Making Prior Authorization as Easy as a Credit Card Swipe - Syam Palakurthy, Co-Founder and CEO at SamaCare
There is approximately $266 billion in administrative waste in the U.S. healthcare system each year, and much of it is tied to the complexity of insurance. Our guest today, Syam Palakurthy, co-founded SamaCare to help solve this seemingly intractable problem. SamaCare builds software to make the often-burdensome process of prior authorization as quick and easy as a credit card swipe, improving outcomes for patients and reducing a major administrative burden for providers. Tune in to this interview with host Michael Carrese to learn how Palakurthy approaches the challenge of threading together disparate incentives in the healthcare system to produce change. Plus, find out why he believes technology can be both a cause of fragility and a source of resilience, and learn how the type of “defragmentation” SamaCare strives for can be applied to the rest of the healthcare system.
MICHAEL CARRESE: Hi everybody, I'm Michael Carrese. Affording the cost of specialty medications for complex conditions can be an obstacle for many patients, but so can administrative obstacles in the healthcare system. As a result, up to 27% of specialty prescriptions and therapies are abandoned or never started at all. Today we're going to learn more about this problem and what's being done about it from Syam Palakurthy, co-founder and CEO at SamaCare, a software company that works with providers, drug makers, and payers to streamline the prior authorization process and other red tape that prevents timely access to these needed treatments. Thanks very much for being with us today.
SYAM PALAKURTHY: Thank you so much for having me on.
CARRESE: Your education background is in engineering and economics, but you spent most of your career in the healthcare space. What drew you to healthcare?
PALAKURTHY: It's interesting. My family is just a ton of medical professionals. Both my parents are doctors, my brother, lots of cousins, uncles, and whatnot. When I started thinking about a career, I said, “I'm willing to do any industry in any part of the world, as long as it's not in healthcare.”
I started in consulting, and when I left, I knew I wanted to be at a company at a very small startup that was doing something that I cared about. I kept running into this situation where I'd talk to these startups that we're doing intellectually interesting things, that seemed like they might have promise. But at the end of the day, I'd finish the conversation and think, “I don't really care if this is something that exists or doesn't exist in the world.” I kept running into that experience.
Around that time, a friend of mine connected me to his dad, who was starting a health care technology company. I knew his dad and I liked him, and I thought he was smart, and I said, “I'm not interested; it's healthcare. I want to stay miles away from that. But I'll have the conversation just as a courtesy.” I had the conversation and I ended up loving the idea and loving what they were working on.
I think at the end of the day, what has drawn me to healthcare and kept me in healthcare is two things. One is, it's just such a complex and wacky world in a lot of ways. From an intellectual perspective, I just love the puzzle of how to align all these very disparate incentives. If you can figure out how to piece those incentives together, that's where you can get magic to happen, if you can kind of thread that needle of the incentives.
The second piece is, at the end of the day, I believe, perhaps naively, that if you can create value for the system, then you can create value. You can help a patient at the end of the day. That is really meaningful, always being able to go home and say, “I might have been working on stuff that was annoying, or felt like busy work; it may not have been the most exciting work that day, but at the end of the day, I know that what we're doing is pushing forward towards a better experience in a better set of care for patients.” I think that's one of the beauties of being in the healthcare industry.
CARRESE: Talk a little bit more about the scope of the problem that I touched on at the beginning, and the impact that has on patients.
PALAKURTHY: Yes, absolutely. So you can kind of think about that from a macro perspective and a micro perspective. From a macro perspective, you mentioned 27% of patients that don't get onto therapy. We've seen numbers that are a little higher depending on the disease state. But what's interesting is, there was a study that was published in JAMA a few years ago, where they looked at the overall costs associated with our healthcare system. They found that, in the U.S. alone, there is about $300 billion in administrative waste. That's waste. That's not administrative work; that's waste. That's administrative work that served no purpose, that created no value, that was pure wastage from the way the system is set up.
The complexity and the administrative complexity is not super sexy. That's the size almost of our entire U.S. prescription drug industry in pure waste that's doing nothing for anyone. So that's, if you think about the macro perspective, it's just a lot of money that's spent. We talked a lot about the cost of care. There's so much money that's spent on things that don't drive anything related to the patient experience or the patient quality of care. So I think it's really important to think about that.
From a micro perspective, it's interesting, we work on a subject called prior authorization. What I've realized is, no one really knows what prior authorization is, unless they've had a bad experience with it. I had this kind of hit home recently, where I lost someone very close to me. He had been battling cancer for almost a decade. I remember talking to his wife about three weeks before he passed away. She called me and said, “Syam, we're having to go through this prior authorization for this new experimental therapy that's kind of a last-ditch thing. We're having to go through this prior authorization process. Can you help?” I looked into it and I tried to see what I could do to help with the prior authorization because that's what we do day-in and day-out.
The crazy thing is, this process was something that his wife, now a widow, had to deal with in the final few weeks of his life. I don't even blame the insurance company for asking these questions. But what's crazy to me is just how intensive it was to get onto that therapy when it turned out they were always going to put them onto that therapy in these final waning hours of his life. That's the patient burden which is, there's so much pain associated with actually getting patients onto therapy, on staying on therapy, and doing the right care.
At the end of the day, it filters down to whether or not the patient gets a certain therapy or not. Even if they do, the experience that they have to go through in order to get and stay on therapy means that it's way too hard to be a patient in this country for any kind of complex condition, and frankly, for some simple stuff, too. That's the microscopic perspective, which I didn't have quite a personal appreciation for until I watched my cousin's wife go through this.
CARRESE: I'm sorry to hear about that. But I imagine in days and weeks and years ahead, that example is going to stick with you.
PALAKURTHY: Yes, absolutely.
CARRESE: Just the stress it causes people seems unnecessary...
CARRESE: What is the solution that SamaCare has come up with to break through some of these obstacles?
PALAKURTHY: We have built a medical practice software that providers and their staff use to digitize, streamline and automate this process of getting the insurance company paperwork to the insurance company in the form they're expecting, and capturing the response back. The whole idea behind what we do is, we're going to do everything we can to streamline that work of what's called prior authorization, the actual insurance company documentation that's required. Our end goal, the end state we're pushing towards, is a prior authorization as easy as a credit card swipe.
We want it to be that easy, because at that point, I think it starts to serve some of the purposes that the insurance companies want from it, without it creating all of this burden for the doctor, for their office, for the patient. That's what we build towards. The software we build is trying to make it as easy as possible. Then, we work with other third-party stakeholders, like pharmaceutical manufacturers, to layer on certain kinds of services that make it super simple to get a patient through the process.
CARRESE: So if you're in a doctor's office in the current state -- if they're not using a system like yours -- they're on the phone with two or three different insurance companies half the day, struggling to figure out how to get Mrs. Smith on this medication. What you're describing is, for that person in the clinic, they've got an interface in front of them, and they're pushing a couple of buttons, and that's it?
PALAKURTHY: Yes, that's exactly right. The way it's done right now, it's very fax, paper, and pencil driven. It's funny, I had a conversation with someone who is not from the health insurance industry, and I mentioned that it was fax-driven, and her response was, “Wait, faxes still exist?” In her mind, she thinks of faxes like rotary phones, like they just don't exist.
CARRESE: Only in healthcare. Yes, you don't find them anywhere else...
PALAKURTHY: Only in healthcare. It's a very, very manual process of getting that information to the insurance company, and it's a very easy process to lose track of, to have something slip through the cracks. What our system does is it takes it off of that very paper, pencil, facts-driven process, moves it into a digitized format that is significantly automated, so it's much faster for the practice. It takes about half the amount of time to get the authorization submitted to the insurance company. We've been able to cut things like the response time and the overall and the average time that it takes to get a patient onto therapy by about 70%, so it can have a major impact on both the practice staff and what they need to go through. But most importantly, it can have a real impact on the patient getting onto therapy in a timely way, getting onto the right therapy, the one that their doctor has said, “This is what you need to get better and to stay better.”
CARRESE: I'm also assuming that the renewal of a prescription would be simplified too, right?
PALAKURTHY: Yes, that's a great question, Michael. I think a lot of people think, “Oh, you do this outside of the industry, or outside of this particular process.” “You do this once you get the patient onto therapy.” There are drugs that someone is on for the rest of their life. It's not like they just have to go through that prior authorization, that documentation process, once. They have to go through that over, and over, and over again,whether it's every year or every six months.
If you talk to patients who go through this process, they'll say, “Every year on the dot, I start to get nervous that this therapy that has finally made me better, that has finally helped me feel like a normal human being, is all of a sudden going to get stuck in insurance limbo, and I'm going to have to go without that therapy for days, for weeks, for months, or maybe I'm not going to be able to get back onto it.” That's a really scary thought for the patient, because a lot of times, these conditions are ones where a particular therapy has totally transformed their lives, and the prospect of losing access to that therapy for anywhere from days to indefinitely is a pretty scary one.
CARRESE: Absolutely. So with this system approach, all the algorithms or whatever else you've got going on, do you see that as being applicable to other pieces of the healthcare system?
PALAKURTHY: Yes. Do you mean beyond just like individual drugs?
PALAKURTHY: Yes, absolutely. I mean, it's not just us. There's a whole crop of companies both on the tech side and not the tech side that are trying to help with what I'll call “defragmentation of the system,” trying to make it so it's not a completely different process for every insurance company, for every drug, for every procedure. When we think about what we're trying to do longer term, we start with a very specific segment and say, “How do we get that process to feel more like a credit card swipe?”
I have a friend who made this analogy: when you go to a Radisson, you don't need to use one credit card, and another when you go to the Hilton or when you go to the grocery store. Our goal is for it to be not just a simplified process, but to be a very simple, easy process that they can apply across all of the other types of care that that practice, or that doctor, is trying to deliver to their patients.
CARRESE: Have you had difficulty getting the stakeholders on board, the insurance companies and so forth?
PALAKURTHY: I think at the end of the day, look there are a lot of big entities in healthcare, whether it's the insurance companies, or the pharmaceutical manufacturers, and they have a lot of reasons for taking the actions that they do. Generally speaking, what I'll say is getting the practices like providers on board is the easiest thing I've ever done in my career, because there's so much need from their perspective. Literally, I got off a call yesterday and this is from a large oncology practice. The person on the other end says, “Wait, so how long have you been around?” I said, “Well, we've been around for about four years.” She's like, “Why are we only hearing about this now? Why didn't we hear about this four years ago?”
On the provider side, there's so much demand there. On the insurance company side, on the pharmaceutical side, there's a lot of demand. I think they have their processes that they need to go through, and there's also some element of complicated incentives. But at the end of the day—my dad, as I mentioned, is a doctor. He does not believe me when I say this, but I think the insurance companies, just as much as all the other stakeholders and systems, want this to be better. So moving towards that direction, being able to show them how this is going to make their process better, has been impactful for getting them excited and getting them on board. Same with the pharmaceutical manufacturers.
CARRESE: Yes, it's interesting. We had Mark Cuban on Raise the Line recently. He's launched a new company that's trying to tackle the problem of high drug costs, and he said there's a lot of finger-pointing. People are always identifying certain villains, but it's much more complicated than that.
PALAKURTHY: So much more complicated.
CARRESE: Yes, dependent on all of that. But if you can find a way, as you were saying, to bring value to everybody involved on all sides, all the stakeholders in this process, then—hey, they're going to listen to that, right?
PALAKURTHY: Yes, absolutely. The truth is, when we started, we said we want to make sure that we're focusing on a problem that's not actually loved by anyone. There is this cynical perspective around things like prior authorization, or that $300 billion in administrative waste I mentioned, that, well, someone's gaining from that. Sure, at some very specific level, someone is gaining from a lot of these processes, but no one looks at our system and says, “That is a perfect healthcare system. We do not want anything to change about it.” Everyone can look at our system and say, “There are clear problems. There are things that need to change.” There are enough of those problems that everyone wants, at some level, to change, that I think there's plenty of room for folks—whether it's healthcare companies or otherwise, to be able to try and thread that needle between the incentives, as long as they understand what those incentives are.
To Mark Cuban's point, it's easy to vilify different stakeholders, but I think that's short-sighted thinking because it ignores the fact that there's some set of incentives that gets them acting in a certain way. But that also means that there's some way to tweak those incentives so that they're acting in a way that is moving the boat forward towards what I think everyone's goal is, which is better patient care.
CARRESE: Yes. I think the way he phrases it, we're getting some of the distortions out of the system.
PALAKURTHY: Yes, that's a great way of thinking about it.
CARRESE: You mentioned you've been up and running for four years. That only gave you a couple of years before COVID hit. Talk about how COVID has impacted your business.
PALAKURTHY: Yes, it's interesting. In some ways, what I think COVID did was—we're not not the type of business where COVID happened and it shut everything down. There are certain kinds of businesses, and then there are other kinds of businesses where COVID happened, and all of a sudden, it went through the roof. I think about telemedicine, for example, or Zoom which we're having this conversation on. It's not either of those.
But I think what COVID did, which in a weird way helped us, was it emphasized the need for baking resilience into the system. I think that our system has been one that for the last decade in a lot of ways there's not resilience baked in, because it's almost like optimizing the best case while setting the conditions up to amplify the worst case.
The example you always heard at the beginning of the pandemic was ICU beds. Hospitals, for very real and understandable incentive reasons, didn't want to have too many empty ICU beds. Then all of a sudden, when you had this spike in demand, it created this huge problem. There were all sorts of issues with supply chain, etcetera.
I think what COVID has done is emphasized the need for resilience. Where that's relevant for us is, technology can both be a cause of fragility, or a source of resilience. It just depends on how you build it. With our product, this idea of moving things off of a facts-based system, off of a very manual-based system where, if someone's gone for the day, all of a sudden their 15,000-row spreadsheet is no longer accessible by anyone else at the staff of a major office.
CARRESE: Greg has his own way of doing it. Nobody knows how Greg does it, so until he gets back from vacation, we're stuck!
PALAKURTHY: Exactly. That process is not optimized for the resilience. I think what our system has helped practices do is to bake more resilience into their underlying processes, to make sure that if someone's out for the day, it's easy for someone to pick up. If someone has to work from home for the day, it's easy for them to pick things up and to act as if they didn't have to change their overall process. In that way, I think it's been helpful.
It's also been good because it's also forced us to think about how we use our product. How do we think about the design of our product to encourage resilience? Whether it's the actual practice users that are using our system, the pharmaceutical manufacturers that are creating the drugs and then helping to ensure that patients get onto therapy, or the insurance companies to do what they do, we have been able to take advantage of the need for greater resilience, but we've also become more conscientious about how we bake that into what we do, and how we can incrementally increase the resilience of the system through what we do.
CARRESE: That's really interesting. I hadn't thought of that angle, and I'm also thinking it might be connected in some way to the burnout issue, because as you look at the surveys from providers, particularly physicians, administrative burden is a big push factor.
CARRESE: So if you can help in this way, I would think that would alleviate that problem somewhat.
PALAKURTHY: That's such a great point. One more thing to say on that point, Michael, is, I had a practice point out that no one wants to be a professional data mover. That's no one's idea of a good job. Everyone wants something more fulfilling. By taking some of that professional data moving off of someone's plate, off of an individual who doesn't want to be doing it so they can focus on more complex and more interesting tasks, it definitely helps with burnout. It helps with things like staff retention. It also helps with things like improving the speed at which you can train a new person, if you need to do that.
CARRESE: Yes, right. Onboarding. A lot of angles here. We only have a couple of minutes left, and we always like to end with having our guests talk to our audience, which is mostly medical students and health profession students, and also early career practitioners, and do a wisdom drop. What would your advice be to them? It's obviously a very turbulent time for anybody in the healthcare space, but it can be beyond just the fact that they're in healthcare if you have general advice about approaching their career.
PALAKURTHY: There are two things that I think it's really important to think about in healthcare. One is this point that we were talking about earlier, which is, it's just so critical to think deeply about the incentives of each stakeholder in the system because it's so easy to vilify or to assume they are making this decision because they're greedy, or they don't want to do the work, or whatever. But I think whether you are a medical student who's trying to figure out how to interact with hospital administrators or insurance companies, or you're an entrepreneur that wants to build a product in the healthcare system, it's very important to understand the core incentives that are driving each of those stakeholders, and to pry beyond just the immediate of, “What are the obvious incentives?” and go one layer deeper and figure out, “What are the actual incentives?”—not the ones that everyone says are driving an individual's or an entity's behavior.
The related piece to that is, it's really important because there are so many adversarial relationships in healthcare. It's really important to remember that the people that are running these companies, that are working at these companies, or these institutions, or hospitals, etcetera, they're normal human beings. Just like anyone else, they operate on the same set of incentives.
Generally speaking, I'm convinced that most people, from a purely financial perspective, can probably make more money being outside of healthcare than in healthcare. So it's worth considering that. These are people that are probably trying to do their job in their little corner of the world. Even if what you think they're doing doesn't make sense, they're probably trying to achieve something that they think is making something about the system or a patient's experience better. But because of those incentives, it can distort what they actually do in a way that, from a global perspective, it's not making the patient experience better. It's not making clinical delivery better.
You have to acknowledge those two factors, which are the incentives that are driving them and the fact that they are just normal human beings that generally have the same motivations that you do. I think, regardless of where you sit in the healthcare system, because it's such a wacky interspersing of incentives, it's easy to forget those two things, but it's critical to remember them.
CARRESE: That's excellent advice and a good point to wind up on. Thank you so much, Syam, for being with us today.
PALAKURTHY: Thank you so much, Michael, for having me. This has been an awesome conversation.
CARRESE: Oh, great, and best of luck with your company. I'm Michael Carrese, thanks for checking out today's show. Remember to do your part to flatten the curve and raise the line. We're all in this together.