American Well’s UnitedHealth Coup: Perspective from CEO Roy Schoenberg

Xconomy Boston — 

Boston-based American Well, in a one-two punch of advances announced this week, has added substance to its dream of giving consumers with health problems a way to consult with doctors over the Web and avoid more costly office visits. On Tuesday, the company said it was upgrading its Web-based “Online Care” platform to provide doctors guidance tailored to specific patients. And yesterday, a division of the UnitedHealth Group, the Minneapolis, MN-based company that is the largest private health insurer in the U.S., said it would begin deploying American Well’s platform to hospitals, practices, and patients across its huge network of more than 70 million members.

That’s a big win for the three-year-old startup, which introduced its Web-based patient communications platform last summer and, up to now, had signed up only two customers—the Blue Cross-Blue Shield plans in Hawaii and Minnesota. The deal with the division of UnitedHealth (NYSE: UNH), called OptumHealth, does a couple important things. It gives American Well access to that company’s so-called “clinical analytics” technology—which mines patient records for examples of gaps in care that can then be highlighted to physicians—and also clears the way for the platform to be made available to millions of people in all of the states where OptumHealth and UnitedHealth do business.

After the OptumHealth announcement, I reached Roy Schoenberg, CEO of American Well Systems, and asked him to explain both developments in more detail. (American Well Systems is the operational side of the venture; Roy’s brother and co-founder Ido Schoenberg is CEO of American Well Incorporated, the business side.) He talked about how the OptumHealth agreement will speed up deployment of American Well’s technology. And he differed with my own diagnosis about the slowness of the rollout so far, saying that he believes the platform is being adopted at a “staggering, unbelievable pace” considering the conservative (some would say anti-technology) nature of the healthcare industry, which still relies heavily on old-fashioned paper records.

Here’s a full writeup of our interview, which was conducted Wednesday.

Xconomy: Before we talk about your agreement with OptumHealth, can you explain the core of the news you released yesterday, about an upgrade to your own Online Care platform?

Roy Schoenberg, CEO, American Well SystemsRoy Schoenberg: The release that came out yesterday was about the unveiling of what we call internally Version 3.0 of the Online Care platform. It has better, broader administrative capabilities and other things that improve the experience based on what we’ve learned from users in Hawaii and Minnesota. But probably the most important feature that has been added is a thing called Online Care Insight. It’s very possible that a patient [using our system] will be seen by a provider with whom they have not had a previous encounter. Which means that anything we can do to equip the provider with insights—not only about who the patient is, in terms of their medical record, which has been there from the very first release, but really what needs to be done for the patient, what are the gaps in care, the appropriate medication changes—will go a long way to make sure the encounter represents a higher quality of care.

The way this is done is by taking advantage of expert systems, called clinical analytics systems in the business, which are very large computer systems typically deployed by large organizations like health plans to review the current healthcare activity of patients to identify such gaps. A typical example would be if a patient has diabetes and they haven’t had an eye exam, which is very important to prevent blindness. These systems will pick that up and drive communication to a physician or a care manager to say, “Listen, you really need to do an eye exam.”

Many such insights are generated by these systems, but until today, typically the results of those insights are, in the best case, the plan would send a letter to the physician saying that when you see the patient next you need to advise them about this thing. But as you can imagine, physicians typically don’t read mass mail, and don’t necessarily follow them. What we have now is the opportunity to engage those [expert] systems in real time when the patient is about to come together with a physician on our system. It brings them directly to the console. So the first time we are literally harvesting the immense computer power of these systems and bringing them into the care encounter.

X: From what I’ve read about OptumHealth’s eSync platform, it sounds like the expert systems or clinical analytics that you’re talking about is a big part of what they provide.

RS: ESync represents the front end of all of these analytics systems that Optum has developed and put in place. They have the ability to generate all of these messages about what needs to be done for the patient. But the big change is to be able to inject that information into the right place at the right time, so the physician can take advantage of it with the patient they are encountering right now. That ability is unique to Online Care. Before Online Care, when a patient was seen by a physician, there was no computer between the two.

X: Well, actually, there has been a computer in the room during almost every medical encounter I’ve had in the last several years.

RS: There is a computer. The question is whether the physician is going to log onto a system and read what that system is telling them about the patient in front of them. You can guess how often that is going to happen. But with Online Care, because the physician is seeing the patient through the computer, it’s like having a TelePrompTer saying what needs to be done right in front of them.

X: So American Well is providing the channel for this clinical analytics content. But the content itself—that’s not something you are building or generating at American Well, right? That’s what you’re now getting through this partnership with OptumHealth?

RS: Yes, the content, the clinical insights themselves are coming from eSync. ESync is creating the observation that “This patient hasn’t been compliant with their beta blocker drug therapy,” for example. Then through Online Care Insight, that information can be injected in front of the next physician that this patient actually sees. That physician then has the ability to discuss it with the patient.

X: Okay, let’s switch gears to today’s announcement.

RS: The announcement that came out this morning is more of a commercial announcement, in the sense that Optum, like Blue Cross Blue Shield of Minnesota or Hawaii, has partnered in a commercial contract with American Well to deliver the online care services to a very large distribution of patients. They are a national plan. You know about the relationship that OptumHealth has with UnitedHealth. Their intention, as they’ve written in their press release, is to roll out Online Care at that scope. So the release is really an evolution in the adoption of Online Care.

X: What interested me about the news is that it seems to represent an opportunity for American Well to expand much faster across the country, rather than adding one state plan at a time. Is that the correct interpretation?

RS: That is absolutely correct. But bear in mind that we have more than one national health plan. There is Optum/United, there is Aetna, there is Wellpoint, and there is a big overlap between them in terms of geographical coverage. So you are going to see Online Care adopted by other health plans, even if they serve the same states. We are very encouraged by the fact that a national health plan is very aggressively, and with a lot of conviction, rolling out Online Care.But that does not mean we are done with the U.S. This is not going to be our last announcement. [Editor’s note: American Well has not announced deals with Aetna, Wellpoint, or other multi-state providers; Schoenberg is referring to the the fact that these are national insurers in the same league as UnitedHealth.]

X: How do you expect to see Online Care actually rolled out across the plans that OptumHealth serves? The wording in your press release was that the rollout would happen “state by state”—what does that mean?

RS: I can’t speak for Optum. But the general notion of rolling out state by state is tied to the fact that becuase Online Care is a care delivery platform, it has to abide by the rules that govern healthcare delivery in each state. For example, the system will only match you with physicians who are licensed to practice in your stage. You can’t see a physician licensed in another state—that is illegal. The rollout is going to involve switching on the connections between patients and physicians in each stage where Optum has an operation. With regard to which states, or how many in parallel, or in what months of the year, those announcements will come from OptumHealth.

X: Was there anything about my story Wednesday about your announcement that you wanted to correct or add to?

RS: What you’re writing is completely accurate, at least from our standpoint. I would just add that we unveiled the notion of Online Care exactly a year ago, at AHIP [the annual meeting of America’s Health Insurance Plans, a trade group] last year. At that point we announced that not only is the software available, but Hawaii is going to be the first plan. Within about six months, we had launched to the entire state. Within three months after that we announced that Minnesota was going to be the second state. And finally, at the one year mark, we are announcing that one of the largest plans in the country has plans to launch it nationally. That is extremely encouraging. There are further announcements coming down the line very soon. I think this is testament to the fact that in a world where healthcare requires a fresh look at how you use technology, this is the writing on the wall, the proof in the pudding.

X: Well, that leads to one last question. From my perspective watching the company, an awfully long time went by between your Hawaii announcement and your Minnesota announcement. The OptumHealth deal has come on the heels of the Minnesota news more quickly, but overall, it would seem that the adoption of American Well’s technology has been extremely gradual up to now. Have you been frustrated with the pace?

RS: I would actually say quite the contrary. What we are doing is literally changing how healthcare is delivered. There are very interesting statistics about what it takes to get a new electronic medical record system to be more prevalently used, and the numbers are ridiculous. A real movement in physician workflow takes about 15 years to complete. Within one year, we have gone from the point of announcing a concept to a national rollout of a new mode of healthcare delivery. That is, to me, a staggering, unbelievable pace of deployment. And it’s not just that consumers and physicians like it, but the financial driving forces of the market, the plans themselves, are literally lining up to do this.

Now, we want this to be everywhere just as much as you do, but Rome was not built in a day. Gartner came out with a statistic a week or two ago saying that by 2013, 25 percent of care that can be handled online will be handled online. That is an incredible prediction, given the fact that until a year ago, this was just a dream. But whether it’s 25 percent or 30 percent or even 15 percent, it’s an incredible shift. Just think about how long it took for Amazon to shift people to buying books online—it’s been more than 10 years. And healthcare is much more conservative; the barriers to shifting how the healthcare industry behaves are way bigger. Yet we’re seeing all this fundamental change right in front of our eyes.

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