This is the transcript from the recent Health 2.0 Communities podcast–original post here.

Matthew Holt: Welcome to another podcast here at the Health Care Blog. This is Matthew Holt, and with me today are two more leaders of what we’re starting to call the Health 2.0 Movement. They are Daniel Palestrand, founder and CEO of Sermo, a community-focused site that focuses on physicians, and Unity Stoakes, President & COO of Organized Wisdom, which is a community site focused on patients and consumers. Good afternoon, both of you.

Daniel Palestrand: Thank you very much. Nice to be here.

Unity Stoakes: Likewise, Matthew. Thank you for setting this up.

Matthew: Let’s start off by getting right into it. I suspect that a lot of people reading the blog haven’t heard of Sermo or Organized Wisdom, and you guys are on different sides of the same coin. This is all to do with the open health care issue, and the idea of getting many more voices online. Daniel, why don’t you start off? Tell us a bit about the core idea behind Sermo, what it does, and what kind of activities are going on on your side?

Daniel: Sure. Up until about fifteen months ago, I was a surgical resident at one of the hospitals here in Boston. I had done some startups in ’98 and ’99, but really had no near-term plans to go back to the business world.

I started seeing a trend more and more with my colleagues, where we would be talking about cases or recent news in the mainstream press — perhaps a new revelation about a new approach to treating a disease, or a problem with a drug or device, or a new resistant form of bacteria. What we were remarking on was that we had inklings of this — it had come up in conversation weeks or months ago — that there was an idea there. We realized that this wasn’t a fluke event. So often in the trenches of medicine, at the bedside, in grand rounds, physicians were talking about these phenomena long before it appeared in the conventional press. That set me about thinking: what would you have to do to capture these clinical insights and make them useful?

My starting point was coming up with a business model. I had done other startups that involved physicians and health care IT, and I knew that trying to get people to part with money is particularly difficult in health care IT. So from the start, we had a model where we would not have physicians paying for anything. We would look to get the parties who find value in the information to pay — to underwrite the business model.

My second thought was, assuming we could get physicians to make these insights, how would we distinguish the signal from the noise? I had had enough experience with my early work with the CDC and Device Registry to know that getting the initial observations isn’t the challenge. The real challenge is separating the signal from the noise in the background. What I wondered was, could you create a model whereby the valuable information would be determined by the users themselves — in other words, the people on the front line.

That was really when Sermo was born. In our model, we have a system where any licensed and credentialed physician can submit an observation, but what really distinguishes the value of that observation is the degree of corroboration that it gets from other physicians. It started out with a very simple, basic idea. We were thrilled to see that it was a very patentable and fundable idea, and has now turned out to be extremely scalable. We are seeing an incredible torrent of information coming out of our system.

We’re now a thriving young startup company, part of what we’ve realized is a much broader trend, variously called social media, Web 2.0, or prediction markets. We’re very excited to see other companies, like Organized Wisdom, tapping into the same trends.

Unity:  I’m actually the president and co-founder of Organized Wisdom. We’re a health-focused social networking site. The easy way to think about what we’re doing is that we’re a mash-up between WebMD and Myspace.com. We’re really focused on integrating expert content with user-generated content, and eventually flaring in industry content and research from health organizations as well.

We got started… actually, my partner Steven Krein and I have been in the online space for the last twelve years. We took a company called Promotions.com public in the late ’90s. It was an online marketing company that was later acquired by iVillage. So we spent many years seeing a lot of these community trends taking shape in other industries, but we didn’t see a lot of progress being made with online health. At the same time, over the last couple of years, we’ve seen eight out of ten people going online to search for health information. We’ve also seen a lot of research indicating that people are turning to their friends and family to get health information. So we got the idea to combine the two and really try to create a community for consumers, patient experts and leaders of health organizations to come together and share their wisdom and knowledge in an organized, structured way… to build a very useful, helpful knowledge base covering thousands of health topics, conditions and diseases, so that any consumer needing health information could easily come in and find the information that they need.

Matthew:
That’s a great description. You’re both in the world in which we’re
talking about collecting information that wasn’t really collected
before — inferences of what people knew about, common knowledge in the
business, what people saw on a daily basis — and then sharing that
information and ranking and rating if not the information itself, at
least who is providing that information.

Daniel, when a
physician logs on to Sermo, what do they see? And then how does what
they contribute or what they’re seeing get rated and ranked, so that
you get that issue of clearing up the noise and giving the clear
signal? How does that work?

Daniel:
The first thing a physician sees the first time they log onto Sermo is
a registration and credentialing page. This is one of the aspects of
the site that I never had anticipated would be both such a challenge,
but also such an enabling technology when we overcame the challenge. In
other words, authenticating physicians – ensuring that they who they
say they are – and credentialing them – making sure that they are, in
fact, licensed physicians – turns out to be a technology that, to the
best of our knowledge, no other online companies had done. And so we’ve
developed some unique approaches to being able to do this real-time
authentication and credentialing. I emphasize that in the sense that it
creates an environment where physicians are confident that the other
people on the site are, in fact, licensed physicians. Legitimate, if
you will.

But once they’ve come into the site for the first
time, what they see is a series of posts. Our model – I think, to some
degree, like the Organized Wisdom model – is sort of a posting-based
model where physicians are able to submit a clinical observation or a
discussion point. And insomuch as it’s sort of the, if you will, the
zeitgeist of the physician community, those posts can be everything
from politics to medicine to patient ideas or new thoughts on drives or
devices.

What the system does is it watches physicians’ behavior
on the site – in other words, what sorts of posts they’re most
interested in, and voting on or commenting on – and will then try to
suggest to them posts that’ll be of most interest to them, based on
their prior usage patterns on the site. Of course, people can search or
browse, as well.

Matthew:
But, to a certain extent, it also produces information for physicians
about comments threads that they’ve already been in, and represents
that information back to them. And it sort of centers the individual in
their own interests.

Daniel:
Exactly. We went to our alpha launch over the summer, and what we
started to see were some behavior patterns of the early users which we
were really surprised by – in other words, we were seeing some
physicians logging onto the site four or five times a day; we were
seeing them using the answer submission form, if you will, as a way to
sort of have discussion dialogues with other users. The more we did
focus groups among our early users, and surveys, what we realized more
and more was that physicians were seeing Sermo as an opportunity for
conversation, an opportunity to have a community.

In retrospect,
this is perhaps something that should have been more obvious to us out
of the gate. There’s been some macro trends in the medical community
where physicians are spending less and less time in hospitals. There’s
been an overall trend towards outpatient medicine. You now have
specialized physicians who take care of all the inpatient medicine. The
net of that is that physicians rarely, if ever, go into the hospital.
The doctors’ lounge is almost a thing of the past. Nobody really golfs
anymore. And so, physicians are feeling increasingly isolated. They
don’t have a way to connect with one another.

And so, what
Sermo, we realized, was doing was creating that environment, albeit a
virtual environment. So what was being alluded to there is that, when
we started to see these patterns, what we did was we modified some of
our interfaces and our workflows. And now what happens is that when a
physician logs on, the first thing they see are any comments or
discussion points that have been made on postings that they’ve
interacted with, and by analyzing the click paths of our users, we
realized very quickly that this is clearly what’s creating the
stickiness and, indeed, the pretty dramatic growth that we’ve been
seeing on the site lately.

Unity:
That’s very interesting, because we’ve experienced almost the exact
same thing at Organized Wisdom. We initially started out with the goal
of really tapping into the vast wisdom of crowds. So many people out
there on the consumer side and patient side have all this knowledge
that is new information, that can often be very practical and useful to
other people going through the same conditions. So we created a very
structured publishing tool to help the community, and help users sort
of publish their content in a way that was organized and tied to
specific topics, so that it would be easy for other people to find.

But
we quickly noticed that the users wanted to do more. They wanted to
interact more with each other. Some of these people are very isolated,
and they want to connect with other people who are experiencing similar
issues as them, so what we’ve been busy doing over the last couple of
months is really building additional tools to help connect people more,
and help drive the community. So, for example, adding private messaging
systems so that people can contact other people anonymously through the
system and not have to worry about exposing their email addresses.
That’s just one simple example of how you may be able to connect to
people with the same issue, but they don’t necessarily want to divulge
their personal information to each other.

Daniel: We’ve actually experienced a number of the same issues at Sermo.com.

Matthew:
That’s really interesting, Unity, and thanks for jumping in. It’s
always the best conversations when the moderator doesn’t actually say
anything. But let me ask you both this – and it’s probably going to be
Daniel, but jump in as well, you’re talking here about creating a
community, so issues that they want to discuss around – there are
plenty of ways to… you know, the patients have been past online and
offline, talking to each other. Less so the physicians, but I do see a
number of physicians come to my blog and comment about issues of
politics and business that they’re interested in; there’s a fair amount
of commentary from physicians on the medical blogs. And in some ways,
you’re combining that, but you’re also combining that with picking out
who’s got the best ideas, or what the best ideas are, and finding ways
to present those to the crowd.

So, in some ways, Daniel, I know
you’ve got a sort of ranking system, or rating system, for individual
posts. Could you explain a bit about that? And then, perhaps, Unity,
after Daniel’s explained his, could you jump in and explain how you
think that’s going to work out on Organized Wisdom?

Daniel:
Yeah. I think you sort of get to the second phase of what it is that
we’re doing. There’s nothing more thrilling than the sort of cacophony
of an online community coming to life, and I can just imagine, Unity,
you’re seeing this. Matthew, I know, from the incredible response you
see in the discussions to your blogs, that you’re seeing a community
take on a life of its own, and it really is nothing short of thrilling.
It’s really been one of the greatest joys I’ve had so far.

Matthew:
Of course, in my case, half the time I’m trying to shut them up and
make them listen to me. [laughing] No, but I understand that that’s
somewhat a business model of what you two are doing, sure. But tell me
a bit about how the ranking goes, and how that works out.

Daniel:
So what we realized was that, while the cacophony might be the first
step, in order for this to be usable information – both in terms of for
our users, many of which, as physicians, are particularly focused on
empiric data – in other words, numbers and data – and for our clients,
likewise, who like to see numbers and easily digestible information – a
blog format isn’t typically the best way to be able to do that. In
other words, conversations and comments in blogs do a very good job of
having a linear flow of information, but if I essentially want to be
able to flip through things and very quickly understand what’s the
relevance, and the collective opinion on this topic, you now need to
start creating tools to allow that.

Sermo does this in two ways.
The first thing is that we have community moderation, or queues, that
people can rank different postings. And they rank those postings based
on a stars system, not so different from Netflix, but also by their
actions. In other words, a post that has several views or lots of
comments on it is clearly one that the community is responding to. You
don’t know whether it is responding positively or negatively to it, but
they are certainly responding.

The second thing you have to do
is to come up with a way where you can allow the community to police
itself. In our model, what we do is tie that back to rank. Rather than
having any sort of editorial board or anyone here at Sermo that decides
what is important or not important, we actually allow our users to do
this. A lot of organizations have had tremendous success in having
moderators who are members of the community. What we do is take an even
more grassroots approach, where the users themselves actually moderate
it through the act of voting on each of these postings. What we do is
each data element, in other words, each posting, has a survey
associated with it. As additional users come along, they are able to
either vote on one of the current answers in the survey or propose
their own answer. Then, based on the degree of corroboration that my
vote got from my colleagues, my rank goes up or down.

Introducing
that rank element creates a very powerful tool to moderate user
behavior. What we can do is tie several things back to rank — like
your ability to ask the community to do things. It certainly creates a
deterrent from people abusing the system. Our Rev One of our ranking
and moderating mechanisms is going extraordinarily well, but I would
also want to be very humble and point out that these are technologies
that others have done a tremendous amount of work with, that we are
able to benefit from. I think it is important to recognize that
organizations like Slashdot, Ebay and Netflix have done a lot of
groundbreaking work based on community moderation. I am sure Unity, as
I looked at your site; you are also doing some very interesting things
in terms of on community moderation.

Unity:
Absolutely, and I agree with you. There has been all of this innovation
taking place in other industries that the health care sector, that
really has not seen too much innovation in the past few years, is able
to now take advantage of. And we are able to learn from the lessons of
these other industries, that have been so successful, and migrate those
technologies and implement them in new ways, for our own communities.
There have been all sorts of studies where eight out of ten people are
going online, but only 16% are actually finding the information that
they are looking for.

Matthew:
That number has gone down over the years. As the number of people going
online to look for healthcare information is going up, the portion
finding what they are looking for is going down. I think part of that
is that there are now so many of these listservs, and there is so much
information out there, people are struggling with figuring out what the
right stuff is and how to manage the volume of information with useful
tools.

Unity:
Absolutely. A couple of examples; there is all sorts of evidence-based
content out there, but if you really look at it, it is essentially, for
the most part, been licensed from the same few companies. So if you go
to WebMD, Yahoo, MySpace, MSN and AOL, they have all licensed,
essentially word-for-word, the same content. There are also bulletin
boards that have been quite useful and helpful to people over the
years. But, as Daniel mentioned, it has really been a linear model, or
communication thread, and now there are new ways to tie in
collaboration and make that information more meaningful, or easier to
find, in a lot of ways. So what we have tried to so is very similar to
what Sermo has done, where we have turned it over to the community to
sort of provide that knowledge and that wisdom, but also, just as
important, to help provide context or value, or make judgments to the
value of how useful that content is. So it is really up to the
community to decide the weight that that content carries. The way that
we do that is that our rating system is very simple; it is a yes or no
question, "Was this information helpful to you? Yes or no?"

So
when a reader comes in to review that content, they can quickly see
that 100 out of 150 people found this information helpful. And, to
Daniel’s point again, it is that sort of leverage from technology that Amazon.com
has used to great success. We were able to take that learning from the
e-commerce world and apply it to information in online health, to make
it very easy for people to assess the credibility of the information.

We
also have a self-policing model where the community can report content,
and finally we have sort of a social search model, where everyone on
the site gets their own personal profile, and they can save wisdom or
medical research and assemble that on their own page. There are a
couple of ways this may be useful, you can imagine. A physician that
wants to direct their patients to content that they think is credible
or legitimate, so that they do not have to spend as much time, can
simply guide their patients to their permalink, which has specific
content already saved on their profile.

Matthew:
Unity, for the sake of just explaining a bit of how that works, in
terms of someone coming to the site –you are kind of a cross between a
search engine and a community piece, where there are people putting in
their own information as well. But you are also allowing people to
access some of that standardized health content form Healthwise and
others. That is somewhere in your site as well? You are not just
sending it out into the world of a search on the Internet, is that
correct?

Unity:
Yes, that is correct. A lot of this expert or evidence-based content
has essentially become a commodity. We essentially licensed the expert
content from Healthwise, which WebMD also licenses. We were able to
license a lot of really powerful and credible research, and what we are
doing is layering on top of that, or next to that, user-generated
content. We are also reaching out to organizations in the health care
industry, so that they can provide their own research and educational
information on the same topics. What we are doing is trying to make it
very easy, so that a patient can come in, quickly read what the doctors
have to say, then read the wisdom of crowds and then also read some of
the research and education from the pharmaceutical companies or health
care organizations.

Matthew:
That is pretty interesting. That is getting us to the next layer on top
of this. We now have these organized community sites, one for
physicians and one for patients, discussing these different issues, and
intermingling there. Obviously there is a lot of information on Sermo,
with people discussing journal articles and stuff that comes out of
traditional medical information sets. You have got the Organized Wisdom
approach, with your layering stuff on top of Healthwise. By the way,
over at the blog we are big fans of Don Kemper and Molly Mettler at the
Healthwise organization, and they would be delighted to know that their
information is becoming, if not a commodity, at least very widely
spread. I guess the next question is this: how are you finding that
other health care organizations are going to start interacting with
this type of community and interactive discussion? Let’s start with
you, Daniel, because you’ve already had an article in your major local
city newspaper which wasn’t exactly necessarily complimentary about how
Sermo is being used. I saw some rather amusing remarks about "sticking
it to the drug companies" — quite an amusing comment. But obviously,
the fact that Sermo exists has already started ruffling some feathers,
and has started changing some people’s perceptions about how
information gets out. So can you take us down the path of what that
article in the Boston Globe was about, and how you think health care
organizations are going to be dealing with organizations like yours?

Daniel:
I think that for any company at our stage to get such mainstream
publicity so early on is always very exciting. I think that we should
also be realistic. There is a tendency, particularly in the mainstream
media, to move press, and that’s often done through sensationalizing.
The Boston Globe article actually is a very well written and
comprehensive article. I think it’s unfortunate that there is this
sort-of fabricated sense of controversy. It turns out that Sermo has
been in very productive discussions with several pharmaceutical
companies for almost a year now. To the best of our knowledge, we don’t
have any controversy that we are aware of. I think the Globe would have
liked to have seen something, and unfortunately somebody gave them some
fodder with that in terms of a quote. But I can say very strongly that
we don’t know, or are not currently involved in any sort of controversy.

With
that said, the response from the Globe article has been nothing short
of overwhelming. It is an unfortunate truth that pharmaceutical
companies are ranked only after the tobacco industry in terms of public
discontent, and for better or for worse, I think the way a lot of
people interpreted that article is that if Sermo is doing something
that is upsetting pharmaceutical companies, they must be doing
something right. While an unfortunate sort of fabrication on the
Globe’s part, it certainly has done a tremendous amount to raise the
profile of the company.

So if I can put that in the context of,
to some degree, fiction, I can talk about the reality that this poses
for other companies, Web 2.0 style companies. What I’m seeing inside
large organizations — and Unity, I’m dying to hear what your response
is, because you’re probably having very similar conversations —
whether I’m talking to a pharmaceutical organization, a large
government agency, an advertiser, whatever the case might be, there is
still a very large number of people who still don’t understand this
trend, the power of the trend. Then there are the remaining segments
who are terrified by what we’re saying, and those who see it as a
tremendous opportunity.

In the case of the pharmaceutical
companies, those companies that have looked at the legal ramifications
of what is being discussed on sites like Organized Wisdom or Sermo will
very quickly realize that, legally, there is virtually nothing that
they can do. This is one of the areas where the case law is very, very
clear: not only can we not be asked to take down the material on our
site, but it is completely legal for our users to say whatever they
want on the site. We have the benefit of a lot of time and effort that
companies like AOL, Amazon and Ebay did, setting up a tremendous amount
of legal precedent in this area. It’s such an interesting topic for a
podcast in itself: what is the potential liability? It turns out that
the legal ramifications are very much in favor of companies like
Organized Wisdom and Sermo.

For those who get past that, they
very quickly turn their focus to the opportunity. While the vast
majority of activity within Sermo has nothing to do with industry or
devices — it’s actually clinical or patient safety, or what you might
call "local medicine" — what discussion topics there are on the site
about devices or drugs are, more often than not, extraordinarily
positive. You have physicians talking about experiences they’ve had
with different devices, drugs or diseases. There are some incredible
discussions right now on the site about physicians using what you might
call "orphan drugs" for some absolutely fascinating off-label uses.
What smart people in the pharmaceutical industry recognize is that many
of the drugs that are blockbusters today are being used in applications
that they were never originally intended for. Viagra was originally a
cardiac drug. Minoxidil was an anti-hypertensive. Gleevec… the list
goes on. These were all drugs that ultimately found new and unique uses.

If
you look through the Sermo site, it is literally a treasure trove of
new insight and exciting new applications for existing drugs. In the
end, that is the mind set that is winning out, at least in the
pharmaceutical industry.

Unity:
That’s interesting. My partner Steven Krein and I just spent the last
two days at the Eye for Pharma e-marketing conference in Philadelphia.
There were 80 or 100 e-marketing executives from the pharmaceutical
industry. The first day was very interesting. It started out with
regulator-types from the organizations saying that there is no way you
can get involved with social media — it’s just not going to happen.
Then as the day went on, certain trailblazers and opinion leaders who
have been very innovative within these organizations had been
explaining what they’re doing, the conventional wisdom. We also spoke
with a number of people on the legal side who were at the conference,
who said that there is a huge opportunity here. We just need to sit
down at the table and work together, to develop programs that work
within the laws and regulations, and also help consumers and physicians
get better information.

So on one side, from certain people, we
saw this fear. But there are a number of people that are starting to
investigate and work towards really getting involved in this new
opportunity in the social media space. I think they see that what’s
really happening right now is that there is this whole conversation
going on online, in physician communities like Sermo as well as in
patient communities. The pharmaceutical companies are spending millions
or billions of dollars, but they are not engaged at all in this
conversation, and they are realizing that they need to be. So our
approach has been to work with the pharmaceutical companies, because we
see this as being ultimately better for consumers and patients. If the
pharmaceutical industry, which is essential to health care, is not
going to participate in this conversation, it hurts everyone. We’d like
to find creative ways that we can all work together, and really help
consumers and physicians get better information. That’s really the
goal. There are so many challenges right now in the health care space,
and I think there is a huge opportunity to leverage new technologies,
social media in particular, to solve some of these challenges.

Matthew:
Unity, that is a great point. And, it is a great place for branching
off. Because, to a certain extent, what we have been talking about so
far is learning from the community that could be used by pharmaceutical
companies or in some cases government agencies or whatever, about what
is going on out there. But I think probably the better, bigger ultimate
use of these types of communities is — and I guess it is the avowed
intention of both of you to do this — is for them to be used as a
place where people can learn stuff, where participants in community and
others can learn things that are going to improve health, improve their
practice in medicine or whatever else. And, at some point, you would
assume that the whole of the health care system — be it the pharma
companies, but also plans, provider organizations, medical groups and
medical societies, right across the board — is going to have to have
some way of interfacing with this type of online community, because
that is where a lot of the activity and what you might call the
intellectual capital, the hidden knowledge of both the patients and the
providers is going to be.

What kind of early steps do either of
you see from mainstream health care organizations to get involved in
this kind of thing? Frankly, to this point I have been very
disappointed in the reaction from most of the major health care
organizations in getting involved in promoting patient-to-patient,
physician-to-physician or physician-to-patient dialogue. It just seems
to be something that healthcare has been, not really a long way behind,
but has certainly been reticent to get involved in, partly because of
the legal issues. But it seems to me that this is going to be more than
just a venue for pharmaceutical companies to learn what kind of
advertising works better, for example. Do either of you have a comment
about that?

Unity: I will tell you, we have been
pleasantly surprised. The phone has been ringing off the hook since we
launched. We have met with virtually every pharmaceutical company in
the top 20 has called us. They want to learn about user-generated
content. They want to learn about social media. They want to figure it
out, or at least there are people within their organizations who want
to figure it out. Initially we thought we were going to have to fight
our way into these organizations, but what has happened is that there
is so much buzz going on with YouTube, MySpace and all sorts of other
things, and they are realizing that this is just a trend that is too
big to ignore anymore. They are starting to realize that they need to
learn about this and they need to figure out what the risks are. I also
think certain organizations are prioritizing the risks of different
types of engagement with social media.

Matthew: Talk to me a little about
that part, about engaging. Because as you said, the drug companies are
an important part of the health care system, but they are not, in
general, the folks involved in treatment planning or care management,
all of the stuff that we generally think of as medical care. Is your
phone off the hook form health plans, provider organizations, medical
groups and those kinds of folks who are looking to use this kind of
tool as well?

Unity:
Not as much. It has really been from the pharmaceutical companies, who
want to learn how to use the tool as an educational tool to get
information out about particular conditions or diseases and to sort of
understand what people are saying online about their brands, or what
issues people are having. Certain companies actually completely ignore
what is being said about them, because they are scared of the adverse
reporting. But we are starting to see more and more paying attention to
what is being said about them in blogs or various online media. But we
have not seen it so much form the providers.

Matthew: Daniel, what are you seeing from the folks who the doctors work for and with on the general health care organization side?

Daniel: I think what I would really
do is echo what Unity is saying. The interest is overwhelming. We
actually have had, in addition to pharma interest, a tremendous amount
of interest from insurers. I think that there might be a perception
that there has not been as much interest there, but I think that is
going to be changing very, very quickly.My organization will be
making some announcements soon. It sounds like, with Organized Wisdom’s
momentum, they will be making some announcements soon as well. What I
would add to it, both as a physician in this conversation, but also as
someone who has been having a lot of meetings with different regulatory
agencies, is that there are so macro trends that make this trend not a
matter of, "if," but really a matter of, "when." In other words, it
really is inevitable.While social media and grassroots can be
very alarming to what you might call the establishment — whether it is
academic institutions in classic hierarchy, conventional media or, for
that matter, pharmaceutical companies — we are going to be seeing more
and more of this coming form some surprising places. The first trend I
think people should be very aware of is this move towards all of these
drugs that people are now on chronically, and it is a major concern of
many different organizations, that these drugs and devices are approved
under Phase III, a clinical trial process that is extremely effective
at testing for efficacy. In other words, confirming that they are good
at lowering blood pressure or cholesterol, but they are not long enough
and using enough people on it to detect all of the side effects.If
you want a buzzword that you will be hearing going around the corridors
of Washington, it is something called PRO, patient-reported outcomes.
And most, if not a lot of, people are looking for PROs to be the future
of how we will catch the next Vioxx, or outbreak of the next Bausch
& Lomb type of situation. And that is the sweet spot of where Unity
and Organized Wisdom are. I think that within a few years that is where
we are going to be seeing those sorts of things bubbling out of, as
supposed to out of the so-called establishment. And believe it or not,
there are a very senior people in regulatory agencies that recognize
that and are actually looking for ways to leverage it.The other
thing that is a very powerful trend is this concept of dynamic
endpoints. As I alluded to before, clinical trials often find out
midway through them that they are testing for the wrong things or, as
you might, say, asking the wrong questions. The FDA, for one, is
actively embracing this concept of allowing trials to be dynamic during
their course, to be able to re-identify different endpoints. The
technologies, tools and user bases that Sermo and Organized Wisdom have
created play into that perfectly. And I am sure that Unity is probably
seeing, in the response that he is getting from medical industry, is
that a lot of people are seeing that this is not just a mater of "if,"
but a matter of "when."

Matthew:
This is interesting, because I was on a call from the folks at the
Center for Information Therapy, which is an organization, founded by
Healthwise, that is primarily made up of leading edge managed care,
insurance and disease management organizations, who are trying to
figure out better ways to get information into the hands of patents and
physicians — particularly in the hands of patients. I asked Paul
Wallace of Kaiser Permanente, who is the Chair, about the Health 2.0
community stuff. Because they (Kaiser), as you know, are putting out
this big HeathConnect record with all of the controversy in recent
days. Part of what it is doing is presenting information to the
patients, and a lot of that is vetted information from the physicians
and from Healthwise and other great data sources. And I said to him,
"Well, that’s great that you’re getting that stuff, but what are you
doing about this other side of the coin, this is the community-centered
stuff?" We do know that both from the physician-to-physician side and
the patient-to-patient side, there’s a lot of information now being
generated. How do you see organizations like big insurers, big health
plans, big academic medical centers, how do you see them interacting?
Do you think they’re going to have their own versions of Sermo to
organize with? Do you think they’re just going to provide links back
and forth? Do you think they’re just going to let it go and try and
deal with it three or four years down the path? Where do you see the
adoption of these types of technologies by those organizations?

Daniel:
I jumped in on this forum because we actually have quite a bit of
activity on this site and we’re pretty far along in negotiating some
relationships with insurers. What we’re seeing is that two things are
promoting their interest. The first one is in the claims process.
Insurers want to make sure that they are truly able to give their
patients the most medically efficacious treatments and regimens as they
come out and both be able to do what’s clinically best for the patient
but also be able to do what’s most cost-effective. Right now, their
methodology for doing that couldn’t be any less efficient. It’s often
men and women in these buildings who are setting up these clinical
committees and conference calls. It’s literally buildings and buildings
of people who have to try and figure out should they allow this
procedure or that procedure.

One application of our technology
that we were approached about by a very large insurance agency was
being able to use what they called a "dynamic consensus" in our
community as a cue for what sorts of things they would cover and what
sorts of things they would not be able to cover. So as a new treatment,
a new regimen appeared in the medical community, they would be able to
look at the overall consensus that appears, literally in real-time
within Sermo, as an indicator of whether or not they should cover that
treatment. For the insurers, not only was it a $10-15 million a year
cost savings for this particular insurer, but it’s a very powerful
position for them to be in, where they are essentially relying on the
consensus of the broader medical committee to help them make their
decisions, as opposed to what you might call closed-door meetings.

The
other application which we’re hearing more and more about from the
insurance community is this ability to give patients very specific,
very rapid feedback about claims that might not be approved. Most
states have a process where if your claim is declined, you are allowed
to appeal it. It takes several days or weeks for them to assemble a
committee of physicians to make a decision on that. In a Sermo model,
they are literally able to make a posting describing the clinical
scenario — certainly not with anything patient-specific that would
violate HIPAA — and in a matter of hours, be able to see what the
physician consensus would be on that particular topic. Again, a very,
very powerful topic.

Where all this is leading with the
insurance agencies is that they are realizing that perhaps some of the
best ways to ultimately moderate physician behavior, rather than trying
to force physicians in the traditional command-and-control structure,
maybe the best way to get physicians to adapt their practice patterns
is to show them that they are out of the norm relative to their peers.
That turns out to be one of the best motivating factors of all. We are
seeing quite a bit of that from the insurance side, from the payer
side.

Matthew:
Unity, how do you think that’s going to work on the patient side? Do
you suspect that when we talk to you in five years’ time, Organized
Wisdom will have licensed its technology to six or seven different
major health plans and health care providers, or do you think you’ll
stay a separate organization, away from the core of what we see now as
the mainstream health care providers?

Unity:
I actually think we’ll go one step beyond that and splinter off to the
SOHO market, where you’re starting to see 400,000 Ebay businesses, and
all of a sudden there’s these small businesses that need to manage
health care in a new way that’s efficient and cost-effective. Their
employees have HSAs. Their employees go to Rediclinics at Walgreens for
their health care needs now. I see potentially syndicating the best
content from an organized wisdom, so that it sits on some sort of
employee-service version for the small business market, as well as for
some of the larger companies.

Matthew:
So your sense is that this actually goes both ways, but more likely is
to be further atomization of the information model, rather than being
integrated back into the traditional health care players?

Unity:
Yeah, I think you’ll see both. I think the traditional health care
players will be driving a lot of this, but they’ll realize that there’s
a lot of opportunity from the new markets that need their own very
tailored solutions. I think you’ll see that technology will enable
those solutions to be tailored to individual organizations and
individual people on a case-by-case basis because of the flexibility
that the technology makes possible.

Matthew:
Let’s end the call by just figuring out where your organizations are as
companies. I know a little bit more about this for Daniel’s company
than yours, Unity, because Daniel took me out for dinner the other week
and told me about it. I want to stress to the audience that these are
both very new and relatively small companies at this time. We’re
obviously on the cutting edge of something that’s very new, and I don’t
think anybody can pretend to know exactly what’s ahead although we’ve
made plenty of speculations in the last fifty minutes or so about that.
Unity, tell us a bit about where you guys are in terms of how long
you’ve been around, number of users, funding to this date, where you
think you’re heading as a company in this Health 2.0 world, and then
perhaps Daniel, you can tell us a bit as well afterwards.

Unity:
Sure. We are in a fortunate position in that we are self-funded now.
We’ve had venture capital companies beating down our door, and we’ve
been holding them off. We’ve been around for almost a year now, and
about six weeks ago we went live with the beta site. We have a fairly
active and growing community, and our site is populated by all of the
content. It’s very robust, with expert evidence-based content, thanks
to our partnership with Healthwise. The user community is really taking
shape, and we’re seeing a trend where it’s growing very rapidly
week-by-week. Thousands of people visit the site every week. It’s
taking shape, taking on a life of its own.

Our long-term
plans… we’ve built growth businesses before. We intend this to be a
very significant company within the online health space on the consumer
side. WebMD has been around for ten years without a number two
competitor, and we feel there is an opportunity to leverage innovation
and technology and the wisdom of crowds to really provide new solutions
and better information for consumer patients.

Matthew: That’s great. Daniel, where is Sermo at the moment?

Daniel:
We were created about a year ago. We are venture-backed by Longworth
Ventures here in Boston. We began what was a rather extensive alpha
test, and then beta test in May, June, July, honing our physician usage
patterns and interfaces. We went to general availability to the
physician community just about six weeks ago or so. So far, the
response really has been overwhelming. We’re probably seeing similar
phenomena to Unity, where week-over-week growth is extraordinary. We’re
seeing a true personality of the community develop. Our expectation is
to be able to show that this is a viable business model, that it can
sustain itself, and continue to execute on what we are doing.

Matthew:
Let me ask you both about that. Final question, when we talk about
sustainable business models, we must be back in a health boom because
we have a minute and 57 seconds left on the show and I haven’t yet
asked you guys how you’re going to make any money!

I can
understand that if you get a robust community of users, either on the
patient side or the physician side, there should be a lot of ways to
mine that for different reasons. But what is your sense, if this stays
a stand-alone business, of where the main revenue streams for the
business as it now stands are going to be?

Unity:
We’re really focusing on an advertising sponsorship model. As part of
what we’re doing, one of the reasons we decided not to take venture
money right now is that we wanted to make sure we have a real business
first. We wanted to get those first few clients and struggle for the
revenue as we grow. As I said, we are advertising sponsorship-focused.
There are plenty of other ways… I mentioned services earlier,
providing licensing of content and research. But we’re really focused
on developing custom programs for the pharmaceutical industry and
health organizations. We also have condition-specific health centers
that will be sponsored by companies.

Matthew: Daniel?

Daniel:
As I alluded to at the start of the call, I think Unity’s and Organized
Wisdom’s business model is extremely well defined, and I really
emphasize, a proven business model. Consumers will respond to this, and
a sponsorship business model works very, very well. My starting point
as a physician, a physician who had been marketed to for years and
years, would be that it would be very difficult to get physicians to
pay for anything. We had to look for a model where we would not be
taking any advertising or any pharma money, at least out of the gate.
That is ultimately why we settled on our current business model, where
we are actually about to sell what you might call the processed
information coming out of the site to three vertical markets: financial
services institutions, industry (however not including any
pharmaceutical companies), and then government and research. So far,
that business model seems to be working, not only from a revenue
standpoint, but also from the viewpoint that our physician community
seems to find it very exciting and very enabling.

Matthew: When you say "industry but not pharmaceuticals", Daniel, what do you mean? Who are your customers in that area?

Daniel:
Quite a few market research organizations. We talked a bit on the
podcast today about insurance. I liked how Unity says it: the people
who have the interest seem to find you quicker than you can find them.
The quote that I seem to have these days is "rather be lucky than
good." I can take one look at Organized Wisdom’s site and tell you that
they are doing an incredible job. I can look around our office here at
Sermo and see that my team is doing an incredible job. But we’re also
damn lucky. This is a great time to be in this space. It’s clearly the
right technologies and the right idea at the right time.

Matthew:
Yeah, and I think that just judging from what’s coming across my desk
here, rolling into my email inbox and showing up on the computer on
Health Care Blog and elsewhere, that there’s clearly a lot of activity
around this whole patient-to-patient, patient-to-physician,
physician-to-physician, and health care organization-to-health care
organization piece in this Health 2.0 movement. I think, now that we’ve
gone through this Web 1.0 thing, people are figuring that out
especially since Google has now figured out how to do advertising in
this discreet, effective and profitable manner.

You’re seeing
these sites not just in health care, but in travel, in videos, in
food… truly across the board. Somebody sent me a food site the other
day where you can start recommending restaurants in a Web 2.0 way. It’s
clearly going to be changing the way people react — not just how you
do research, but how people handle their everyday transactions and
information gathering. It’s clearly a really significant change. We’re
going past the "now you can book your own flight the way a travel agent
does" phase, which is what the 90s were all about, to this new phase of
investigating what other people know and what they are doing, and do
transactions off the back of that.

I think that we’re in a
fascinating time, because healthcare is obviously becoming more and
more important. Organizations and technologies like yours are going to
become more important. This editorial, of course, is not to say that I
necessarily think that either Sermo or Organized Wisdom is going to be
the dominant player in their segments. You both have competitors—I’m
sure you are well aware of that—who are going to come after you pretty
hard. It’s not going to be an easy world out there. But we’re talking
about a systemic shift, and people who are listening to this program,
who are in general looking at the health care scene, are going to have
to be very aware of this right now and in the next few years.

So with that, do you each have concluding comments, on where you think this is going to be in four to five years?

Unity:
Sure. Just to echo what you both have said, it is very early in the
game for the Health 2.0 world. It’s an exciting time. I was very
excited when I first found out about Sermo.com,
because there are these innovative entrepreneurs out there that, as a
group, are really pushing solutions forward and trying to innovate.
Ultimately, I think, it is better for everyone — for consumers and
patients, for physicians, and for the health care industry. I think
what we’ll see in the next five years is — we can almost see the
future by looking at what we’ve seen in other categories, like
entertainment or automotive or travel. I think there is going to be
rapid growth in adoption, and ultimately people getting better health
care information.

Matthew: Daniel? Final word?

Daniel:
It’s hard to follow that. I think both of you captured it very well.
I’ll end it on a very positive note. It’s very wonderful to see who
we’re sharing the stage with. It really is a great new breed of
entrepreneurs, who are a little bit more wise, a little bit more
reserved, and a lot more focused than what we saw in the last wave.

Matthew:
And with that, I’d like to say thanks a lot to Daniel Palestrand from
Sermo and Unity Stoakes from Organized Wisdom. Thanks for listening to
the Health Care Blog.