We publish our conversations with inspirational individuals in the healthcare industry to promote the innovation discourse and support framework. We spoke with Dan Hogan, Founder, President, and CEO of Medalogix. Medalogix provides predictive modeling and analytics technology to the home health setting and has been recognized by Fierce as a Fierce Innovation finalist and Harvard University as a Health Acceleration Challenge finalist.

Mr. Hogan shared his journey from owning a limousine company to starting the innovation challenge-dominating company he operates today. Mr. Hogan also shares his vision for healthcare going forwards and the areas within the industry he sees as the most ripe for disruption. A transcript of our conversation is below.

Healthcare Innovators: Hi Dan! How are you?

Dan Hogan: Great, how are you?

Healthcare Innovators: Fantastic. Thank you so much for taking my call.

Dan Hogan: No worries, my friend. How can I help you?

Healthcare Innovators: We are very interested in healthcare innovation, especially how we can innovate as students. We want to speak with you because you have come up with such an amazing innovation, and we are very curious to hear your thinking process and story. How have you gotten to where you are now?

Dan Hogan: Thank you, I appreciate your kind words. I have to admit, I do not view it that way. I always set forth to rectify a problem that I have identified. I was simply setting out to solve a problem. In 2009, the problem that I identified was not even properly identified. I was trying to demonstrate to the community of referral-based home health hospitals, a fairly specialized group, that I was going to be in better position to do a better job of getting their patients of coming back to them in terms of readmission penalties. It has evolved into a very specialized data-analysis firm that works with clinical data to derive forward-looking insight via descriptive and prescriptive measures. That has been the culmination of an absolute mountain of talent beyond me.

The answer to your question is that I get by with a little help from my friends. My ability to innovate really was limited to the identification of a problem and the willingness to change it. It is not false modesty. While I recognize my contribution to the company and that it would not be here without me, the reality is that the work we are doing here is so sophisticated that no one person can complain that there is a foundation of it.

Healthcare Innovators: Can you speak a little bit of how you conceived your idea? I read that you used to own your own home-health agency. Could you describe what you were thinking career-wise when you were growing up? I know that you went to the University of Georgia. What did you think about studying there and moving on to EMC?

Dan Hogan: Wow, you have done your research.

Healthcare Innovators: You’re an inspiring guy! We have to do our due diligence.

Dan Hogan: When I was a student at the University of Georgia, I was focused on being social. I anticipated that when I got out of school, I would get a sales job. I knew that I could be compelling and that I have a natural inclination for sales. The fact of the matter is that I was not thinking of being an innovator or entrepreneur until I met a guy in college that owned a valet company and got to know him. As a matter of fact, still to this day, he is my closest friend. He told me that I did not have to get a job at a big company, but rather start my own company. That was eye opening for me. Shortly thereafter, he and I started a limousine company. We had a retail store together. We got the special events permit in Athens, GA, with some local businessmen supporting us, to host the Olympics Festival along with the 1996 Olympics Games.

For all of that, I relied very heavily on being persuasive. I needed that to find investors, give us the permit, and get money from my parents to buy us a limousine. It went on from there. My thought as far as the future was that I would be in sales. Right now, I am not in conventional sales. I certainly was at one point, but right now, I am still selling, if not to new clients, to new recruits. A lot of my work today is retention and recruiting.

Healthcare Innovators: How did you segue into the home health agency? How did you springboard from the limousine company into what you do today?

Dan Hogan: The limousine company taught me a valuable lesson that I could make my own path. I did not come from an entrepreneurial family. Once I did the limousine company with my buddy, Scott, I realized I wanted to do it again in some capacity. I approached the early stages of my career as a learning opportunity. I really think that I got an MBA in the school of life, not only through the work that I did with the City of Athens, but by becoming a lobbyist, and then a successful salesperson at EMC. I got a big lesson in finance. It was very helpful. In the back of my mind, I was thoughtful that I wanted to start my own company. I saw a boss who quit a company I was working for move back to Detroit and buy a third of his brother-in-law’s home health agency. I saw that in a matter of two years, he was making three times the revenue. I said to myself that I can do something like that — he didn’t have any healthcare experience. I went an hour outside of Nashville and found a similar opportunity to buy an agency. Then again, by being persuasive, I convinced friends, family, and coworkers to lend me money. I eventually bought the company, and I did not know a thing about home-health agencies.

Healthcare Innovators: Wow, thats amazing. What led you to identify the problem? You’ve spoken about electronic medical records in the past and that we can apply big data to that. Was there any major point at which you realized the problem exists and that you could address it?

Dan Hogan: Yes, the 2009 and 2010 debate about healthcare reform. There was plenty of discussion about how payment structures were going to change and how hospitals were going to be subjected to readmission penalties based on a new pay-per-performance policy. That created worlds of opportunity. In fact, I don’t think that we have even scratched the surface when it comes to the opportunity that that law created. I got to thinking, well, “What can I do to convince these hospitals and healthcare systems that when they want to discharge a patient into home health, that I would be their best choice to take care of these patients. When I dug deep and found out what an opportunity there was, I continued to invest. I recruited more people to join and we have had tremendous luck because our approach is sound. Taking a data analysis approach to clinical data had never been done in home health. There have been predictive data systems for years built on claims data. The actuarial sciences that have grown up in the insurance industry are very sophisticated, but do not at all provide clinical direction. That is where [Medalogix] come in.

Healthcare Innovators: That’s awesome. What made you pursue the Harvard Health Innovation Challenge and the Fierce Innovation competition? What was the motivation behind that?

Dan Hogan: I was trying to define the practice of what we were doing as innovative. Entering in competitions helped us find cover for new clients who had never tried a tool like [ours]. Winning the innovation award provide some legitimacy to our company.

Healthcare Innovators: That makes sense. What have you seen since winning the Harvard Challenge and the Fierce Competition? What changes have you seen in day to day business? I know that you have been trying to expand in other areas.

Dan Hogan: We do have aspirations to go into skilled nursing and other post-acute care venues. We have not done that yet because we have not exhausted our home health platform. I have people on staff who have spent years in our industry, but don’t have anybody with a lot of experience in nursing. Quite honestly, I feel I will have to start over. I have to develop a pilot to prove the concept and field test it for a couple of years. It is a very expensive process.

Healthcare Innovators: I see. What do you think is the next biggest thing in healthcare that requires change?

Dan Hogan: I think skilled nursing delivery is the biggest loser in the next two decades. Also, home health and hospice will both grow substantially. We will see continued reduction and turnaround times for patients in hospital stays. At one point, heart attack victims had to stay in the hospital for three weeks. Now, they are suffering chronic heart failure and acute myocardial infarction but are back home in two days. This is a continuing trend that will drive efficiency but will also reduce overall spending in the acute setting.

Also, telemedicine and remote interventions will be a big segment of spending and focus of medical specialties. Medical specialties are being outsourced. For example, we currently sending radiology information to Israel for overnight processing. In the future, orthopedics will be done over Skype! That will become a reimbursable service, as we are already seeing now. We will see the erosion of the brick-and-mortar foundation of all specialty practices. We will not need to see as many specialists. I would like to see us approach the business of primary care medicine in the U.S. like they do in England, where every primary care physician is a population doctor. If they are able to make their patients healthier in aggregate within a year’s period, in terms of smoking, diabetes, etc, they get bonuses.

Healthcare Innovators: That is so fascinating! You mentioned hospice earlier. In your experience, have you seen a difference in the quality of care between hospices that are for-profit and not-for-profit, especially as it relates to the Medalogix platform? Have you seen any significant trend between the two otherwise?

Dan Hogan: Most of the non-profit hospices are standalone. Most of the for-profit hospices are associated with a healthcare system or the larger regional/national home health providers. We service a number of large companies that are actively mining patients whose health is declining to see where they can place them next. Part of the reason that is an important metric is that it is a qualitative part of end of life care. I did a Ted Talk on this. People in hospice tend to live 2.4 months longer than others. That is important time. It is really important time. The answer to your question is no, I have not seen any differences [in the quality of care between for-profit and not-for-profit hospices]. However, I have seen a real demarcation as to how they are structured regarding profit and other metrics.

Healthcare Innovators: Thank you. Going back innovation, a friend of mine recently won a Rhodes Scholarship and is currently studying at Oxford. He mentioned that the new model that he sees as very prevalent and emerging is increased role of nurses. He sees the role of nurses as so important in England that they are doing what primary care physicians are doing in the U.S.

Dan Hogan: Absolutely. We are seeing that in the rural market. At my home health business from 2005-2010, in a rural area east of Nashville in the state of Tennessee, I saw a huge increase in the number of family nurse practitioners that were opening standard physicians’ practices that were operating under the supervision of a local doctor. They were able to produce larger volume at lower cost, and often with better outcomes.

Healthcare Innovators: What do you predict going forward of this dynamic between physicians and nurse practitioners? Will the field become disenfranchised and move towards nursing?

Dan Hogan: I think that we have already seen an erosion in the compensations of physicians, especially with primary care and pediatrics. For physicians to maintain the level of income that they are expecting, they will need to start managing and supervising others. Think about a dental practice. When you go get your teeth cleaned, 90% of the time that you spend in the office is spent with the dental technician. In the last 10 minutes, the doctor comes in, says, “Yes, yes, yes. You’re good,” and you’re out. That’s exactly how I expect medical practices to evolve. It is already a proven and profitable model.

Healthcare Innovators: Amazing. That is very interesting for us to hear, especially for our members who are aspiring physicians. My last question for you is, what would you do today if you were in our position and wanted to make a difference in healthcare?

Dan Hogan: My one piece of advice is due to where you are located geographically. If you are curious how healthcare innovation is evolving in the next 20 to 30 years and want to know what is coming down the pipeline, go intern for a government organization that is involved in health policy. Go sit in the parking lot and see what those guys talk about during coffee breaks. That is where the real innovation is happening.

Healthcare Innovators: Hahaha. As an afterthought, what are you thoughts on the changes coming from CMMS most recently? Are they meeting the mandated threshold of quality and innovation in your opinion?

Dan Hogan: Medalogix is the perfect example of how Medicare and CMMS have established a platform by which innovation can take place. For example, they have built a beautiful assessment called OASIS-C — standard, numeric, ordinal data by which patient data can be easily accessed and leveraged. CMMS will never build healthcare startups, but they are forcing the utility of a platform that makes what I do possible.

Healthcare Innovators: Interesting. Well, Dan, thank you so much for your time. I really enjoyed our conversation and I cannot thank you enough for not only helping me, but also our members who will definitely be inspired and make some change from your advice.

Dan Hogan: No problem! I am flattered to have had the opportunity. Thank you!

About the speaker

Dan Hogan is the Founder, President, and CEO of Medalogix. Mr. Hogan has been named one of Nashville Business Journal’s “Most Admired CEOs,” and has presented at The National Association of Home Care and Hospice and the Visiting Nurse Association of America.

http://medalogix.com