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Healthcare Reform Through Entrepreneurship: Phytel CEO Steve Schelhammer (Part 6)

Posted on Monday, Apr 13th 2009

SM: Your background is not in technology. Where does your company’s technology come from? What you are suggesting is not an easy problem to solve.

SS: It is definitely not an easy problem to solve. Form follows function. The most important thing is to lay out and articulate our approach to the marketplace and show where we can add value. By leveraging a combination of proprietary and existing technologies, along with strategic partnerships, we believe we can execute on that vision.

SM: How far along are you on this right now?

SS: I would say that we are squarely into pillar one, we are in beta on pillar two, and we are on the verge of deciding who our partners are going to be on pillar three. We have not launched the ‘extend’ part of our vision yet. We are actively involved in our planning. We are going to use a combination of existing off-the-shelf technologies. Ten years ago we had to build everything. Today there are great email, MMS and other communication solutions. There is no need to build every piece of that.

SM: What is the combination? Is it still a call center approach?

SS: No, it is not a call center. We will leverage automation to deliver on everything we have just said. We are flipping the pyramid upside down. What I built in generation one largely ignored messaging. Communications were done via live people over the phone. We are turning that paradigm upside down. Now the lion’s share of messaging is smart messaging driven by logic utilizing existing technologies. In some cases it will be rendered via email, in other cases text, and in some cases via snail mail. There is still a segment of the population that needs education but the route that is suitable for them is a printable format. There may be a few cases where the education needs to occur with a live person, but we are not going to build the call center. Those are commodities in the marketplace, and we will find a partner for that piece of the solution.

SM: What is the status of the motivation piece of the business? You said you have built it out substantially at this point. What is a physician paying to be a part of this?

SS: We consistently deliver a 3x return on investment. We guarantee that. There is really strong visibility on value proposition in regards to the financial returns. Our model is a subscription model per physician on our service. It is less than $400 per physician per month.

SM: It is based entirely on physicians and not on the number of patients?

SS: We have a cutoff point for physicians who are not full-time. The price is less for them, but they have a cutoff in regards to the number of patients. Most full-time physicians have 1,500–2,500 patients. We have some very large customers, and they have hundreds of physicians using our service. In those cases they receive a price discount.

SM: What kind of adoption are you seeing in your user base? What are the assumptions you have had to make and how are you validating them?

SS: In the past 18 months we have grown from 15 to over 80 customers in terms of physician organizations. We are seeing very encouraging and rapid uptake of our offering in the marketplace.

SM: What can you share in regards to revenue numbers?

SS: We are in the $20 million-$50 million range of annualized revenue.

This segment is part 6 in the series : Healthcare Reform Through Entrepreneurship: Phytel CEO Steve Schelhammer
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