DoctorBase’s CEO John Kim shares lessons learned and explains why it takes more than experience for health tech entrepreneurs to find success in the health tech industry.
Right now, innovations and the companies that create them are abounding in HIT. But that doesn’t mean that cracking the code to HIT success is all that easy. Even an experienced entrepreneur like John Kim says that healthcare is a difficult space for startups. And he should know. He started one.
In April 2010, Kim cofounded DoctorBase, a developer of a cloud-based communications platform that offers mobile engagements to patients for providers. The San Francisco, CA-based company seems to be steadily growing as its platform moves into small and mid-level health organizations. Kim said he knew that the idea for DoctorBase was a solid one, having had previous success with his startup Five9 and its development of virtual call center software.
Still, it hasn’t been all smooth sailing for DoctorBase. Kim admits encountering his fair share of snags in the healthcare space, which have since humbled him. As a result, we at HIT Consultant wanted to sit down with Kim and talk about his successes and stumbles as an health tech entrepreneur, and how they are helping him shape the future of DoctorBase as its Cofounder and CEO:
Let’s start with talking about DoctorBase and how the company came to fruition: What was the inspiration and thought process behind forming the company and devising the patient-doctor communications technology?
In 2010 we saw the power of marketing automation software that was starting to become adopted by mainstream businesses, and we knew eventually, it was going to find its way into healthcare. We’re seeing that without marketing automation, patient engagement doesn’t operate efficiently at scale or get adoption from either providers or patients.
Marketing automation is the secret sauce to effective patient engagement; so being better at healthcare marketing automation than anyone else has always been our focus.
What was it about DoctorBase that made you think it was a project worthy of pursuing? What elements stuck out to you about the technologies that were going to give you an edge on the competition?
Our first customer (the office manager for a doctor’s office named Linda) sent me a 2 word email in all caps. “LOVE IT.”
That’s when we knew we were onto something.
You have had notable success with launching multiple startups outside of the healthcare space. Tell me a briefly about what those experiences compare to DoctorBase: What’s been the greatest departure or change in approach that you had to adapt to when it comes to the HIT space?
The toughest lesson for me was also the most humbling one. Based on the moderate success of my previous SaaS company Five9, I thought that we would walk into healthcare IT and “revolutionize it.” What we found, and are still learning, is that healthcare is actually a byzantine network of different industries, and not all of them are governed by traditional business rules or economic forces.
From a technical or product perspective, we now push thousands of messages per day between providers and patients, and in healthcare you just can’t have “routine scheduled downtime maintenance” like you can with many B2B SaaS companies. The goal for the margin of allowable error is always nearing zero in healthcare.
What are/were some of the key challenges that you have encountered with launching DoctorBase?
We face a three pronged challenge each day:
1. How do you get patients engaged with their doctor and their medical staff without over-burdening the medical providers?
2. How do we make the lives of the medical office staff easier?
3. How do we get healthcare providers to collaboratively engage in meaningful ways that go beyond simple point-to-point email?
Furthermore, how have those challenges changed your perspective on the HIT space? Were there assumptions or expectations you had that yielded different results?
Many, many experts told us that medical professionals would not build their own social network on our platform or answer patient questions for free on their downtime. With thousands of our doctors answering patient questions for free on our platform (even though this new feature is just seven weeks old), our users have proven that the critics were wrong. Ultimately, all credit goes to the doctors and mid-levels who answer consumers – the critics just underestimated their compassion. Amidst all of this reshuffling of the healthcare economic cards, healthcare providers are healers by calling – nothing is going to stop them from helping people.
Would you say that the consumer mentality is different in healthcare? Which part is the trickier piece of the puzzle, appealing to providers or to patients? Naturally, you are selling to providers, but you have to make sure you have a product that patients will use. Has that been part of the challenge at all?
Here’s the tricky part of healthcare economics (and I’m part of this American sentiment as well so guilty as charged): When we’re healthy, we want to pay for the equivalent of cheap, federally subsidized cafeteria food. When we’re seriously ill, we want the hospital with the Louis Vuitton suite. That’s a tough challenge.
What about the fact that DoctorBase started with a strictly mobile offering? Did that create unforeseen challenges?
We started as a desktop offering that was forced to move to a dual-mode delivery platform that was heavily based on mobile experiences. If one thinks about it :
A) Office staff are on Wintel desktop computers during their work hours.
B) Doctors are on both desktop and mobile (heavily iOS) during work hours (for many doctors, all waking work hours are potential work hours). Also, throw in a high adoption rate of iPads amongst doctors.
C) Patients can be heavily Android depending on the geographic area. We’ve seen in some of our neighborhoods that Android devices can be over 70% of the patient population on our platform.
Building a seamless user experience with singularity of purpose-as-per-role is a constant puzzle, challenge and joy to work on with a three user interface – patient, provider and staff.
We are starting to get marketing agencies and practice management consultants using our platform on behalf of their clients, so that may be another user base we need to learn from and address. However, this was totally unexpected as a user base even as of last year and we’re still learning about their needs as more healthcare organizations employ the professional services of agencies and consultants.
How has tackling these challenges changed the way you view the company and product offerings? What about the consumers?
DoctorBase has nearly doubled each year over the lifespan of our last four years, and we did it without VC funding. Healthcare has both humbled me and taught me to have more of a long term view on both the company and how our product innovations spread their influence over time.
Now having experienced some of these challenges firsthand, why do you think it’s so difficult to build a successful health-tech startup as an entrepreneur?
There are so many reasons why health-tech is so difficult for entrepreneurs, but I’ll list the top three in descending order of importance:
1. The biggest challenge is what Jason Lemkin of Saastr refers to as “VC Overhang.” In healthcare this is especially true, where you have companies that after raising several million dollars need a sizable exit in an industry where the potential M&A companies have more conservative valuations than VCs.
2. Lack of integrations kill nearly any good health IT ideas. Integration into existing EHR, billing, and PMS systems are a must if one’s idea is going to actually scale. We know this is especially difficult for a young startup, so our CTO has been documenting our APIs in the hopes that one day the increasing amount of Y Combinator, TechStars and Rock Health companies asking DoctorBase to license our integration libraries (we integrate to over 27 different EHR and PMS systems) can do it in a safe, affordable manner.
3. The patient owns the data. The doctor owns the patient (relationship). The office manager owns the office.
Building an organizational culture that respects these fundamental truths was a lot harder than one might think.
Are there unique challenges to consider when garnering funding, or creating an appropriate yet scalable business model in the HIT space? If so, what are they? Additionally, How do you ensure that you are growing your business at the right pace and what risk do your run when it comes to premature scaling?
Most of the money in healthcare is in the services of delivering care -not technology. It’s a wonderful time to be raising money for your health-tech venture because there is an ocean of money out there right now, but both investors and developers have to be aware that there are very few potential bIllion dollar ARR companies in digital health currently. It’s important for entrepreneurs not to over-promise their investors, prepare their team for the long journey across the desert, and drink lots of fluids along the way.
If you build your culture right, it will be an amazing road trip and the scale issues will resolve themselves simply because your team will help you pilot and adjust along your maze-like journey.
As a result of all you have learned, where is DoctorBase today? What important changes have you made and what direction is the company headed in as a result?
Deloitte released a study showing that 2014 was the breakout year for secure messages between providers and patients, and there’s potential legislation next year with bi-partisan support that would allow doctors to be reimbursed by Medicare for accepting patient messages. By being amongst the first platforms to gain traction in engaging providers, admins and patients in meaningful, collaborative and time-efficient ways, DoctorBase will be at the forefront of how healthcare access will be defined – and paid for.
What is the critical lesson here for ambitious health-tech entrepreneurs?
Walt Disney once said, “My best product goes home each night.”
Similarly, in health-technology it’s all about the team. We just hired Joshua Angeles from ZocDoc to be our first VP of Sales – the energy his team brings to the office is infectious, both to our engineers and support team.
From a product perspective my focus is on the next version of our platform, called PANDA Black – a culmination of 4 years of learning, mistakes and discoveries. I will wake up in the middle of the night and start working on it again because I can’t sleep, and often notice half of my engineering team is still on Slack (our group messaging application). We’re just loving it.
The team is everything.
Is there any one thing you wish you had done differently from the beginning? More importantly, is there anything that you definitely being doing differently as DoctorBase moves forward?
I wish that we had found a co-founder from day one with a deep background in building great customer service teams. We had to find one later, and it cost us big time.
Are the elements that made this project worth pursuing, have they changed at all, or have they still held true?
It’s wise to follow Steve Job’s adage to “build useful things,” but in health-technology, those useful things better be monetizable relatively quickly and with a sizeable total addressable market to boot.