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An interview with Rick Dean, CEO of Oncology Analytics
All healthcare is pretty expensive in the U.S., where even a doctor visit for a something as small as a common cold can run you hundreds of dollars when all is said and done. It's exponentially more expensive, though, when you develop something like cancer. According to the Agency for Healthcare research and Quality (AHRQ), the direct medical costs for cancer in the U.S. in 2015 were over $80 billion, with over half of that coming just from hospital outpatient or doctor office visits. Simply getting treated for cancer can break the bank.
Oncology Analytics is a company that is using technology to help lower those costs by providing a utilization management platform specifically built for oncology. It uses evidence-based analytics, making sure that patients are getting the right treatment for them at a more favorable cost.
Earlier this week, the company announced that it raised a $21 million Series B funding. The round was led by Oak HC/FT, along with new investor McKesson Ventures and returning investors Blue Cross Blue Shield Venture Partners and Sandbox Advantage Fund, bringing its total funding to $28.5 million after it raised a $7.5 million Series A round in 2016.
In addition to the funding, it was also announced that Annie Lamont, Managing Partner at Oak HC/FT, as well as Ezekiel J. "Zeke" Emanuel, M.D. Ph.D., Venture Partner at Oak HC/FT, joined the Board of Directors at Oncology Analytics.
Rick Dean, CEO of Oncology Analytics, spoke to VatorNews about the issues facing the cancer marketplace today, the problems that patients encounter as a result and the technologies that have helped Oncology Analytics to solve them.
VatorNews: What is the problem that Oncology Analytics is trying to solve?
Rick Dean: The cost of cancer drug treatment in the U.S., and it’s not even a U.S. issue, it’s a global issue, is astronomical. In 2017 the average wholesale price on the chemotherapy drugs that were approved in the U.S. by the FDA was $100,000 or more. When you think about the financial burden for patients, when employer's and carrier's health plans are moving more of the risks to the patient, meaning more co-pays or higher deductibles, those things become very burdensome on us, as a civilization and as a population. That’s the first problem, that anticancer drug costs are high.
The other aspect of that is that they’re working. You see the new therapeutics that are coming on the market from immunotherapies and CAR-T therapies, these are wonderful medications, wonderful new innovations in technology and bioscience, but they’re really expensive. Some of them have not gotten to the point where they’re broad across different indications of cancer, so being able to understand where they’re utilized, when they’re utilized, those things are really important.
And, of course, the market just in general, when you think about the number of pharmaceutical manufacturers globally that are racing to create the next new therapy, I think IQVIA had said that in 2018 there’s roughly 700 manufacturers in various stages of trials that are looking at new cancer therapeutics from a drug perspective.
VN: Walk me through your solution and how it works.
RD: Number one, we’re hyper focused on just oncology; we don’t go into other therapeutics. We have created a technology enabled service offering for health plans, so our customers are health plans, but our constituents, or the people we talk to every day, are actually the healthcare providers in the U.S., so think of the oncologist, the hematologist, the radiation oncologist and so forth. Ultimately, if you draw that picture, the patient really always becomes center of all of this.
What Oncology Analytics does is utilize a technology enabled service to ensure that the patients are getting the right treatment based on science, based on evidence, at the right time, at the right cost, and certainly with the right efficacy. For example, you have a cancer patient that was newly diagnosed seeing their oncologist. The oncology team gets together to think about the treatment protocols that they want to utilize for that particular patient. When they write that order, they check the health plan; most health plans in the U.S. today on chemotherapeutic medications have to go through a utilization review to make sure that that treatment is appropriate for all the reasons I said earlier around cost and around efficacy and so on. We play a major role in the middle of that, where we have a technology that looks at those orders that come in, we match those against the latest science and the latest evidence, and decide, as almost a second opinion for the health plan, is this medication appropriate? Is it indicated for what’s being asked for right now? Because the science is changing so fast it’s hard for the healthcare provider, and for the health plan and, certainly, it’s impossible for the consumer, to keep up with all the information that’s happening, and all the wonderful innovations happening in cancer research right now. We provide that middle area where we are reviewing on behalf of the patient and the health plan that order for the chemotherapy to make sure that the patients get what they should get.
If it turns out that we don’t agree with what the provider is doing, because we think there’s an alternative therapy, or if we think that the medications that are being asked for are not right based on science and evidence, we will have one of our board certified medical oncologists talk to the oncologist for the provider in a peer-to-peer conversation to discuss the case, understand any nuances that are there, and really try to collaborate to come to the best decision for the patient in general. So, that’s the middle ground that we play to help solve those problems, again, making sure that patients are getting exactly what they need with the right amount of science and data behind it.
VN: Who is the customer for Oncology Analytics?
RD: Our customer is the health plan, so the insurance company is who utilizes our service, but we talk to, and interact with, the patient’s oncologist on a day in and day out basis, because they’re the one that’s making the actual decisions on the best therapy for the patient.
VN: How many insurance companies are you working with? How are you growing?
RD: We have six health plans today, but three of those have been signed in the last nine months, so the company has started to take off considerably in 2018. Looking forward to 2019 and 2020, we expect to certainly double that next year, if not a little better than that.
Let me translate that into a metric that might make a little more sense. If you think about six health plans, you might say, ‘Maybe that’s not a lot.’ That actually translates into 25,000 chemotherapy patients on an annual basis that we see, so it’s a substantial amount of patient population that we’re taking care of.
Our major customer in the U.S., from a name recognition perspective, would be Humana, and we cover all lines of business whether it’s Medicare, Medicaid or commercial business for Humana. We also have relationships with health partners in Minneapolis, that’s a health plan customer of ours.
VN: How does your solution differ from current treatments? What makes you more effective?
RD: The differentiation is that we made a decision when the company was founded by Dr. Marc Fishman in 2009 that we’re only going to utilize board certified oncologists, radiation oncologists and hematologists. That’s not typical of what organizations do; typically, they utilize nursing care because it costs less, they utilize a great deal of simply straightforward technology to try to make decisions on behalf of a patient, but that’s not easy to do because there are nuances in cancer cases. So, the difference really is a laser focus on oncology and chemo and the experience that we’ve had of having board certified oncologists as our practice versus utilizing a nursing team or a family practitioner.
If you think about the example I gave a moment ago, if an oncologist at an academic medical center prescribing chemotherapy in a rare case of cancer is asking for a protocol that is maybe not standard, and they want to have a conversation so they can get it approved, that oncologist at that academic medical center is going to want to talk to another oncologist, because there are nuances there and they need someone who understands cancer. Talking to a family practitioner, which is done in a lot of cases, doesn't get you to that level. We really believe in peer-to-peer conversations, with the true meaning of peer-to-peer, oncologist to oncologist.
VN: Are your oncologists considered employees? How many oncologists do you have on staff?
RD: They actually are. We don’t rent them, if you will, we actually employ them. We have right around a dozen oncologists that are on staff. We also have a fairly robust team of board certified oncology pharmacists as well, and that’s really important to keep up with everything that’s happening in the world of oncology medications today. And we have a team of oncology nurses who look at the ancillary drugs for cancer, so think things like anti-nausea medications and things like that.
VN: It seems like you are working with a mix of technology and human intelligence. What do you see as the benefits of that combination?
RD: It’s speed and accuracy and attention to detail with respect to the patient. When we think about speed, we are able to take the knowledge that we have, which we utilize over 6,000 of our own protocols today on our technology, and combine it with best practices that are in the cancer market in general. One of the things that utilization management gets dinged on often is that this is another step that a doctor is having to go through to get a therapy approved. In a lot of instances, I agree with that premise, that it can be challenging and sometimes not even worthwhile, but usually those are on non-cancer related cases. So, if you have to go get an MRI for your knee or a shoulder, usually those have to go through utilization management. We’re not in that kind of world, we’re only in cancer, but there’s still regulations from CMS, there’s regulations from the state governments, around how quickly you need to be able to review those cases because there’s a patient waiting on the other end. So, we employ our technology to look at that in a very rapid fashion, and be able to get back to that oncologist typically within 24 hours, a lot of time we’re doing within six or seven hours.
VN: What kind of ROI have you been able to calculate? Do you have any hard numbers you can share in terms of readmission rates or anything like that?
RD: When you look at some of the requests that we see for expensive medications, or medications that are not indicated at a particular time, and you’re able to look at what’s in the best interest of the patient and find alternative therapies that are indicated to be as efficacious as the one being asked for, there could easily be instances where drugs being asked for total up to $50 to $60,000, but there are perfectly acceptable drugs that have same efficacy that are on the market today for $1,000. So, those are huge savings, as long as you are doing that in the best interest of the patient, and that’s what we try to do every day, to make sure that the patient’s getting what the patient needs without having to bear undue expense and cost. Also, toxicity; some of these drugs can also have very, very harsh side effects, so we take toxicity into consideration, and take where the patient is in their journey of cancer treatment into account as well.
VN: What will you do with the new funding that you just raised? Will it go toward hiring, expansion, product development?
RD: It’s going to go toward a little bit of all that. We announced a week or so ago that we’ve moved our corporate offices to Atlanta and part of the rationale for that is being able to attract more data science talent as we start looking at more and more data and more outcomes data on the cancer patients that we take care of.
The investments will go towards product development, it will go toward data science and analytics, it will go toward adjacent markets; we think the market we serve now with the health plan, there is a very high need for this ‘second opinion’ market for large self insured employers. They have the same problems, they have employees where they, or their families, are diagnosed with cancer and how do they know that the treatment is the right treatment? I was just asked last night by a friend of mine whose dad is going through a cancer stage right now and it was like, ‘We just don’t know. As consumers, we trust the physician, but we don’t know if it’s the right treatment or not. Would you have your team take a look at it?’ The challenge is that not everybody has the CEO of an oncology analytics company that they can call and ask for that. So, we think that adjacent markets, whether it’s employer, or even life sciences, provides additional opportunities for the company.
VN: You mentioned product development as part of the plan going forward. What are some of the things you’d like to go that you aren’t doing now?
RD: We want to make it smarter on the front end. What I mean by that is, we talked about speed a little earlier, we want to make it so that an oncologist can get into our system with the right information at the right time, and we provide the right answers, and do it dynamically generated, in a quick, smart way. The second thing is we’re getting hyper focused on digital healthcare and trying to empower the consumer to understand their outcomes better. So, we think there’s an opportunity for us, with the experience we have of seeing 25,000 cancer patients a year, to take that knowledge and to empower consumers. We won’t go directly to consumers, but we want to create digital health technologies that the health plan, or an employer, could give to their employees or members that would allow them to take more control over their cancer therapy as they go through. So those are a couple of areas of investment around new products, or at least enhancing some of the products that we have.
Lastly, we talked about analytics and data science and we have a lot of data that we sit on today around what we’ll call ‘the switch data.’ Think about the oncologist asking for a particular therapy, we look at the evidence and science and we think that there’s either an alternative or outright the one that they’re asking for is not going to be beneficial to the patient, we’ve documented all of that for years. We have a lot of data there on why we think those switches happen, so think clinical value, think all the compendium data, there’s value in that. We’re working on mining that data now to help us to do our job better.
VN: What will Annie Lamont and Ezekiel Emanuel bring to the company as members of the board of directors?
RD: I’ve known both of them for a couple of years. We strategically wanted to have Oak Healthcare Fintech, which is the name of the investment firm that they both work for, and that Annie founded. We wanted them both to be part of the organization because really what they bring to us is different than money. You’re in this business so you understand, there’s money on the sidelines everywhere. What we were really looking for is strategic value and what Annie and Zeke both bring, as well as Dr. Tom Hawes, who’s been on our board from Blue Cross Blue Shield Venture Partners, these folks bring vast strategic experience in healthcare, not just their checkbooks, and that’s really what we were looking for. With Dr. Hawes and Dr. Emanuel and Annie Lamont, they fit that bill and they’re good people. They’re really out to do the right thing, as we are, for patients; it’s not just about making money off a venture investment to them. It’s really about how they can work with entrepreneurs and how they can change healthcare and make it better for their families, your family, my family, and so on. That’s really what we hope to achieve with those folks joining and I absolutely think we will.
VN: How has the evolution of the healthcare space, with the explosion of data, and the emergence of AI and machine learning, allowed a solution like Oncology Analytics to thrive?
RD: It’s a couple of things. One is, that, you’re right, there is an explosion of data but what you’re seeing that’s happening on a national level, and it’s certainly happening amongst the electronic medical record vendors, or it’s starting to, is a trend toward sharing more of that data. Traditionally, the data has been siloed and you really couldn’t get to it, and the people who are really getting, not necessarily harmed, but who were not being able to take advantage of that, are you and I as consumers or patients.
So, the market is moving more toward openness of healthcare data, and that’s going to allow things like machine learning and AI to take hold because it can look at data a whole lot faster than a human can. Think about drug manufacturers, think about health plans, being able to have a conversation between the two, and data will allow this to happen. You will have efficacy of particular therapeutics that a pharmacy puts into the marketplace and you can imagine soon, and it’s already starting, that health plans are going to look at pharmaceutical companies and say, ‘You’re going to have to prove the efficacy of that drug before I’m going to allow us to pay you the money that you want for it.’ 10 years ago you really didn’t have access to the data to be able to do that; today, those markets are opening up a lot more. AI and machine learning allow that to happen and we’re starting to do some of that as well. We’re starting to employ machine learning looking at the data that we have, and we think there’s a lot of value to that, especially as our business grows. We have more data that we’re going to be looking at and it allows us to do that more efficiently from a costs standpoint, and certainly from a benefits standpoint.
VN: What is your ultimate goal with the company? How do you want to have changed the healthcare space five years from now?
RD: We just want to ensure that patients have a voice in their treatments, and if we can play a role to ensure that the right treatment at the right time is being used, then I think then we will have succeeded. You go back to the examples that I used a moment ago where a friend calls a friend and says, ‘I’ve got a parent going through chemotherapy, we don’t know if it’s the right treatment, we really have to take the word of the physician.’ Usually that’s really accurate and that’s really good, but sometimes it’s not, and we think we can really help to empower the consumer to know more.
VN: Is there anything else I should know about the company or the new funding round?
RD: It’s a business that we’re pretty passionate about. We think we’ve got something really interesting that we want the world to know about. Again, it goes back to us on the consumer side being able to ensure patients have a voice in this treatment process.
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McKesson Corporation, currently ranked 11th on the FORTUNE 500, is a healthcare services and information technology company dedicated to making the business of healthcare run better. We partner with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in every setting. McKesson helps its customers improve their financial, operational, and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, healthcare information technology, and business and clinical services.
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Oak HC/FT is the premier venture growth-equity fund investing in Healthcare Information & Services (“HC”) and Financial Services Technology (“FT”). We are focused on driving transformation in these industries by providing entrepreneurs and companies with strategic counsel, board-level participation, business plan execution and access to our extensive network of industry leaders.