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Episode 25: Mid-sized practice, full-sized problems—Discussing data-driven efficiency with Blake Wylie of Montecito Medical

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March 30, 2023

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Episode 25: Mid-sized practice, full-sized problems—Discussing data-driven efficiency with Blake Wylie of Montecito Medical

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Mid-sized physician groups face a lot of the same problems as major health networks—they just have fewer resources to work with. Blake Wylie, chief technology officer at Montecito Medical, joins Justin to discuss how AI and data-driven strategies can help smaller practices operate more efficiently and overcome common challenges related to recruiting, no-show patients, lack of market insight, and more.

Justin and Blake ask some interesting questions facing both providers and the organizations who work with them: Is 7% of graduating physicians enough to support a healthy mid-sized practice market? How can we get remote patient monitoring tech into more of these practices? And what can healthcare companies learn from Japan’s Keiretsu business model?

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Episode transcript

Justin Steinman:
Definitively Speaking is a Definitive Healthcare podcast series recorded and produced in Framingham, Massachusetts. To learn more about Healthcare Commercial intelligence, please visit us at definitivehc.com.

Justin Steinman:
Hello and welcome to another episode of Definitively Speaking, the podcast where we have data-driven conversations on the current state of healthcare. I'm Justin Steinman, Chief Marketing Officer here at Definitive Healthcare and your host for this podcast. Before I get started on today's episode, a quick programming note. At the end of our last podcast episode, I promised that we'd have Dr. Sameer Berry on the next episode. However, life intervened and our producer here at Definitive Speaking had a back injury, so that forced us to move some things around and postpone Dr. Berry to a future episode. But don't worry, he's coming soon and we've got a fantastic episode for you today. There are more than 1,700 independent mid-size physician groups in the United States. Together, these groups employ nearly 53,000 doctors and treat more than 15 million patients annually. Yet for some reason, we don't talk enough about what their lives are like and what challenges their practices are facing.
So today we're going to do our small part here on Definitively Speaking to change that. I'm joined today by Blake Wylie, the Chief Technology Officer at Montecito Medical. Originally conceived as a real estate advisory firm, Montecito Medical has expanded to providing a full range of value added services like coding and recruiting to mid-size physician groups. In fact, their credo is physicians take care of everyone, Montecito takes care of physicians. We'll talk about what that means in a moment. As the CTO, Blake is responsible for all aspects of technology, from infrastructure to applications to product development. And while he's here today to talk about mid-size physician groups, I'd frankly prefer to talk about his last job where he worked in IT for Lipman Brothers, Tennessee's oldest distributor of wine, spirits, and craft beer. But I think that's probably more appropriate for a different podcast. Perhaps we'll do one called Definitively Speaking after 5:00 PM. Anyways, Blake, welcome to Definitively Speaking. We're happy to have you here.

Blake Wylie:
Great, thank you. Thanks for having me.

Justin Steinman:
Awesome. So there's so much talk about in this space, Blake, just for the sake of clarity for our listeners, we're defining a mid-size physician group as one that employs anywhere between 20 to 50 physicians. Do you agree with that kind of general sizing for a mid-size physician group?

Blake Wylie:
I believe so. Yeah, that makes a lot of sense. We've been dealing with physician groups of that size for 18 years almost at this point, and we've been hearing a lot of just their needs and their concerns and how they operate their business, and we've been working with them on solving some of their problems and that range makes complete sense.

Justin Steinman:
And so what are some of those main challenges facing these groups? You say you got 18 years of experience, you must have encountered a lot of problems that they're facing.

Blake Wylie:
Right. Yeah, absolutely. I mean, we started out, and we still operate heavily in the real estate side. We've been looking at working with them on acquiring medical office buildings built, putting them into portfolios. But in that process, we were really focusing on the physicians themselves a lot of the times, and it would be allowing them to reinvest back into the real estate that they previously owned and being able to do that tax deferred and then just working with them on a regular basis, we find out, hey, I have an issue and whatever it is, we've got issues in recruiting physicians coming to whatever mid-size practice group that they're recruiting for, or they've got issues in people not showing up for their appointments on a regular basis, which again, these are issues that just are happening across the entire industry of healthcare or coding or whatever else it is.
Just being able to operate more efficiently. And that's where we really started to work with these practice groups and become their outsourced innovation. They come to us, they have problems, and we start to look at opportunities not only with them but other groups and determine, hey, is this something that could be useful for physicians and can we build it? Can we go out and buy something that would help them? Or do we need to just incubate our own company and start it from scratch to be able to meet those needs? And that's what we've been doing.

Justin Steinman:
Interesting. Interesting. I had to be honest, it's kind of interesting that they're going to a real estate company to do this. I mean, you started as a real estate company. I mean, recruiting is a common problem in every industry. I've got recruiting problems here in marketing at Definitive Healthcare, can't find the people I need. And there's staffing firms out there. There's professional recruiting firms, there's software. Why you guys?

Blake Wylie:
Well, I think we were finding ourselves uniquely positioned in the real estate side, and we continue to do so where just working with these groups and they come to us, they trust us, and we just see these needs and we're an innovative company. We see ourselves as innovative, and we are. And we started to look at these opportunities as opportunities not only for us, but for the physicians themselves. And it goes along with our credo, which is to take care of the physicians as well. So we looked at investing in a company that would, specifically to the recruitment side, that would utilize AI essentially to build a platform to recruit physicians. So building out the relationships between physicians, and it's an application that's out there today, it's actually being implemented in many companies. It's called Winnow. And that application is a game changer in a lot of ways from a physician recruitment perspective. And it utilizes AI. I mean, we hear a lot about that, right?

Justin Steinman:
Yeah. I mean AI, I feel like you can't open up the newspaper, turn on the TV or turn on the radio even without hearing about AI. And so you're now bringing AI into recruiting. Interesting. Do you think there are kind of unique needs of these mid-size groups that are different than the large IDNs or even the small one-two doctor practice?

Blake Wylie:
Well, a lot of times it is they're the same problems, just that the mid-size practices a lot of times don't have access to a lot of the resources and capital that a larger group or system would have. So we provide innovative solutions and we allow them to take part sometimes even in building out these solutions. So they're alongside of us with a lot of times we're finding a partner to work with us to develop these solutions and provide the expertise and also take part in the process of building that.

Justin Steinman:
You mentioned coding, right? How are you helping with coding? And again, I mean coding is a massive problem. And again, there are agencies and companies that are doing this. What's kind of your unique value prop, or are these mid-size groups struggling with a different set of problems? Help me understand what's going on there.

Blake Wylie:
Well, I was talking about earlier where we either incubate our own companies, we invest in companies and start them up, or we acquire a company. This is one where we actually acquired a company and it's really starting it up and pushing it forward. And it's utilizing machine learning and AI for coding purposes. E and M level coding, this is where the physicians are coming in, they're doing their own charts or, maybe they're outsourcing it to other companies that are doing the coding for them. But we recently utilized the software to run just a test on several charts from a physician group we're working with out west. We found that 27% of the charts that were coded were either underbilled, overbilled, or just incomplete. And I mean really this is not the physician's fault. I mean, the coding changes happened in the beginning of the year. They're trying to play catch up to that. There's just, they're busy.
They're experts in medicine and they need to be experts in medicine and focus on the patients. We don't really expect them to be experts in coding as well, and that's really difficult. But what we do with this application is called Calm Waters AI, and we're really pushing it out there. It integrates with the EMRs, EPIC, Athena, and it codes the charts for the physicians, and it does it in a way that is defensible and it's audit proof. It creates an audit trail, a paper audit trail so that when these get sent to the payers that they'll be paid and they're defensible from an audit perspective as well. I mean, this takes, again, an efficiency and it helps the physician groups, especially these mid-size groups, become more efficient. They can scale, they can be relevant, more competitive in their regions that they're focusing on. But I mean, these are things that every physician group, not just mid-size, are struggling with. And these are solutions that were, we started out really focusing on these mid-size groups, but these are still applicable to large systems and large health groups. So this is something that we're pushing out to everyone at this point, but starting with that focus on the mid-size.

Justin Steinman:
Yeah, but you had to imagine that a large IDN has a whole billing department, right? If you've got thousands of doctors, it makes sense to create economies of scale and send all your billing and all your coding, and there are people who, whole profession is coding. When I think about a mid-size physician group, you've got 20 doctors, what's your ratio to surrounding staff? It can't be very high. And so I think that's why you start thinking about outsourcing and looking for other needs as you start to go there and other services.

Blake Wylie:
Yeah, absolutely. And going back to the AI discussion, where we are seeing this a lot in the news, and there's a lot of discussion around and even fear around AI and machine learning and how it's applied within companies. And it's not something that I see as something we should fear. Even for a large group that may have outsourced their coding, there's efficiencies you can build in utilizing machine learning in a coding software like Calm Waters because it will build the efficiencies, so you're struggling to find coders, you're struggling to have charts coded in a way that's defensible from an audit perspective. No matter who's doing it, let's let the machine also do some of that and come alongside your existing coders and really augment them and enhance them so that they can focus on the exceptions, not the rule. It allows them to get rid of really the menial tasks that take up an every day and take up the majority of someone's day so they can, like I said, really focus on those exceptions and that makes them more efficient across the board.

Justin Steinman:
Yeah, I saw an article in New York Times having something very similar recently about radiology and their training machine learning to recognize routine breast cancer. And so that the exceptions are still being read by the radiologists, but the baseline cases are being read by the machines and they're identifying the anomalies, which is kind of interesting.

Blake Wylie:
Absolutely. And think about the time savings and the focus that the physicians can have. And again, we already have a shortage of physicians, it seems like, right? Let's make them more efficient so that they can focus on those, the needs, right?

Justin Steinman:
Yeah. Well, as regular listeners of this podcast, no, it seems like there is a shortage of physicians. We know there is a shortage of physicians in this country right now, and it's not getting any better anytime soon. So that's something that's there. I will take issue though with your comment that artificial intelligence isn't scary. I don't know. I keep seeing about all the ChatGPT stuff and the article told the New York Times columnist to leave his wife and marry ChatGPT. I don't know. That stuff kind of scares me and I feel like we're two steps away from the Terminator.

Blake Wylie:
I mean, maybe. I mean, Skynet, Skynet could be real. You never know. I mean, I'll sign up for the machines when that happens.

Justin Steinman:
Skynet is coming, I think, sooner than we all think. So I want to come back, as I was preparing for this podcast today, I started doing research and having you talk to me, I thought you're almost like Montecito is a Japanese Keiretsu model. And so for our friends out there listening who don't know what a Keiretsu is, I'm probably mispronouncing that, but I'll do the best I can. According to our friends at Investopedia, a Keiretsu is a Japanese term referring to a business network made up of different companies including manufacturers, supply chain partners, distributors, and even financing. These companies work together, have close relationships and sometime take equity stakes in each other all while remaining operationally independent. Translated literally, Keiretsu means headless combine. And so as I listen to you talk about your company, it was almost like you're applying the Keiretsu philosophy to the mid-size physician group. Would you agree with that statement?

Blake Wylie:
I would absolutely agree with that. We consider ourselves a platform company. I mean, we're solving problems across the board, not just from a real estate perspective, but right down to the business models within practice groups. And I mean, we read a book internally, we read a lot of books internally, and I think that every company should really have a keen eye on looking out for opportunities to bring information externally into the company, whether it's book club or whatever else. That may sound cheesy, but having a list of books that you read. One of the books we read was Platform Revolution, and we really took that concept to heart of building out a platform that's not just focused on one core thing, but multiple things that we can go out to the market with. And each one is its own independent, almost operating unit, but all fall under the platform or apparent sort of umbrella, if you will.

Justin Steinman:
So you seem to know a lot about these mid-sized physician groups, and that's really interesting that you've developed so much knowledge about them and you've built this platform and it seems very extensible. I'm definitely going to go read Platform Revolution. I'll add that to my reading list and my internal book club here. So that's great. Thank you. So what's next? What other problems are you seeing for these mid-sized physician groups and how are you planning to attack them or provide new services?

Blake Wylie:
Right. Yeah, again, going back, we do here, I mean they come to us, we work with them to provide solutions. And one of those solutions specifically, and this goes back to the real estate side, is building out and identifying opportunities in their own marketplaces to expand. They don't have the access to the resources like I was saying earlier, like a big large health system or hospital system. So if they want to expand or grow their business, they kind of have an idea usually of where they want to go in that marketplace, but they really don't have the data to back that feeling up. We've actually built out into our app, one of our applications that we use internally. It's called Scout Insight, and we utilize data from healthcare data to census data, demographic information, all that, and bring it all together to help make decisions to grow their business out in that marketplace.
We can identify all the way down to a parcel level of where they should be expanding to, and then we could put that into a report and we do put that in a report and show them and we say, this is where you should go. These are the areas of opportunity in your marketplace. And by the way, there may be another opportunity on the other side of town that you weren't thinking about as well because there are no competitors over there and the demographics and the healthcare needs of this area are going to be matching what you provide at the marketplace. So it's really expanding not only the physician groups and helping the physician groups, it's also helping provide healthcare to areas that are currently underserved. So utilizing it again, data, machine learning and AI to bring to bear to help make those decisions and help those groups.

Justin Steinman:
That's awesome. That's really cool. I like the health equity angle of it, really trying to get to underserved areas. That's kind of nice. So let's talk about another area. We recently published a paper here at Definitive Healthcare on Remote Patient Monitoring, RPM. Our research showed that RPM procedures are up 1300% since 2019. That's 1300%, and yet only a quarter of providers are using RPM technology actively. In your opinion, how can we accelerate RPM, right? What benefits is there for RPM for mid-size physician groups?

Blake Wylie:
Absolutely. I think RPM is very important at this point in time. And when we're talking about value-based care, all of that, we actually invested in a company, it's called Medical Brain. And really when you're looking at an RPM solution, you really want to have something that where the technology is easy to use for the patients, they're not afraid to use it, and Medical Brain we found really provides that solution and answers those issues or concerns that a patient or even a physician would have. So this is another one, again, AI machine learning, going back to even ChatGPT, right? This is a solution that will actually converse with a patient in real time. It's actually asking them questions that are relevant to their need at that point in time. And it's identifying if there's a concern or an issue that needs to be escalated immediately to a physician.
This is going back to build making physicians more efficient as well, because if there is a patient out there that is being remotely monitored and there's not an issue that's occurring, they're fine, they're normal, they may have some questions. This solution can actually answer those questions, so it doesn't have to be escalated to the physician. But if there is an immediate concern, this solution can immediately detect what that problem is and escalate it to the physician immediately. That way the physician can focus on the critical needs and not the ones that are not critical at that point in time. So again, building efficiencies and making it to where the physician can spend more time seeing patients that have a need and it's taking care of everything else.

Justin Steinman:
It's interesting because a lot of times in these mid-sized physician groups, these are basically small business owners. I mean 20, 30, 40 employees. You know, work at Mass General Hospital here in Massachusetts, and they have a whole innovation department. They've got 50 people responsible for finding innovation and sorting through all these RPM solutions and finding the two or three winners that are out there, most relevant. If you're a mid-size physician group, how do you find, how do you get started with this? How do you figure out this? You type RPM into Google, good luck. You're going to get like 9000 entries. How do you start to figure out where to start and how to get going?

Blake Wylie:
I mean, this is a good question. This is where we come in and we offer, you're talking about innovation departments, this is where, again, we're the outsourced innovation for these groups, and we help identify these solutions and we see their problems and we bring them to them and offer them up. And these are solutions that are easy for them to implement, they're easy for them to use, and they will build those efficiencies in with these solutions. So that's where we bring our expertise to bear and work with the groups that we have been working with for years and continue to identify new groups to work with as well.

Justin Steinman:
Yeah, it really seems like you're kind of that strategic advisor to these mid-sized physician groups. And I think it is a nice market, as we've talked about, 1700 practices, 15 million patients a year. That's important. And again, I think we almost take that for granted. People kind of romanticize the one doc shop showing up at somebody's house, doing house calls with their old medical bag, and then they think about the big massive hospital systems, the HCAs, as I said, Mass General's here in Boston. And I think sometimes we forget about the small group as I really think plays a critical role in our healthcare system.

Blake Wylie:
Absolutely, it does.

Justin Steinman:
So then let's, last question here before I let you go, right? And let's talk about the future of these mid-size groups. We've all read that doctors are leaving the workforce in droves. They're retiring, they're changing careers, they're going to become chief medical officers at software companies. They're going and doing all sorts of different stuff. Our research shows that less than 7% of graduating MDs are choosing to join these mid-size practices. So is that enough, you think, to keep this mid-size position market healthy? Do we think the economics work still for mid-size physician groups, or do you think we're really going to kind of see a lot of things in other industries, the middle market almost kind of disappear?

Blake Wylie:
I'm going to answer this in a way that you may not hear many people say that might be on your podcast, and I'm going to say I don't know. But I will say the one thing I do know is that we're still going to be there helping these groups solve those problems. We're going to help them solve their problems with them. So no matter what the market is looking like in the future from that perspective, we're going to be there and we're going to be bringing technology to bear. And that's what my role is to identify these solutions and really help these groups that might be struggling. And we don't know what they're going to be looking like in the future, but we're going to be right there with them.

Justin Steinman:
Yeah, so I'll let my bias show through and tell you that A, I go to a doctor who's in a mid-size physician group, and B, when I did some quick math, they're treating 15 million patients out of roughly 330 million people in the United States. That's roughly 5% of the population. So if you're getting 7% of graduating MDs going in to treat 5% of the patients, the math would say that the market's actually growing and it's probably optimistic. So I'm actually bullish on this space and then my math makes me feel better about it. So I think this is an important market segment, one that's going to continue to grow, and I really look forward to seeing what you guys are going to do in this space to help these guys continue to grow.

Blake Wylie:
Yeah, we are, and we're pushing forward and we're going to continue to push forward in offering these solutions. Like I said, we're going to be there, right there with them, and we too are bullish on them, and that's why we're working with them and we're going to continue to do so.

Justin Steinman:
Awesome. Well, Blake, thanks for taking time to talk with Definitively Speaking today. Really enjoyed having you here.

Blake Wylie:
Thank you very much. I appreciate it.

Justin Steinman:
And for all our listeners out there, thank you for listening to Definitively Speaking, a Definitive Healthcare podcast. As I mentioned earlier, please join me next time for a conversation with Dr. Sameer Berry, the Chief Medical Officer at Oshi Health. Oshi Health is a virtual, multidisciplinary GI care company, and Dr. Berry is going to share some results from a recent research study they conducted. Not to spoil the show, but the research shows that the new hybrid and virtual care approaches can dramatically lower healthcare costs, ER visits, and improve the quality of GI care. Quite important research, as digestive disorders affect 70 million people annually and cost the U.S. healthcare system more than 135 billion dollars each year. I hope you'll tune in. If you like what you've heard today, please remember to rate, review, and subscribe to the show on Apple Podcast, Google Podcast, Spotify, or wherever you get your podcast. To learn more about how healthcare commercial intelligence can support your business, please follow us on Twitter @DefinitiveHC or visit us at definitivehc.com. Until next time, take care, stay healthy and watch out for Skynet.