Switch Healthcare aims to save employers money by helping their employees get healthy

Helping employees manage their medication is one strategy for improving health, said Dr. Carl Myers, CEO of Switch Healthcare. (Lisa Stiffler / GeekWire)

Most people attend high school reunions to reminisce with old friends and check out the status of former girlfriends and boyfriends.

Dr. Carl Myers took a more productive approach. At his 45th reunion, he asked his peers if in their lifetimes, they’d experienced a disaster in the healthcare system. Everyone he spoke to had a horror story to share of mismanaged care.

“I went into health care like most every doctor: because they want to help people. I look at how much healthcare costs our country and look at the health of our individuals compared to competitor countries and I’m embarrassed by it,” Myers said. “What have I been doing for 35 years?”

Myers had both practiced medicine — he was a medical oncologist and worked as the chief medical officer for startups and larger organizations — and also has an MBA and experience building companies.

Dr. Carl Myers, co-founder and CEO of Switch Healthcare. (Switch Healthcare Photo)

“I’ve been able to see what works and what doesn’t work,” Myers said, and he had an idea for helping fixing the system.

Inspired in part by his guerilla high school reunion survey four years ago, he launched Switch Healthcare, a Seattle-based startup that is working with self-insured employers to provide guidance and education to their employees, making them healthier and reducing healthcare costs. The business incorporated in March 2015 and has 10 employees. Myers is CEO.

The idea is to work with larger employers and target more common chronic conditions such as type 2 diabetes and hypertension. Switch and the employer would reach out to employees and ask if they or covered family members have a particular health challenge and want help addressing it. It’s a different approach to programs that provide financial incentives for people to stay healthy.

“Ours is completely voluntary for a lot of reasons,” Myers said. “You can’t pay people enough to change their lifestyle if they don’t want to change it.”

Switch employees and contractors would then work with interested workers to review medications they’re taking and lifestyle habits, such as diet, exercise and stress management. They might suggest dropping some medications when people are over-prescribed and their care isn’t coordinated well. The Switch providers would also guide people to healthier lifestyle choices.

“It’s in addition to what happens in the physician’s office, versus a criticism or analysis of what happens in the physician’s office,” Myers said.

In an initial trial with individuals, their approach met Switch’s goal of a 200 percent return on investment — for every dollar spent there were two dollars in healthcare savings — and a more than 35 percent reversal in the rate of targeted conditions. The startup does not yet have any companies enrolled in the program, and Myers said the pricing will be flexible and ideally include a shared-savings component.

Switch recently launched a “friends and family” funding round with a target of raising $1.1 million by Jan. 10. Then the company will explore funding from angel investors.

There are other enterprises trying to reduce costs by improving employees’ health. Partners Online is a Harvard University-affiliated nonprofit that provides second opinions on medical treatment, with the goal of providing better care. And there are numerous “wellness companies” that target the lifestyle aspect of good health.

Switch will do both, Myers said. “We’re looking at it in a more comprehensive way.”

Philip Walling, chief operating officer and co-founder of Switch Healthcare. (Switch Healthcare Photo)

We caught up with Myers for this Startup Spotlight, a regular GeekWire feature. Continue reading for his answers to our questionnaire.

Explain what you do so our parents can understand it: Switch combines solid medical science, what individuals can do for themselves, and the art of effective change management to achieve superior health.

Inspiration hit us when: In August 2014, after I had been fired but was still on the job, I had an uncomfortable “aha” moment. (Myers explained that he was “pushing change too fast and on too many different fronts,” and it was a mutual decision for him to retire.) Healthcare would not be fixed from within the walls of the status quo. It was too big, too complex and too profitable. Given what needed to be done, I had too much energy to retire.

VC, Angel or Bootstrap: There were three reasons to stay in bootstrap mode as long as we did:

1. To give us time to test different micro-environments for change (think big, but start small).
2. To deliver better value down the road by first developing a thrifty corporate culture.
3. To avoid taking on financial obligations before clearly knowing where we were headed.

Now we’re seeking angel rather than VC investments because:

1. We need a relatively small amount of capital to reach our near-term milestones.
2. VCs don’t have a convincing history of helping healthcare service startups.
3. Our next milestones will give us the foundation necessary to scale and the data points to leverage machine learning. At that juncture, finding the right VC or corporate collaborative partner makes sense.

Our ‘secret sauce’ is: We’ll know we’ve got the secret sauce right when the pundits stop asking us for it and instead they begin to create the models to explain what we’re doing. We’re staying “mostly stealth” until we have a few more pieces in place.

The smartest move we’ve made so far: That’s easy. Hiring Philip Walling as chief operating officer in May 2015.

The biggest mistake we’ve made so far: In late 2016, we made the decision to opt out of a deal that promised several million dollars a year in revenue. We’ll never know if that was really a mistake. Given where we were in our evolution, I decided we were taking on more risk than was prudent. From that perspective, it might have been the second smartest move we’ve made.

Dr. Donald Forrester, chief medical officer (emeritus) and co-founder of Switch Healthcare. (Switch Healthcare Photo)

Which leading entrepreneur or executive would you most want working in your corner? Switch Healthcare culture stresses a stewardship mentality in an atmosphere of radical collaboration. Given this, we would choose Microsoft CEO Satya Nadella.

Our favorite team-building activity is: To act in a manner that fosters a culture of courageous relationships. (We owe the term to Gus Lee and his book “Courage: The Backbone of Leadership.”)

The biggest thing we look for when hiring is: Purpose-driven competence.

What’s the one piece of advice you’d give to other entrepreneurs just starting out: Create the opportunities to address problems early rather than letting them slide while just hoping things will get better on their own. They won’t. It would be better to just read “The Hard Things About Hard Things” by Ben Horowitz.