Dr. Alan Russell and Lynn Banaszak, hosts of the Innovations Unleashed podcast, sat down with Patrick Colletti, Chief Innovation Officer of Net Health, to discuss the software business, healthcare, philosophy, culture, and how Patrick got his start.
Click the link below to listen to the full podcast.
After listening to all the great lessons and experiences, we couldn’t help but formulate some questions of our own. We followed up with Patrick to pick his brain a little more about U.S. healthcare and the role Net Health will have in its reshaping.
- Alan opens with a set of dire statistics about US healthcare. NH can’t solve them all but, plays a role in reshaping healthcare. How do we contribute? Our goal is to reunite caregivers with their calling. For a software company, this means removing barriers that caregivers face like duplication of effort, lack of integration, and time wasted on the support of non-care related tasks, such as digital marketing, predictive analytic computation, and modern administrivia.
- Alan does make a great point about the rise of outpatient care throughout the healthcare system. At 2:30, he says “it [outpatient] will ultimately disrupt the way that we get the care we need.” Do you (does Net Health) relate to the word ‘disrupt’? Yes, that word resonates but should be redefined. For example, a welcome surprise is still a disruption. Outpatient care, moving all the way from hospital to home, is clearly an effective way to support the disruption that is needed. Innovations we develop to help caregivers spend more time with patients and less time on administrivia should be a welcome surprise. By helping to provide the right information at the right time, benchmarked with facts, we can save time and, in some cases, lives.
- Alan was ranked by Rolling Stone as one of the 100 people most likely to change America. How did it feel to be selected? It was fun to connect with Alan and co-host Lynn Banaszak. They focus on innovative ideas, people, and companies that are solving problems at scale and helping to redefine the future. We work and dream about these kinds of topics each day, so it felt like a great fit.
Welcome to Innovation Unleashed. This is Alan Russell and together with Lynn Banaszak it's our pleasure to be your hosts. On Innovation Unleashed we share how innovation and technology are two of the essential threads in the beautiful tapestry that's our lives. Innovation is of course a team sport. And Innovation Unleashed wants to share the rules of the game with listeners, and give them an opportunity to meet the players making a difference and doing great work.
If you're a regular listener, you'll know that Innovation Unleashed was born from a desire to provide a broad community of innovators, with a platform from which they can explain where they see technology going, and how they will personally construct and impact the future. If you're not a regular listener, then you jolly well should be. Often on Innovation Unleashed, we're asking seemingly simple questions with complicated answers, to the people that know how the future and technology and healthcare is going to move forward.
So let's talk healthcare for a moment. According to a report from the Center for American Progress, healthcare cost ranked among voters top concerns in the 2018 midterm elections. The Federal Government estimates that health care expenditures will reach an average of $11,000 per person per year. And the cost will continue to grow more than 5% annually over the next decade. Slowing this increase in healthcare cost will of course be impossible without reforms to one of the largest components of healthcare expenditures, hospital-based care.
Hospitals receive a dollar of every $3 spent on healthcare. And across the United States the projected total spend for hospital care alone in 2019, will be $1.3 trillion. A notable shift is that inpatient care, which is when you actually stay overnight in the hospital for something more than observation, now makes up only slightly more than half of the hospital revenue, compared with about 70% in 1995. Getting patients the right care at the right time in the right setting, has increased the utilization of outpatient care or services and medical procedures and tests that can be done somewhere without an overnight stay.
Some believe that this flip from inpatient care to mostly outpatient care, will continue into the future. This shift impacts all of us and will ultimately disrupt the way that we as patients get the care we need, when we're injured or sick. Take for example joint replacement surgery, which in some places is now offered in an outpatient environment.
Today, we're going to talk with Patrick Colletti, the COO and newly named Chief Innovation Officer of Net Health. A company that creates software solutions for specialized outpatient care. Net Health serves healthcare professionals, essentially all of the largest hospital chains in the US, as well as private practices around the country. They're working to strengthen patient care, outcomes and performance.
At the beginning of July, Net Health entered into an agreement to acquire Optima Healthcare Solutions. The combination of these two companies now serves multiple specialized clinical settings throughout the continuum of care, from the hospital to our homes and everywhere in between. Patrick's association with Net Health began in a consultant role during the company's startup phase.
In 2001, he became the president and became a board of directors member in 2002. Patrick's previous experiences include strategy and sales roles with Dorland Data Networks and American Lawyer Media, where he was part of the team that launched the online marketplace and contact portal, now law.com.
He's also been an Associate Professor of Marketing at Point Park University, and held many other exciting roles and has received many awards over the course of his career, including the Ernst and Young Entrepreneur of the Year Award in 2010. Patrick is a graduate of Muskingum university with double majors in Business and philosophy.
Patrick's a perfect person to talk to us about the transformation of health care delivery from what was at best, the right therapy being delivered in the wrong places to delivering the right care at the right time, place and cost. Patrick, welcome to Innovation Unleashed.
Thrilled to be here, thank you both for having me.
So I want to start, before all his greatness, how did you get into this whole field, where as a young university student, did you see this as the future? And tell us a little bit about business and the philosophy that's just awesome.
Yeah, thank you. Well, I didn't have a really clear ambition in terms of what my career path should be, but I was open. And so my first experience came from a odd job that I kept in college. And so I had sold advertising, I wrote horoscopes. I did whatever I could do in school to earn money.
Wait a minute, you wrote horoscopes.
I absolutely did, until I was fired.
Like birth date dependent horoscopes, or just the general Leos will do this this week.
Leo's will do this, this week. So what will Leos do this week. This week is a good week for Leo's. Okay. I'm going to stop right there.
No, no, no, continue, I need to know my future.
It was a joy because, and I was fired from that job because I was essentially writing horoscopes to all of my friends. And after a while, the editor said, "These seem a little too specific and event specific. So we think we should give you a new job in selling advertising."
And so that led to my role at American Lawyer Media and Dorland's Data Networks. Well, you asked an interesting question about, how do I think about business and philosophy and as I was graduating and studying philosophy, I had the same wonder, how will I ever apply this? And today I would say I use philosophy on a daily basis. I think it's probably the most powerful weapon we can bring to bear when we think about culture building.
So culture building is really all about the why. Why do we do the things we do, and what makes people come alive and want to be engaged in a business? And so while finance is important and strategy is critical and product is vital, when you think about the reasons of why we do the things we do, that really is the essence of philosophy.
And today I've found, that's probably my biggest contribution to the business as a whole, is helping people understand where we are and why we're there and what we should do about it.
And it seems that that foundation in philosophy would also drive a real recognition of purpose of why this is important and how you can touch people's lives.
Yeah, absolutely. So I'm a profound believer that today's competitive advantage is purpose. It is why are we here? Why this organization, what's the goal? And it has to be a greater goal. And so I've seen competitive advantages become disadvantages when people focus too much on a great particular leader, somebody with tremendous experience in one particular product area, it really is about developing the largest community possible of people who get it and are engaged.
And so while a lot of companies focus on a specific strategy or product line, at least today, the way I think, I think how large of a community can we build of people who get it, are driven, are purpose motivated. And so rather than me thinking about, when we'll be a $500 million a year company, I think about, can we sustain an organization in a community of 5,000 people?
So you're saying something sort of maybe remotely almost un-American, that helping people might be as a purpose, might be more important than making money. And of course, a lot of business revolves around making money as its purpose, but helping people is what drives resilience. How do you balance the two in the space that you're in?
Yeah, so a really good question. I'm asked this a lot, and so we've worked with lots of different private equity firms and I've had relationships with lots of investors. And so I'd say that that's my belief, that's my philosophy, and it's always gotten results. And so I think if you start with the result in mind, how can we drive EBITDA margin to 40%, or how do we consistently get revenue to 30% or whatever that number is for you and your organization. If you start with that end, you'll inevitably crush people, create a bad reputation and have some carnage behind you.
But if you start with, how do we sustain as an organization an engaged level of commitment, how do we teach people to do what they need to do? How do we create an opportunity for flourishing? Because candidly, it's all about flourishing. Investors deserve to flourish, clients deserve to flourish, and so do our employees. And so for me, having fallen in love with the patient at a young age in this, and being able to provide consistent returns for investors, today, I'm very focused on organizational design and how we can build a large community.
So at the beginning, when you develop these concepts for Net Health, what was the purpose and has it evolved?
Yeah, absolutely. So I'm not the founder of Net Health, although, I carry that title, I like to think of myself as a refounder. And here's what I mean by that. I entered a startup situation and was part of a classic dot-com and it kind of blew into flames. And so for those of you that remember September 11th, 2001, I remember where I was that day. And four days later, I received a call from a newly appointed chairman of then Synaptica, now Net Health, who said, would you be willing to stay for a turnaround?
And so at the time we had about 11 employees, I was 27 years old, just newly married and essentially found out I was out of a job. So I took the weekend to think about it. And then the following week, Chris Hayes, who's our CTO today and I agreed to stay. And so what that meant was everybody was laid off. We had to bring in a forensic accountant to sort out what was going on exactly.
And what we learned was, the investor's money was gone. So there was paid in capital that was gone, 30 plus people in the cap table who had a lot of questions, all of a sudden for this new person who had the title of president and we have trade debt. So we have about a half a million dollars in trade debt. And so my start, and when I speak to young people and candidly people of all age, I like to remind them that if you're waiting for that opportunity, that's got to bow on it, that's perfect for you to smack it out of the park, you're going to wait the rest of your life.
But you did the complete opposite. That's pretty brave.
Well, yeah, and it was probably a mixture of fear and trepidation and concern. And again, I was newly married, I mean, I couldn't fail so to speak. I also believed in the mission. I told you that I fell in love with the patient at an early age. We had begun to develop some wound care software. And we were focused on the wrong market. We were looking at longterm care.
And just for our listeners, wound care software, two words that necessarily marry with each other. What is that?
Yeah. So today there are millions of chronic wounds in the United States that go unhealed each year. So a chronic wound is not like the kind of wound we get when we get a brush burn. If there's a surgical wound, any kind of normal wound that we think about when we take care of our children, these are chronic wounds. These are associated with diabetes, vascular insufficiency, pressure ulcers.
And so unless a multidisciplinary group comes together to heal these wounds, they will typically end up in amputation. And this year there will be 70,000 amputations that are avoidable, that occur, typically costs about $80,000 just for the initial procedure. But then what we've learned is, you have a 50% chance of having the second limb amputated within five years.
So if you think about the downstream expense of wound care to us as a tax paying entity and to us, as a feeling thinking human being who can avoid these kinds of things, we have a crisis. And so we pointed our attention to that market.
So what did you do? I mean, how does software heal wounds?
Sure, yeah. So part of it starts with, if you can't measure it, you really, you can't fix it, you can't improve it. We're just using what we think is the right thing. And so the earliest versions of the software included a simple diagnosis, pictures, measurements, some descriptions of the wound. We were web based since day one, and so what that meant was the doctor and the nurse and whatever other providers could collaborate, they could see it from wherever they were. And over time they could test whether their healing protocols were actually working.
And so when you've got a paper chart and you're just thinking it's working and you're taking measurements, but the measurements are actually from a different perspective each time, you really can't compare apples to apples. And so in that scenario, you don't have clarity around what's actually healing wounds, and that's candidly the way we've existed for thousands and thousands of years here. And so by looking at measurements, being able to compare healing protocols and different products, you now had the basis of information, it's kind of pre-knowledge. And so those were the earliest versions of our software.
And are you still doing wound healing?
So one of my favorite people in the world, Dr. David Steed is a wound healing surgeon, who's contributed a lot to the space of wound healing. And I seem to remember him explaining to me at one time that the data suggested that all of these kinds of wounds that you're talking about heal at the same rate, the same speed in every patient, but what changes with the different therapies is who's going to heal and who isn't.
And so with some therapies, 10% may heal, with others, 50% may heal, but when they heal, they heal at the same pace. Is that what your data has ... have you seen being able to look at things like that.
We have, and let me start by saying Dave Steed is brilliant, and he was extraordinarily helpful to me as a young man navigating in these early waters, a very small company that nobody wanted to work for.
It's such a small world.
It is such a small world.
Isn't he ... He is a gem.
He's lovely. And he early on joined our advisory board and added a level of credibility to our business.
Our listeners aren't going to believe that I didn't know this. I did not know this.
Yeah. So Dave, hopefully Dave's listening too, but I have such high respect for him, and he's respected in the industry and literally has helped to publish guidelines here in the business.
So, but the answer is pretty simple. Yes. So we have over a million patients healed each year in our software. So just the size of the database and the amount of information that's coming through provides us with a particular purview in the business that no one else has. And so we sit in a good position to utilize that information and we use it in a few ways.
So for starters, we give it back to our clients. And so there's benchmarking. And so if you have an outpatient wound clinic in Arizona versus one in Florida versus, fill in the blank, you can actually see how your wound healing is doing in terms of days to closure, compared to another's.
And you can sort it by wound type, you can look at risk factors and comorbidities. So basically we're putting the power back in their hands. We also provide the ability for researchers to utilize our database. And everything of course is done in a PHI safe way. We've got BAAs with all of our clients.
PHI, Protected Health Information.
That's right. Yep. And so, yeah, it's a tremendous part of our business and really a credit to the original design of the software, being web based from day one has really helped us. That's remarkable.
So, as you're talking, I remember I feel like I'm old, but I remember because you're young, maybe I am old, but I remember these beginning conversations that we had a decade ago, and I can remember at some point and correct me if I'm wrong, you sort-of spoke to it. There was a huge pivot in the company and you had to figure out how to pivot and grow at the same time.
And so I guess I'm interested in sort of, certainly with all the growth that you sit in front of now, what happens in that moment when you have to be something different than you already are, and where do you pull the vision from to get to where you are today?
Is it the technology? Is it the purpose? Is it a combination? And I'm just interested a little bit in sort of how that feels in that moment. And then when you've arrived to today, is it what you had planned for or is it something different?
Sure. Yeah. One of the challenges with perception I think is that you never arrive. And so while I am more confident today, and I feel more competent in my ability to execute on these kinds of plans, I still feel fresh. And I think that the opportunities are ahead of us. So Lynn, I look at it this way.
Each year, I learn more about the opportunity in health care and each year I am astounded by what I find in terms of its brokenness. And so just from a consumer perspective, for a moment, think about the untapped entrepreneurial spirit in our country right now. And here's what I mean, I've got lots of friends that talk a good game over a glass of wine or a beer about wanting to start their own company. And I know there's a lot of legitimate folks out there that would like to start a company.
And typically the talk track goes selling like this. "Yeah, I could do it. I've got savings, I could probably invest in it, but I just don't want to deal with the healthcare." Well, that's a pretty lame excuse for somebody not to go and start a business, however, it's real and it's felt.
And so while I have a conviction around patients who are suffering, I've also found levels and levels of brokenness in the entire system. So in terms of how do we reframe and how do we stay fresh and hungry, I think the older I get the vastness of the challenges and problems become things I want to sort out, things I want to fix, and I want to be part of those solutions.
Working on sort of workflow type things. It sounds like in wound healing that's what you did, where as you broadened the company now, is that sort of the sweet spot?
Yeah. So the old version of software was to bedazzle people with cool reports and tell them how good it ought to be or could be. And then there's legions of software companies that oversold cool reports, but they never worked on workflow. Five years later, they churn there's an RFP and there's a problem. And then that same organization is stuck in this loop of never really getting it. And so about four years ago, we launched something called 360 Services, and we did this by an Acqui-hire. We acquired a company called WCS.
What did you call it? An Acqui-hire.
An Acqui-hire. Yeah. So this is a-
Is that like a hire in water or something. I've not heard that term before.
This is more common in Silicon Valley where you have got a brilliant founder who has good ideas and perhaps their product hasn't fully, fully launched yet. And what you really want is you want to work with that person or those people. So we acquired a company called WCS and brilliant and talented lady named Kathy Thomas Hess, author, speaker, wound care genius all around.
And then we develop what we call 360 Services to basically overcome this problem and challenge of salespeople selling things, people installing things, knowing how to use it well enough, but never getting to mastery. And so this is a growing part of our business where you can't really go live until your workflow is clear. And you've got to sort through the politics of your organization to understand the right way to operate.
And so I'd say today, that's a bigger part of our challenge is actually making sure they're working well. And then after a client is live and utilizing our software in any of the locations and types, we come back in, because we've got another set of experts that understand how to improve patient outcomes, how to increase revenue, how to remove missed visits, all of those things that take a normal business truly from good to great.
So workflow, it's kind of a buzzword in some ways. In healthcare workflow is the stuff that each person in the organization ends up doing and how it coordinates with each other. Is that kind of what it is?
Absolutely. It's click stream, it's thought stream. It's literally activity management.
And I understand that in healthcare, one of the biggest problem areas is what they call transitions of care. So a lot of risk to the patient and a lot of dropped balls take place when one person stops doing something and someone else starts. How does what you do and your purpose relate to those set of issues?
The transition of care issue is being solved in other ways. So for example, part of the thesis for acquiring Optima was that we wanted to be the first truly connected healthcare company to go from hospital to home and essentially every stop in between.
And so part of what our ambition is and what we're endeavoring to do is create that fully connected record, so that at every stop along the way, the healthcare providers, families, patients have access to the same information, transcribed and recorded and reported in a similar if not exactly same way.
If you reflect back to the days of early computing and personal computing, there was a system called Dos, which was an operating system that allowed computers to run and then Windows and the Mac got invented, and that was the platform that allowed people to really use computers and do great things.
The way I've heard it is that the first few generations of electronic health records were really all about building an operating system, but what hadn't yet been invented was how to use it to really improve care. And I think what you're talking about is that now that is happening
Well, I really appreciate that you brought up the Microsoft example and I didn't, but I think it's a really great one. And if you look back in the history of antitrust, I think there's probably a few things we can learn from it.
So I'd say, I agree. I tip my hat to all of the early pioneers in terms of healthcare software, Medic and Misis, and Next Gen, what today is Allscripts and Athena, Cerner, there are many fine organizations out there that really have done some tremendous things.
What scares you in this business space?
Yeah, there is a generational inefficiency in terms of solving these problems. And so what I mean by that is, the folks that launched version 1.0 of electronic health records, they're retiring right now. And the folks that were a part of that second generation in many cases have made so much money that they're off doing other things, golfing, fishing, relaxing, retiring in their 50s and late 40s.
And so there is a tribal knowledge handoff that's not always occurring, that to me is an inhibitor of efficiency in terms of how quickly we should be improving here. And so occasionally in fits and spurts, the government will get involved and with meaningful use, that was helpful to a degree, but it irritates me that it is not more similar to a consumer market, where there is an innovation cycle that's rapid and competition that's far more vital.
So what excites you?
We have a, I would say, I believe very firmly in the power of the individual. I believe that we are uniquely created and important and have a reason to flourish. And so if that is true, then for me, the thing that excites me is as an employer, I have an ability to reflect that on the team and give them a place where they can flourish.
That said, it's all about the patient. And so every day that a patient isn't seen by a care provider who's using the best in class tools, who's absolutely minimizing the amount of time they're wasting on clicks, that can be a wasted day. So I'd say it's all about the patients deserving the best care, and until you have to go to physical therapy, or until you have a chronic wound or an OakMed challenge, or you need hospice care, sometimes you don't understand how much improvement opportunity there really is. So I'd say, I am driven by all of those reasons.
So I guess Alan spoke a little bit about inpatient care versus outpatient care earlier in the intro. And I just wondered what your opinion is. Do you think shifting to this outpatient model is the way of the future? Do you think it's just been a functional result of necessity or is it really a trend that's going to take more and more patients out of the hospital as technology and efficiency increases?
Yeah, I'd make a relationship to a standard consumer model. I love to go to the movie theater. So I'm old school in that regard, but that said, look at what we do now, we have Netflix. It's simple, it comes to us. Uber Eats is a reality in every major city. I get my groceries delivered to my home. And so there are inefficiencies as a consumer that we simply won't tolerate, but we put up with every day as a consumer of healthcare.
And so I'd say there's an obviousness if you take several steps back and just kind of look at it as an organic system and how it ought to operate, and the disconnect with where we actually are today. So I'd say it's not only a natural, an obvious reality that's going to take place, there's market efficiencies that will help to drive it.
Why don't we insist that it's different?
Boy, Alan, that's a question.
You're the philosopher, you have a degree.
Yeah. It's really a great question. And so part of it is, many of us may be fat and happy. The other part of it is many of us don't have a voice. And so we live in this tension between many who have and have the ability to change, but they're kind of along for the ride, they get it, they know the way it works, they have lots of friends who are in the business, either as operators or owners. And again, you have other people who don't have a voice. And so I think there's this unfortunate generational latency problem that we've got, and so I chalk it up partially to that.
I wonder. I mean, it would make for an interesting discussion over wine and cheese, but I don't know that the market necessarily wanted people to deliver groceries. I don't know that the market was yelling out for that. Some innovator somewhere said, "You know what, I think I can deliver groceries. I can figure out how to keep things cool. I can put things in boxes, get it there in a day, et cetera, et cetera, bring the costs down to where it's basically the same cost."
I wonder in healthcare, if actually it isn't so much the voices of the consumers of healthcare, rather than the level of innovation within healthcare.
It's a great example. And I'll use groceries for a moment here. So about seven or eight years ago, it dawned on me. I probably should have learned this earlier that the amount of time I had to spend with my children on the weekend was finite and it was really limited. And so, while I felt like the right thing to do for me for years was to mow my own lawn. I learned seven or eight years ago that with this small amount of money, I could buy back three hours of very precious time.
What's the value of those 12 or 15 hours I get in the weekend with my children, how do I value those hours compared to the rest of them? And so I kind of learned that lesson related to lawn mowing. I felt the same way about grocery shopping. This is not that different of a thing from week to week. I mean, we stock 85% of the same things in our refrigerator from week to week to week, so why should I drive 25 minutes to get to the whole foods or whatever grocery store you want to go when that consistency occurs?
And so I think that there's an analogy there. There's early adopters and there's innovators. And so I had literally been pinging the grocery store to do this four years ago, because I saw the waste that it created in the thing that I valued the most during the times that I would grocery shop, which was the weekend.
And so I'd say there's consumers who have been enlightened and the illumination is already here. And then there's a lot of people that have never seen the value of how that extra time with their children can be utilized. And so I'd make that same analogy in healthcare today.
Well, we've had a broad ranging and I think a really fascinating discussion. It's a really interesting space that you're in. I think as a consumer of healthcare, people very rarely think about the machine that's running in the background, supporting the endeavor. They meet the people who are delivering healthcare and that's what's most important to them.
So it's really wonderful to talk about that foundation and to understand a little bit about some of the challenges and opportunities in the space. So thank you so much, Patrick, for joining us.
It's been a pleasure, thank you.
Was there another that, I like to ask, I guess, was there anything you expected us to talk about that we didn't get to talk about?
I think we covered it. I mean-
We nailed it, Lynn.
We nailed it. Oh, and I think for listeners, one of the things that struck me from this conversation to build on what Alan said is that people don't think about the cogs that make the whole thing work. And they think of it really I'm assuming, data and computers and all of this stuff is very impersonal.
And so I think it's interesting as you're talking that you're really running a company that uses data and software platforms to do all of that work, but that you're doing it with an underpinning of caring about things from a personal standpoint.
And so I think that's a very interesting outcome of this conversation for listeners is that, there are companies and people out there that are using platforms, but they're building them based on caring about the purpose and the people that are the end users. So that was a great takeaway for me from today. And it's always good to see you, so.
Thank you Lynn, thank you Alan.
I agree. We should tip our hat finally to Muskingum University for offering a double major in philosophy in business. I think that's a pretty big-
You just wanted to say it one more time.
... that's a pretty big deal. So anyway, thank you for joining us today, Patrick, and thank you to all of our listeners. Join us on the next episode of Innovation Unleashed, where we'll continue the conversation about the innovation that's making yesterday's science-fiction today's technology solutions.
You can find us on Twitter @DrAlanRussell, and on Facebook, @InnovationUnleashed. Please send listener questions and ideas to InnovationUnleashedpodcast@gmail.com. Thank you and we'll see you next time.