An Exclusive Interview with Gary Kennedy, President and CEO of RemedyMD

Gary Kennedy of RemedyMD
(photo from deseretnews.com)

Maybe you see those small booths off the big aisles of HIMSS and think, hmmm, there can't be anything interesting to see. Those little up-and-coming companies are probably low-tech, run by people short on business savvy, and not likely to have any fresh ideas.

That's what I expected when I dropped by the small HIMSS booth of RemedyMD. My stereotype was about as wrong as it gets. I found RemedyMD's product to be ultra-cool, one of the slickest development and data analysis tools I've seen. Usually I'm itching to break free from a long demo, but I was so engrossed that I stayed well past the afternoon's closing of the exhibit hall.

To top it off, president and CEO Gary Kennedy was manning the booth. I found later that this wasn't his first job with the President title. He held it at a little company you may have heard of called Oracle USA. Also at a big IT division of Black and Decker. Also at software developer TenFold. If you're going to make same-title career moves, Gary's way seems to work.

Talking to Gary is a challenge because he can veer off into almost any topic with surprising depth and well-informed opinion, but he still listens, too. You might thing that he's just a technical leader, but check out the exhaustive description of RemedyMD's culture on the company website. He's obviously taken a lot of ideas learned at big and successful companies and put them into place at RemedyMD.

So, let's see: smoking hot technology, personal funding by the management team, careful attention to the people side of the business, super-credentialed management, and the objectivity of someone who's been successful outside of healthcare. I expect RemedyMD to do just fine. Thanks for Gary for speaking with me.

You’re the founder of Double Eagle Ventures. What kind of companies do you invest in?

Double Eagle Ventures has ten investments. They’re almost all information technology businesses. I own three businesses in Brazil.

I was the president of Oracle USA years ago, which was about a $1 billion company when I left. I have no interest in small opportunities. I invest in companies with a chance to get large. Our big investments are RemedyMD and a company that puts television monitors and aisle screens in large grocery stories.

That's a huge opportunity. We've created the world’s largest television station. The traffic of people going through a grocery store in a day is significatnt. We built technology using voice over IP to present targeted ads specific to a customer. If you're walking down the grape juice aisle, you'll hear it offer you a sales price on Welch's. Eventually, we'll have loyalty information, like that you bought Welch's last time but cranberry juice is on sale.

RemedyMD is a big opportunity, almost beyond description. The size of the market is massive and the degree of pain is significant. That’s important when you invest early, as I always do. Healthcare's reputation is that there are few early adopters. They're on Wall Street and other places with competive advantage.

People tend to buy before the technology matures because they get competitive advantage or they have pain. Pain gave us opportunities. One of our largest customers is Cleveland Clinic. Why would they buy from a flaky company in Utah if their needs could be met elsewhere? They went to Epic and they couldn't meet their needs. We were second choice.

What was it like in the early days as one of Oracle’s first employees?

It was surreal. When I joined, there were less than 10 of us. I’d been there about two days and we were having a celebration in the conference room. I wasn’t invited since I was the new guy, but I went anyway. There was cake. The sales VP announced that we’d just passed a million dollars a year in revenue. Larry [Ellison] just looked at me because he’d told me when he hired me that they were at $5 million (laughs.)

Larry always dreamed about the future and didn’t pay much attention to verb tense. In the early days, Larry would stop by, we’d shoot baskets, he’d drop by the house to have a sandwich. We were in it together to build a company. After nine years, Larry was worth tens of billions of dollars. Like they say about rich people, Larry wasn't like you and me. He wanted to talk about yachts and places in the French Riviera he’d sailed, but I wanted to talk about what we needed to do to get the Caterpillar deal.

I’ve probably worked for Larry longer than anyone else, over seven years, since the half life is short (laughs.) He’s a brilliant guy.

Tell me what RemedyMD’s product does, how it came to be, and who’s involved with the company.

I saw a business plan and had entrepreneurs present the business to me. What they had was a surgery room scheduling product, which held no interest to me, and a patent for what they called the MyWay UI. I don't think they knew it, but it addressed the conundrum of how to customize a product for 200 customers when everyone wants to run a seemingly different product.

That was intriguing to me. It seemed like mass customization was the phrase of the future. I knew that doctors, especially surgeons, wouldn’t put up with a "one size fits all" EHR. I gave them a little bit of money on the condition that we change the value proposition to "Better Data, Better Decisions, Better Outcomes." We hired highly talented designers from Oracle and TenFold. 

The management team has probably $12 million of our money in it. It's all our money. No limited partners. We take our investments seriously. It was such an opportunity that it wasn’t hard to make a big commitment.

We began to build what we wanted to be. We're not there yet, but it's almost a perfect company. When you’ve been through some of the startups and larger companies that I've worked for, like Black and Decker and Procter & Gamble, you come to find out what makes a successful company.

We had four or five things we wanted to do. One of them was to finance ourselves and take no venture capital. Another was to make sure that we built for the future. We spent almost four years building our SMART Platform. We knew we couldn’t build a successful company building niche apps. With that platform, we could attack market segments quickly with almost no effort.

For example, the State of California penal system needed an EHR for inmates. We told them we could adapt what we had. They said they didn't  think so, it needed to be specific for podiatry and psychological exams and for dealing with infected tattoos. We took the master EHR we have, which is part of the platform, and began to use our tool called FormBuilder to configure it.

You don't have to program, you just fill in rows and columns. It's a data-driven application. The data determine the form and function of the application. When we push the button, it creates the corrections EHR. We make a few changes, add a few graphs, and get with the customer to see what they want. For example, they needed to be able to search by identifying marks or tattoos and to use two-way video to record the interaction of coming into prison for the first time. In almost no time, we were able to come out with a very specialty-specific product.

We're seeing opportunity all over the place. That happens when you have a platform that you can configure quickly.

Some have said it’s hard to describe RemedyMD’s software product in a nutshell. Can you do it in 30 seconds?

It is an extremely sophisticated decision support system.

Wow. You still have 25 seconds left.

Everything we do is driven to help us make better decisions. All our outcome tracking is designed to circle back to help us make better decisions.

We decided early that we weren't interested in tracking outcomes. We want to influence them. In another industry, they might call us a business intelligence company. All our products for researchers and patients will help them make better decisions and give better outcomes.

We put all the data together in Mosaic and then put a different skin on it, depending on who’s using it. We didn't realize how important that was until we started finding interesting ramifications to our research. For example, we just started building our version of a PHR. It's a one- or two-month project because all the data's already there and stored in Mosaic. All we have to do is create the user interface and we have tools to do that quickly.

Sometimes it shocks me how quickly things can come out when the data's already stored and mapped.You don’t have to ask which George Jones this is. Putting a new skin on existing data is a fast proposition.

It’s been gratifying how closely related stakeholders are. They all need the same data. Researchers can care less about individualized data. They only want anonymized data. They really care about characteristics of the cohort. Individual providers don’t care about cohorts. They want to treat you and me when we’re sitting in their office. But, it's all the same data. They just look at it differently.

Who’s buying your software and what are they doing with it?

We have around 200 bariatric surgeons using our product. 80% use a customized version for them. Some may do surgery in an outpatient center, others in the hospital. We also do bariatric physicians, which is a different proposition. They need to track their supplements and they don't do surgery. We eliminated the surgical components of our application and added deep information on diets and built an inventory module, all in a month.

We have a product for endocrinologists that we just started selling. We have a few customers in general surgery, but we haven't really tried to sell them yet. Those are providers. We have researchers. Cleveland Clinic was a development partner. We have patients. 170,000 of them have registered to use our product, almost always sent there by their doctor. They're not all active users, of course, but a substantial number use the product every day.

We recently began to sell to platform partners. For example, here in Salt Lake, a company has an EHR they sell to rural hospitals and practices. They have around 2,000 customers. They wanted us to Web-enable their product. We said no, but offered to configure our product to do more and in less time. We just began to sell it and have five or six platform partners already.

We just began selling to payors. It's always been a good value proposition, but we couldn't find the time to sell to them. We've had significant interest from a payor in Brazil. It's basically the same model each time. "I want a barebones version of your MyHealthManager patient portal for all my covered lives. I'll pay you a low rate, like $1 per patient per month, for features like journaling their food, tracking their pain, and chat. Then, we'll allow you to market to those patients".

It's a hosted model, so if we send a note that we just finished our pain model with a 30-day trial at $1.50 a month, or a diagnostic product where we take information from our registration form and the product produces a diagnosis and shows the Bayesian logic it uses.

As long as products are built on our platform, they just plug in and become a menu item. We have a lot of interest in influencing outcomes. Tracking them is good for budgeting purposes, but doesn't help you very much.

What would you say is the current state of application technology being used by healthcare software vendors?

Pretty awful. I say that from both an absolute and a relative standpoint. Absolute, meaning they can’t get their job done in many cases and healthcare isn’t seeing the kinds of productivity increases that other industries see. That's also true from a relative standpoint. Some of the things we’re doing are innovative, but Wall Street would yawn at Web 2.0, AJAX, and smart tools. We’d be one of five companies they could pick from. In healthcare, we’re not one in five, we seem to be one of one.

There are benefits of that. Sometimes we do find ourselves answering the question, “What is decision support? I bought his module from Cerner.” As far as it goes, it is decision support. If you want to watch vital signs and analyze free text, then yes, you can do that and it’s decision support. What we say is, when you have a single uniform data repository and you’re able to take data from nine or 10 dimensions of data with a 360-degree view, sometimes it’s that last dimension that turns over the tile and gives you the answer. 

The company’s website has a detailed description of culture and values. How do you operationalize that in recruiting and managing people?

Coming up at 4:00 today, we have our monthly training class. It has nine new employees in it. I spoke with them from 9 to 11 this morning on RemedyMD's strategy. Tomorrow, we hit them with SMART Platform. From 4 to 6, I’ll talk them through culture and values. That information on the site is talked through point by point with examples.

It’s not just about what you do, but how you do it. We explain that, in healthcare, you can’t make a decision being 70% certain.

We had a consultant start last week. He was behind all of the Oracle advertising strategy for the first 10 or 12 years, like the biplane getting shot down. At Oracle, you were in the business of getting attention, but a child with an unchanged diaper gets attention. We don't work that way. We don't want planes shooting each other down or, like another Oracle ad, Elvira stabbing the competition. There are plenty of good ways to get attention. We don’t have to resort to the shock ads.

That’s an example of how we institutionalize culture and values. We don’t have right and wrong things, just compliant and non-compliant things. Even if someone was giving a presentation internally and was honest but gave a false impression, that's a culture violation, even though they never lied.

What was your impression of the HIMSS conference?

I was pretty disappointed. It was really strange. We had several people come up to us on the street and asked us to tell everyone that New Orleans is back. I could, but I’d be lying. The hotel service was horrible. I’d feel guilty when I’d call room service and they’d say, "I'm by myself and busy so it will be a long time, so you should come on down and get something."

It’s almost a huge propaganda effort trying to convince people that large numbers were coming to HIMSS. Some of the places, not just in our little booth but in the big ones, I’d expect a lot bigger crowd and it wasn't there. It didn't seem like people were buying. It was a completely different mood than in previous years, although I know no one wants to admit that.

It was a disappointing event, yet it was massively expensive. We go to lots of shows and HIMSS was a fourth of our budget. That seems like a lot for one show.

What are the most exciting things happening in healthcare IT right now?

Pain is driving people to make more aggressive decisions. We don’t see the timelines to close deals like they were. They’re accelerated.

I'm really encouraged by a lot of the ontological initiatives. What it comes down to it, if you don’t have a way to enforce ontology, data can never be reliable enough to make good healthcare decisions. We looked at three or four vendors,  like Language & Computing, that have well thought out products. It’s gratifying to talk about some of these issues. Three or four years ago, it was like a blank stare. Why would you want a specialty-specific product or to collect data at the level of what someone ate for breakfast this morning?

Now, it seems like even practicing physicians have more of a research orientation. They're asking deeper questions. What’s the meaning of this, and if I see these things together, what does it mean? When the information begins to become available, it's like, "I want more and more and more." Everything we see is geared toward making better decisions.

For example, Oracle just released a new imaging data type. If we had to build that, which we were planning, it would have been a three or four month project. It's easy to dump image data to storage, but you can't search it, like "show me all the people who have the same kind of knee tear I do." With a standard data type, that's less of a problem.

The gap between research breakthroughs and clinical implementation can’t be 15-20 years. We asked a new NIH consultant we hired about translational research. He said they don’t do anything that isn’t translational. He wouldn't have said that three or four years ago.

You’ve had a lot of experience building and growing software companies. What are the secrets?

One thing that's not well understood is that whenever you build a software company, you really have to make some bets. No one wants to put it that way, because the obvious implication is that if the bets don't come home, you lose and go broke.

For example, Oracle and SQL. It wasn't a slam dunk. There were two or three better languages at the time. Or, a less obvious bet, that people wanted to run the same software on their desktop as on their mainframes. That was a huge leg up for Oracle.

Here, four years ago, we made five or six bets. I said at the time that if most or all of those come home, then we'll build a very solid, successful, perhaps amazingly so company. If half do, we'll do OK. If a few do, we'll languish in mediocrity. If none do, we go broke.

You have to put a stake in the ground and make some bets. For example, it's pretty obvious now, but that patients are going to want to accept more responsibility for their own health. That drilled us to build the whole patient portal and get used to the idea that people would be involved in their health. Another is we really believe in personalized medicine, where when you see a doctor, they’ll compare your genomic panel and proteomic data to your phenotypical data and use that to recognize patterns and prescribe a treatment plan personalized to you. That’s the slowest in coming, but it’s a good bet.

You’re an investment guy. When do you sell RemedyMD and to whom?

We’ve already had some interest. Our answer has been no. We really want to make this company into something that changes peoples lives. There will be a time where it will be large enough that someone like Oracle or someone else could acquire the company, keep it going, and use their resources to make it better.

GE has destroyed more software companies than anyone known to man. They acquire small companies, the assets leave because they don’t want to work for GE, and they chalk it up as a failed acquisition that at least took another competitor out of the market.

It was hard working for Black and Decker. I was president of PRC, Inc, systems integrator that was their subsidiary. I’d give presentations at board meetings and no one even understood what I was talking about. We'd won a huge contract to re-engineer the patent and trademark office and no one even knew what I was talking about.

If we were acquired by a large company and were big enough that they didn’t cast us aside, we could keep going. Someone who doesn’t understand the market would destroy the company. Given that Double Eagle owns over half the shares, we aren’t in any hurry. Maybe we'll have a public offering sometime. I know the employees are looking for ways to monetize.

You’ve obviously made a lot of money over the years. What do you do differently now than when you didn’t have any, and what motivates you to go to work each day?

I grew up very poor. My father was a coal miner in Wyoming. We really struggled.

In the early days, it was all about getting enough money to put away so I wouldn’t have to see my family go hungry. That took me through Procter & Gamble and business school and Intel. We were doing a pretty good job putting money away. When I joined Oracle, my dad called me and told me I couldn’t keep jumping from job to job, even though it was my first job change. He asked me the chance of succeeding with small software company and  I said 25%. He wondered why I'd take a job with a 75% chance of not succeeding.

If you have marketable skills, you can always go back. I shouldn’t worry about having money in the bank to feed the family. Larry would hand me a commission check and tell me it was huge one. I had no idea how much commission I’d get. Oracle announced plans one year in late December to go public in early March. I sent the secretary a note asking for details on the stock grants I’d received, figuring it was time I asked. I had lots of them. She had the unpleasant job to tell me that, three years earlier when I got the “lock you in” shares, almost 1% of Oracle at the time, Larry didn’t tell me it was cliff vested. It didn’t start vesting for four years.

Since I stayed nine years, I eventually vested most of it, but I hadn’t even read the options paperwork. As long as we have enough to eat, I don’t have an interest in making or putting away money. I never sold a share of Oracle until I left, which was stupid because it was at 7, down from 24. I'm a bad example as a financier. It’s not something I do well and I don’t like dealing with money,.

Of the investments we’ve made, only one has failed. All the rest have succeeded or have gone public. I've made more money than I did at Oracle. I either donate to the church or have it sitting there to give to the kids. I indulge in one thing, fly-fishing. I try to go one to place a year, like Alaska or Patagonia or somewhere pretty fun.

Who do you admire in the industry?

Steve Case really understands some of the problems that exist in the industry and I’m impressed with his vision. He’s putting his own money where his mouth is.

I'm very impressed with Secretary Leavitt. He was our governor here before becoming secretary of HHS. He's really committed to doing something to make this seemingly intractable healthcare problem manageable. There are plenty of other things he could be doing. I suspect he’s having major frustration dealing with the vagaries of government and a lame duck president. He's deeply committed to healthcare.

The third one is Jon Huntsman. He funded cancer research center at University of Utah. He's put hundreds of millions of dollars to address the preventative issues behind cancer. You can’t help but admire someone who’s a shrewd businessman, but very altruistric.

Do you read HIStalk?

Thankfully, I do. I started reading it when there was positive discussion about our company. It sort of made me think, "I wonder if there are other things out there that I’m missing?" Then, I started reading about the Shreeve boys. I'd heard the board's story, but not theirs. Absolutely fascinating. My only regret is that to really appreciate it, you need to know the people and I’m not familiar enough with healthcare that I know everyone. We used to have that in Silicon Valley. What I like about it are interesting ideas, tips, tidbits, who’s doing what. I can get more in a couple of paragraphs than by going to somebody’s booth. I read it all the time.