Health Innovators
Health Innovators

Episode 115 · 1 month ago

From Corporate to Startup to Building a Unicorn w/ John Figueroa

ABOUT THIS EPISODE

Careers are a funny thing. We build them and nurture them and then, for some of us, we switch gears and chase our dream to build a unicorn startup.

It can be a scary place for most folks. But when you have an established career in the healthcare space, you’ve got a lot of leverage that you might not know you can capitalize on.

This week, we sit down with John Figueroa, Founder and CEO of Carepath Rx. He shares some of the strategies he used to do just that: chase the dream of a unicorn startup that changes healthcare - for the better.

Touching on everything from how to leverage relationships you’ve built over the years to understanding the criteria and framework for a true unicorn business, John brings it all to the table for listeners.

Maybe you’ve been thinking about how you need a change, or want to make a difference, or would really like to put your idea to the test. Whatever your reasons, if you’re considering a change in perspective for your career, you’re going to want to tune in!

Here are the show highlights:

  • Switching gears from an established career to a startup (7:11)
  • How to leverage your experience (and relationships) to open doors (11:28)
  • Why service innovation is a form of product innovation (14:01)
  • How digital technology can make America healthier (17:39)
  • A breakdown of the unicorn criteria (18:36)
  • Healthcare trends to watch for (23:55) 

Guest Bio

John Figueroa is the Chairman and CEO of CarepathRx, a company providing innovative pharmacy solutions to hospital health systems.

In his 30-year career in the healthcare industry, John has served as CEO of Genoa Health, Chairman and CEO of Apria Healthcare Group and Coram LLC, CEO and Board Member of Omnicare, Inc. and President of McKesson Corporation’s U.S. Pharmaceutical Group.

Honored with the Distinguished Alumnus and Pepperdine Graziadio Business School Inspired Leadership Award, he went on to receive the Supply Chain Executive of the Decade award from the Global Supply Chain Leaders Group (GSCLG) and served as a Commissioned Officer in the United States Army as well as serving with the 12th Special Forces Group.

John received his Bachelor’s degrees in both English Literature and Political Science from the University of California at Los Angeles, and his Master’s Degree in Business Administration from Pepperdine University.

If you’d like to know more about John and CarepathRx, visit their website at carepathrxllc.com.

You're listening to health innovators, a podcast and video show about the leaders, influencers and early adoptors who are shaping the future of healthcare. I'm your host, Dr Roxy Movie. Welcome back to the show health innovators. On today's episode, I'm sitting down with a very special guest, John Figueroa, who is the founder and CEO of Care Path Rx. Welcome to the show, John. Thank you, Dr Roxy. Pleasure to be here. So let's get started by telling our audience a little bit about your background and what you've been working on these days. Well, I've been in the healthcare industry for almost thirty two years now. A number of the positions that I've held over thirty two years have been centered around pharmacy in the US. I started my career with Baxter, where I was the sales rap. Eventually made my way to mcksson where, after thirteen years, I became the president of US Farma, running over ninety billion dollars of revenue. That's really where I learned the pharmacy supply chain business. When I left mcksson, I became the CEO of Gosh. Why am I forgetting the name of Amy Care? So I was the CEO of Bomby care and I've been in healthcare for thirty some idears. That's exactly right. So I was CEO of Vomni care for two years, which is the largest long term Care Pharmacy Company in the US. Then I moved into private equity and my first private equity experience was with apria healthcare, where I was the CEO. We had to primary businesses, DME business as well as home infusion, and we eventually split off the home and fusion business quorum, where we sold that to to CBS Care Mark. And when I left that business I became the CEO of general healthcare, which was the largest behavioral Health Pharmacy Company in the US. We eventually sold that in two thousand and eighteen to united healthcare, and when we sold that in two thousand and eighteen, I took a few months off and then started to think about the landscape of pharmacy and where there can be some improvements within pharmacy and I started to hone in on the hospital system. And when I think about my thirty years of experience, one thing that I was come back to is when I used to call on hospitals with Baxter thirty two years ago. The pharmacy systems in hospitals are almost identical to what they were thirty two years ago. And here's what I need. When you look at a hospital system, they do in patient pharmacy exceptionally well. If you're a patient in the hospital and you're...

...there in their bed for three days, the doctor will come by on a regular basis so check on you. Meant he'll make sure you're getting better and he will prescribe whatever he thinks you need to get better, no matter what that that medicine may be, and they get it to you on time every time. And once they get you better, they move you out of the hospital. And the thought process for the new company that I started in two thousand and nineteen, which is called Care Path, our x is to bring a comprehensive pharmacy service to the hospital system, to make sure that pharmacy stays as a continuum and integrated part of care for that patient's experience, not only in the hospital but when they leave the hospital or when they come to a hospital clinic or when they come to see a doctor associated with the hospital the minute they leave, instead of giving them a prescription to go fill that somewhere else. They can do it themselves. They can stay connected to that patient. They can not only stay connected through the prescription but through the EHR. So if we're providing pharmaceutical services, we can capture anything that's happening with that patient, no matter where there are, back into the EHR so that the doctor or doctors can have a visibility on what's happening with that patient. So that's the concept. We wanted to bring that comprehensive care to hospital so that they could stay connected to their patients. And I'll say another thing about that. Here's the other reason why I started the company today, because pharmacy is so disconnected to the hospital system. If you are getting any type of Specialty Med or expensive med that takes a while to get through the supply chain. And I'll give the example of somebody going into their doctor and being told that they have cancer for the very first time. Imagine being told that you have cancer and you needed to start a specific therapy and having to wait fifteen to twenty days before it goes through the entire bureaucracy system to get started on your therapy. Just imagine you or your family member having to wait fifteen to twenty days. That statistic just blew me away and made me realize that that that's just simply wrong and it's mainly wrong because of the disconnection between pharmacy and the site of care. And we determined that if we can provide this comprehensive pharmacy services on behalf of the hospital system, we can serve that patient within a day, maximum two days, by doing all the pre authorization work, getting everything set up and making sure our pharmacy can provide that service to that patient...

...almost immediately if that's what that patient and the doctor wants. So it's all about service. You know, the fact of the matter is, in this example with the specialty drug if eighty five percent of all of these expensive specialty drugs are written by a hospital system, they only fill five percent. All of the rest is moving to a third party entity where the service just simply is not connected. It is not tracking and adherence levels, if you're lucky, get to fifty percent. We believe pharmacy inside a hospital system is not only great for the patient and maintains adherents at a ninety percent level instead of a fifty percent level, and the hospitals actually begin to enjoy the financial benefits of pharmacy instead of letting it walk out the system going to a third party. So that's the concept of the thirty two years, you know, getting to the point of building care path, our acts in building a company that I think it will be certainly one of the greatest impactful companies and services that I've ever had the privilege to be a part of. So thank you for that. That gives our audience, you know, a lot of context. So continuing that conversation, how different is it for you working in a start up versus some of the larger corporations that you have had such a long experience in? That's that's a great question and one that I find myself thinking about all of the time. I spent the vast majority of my career walking into an established company and and hopefully improving that company by the time that I left. That was the mission, taking an established company and working into a better place. So starting from scratch was was certainly different, and I have to say that I cheated a little bit. I think most founders who come up with an idea take years establishing and building that business, getting their first contract establishing their very first customer experience and then and then growing from there. I had the luxury of working with a wonderful private equity firm, not a partners where I worked with in the past. They were one of the founding private equity firms for general healthcare and as we were discussing the idea, they very quickly indicated that if I needed funds to buy established companies early, that would speed up the process of implementing the company and the idea and I took them up on that. You know, met with with Nott A and Providence, Rhode Island a few times to discuss the model. They indicated that they would...

...provide the funds and in two thousand and twenty we we acquired six companies. Fixed companies allowed us to establish pharmacy and at had pharmacy licenses in all fifty states where we could sublock supply hospital systems with specialty pharmaceuticals with forty b pharmacy, we could do home infusion and we could also do a poly pharmacy for the chronically ill. When they leave a hospital setting and they have multiple chronic conditions, we can put their medication together send it to them on a regular basis, visit them at the home, do med reconciliation, basically established a long term care pharmacy at the home and and continue to remain connected into the EHR. And then we bought a couple of technology companies that gave us access and connectivity to every EHR in the in the country. We also bought a technology company that allowed us to track all specialty meds for payers and and patients, as well as manufacturers. And then the sixth acquisition was very important. We purchased from new PMC their operations for their in few Asian and specialty pharmacy that gave us the expertise from a system like UPMC to walk into any system in the country and give them and provide them a blueprint on how to build this pharmacy capability from either from scratch or utilizing us on day one to help them integrate into the pharmacy world with a primary partner. And so those are the six acquisitions. And as you as you ask about being a founder, I think the toughest thing was coming up with the plan and the idea. The second was the six acquisitions and then the third was integrating all six of the companies so that it looked like one company in front of the customer. It could provide all of the services turnkey, no matter where the pharmacy was coming from. And once we did that, then rowing the business exponentially. So so that was probably the toughest thing I've ever done in my career, starting from scratch. But you know, so far it's going well. So what is different about you and or and or not a partners? You know, I have a lot of startup entrepreneurs that come on the show and they are hustling to raid to raise precede seed ABC rounds right and pitching to vc...

...partners and really, you know, the idea of fast tracking or circumventing all of that and going directly to private equity with an idea we is just absolutely unheard of. Yeah, so wave view or not a partner's different that you were able to, you know, partner with a private equity company and be able to fast track this commercialization in the way that you did. Well, rocks, I'd like to tell you that it was something spectacular about the process, but the reality is I think it goes back to the first question that you asked me, which is my background so I've been in the business for thirty two years and I think that primarily, more than anything else, got me into the front door, got me to meetings where people would listen to the idea. I like to joke all the time and so does my team. No matter where I go, it seems I know somebody in the room and I know somebody in the room because we work together fifteen years ago, or we had a contract with a company that I worked with, you know, twenty years ago. I'll tell you. Being in healthcare for thirty two years, it is a small community and there are a number of people that just continue to pop up in my life that I have seen through the years or or haven't seen for ten years and all of a sudden pop up in a meeting. I've had the pleasure of running public companies as well as private companies, and on the private setting I've worked with companies as large as blackstone, advent international and and midsize, you know companies, certainly like noddic and and other private equity firms. So the ability to have an idea and pick up the phone and say, Gosh, can we have a meeting or can we have a lunch I'd like to discuss something with you. I had a lot of doors open for me, I think, based on just three decades of experience, and I don't think it was anything more than that. That makes a lot of sense. Hey, it's Dr Roxy here with a quick break from the conversation. Are you trying to figure out what moves you need to make to survive and thrive in the new covid economy? I want every health innovator to find their most viable and profitable pivot strategy, which is why I created the covid proof your business pivot kit. The pivot kit is a step by step framework that helps you find your best pivot strategy. It walks you through six categories you need to examine for a three hundred and sixty degree view of your business. I call them the six critical pivot lenses. As you make your way through this comprehensive kit, you'll be armed with the tools, tips and strategies you need to make sure you can pivot with speed without missing out on critical details and opportunities. Learn more at legacy and DNACOM backslash...

...kit. So you know. Another thing on the show is we really talk a lot about digital health innovation or innovation around products, and what you're talking about is a lot more of service innovation. So what are some of the differences from your point of view when you're talking about service innovation and being able to bring that to market versus something that's a tangible product ructu that? That's a great question and it's a great question because it really is the evolution of Word Pharmacy is going and and, as you've indicated, we are a service network and in fact we started the entire business focused on the provider, and this is what the doctor really wants to have for their patient. We very quickly found that the payer organizations, the insurance companies, were also very excited to hear about what we were doing because, quite frankly, if you keep people on their meds, they stay out of the emergency room, they stay out the hospital and the insurer actually pays less in taking care of that patient because they're healthy as opposed to not being healthy, and meds are a critical element to that. So we started with the provider, we're talking to the pair and now we're concentrating specifically on that patient. So as the patient leads, we communicate it with them on email, we call them on the phone, we take care of all the things that need to be taken care of. But the digital pharmacy concept is really the next evolution of the business. As I mentioned, we're connected into the EHR, so anytime we do something for that patient, we immediately go to the computer and we punch it in and it goes into their electronic health care record. Doctors have access to it and it's in there. I mean that the information is in there and can go back and forth anytime we need it to be. But communicating with the patient is still over the phone or or sending them an email. The digital piece of our business is really the next evolution where we can continue to talk to them as easily as possible. We can remind them of their of their refills, we can remind them that they have a doctor's appointment. We can even, with our payer partners, give them information that the payer wants them to have, since we have that direct communication. We are doing this with some of our businesses now in small areas, bioplus, for example, which is our largest independent specialty pharmacy in the country, I should say the largest specialty independent company in the country in fifty states. We have the ability to communicate with our specialty patient population on a regular basis. This is critical because it is they are meds that they absolutely have to to take at the right...

...time, so being able to communicate with them directly is critically important. We've also done this with our polypharmacy, the exact care business that takes care of chronically old patients at the home, where we can communicate with them digitally more so than we ever have in the past. Now we need to incorporate that into the rest of our business. All of our pharmacy functions need to have that type of ability to communicate and that will be the next evolution of our company. And, as you indicate a roxy, I think in the question, this is where everybody is going. I mean this is the need for connectivity and technology and and we also need to be a big part of that. Yeah, that makes sense. The digital transformation that happens within the organization, and I think what you're talking about also is, you know, what's happening to most industries and most businesses, where we're reimagining the value that we can deliver to those target customers through technology. Technology is the name for that. Absolutely and it's the ease, it's the ease of service, and that's where we're at in America. Whether it's healthcare industry or any other industry, we're all looking for that easy button to make communication easier and actually activity. The the net result for us and for healthcare is we want people to take their meds when they need to take their meds, and when they do that, America is just healthier, the longevity and life is better and costs come down. So that's that's our focus and if we can use digital technology to make that a success, we're going to do it. So I heard two terms kind of paired together. Care Path, a rex in Unicorn. What what is happening there? It's care path, a rex, a Unicorn destined to be a unicorn. To our audience, a little bit about this story. Okay, Roxy, you're cheating now because you heard me speak and mentioned this before. So and that's okay. I actually love this question as well. You know, in in the finance world, and this is really where this term has come from, you know, banks and investment entities and other entities who are looking at a successful business. The criteria for a successful business is vast right I mean the first and ultimate criteria is are you taking care of patients and are you doing and are you doing it well? And if you're doing that, is it making an impact on the economics of healthcare? And if you're doing that, you are a successful healthcare company. But when you look at a company from a financial standpoint, and you know there are...

...a lot of not for profits in healthcare, there are a lot of for profits in healthcare, but the bottom line is, even if you are not for profit, you better figure out how to break even or you're not going to be able to serve anybody anyway. So the financial component of a business, especially for a startup business, is to hit three specific areas. And when you look at some of new companies in healthcare and a specialty digital companies, you know, going back to our digital conversation, a lot of these companies still haven't made a profit. Their entire concept is moving the evolution of care into the digital space and capturing as much market share as they can, even if it's at a loss. So many investors will say, we love the strategy, your impacting cost for the system. You can't make any profit yet, but we believe you will. You know some day you will, and we believe in that and will invest in that. So the measure is revenue. You know, how quickly can you get revenue into your market? And that's one of the elements of being a uniforn. It's it's revenue, and a lot of companies can do that. They can generate revenue and you see that everywhere. The second is actually having a strong gross profit and a year over year increase in gross profit as you're growing the business. So going back to the for profits and and the profits, ultimately you still have to make a gross profit to succeed and that gross profit is important to make sure that that's a positive number. And that's the second criteria if in fact you're going to be a unicorn. Now the third piece to being a Unicorn, and if you can do this you are officially a Unicorn, is continued to grow your operating profit. So you've got your revenue, you've got your gross profit, you've got your operating profit and if you can can, if you can grow all three of those faster than the market, you're a Unicorn and and that's what most investors and bankers will call you, because it's very difficult to do all three, especially if you're a young company, and doing it at a level of twenty percent on each of those categories, is really, really unique, and we have been called that. You know, we're a couple of years into the strategy and and both years of operating we have had the pleasure of being able to do all three of those things on a pretty regular basis, and so we have been called by many folks a Unicorn Company...

...any which is a compliment, you know, certainly you know. Now the pressure is on to continue to do that. I think what's important here is it's not only the fact that we have been successful because of our model, but we have contracted with six hundred and thirty hospitals in our first two years of operation. A lot of that came through the acquisitions, but we continue to grow our hospital numbers by over twenty percent a year as well. And what's important is we're only successful when the hospital system is successful, because they're keeping the majority of the profit. As we partner together, we make sure that the financial health of the hospital system is taken care of first as their primary partner. That that's important to us. So our success really reflects the fact that our hospital partners have also seen some wonderful success. That's great. I know our listeners wanted to hear that. Unicorn stories. Had to get you to talk about that. So I want to kind of talk about you know, what are some of the trends happening in healthcare right now that we should be aware of watch out for? I think the watch out for the digital pharmacy is is massive. I think you're going to continue to see that and continue to see it in a big way because technology and healthcare, I believe, is one of the most funded areas ums to to technology in our country now. You know, you know you have to remember that. You know that the healthcare is almost a third of the GDP in our country now, and I think it's like twenty five percent, so forth fourth maybe. So think about that. One out of every four dollars in our entire economy is in healthcare. So making sure that we can have technology that brings down cost and increases quality or increases the quality of care is extremely important. So digital healthcare technology, and I'll probably move towards ai as one of the key areas in healthcare that's coming. You know, we did a seminar at Pepperdine University a couple of years ago that concentrated on the evolution of of Ai come into the market place. We looked at what it's done to radiology and the technology capturing much more on an x Ray than humanize have done in radiology and I would tell you within the next ten years I think ai would would probably function to eighty percent of all of the data that comes out of radiology will be done by a technology system. Radiologists will be the last act of approval,...

...looking at the data and verifying that that the technology was correct. But that evolution is moving quickly. When you look at technology, for anything in health care there is applicability and I think technology investment will continue to increase at a very, very high rate. Ai Adaptability will continue to to increase throughout the years and so that, I believe, is a given. I think it's good. I think that's a good thing for the industry. All talk about some other things that are happening that I think are bad for the industry, and that's you know, the government still continues to be one of the largest payers in the country. So you have a number of large payers out there, but it really is the government that pays for the vast majority of care and you see private payers, in some cases, I should say, continuing to raise reimbursement and certain areas for quality of care, and private payers have moved towards value care propositions. If you can prove that you are providing value, they will pay you for the value and it's one of the things I love about care path, our acts, as we continue to demonstrate results, we continue to have very, very positive conversations with payers. It makes it makes a lot of sense. The government says that they want to move in that direction, but normally what happens is they say they want to yet to continue to cut reimbursement, and it's not just for pharmacy, it's in all areas of care and as we deal with hospitals on a regular basis, dealing with the cuts and reimbursement that come from the government on a regular basis is extremely difficult and I think we as a country, I think, need to continue to encourage that the government invests in the right type of value care and the return for our tax payers will certainly be a lot better in the long run for this quality and value of care than simply doing things the way we've always done things and cutting reimbursement on a regular basis. So those are the two things roxy I mean that the good side of the technology and the bad side of continuing to just to pay for the way we've always done it and and reducing that pay seems to be crazy to me. But well, and it's so difficult for businesses, you know, with it's being uncertain right it's uncertain when that's going to happen, if it's going to happen in the unpredictability of how that's going to happen, and so being able to adapt to those adjustments quarter over quarter, year over year, and still be able to attain that year we year growth is is very challenging. Absolutely correct. You hit it on the nose. It's very difficult for these companies to continue to do what they do. And then you know, you know, public companies...

...have to present the results every quorder. So there's a lot of short term anks in what they're doing and how they're running their business and and the long term play, I think, is what's important for these companies and certainly for the government as they evaluate their partners. Sure. So what are some lessons learn, you know, is you kind of think about your thirty semigg years in the industry and just being exposed to other verticals, whether it's like personal experience or just looking at other businesses. What are some of the lessons that you think healthcare can still learn from these other industries that, you know, tend to be much further than us in healthcare? Yeah, it all comes down to connectivity. You know, it Gos. Has Probably been twenty years since the industry and the government talked about interoperability where, you know, we all have the same information and and so we've been talking about that for twenty years, right roxy, but if I went to my doctor today, she's still going to give me three pieces of paper before I see her, you know, so you know what's what's going on, what's your insurance card, our things, you know, have you been coughing? Whatever it is, it's still very, very manual. You can never walk into any setting in the healthcare today where you still don't fill out a piece of paper and then they asked you the exact same questions that you put in to the electronic health care record a dozen times. But they're still going to ask you the exact same question over and over again, and the biggest reason for that is systems change all the time. They never talked to each other and no matter where you go in the system, there are disparate information systems going on all the time. And we talked about that with our hospital partners because when we walk in and say let's build the pharmacy piece together, they get excited and say that's great. We ask them which electronic healthcare record system do they use and they say system, we've got systems. So healthcare system has five or six different EHRS. The doctors use an Emr that doesn't always connect into the EHR. So this this level of of Gosh, I am not going to use the word I wanted to use incompetence. I'm not going to use that word. This this level of unsophistication. Where we go, we cannot talk to each other, even though they're owned by the same entity or it's one patient going to multiple areas in the same entity. They can't talk to each other, and this is where medical errors and medication errors continue to happen. It's the lack of communication at your fingertips when you need it. And even though we've been talking about it for twenty years. It's just crazy that we haven't figured this out, and I'll tell you why. My personal opinion, I...

...think the biggest impediment to this has been privacy. Now, good or back, you can argue that one way or the other. You know, we need to continue to maintain pharmacy. I'm certainly okay with that, but that has been the excuse every single time a option for connectivity happens and prevents us from moving down that path a lot faster than we could anywhere else. Now, since Covid I would tell you that the interoperability and ability to share information is getting faster. Yeah, but you know the fact that we have entities that are breaching into technology systems and trying to steal healthcare information is setting us back, you know. So every time we think we take a step forward, you know, we take another step back and it's very difficult to make progress of this category. And I understand all of the reasons and all of the issues and I respect that, but ultimately I would say that the biggest reason why we're not moving as quite as fast as we should in healthcare is because we just have a very difficult time communicating with each other. It's complicated, but we have to figure it out. I agree. Yeah, and if I was a tech guy, I would say that's that's where I would go, but I'm not a tech guy. Irit right, and hope it works. So so kind of in our last question here is we wrap up thinking about where you would go or where you're going. You know, legacy is something that is really important to me and I think this idea of innovation plays intersects with leg the idea of legacy, very intimately, and so I want to ask you how do you want to be remembered in healthcare and outside of healthcare? What's important to you when you think of the legacy that you're going to leave behind, maybe through what you're doing with care path a rex, or maybe just in life? Yeah, well, you know, goes back to your earlier question and how we got this business moving so quickly, and I indicated that after thirty two years, I know a lot of people. I think what's exciting for me and I hope my legacy when when I finally do hang it up and retire from healthcare, is that, you know, I conducted my business honestly, you know, with everybody that I interacted with that I treated people with respect along the way and even if we didn't agree, you know, we figured out how we could continue to work together and not work together but understand the reasons why. So, you know, to me I hope that people at the end of the day say he was a just a good, honest businessperson in our industry and and if I'm remembered that way that would be great. I think secondarily, if they looked at...

...some of the accomplishments of the companies that I ran and and how good they are even today in serving the patient population that we served, that would be important to me. And then, I think finally, I hope they say Care Path. Our REX was one of the most disruptive pharmacy companies ever in America and it transformed how hospitals run pharmacy today and ultimately, thirty years from now, somebody's going to talk about the fact that hospitals do eighty percent of their pharmacy as opposed to letting that go somewhere else. I hope that that that that's part of the legacy as well. That's awesome. You know, that's the mission that gets you up in the morning every day and keeps you pounding every day, day in and day out, you know, helping you overcome all of those obstacles, because it's a bigger purpose than beyond ourselves. Yet absolutely right that that's that's what get us, that's what gets us all going. Yeah. Well, thank you so much, John for joining me today. How To folks get ahold of you if they wanted to stay connected with you after listening to the show? Yeah, I think the best ways to go on to the care path, our x website, and you can contact a variety of leaders through that organization and ultimately get through me as well. Awesome. Thank you so much for joining me today. Thank you so much for listening. I know you're busy working to bring your life changing innovation to market and I value your time and attention. To get the latest episodes on your mobile device, automatically subscribe to the show on your favorite podcast APP like apple podcast, spotify and stitcher. Thank you for listening and I appreciate everyone who shared the show with friends and colleagues. See You on the next episode of Health Innovators.

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