Transforming Healthcare: Epocrates CEO Kirk Loevner (Part 7)

SM: Candidly, are there other companies who are executing as well with a strong adoption curve?

KL: WebMD has done very well. A big part of their business is consumer, and their growth rate has slowed dramatically. They are more of a consumer healthcare magazine. In terms of workflow, there is a company called Quality Systems that has done very well in providing health care IT systems. There are not a lot of companies that have executed well.

SM: Healthcare and education are two tremendously inefficient categories which have had very little technology adoption. I am trying to understand why. I see your company as a good example in this space.

KL: I think there are a lot of ways to see our growth accelerate dramatically because of our broad reach and our position between several parties. We are between the physician and the drug care industry, as well as between the physician and healthcare plans. There is not any other company that enjoys that market position. I cannot sit here and say that we will be a $500 million company tomorrow, but I do think the opportunity is there for us.

SM: I think your architecture is a modern one. Client-server is no longer a modern architecture. When you are going after SME, you have to be a SaaS model.

KL: I would add that we have no barriers to entry. You do not have to have an enterprise sales force visit you with SaaS.

SM: How much money did you raise to get to where you are today?

KL: The company raised $45 million over three rounds. The last round was in 2003. We have been cash flow positive since then.

SM: Is there something I should have asked you that I didn’t?

KL: We have not talked about our market research business, which is fascinating. We have over 200,000 physicians on our honors panel. That is where pharma companies and market research companies that want to study a new drug and learn how physicians feel about this drug can ask us for 50 physicians whose specialty is in the field where the drug is applicable. We will push a survey to the physicians and provide companies with the answers, and it is all done in a very automated way. We are doing about 80–90 surveys a month for about 200 research companies. We have become the largest provider in the US of healthcare professionals for market research.

SM: That is excellent. That gives you a lot of gravy as a business.

KL: To add more gravy on top of that, we were approached by Goldman Sachs last fall and ended up striking a deal with them. They bought 13% of our company, after which we allowed Goldman Sachs to sell our market research technology to hedge funds and Wall Street. A hedge fund that is looking at GSA or Merck as an investment can now go out to a bunch of doctors and get their opinion on the new drugs, and they get instant data. That helps them prove their investment decisions.

The beauty of the market research is that it is one area where we can pay the doctors. They get $75 for doing a survey, and they can make $10,000-$20,000 a year doing surveys at night. It is a winning scenario for everyone.

SM: Does your team have a lot of people from the healthcare space, or are they primarily IT people?

KL: There are a couple of expertise areas. IT and MDs are both core. We have a dozen or more MDs and pharmacists on staff. When you are designing products for doctors, you want to have them as part of the development process.

SM: It is a great story. I am definitely fascinated.

This segment is part 7 in the series : Transforming Healthcare: Epocrates CEO Kirk Loevner
1 2 3 4 5 6 7