HIStalk Quotes
An Exclusive Interview with Gerard Dab, Chairman and CEO of VisualMED Solutions
posted 04/26/2006
I first saw the VisualMED product back in 1999 or so. I thought it was beautifully designed with some obviously original ideas that made it look and work differently from the mainframe-heritaged products that dominated the market back then (and still do, largely.) Given the dearth of rich clinical products, I always rooted for them to succeed and I still do today. I hope to get an up-to-date look at their product shortly since I missed them at HIMSS. In the mean time, CEO Gerard Dab was kind enough to catch me up to what's been going on with VisualMED.
Tell me about VisualMED – the company, history, and products.
The company was started in 1998 in order to bring into the commercial space pioneering work that had been done by the Department of Medicine at McGill University. This work had been primarily conducted under the direction of Dr. Art Gelston, who, at the time, was head of the medical clinics at Royal Victoria Hospital.
We started the company, raised private money through the usual mechanisms of going public and raising equity, and got tremendous support from the Quebec government. We invested $45 million in the last seven years and about 25% of that came from the federal and provincial governments.
Even though we are located in Montreal and taking advantage of generous tax credits and our relationships with McGill University and University of Montreal, we’re an international company. Our corporate structure is as a US-based company. Several of our executives are American and our main focus is the US market.
The Quebec government just announced a provincial and federal initiative of $547 million to be spent on medical systems like VisualMED. So, suddenly it looks like Canada is becoming a market for us.
Your product has sound technology. Do you invest a lot in research and development?
I think there’s a misunderstanding in the marketplace. You can use Oracle and existing technology, but we invest most of the money developing thousands of medical algorithms that help doctors and nurses make decisions. The name of the game is clinical decision support. Tracking the patient in real time, reducing adverse drug reactions. Our focus is the practice of medicine.
In that way, I’m not sure that I’m an information company like MEDITECH. I think I’m a medical company. My founders and most of my key collaborators are professors at major medical schools. We deploy a modern architecture that helps professionals do their work better and more comfortably, the way a lawyer, engineer, or designer uses technology to enhance the quality of their work. So, the money has been spent on alpha sites, clinical trials, consulting, doctors, and clinicians.
VisualMED seems to have gotten market traction lately: a private clinical network deal in Canada, three recent US hospital implementations, and a $9 million hospital deal in Montreal. You’re also getting European interest. After several years in business, what changed and where do you go from here?
A year and half ago, we finished our first installation, in Texas. We refocused and refinance the company and fundamentally got some marketing consulting expertise and defined that our market would be the new digital hospital. We’re trying to really stay on strategy. If, tomorrow, a hospital was to say they wanted a data repository, I might be tempted to be a supplier, but there’s a lot of other suppliers. If they say they want to be paperless, I might be the only bidder or with one or two other companies.
There are quite a few small, private hospitals under construction in Texas, in the Midwest, and, for the first time, in Canada. VisualMED can deliver a complete, turnkey operation to a 100-bed hospital that doesn’t have an IT department. We’ll do it all: gather relevant clinical information, load the hospital's information, train, deploy, and support at a distance. All that a price that’s probably less than half of what a competitor would charge.
In fact, a hospital that’s not particularly knowledgeable in IT is likely to be more happy with us. You hire IT people and by the time they figure out what’s needed for you, a couple of years have gone by.
Technology isn’t the issue. The issue is that, out in the field, there are two or three companies that focus on the clinical side. I don’t have to name them for you. Take a small hospital, 80 beds for example, running MEDITECH, which is really a technology company. You’ve got this solid MEDITECH application that you use for storing data and billing. A company comes along who tells you to throw it all away and start again. We’ve installed our technology in a hospital and we have all the interfaces to MEDITECH. You get the clinical side of VisualMED and you can still keep your legacy systems you’ve invested money in.
I’m saying that, with a totally state-of-the-art system like VisualMED, interoperability, which is the big buzzword in Washington today, that’s yesterday’s issue for people who worked in the 90s doing interfaces. In 2006, VisualMED can interface to anything.
I don’t have to think of the next step. I’m finding that each satisfied customer becomes the generator of a dozen referrals. A lot of hospitals are looking, and in the first four months of this year, I’ve seen a rapid acceleration of our business. There’s at least a half dozen announcements of new hospitals in Canada alone, Whether the Canadian government likes it or not, they can’t prevent private initiatives in this field because there’s so much pent-up demand for good care.
Medical issues, such as infection control, have become so dire that many hospitals will have to be rebuilt. This is where VisualMED's opportunities are.
Another set of opportunities came to us because some organizations began talking to us. They were leaders, early adapters of medical and information technology and patient care in the 1990s. They seem to have a position of leadership. Unfortunately, I can’t give you any names. Social Security reform has dropped their revenues and they can’t afford a $100 million upgrade from their current providers. They can get VisualMED for just the cost of their current maintenance. Why are we so cheap? Because we developed it for maybe 1/10 the cost and it works.
We recently went to a small hospital and thought we’d figured out what they wanted. They said we were wrong. It took five people just five weeks to give them what they wanted. When you compare that with implementation time running 3-4 years or more, that makes us different.
Everything is defined in external tables. The architecture is multi-tier and was designed to be adaptable. We not only gave them what they want, there were at least 50 doctors who wanted their applications customized. It isn’t going into the code, it’s customizing the order sets, and that takes only a few minutes. If you were to deploy hard-wired guidelines, then obviously modification becomes extremely difficult. VisualMED was created by doctors for doctors, so it was made extremely flexible.
Who do we compete with? We compete with a white page. We have to let the doctor be as creative in the application as he would scribbling on a white page.
Are your US hospital customers good site visits for prospects?
Yes. They actually enjoy the attention and are visited regularly. We've started to attract the attention of consultants, who have begun to write reports on us. Beyond the obvious ones, like Leapfrog, which gave us a very good writeup.
The last time I spoke to Leapfrog, out of 500 hospitals who said they wanted to meet the Leapfrog criteria, only four hospitals actually did so. One of our customers bought our product for that reason. They have a big defense contractor in their community and they heard that their employees would be directed to establishments that would give better quality for the money. What’s better quality? Reduction of adverse drug reactions, for example. There’s a cover story in Time magazine this week about why doctors are afraid to go to the hospital.
We’re low cost because we’re a tightly run organization. We outsource to other tightly run organizations. We have very strong academic relationships, so when I talk about our strong medical content, we have academics create it and then hospitals can modify it to their own protocols.
By the end of the day, I think that our business will be due to evolving political pressure. It’s a matter of time until patients start realizing that being a victim of an error in a hospital isn’t just bad luck, it may be negligence by an organization that didn’t take measures to protect you. A Canadian report from Ministry of Health says that 24,000 deaths a year could be prevented. They want to create an institute because it doesn’t seem that policy is concerned with that. At the same time, the report points out the billions of dollars spent on air travel safety, but you know only a few hundred people die in plane accidents. Nothing is being done for the 24,000.
The documentation of these issues started with the IOM report. So, there will be pressure that will translate into either customers choosing better hospitals or actual laws forcing hospitals to address issues of preventable errors.
What are the advantages of your product as compared to clinical systems from Cerner, Eclipsys, GE, and others?
We arrive at a customer site with the medical content. We don’t have to sit around for four years with a hospital spending millions while we try to figure out whether we’ll put this or that in. We know what every discipline needs and adapting it to their conditions is a matter of turning off some things or turning some on.
Some of our competitors have that and are more expensive, perhaps, because they’re better known or tackle larger sites. Most don’t. Vendors show up with empty systems and expect customers to spend thousands of hours building their own content, which, by the way, never ends up working. The evidence is that it can’t work. Four systems are good, including ours [note: he names them off the record.] Each has an original inventor who actually created the core functionality. Our system was entirely designed by Dr. Gelston, concept to design. Up to 60 programmers coded it. The original architecture is a medical architecture that reflects medical thinking.
How would you advise a hospital to choose a system like that?
Buy something where the functionality is already in the system. If it's really there, then look for a turnkey solution, get it from a vendor that will come and deploy it themselves, and that’s it.
What do you avoid? Somebody spending five years building it for you and you’re avoiding buying a system for $5 and then hiring Price Waterhouse for $200 to put it in. That’s what you want to avoid. Somebody has to come to you and deliver a turnkey operation, and if consultants are needed, they have to provide them in the package.
Last, the same advice as Leapfrog gives: go for best of breed because there’s no such thing as single vendor. Every vendor is the agglomeration of many purchases. What are these companies doing in hospital informatics? Often they just bought another company.
The leader is Cerner, and what they’ve shown is that great marketing works. Why not? We don’t compete with them. The have a space that works for them. They sell you a complete architecture from A to Z. I’m a medical company. I don’t have a billing system or a lab system. I may bring PACS if you want, maybe getting it from Cerner. They replace everything with one single system.
I’m a clinical system and I complete other systems that you have. I recognize that my market is medium-sized hospitals and, a lot of the time, they don’t have much money. We've gone a long way so that they can keep the legacy systems and we enhance them. If you have MEDITECH and bring in VisualMED, not only are you getting clinicals, you’re enhancing the existing functionality of MEDITECH. Cerner gets the biggest contracts and hospitals and I can’t say anything bad about them. The better they do, the better we’ll do in our own space of medium-sized hospitals.
What will you need to do as a small, under-the-radar company from Canada to crack the US market?
All the attention we have is on the US market. We don’t have any customers in Canada and aren’t looking for any. It’s a socialist system where civil servants decide on policy. All my reference sites are in Kansas, Michigan, and Texas and most of my good prospects are in New York, New Jersey, and Pennsylvania. The digital hospitals I mentioned are those not covered by the Canadian health care system. The typical hospital in Canada makes a decision with political support.
Cardinal Health was the exclusive reseller of VisualMED at one time, calling it Pyxis VisualMed. How many hospitals did they sell and is that agreement still in place?
They sold one and we have cordial relations with them, but they’ve been undergoing a major reorganization after buying Alaris and merging it with Pyxis. Pyxis was our main partner, but there hasn’t been any development. I hope in the future we can rekindle the relationship.
We’re looking for customers, not partners, In fact, customers are finding us. We got four new clients last year, so I think our progression is likely to be geometric and I expect to get 16 this year. It’s logical. I’m also, for the first time ever, signing preliminary protocols for major, major multi-hospital deployments where we are the junior partner to a management group. We provide the medical functionalities and other people provide the other deployment that is needed.
These are projects that are slow to develop, but are predicated on recent literature focusing on some of the mishaps of modern medicine. As medicine becomes more complex and we have more drugs that are efficacious, no doctor, no matter how smart, can understand all of the interactions that can threaten this patient. You know the primary ones, but not the secondary ones. There are organizations planning major overhauls and we’ve been included in some of these initiatives. We may become part of a consortium serving a group of hospitals or a region.
Physicians love us. Even in the early days, one of our associates went to see the head of a hospital at 5:00 in the afternoon and he was exhausted. He had the laptop and the physician started navigating through it himself, to vital signs, to the graph. If we invite physicians to our lab, which was how we got our Montreal hospital, we give them a 15 minute introduction and a keyboard. They start navigating. That’s how friendly it is to physicians.
That doesn’t make it attractive to IT professionals, who look at our screens and say, "My God who designed this?" We say, "Doctors did, not air traffic controllers or home PC users." That’s the originality of good systems – they are designed by physicians who learned informatics.
The plan at one time was to market the product as a pay-per-use application through other companies. Have you pursued that?
That’s still on the table. We offered it to three Canadian hospitals for free as a way to establish a bridgehead. It was nixed by bureaucrats who control the hospital [laughs.] We will offer it pay-for-use. You can buy it or get it as an off-balance sheet straight rental, not even a lease. Or pay-per-use. It’s probably not a feature that will help us sell.
The customers I’ve had are hospitals who want to compete more aggressively with local competitors. The old rules of “cover your ass” and “don’t take any chances” don’t apply. Our Kansas City surgery hospital has 40 beds but does more surgery than a 600-bed Canadian hospital. They don’t fool around, there’s not an IT director covering his ass, and they don’t wonder if something will work or not.
In your 2005 annual report, the auditors expressed doubt that the company could continue as a going concern. How do you convince a prospective customer that your company is a stable and a safe alternative to the big vendors?
The subject rarely comes up with customers. Auditors of public companies like ours are going to be writing this type of report until the company is more mature. This was in their report five years ago. Once a company’s been in business more than five years, its chance for survival is more than 90%. We’re in our eighth year, run by the same people who founded it. It’s a very strong attachment to the company. It is strongly supported by shareholders and stakeholders and still gets a lot of government grants. We started our real marketing a little over a year ago and have entered the revenue stage. We expect to start breaking even in the summer of 2007 just by accumulating small clients, not even factoring in some of the big projects I’ve mentioned.
Your competitors spend large amounts at the HIMSS conference vs. a modest presence for VisualMED. What are your thoughts about the show and its importance to the company?
Every time we've gone to HIMSS we get one customer. We met Cardinal Health there. So, we don’t get a lot of customers, but every industry needs a major show like that. That’s the name of the game. If my big competitors have the big bucks and the big booths, that's OK. We’re happy to have a small booth and meet fewer people, but hopefully over the years people will find their way to us. HIMSS is fine. We also go to AMIA. You never know what brings in business.
We had ten times more visitors this year than last year and we weren’t even in a good location. One of the changes we made was that, in the first year, we cooperated with big organizations like Johns Hopkins and big engineering firms. We’ve changed in keeping with our policy of looking for customers who want to have modern digital hospital and be paperless. We’re finding like-minded companies that do other systems for hospitals that are cutting edge. We might look at sharing a booth with some of these people.
How does the recent emphasis on interoperability and information exchange affect your company’s business plan?
It doesn’t. It’s irrelevant. The government has been trying to regulate informatics from the beginning and is always five steps behind. How much money did state and federal government spend on mainframes in the early 90s when PCs had been around for years? Who planned for the BlackBerry? No one – it was adapted. We’ll eventually have an installed base of customers and we look for customers who want to excel. I want to be the best medical company, not necessarily the biggest in the short term.
What are your thoughts on open source in health care, such as Medsphere’s OpenVista product?
You can’t have open source if you’re interlocking complex diagnostics that are designed to support a doctor looking after a real patient. Maybe you could get yesterday’s hospital information system cheap, but how can you gather the compounded medical knowledge from a leading medical school and have it be open source? Medical knowledge moves too quickly.
The point isn’t about getting this system or that system, but medical costs are growing 10-15% a year. How can you contain them? There has to be a measure of efficiency. Where do we know of the greatest efficiency? Japanese car manufacturers, but they didn’t cut corners. They focused on quality and developed measures to deliver it.
There’s plenty of reports in Western countries where, if you were to just do away with most medical errors in hospitals, you’d end up saving maybe half the health care budget. If you look at the patient correctly the first time around, he won’t need to come back for awhile. I keep going back for a small ailment, and eventually I’ll find someone to fix it, but in the meantime the system spent $5,000 of the government’s money when all I needed was a $30 consult and $10 worth of drugs.
We don’t want to be lumped in with the other guys. We’re medical and are for medical results, real doctors who are medical people and not former ones who became businesspeople years ago. Of your readers, a handful will see that I had a frank conversation with you. I’ll get flak from my marketing guy, who wanted me to say that we’re the best thing and will conquer the world.
What is your strategic plan for the company over the next few years?
Attract the attention of organizations building brand new hospitals, who will always look to put in the latest technology. Engineering firms with expertise in building hospitals could include us in their RFP responses and do better.
If I sound dispassionate on issues like marketing, we’ve tried it all. We’ve been with Cardinal and tried other things. At the end of the day, we’ve created something that has to do with medical excellence that includes nurses, pharmacists, and all the professionals in the hospital. When we talk about paperless, we’re not talking about hiring clerks to re-transcribe information into the system, errors and all. It’s paperless because everybody has their own interfaces. The nutritionist, the psychologist, the cardiologist, the pharmacist -- everyone has part of the system specially designed for them. Big characters and a color-coded screen so you can work well after a long day.
We’re not a warehouse selling you computers. We’ve invented applications for the medical field. When we go to see what your needs are, we want to sell our application, not to make you buy ancillary machinery. We make good margins on the software, but we save you a lot of money on the hardware and in lowering the cost of operations. In order to propose this, we have to be a pretty open company. We operate that way. That’s what makes us different. We don’t cut corners and we don’t cheat. We don’t sell you useless data repositories tomorrow because I’d lose my topnotch doctors, who are involved only because they feel we’re going to change medicine.
We won’t make compromises on quality. We will survive and prevail.
Who do you admire in the industry?
Dr. Art Gelston. I’m being sincere. I’m saying it honestly, not for any self-serving reason. He’s single-handedly wrote more than 30,000 user cases.
Do you read HIStalk?
Yes, and it’s great. The term I would use for HIStalk, the adjective that comes to mind, is refreshing. I hope you take it positively [Laughs.] You’re one of the great, if not the only exciting, blog in this field.
comments (3)
1. TomG left...
04/27/2006 7:44 am
Great interview - thanks. I knew very little about VisualMED but this has
definitely piqued by interest. I think Gerard's spot-on about the
installation and build-out of most clinical systems.
2. real world left...
04/29/2006 5:29 am
I have competed a study of VM
and I'm very impressed with their solution.
Ed Koscic
eek@go2guy.us
