Recently, I interviewed the CEO of Avant-garde Health, Derek Haas, to learn how his startup collaborates with health care providers to enable them to deliver higher value care. He is on a mission to make the delivery of healthcare more cost effective. Derek grew up in a family of doctors and learned of many pain points in the healthcare industry at the dinner table. In addition, - as a Fellow at HBS - he is working with Professors Bob Kaplan and Michael Porter to help health care providers better measure and manage their costs. Previously, he consulted at Bain & Company, served on the staff of Council of Economic Advisers, and worked at the Office of Massachusetts Inspector General. He received his BA and MBA from Harvard University. Here's our interview:
Marquis Cabrera: What is Avant-garde Health and what pain point is Avant-garde Health solving?
Derek Haas, MBA: Avant-garde Health enables health systems and clinicians to identify and pursue opportunities for delivering high quality care cost effectively. Unfortunately, today health care providers lack accurate actionable information on the true costs and outcomes of the care they provide, and how to deliver the highest value care to their patients. We have an analytics platform that delivers these insights, and we also coach our clients through what they could be doing to improve.
Marquis Cabrera: Can you explain how Avant-garde Health's analytics-based approach physicians, hospital staff and administrators is different from the current standards?
Derek Haas, MBA: Avant-garde is working to create industry standards around the data, metrics, and methods that are used as part of value-based health care delivery. For instance, today in health care there is no standard approach to cost accounting. We are utilizing an approach called Time-Driven Activity-Based Costing (TDABC) that grows out of research at Harvard Business School (HBS) to capture information on the true cost of care and allows us to make apples-to-apples comparisons across organizations. The idea behind TDABC is to calculate the cost of each service by multiplying the number of minutes spent on it by each type of clinician or staff member by the cost per minute of each of their time. The TDABC methodology was co-developed by HBS Professor Bob Kaplan. HBS Professor Michael Porter's research on how to think about value and measure outcomes also informs our approach.
Marquis Cabrera: Where did you get the idea for it from and how has your research with Professors Michael Porter and Bob Kaplan informed the development of your startup?
Derek Haas, MBA: I am the black sheep of my family--both my parents and both my siblings are doctors--and so I grew up hearing a lot about how our health care system has and has not worked well. But Avant-garde Health specifically grows out of my work at Harvard Business School with Professors Bob Kaplan and Michael Porter. They're both incredibly passionate about improving the value delivered by the health care system, where value is measured by the outcomes that matter to patients relative to the underlying cost of providing the care. I began to work with Bob Kaplan and Michael Porter 3 years ago and noticed a strong interest from the organizations we were working with for a more scalable solution that they could use to be improving their care value on an ongoing basis. I formed Avant-garde Health in the fall of 2014 and we launched with our initial set of 12 customers in the spring of 2015.
My incredible team - comprised of top business thinkers that hail from Harvard, MIT, Bain, and McKinsey; leaders from Mass General Hospital and Henry Ford Health System; as well as technologists and data analytics gurus, have helped to bring Avant-garde's vision to life.
Marquis Cabrera: What is your core product?
Derek Haas, MBA: Our core product is a web-based analytics platform that health systems and physicians use to track their performance and understand how they could more effectively deliver high quality care cost effectively. Beyond simply providing the analytics to our clients, we also help them interpret the information and develop performance improvement plans. Our mission is to help each organization we work with be successful with creating a track record of delivering higher value care over time. We are off to a strong start as our initial clients have saved in aggregate many times our fees. We launched our product first in the area of joint replacements and now are extending into spine surgery with plans to grow to a wide range of medical areas over time.
Marquis Cabrera: How do you enable hospitals and clinicians to deliver the highest quality, most cost-effective care?
Derek Haas, MBA: We are not doctors, and so our role is not to say here is how care should be delivered. Rather we help doctors and administrators understand the implications of their choices so they can make more informed decisions, and also help them track their progress over time. Today there is an enormous amount of variation in how health care is delivered, which results in significant variation in both the outcomes and the cost of the care. Variation commonly exists in what care is delivered to patients, which types of staff members and clinicians are involved with performing the care, and the types of supplies and drugs that are utilized. For instance, we see a myriad of different approaches for managing a patient's pain both across surgeons within a hospital and across hospitals that we work with. We can help doctors understand how their colleagues at the same hospital and across hospitals treat similar patients and whether or not there is a difference in the outcomes and cost of the care.
This information sharing results in more efficient and effective care for patients. Patients benefit since more well organized care usually results in better outcomes at lower costs. For instance, better communication and planning with a patient pre-operatively helps improves the likelihood the patient will be able to go home safely after surgery rather than go to an extended care facility.
Marquis Cabrera: Have you gained traction in the market with your MVP?
Derek Haas, MBA: We have been fortunate to gain significant traction very quickly in the market. Launching with 12 customers, including a number of the leading hospitals in the country, is very unusual for a health-tech startup. We are helping hospitals successfully respond to a growing challenge they are facing to identify ways to deliver high quality care cost effectively from payers and become more accountable for the full cost of the care they deliver.
Marquis Cabrera: How has HBS helped you move your startup forward?
Derek Haas, MBA: The faculty at HBS has been incredibly supportive. A number of professors have been very generous with their time providing advice and helping to make introductions. The work at HBS has also provided fantastic exposure to the problems that health care providers are facing, and what types of solutions would be most valuable. Our company is also located in office space that Harvard created specifically for startups founded by alumni, and it has been fantastic to be part of the ecosystem the school is creating with the i-lab.
Marquis Cabrera: What advice would you give to someone looking to become a healthcare entrepreneur?
Derek Haas, MBA: First, is to recognize the virtue of having a lot of patience. This has been one of the hardest things for me to learn. Health care providers are deliberate consensus-driven organizations and so a number of people often need to give approval before a decision can be made.
Second, is that it is important to both have a grand vision for what you are seeking to build and a plan for how you can tackle a well-defined smaller piece at the start given the complexities in health care. For instance, we started out by launching our product only in the area of knee and hip replacements and are expanding out from there.
Third, is that now is a great time to be a health care entrepreneur. There is so much potential for improving all aspects of the industry, and with the country in the midst of a transition from a fee-for-service to more value-based payment methods many are looking for solutions to help them be successful under the new paradigm.