments are all maneuvered in and 99.9% of cases before as a patient of white walk out the door. All that's kind of handled and all the notifications are in by phone and all the data is moved from system to system. That's that's the vision of it. And then if you mix in the regulatory that the lawyer side of me is looking like, this is the part I'm less certain about happening. And there's more pieces that are hard to control there. But I hope that the legal regulatory landscape and the policy based landscape becomes much easier for folks to follow and understand and for providers, patients and stuff to implement in companies and startups to implement, you know, to stay on the cutting edge of so that's our view is that, you know, at the end of the day, you know, in healthcare, healthcare is about providers and patients, right. I mean, that's just what it is. Whether it's a device, whether it's a facility, whether it's an insurance company, or us a software company, we're all supposed to just be there to support the core of delivery care from one human physician to human, you know, provider, I mean patient. And so, my next step goes for the government, employees and lobbyists and everyone, we're all supposed to be here rowing in that same direction. So as an idealist as a technologist as a disrupter. My vision for 2030 is that we, you know, have transparency and efficiency. We all get to focus on our lives.

Chris:

Got it? Well, Hanes, I love that painting of the future and happy to have you as one of those companies taking us from Flintstones to the Jetsons. Okay, thanks. Yeah, hence, thank you for your time.

Hanes:

Thanks for having us

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