Podcast with Dr. Keith Dunleavy, Chairman and CEO of Inovalon

Welcome to the big unlock where we discuss data analytics and emerging technologies in healthcare. Here’s some of the most innovative thinkers in health care information technology talk about the digital transformation of healthcare and how they are driving change in their organizations.

Hello everyone and welcome to the podcast it is my honor and privilege to have as my special guest today Dr. Keith Dunleavy, Chairman and CEO of Inovalon. Dr. Dunleavy welcome.

Thank You Paddy thank you very much it’s a pleasure good to be talking to you again.

Thank you very much. For the benefit of our listeners maybe you could start by telling us a little bit about who Inovalon is and what kind of problems you’re solving today for the healthcare industry.

Sure Paddy thank you. Inovalon is a company that is entirely focused on how data can help to improve the understanding and the clinical and economic outcome improvement of healthcare. Data is at the center of all decision-making and all efforts to improve healthcare and in order to bring that data together to analyze it to inform a more intelligent and informed decision in the healthcare community you need a number of technological capabilities and it’s these technological capabilities that Inovalon is focused on. Those capabilities are the ability to connect into an aggregate massive amounts of data. Number two to be able to analyze that data in a petabyte volumes in incredibly high speeds. Number three is to be able to then take the analysis from that computer and be able to drive meaningful impact in the marketplace in the point of care where the patients are actually serviced and taken care of. And then number four the ability to take all of that impact and summarize it into data visualization and reporting and processes that are necessary for the backend of healthcare to operate and be strategically directions. So it’s these four capabilities that enable what is referred to often in healthcare as the transformation from a volume driven health care market to a value driven healthcare market that Inovalon is focused on. So it’s really a technology layer, a cloud-based technology layer that is enabling and empowering the improvement of healthcare.

Right right and I will come back to the major themes that you highlighted data-driven healthcare, the transition from fee-for-service to value-based care and cloud. These are very important emerging themes in healthcare today. I will come to that in a minute but first you made a big exciting announcement last week, your acquisition of ability network first of all congratulations!

Thank you.

And would you like to tell us a little bit about the rationale for the acquisition and the synergies that you expect to drive from the transaction.

Sure so historically Inovalon have focused on aggregating information, analyzing it and driving impact on behalf of the major health plans, pharmaceutical companies, medical device manufacturers and diagnostic companies around the country. Now these are large corporations that service tens and hundreds of millions of patients and we have spent our time developing the analytical capabilities connection pipes and cloud computing environment necessary to do that. Ultimately getting to the point where we today have over 241 million patients in our system and trans-covering the vast amount of the United States in our work. What combining with ability network allows us to now do is to dramatically expand the reach of that analytical capability that connectivity capability and the ability to drive impact all the way down to the point of care at 44,000 provider sites around the country combining what we have historically achieved at Inovalon together. With the SAS software as-a-service cloud-based platform of ability network allows us to achieve a market-leading vertical integration of data driven healthcare all the way from the health plan, the pharmaceutical company, the medical device manufacturer, the diagnostic company, the employer all the way down to where the patient gets their care at the point of care where the provider is. So this achieves enormous expansion of capability and reach but also achieves a significant improvement in the operational efficiencies of the company and the scale of the company allowing us to really deliver end to end value-based care enablement through a cloud-based platform across the entire breadth of the ecosystem. It’s very exciting for us there is enormous expansion of channel for the company and also a very significant expansion of total data set size and connectivity reach. So we’re very excited about it a lot of positives for the healthcare marketplace as well as the technology marketplace and our shareholders as well.

Right right and definitely exciting it’s a worth of a billion dollars or so in transaction size so it’s not a small transaction by any means and definitely sounds like you are expanding your coverage and reach significantly especially on the provider side and even more specifically on the ambulatory side of the continuum. Would that be a fair statement?

Paddy you’re spot on they cover approximately 44,000 what are called provider sites and as you appropriately point out what that means in the healthcare world is acute care providers like hospitals and walk-in clinics. Post acute providers like homecare, nursing homes, and hospice and ambulatory providers like the doctors offices that you and I would go to on a routine basis or or when we get sick. So across the board they have that connectivity into those provider environments and very importantly they do it in a way that’s in the workflow of how those organizations practice medicine. So unlike a connectivity that might be in what we call the back end of the IT systems of facilities ability network is part of the front end and the operational day-to-day flow of operations at these centers. They actually have what is called the my ability software platform which is a workspace or a desktop of seven different applications that their customer base uses every day to execute on the critical needs that they have administratively clinical quality wise, regulatory compliance wise, financial processing wise. All of the matters that a physician and care giving facility needs to deal with in order to ultimately operate so by having that front of mind presence in the provider environment connected in real-time with the Inovalon one platform. Cloud allows us to do tremendous things. You know have access to information and data in a real-time manner be able to put analytical results and insights in front of the provider site also in real-time allow us to help them operate more efficiently, achieve better quality insights and outcomes have a better financial and economic performance ultimately improve the patient experience as well as the overall economics of the whole ecosystem. So it is quite exciting and it is truly industry-leading there’s no other solution that vertically integrates all the away from the major players in the health plan Pharma device Diagnostics world all the way down to the patient’s point of care in real time in a cloud-based format like we will now have. So it is a very exciting process for us.

Absolutely it does sound like all the best on the transaction I know it’s yet to close but all the best with the transaction flows and I’m sure you are going to have your hands full in the foreseeable future. So switching topics Inovalon believes in a data-driven future for healthcare so can you talk to us a little bit about the emerging data sources now it’s you know we’ve gone well past electronic health records that’s kind of table stakes now everybody’s supposed to have access to it and claims data which has been around a long time this is all the traditional data sources for one of a better word now you’ve got new data sources coming together right. You’ve got the IOT data, the social determinants data, genomics data soon you’re going to have speech data from your Alex among other things. What’s your view on how all of these new data sources can be integrated into transforming care delivery as we know it and what role do you see for those types of data sources in your own services and products to your customers.

Well Paddy, this is an enormously important topic as you aptly point out. Let’s walk through there’s a lot in there in your question let’s kind of tease out the different parts and pieces of it that allow for a holistic data strategy. So first and foremost as you point out there are lots of different types of data that are involved in healthcare. There are the most traditional element that people would refer to as claims data, there is obviously what some people call as clinical data. We’ll come back and talk about that in a moment. There’s also a patient reported data, there is a data that gets reflected in what’s called activities of daily living data, there is behavioral data reflecting whether or not a patient is actually doing what they are recommended to do from as basic as are they getting their prescriptions filled too are they actually doing the physical therapy that they’re recommended to have done and and are they managing their salt intake or other aspects of their care. So this is a type of data that’s important. There is significant amounts of additional data from activities and devices so you have your health care trackers that come from your mobile phone, that come from your Fitbit, that come from your electronically connected scale there is data that comes from medical devices such as implantable defibrillators and pacemakers and insulin pumps there’s data that comes from as you point out genetic components and genetic is an entire world of its own where you range from genetic marker data which is whether a patient has or does not have a particular sequence that is identified as a genetic marker versus having actual sequence data which is a more granular level of genetic data. We can come back and talk about that as well but then also is the very important aspect that you point out about these these walled gardens and the aspect that data for a particular patient resides in so many different locations and platforms it’s not just that there are numerous different types of data it’s also that there are numerous different locations of data and also stages of data. The process of a patient’s healthcare experience actually has various different linear stuffs that alter the data things like what are called adjudication steps where the information that reflects the patient’s care actually gets edited and expanded on or actually removed from the data set from a financial point of view or a authorized point of view so you have this a multi-dimensional set of information that is variant in the nature of it, the location of it, the timing of it, the staging of it all of which needs to be tracked. And they are this data resides in a highly disparate set of sophistication levels of management in the marketplace meaning some of it is in very basic diagnostic laboratory machine level repositories and some of it is in very advanced cloud-based architectures. So the task of bringing this together in comprehensive fashion is rather significant in its scale and this is something that Inovalon has spent tremendous amount of time, investment energy, focus, subject matter expertise in developing so I’ll give you a few statistics that you might find Interesting. In 2016 the numbers for 2017 I don’t have in my head yet but for 2016 the average Medicare Advantage member in the United States saw 6.2 different locations, each one of those locations more than one location two or more locations often on different EHR platforms or connected through different HIE systems so that the average patient typically had data residing in a minimum of twelve different systems around the country around their eco system and beyond that of course they might travel somewhere on vacation and get sick there or fill a prescription there or have a visit to an emergency room there and of course patients change their name their name gets incorrectly entered into systems the multi additional identifiers of those patients vary by accident or on purpose on purpose meaning when they get married or not and so proper alignment of it with the right patient is incredibly important at Inovalon. What we’ve done is we have developed a system of intelligent data integration we call the front end of this the I port system and the I port system which has multiple different types meaning there’s Enterprise ID port and there’s cloud-based I port which we call I port HD. This undertakes a process of allowing the 37 billion medical events that we have in our platform to teach the system what to expect as far as data inflows because you can’t possibly use human data mapping on those kinds of massive data influx when you’re receiving data that ultimately sourced from thousands of different hospitals, tens of thousands of different clinical facilities, hundreds of thousands of different laboratory sources across millions of patients that is streaming in at a velocity that requires you to have a very intelligent data integration platform. Ours conducts more than 1100 data integrity analyses on the data that comes in so that it can identify errors and omissions in the data and get smarter and smarter at identifying where an error might be. So Inovalon data comes to it in identified what’s called primary source fashion which means we have a proper identifiers on all of our data and can longitudinally match up the genetic data with the claims data, with the laboratory data, with the patient reported data, with the physician entered data, with the electronic health care record data and so forth before then undertaking and encrypted at the identification process on that data so then to come back to what are we doing in a going-forward way it has also to do with how do you structure that data. So one of the things we have been very mindful over the years is how do you make sure that the data structure in our database architecture strategy is laid out in a way that allows for super high speed analysis. Because actually the way that you store your data significantly impacts the speed at which you can undertake a multivariate compute process. So we had to also anticipate the expansion of data types over time in structuring the architecture you know how might genetic data look as we get further and further into the granularity of that information, how might patient reported devices look. So all this is a huge focus of ours we are we have a whole team that focuses on data architecture strategy and it’s a significant differentiator of the size and volumes of data that we deal with.

Thank you for that detailed overview yeah it sounds to me like if I boil it down there’s a couple things. One is the ability of an enterprise such as Inovalon to take all the data that’s coming in standardized it, normalize it, and make it usable to put it very simply. There’s also an external factor which you referred to earlier on in your comments which are the wall gardens you have to have the you know having the internal ability to integrate aggregate and standardize and normalize the data is one thing but having the ability to get the data is another thing and there’s some external factors there which I think you refer to as walled gardens and we know we all talk about the I word interoperability and just a quick comment on that. Do you think we’re getting any closer to solving that through fire for instance what do you think it’s going to be left of individual enterprises such as Inovalon to find and build solutions and try to gain acceptance across the industry where do you where do you think we are in that journey.

I think we’re making good progress Paddy, so I think that the you know we’re in a refreshed cycle in the healthcare technology landscape in our view you know you had first generational electronic health care record systems for instance you then with the financial stimulus of a few years back went through a second cycle an enormous expansion of the brands and formats of EHRs which dramatically expanded coverage of various different technology platforms. But also unfortunately at the same time expanded than the number of variants of data structures that introduced a new challenge of interoperability ironically. We’re now on arguably the third cycle and this is now driven more intensely by financial scrutiny of how do I as a hospital or a health plan or an integrated health care delivery system invest my hard-earned dollars into technology as opposed to a scramble to put something in place for meaningful use or collection of stimulus dollars. So the marketplace is being more scrutinizing of platforms today and the technological function now on the interoperability provided by those different platforms is now getting a lot more attention than arguably it did four or five years ago. So that is playing well to the market now increasingly coming up with standards you’re getting this book politically technologically and economically which I think is heading us in the right direction.

Thank you thank you Dr. Dunleavy. Switching to another topic cloud you know Inovalon platform is a cloud-based platform and you pointed to that in your earlier comments how do you see cloud adoption rates in general today in healthcare and is there anything holding it back from an accelerated adoption curve.

So we have seen a significant inflection in the adoption of cloud we at Inovalon began our cloud journey approximately three years ago and started aggressively investing into cloud in 2015 and all new development or the vast majority of new development was being done in native cloud format and then in 2017 last year we brought together approximately 80 different components in our platform into one cloud-based platform called the Inovalon one platform and we undertook an aggressive migration of clients to that platform because it enabled far more modular approach to solutioning for our clients benefit, it allowed for a much more efficient application of technology dollars and elimination of inefficiency a human being a time and overall delivered a higher ROI for for our clients as well as greater flexibility for for the company. So by the end of 2017 we had 94 million patients migrated onto our cloud-based platform which is up about 450 percent year-over-year and that included four of the nation’s five largest healthcare systems. So that is literally within a 12-month period so an enormously rapid transition of marketplaces willingness to be utilizing the cloud and I think that that’s for a number of different reasons it’s because of the economic pressures on healthcare it’s because of the functionality differentiator able to be delivered in cloud is overcoming the subjective concern around things like security of the data and of the computer environment. So as that has the value able to be delivered through cloud and the economic benefit of being able to be delivered through cloud has accelerated so dramatically over the last 2 or so years that has overcome the subjective concerns of this new thing and we’re seeing strong positive response to the cloud.

That’s that’s really encouraging to hear Dr. Dunleavy and I’m sure that it’s going to play out well for you know all the other technology companies and healthcare enterprises who are adopting a kind of a cloud for strategies if you world for new solutions. Especially in analytics where data is coming in from different sources and eventually the data leaks and data warehouses are now sitting on cloud somewhere as opposed to an enterprise environment. So that’s really encouraging to hear now you also touched upon economic pressures in your in your comments just now so we are seeing a shift from fee-for-service to value-based care and the value-based care train has left the station as everybody acknowledges that I’m curious know your views on how far ahead the industry is in terms of adopting value based care initiatives you know alternate payment models and the like and not just because of regulatory pressure but also market pressures and just as a way of doing business for the future and related to that you know how are other forces such as rising consumerism, the growing influence of Millennials and their way of consuming healthcare and their way of engaging in general with smart phones and stuff like that. What does all that mean for your business and for the healthcare market? Would you care to comment on that?

No Paddy, we’re the technology platform that enables it to happen so let me try and give you an example so let’s take the pharmaceutical marketplace for instance. Very well known in in healthcare that new drugs are coming on to the market that are very expensive they’re very expensive but they can deliver a tremendous benefit to the right patient so a health plan or an employer who is being asked to pay for these medications is obviously sensitive to making sure that it is being given to the right patient, the patient that really needs it and uniquely benefits from it and that the value argued for the medication is in fact being realized so herein is a great place for our technology platform. A technology platform that is able to be connected into the ecosystem the laboratories, the hospitals, the health plans, the pharmaceutical data streams can help to identify the right patients that fulfil the criteria for being appropriate and eligible for a particular medication, an expensive medication. Then can identify that patient to the right physicians and then can track and report on the impact and benefit and performance of that drug on that patient so that a pharmaceutical company can go to a health plan and say we have a great drug it’s expensive but the value delivered is way in excess of the expense and we will stand behind that we have a technology partner by the name of Inovalon who we’ll put in place this platform you will be able to monitor and see the patients that are on these medications you’ll be able to monitor and see the value that you are receiving and in exchange the health plan gets comfortable with the high cost medication because they can see the high value benefit and they’re able to see that in near real-time using our software so that all parties are benefited the pharmaceutical company gets a larger distribution of its drug to an expanded market, the health plan or the employer gets visibility into the value that they are receiving in exchange for what they are paying out and of course the patient is getting a new medication that is highly beneficial to whatever condition they’re suffering from and its software and connectivity and intervention and reporting capabilities on the Inovalon one platform that empowers that entire exchange of value and benefit and cost.

Interesting very interesting Dr. Dunleavy let’s talk about quest Diagnostics this is one of your strategic partnerships and this is this is this is something that you and I have discussed before and I also saw that lately you won some awards for the products that you launched collaboratively with Quest. Firstly, congratulations on that in fact I featured some of that work in my book as well you want to give us an update on where you are with the partnership you know any key milestones you want to touch upon.

Thanks Paddy, our company that obviously is highly highly penetrated into the marketplace and is looking for lots of ways that not only the laboratory work that they do but the platform and presence that they have with physicians is leveraged to the greatest degree possible. So as you know what we put in place in partnership with Quest is the ability to have a request by a physician not only be for a blood laboratory for instance but for an analytical test data diagnostic which they can request in the same way that they would request a blood test. But instead of the blood test taking one two or three or however many days to be complete the analytical test is complete within a couple seconds and reports back to them on a number of different enquiries they can have so that they can help change how they would practice medicine for the benefit of the patient in real-time so that that obviously required significant efforts on quest side to enable that in their platform. And we at Inovalon designed the real-time capability in an active active active cloud from native environment format which was first of its kind and allowed for responses back within two or three seconds anywhere in the country despite the massive size of data moving that was necessary in compute process that was necessary and formulation of format response that was necessary. So both organizations did some really impressive development and achievement on that and we are really pleased with aware that moved this capability in the marketplace and how many other applications that now obviously has with on demand a real-time analytics so we continue to move that into a different Quest opportunities meaning clients of theirs, ACO’s of theirs, hospital systems of theirs neither organization reports out on the volumes under that process but it is a very exciting and ongoing positive progression of our technologies together so it I very recently met with several of their senior people and we’re excited about next chapters on that as well.

Right and it’s award-winning – so congratulations on that.

Thank you, thank You Paddy.

Well we are done to a last couple minutes here I thought maybe you could round out this discussion by talking to us about what your top two priorities are for 2018.

Well great I appreciate it Paddy I’d love to tell you about some of the new technologies that we’ve been working on and undertaking in the marketplace and are extremely exciting. So obviously one of the main focus is we spent a lot of time, energy and resources in ‘016 and ‘017 building out our cloud environment. We run a private cloud environment in multiple tier 4 data centers and also burst into and utilize commercial clouds such as AWS and Azure and others that large investment we’re now converting into strong harvesting of value for our clients and for us but we’re also using that a very large compute environment that we now have to do some very exciting new capabilities. One of them is natural language processing as a service or NLP as a service in 2016 we developed natural language processing capability here at Inovalon to decrease the amount of human intervention we needed to convert unstructured data into structured data. We rolled that out across the company in 2017 and it dramatically decreased our personnel requirements and therefore obviously cost and dramatically increased our speed. You combine NLP together with Direct Connect EHRs and you get a capability that allows you to aggregate clinical data in real time from millions of different patient data sources and then apply natural language processing on it in near real-time and provide back a compute on what was previously thought of as an ____(transcript missing) 39:48

So we have started rolling out a service called NLP as a service where organizations can literally just license and use that software capability in large scale. We have made great progress on that we’re excited about that and that requires the enormous computer environment that we’ve developed and the connectivity that we’ve developed so bringing together investments that we have done to bring truly market-leading capabilities out into healthcare. So it’s just one of the examples of things we were working on here in 2018 and we’re excited about it.

Yeah yeah and unstructured data is of course the vast unexplored frontier of health care data which by some estimates constitutes 80 percent of all healthcare data out there. So that should be exciting too so you’re opening up the new frontier there.

No it is truly exciting and as an engineer and a physician. You know I was an electrical engineer before I went off to medical school to sit in a conference room and watch on the screen cases in real time be aggregated and analyzed from all their different EHR locations and identified as whether or not this patient’s cancer is progressing, is stable, needs a change in therapeutic approach it is truly amazing absolutely amazing.

Unbelievable that’s great so Dr. Dunleavy we are at the end of our a lot of time for this and greatly greatly appreciate your taking the time it’s a real pleasure speaking with you as always and all the way best for for the rest of the year and beyond.

Paddy always a pleasure and I appreciate your time great to talk to you again.

Thank you so much and have a great day. It was really good talking to you. Thank you Keith and thank you ____(transcript missing)

Thank you, have a great weekend.

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