Texas Telemedicine Lessons Learned from Wal-Mart and Texas Prisons

00:00 Dr. Milton Chen: So this is our weekly webinar series called Telehealth Failures and Secrets of Success. And this is following our very successful conference in December. So today, I’m super excited, we have Glenn, the CEO and founder of NuPhysicia. I would consider him my personal friend and mentor and someone I look up to. Of all the people in the telehealth, I consider him one of the true thought leaders. I’m really excited to have him share with us his insight on telehealth from Walmart to Texas prisons and, of course, the implications for the larger discussion. The format is Dr. Hammack will give about a 10-minute presentation, and I’ll be chatting with him for about 20 minutes. And we’ll open the floor about 15 minutes for questions from the audience. Glenn, maybe you could give a quick intro of yourself and then… We’d love to hear your thoughts.

Dr. Glen Hammack’s road to the telemedicine industry

01:14 Dr. Glenn Hammack: Great, Milton, thanks for the very thoughtful and flattering introduction, I really appreciate it. For the group that’s watching, again the VSee group and Milton has really been an amazing addition to the space, and we have a lot of good alignments in the way we think, so I’m hoping that this’ll be a helpful conversation. So not to go into it, but a little bit about me for those of you who don’t know me, I’d like to say I’ve been making mistakes in telemedicine for 20 years. I started life as an eye doctor of all things at Henry Ford Hospital. I’m the world’s worst testament to career planning. Five years in Henry Ford Hospital and then 10 years at University of Alabama, running their eye clinics for the optometry and ophthalmology divisions. I did some graduate work in health informatics there and to finish that postgraduate degree, I ended up doing an internship at Massachusetts General Hospital, where, by absolute dumb luck, I got assigned to the telemedicine group there under Joe Kvedar, that’s about 1998. 02:18 It was a wonderful time to learn and see what, at that time, was starting up, there’s a lot of concepts in telehealth and telemedicine. Very innovative group up there, continues to be a leader in the area with their Connected Health Symposium and other areas. Then I was a tenured faculty member and I had built a house that I thought I was gonna retire into in Birmingham, Alabama, and I started getting calls from the Texas University, University of Texas Medical Branch. And after a lot of discussion and conversation about moving my 14-year-old daughter, we ended up moving to Houston. And I was just gonna do it for a two-year period, and that was 14 years ago. So, wasn’t sure how things changed. So anyway, enough about me, let’s dive in a little bit. So, again, I had the unique opportunity to get started in telemedicine at Mass General, but then was asked to take over a very real business case, inside, of all places, the Texas Prison System, which was operated out of the University of Texas Medical Branch, which is not in Houston, it’s down in Galveston, Texas. It’s the oldest medical school in Western Mississippi.

Early telemedicine technology in the Texas prison system – the 90’s and 2000’s

03:25 Dr. Glenn Hammack: So in 1995, this is what was called telemedicine. You were using ISDN circuits, you were linking basically ISDN connected video conferencing systems at both locations. You had a camera for near, a camera for far. A lot of things are recognizable because a lot of these basic modalities haven’t changed, the technology has changed. The device in the upper left corner was called a ‘portable unit’, of all things. It was about as big as a full-sized refrigerator, and that’s what was in a small number of Texas prisons when I took over the program. While we were there, through some investments, we, at that time, decided to do the radical thing of using IP connectivity for video conferencing. We built a statewide IP network that didn’t really exist before, everything was being run on mainframes. And we built an environment to really make telemedicine a preferred modality for physicians. 04:20 Dr. Glenn Hammack: So what you see in these photographs here are our studios. The upper right one, that looks like the bridge of a starship was for specialty services. You had the video conferencing presence on the wall, you had screens in front of the provider for electronic medical records and other types of internet access tools. And then in front of them, these screens actually in the [04:43] ____ for Utilization Review Case Management system, they really, in real time, would extract things from the medical record and give advisements, and when someone was on protocol or off protocol right there to the physician during the visit. The lower left one, the beautifully paneled wood one was for primary care docs. And again, video conferencing presence on the wall. You had EMR screens and Utilization Review Case Management screens in front of the provider. And these are still done there in Galveston, they’re still used in the Texas Telemedicine Program. What we were putting next to the patient was a form of a cart in the lower right. You had the otoscope, you had a laryngoscope, you had a live stethoscope system along with a video. And this was the standard setup that we were putting in 2000.

The Texas prison telemedicine success story – 160K telemedicine visits annually

05:33 Dr. Glenn Hammack: This is a younger version of me, showing what I know by looking into an ear and seeing a patient’s bowel with the colonoscopy image on the screen. But it just goes to show that time spares the ravages to no one. And I was thinner and had darker hair. But this is where we were, it was a good time. We chartered the program with orthopedics and it grew from there. By 2006, so this would be five years into the program, this is where we were in terms of correctional encounter volumes. We were doing around 37,000 visits a year. As you can see the breakdown, we were doing primary care to a certain level, and the way that this program is running today, it’s at about 160,000 visits a year, about a third is specialty care, about a third is primary care and about a third is behavioral health. So it’s a really good robust program that’s continuing under the leadership of those folks today. A lot of great leaders are continuing the tradition that we started. So over time, we have some recognition. The Gartner group did a study on us that you can see the number there. We got some recognition from Gartner for the way we were implementing and combined electronic medical record and telemedicine strategy. And it was great to see it still being recognized. 06:52 Dr. Glenn Hammack: So 2016, the Pew Charitable Trust did a report on the Texas Prison System’s telemedicine program. And the leadership there, it’s quoted was a team that we worked with in building it, and so it’s great to see that it’s continuing to go. So it is still the largest ongoing telehealth network in the US. And it has a significant number of visits for site-to-site telemedicine and that’s really an industry leader. So it’s quietly in the background, really doing what a lot of folks wish they could do in terms of building programs. 07:27 Dr. Glenn Hammack: Another program that I wanted to highlight was some work that we did with Walmart in the 2008 timeframe. We had just started the company out of the university. What had happened at the university, we had our successes inside the prison system. We had built some intellectual property in process and method and technology that we licensed out. We had actually three patents. We started doing work in an incubator called the ‘Electronic Health Network’ in 2004. And by 2007, we were doing work outside the State of Texas. And so we, with the university’s support, we’d spun NuPhysicia out of the university at that time, and we’ve been going strong ever since.

Retail telemedicine with nurse practitioners in Walmart

08:05 Dr. Glenn Hammack: But in the early days, one of the more interesting programs that we did was in 2008, we were approached by a nurse practitioner retail health group that was having some compensation challenges by trying to find nurse practitioners. And they had a contract for six locations around Houston inside Walmart or retail space. And so we undertook this project. It was very interesting and innovative for its time. We brought in our EMR. It was financially very interesting ’cause it was pure cash on the barrelhead. We didn’t take insurance, it was cash, check or charge. We didn’t use any grants, it was a pure economic endeavor of the company. And so it was, really, I cherish it because it offered telemedicine to the public for a cash on the barrelhead, unsteered, unmodified, not [09:00] ____ car-shared basis. And gave us a lot of confidence into two things, gave us a lot of confidence in the economic viability of these kind of programs, it gave us a lot of confidence into the patient acceptance of this modality. 09:11 Dr. Glenn Hammack: This map has the blue markers where the clinics were around Greater Houston. If you know anything about Houston, you know that the lower right corner is kind of industrial. The upper left corner is a little more residential. The far west area is actually the up and coming area called Katy. This is what they look like on the inside. The trade name for it was Walk-In Telemedicine Health Care or WITHCare. And it was staffed by a medical assistant at the reception desk, and we use a model of paramedics next to the patient. It helped us with a lot of the emerging rules at that time for telemedicine. We had to have a state registered health professional next to the patient for all patient care. In the rooms, we put our cart systems, we connected them by standard business class DSL, using Polycom equipment as the core and then using our standard suite of otoscopes, laryngoscopes and live stethoscope systems, and patients were seen. It was a great program. This paramedic, even though he looks young enough to be a high school student, was actually a very skilled gentleman. His name was Doug. He’s still with us, and if I ever have to be intubated on a freeway in the middle of the night, I would want him to do it. He’s a very skilled young man. 10:24 Dr. Glenn Hammack: This is what the clinics look like in the environment when it was running. This is one of the grand opening days. It was all walk-in service. We really didn’t even bother to take appointments ’cause it was all walk-in retail access. And again, other than that being a darn good price on Doritos there, we always knew when our doctors were connected to the Walmart because we could hear the beeping of the cash registers through the video system. So it gave us a curiosity in terms of knowing where the doctors were seeing patients at any given time. What kind of patients did we see? We ran this program for about two years and I’ll talk in-depth a little bit about why we stopped doing it. But the age range that we accepted was anything over age two, with no upper age limit. And this is what we saw. It was pretty consistent each month. The average age was around 30, 35. We saw patients as old as 90, in some cases over 100. We saw patients as young as age two. This was the kind of problems we would see. This was a report from a snapshot from a given month. A lot of convenience care. General physicals. Upper respiratory tract infections; pharyngitis, sinusitis, bronchitis and a smattering of things. And I think most folks would say that for convenience care, this is a pretty standard profile. 11:37 Dr. Glenn Hammack: Operationally, this was our monthly volume per site, per day. And our revenue probation per day. We were $59, cash on the barrelhead, with supplemental fees for lab testing. And we were achieving some pretty decent numbers in terms of our revenues. So what happened to it over time? Well, those of you that were in the space at that time will remember Walmart went from just renting space to folks at the back of the store for retail healthcare, putting us there between the nail salon and the bank. And then they started the operation called ‘The Clinics at Walmart,’ which was a franchising opportunity. When they came out with that, they offered it to us. We took a look at the requirements of that program at that time, which was a franchising fee and having to use their designated medical record system, having to buy all consumables through Sam’s Club. We looked at the books, we looked at what we knew the operation could do and we just didn’t see the fit. We just stepped away from it at the end of, I think about the middle of 2009. Things moved on from there.

Main telemedicine learnings from Walmart

12:49 Dr. Glenn Hammack: But again, we learned a lot. What did we learn? Again, we learned that the public really did accept this as a care modality. When we started it, we thought we would have to do a lot of patient instruction about what to expect and how the doctors, we were not gonna be in the room and so we’ve got to make sure everybody understands. Then what happened was the patients got it right away. We actually even did, like an informed consent video that we had ready to go, we put in DVD players with monitors to play the informed consent video for every patient. After about the first two or three months we took ’em out because patients got it. We didn’t have anybody who said, “Wait a minute! The doctor’s really not here?” Patients got it, so that was very good. The other thing was, while we got a lot of interest in this program, and to a certain extent a lot of press from folks, even like Elizabeth Cohen at CNN who interviewed me on Christmas Day in 2009 and put it on the air. They were expecting this clinic to be a poor person’s clinic. They expected that this was a technology that would help the great unwashed of America. 13:54 Dr. Glenn Hammack: Again, if you look at the revenue per patient and you look at the kind of payer mix that we had, we had people paying for us with their American Express Black Centurion cards. And that was a lesson too, that it was not folks coming to us from hardscrabble lives, scraping to get enough money for a doctor’s visit. It was people who wanted the convenience of being able to walk in and get physician care. And it was really a strong lesson in that convenience is one of the most important drivers of the success of one of these programs. So, I’d be happy to talk more about those things, don’t want to belabor them too long, ’cause I think the best part of the day is gonna be the question and answer.

The NuPhysicia telemedicine business model

14:34 Dr. Glenn Hammack: A little bit about NuPhysicia as we stand today. We’ve always been a bit of a mystery to folks, are we a technology company, are we a services company? Well, we’re two mixed in one, we’re both. Our DMS product lines is how we help folks in the consulting space. InPlace Medical Solutions is offshore and remote. We primarily have operations today in Brazil and Egypt and then Medicine At Work is our domestic healthcare plan. It’s kind of a program for folks who on an on-site clinic, but typically are not thought of as being good candidates for on-site clinics and I’ll talk more about that. Medicine At Work uses a telemedicine model. We give folks a staffed on-site clinic into workplaces of 300 employees or more. They can choose from three-day a week or five-day a week staff services. There’s a paramedic on site. The physicians come in through our classic model of using video tools and using examination tools. We’re a little bit different than an on-site clinic industry in that we don’t have startup costs, we don’t do long term-contracts. It’s a pure, per-member, per-month compensation, which works very well for us. We give them convenience care, coughs, colds, flu, ear, nose, throat infections, skin conditions, all the usual things you would get from a convenience care or retail clinical site. 15:43 Dr. Glenn Hammack: In addition, thinking about the needs of the employer market, we give them well-being programs, we give them health risk assessments, we give them biometric for their employees, biometric lab testing. We do blood pressure, cholesterol, blood sugar checks. All of our paramedics are NESTA certified for doing counseling, for stress management, weight management activities. And then we also give them lightweight Occ Med support. We give them physicals, pre-employment physicals, job physicals, DOT drug screens. This is part of the services package. And then also, DMS, because we’ve been doing this for a long time, we’ve had a lot of people like CVS Minute Clinics and Cleveland Clinic and other places come to us and say, “You guys have been doing this as a service for a long time, we wanna do it with our own nurses and doctors and clinics. We don’t wanna start from scratch. Can you tell us what to do and help us figure it out?” So, we have a very healthy business line, helping hospitals and health systems figure out how they wanna do telehealth and telemedicine, what the tools should be. 16:42 Dr. Glenn Hammack: We help them with training. One of the things that’s a differentiator for us in this market that’s been recognized is that the trainers that we send out are not technology people, they are clinical people that have been doing it in our programs just up to the day before. Then we help people with equipment procurement, we run some software for traffic management that we do. So, that’s about us and about NuPhysicia and they were asking me to go back to the main slide and that’s really want I wanted to show. Milton, I hope that covered some basics for us.

The economic viability of telemedicine

17:11 Dr. Milton Chen: Glenn, that’s phenomenal, thank you so much for that. From your work at Walmart and then the venture failure [17:24] ____ last year, I guess, what’s your prediction [17:28] ____ telemedicine in this, where like, from Walmart or CVS, Walgreens. I know CVS they’ve been doing this for a while, but I think the industry, CVS is actually losing money on their Minute Clinic and so on. Do you see us being able to just go to any of these pharmacy telemedicine clinic or [17:46] ____ like you don’t see that deployment? 17:54 Dr. Glenn Hammack: The economic viability of telemedicine has always been something that’s hard to fight for. We’ve been fortunate by staying vested in per-site revenue or per-member revenue. That’s the secret of our success in terms of the almost 10-year run of NuPhysicia now. I think as folks step closer to per-encounter revenue, it becomes a different model. I think you’re going to see development of models in pharmacies. I think in some parts of the country, there’s still something about it that people don’t believe that it works. The joke is that telemedicine is a 25-year overnight success story. I think those that have been on the field for a long time, we get a little jaded every spring or every January when somebody says, “2017 is gonna be the year for telemedicine. It’s gonna be the year telemedicine breaks out.” All of us have said, “Well, we’ve heard that every year.” And there’s always something that stops it. I think it has a lot to do with the fact that telemedicine is a tool that somehow captures the imagination of investors, it captures the imagination of the public, but then when it comes down to the nitty-gritty of actually providing the services and getting paid for the services, that’s what some of the disconnects are. I think that’s still gonna be a challenge as we go through the next couple of years.

Why is consumer utilization of telemedicine services so low?

19:18 Dr. Milton Chen: Got it. That makes sense. Recently there’s a Forbes article that says something, much as like 60% of employers now offer telemedicine to their employees. And at the same time, I think the industry, the actual utilization of the employees on telemedicine is actually extremely low in there as an industry.Why is that? Why is something that seems to be pretty beneficial to the employees – to be able to access telemedicine at the same time actual utilization is just so terrible? 19:57 Dr. Glenn Hammack: There’s a couple of things. We learned a lot when we started really aggressively getting into the marketing of Medicine At Work. And what we learned was that insurance companies and employers have wanted to have ways of modifying their employees’ health behaviors for a long time. And if you look at everything from free gym memberships to online health risk assessments, to online nutrition and counselling programs, to Fitbits, to pedometers and even now to telephone-based telemedicine, there’s this magical 4% to 5% barrier of utilization. 20:39 Dr. Glenn Hammack: So, with all these things as a bundle, that’s about as far as they go. And the only time that you see utilization of a feature higher than that, is when it’s really strongly incentivized. We had one client of ours that, to start up the program, we did health risk assessments with physicians on every single employee, but to motivate the employees to get 100% compliance with that, or close to 100% compliance, they had to literally pay each employee $150 cash to do it. So you have to really strongly incentivize. And I think there’s a natural resistance for people to not explore new things unless they’re in a jam and they’re of the type of character to try something new. Try something new like that. And I think one of the things that works against it in some of these areas is that when they’re hurting and you got a problem, you don’t necessarily think that that’s a good time to try something new. You wanna go with the tried-and-true and the proven. 21:36 Dr. Glenn Hammack: So the high uptake, I think, of 60% of employers offering telemedicine is I think just due to the promise that they make that every patient seen by the telephone service is gonna be one less patient in the emergency room. Yes, that can be a strong motivator if that’s part of it. But then when you really look at how it’s utilized though, it’s less strong. I think one of the more recent features in the press about it, said, “The real… If you account for that low utilization of 4%, that $4 or $3 or $5 per member per month that gets paid for the telephone-based telemedicine equates to like $450 a visit.” And so this is the way some of the new analysis is coming in. So I think that’s kind of the landscape for that. And that’s one of the reasons that as we take a look at our future successes in Medicine At Work, having it be a more affordable, and more flexible approach to an on-site clinic, it’s really the rationale for it, driving it. Not so much the traditional healthcare behavior change [22:41] ____ all of it.

Are monetary incentives the only way to get people to use telemedicine?

22:43 Dr. Milton Chen:I think United Health – they have an actual payment mechanism to help people get healthy. Do you think that directly paying people is the only way to get adoption? 23:05 Dr. Glenn Hammack: Yeah, and I think it’s one of the things that, as a culture, if we knew that our engines would be replaced in our cars for free, would we ever pay to change our oil? We tend not to be a culture of prevention. And that’s one of the things also in the medical insurance space that’s coming out now is that, as folks are moving to high deductible health plans and health savings accounts, the numbers are starting to show that the patients are not using any of those savings or money or resources for preventative care. And then deferring and eliminating doing preventative care and wellness visits, even though in some cases they get discounts for them. And so what they’re doing in fear is that they’re just driving themselves into more adverse and significant health events two to three years in the future. So there’s a lot of psychology in the economics of the market, and I think the telemedicine can contribute in this, offers a lot of tools but the market is the market and it takes a little ingenuity to figure out the right way to apply it.

Who Really Benefits from Telemedicine: Payors, Patients, or Physicians?

24:10 Dr. Milton Chen: So Glenn, one of my favorite things we’ve discussed, and I’m very grateful for, is this idea of how telemedicine benefits the patients, the provider and the payers and the idea is that telemedicine really only benefits the payers and patients, but the providers, they actually don’t see that much benefit. As a consequence, that creates a lot of inertia from physicians. I was wondering if you could extend that a little bit. 24:42 Dr. Glenn Hammack: One of the things that made the program at the Texas prisons work so well, was of course, is that, that was an environment where there was an economic reason to care how frequently and how far somebody had to travel to see a specialist. That was it in a nutshell. We are in a public healthcare system where as a rule, most folks don’t really give a hoot how far patients need to travel to see their providers. And it’s given rise to a very almost Byzantine Middle Ages approach to territories where hospitals and health systems have to build facilities and research centers, clinics… It’s almost like building castles to get to the patient. Telemedicine, of course, can completely get around that, but there’s a couple of things. It’s been our impression for a number of years that telehealth and telemedicine benefits the patients, it really benefits the caregivers or folks involved with a patient who have to think about transportation and arrangements for folks who may be physically-challenged. And, in the end, it benefits the people who pay for the care. You’ve gotta get past their fear of over-utilization, the telemedicine makes it so easy, and some of the big fears of telemedicine parity laws is that if you’re opening up a floodgate of claims, then you’re gonna drain the coffers. 26:10 Dr. Glenn Hammack: But I think it is still pretty true that telehealth and telemedicine benefits patients and benefits the people who pay for patients. And providers are in a little bit of a pickle, and that is, if they optimize their practice for face-to-face care, it tends not to leave them the time or the inclination to get involved in telehealth and telemedicine. And that’s one of the reasons that you’ll see in many successful business models on a skill basis where the doctors have non-distractive duties, they’re not seeing their patient in their real clinic one minute and then seeing a telehealth patient the next minute, they’re usually staffing and sitting down and putting themselves on for a three-hour shift, four-hour shift for telemedicine. Telemedicine in the end is not a force multiplier of physicians. It will allow a provider to address a pocket of need that they otherwise would not have a good ability to address but it does not allow one provider to do the work of 10. 27:09 Dr. Milton Chen: Your perspective, I actually repeat this all the time, I think is one of the most insightful things you taught me, I really appreciate it. So we have some questions from the audience in there. One of the questions is, so from a provider staffing standpoint, what are the challenges have you seen and what are some of the ways you get around these challenges?

Challenges of Provider Staffing for Telemedicine

27:37 Dr. Glenn Hammack: I think in terms of provider staffing we’ve been fortunate, we have a great group of core doctors, we tend to develop… We try to develop small group practices, and again, we stick to the concept of the non-distractive provider. One of the things that we do not do is the eHarmony of healthcare where there’s this bulletin board of doctors waiting to take your call, each of of our clients has a primary doctor, a back-up doctor and, each client will probably be seen by at most maybe three different physicians during their contracts. That’s worked well for us. What’s worked well for us is to have a way of providing the doctors that they feel comfortable that they’re not wasting their time, that they’re being compensated for taking the call. So there’s an element of their compensation that’s a flat hourly rate, and then there’s what we have, some parameters for over-utilization bonusing, that if they have more than X number of patients during a designated number of hours or days in a period they get some supplemental support for that. 28:45 Dr. Glenn Hammack: So it’s been a complicated mix. What works for us may not work for other people but those are the approaches that work for us. Non-distractive providers, a base staffing rate for them, of course one of the nice things about telehealth and telemedicine and electronic medical records used in synergy, is that you get a lot of natural performance documentation. You get a natural tracking of how long people are taking, who’s moving too quickly on and off a patient, who’s taking too long on and off a patient, who’s documenting effectively, who’s not documenting effectively. So the ability to audit and provide feedback to the care providers in a telemedicine business environment is actually better than in a typical clinic environment. Those are just some factors that helped us.

Is Mass Consumer Adoption of Telemedicine Realistic?

29:27 Dr. Milton Chen: Nice, excellent. Okay, there’s another question from the audience, so, I guess… So telemedicine seems to be a perfect fit for things like a prison system, things like a public school, armed forces, any time you have these sort of “captive audience,” things like senior living, all these things. The question from the audience is, what needs to happen until we actually see more consumer adoption, to really get going? 29:58 Dr. Glenn Hammack: Well that’s a good call. That was one of the jokes that we had when we were talking about our telemedicine programs in the prisons is that, “Well you have a captive audience, ha ha ha.” [chuckle] Yeah. We had a captive checkbook. Because of the way the prison healthcare program was run, it was an all in-capitated operation. Still is today. So, so many dollars per day come from the state and with that the managing universities have to pay for all inpatient, all outpatient care, all medications, all dental work, all psych services, dialysis, autopsies and burials, hauling medical waste, running ambulances, everything. And so, again while we got a lot of joking about it being a captive audience, it was a captive checkbook, meaning that for the first time we had a very clear economic model run on one checkbook ledger, for lack of a better phrase, where it was beautiful to be able to see the old water balloon analogy, when you press in on one side of the water balloon where does it expand on the other side? As we were making investments in technology, as we were improving care access for specialty services, as we were reducing redundant visits, or we were reducing redundant testing, we were increasing the velocity of care, the time to go from requesting a specialty visit to accomplishing a specialty visit dropped dramatically. 31:13 Dr. Glenn Hammack: All these things had real relevant evidence at a dollar level that it was working and having positive effect. In fact the whole system, which I think was around $35 million, was installed statewide across the State of Texas, 150 prisons, over a quarter of a million square miles, without any supplemental funding requests from the state. Every time we needed to expand the system we had generated enough savings from the first implementation to fund… And we were running wires, running CAT-5 at that time, putting in servers, putting in computers, putting in printers, putting in scanners, putting in telemedicine gear, everything. It was all funded from the savings in the program. 31:54 Dr. Glenn Hammack: So I think part of your question goes to one of the challenges we have is the economic model. We had the luxury of a very clear economic model in the Texas environment and to a certain extent in the Walmart model. It’s really hard to find these days. Even trying to do a comparative cost per visit in public healthcare, by the time you deal with negotiated rates that the payer has, you deal with copays and deductibles, it becomes very difficult to show a dollar-for-dollar comparison of the value of the care. And that’s one of the challenges, I think. I think as… Depending on what happens with these, in new revisions and modifications to Obamacare, it’ll be interesting to see whether or not we simply add more complexity to that or more simplification to that. Because that’ll give us a lot of clarity or lack of clarity about how telemedicine and its technologies can really create a better healthcare environment.

Handling Tort Liability for Telemedicine

32:58 Dr. Milton Chen: I guess, it really comes down to the money, the revenues, the engine behind there… Okay, there’s another question from the audience in there: How did you manage tort liability costs? 33:16 Dr. Glenn Hammack: First of all, Texas has a tort limit for… I think damage awards are limited to a quarter million or something like that. That was part of it but that wasn’t all of it because we’ve expanded into other states since. We’re operating in Pennsylvania. We’re operating in Georgia. We operate internationally. And when we first started, even when we were at the university, we were working outside the State of Texas, we had to buy insurance for outside the state. And what we found is that once the insurance group learned that we were doing this form of telemedicine that was site-based, that had some diagnostic assistance to it, and I think most importantly that we weren’t doing procedures, we found that our rates were very manageable. 34:03 Dr. Glenn Hammack: In fact, they were so reasonable that I went back and made sure that they double-checked them. So they are… That has been a learning point for us that as a rule, we found that compared to medical malpractice liability insurance for clinical care, for an in-person clinic, it’s much higher than for a telemedicine practice. Of course, it’s gonna depend a lot on the experience of the providers, but as a rule, we found no challenges and we’ve usually been pleasantly surprised when we get our rates and renewals every year.

Physician Staffing for Telemedicine

34:38 Dr. Milton Chen: So we got two more audience questions, they are asking the same thing. So I guess, did you have difficulty in terms of finding physicians to provide services [34:50] ____ in terms of filling out the spots in there? And also, I guess something related to that, were you find a different [34:58] ____ like, let’s say, finding someone on a full-time basis versus things like somewhere like low-income based and… 35:06 Dr. Glenn Hammack: We’ve had a great experience with board-certified emergency physicians as our pool doctors. They tend to go in and staff an ER for X number of days and then they like to use our services to fill in the off days. We have a couple of doctors that work for us full-time. So we haven’t found it to be particularly challenging. Most of our providers are like me; a little thick in the middle, a little thin on top. They’re tired of buying comfortable shoes to run around the medical center, and the opportunity to see patients and exercise their clinical skills in this kind of modality, I think they find pretty satisfying. So at least for us as an operation, we’ve found it not too difficult to recruit physicians. I think one of the things that helps us there is that we have tended to focus on providers and provider groups that have reached a certain level of comfort in their professions. Even when we were at the university, we learned pretty quickly that to get the doctors to staff for telemedicine service, while we thought maybe getting a physician champion and going to the department chair would be the way to go, we found that to be not very satisfactory because those folks tend to be focused on developing their own practices, or their own departments. 36:23 Dr. Glenn Hammack:: They wanted to make money the old-fashioned way… The more time they spend at the OR, the better off they did, etcetera. Where we found the greatest success was in the guys who used to be the department heads, they still have a lot of weight and credibility amongst the team that had reached a certain comfortable level of their profession and in their careers, and were interested in looking at something new and something different, but had that weight of experience, had that weight of clinical experience that they were able to bring to the program, it’s actually a question we get a lot. All our doctors are young guys who can reset the device drivers and the software, and understand all the technology… No. Actually the vast majority of our doctors are over the age of 40.

Successful Business Models for Telemedicine

37:08 Dr. Glenn Hammack: Nice. Thanks for that, really, insight in there. There’s another audience question is: In terms of the business model of paying telemedicine, do you find just purely paying cash is better versus like going after the insurance route, versus maybe subscription? What would be the best mechanism that you like, for actually paying for telemedicine? 37:31 Dr. Glenn Hammack:: Well, actually, from our experience, there’s folks that are successful with other models, I’m sure, but for us, subscription revenue has been the way to go. It’s an element of shared risk. They pay a certain floor and then we challenge them to over-utilize this, for a lack of a better phrase. It probably has limited some of our sales growth in some markets, but it has enabled us to maintain a positive experience for our investors and for the business. I think there’s an element that’s fundamentally changing. I think, when we were starting this game, you had significant capital cost to open a clinic. You were putting $40,000 to 60,000 into the technology side alone at the clinic, and you had to overcome that. I think as innovative solutions have continued to come out on the market, I think as you’re seeing even cart solutions are now dropping below $20,000. You’re seeing other solutions as being even lower than that, when you get to tablet tools and things like that. I think that’s gonna be one element that enables more ability to survive on an [38:40] ____ encounter bill basis. 38:44 Dr. Glenn Hammack:: I spent 12 years running clinics, more than that actually. And healthcare is hard. You run your insurance receivables, and they don’t pay too fast. You run your patient receivables, and they don’t pay too fast. You spend a lot of time waiting for your money with encounter bill models, which is one of the challenges for hospitals and health systems every day, but it’s a little bit of an added burden when you’re trying to start a successful telemedicine business.

Licensing and Regulatory Limitations on Telemedicine

39:11 Dr. Milton Chen: Okay, we’ve got another audience question: To what extent does your state laws require licenses, and these other sort of limit in terms of adoption of practice? And also of course, there are certain states, for example, in the case of Texas that require in-person encounter first if we could do telemedicine? Again, do you see these were a legal burden, [39:39] ____ program, telemedicine adoption, or this is really not that big a deal at all? 39:45 Dr. Glenn Hammack: Having played a role on the Department of Texas Health and Human Services Telemedicine Committee, and being a member of Texas’s Stakeholders Panel for the medical board for a number of years, I think there was a lot of misinterpretation about what Texas was trying to do in their rules. And in certain cases, I think a lot of it is gonna be a moot point here, pretty shortly. But we didn’t find too much trouble with it because we stayed focused on the idea of an assisted examination for better or for worse. And it had to do with our physicians being comfortable extending their license to the point of prescribing. It might have been due to our roots in academia, or whatever, but the idea that I could give the providers a rich, high fidelity experience with a patient, by giving them some basic exam tools of quality otoscope view, quality pharynx view, quality [40:42] ____ view with controlled lighting and focus, and the ability to [40:46] ____ using a stethoscope live under their instruction, under direct observation. 40:53 Dr. Glenn Hammack: These are things that I felt allowed our doctors to be like people making pottery in a potter’s wheel with all 10 fingers. If you took away those exam tools or the clarity, and you went to lower, lower cost exam tools, you took away the number of hands they could lay on the clay. You’re asking them to either make a choice of either continuing the script the way that they like to, but increase some risks because of things that they might not see. Or the way they simply found that they would naturally adjust for that, they would become more conservative in their decision-making. So, I think that’s a big part of this, as you take a look at the laws, and the rules being promulgated. 41:36 Dr. Glenn Hammack: When Texas did the clarification that first visits, the initial encounters can be done by video, that you needed, say medical board, and AMA guidelines of eye contact with the patient to establish doctor-patient relationship, we’ve not found it to be onerous. We’ve also not found state licensing to be onerous. We tend to do it the old-fashioned way and either get a full license for our doctors in the state where the patient is, or take advantage of any telemedicine license tools that those states may offer. But I would say we’re in a different era today. I think there was a time that you would say, “What are the biggest challenges facing telemedicine?” And everyone saying, “Well it’s licensure and reimbursement.” I think we’re seeing that changing. I think there may be some corner cases where those are challenges, but I think well-structured and well-designed programs can succeed very well and I don’t think those are the big issues anymore.

Trumpcare and the future of telemedicine: What policies will move telemedicine forward?

42:32 Dr. Milton Chen: As we’re getting closer to wrapping our session, how do you see, President Trump’s administration, the various possible changes with the Affordable Care Act, other possible repeals, repairs, all those things…Do you have a personal prediction of how the new healthcare will look… and what would that be some of the impact on the world of telemedicine. [chuckle] 43:11 Dr. Glenn Hammack: I do think there’s a couple of things that have an opportunity to move forward the telemedicine marketplace. I think more states getting a telemedicine parity law in place is helpful, and I think at some point… And I think focus should be brought to bear, but I don’t think we’re gonna have the opportunity because of the noise in the space. At some point, it’ll have to be evaluated. The rural HRSA enablement of Medicare reimbursement for telehealth and telemedicine. That’s gonna have to be looked at and go by the wayside. So I can’t tell you what it’s gonna be. I can tell you the two things that will help, and if in the melee and in the mix and in the crazy days of all the changes to come, it there’s a couple of things that can be changed, I think parity is important, and I think dropping the rural requirement for Medicare is important. Because so many private payers drive their policies of off the Medicare requirements, Medicare policies. That if that rural space requirement were to go away, I think it would be a fundamental enabler for telemedicine businesses across the US.

Biggest telemedicine mistakes people make: Not going deep right from the start

44:24 Dr. Milton Chen: Excellent. We heard it first from Glenn, [chuckle] and now we can maybe spread the word and influence the administration. I guess, the final question maybe as we’re wrapping up is, so what are some of the big mistakes you see people making when they put together a telemedicine program? 44:47 Dr. Glenn Hammack: Well again, saying, our focus and our business strategies are all around site-to-site telehealth and telemedicine. And we’re gonna stay focused there because we think that’s a good space to be at. And we know that it’s very divergent, because a lot of times I’ll give a talk and I’ll talk about the fact that the telemedicine market today is a diverged model. You’ve got direct consumer, smartphone-based video or audio telephone call telemedicine, and then you have the site-based telemedicine and that’s really where we stay. As we take a look at that, some of the mistakes that we see a lot of folks make, is, telemedicine is really a place of service, when you think about it. You’ve got hospital care, you’ve got out-patient care, you’ve got telemedicine care, site-based or otherwise. And if we tend to look at it that way, it will tend to succeed that way. Telemedicine Tip #1: Have your first project be more than one discipline at more than one location 45:43 DH: What I mean by that is, if we look at the prison environment that we were in, one of the things that made it work was a decree from both the medical and administrative leaderships that every foray into specialty care, every referral would go to a telemedicine consult first before they actually move the patient. Obviously with the emergency cases that wouldn’t happen. But any standard escalation from primary care went to telemedicine. It wasn’t conditional. We see a lot of folks to this day that say, “Well Glenn, give me the secret. What is the best… Where should you start? It’s dermatology, isn’t it? We really need to start with dermatology.” And the answer is no. There’s really no best way to start other than the fact that you don’t pick one winner. What worked for us was the idea that if you’re going to get into the game, you gotta go deep. And one of the things that we tell folks is, “Have your first project be more than one discipline at more than one location. So you want to bring up at least two disciplines at two locations to really get going. And you gotta have some guts to live with the blow back that’s gonna happen in the first half a year during the program’s implementation.” That was one of the things that worked in both our environments. 47:02 DH: The analogy is this. There’s been a long legacy of telemedicine as not being successful. Again, telemedicine’s a 25-year-old overnight success story. I’m not sure that there’s a single hospital or health system in most states that has not tried dabbling in telehealth or telemedicine in some fashion over the last 20 years. Either got a grant or given grant money, had somebody from a major university come to them with grant money. When we were starting our programs across Texas, there was a lot of legacy equipment sitting around. I felt like we were in one of these movies where people are uncovering evidence of a lost civilization. You’d be out at a mental health, mental retardation center somewhere in Texas and we’d say, “Hi, we’re the telemedicine people.” And they would go, “Oh telemedicine, telemedicine. We used to have telemedicine.” And they would lead us to the building and lead us back to this conference room and throw open a closet in the conference room and sitting there was untouched, pristine brand new set up that probably never fired up, except for press demonstrations, a beautiful telemedicine system from seven years ago. And it was like delving into a lost civilization.

Telemedicine Tip #2: Start with a great business model first, don’t base results on a telemedicine pilot that’s too specific in scope

48:11 DH: And it has a lot to do with the idea that you need to have a great business model first. You have to apply it across a number of disciplines and a number of locations together. Otherwise, it would be the equivalent of saying, “We’re gonna try building an ambulatory surgical center in this new town and we’re gonna build it and we’re gonna staff it, and we’re gonna have it only open on Tuesday mornings for left-handed people. We’re gonna run a few patients and then we’ll see how well it works.” And then run the evaluation and you say, “But the cost per patient is so high.” There’s a lot of analogies to that, ridiculous analogy to a lot of telemedicine pilot programs. They go in, they see a few patients, they try to run some numbers, and the numbers are relatively meaningless, because it never reaches a critical scale. If there’s one thing that we have focused on in our programs, it’s always looking for starting off with a plan to scale right away and going in deep, and we’ve been successful in some markets and unsuccessful in others. Where we have been successful, it has always pointed back to the fact that we didn’t just pick one location, try it on a couple of patients and then try to extrapolate from there. You have to step in with some authority. 49:20 Dr. Milton Chen: Thank you so much for the insight in there. To the audience, I apologize we’re not able to get to everyone’s questions in there. I invite all of you to come to our next week’s webinar. We’re gonna have a phenomenal speaker, and maybe the world expert on the specific, in the case of Texas telemedicine regulations. She’ll discuss the details, the subtleties, which I think may have a big impact in terms of general telehealth overall. Again, thank you so much Glenn for your wisdom and insight. 50:02 Dr. Glenn Hammack: Great, it was great to be here, Milton, always great to see you and be part of your programs. Always wishing you a lot of success in your businesses. I know you wish me in mine. If there’s other questions that we didn’t get to, I’ll be happy to respond to them offline. And I believe we’re gonna make my slide deck available, as a PDF through your website. 50:22 Dr. Milton Chen: That’s correct. Again, this session will be recorded and put online, and people can watch it afterwards. Thank you so much, Glenn. 50:29 Dr. Glenn Hammack:: Okay. Take care everybody. Thanks so much for your attention.

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