VIDEO: Reliq Health Technologies CEO Lisa Crossley on Quadrupling Patient Enrolment
Reliq Health Technologies Inc. (TSXV:RHT) (OTCQB:RQHTF) (FRA:MHN2) is a healthcare technology company that develops innovative mobile solutions for at-home, high quality care at an affordable rate. With 1,000 patients currently on their mobile platform, CEO Lisa Crossley says they expect to have minimum 20,000 patients and margins to surpass 85% next year.
James West: Lisa, thanks for joining us today.
Lisa Crossley: Thanks for having me, James.
James West: Lisa, why don’t we start with an overview: what is it Reliq Health does?
Lisa Crossley: So Reliq Health is focused on the community care space. So that’s really everything after you’re discharged from hospital, whether you go home, or into an assisted living facility, or into a short-term rehab. And what we do is provide a platform that offers remote patient monitoring, so when the patients are in the home care or assisted living facility, you can monitor them 24/7/365 and help them proactively manage their chronic diseases.
And then we also have a component to our platform that’s really like a HIPAA-compliant Facebook for the entire patient circle of care. So it’s a secure online communication portal for the clinical care team, the patient and the family.
James West: Okay. So how do you make money?
Lisa Crossley: Basically, the fundamental problem we’re solving is that 80 percent of the health care dollars in the developed nations as a whole, are spent on the 15-20 percent of the population of chronic diseases like diabetes, congestive heart failure, chronic obstructive pulmonary disease. So those patients cost the system a lot because they tend to go back into the hospital several times a year, and they often have ICU stays, so they’re very costly as a patient population.
So the best way to save the health care system is to do something that’s also very good for the patients, which is to improve their health outcomes. So what we do is put systems in the home that help them proactively manage their conditions, and that system is direct-billable to OHIP, to Medicare, to Medicaid, to the private insurers. So we charge a subscription fee per patient, per month. It’s a fraction of what you would pay if you were getting home nursing care coming in once or twice a week, but in exchange, you get 24/7/365 monitoring at a very high level, like you would in the ICU.
And it’s all paid by the insurers, whether that’s government funded or privately funded. So the patient pays nothing out of pocket.
James West: You get paid by the health care system?
Lisa Crossley: That’s right, yeah.
James West: Okay. So tell me: how does the cost of sales work versus your margins, and what kind of sort of retained earnings in the bigger picture do you look at?
Lisa Crossley: So it’s a software as a service fundamentally, at its core, so the margins are very high. Obviously there’s economies of scale associated with –
James West: How high?
Lisa Crossley: So by next year, by the end of next year, we expect our margins to be well over 85 percent.
James West: Okay, so what is the market now that you service in terms of number of patients, and what is the market going to be a year from now?
Lisa Crossley: Well, the market broadly for community care is currently valued at about 25 billion. So it’s –
James West: In Canada?
Lisa Crossley: No, worldwide. And it’s projected to grow to 43 billion by 2019, so it’s in a very rapid phase of growth, and the reason for that is there’s a lot of drivers that are pushing for more proactive care in the community. So Medicare and Medicaid in the States have implemented readmissions penalties, so on average, 20 percent of all patients who are discharged from hospital are back again within 30 days. If that happens in the States and they’re a Medicare or Medicaid patient, Medicare and Medicaid will assess a penalty on the hospital, and last year US hospitals spent over 600 million on those penalties.
So there’s suddenly this real driver to try to implement some kind of post-discharge care. Beyond that, you know, the insurers in the States, here, overseas, have started to recognize that the only way to reduce the cost burden of this patient population that’s costing us 80 percent of our health care dollars, so in the US last year that was 3 trillion out of less than 3.5 trillion – that’s a big chunk out of our overall budget, and we have similar numbers here, just an order of magnitude smaller – is to really provide proactive care in the home. Remind them to take their medication. 50 percent of all chronic disease patients don’t take their meds as prescribed. If you can even just address medication adherence and compliance, you get much better health outcomes.
So for us, you know, right now we’re just really getting started in the market, and we’ve just recently announced that we have 1,000 patients that we’ve on-boarded on the platform. By the end of the next year, we certainly expect to be at a minimum of 20,000 patients on the platform based on contracts that we’ve already publicly disclosed.
James West: Sure. So how much revenue does one patient generate, on average?
Lisa Crossley: We charge anywhere between $50 and $200 per patient, per month. That’s US dollars. And it really depends on which features they’re using in the platform, whether they’re paying 50 or 200.
James West: At what rate do you anticipate growing over the next five years?
Lisa Crossley: Well, I think we’re going to at least double every year going forward, for the foreseeable future. We have contracts that give us access to 48,000 patients already, and that’s not including what we’re working on in the pipeline; obviously, every company is always filling their customer pipeline and planning to bring new customers onboard. And I think because there are these relatively new and unique drivers in the market that are pulling solutions like ours into the space, and we do have something very unique – you know, we use in the home a two-way voice technology hub as the primary user interface for these patients, who tend to be elderly and not really tech-savvy, and they’re quite ill as well. So rather than asking them to learn how to use an app on a tablet or a smartphone when there’s visual acuity issues and maybe cognitive issues, everything is done by two-way voice. It automatically translates into any of the 133 languages.
So we’ve really made a concerted effort to meet this patient population where they are, and not ask them at a stage in their life where it’s already very stressful, to learn how to use all this new technology that they didn’t grow up with and will never be comfortable with.
James West: Right. Interesting. So how does the competitive landscape look now in terms of what other companies are out there, what bigger ones could wipe you out? Where’s the 900-lb gorilla in the room, so to speak?
Lisa Crossley: I mean, there are definitely other companies out there that are looking at the same problem; Phillips Health is one, Cloud DX here in Toronto is looking at it, but I think everyone is kind of taking a different piece of the spectrum and is addressing a slightly different market, and everyone’s kind of got their own unique approach to it. I think the app-driven solutions, you’re always going to have trouble with adoption in the elderly population, when you’re asking them to use an app. You can put big buttons and everything, but I know my grandmother, 95, she can barely see the TV; it didn’t matter how big a button on a tablet was, there’s no way she was going to interact with that.
James West: So then, what percentage of your strategy and your current patient base is based in the US versus the rest of the world, and how important is the US component to the strategy overall in terms of growth?
Lisa Crossley: So we have an ongoing pilot with the National Health Service in the United Kingdom through Imperial College Hospital in London, and that was a competitive process to get deployed there, and they have really focused on trying to provide better care for that chronic disease population, particularly outside of hospitals. So we’ve had some traction there. We’re doing certain work here in Canada with pilots with First Nations reserves to provide more proactive control of diabetes in that population. But the US is our primary market from a revenue perspective, at this stage. It’s the biggest market in the world, a lot of their hospital systems are for-profit so they really understand the ROI associated with deploying our system, and then for the not-for-profit hospitals that work with a lot of Medicare and Medicaid patients, for Medicare and Medicaid, if we can keep one of those patients out of the hospital once in the year, and they typically go in at least twice, that saves them $250,000 right away. And for that, you could deploy our system to 1,000 patients for a year, easily.
So there’s a clear ROI even for the publicly funded insurers in the US, so that drives rapid adoption. And our clients in the US, the accountable care organizations, family practices, the home care agencies, they actually generate incremental revenue by implementing our system. So they’re able to bill for what’s called chronic care management in the US, so we take a piece of that, but they get to keep the balance. So they’re actually increasing their own profits in what can be fairly narrow profit margin businesses. So that’s creating a very significant demand for this solution down south.
James West: Great. All right, Lisa, well that’s a great initial overview. We’re going to have you back in a quarter’s time or two and see how you’re making out. Thanks for joining me today.
Lisa Crossley: Thanks very much for having me, James.
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