Season 4: Episode #109

Podcast with Kyle Kiser, Chief Executive Officer, RxRevu

“Behavior change is where value is derived in digital health”

paddy Hosted by Paddy Padmanabhan
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In this podcast, Kyle Kiser, CEO of RxRevu, discusses how they have built a data network to provide real-time patient-specific prescription pricing information to providers at the point of care.

Pharmacy Benefits Management is a concentrated space with a handful of players. The PBM model is changing into something more holistic and more focused on managing patients, not just around pharmacy benefits specifically, but managing the total cost of care, using pharmacy benefits as a tool to achieve the goals. RxRevu has focused on building trust in their tool to drive prescription behavior change among providers. Kyle also emphasizes the need to have the tools in the hands of the right users to drive impact.

Kyle advises digital health startups to spend time on understanding where the value accrues in terms of finding customers. While it may look chaotic from the outside, the incentives in the healthcare value chain drive rational decisions for each entity. He urges startups to understand incentives and builds business models within them. Take a listen.

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Show Notes

00:35Tell us how you came about starting RxRevu and what’s your journey been like over the last few years?
02:07What is the main value proposition here? Who are your main customers -- health plans providers, employers?
04:38What's the differentiator from your perspective for your company? 
06:56 If PBMs and health plans are your customers, do they feel a threat of disintermediation in any way? Do help us understand.
09:16 Give us an example of how you make an impact. What is the kind of savings we’re talking about using the tool delivering real-time information?
13:56 What's the biggest challenge you encounter while trying to do this real-time dynamic integration of the data?
17:02 What’d be your advice to the digital health startups like yours?
20:30 How important are the clinical workflows for you? Is yours a standalone solution that can be launched from inside of the EHRs?
22:46 What would be your advice for digital health startups or their VC firms who are coming up with an innovative solution and want to enter the market today? What are the one or two big themes that you think are important for 2022?

About our guest

Kyle_Kiser_Profile

Kyle Kiser is Chief Executive Officer at RxRevu, the industry leader in Real-Time Prescription Benefit services. In this role, he focuses on creating more seamless, cost-effective prescribing experiences for patients and providers. Since 2013, Kyle has helped develop innovative Prescription Decision Support solutions, which allow providers to select appropriate medication options for their patients. By partnering with physicians, health plans, IT vendors, and health systems, RxRevu is driving data transparency and better patient care nationwide.

Kyle has helped grow RxRevu from a vision to a reality and has been at the forefront of some of the most transformational initiatives in the healthcare industry. In particular, he has focused on projects that lower the cost of care, improve health outcomes, and enable informed decision making at the point of care. His focus on interoperability has allowed partners to improve prescription workflows and millions of patients’ lives. Kyle has helped develop incentive strategies for the country’s most innovative employers and led product launches with the nation’s largest payers. Prior to joining RxRevu, he was a senior leader at Welltok, Catapult Health, and Principal Wellness Company.

Q: Let’s start with a short background – tell us how you came about starting RxRevu. What’s your journey been like over the last few years? 

Kyle: I come from an employee benefits background and my family was into brokerage consultancy. As a kid, when I got into trouble, I’d come home from school and must stuff enrolment packets. It was that sort of a beginning. I was always in the payor-oriented side of the business and over time, when I looked at that world, I didn’t really necessarily see the opportunities to impact the system in the ways that I wanted to. You think about the options available to brokers and consultants to solve some problems for employers but ultimately, it’s just passing the cost along with the patient. You can try and distribute the out-of-control spending as best you can. So, I wanted to impact the cost curve by finding a different way to work within the existing system. 

Q: RxRevu focuses specifically on the pharmacy-benefits side of employee-benefits, as you mentioned. So, what is the main value proposition here? Who are your main customers — health plans, providers, employers? 

Kyle: We’ve built a data network that connects to the point of decisions. So, when providers order care, it could be in the form of prescriptions or something else. We connect to the systems they use to make those orders and bring into their consideration real-time, patient-specific, pricing information. We also connect to a network of payers, provider organizations, and PBMs for the data, and to the EHR systems to form that decision with that new cost value. 

Q: Let’s start with a short background – tell us how you came about starting RxRevu. What’s your journey been like over the last few years? 

Kyle: I come from an employee benefits background and my family was into brokerage consultancy. As a kid, when I got into trouble, I’d come home from school and must stuff enrolment packets. It was that sort of a beginning. I was always in the payor-oriented side of the business and over time, when I looked at that world, I didn’t really necessarily see the opportunities to impact the system in the ways that I wanted to. You think about the options available to brokers and consultants to solve some problems for employers but ultimately, it’s just passing the cost along with the patient. You can try and distribute the out-of-control spending as best you can. So, I wanted to impact the cost curve by finding a different way to work within the existing system. 

Q: RxRevu focuses specifically on the pharmacy-benefits side of employee-benefits, as you mentioned. So, what is the main value proposition here? Who are your main customers — health plans, providers, employers? 

Kyle: We’ve built a data network that connects to the point of decisions. So, when providers order care, it could be in the form of prescriptions or something else. We connect to the systems they use to make those orders and bring into their consideration real-time, patient-specific, pricing information. We also connect to a network of payers, provider organizations, and PBMs for the data, and to the EHR systems to form that decision with that new cost value. 

Q: You’re in a technology-heavy, data-intensive business, making these real-time connections between different data sources and potentially surfacing opportunities for reduced costs and perhaps, alternates to medications etc. Am I right? 

Kyle: Yes, that’s right. What we bring to the workflow is price information and any formulary restrictions that may exist — prior authorization, the quantity limit, a step therapy, alternative choices or lower cost options etc. These come in two forms – a different drug or a different pharmacy. The goal there is to help a prescriber. For instance, when they make a prescribing decision, we enable them to consider some other options that might have lower out-of-pocket costs for the patient either by switching drugs to something that’s more in relationship with the rules on the patient’s formulary or to a different pharmacy that would have a lower price-point compared to the patient’s preferred pharmacy. 

Q: Let’s talk about the concentrated PBM space. There’s a handful of players now and the number is shrinking. However, we’re noticing the emergence of a new category of startups like yours for instance, who are trying to approach this differently. What’s changed? What’s the differentiator from your perspective for your company? 

Kyle: PBMs are our customers, so, regardless of who’s managing the pharmacy benefit, we want to make sure we’re working on behalf of the risk-bearing entity and connecting them with whoever’s making their decisions. That’s the focus and the difference about what we’re trying to accomplish broadly around PBM consolidation and the model itself though there are changes ahead. The fact that many of them are being absorbed into the bigger healthcare conglomerates suggests that the PBM model is becoming more holistic and focused on managing patients; not just around pharmacy benefit specifically but managing the total cost of care with pharmacy benefits as a tool to do that. Bending the cost curve in general is going to require a lot of tools around care management, benefit management and really drive different behaviors on the front- and back-end of that. Pharmacy benefits are a component of that, but not necessarily the whole story and in that context, the consolidation of the markets evidenced is true.

Q: If PBMs and health plans are your customers, do they feel a threat of disintermediation in any way? Do help us understand.

Kyle: That’s true. We work with PBMs and health plans and in many cases, those are the same entity. It’s true that we’ve built a network that has different functionalities based on what problem we’re trying to solve. In some cases, it’s about simply specifying the cost and offering some lower cost choices. In some cases, it’s based on what we know about the patient. So, we put forth some sites or pharmacies that might be better options for them. One example for this is we work with health systems to ensure that we maximize the opportunities for them to fill those medications because we know that more integrated care is going to drive a better outcome especially, if we can send a patient downstairs to fill the prescription. We can make them more adherent and consequently, empower the provider encounter in a different way. That’s valuable. 

We’re in the position to do so since we’re focused intensely on provider-ordering as the point of intervention and a lot of those conflicts resolve there. The health plans and PBMs are rarely in conflict with regard to preferences, because, PBMs work on behalf of the health plans to manage risk, and both are incentivized to enforce the formulary, find the lowest-cost pharmacy, maintain interest in adherence and manage a better patient experience. We look for such opportunities where stakeholders align well enough for us to try and drive a different outcome because ultimately, finding that path of least resistance is how we make a bigger impact on the system. 

Q: Give us an example of how you make an impact – either by picking a therapeutic category, a client of some kind or what is the kind of savings we’re talking about using the tool delivering real-time information? 

Kyle: Let’s talk about behavior change, specifically since that’s ultimately where value is derived. We’re approaching five million transactions a month now through the tool that represents about $3 billion in annual prescription spent on the pharmacy-side of the world. Those are exciting numbers but what it really comes down to is how do you convert that into a different behavior at the point of prescribing those results at a lower cost option for the patient? 

We did a side-by-side comparison for the business in Florida and when competing with this other company we realized that we were delivering six times the behavior changes as the sort of standard solution. That really comes down to a few things – one, where we’re returning transactions at a rate of about 95%; that means out of all the opportunities we have had to price medications, we’re pricing successfully in returning value that’s relevant. So, 95% of that is 15% higher than the rest of the industry. In that, 15% are the complex things. 

It’s not that hard to price the medications of the capsules. However, what’s challenging is pricing the sort of non-standard forms – creams, inhalers, self-injectables, and things that don’t fit neatly into the other types of drug forms. What I can attribute the behavior change to is we’re working really hard to make sure that the most valuable encounters are successful pricing to service the lower cost alternatives because those are relevant opportunities to impact the patient’s outcome. They’re relevant to the provider, positive experiences and valuable to the users, our paying customers, the payers PBMs. 

Our goal is to create a relevant value for every provider that uses the tool. Technology providers love the data and incorporating it into their decision-making process. Initially, it wasn’t working very consistently because there were only so many payers of the PBMs that were capable of doing this but that’s changed over time. We’ve added the intelligence layers to ensure that it works at an even higher rate and ultimately, it’s the trust in the tool that’s driving more behavior change. So, that’s how we think about success — how do we ultimately convert these things into different behaviors at the point of care and a different outcome? 

Q: This entire platform is built on the premise of real-time data aggregation and intelligence on top of it to deliver recommendations at the point of care. Is that right? 

Kyle: Yes. The only change is less aggregation and more connectivity. Health insurance and health care pricing is quite dynamic, and variable based on location and the insurance coverage phase. So, all the aggregation opportunities become less valuable than the real-time connectivity opportunities. What’s important is our ability to transact in real-time based on what’s happening this second — the price at a pharmacy or at a health system or at this clinic today, based on what one knows, where one is, and one’s insurance plan. That’s the type of insight we must deliver and why this tool will be valuable. 

Q: What’s the biggest challenge you encounter while you’re trying to do this real-time dynamic integration of the data — Is it the technology? Is that resistance from those who have the data? 

Kyle: One of the biggest challenges is convincing providers that it’s real. The providers have, for so long, been at the receiving end of some unmet expectations with these types of tools for two reasons– one, because the data exchange was not happening in real-time so, it was inaccurate, outdated, and providers just stopped paying attention, looking at it or trusting it. Second, to capture the market before the technology arrived a lot of things were misrepresented as real-time, patient-specific, moment in time-specific pricing to indicate price transparency via tools that weren’t so. 

Both cases eroded provider trust in tools so they began to ignore them and one of our biggest hurdles to climb early on was just around convincing the providers that our tool was different, reliable and they could have a different expectation around this. We’ve overcome those hurdles today, because we partnered really closely with provider organizations like the U.S. Health Presbyterian in Mexico, Providence in the Northwest etc., to listen to providers and understand their side of the story. It helped us evolve our pipeline and communicate the value of the tools that we had better. 

Q: Let’s talk about the overall digital health landscape. You’re one of the emerging digital health companies, recently raised a Series B round and demonstrated some success. But there’re digital health companies developing innovative solutions and making a difference, but the flip side is, they’re confused about how to really evaluate partnerships. What’d be your advice to these startups? 

Kyle: I feel that the answer will be variable based on the type of company. As a sort of general, broad swath, scale matters. We experienced that early on and overcame that issue because in a lot of cases, the functionality only mattered if the right end user was engaging with it and only that could drive impact. 

Now, that’s hard to do in healthcare, especially when you’re talking about provider tools, point of care tools, coaching tools etc., because it’s a challenging B2B sales cycle to overcome if it doesn’t have scale which is, engaging with the users that matter most. Without scale, there may not be a great outcome. So, I’ll talk about how we’re reaching 300,000 providers and five million transactions a month because that’s an opportunity for us to drive value at a much larger scale compared to the early days. That’s the first point. 

I don’t think that necessarily correlates with venture capital, though. We’ve tried to be judicious about how much, when, and from who we pursue those investments and have ultimately decided that finding strategic partners that could help us drive value through who they are, what they do or what they know what was most important. That led us to on a health system path. We focused on provider systems, healthcare systems as strategic investors with a couple of notable exceptions and found a lot of value from those we brought to the table. Ultimately, for us, being very provider-centric and understanding the challenges they faced, how we could help them overcome those challenges was important. Having a web app where we could sort of test and iterate on those things was critical, too. So, the venture capital dollars are the lifeblood for many in this industry. Our perspective was just to ensure we were providing the right types of investors that could add specific and tactical value to our approach. 

Q: What about the EHR vendors? Our healthcare clients like to see single interfaces for all the technology tools. So, how important are the clinical workflows for you? Is yours a standalone solution that can be launched from inside of the EHRs? 

Kyle: Yes, we’re an embedded component of the EMRs where the data network that powers the price transparency features in Epic. We see a lot of value in such partnerships since they’ve helped us drive scale in a significant way. Frankly, these partnerships have considerable important inputs on the right ways to design such solutions because they’ve been serving those users for a long time. Like it or not, they’re some of the best chances we have in platform companies and health care. So, we want to be in those workflows ultimately, because that’s how you drive provider adoption and engagement. However, the minute you ask providers to do anything but their standard, it’s less likely that you are to actually be able to deliver something of value. 

Q: Scale is very important and though it’s still early days for digital health, and there are mergers and acquisitions, many companies will undergo some kind of an evolution. Do you think there’s also the prospect of a shakeout when some of these companies don’t reach scale? 

Kyle: Absolutely. I agree with that entirely. That’s part of the thrill and risk associated with entrepreneurship, right? Not everyone’s going to succeed and that’s the reality of any market you enter. 

Q: Can you share some advice for digital health startups or their VC firms who are coming up with an innovative solution and want to enter the market today? Specifically for those already in the game, what are the one or two big themes that you think are important for 2022? 

Kyle: If we were starting today, I would do a lot of the same things we’ve done, which is be entirely obsessive about the incentives that exist and understand where value accrues. Once you understand where value accrues, you know where your customer is. In our case, that was initially prescribing behavior. But because of the value we accrued for the payers, the PBMs, since they were looking to reduce their cost of goods by driving lower cost choices, we became naturally inclined to selling directly to providers. We wanted to engage those providers, users and monetize that effort. In our case, it was a multi-sided network opportunity because the incentives were not aligned necessarily, or the providers’ risk wasn’t to a significant enough scale or didn’t include pharmacy benefits. So, I think it’d be — be obsessed with the incentives in the healthcare value chain because while they look chaotic from the outside, at times, these are very rational decisions being made based on the incentives that are in front of one entity or another. And if you can understand those well enough, you can build a business model within it. 

We hope you enjoyed this podcast. Subscribe to our podcast series at  www.thebigunlock.com  and write to us at  info@thebigunlock.com

Disclaimer: This Q&A has been derived from the podcast transcript and has been edited for readability and clarity

About the host

Paddy is the co-author of Healthcare Digital Transformation – How Consumerism, Technology and Pandemic are Accelerating the Future (Taylor & Francis, Aug 2020), along with Edward W. Marx. Paddy is also the author of the best-selling book The Big Unlock – Harnessing Data and Growing Digital Health Businesses in a Value-based Care Era (Archway Publishing, 2017). He is the host of the highly subscribed The Big Unlock podcast on digital transformation in healthcare featuring C-level executives from the healthcare and technology sectors. He is widely published and has a by-lined column in CIO Magazine and other respected industry publications.

The Healthcare Digital Transformation Leader

Stay informed on the latest in digital health innovation and digital transformation.

The Healthcare Digital Transformation Leader

Stay informed on the latest in digital health innovation and digital transformation.

The Healthcare Digital Transformation Leader

Stay informed on the latest in digital health innovation and digital transformation.