The third time is the charm for Piction Health. Super founder Susan Conover is back to talk about the third iteration of their business model which is showing promise of scaling profitably. Her AI has ingested a million diagnosed images of hair and skin conditions and is now making dermatologists 15X more productive. See for yourself at PictionHealth.com.
Highlights:
Sal Daher Introduces Susan Conover
What Piction Health is Solving
"... We solve the full problem for patients, end-to-end. If they have a rash or a mole they're worried about, or a case like that, they submit a case, we review that case within 24 hours with our board-certified dermatologist, we call in prescriptions..."
A Typical Consultation at Piction Health
"... How did you discover this? How is it that it dawned on you that this is the direction to go in?..."
"... Dermatologists loving working with us is one of our really important metrics that we want to make it really easy for them..."
"... How can our listeners be helpful to Piction Health?"
Thoughts to the Audience
ANGEL INVEST BOSTON IS SPONSORED BY:
Transcript of “Piction Health Takes Off”
Guest: Susan Conover
Sal Daher: I'm really proud to say that the Angel Invest Boston Podcast is sponsored by Purdue University Entrepreneurship and Peter Fasse, patent attorney at Fish & Richardson. Purdue is exceptional in its support of its faculty, faculty of its top five engineering school in helping them get their technology from the lab out to the market, out to industry, out to the clinic.
Peter Fasse is also a great support to entrepreneurs. He is a patent attorney specializing in microfluidics and has been tremendously helpful to some of the startups in which I'm involved, including a startup that came out of Purdue, Savran Technologies. I'm proud to have these two sponsors for my podcast.
Sal Daher Introduces Susan Conover
Welcome to Angel Invest Boston conversations with Boston's most interesting angels and founders. Today, we are very privileged to have returning Susan Conover. Welcome, Susan.
Susan Conover: Oh, my gosh, Sal. Thank you so much for having me.
Sal Daher: Susan is a fantastic founder. She's the founder of Piction Health, which is revolutionizing how doctors treat skin problems. Susan has been on the podcast before, talking about how she built her algorithm for recognizing skin lesions and so forth, gathered hundreds of thousands of diagnosed images, and did all this stuff with machine learning and computer vision. Now, she also has a different model for delivering care. In her own words so, Susan, explain the problem that Piction Health is solving.
What Piction Health is Solving
Susan Conover: Absolutely. I don't know if your listeners have had a hair, skin, or nail issue in the past and have gone and seen a provider for it, but that's the space and domain we play in. I'm originally trained as a mechanical engineer and worked in management consulting, but got interested in dermatology because I've had melanoma a few times and struggled to get in to see a dermatologist. The problem space that we operate in is that one in four Americans seeks help for a skin issue every year. Two-thirds of those are first addressed in primary care.
Those doctors are trying their best and end up misdiagnosing about half of cases. Of the cases that end up at a dermatologist, they're much higher accuracy but really hard to get into. It can take three to six months to get into a dermatologist, or even longer, especially post-pandemic and with the rise of cosmetic procedures like Botox and fillers. The problem scope is just like, how can we help patients get access to expert dermatology care and really solve their medical issue?
We have previously had a go-to-market strategy of helping every frontline provider like PCPs, emergency care docs have the clinical decision support and information at their fingertips to know what's going on and make the right decision every time. We realized in the market that there would just be a lot faster way to grow quickly and impact a lot more patients if we did a vertical integration and supported that direct care ourselves.
Sal Daher: Unpack this a little bit, vertical integration means that you have this algorithm for recognizing skin conditions and hair conditions and you're also getting involved in delivering the care. You're integrating not just recognizing...doing the software side of things, you're not just a software provider, you're also running clinics. That's the big step, and explain why you thought that that was a faster way to market.
"... We solve the full problem for patients, end-to-end. If they have a rash or a mole they're worried about, or a case like that, they submit a case, we review that case within 24 hours with our board-certified dermatologist, we call in prescriptions..."
Susan Conover: [laughs] Of course. We solve the full problem for patients, end-to-end. If they have a rash or a mole they're worried about, or a case like that, they submit a case, we review that case within 24 hours with our board-certified dermatologist, we call in prescriptions. We do the end-to-end process. When people need in-person care, which about one-third of cases do need a biopsy or allergy test or something, we help people get that care quickly with our local partners.
We decided to make this big shift because we just realized that in healthcare and in the business of healthcare, there's standard ways to get paid and reimbursed, and then there are more innovative ways like a medical device that's getting a CPT code. We realized that where healthcare is today, the way we could start generating revenue quickly, caring for patients, and then actually being able to make care scalable using our AI. We just need to solve the full problem. I think that we're talking specifically about healthcare, but it's a general problem.
If in entrepreneurship, how are you going to solve the full problem for your customer to where it's sufficiently addressed? I think that we just stepped back, looked at the strategy of it and the business models and just made this choice because it seemed the best fit for what we're trying to solve.
Sal Daher: Walk us through a typical consultation. I had this itch on my cheek and I contact your clinic via a website, what happens after that?
A Typical Consultation at Piction Health
Susan Conover: Yes, a lot of patients who start with us is that they'll be on their smartphone, visit our website, pictionhealth.com, they'll go in their browser and then click the begin process. Then they'll be guided through basically an intake form that takes less than five minutes and you answer questions like what's your insurance, how long have you had this issue? Taking photos of your issue and clicking submit.
Once that case is submitted, within two days one of our board-certified dermatologists reviews and determines your diagnosis and treatment plan. You get a message back saying, "Hey, you've been reviewed." If your case involves a prescription, we ask you which pharmacy to send it to. If your case involves in-person care, we help you get that in-person care appointment in your area. Basically, a process that takes three to six months, we turn around within two days. Then if you need in-person care, we ensure you get that within the next two to three weeks. It's a overall much faster process and we're incorporating our AI systems really in the backend for two reasons.
One is to streamline care and make it really simple and fast for patients and dermatologists and our other clinical staff. Then also to ensure quality of care and reduce physician burnout risk. Basically, catching the cases that may be off and make sure if we need to have a second pair of eyes on them, they get checked to make sure every patient gets the right evaluation the right time.
Sal Daher: Basically, screening out the things that are not serious and then supporting the dermatologist in catching the things that are serious?
Susan Conover: Yes, exactly.
Sal Daher: It makes their lives easier. Instead of just spending a lot of time looking at garden-variety things, they're just looking at stuff that's high-valued.
Susan Conover: Yes, so in dermatology care today, in a lot of medicine, it's just the first patient who calls is the highest prioritized patient that gets the first appointment, et cetera. In our system, we actually get to understand what the likely condition is that patient has and then make sure they get the sufficient care for that condition. Including accelerating cases that are really important cases that need to be accelerated that if you call the front desk, they're going to say, "Hey, the next appointment is in February. I don't know how to how to help you."
Sal Daher: I'm an investor in Piction Health, a very happy investor. I've invested in several rounds if I recall correctly. What's the situation with liability? Let's say somebody comes in and has a condition. Your AI says, "Ah, nothing to worry about," and it turns out to be something serious. What happens then?
Susan Conover: Yes, so it's a really important. One is that we don't have our AI making decisions at the end of the day. A dermatologist is reviewing every case and making a decision. Second is that the Piction Health Corporation is a separate entity that has firewalls between that and the medical group [crosstalk] and so we have corporate isolation as well.
Sal Daher: Okay. Very good. How far along are you with this new model?
Susan Conover: We made the decision last fall to start the process and we opened our first practice, our first virtual practice in January in New Hampshire. Since then, we've launched three additional states. We're now delivering care in Connecticut, Massachusetts, and Florida. We've been fortunate enough that we've been doubling every month in patients and in revenue and have positive gross margins, which is impressive for a company at our stage.
Sal Daher: Congratulations. I like to hear that.
Susan Conover: Thank you so much.
Sal Daher: Well, listeners, if you have some skin lesion, you said hair as well? Some problem with hair.
Susan Conover: Yes, dermatology includes hair, skin, and nails.
Sal Daher: And nails. Okay, pictionhealth.com and go through the workflow, and have your condition looked at. I just got a spot on my forehead, where I get a lot of sun and I'm going to have that looked at. I'm pretty sure there's nothing problematic. I've gotten used to recognizing things, but just for the experience, I'll do it.
Susan Conover: Yes, we'd love to have you as a patient and always want to hear your feedback, so we can make the process better.
"... How did you discover this? How is it that it dawned on you that this is the direction to go in?..."
Sal Daher: I'm going to try that. Very good. Now you're in several states, it is a completely counterintuitive thing that an artificial intelligence company would be setting up clinics to take care to the patients. It is just astonishing direction that you found that that is the model that is more likely to scale and how am I going to argue against that? Because you're now in a bunch of different states, you're making money. How did you discover this? How is it that it dawned on you that this is the direction to go in?
Susan Conover: It showed up as an alternative many years ago, but then it was really, in the pandemic and after the pandemic that we started to see more service providers that can enable setting up a virtual practice faster, like revenue cycle and billing systems that will help you bill and patient CRM systems. You don't have to build everything yourself, which really has reduced the barrier for us to be able to move quickly, which has been very fortunate.
Then we've also just seen a model of there was a regulatory change, is we went from very few reimbursements being allowed outside of specific clinical environments to okay now we're managing patients at home and that's Medicare and plenty of other providers and then laws around coverage parity and remote coverage across different states that have been put into law in a way that they previously haven't been.
There have been a few different regulatory changes and then also increasingly a model of repeatability but in other virtual for specialty areas. We have friends in the menopause space, GI space, and lots of different areas. No one's really done it in derm, and then they're not doing it to manage more care at scale in dermatology. That's what we are specializing in.
Sal Daher: Interesting, interesting, so how does the specialist look at this? How does a dermatologist look at this? Is that something that's helpful to her or him?
Susan Conover: Yes, so already all of our cases are reviewed by a board-certified dermatologist and determined if they need in-person care or how urgent. That's helpful for an in-person fee for service or other dermatology practice that doesn't have a way to triage those cases and prioritize, but then the cases we're sending are more likely to involve procedures and so it works more in the clinical environment in which they operate better. There's a few other ways that we are expanding our ability to work with in-person clinics, but that's just one of the first ways is getting our patients seen quickly.
Then in terms of dermatologists like any doctor, they're both very frustrated with all the amount of time they have to spend in EHR's documentation. They put their kids to bed and then they-
[laughter]
Susan Conover: -spend two hours on the computer just documenting cases.
Sal Daher: My daughter is a primary care physician. She lives upstairs, and she spends all her time on that stuff instead of-- She sees patients during her hours, and then at night she's on the records, on the EHR. You're lightening that burden for the specialists?
"... Dermatologists loving working with us is one of our really important metrics that we want to make it really easy for them..."
Susan Conover: Exactly, so we are systematizing a lot of different things that they get really frustrated with in other clinical environments. It's also very flexible. It's also designed to help them make just as much with remote care as they do with in-person, and designed to fit around their clinical schedule that they already have. There's a lot of different components. Dermatologists loving working with us is one of our really important metrics that we want to make it really easy for them.
Sal Daher: That is very important because if you're going to succeed you have to be able to bring dermatologists onto your system. It's not just attracting patients. It's a tough thing. You're in a two-sided market. You have to attract patients, and you have to attract dermatologists, specialized providers.
Susan Conover: I know, yes.
Sal Daher: Do you have an organization that's conducting outreach to dermatologists right now? Do you have somebody who's doing that full-time?
Susan Conover: We don't. We've largely worked with dermatologists who are already comfortable in doing telehealth and are already doing telehealth, cosmetic or otherwise in other capacities and that are more broadly licensed, so licensed across multiple states, but we certainly will expand our clinical staff. Also, our nurse practitioners are a really important part of how we deliver care and communicate with patients. Expanding in that area too is, I think, a lot about how do we expand our clinical team and make sure we have the right people on board.
Sal Daher: Excellent. The basic driver for growth with you is land and expand, go to more states and then build practices there.
Susan Conover: Yes. We've been talking a lot about what we've done to date. I think that it is a little different in how we talk about what the future looks like. In terms of in healthcare, what we see as really valuable is building evidence that our care is on par or better than in-person care, that we're reducing costs or our measures show that we can reduce costs by 50% or even more, and then expanding more into value-based contracts as we expand across states. We just practically began with a fee-for-service pathway first in our network for more than one and a half million people today.
Sal Daher: Oh, wow.
Susan Conover: Yes. I think of it as how do we build that evidence and then utilize that to become a resource and build more out across other states outside of the four states we're in today?
Sal Daher: Okay. The fact that you're doing it profitably, and then you can prove that you can reduce cost, that makes a very compelling-- This is a business that can really expand significantly.
Susan Conover: Yes. I think we've set it up to be streamlined and enable our dermatologists to manage up to 15 times more patients than they could otherwise manage so yes, the sky is the limit.
Sal Daher: Oh, wow. Not 10x. 15x. That's awesome.
[laughter]
Sal Daher: I'm just writing that down here so I'll just process that. Basically, you're removing a lot of low-value, like the first person who calls that selection, and you're bringing in a lot more patients and a lot more high-value patients because you're basically screening out people who have minor conditions that can be addressed very easily. I can imagine that you could end up having dermatologists just flocking to your system eventually and just taking over the whole thing and just becoming a model for that's how dermatology is done. 15 times, I mean, you can't complete with 15x.
Susan Conover: I mean, we still have certainly some groundwork to do to get to that, but that's what our model show we can get to. We've seen it in some other applications in virtual-first other spaces. I mean, I think we are on track. I mean, Sal, you know the journey? As an entrepreneur -
Sal Daher: No. I don't know the journey as an entrepreneur. I have watched the journey as an entrepreneur. I mean, Susan, it's so tough. It was really tough. Obviously, you didn't do this for the money because someone as talented as you could make money much more easily than this. It's a passion. I was talking to another founder this morning precisely because of this.
I mean, at the beginning of this, you had an app, and the idea with the app was that it was going to be a way of getting images that you could then diagnose. Then you said that's not working. Let's switch to going out to medical practices and getting diagnosed images. You collected the last time I heard 750,000 diagnosed images that you trained your AI on. Still, it didn't work because you didn't have the right business model.
Then, you pivoted your business model yet again to what you're doing now. You learned, and you are in a very tough business because you're worrying about patient and satisfying the patient and also satisfying the provider, the doctor, the specialist. [chuckles] It's really impressive that you've taken all these turns. It's a tribute to your tremendous tenacity but also flexibility to figure out that things aren't working. I'm not just going to keep banging my head against this. There's got to be a better way to do it.
Susan Conover: Thank you. I think having my heart in the right place is helpful. We've always been focused on how do we improve access to care in dermatology. We've never changed. That's always been our focus. How it looks has evolved, but we're just-- When you hit product market fit, you're like, "Oh, this is okay."
[laughter]
Sal Daher: Product market fit. You only know it when it really happens. It's like a gusher, and you're like, "Oh my gosh. This is what product-market fit is like."
[laughter]
"... How can our listeners be helpful to Piction Health?..."
Sal Daher: Everything else is just pretend. That's tremendous. How can our listeners be helpful to Piction Health?
Susan Conover: Sure. We're always excited and happy to take on additional patients. I believe we're covered in Connecticut Aetna and Anthem Blue Cross. Then we also have United coverage in Massachusetts, and we're expanding that, of course. Then, if your listeners can help with any of the coverage steps, we're already pursuing it, but if there are any inroads, that could be really helpful, but otherwise, yes, I have-- Then, of course, dermatologists who are excited about AI or access to care, we always look for additional partners there.
Then soon we'll be hiring a clinical ops head. If you know of someone in that space, but otherwise, I guess just, yes, happy to have folks as patients if they have hair, skin, or nail issues and are struggling to get in.
Sal Daher: That's tremendous.
Susan Conover: Well, thank you, Sal, for being such a good supporter over the years and through the whole journey.
Sal Daher: I mean, it's just amazing what you've done. I thought, "Oh, my gosh, she's going to--" With this app that you had at the beginning, and embarrassing skin conditions, I was like, "Oh, I don't know about this." The thing is with founders, you believe in the founder, you don't believe in the founder's ideas. You know Michael Mark? Our friend, Michael Mark, right?
Susan Conover: Yes.
Sal Daher: Ah, they'll figure it out somehow. The really good founders to figure it out. You don't worry too much about the idea. You try to figure out, is this person really, really motivated and does this person have that mix of flexibility and tenacity? Then has a motivation to figure out the solution. That is what it takes to bring forth something entirely new, something that's never been done before. It takes a lot of effort. It looks easy from far away but close up, I cannot imagine all the frustration that you've gone through and you just keep on chugging. Phenomenal, very inspiring.
Susan Conover: I think every founder wants it to just be simple and up into the right in the dream and there's a temptation to paint it in that direction. Then I think you're right, like the grit, the flexibility, the figuring out how to change course or expand the course, in our case, has been important to get us to where we are today. We still have a long way to go but just excited to have folks like you be in our corner and helping out when needed.
Sal Daher: Well, I'm glad to help. I'm really inspired by amazing work that you've done. Any other thoughts that you want to communicate to our audience of founders and angel investors?
Thoughts to the Audience
Susan Conover: Yes, that's a good question. I don't have anything specific now. If there's any way I can be helpful for others, we've certainly learned a lot in our journey to date and we'll learn a lot in the future. If there's any way I could be of support, please don't hesitate to reach out. Otherwise, Sal, just excited to have such wonderful supporters and be in such a great city that focuses on healthcare and focuses on how do we really change things rather than just create another game or app with users and that sort of thing.
I have a lot of respect for the knowledge and thought that goes into innovation in Boston. I'm just excited to be part of it.
Sal Daher: Well, sorry. After the beautiful closing statement, I have some staircase wit, in French they call, what's it, esprit de l'escalier, wit of the staircase. I just remembered that there was something else I wanted to ask you about the regulatory environment. How did you handle that? Did you need to have an approval from the FDA to create a support for physicians in their diagnosis?
Susan Conover: That's a good question. There are different ways that things are evaluated and regulated in the space. Certainly, the FDA has had more specific and more restrictive guidelines on clinical decision support and software as a medical device. That was actually something that was addressed by our shift toward delivering our own care is that we have the flexibility in our own practice to determine how best to deliver care.
Also, every case is reviewed and approved by a board-certified dermatologist. We have safety mechanisms in place, and also, if we were selling to other practice it would be a different story, but we get to optimize. We no longer have to restrict our AI utilization to a single point of insertion. I mean, I'm speaking of it vaguely, but basically, it was one of those--
Sal Daher: Oh, no, no. I wouldn't want you to speak any more specifically than if you're comfortable.
Susan Conover: Also, of course, we have amazing regulatory and compliance lawyers that we work with all of the time that have specific expertise in telehealth and this space, in order to make sure we're getting ahead.
Sal Daher: This is like "sun over Marblehead", that makes sense to me now. If you are running the clinics, you own the data, and then you can-- all the learnings from the data are proprietary, and the --
Susan Conover: There's a lot of things that got quickly addressed with our expansion. One of those also is that our cases over time, we can actually match a case with this diagnosis with the patient outcome, which is the ultimate measure even beyond pathology information is the ultimate measure of effectiveness. We have the platform to be the thought leader in the space.
Sal Daher: By following the EHR and seeing how the patient progresses after the diagnosis, after the treatment.
Susan Conover: We have the potential to say, "Hey, based on what we know about you, you're going to actually respond to this medication better than this other one in the future," and things like that, which if you don't have that centralized information, which we are capturing virtually, it'd be really hard to do that. That data is really only in clinical trials.
Sal Daher: Oh, you're building a very extremely and even more valuable enterprise than I suspected, because if you are a big strategic player that is creating treatment for this, that's the Holy Grail. If you know what works for whom, what clinical trials to design, and so forth, you're going to be saying, "Oh, this is so valuable for me."
Susan Conover: If you went to MIT or in the Kendall ecosystem, it's all about feedback loops, and how can you continually grow and expand. Then these days, it's a data strategy that supports our ability to deliver great care. We solved a lot of stuff with [laughs] our expansion.
Sal Daher: Oh, I'm so glad that I went back up the staircase to ask that question. Very good.
[music]
Sal Daher: Susan Conover, founder of Piction Health, thank you very much for being on the Angel Invest Boston podcast.
Susan Conover: Absolutely. Thanks so much for having me, and good to catch up with you.
[music]
Sal Daher: Awesome. This is Angel Invest Boston. I'm Sal Daher. Thanks for listening.
[music]
Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.