Health Evolution | May 26, 2021
Peter Everett first joined NextHealth Technologies as an early investor and board member. Then he became COO. Everett has since taken over as CEO of the analytics company that provides “personalization at scale.”
Prior to joining NextHealth, Everett founded and served as CEO of HealthConnect Systems, which offered cloud-based sales automation solutions and was sold to Ebix. Before HealthConnect, Everett spent a decade on Wall Street, including as a Principal at JPMorgan, advising mergers and acquisitions and providing capital raising services to technology startups.
Health Evolution spoke with Everett about why NextHealth considers itself to be in an analytics greenfield space, how the company differs from other analytics vendors, what he is most proud of as a CEO and serial entrepreneur, and more.
As an early investor in NextHealth, what inspired you to become part of the company and eventually take the CEO role?
Everett: When I originally became involved, I had just exited a previous company and I had some funds to put to work and was really looking for an opportunity to work with a team and have a meaningful ownership stake but not on a full-time basis. I wanted to be able to play a value-added board role, or what I call the utility infielder. I had previously started up a health care IT company called HealthConnect Systems and I just know how incredibly difficult it is to sit in the CEO’s seat. So, the founder of the company and CEO at the time, Eric Grossman, and I had gotten to know each other. He had been charged with putting together an analytics strategy for TriZetto and in that role he had a bird’s eye view because he was able to meet with a lot of C-suite clients, many competitors in the industry and he developed a viewpoint as to what the solution should be. As they were getting ready to go to market, TriZetto missed its earnings and financials. The CEO decided to cut back on new investments and armed with the strategy he had developed Eric recognized analytics as a great opportunity so he started NextHealth. I made a seed investment and served on the board for about six or seven years. Then about two years ago with our daughter heading off to college, my wife and I realized that we’ve been doing the same thing in the same place for a long time and we started rethinking our opportunities. NextHealth raised a Series B round and was looking for somebody to come in as the chief operating officer so we decided to go to Denver to spice things up so. Things progressed from there and Eric and I had a change of roles. He moved more into the founder role and I took over as the CEO.
Building on that, NextHealth describes its platform as enabling “precision at scale.” At first blush, the phrase appears to almost contradict itself. So what’s the concept?
Everett: If you look at the health care industry today, there’s still tremendous inefficiency. One area with tremendous inefficiency happens because health plan members engage in behavior X rather than behavior Y. Massive costs are incurred and sub optimal cost and quality outcomes result from that behavior. If you can impact those behaviors at scale, you can deliver better costs and quality outcomes for the members and the health plans, which is their mandate. From a societal and personal satisfaction perspective, you can make the health care system better. So precision at scale is focused on identifying areas with a lot of members engaging in behavior X that would be better for all, starting with the members, to move them to a different type of behavior. Then it becomes about engaging those members in a way where you can provide casual demonstration of that change’s impact, quantify its value and if you can do that there’s an awful lot of opportunity and improvement you can bring to health care.
Can you highlight a recent example?
Everett: Sure, a good example would be the work we did for the Medicare division of a large national health plan. It was seeing an alarming increase in costs from untreated behavioral health challenges. As we all know, a lot of behavioral health issues have been expanding quite significantly during the COVID-19 pandemic and the real shortage of behavioral health providers out there is only making it worse. That said, there’s a whole new wave of virtual providers that have stepped in such that the capacity of providers has increased similar to how Uber increased the capacity of taxi drivers. There’s a solution but it’s not worth anything unless you can get members to change behavior to activate and engage with those virtual providers. This same client had launched an effort to activate members into virtual behavioral health care. And they were not activating as many members as they wanted to. So, we came in and went through a process with them to take a hard look at how they were reaching out to members and help them come up with a number of suggestions to improve. That resulted in a 50 percent increase in activating members, and we’re not done yet.
Peter Everett, NextHealth Technologies
What should our CEO-level readers understand about NextHealth’s offerings?
Everett: There are many member engagement companies. Among those, quite a few analytics companies offer solutions in different areas and so it’s not unusual that we get confused with competitors. But we view ourselves in a greenfield space because of the way we’re approaching the market. When you go to a health plan and you’re looking to deliver value with analytics and you’re making recommendations to the client about workflow or other changes to make, it’s absolutely critical to show the causal impact of what you did and to prove causality relative to a change. Secondly, you have to be able to quantify the value of the improvement and it sounds like a really simple thing but I can assure you it is not. We spend a lot of time and a lot of investment creating that secret sauce, if you will. At the core of NextHealth is the complete portfolio of tools to show causal impact then quantify it. That’s a really critical part about what we do. And we do not see that from competitors. We’ll see companies talk about how they engage members and then show click through rates or metrics like that. What we don’t see is them sitting on top of claims data where they’ve done a randomized controlled trial and then be able to look at the behavior of the trial group versus the control group and come back and say with 97 percent confidence that we were able to reduce your costs in this particular area by $2.83 million a year. Plans struggle with that too. Our edge is being able to identify a population to target and conduct all the sequence of steps in order to get to a statistically significant medical cost reduction. Having that whole pie is really our key differentiator.
Looking toward the future, what should prospective and existing clients expect from NextHealth? And perhaps we can break into two with first half being the next 18-24 months. Then after that we can delve into 3-5 years.
Everett: That’s actually how we think about it internally. Initially, we focused on one particular area, which is telehealth for virtual care. We go through a process by which we help plans identify how they’re utilizing telehealth currently and then from that decide where they want to amplify utilization and determine with which members and for a specific expected impact. And then we help them achieve that impact. So in terms of the next twelve to eighteen months that’s the solution we’re really focused on because virtual care is going to become an increasingly important delivery channel in the future. It’s a great opportunity for members to get much better access and for plans to offer their members access with comparable or even better outcomes. It also tends to be more cost effective.
What about beyond that timeframe and into the next 3-5 years?
Everett: Our efforts will become much broader over the next three to five years with a whole series of solutions focused on new behavior change challenges. So as an example, there’s a really interesting portfolio of use cases with Medicare for which we think we can help members get better outcomes while also helping health plans achieve more effective risk adjustment and earn Star Ratings. There are also interesting areas around ASO clients and all kinds of things we can do there. Over the next three to five years, there’s just no shortage of opportunities to build a full portfolio of solutions around driving behavior change.
As both the CEO and a serial entrepreneur, what career accomplishments are you most proud of?
Everett: I serve three masters. I serve our clients, I serve our shareholders and I serve our employees. All three of those have to get a good deal from working at whatever organization it is I’m leading and I just take a lot of satisfaction when we’re able to serve all three well. At my previous company, a career highlight happened when after an exit I was able to sit down with a woman who had worked for us and present her with a check, her slice of the pie, and she talked about how the money would change her life because she was going to put it away to send her kids to college. And I could see the pride in her and I felt a great satisfaction making that impact knowing that constituent was served well. That’s just one. Another highlight is just helping a company find its voice and then get everyone aligned around it.
Following that, how do you as CEO think strategically about and lead the company’s culture?
Everett: Culture is always interesting. When you study organizations, what you very often find is it’s one thing to be between zero and 30 employees. The focus is what you need to do to win clients and deliver value. It can really be about whatever role is necessary in order to get off the mat with a startup. But somewhere around 30 to 35 employees, the nature of the organization changes and you have to migrate away from the initial stages trying to discover a solution or what your company is going to be and concentrate on scaling. It becomes a matter of structure and organization and really the qualities you look for and the strengths that you look for in the leadership team can change. We’ve gone through that and we’re up to a little over fifty employees right now. We’ll probably end up being several hundred, if not more, by the time we’re done. So the focus is less on entrepreneurship and more on management, operational discipline, and growth. That requires assembling a very complex but very discreet set of disciplines. So there’s a data sciences discipline that we need to have within the company, a discipline around understanding health care economics, a discipline for setting up a product organization, complex development skills that have to be brought together. There are a lot of challenges and issues on the sales side and how you manage the sales cycle for us to be successful. All of those disciplines have to come together and work well. To successfully make that happen, you need to have the right culture and the right people. So we work really hard in the interviewing process and then onboarding and post onboarding to establish a culture of collaboration and transparency. Collaboration is really what we value the most and humor and just creating an environment where everyone feels comfortable working together. The humor doesn’t mean we’re not hard charging hard and want to win but it is an important element to our success as a company. That’s the culture we need to be successful as a company so we place a lot of value in it and live it everyday.
What advice would you offer to other founders, CEOs, people running startups, or others considering doing so?
Everett: Number one advice I give is first who, then what. Very carefully choose your team because if you don’t get that right, it doesn’t really matter what else you do. The next is really around alignment. You need to have a clear vision of where you want to bring the company and you have to spend a lot of time getting that team aligned and thinking the same way about the direction you’re headed. If you do that and you have a compelling value proposition to your clients, the rest of it kind of takes care of itself.
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