Writing on July 4th, I applaud a nation that produced a Rashaun P. Sourles, a compelling young man on a mission to improve health care and disrupt inefficient sales channels.
Sourles grew up in a working class neighborhood and achieved top selling ranks at Johnson & Johnson, a Fortune 500 company. Sourles grew frustrated as one of J&J’s pharmaceutical representatives, with the considerable wasted time (up to 80% a week) spent trying to find, contact and set up meaningful exchanges with clinical and administrative decision makers.
Had he been in the industry decades earlier, the hurdles would have been much lower. But an increasingly consolidated provider community now severely limits access of pharmaceutical representatives to clinicians to drive more volume over fewer drugs, thereby lowering costs. The barriers also reduce “hard-selling” – selling based on factors other than patient outcomes. In fact one-quarter of physicians, according to the NYT, flat out refuse to meet with drug sellers today.
Sourles’ frustration with provider-imposed hurdles concerned not just his own commissions. He was equally troubled by obstacles to providing important information, helpful services and other value-added solutions – beyond J&J drugs – that could help providers improve patient care. Rather than throw in the towel, Sourles seized an innovative business opportunity.
Drawn by Google’s success in providing information through keyword searches, Twitter’s success as a personal publishing platform and graduate work in Northwestern’s strategic change management program, Sourles’ went after the problem. His company, Qualtrx, is building a social network that connects healthcare providers to their vendors in a new marketplace. With Qualtrx, the provider controls the connection via real-time publishing of needs and goals that vendors like J&J will subscribe to, for a fee. Sales representatives respond to published needs and goals with targeted proposals. (Disclosure: I am on Qualtrx’s advisory board.)
Providers, not the vendors, control the pace of the engagement and respond only to proposals of interest. Their choice is aided by a three-step proprietary algorithmic ranking of vendor proposals based on:
- Providers’ ranking of representatives’ prior proposals
- Keyword match
- IR, or Implied Relevance (Qualtrx’s secret sauce)
Qualtrx’s young team recently won a coveted place in a Minneapolis technology start-up accelerator and was selected by the Minnesota Cup business plan competition for innovative and breakthrough business ideas. The company is just starting to raise money. The first test site is underway.
Let’s hope the Qualtrx business model works, as the idea is huge, on two levels.
First, Qualtrx’s new marketplace for ideas could prove disruptive to the pharmaceutical industry and possibly others. Unable to scale drug development, giant pharmaceutical companies now buy or partner with small biotech companies to fill their pipeline. With a new marketplace, start-up drug companies will have an alternative to get to market. The same applies for other medical product start-ups.
Second, the business model is a great example of enhancing value through innovation – for pharmaceutical companies, lower selling costs; for providers, more efficient and effective use of clinicians’ and administrators’ time spent with sales representatives; and for payers and patients, better outcomes from our health care system. The Qualtrx exchange, based on transparency, efficiency and effectiveness, is a much better way to transfer information than a purchasing agent acting as a strict gatekeeper.
Qualtrx exemplifies how a new technology evolves. Most new technologies (in Sourles’ case Search) start in a specific market, then grow horizontally into other markets. But needs from a technology are not uniform, so once the technology starts to mature, niche companies like Qualtrx design highly tailored applications of the technology. Eventually, larger companies with strategic interest in a market segment purchase the niche companies with winning segment applications.
My prediction, therefore, is that VHA – the leading group purchasing organization for healthcare providers – will likely set their sites on buying Qualtrx after its proven the business model. Alternatively, Google and Microsoft, both with a healthy appetite for acquisition in the health vertical, may look to a company like Qualtrx as an example of a scalable healthcare IT innovation that avoids the thorny regulations around the management of personal health records and personal health information.
Should Sourles want instead an ongoing business without a corporate parent, approaching strategy as a continuous design process will serve him well. Medical equipment and supplies are obvious adjacencies. Beyond this there are other sales channels to transform via intelligent social networks.
Rashaun, set your sights high. Win or lose, you’re an American hero in a century in which the innovative spirit will drive our economic success.