Uncovering the Vulnerabilities of Healthcare Supply Chains with Dr. Pearce McCarty, Co-founder of DOCSI

[00:00:02] Hey, everyone. Welcome back to the Outcomes Rocket. Saul Marquez here. And today we have the amazing Dr. Pierce McCarty with us. He's an experienced orthosurgeon, entrepreneur and healthcare leader driven by a desire to make healthcare more efficient, affordable and accessible. We know we

[00:00:24] need all three. In addition to maintaining a sub specialty practice focused on complex shoulder and elbow issues. He co founded a healthcare IT company in 2020 called Doxy. We're gonna be talking about the work that they do

[00:00:39] at Doxy, but in short, they're devoted to developing digital tools that lower costs and improve operations and procedural environments at scale. Such a great privilege to have you here, Dr. McCarty. Thanks for joining us. So thanks for having me. I really appreciate the opportunity. Excited.

[00:00:56] Absolutely. And we're excited too. And look, I actually at the very beginning of my career started as a orthopedic device rep. So certainly appreciate the work you do. The shoulder is a tough one. It's a tough one to fix.

[00:01:12] It's a challenging joint. And I think that's one of the things that attracted me to it in the first place. But it's yeah, and thanks for whatever work you did as a rep, you guys definitely provide a lot of value for us and the operator.

[00:01:22] Appreciate that. Yeah, for sure. So look, what got you into the business of healthcare, the practice of healthcare? Tell us more so we can get to know you. Yeah, so I wear a few different hats in healthcare. You talked about a few of

[00:01:35] them in the intro surgeon, healthcare leader, entrepreneur. So I think I draw from a few different wells of inspiration for each of those roles. Initially, I was driven to train as a surgeon motivated by a combination of a

[00:01:47] desire to create value in restoring patients to function. As you mentioned, I'm an orthopedic surgeon is one of my mentors once told me orthopedic surgeons really don't save many lives, we save lifestyles. And so we restore

[00:02:01] patients to function. That's really what we do. And that resonated with me as a as a younger, younger adult going through medical school and trying to decide what sub specialty I wanted to pursue. And I get a lot of satisfaction

[00:02:14] out of restoring patients to their lifestyles, allowing them to pursue whatever activities are important to them and their quality of life. As a healthcare leader, I think most first and foremost, I'm driven by a desire to make healthcare more affordable and efficient for patients. I think we have

[00:02:29] a moral obligation as clinicians to have an interest in this and to work in whatever capacity we can to make both of these things happen. As an entrepreneur, I'm very passionate about building teams to create novel

[00:02:42] solutions for many of the problems we face in healthcare, but primarily those problems that involve cost and supply utilization. In the past, I focused on implants and device design, but currently I'm hyper focused on supply chain and operational efficiency.

[00:02:58] Love that. Yeah, and we need it. Definitely cost is a big issue. Access is an issue. So help us understand more about Doxy. What are you guys doing there? How are you actually making things? Yeah, so I think Doxy really focuses on optimizing surgical and procedural

[00:03:16] supply chain, elevating operational efficiency in the operating room and fostering a culture of effective fiscal stewardship among physicians. Doxy really does its part to lower the overall cost of care in accomplishing each of those goals. So I'll take a step back here. I think that COVID

[00:03:36] really shined a spotlight on certain areas of vulnerability in healthcare in general, but specifically in healthcare supply chain. I think that has resulted in an increased focus in supply chain efficiency and building resilience and supply chain. Kind of a resilient supply chain is a catchphrase that's often

[00:03:53] heard not only in healthcare, but in corporate boardrooms all over America where supply chain broke down during COVID. I think among physicians, if you talk about supply chain, given a set of supplies or implants that will show up

[00:04:07] in the appropriate quantities at the appropriate time again and again is more or less taken for granted. And so when this didn't happen during COVID, everybody stepped back and said, where's my stuff? And the answer was, well,

[00:04:20] there's no more stuff or we can't get your stuff or we don't know how to get the same stuff that you were using before. So I think that physicians as well as healthcare system leaders also stopped taking a lot of elements in

[00:04:35] supply chain for granted. And so Doxie really focuses on optimizing the utilization of supplies within a healthcare system on making sure that there's a minimal amount of clinical variation or utilization variation. I think one thing that surprises a lot of patients that I talked to is that one

[00:04:57] would think especially among fairly commoditized procedures, such as say in my field, hip replacement, knee replacement. I think they're surprised that the variation that exists in how these procedures are done in the implants and supplies that are utilized to do those procedures in that clinical

[00:05:14] variation and that utilization variation translates into increased costs. It can translate to variability and outcomes. And so what Doxie's digital platform does is at scale reduce that clinical variation by engaging physicians at an item level with respect to their cases in what they're using and giving them in

[00:05:36] a way that they can make choices to reduce that clinical variation. So we have the platform is actionable as well as data driven with respect to data transparency. So then in this particular case, the physician would have a screen

[00:05:51] that that pops up in Epic maybe or whatever EMR they're using or maybe just on the web and they're taking a look line by line on the items they would use on a particular surgery and deciding, hey, these are the ones that I want and

[00:06:07] these are gonna help us be more profitable while still delivering the right amount of care. Is that hearing it right? Yeah, I think in a nutshell that's at high levels. To add a little bit of color to your explanation, that was a really good

[00:06:19] recap. What Doxie's platform will do is ingest, and I'm going to try to stay away from a lot of supply chain jargon here, because I appreciate the fact that not everybody who's listening to your podcast is necessarily a supply chain

[00:06:32] aficionado, but what they will be interested in is creating a health care system that is affordable and accessible, right? And this is part of that. And so what Doxie will do is ingest all of the utilization items, so everything that's

[00:06:45] used to do a given surgical procedure or series of procedures across an entire health care system. So that's what we're talking about at scale. So for a given health care system, we'll have hundreds and hundreds of surgeons that perform procedures throughout that system's hospitals, ambulatory surgery centers, and

[00:07:01] other procedural sites. And so we will ingest all of that utilization information either through the EHR or there may be an ERP, an overlying ERP platform that pulls a lot of that information out, maybe something like

[00:07:14] Workday, etc. And so in addition to the utilization data, we'll pull cost data. We will pull case volumes. And then we will create an individualized dashboard for every surgeon that's based on their case type, their case volume, their utilization patterns. And then we'll interact with the supply chain

[00:07:36] leadership and the executive leadership of the health care system to understand, you know, this is what we can deliver. What are your goals? Is your goal simply to make things more efficient? Is your goal to lower overall cost by decreasing

[00:07:48] waste? Is your goal to increase contract compliance? You worked as a medical device rep in orthopedics. There are often benchmark-based contracts where you have to achieve a certain spend threshold or volume-based threshold. And so is the leadership interested in increasing the compliance with

[00:08:05] that contract to hit a certain goal? Or do they want to do some combination of all of those things? And then we will create campaigns where via a web-based app that is delivered to a surgeon via a one tap text link that's secure, HIPAA

[00:08:22] compliant, it goes out to their mobile device. They will be able to access their individualized dashboard. And to take a step back, so you know I think engaging physicians and in particular engaging surgeons around utilization and supply

[00:08:37] chain has always been a very challenging thing. This was a gap that we noticed in the market some time back. And one of the reasons why it is challenging is because it's not that clinicians are not interested in these things. They very

[00:08:49] much are. Now more than ever, physicians understand that they have to be cost-conscious and they're interested in that cost data. Additionally, physicians and especially surgeons are competitive. So we combine those two things with some fairly basic design principles of making this information

[00:09:06] very convenient to access. So delivered to their mobile device wherever they are. We make it curated so we want to show them what they need to know to accomplish the goals we're trying to accomplish no more no less. We want to

[00:09:18] make it actionable. One of the things that physicians hate is when you take their time to show them something non-clinical and then they say okay what do you want me to do about this? And you say well no I was just going to show you this. I just

[00:09:30] wanted to show this to you. And they say well you just wasted my time. I'm used to making decisions. I'm happy to make a decision about this and so let's make this an actionable encounter. And so we make this information actionable. So to

[00:09:44] make this concrete, let's say we're running a contract compliance campaign. They may have the opportunity after they look over their utilization for a given procedure. And I haven't introduced the term preference card yet but that is a common term that's used when we're talking about healthcare supply chain

[00:10:02] right and it's the bill of goods or the blueprint for everything that's utilized in the given procedure. We organize their dashboard along the format of a preference card because it's a very familiar interface for surgeons. And then

[00:10:15] they will be able to look over this and say okay well this is what I'm using now this is what all my peers are using this is what I'm costing this is my cost effectiveness. And we leaderboard them with their peers and then we give

[00:10:27] them the opportunity to make a variety of decisions. They could make a very simple decision where they decide okay I'm not using the contract compliant item I'm gonna switch. I'm gonna swap my item for the contract compliant item.

[00:10:40] They're able to do that on the platform. They may say I'm not ready to make that swap but I am interested in it and so I want to learn more about it. And so we

[00:10:48] can put them in touch with the rep we can put them in touch with the OEM. They may say you know what I actually like to trial it I'd like to use it in a wet lab

[00:10:55] which is for those who don't know is an environment where surgeons can go in on a cadaver or a saw bones or artificial construct try the implant or try the device. They may say well I'm willing to go into a wet lab and try this device

[00:11:08] before I use it in the actual operating room. And so we give them the opportunity to do all that. If they refuse everything we're also a data collection tool. We're gonna ask them why. We want some intelligence around why are

[00:11:19] they resistant to this item? Is there something we need to know about that? Do they feel this items clinically deficient? Do they feel like it's hard to use? Do they feel like it just costs too much? Sometimes there is a cost

[00:11:31] difference they know about. And so then we collect all these decisions. We collect this input and we deliver that back to supply chain for kind of a final overview. It doesn't go directly into the EMR ERP and then once they have reviewed

[00:11:45] it via our portal then they can make the final changes. And so that's the kind of taking you through a concrete example of how a clinician might interact with our current platform in the context of a contract compliance campaign. And just

[00:11:59] to give you an idea of what type of traction we've had with clinicians, we have 90 to 95 percent clinician engagement. Meaning that for a given group of clinicians with whom we engage, 90 to 95 percent of them will engage with

[00:12:14] our platform and will interact with the information they're given. That doesn't mean that 90 to 95 percent will do what we want them to do or that what we're nudging them to do. That's more along the lines of 65 to 70 percent, but that's

[00:12:28] still a very large percentage and certainly enough to move the needle in something like a contract compliance campaign. I appreciate the walkthrough here. It makes it very concrete and easy to understand. At the end of the day

[00:12:40] you're digitizing that preference card and giving the data to the surgeon so that they can choose. You're empowering them. That's right. We're increasing that utilization and cost transparency for clinicians at scale. And there are some other companies that have simply digitized a preference card and we

[00:13:01] really go a step beyond that because we look, we have algorithms, machine learning algorithms, that scan the utilization, historical utilization data, current utilization data, and actively identify opportunities for reduction in clinical variation, for reduction in costs, for improvement in efficiencies. Just to give

[00:13:20] you an idea around efficiency improvement, small campaign we ran with a mid-size health care system around general surgical endomechanicals. We're talking about trocars, we're talking about mesh, we're talking about procedures such as laparoscopic appendectomy, laparoscopic cholecystectomy, very commonly performed

[00:13:38] procedures in any given health care system. And this is a small group of surgeons, it's about 18-19 surgeons. And just to give you an idea of the speed to which we can do this, this is over about a six-week period. We're able to fully

[00:13:52] execute on these, the data analysis, presentation of the data with creation of the dashboards, interaction of the dashboard in the surgeon, and then decision-making, interpretation of those decisions, and final implementation of changes by the health care system supply chain team. We eliminated over

[00:14:10] 15,000 items that would be picked and restocked on an annualized basis just within that small group. That's a tremendous number. If you think about the reduction in demand, we're not really in labor cost savings play, but there are

[00:14:26] very real labor cost savings when you talk about reducing that number of items that your materials management is going to have to pick and restock. Yeah, so that's 15,000 less SKUs that they have to buy.

[00:14:37] So it's 15,000 less SKUs that they have to pick and restock. A percentage of that 15,000 will be actually reduced in terms of the next cycle. That's where your very real cost savings come in. I don't think I have

[00:14:53] to point out to many listeners that the most efficient way of adding to the bottom line is expense reduction because dollar for dollar, that's adding back in to your bottom line as opposed to revenue generation. I think revenue

[00:15:06] generation is a great play if we're just talking from business standpoint, but obviously, top line revenue, a very small percentage of that, especially in healthcare, is going to drop to the bottom line where a lot of healthcare

[00:15:18] systems are routinely in a good year running operating margins of anywhere from 2% to 4%. Yeah, it's pretty low numbers for sure and every little bit counts. And just for the sake of understanding here and for everybody else listening, probably

[00:15:33] wondering too, so Pierce, tell us, is there an opportunity for even some of the med device companies to leverage this and maybe become a player as far as funding? Yeah, that's a very insightful question, Saul. And in point of fact, and I can't

[00:15:52] really, not at liberty to say with whom, but we're already working with a very large internationally known medical device manufacturer, in particular in the space of contract compliance. I think that, yeah. And I think their interest in us is driven by several

[00:16:09] different factors. One is our ability to drive contract compliance. So for a given contract they have with the healthcare system, right? That's mutually beneficial. So there's benefit on the vendor side, there's benefit on the healthcare system

[00:16:22] side. But they're also very interested in the intelligence that we collect around physicians who really don't want to use their product. Why don't they want to use their product? Because that gives them the opportunity to get at scale,

[00:16:36] meaningful feedback, which can then in turn inform product development, product evolution, or even changes in their sales strategy. If they need to make improvements in product education or instruction for use, they can do that based on actual feedback from physicians at scale. Many implant manufacturers have

[00:16:58] groups of KOLs, so key opinion leaders that will provide them with some of this intelligence. But there's an inherent bias in that because these are individuals, these are physicians who are typically contracted as consultants. They're getting paid for their opinion. What we're delivering is unbiased

[00:17:14] intelligence. The surgeons we're querying, again, large numbers, they're just giving the platform feedback which then can be delivered back to these vendors. And I think that's more meaningful. That's awesome. So for all our MedTech listeners, a great angle for marketing

[00:17:30] and also sales compliance, the partnership for providers listening, cutting the waste out of the system, big opportunities to engage your surgeons to really make a difference in the health system and take control for their procedures. I love this. Look, the opportunities are big and really

[00:17:51] appreciate you teeing this opportunity up for all of our listeners. What's the call to action would you leave everybody with here as we close out today, Dr. McCarty? Yeah, I again, I want to emphasize that Doxy is dedicated to engaging physicians using scalable digital platforms to generate meaningful

[00:18:11] traction through clinician centric design principles. And I encourage you to check us out at doxyhealth.com. We have a great team that would love to talk to you about how we can bring value to your system, how we can help

[00:18:26] you engage your physicians to create a cultural, a better culture of fiscal stewardship, and then obviously lower costs and improve efficiency. Creating a clinically integrated supply chain is another catchphrase that you'll hear at many conferences today. And I think to put things in the last bit of

[00:18:44] perspective, when you have less than point 2% of the adult population, which are physicians in the United States, whose decision is driving. Yeah, point 2% of the adult population that drive 20% of the GDP spend. If you don't think that engaging that group in meaningful, fiscally responsible

[00:19:13] decision making is the way to bend the cost of care. Well, I don't know how else you're going to do it. You've got to engage clinicians, you've got to engage them in a meaningful way. And so we can help you do that. We'd love to

[00:19:27] talk to anyone who's interested in finding out how. That's fantastic. Clinically integrated supply chain. Let's make it happen people. Now's the time. In the show notes, we're going to leave ways to get in touch with Dr. McCarty and his team at Doxy. And of course, a summary of

[00:19:43] everything that we've discussed today. This has been a really big pleasure for us. Pierce, we really appreciate you being with us. Thank you, Saul. I really appreciate the opportunity. It's been a lot of fun talking to you today. Thank you so much.