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How innovation will evolve in 2021: An interview with Xealth CEO Mike McSherry

McSherry on preparing for the innovation influx coming from VC and big tech, the value of capturing first-dollar, the impact President-elect Joe Biden’s administration could have on digital health, and more.

Tom Sullivan | November 24, 2020

Xealth began as an entrepreneur-in-residence initiative within Providence. Then in 2017, Xealth was spun out on its own and EIR Mike McSherry became CEO.  

Prior to Xealth, McSherry co-founded Swype, Boost Mobile, Amp’d Mobile, and Zivo and served in roles at Nuance and Microsoft.  

 In 2020, the Xealth platform that enables physicians to prescribe digital health tools, apps and services for patients came into the spotlight for its effectiveness at Providence as well as Baylor, Scott & WhiteMemorialCare Health System, Froedtert and other organizations during the early COVID-19 response.  

Health Evolution Editor-in-Chief Tom Sullivan spoke with McSherry about how digital health innovation is evolving during 2020 and moving forward, what CMS could do to advance digital health and therapeutics, how CEOs can keep pace this year’s innovation explosion, and more.  

Health Evolution: The word of the year in 2020 among innovators and technologists just might be “accelerate.” From AI to vaccines, we have witnessed progress at a pace very few people would have envisioned as recently as January.  How do you see that reshaping the landscape?  
McSherry: Business and competitive pressures are forcing CEOs to confront digital health in new ways. Payers are catching premium first dollar and pulling in large profit metrics, as well as building digital front doors and telling members to start with those. That leads to hospital systems being relegated downstream in the referral process or only doing complex surgeries, maternity or births, as examples. The COVID-19 shock to the system is proving how valuable capturing that first dollar is and all of our large hospital customer CEOs and board rooms are in a race to take on more capitation and risk, whether becoming ACOs or negotiating more aggressively with the plans in their regions. Market dynamics are forcing providers to become more digitally savvy in engaging patient populations and whole-person care.   

Health Evolution: Another factor heading into 2021 will be President-elect Joe Biden, who has espoused digital health and cancer moonshots. What impact do you envision the new administration will have on innovation?  
McSherry: Biden is going to have a broader engagement in health care, which leads toward more dollars and more covered lives. Hes been a proponent of digitalization in health careUnder the Trump administration, the telehealth rules have been relaxed, as has cross state licensure so providers are more enabled to build a front-door strategy than ever before. And that’s important to the future because if youre going to owcapitation and risk, you will have to manage lives in remote patient monitoring and chronic care management apps. Providers have to share risk, figure out entire digital strategies around attracting patients and then manage them in a capitated way with more digital tools because of the cost-efficiencies.   

Now is not a time for stasis. You are either playing to win or to lose. Those playing to win are probably going to be consolidators, and those playing to lose will likely get consolidated. You have to place bets on directions.

Mike McSherry, Xealth

Health Evolution: When it comes to scaling digital health – what are the big opportunities? The pandemic has certainly highlighted inequities in underserved communities and behavioral health as areas in particular need of scale …  
McSherry: I would like to see CMS reimbursing for digital health. Pretty much all large employers and commercial payers have Livongo, Omada, Quartet, Lyra, you name your digital app treating chronic care disease states, but CMS has not covered that. Medicare and Medicaid patients don’t have virtual offerings accessible to them – that health inequality does not seem appropriate in the public health crisis facing this country right now. I would like to see the Biden administration tackle chronic care reimbursement at the CMS level for proven digital therapeutics  

Health Evolution: How realistic do you imagine it is that CMS take your suggestion in the short-term? 
McSherry: Very realistic. Why wouldn’t CMS cut some massive national deal on these behavioral health tools that provide demonstrated benefit? In 2017, CMS covered pre-diabetes prevention programs and it was expected they would cover digital and virtual tools. But then in the in the 11th hour, the government said: “No, we won’t cover digital even though the data showed it to be as effective, if not more so, than live pre-diabetes coaching environments.”  

Health Evolution: From the viewpoint of an entrepreneur-in-residence within Providence who ultimately stood up a digital health company, how do you envision innovation evolving moving into 2021 and the future?  
McSherry: Venture capital has lured in tremendous amounts of innovation dollars to address health care needs writ large, whether that’s pharma, insurance, direct-to-consumer, devices, etc. The second thing is the rise of big tech with Google, Amazon, Microsoft all getting serious about health care, in terms of teams and dollars and resources. In some cases, they are competitive with incumbents and in some cases supportive. COVID whiplashed the entire industry to now understand that stasis will get you nowhere.  

Health Evolution: And how can payer and provider CEOs prepare for that influx on innovation spending? What should they know?   
McSherry: Now is not a time for stasis. You are either playing to win or to lose. Those that are playing to win are probably going to be consolidators, and those playing to lose will likely get consolidated. You have to place bets on directions. Choose your strategy and match your investment appropriately.  

Health Evolution: One of the great conundrums of innovation is that it can be difficult to measure the impact quantitively versus qualitatively. How do you see that changing, if at all?  
McSherry: The measurement of innovation? Writ large, from the dynamic of payer or provider, that remains to be seen. But the Triple Aim still stands and against those metrics, there’s vastly more data being captured to drive toward quantitative measurements of results. One element of innovation that will change, in fact, is the vast amounts of data in the cloud, and then ONC- interoperable-data because of information blocking and patient access rules — so there will be more quantitative measurements against true innovation versus brand, marketing or hype.   

About the Author

Tom Sullivan, EVP & Editor-in-Chief of Digital Content

Tom Sullivan brings more than two decades in editing and journalism experience to Health Evolution. Sullivan most recently served as Editor-in-Chief at HIMSS, leading Healthcare IT News, Health Finance, MobiHealthNews. Prior to HIMSS Media, Sullivan was News Editor of IDG’s InfoWorld, directing a dozen reporters’ coverage for the weekly print publication and daily website.