The App Docs Don’t Know They Need

Startup offers new way for physicans to cope with late-night calls

By Anjalee Khemlani

Keeping track of patient communications after hours is like a bad game of telephone. It’s all too easy for doctors to end up with inaccurate information, or no information at all, when they return the next morning.

So three New Jersey doctors got together to create MedXCom — a startup company that launched an app in 2010 to help doctors keep up with their technology-savvy patients and simultaneously remain HIPAA-compliant.

“Physicians don’t even know they need it at this point,” CEO Henry Kane said, explaining just how robust the app is.

The platform provides a way for patients to securely text and call doctors. It provides doctors with the ability to choose when to receive calls and texts, can instantly make changes to on-call redirects, differentiates between patients’ contact information and other physicians, and stores all communications for 23 years.

“Why 23 years? Because that is the longest statute of limitations in any state in the country,” Kane said. “And, right now, HIPAA-compliant cloud-based storage is so cheap right now that we can afford to (keep 23 years’ worth of data).”

It also shows patient information such as age, problems, medications and allergies on screen so the doctor can have all the details handy when communicating with the patient.

Up until two months ago, the app operated alone, but seeing that some patients and doctors still prefer a live operator, MedXCom added the feature, still keeping the hybrid service affordable.

The app is a cost-effective tool, its creators say, since it reduces the pay-per-minute billing that comes with live operators. Instead, the app is priced with flat rates on many services, resulting in one-third the cost, though the use of the live operator option will still result in traditional fees.

Every single form of communication — whether it’s a text or a phone call answered by the doctor, on-call doctor or resident, or even the live operators — is recorded and easily retrievable by the doctors. That was a key to the start of the app.

“It was born out of frustration, because live operators were the only choice we had for after-hours situations, and sometimes they are great and sometimes they are terrible,” said Michael Nusbaum, a bariatric surgeon in Morristown and a co-founder. “It’s kind of a black hole in health care, that there is no ability to track what takes place after hours. So we set out to communicate with our patients the same way the rest of the world communicates with each other.”

But texting and calling are not allowed under HIPAA rules, so the app was born.

And with the tech expertise of the founders, added security was a no-brainer.

“The database is encrypted, so even if you were able to hack into the database, it’s just kind of gibberish. It’s not like Ashley Madison. … That was just a straightforward database; it was not encrypted,” Nusbaum said. “So we made sure that if anyone was able to breach all that security that’s in front of it, the database is encrypted so you are not going to be able to make heads or tails of it.”

The robust app was created by three doctors, Nusbaum, Annette Nusbaum and Michael Rothkopf, after a colleague was sued in a he-said-she-said night call situation.

Nusbaum has a background in technology, having been an avid hacker in his teenage years. Both he and Rothkopf have been pioneers in medical technology, and revealed a tablet-like computer that they used to keep track of patient records in 2000, long before iPads ever made it a mainstream concept.

The founders began the company with $2 million of their own money (along with contributions from family and friends), and spent two and a half years developing the app before pushing for a wider audience and bringing Kane on board.

The 14-person operation is headquartered in Hoboken and is steadily growing despite having turned away investors, Kane said, adding that MedXCom currently has enough capital for operations 10 months out.

Having had time to work out any kinks, MedXCom now seeks to take on a larger share of users by relying on water cooler discussions through medical societies, health insurance agents and health care lawyers.

And the company is one of a growing population around the country. Just last week, an entire conference was dedicated to the so-called medtech field in California.

Meantime, Ernst & Young Global released a report Oct. 6 that defined financial struggles of such medtech startups. Venture capital investment held steady from 2013 to 2014, but early round investment dropped 19 percent to less than $1.3 billion.

And despite a robust market for initial public offerings and a number of mergers and acquisitions, there is a dwindling pool of investors for early-stage companies.

“Over the last 12 months, the disparity between the ‘haves’ and the ‘have-nots’ in the medtech sector has grown increasingly stark,” said Glen Giovannetti, EY’s global life sciences leader. “Even in this buoyant fundraising and deal-making environment, there remains a persistent gap in the type of early-stage venture capital funding required to support an innovative medtech ecosystem.”

The market trend is certainly reminiscent of the dot-com era, said Dave DeMarco, Northeast life sciences leader at EY.

“In the dot-com era it was technology; now with medtech it is a combination of technology and regulatory transformation,” DeMarco said. “The opportunities exist today for medtech to drive changes in the industry by being the first to deliver on the move to better health outcomes.

“Medtech is closer to the patient and has the possibility of using the data it holds to develop personalized interventions that can deliver better health outcomes. And the slow movement from the investor side is a byproduct of an increasingly lengthy and rigorous regulatory process.”