William Leonard
Ladies and gentlemen, welcome back to the Atlanta Startup Podcast. My name is William Leonard, your host for today. And I’m really excited to be sitting down with one of Valor’s newest CEOs in the portfolio, Michael Muchniki. Michael, welcome to the podcast.
Michael Muchnicki
Thank you very much.
William Leonard
Michael, we’re really excited that you’re taking over the leadership role at Physician 360. And you’ve got such an incredible background that really places you in this role now as a visionary to scale and grow Physician 360. So maybe we can kick it off with a high level from your perspective of what Physician 360 is doing and then I would love to dive into your background a bit and why you felt like the company is ready to scale.
Michael Muchnicki
Sure. Now, happy to do that, today where Physician360 is really does provide a service need that’s filling a need for many patients and really gets back, really back to COVID. During COVID there were 28 million people that had a virtual visit with a provider through the years or through the pandemic. And in the last year, we still had 27 million people reach out and have a virtual visit with a provider. And so basically it says that virtual care is still here and is not going anywhere and that patients really like it and kind of demand it. In many ways, Physician 360 went through a couple of different iterations but really is now a company that’s a national platform that is in all 50 states. We have a group of physicians that support it that are basically on demand 365 days a year, 09:00 to 09:00 for a number of different conditions, but really the conditions that most people go to urgent care for or to their primary care. And many times it could be a mom that has a child that’s got an earache. They call the pediatrician’s office and they can’t get in until Thursday, and today’s Monday. So they go to the pharmacist and they talk to the pharmacist. They can get on board, sign on, and log in with Physician360. They immediately have the virtual visit. It could be in the car, it could be on their iPad, it could be on their phone. They have that done and within 30 minutes, they’re in and out of the pharmacy. And many people still go to and use the pharmacy in that way as a trusted advisor for their healthcare and community pharmacies, especially in rural areas. And so when I started to get involved and learn more about the opportunity, I immediately said, we have so many challenges in healthcare, there’s still a lot of them, and a lot of them really bubbled up to the top during COVID. There have been so many incredible, great companies that have started since COVID and have scaled and have done well and are making an impact on people’s lives. I feel the same way about Physician 360 as we focus on the rural market. My background is that basically, I run health plans for most of my career and physician practices and have been involved with care delivery for a long time in different ways. But one of the biggest challenges I felt like is when you’re out in the rural markets, is that those people have different challenges than we do that live here in Atlanta or live in an urban area. That’s part of what the discussion around health equity is. When I started, again, considering taking this role, I did have the opportunity to go out and do some focus groups and heard from some of the people how they access health care when they have a cold, or upper respiratory, what you do if you don’t have a doctor? And if you look at statistics in the rural areas, we generally have higher disease states of cancer and heart disease, diabetes, those types of things, because people don’t have access to care in many cases. And so things progress and they get a little bit more advanced. And so when you sit down and you talk to these people, it really does open up your eyes a bit. And so how I looked at it is, I know when I put my old CEO hat on being with health plans is that we’ve got to get our services out to everybody. They need access. I really believe that by using the local community pharmacy and facilitating that through that pharmacy with a clinician, internal medicine, board-certified physician, and getting their needs met, we’re going to increase the access to health care by, on average for a health plan, about 25% in the rural markets. And when I go to my healthcare buddies that are still running health plans and we talk about challenges around rural, they’re like, this is a great service. How do we expand it? And so those were some of the indications that I was like, okay, this really does have a lot of because I talked to physicians that live in the rural communities, and they’re like, I can’t take care of everybody I’ve got because there’s an overwhelming amount of patients. Same thing with the pharmacies. All the big bucks pharmacies, the big retailers, they’ve pulled out of the rural markets, but the local community pharmacies are still there. Those are people that they trust. People had been paying for Physician 360 on a direct consumer basis out of their own pocket because the company didn’t take insurance. And so with my background, I mean, obviously 20 plus years 25 plus years of running health plans, I believe that I can scale the company pretty rapidly. Through my relationships with a number of health plans and just in a very short period of time, we’ve been able to get a significant number of brand names to sign contracts with us.
William Leonard
And that’s such an interesting point. You talk about the original business model of being more D to C-focused here. How do you think about scaling and reshaping a business model at this point of a company’s maturity? What goes into that practically from a CEO standpoint?
Michael Muchnicki
Well, I think part of it is identifying again what you’re trying to accomplish. And I think the original thesis of the company was around testing and in-home tests and things like that. And that got to be a little bit consuming and not really efficient because there are other ways for people to have tests done. And so we kind of moved away from the in-home test, letting the pharmacy facilitate that and really just getting into the care delivery component of it and trying to make it simple. And then, when we started speaking with health plans, we also talked to them about gap closures. Gap closures is a term that if someone has diabetes, making sure that they’re having their A1C checked every quarter, have they had a colonoscopy, have they had their flu shot. Have they had those basically wellness-type things done that the health plans are required to do, especially in the government programs? Arena whether you’re talking about Medicare, Medicaid and so there are certain criteria that they’ve got to hit from a quality metric standpoint. So, they have more difficulty doing that in a rural market than they do in an urban and just because, again, there’s a lack of access to care. And so if we can arm the pharmacists with tools to help us as a health plan operator, help the health plans achieve some of those goals, that also is another opportunity. So it really kind of goes back to what our value proposition is. Our value proposition kind of gets expanded from where it was when it was originally just a direct-to-consumer. The direct-to-consumer is always going to be the patient is always going to be the center of our world, making sure that they get what they need in a timely manner and that we follow up with them and so on. But I think the other two components to it that really become a part of the value proposition that isn’t more expanded is that of the pharmacy, the role of the pharmacy, because their world has changed too. Post-COVID, if you think about it, all of a sudden during COVID they started giving shots and taking tests. Every pharmacy had a line out the door. So their lives changed too. And now, post-pandemic, it’s like, okay, how do we take what we learn during that period of time and then go forward with it? They play a significant role for us as well, too. And we need to just make their life as easy as possible. It only takes them a few minutes to facilitate and work with our physicians. Then our physicians take it over. I really think that we have like three value propositions, and that’s one for the patient, one for the pharmacy, and one for the health plan. And that’s kind of a three-legged stool, as they use the saying. But those three working together, I feel that we can increase access to care, we can reduce the total cost of care, and improve people’s health and wellness and so overall make a difference.
William Leonard
And I love how you break down the value prop there.
Michael Muchnicki
Right.
William Leonard
You want to increase access to care and decrease the cost of care. And P360 is so hyper-focused on rural markets today. I would love for you to talk to us about the patient journey of care in a rural market and how that differs from an urban market. Obviously, there are obvious glaring differences, but maybe you can highlight some of the non-obvious differences that exist in rural versus urban care.
Michael Muchnicki
Sure, that’s a big deal, let me tell you. You don’t realize it until you go out and talk to people. I mentioned, I referenced earlier a few minutes ago that I went out and did some focus groups with folks. These are people that were in South Georgia, in the most rural parts of Georgia, where there aren’t doctors for 20 miles, and met with 8 to I think it was about 12 people, 2 different groups. And then just listen to just ask them questions about what do they do for basic health care when they have a cold, what did they do during COVID, and what did they do when they were raising their kids. And then just listen to what their challenges are. And there are many, but the biggest one was just the access-ready access to a provider. They felt that sometimes this is when we talk about health equity and social determinants and things like that, but for them to have to drive 20 miles to go see a doctor sometimes that tank of gas could be food on the table. You continue to unravel this yarn and there are just more and more issues because there’s a big cost factor also that’s associated with receiving that care. A diabetic, for example, they gets diagnosed with type two diabetes but doesn’t refill their meds because the doctor is too far. It didn’t have it retested. There’s a lot of things that happen and it kind of breaks your heart when you sit and talk to these people. It really does, because the cost is higher for them generally too, just because, as I said, the drive, the out-of-pocket expenses, the amount of underinsurance that they have, many of them have high deductible plans and that just have catastrophic type coverage. So majority of these expenses are coming out of their pocket and this is for routine care. Some of the things that happened also during the Pandemic were urgent care visits, the urgent care companies really went down and helped with some of these basic primary care needs. But since the pandemic, they’ve kind of gone back up to more high acuity type activities, taking people from the emergency room, the overflow from there. And it’s left what I call the lower level services of everything from a UTI or like I said, the upper respiratory earache, sore throat, fever, things like that. Basic type things that you would go to a doctor for. All those things can be addressed virtually now and people don’t know that. And so when I talked to these focus groups, talk to these people in the rural areas, and I told them, I said, I asked them, I said, first off, tell me who your pharmacist is. Oh my God. They’d talk about who they were. They’re all excited. They talked to them just like they were talking about a family member or a doctor and so favorable. And I said, what if I told you, that you’d be able to go to see him and he could help you with a virtual visit with a board-certified physician to help you with that cold or that respiratory, or even if you got COVID again? What if I told you we could do that and it would be covered under your insurance for the $0 copay? They’re like, “Oh my God, that would be great.” And so I left those meetings thinking, I know we can make a difference here in people’s lives. And I always tell people a big part of me taking on this role is a mission is that I think we can make a difference. And that’s pretty exciting too, for me.
William Leonard
Yeah, it is. And no, it’s unfortunate that as advanced as we are as a nation in a country, there are still pockets of the country where innovation just hasn’t gotten to and hasn’t infiltrated those people. And so we understand the high out-of-pocket expenses that they’re facing, the underinsurance that exists, and the lack of access to basic care, are some of the differences in the rural versus urban patient journey. What would you pinpoint as some of the macroeconomic tailwinds here that are making adoption for P360, right and viable for right now?
Michael Muchnicki
Well, it was evident my first couple of months on the job when I went and talked to a number of the CEOs here in Georgia, one in Maryland, folks over in Arkansas, and these are CEOs and very high-level people at the insurance companies. And as soon as I started talking about it with them, they immediately knew this was going to help us reduce, and keep our premiums in check. Because what it does is they pay on average for an urgent care visit, one hundred and seventy dollars to one hundred and ninety dollars for that visit. And they’re going to have costs that are probably half of that with us and they’re going to have a higher patient satisfaction. And so when you talk about macro, I’m talking about the total cost of care of a patient. That’s where I also think we make a big difference. That other if you’re talking about a regular urgent care center or even the emergency room, those are some of the highest points of access to care that you can get and this is going to be much more affordable. That’s exciting when I talk to them because they also believe that P360 will also be an innovation that will increase their patient and member satisfaction, which is a big part of Medicare Advantage right now. It’s focused on the satisfaction of the member and they really believe that would be a big piece because that also drives the revenue that the company gets, the health plans get from CMS to care for those patients too. So, I mean, there’s so many bigger levers and a whole scope of things. So the more people that use Physician360 will have the power of the health plans behind us, help promoting this so that we can get them into a lower cost of care, but broader access.
William Leonard
Right! And that’s a great insight. I want to shift the conversation a bit more tactically now because you’ve been operating as a leader of health groups and health plans for decades now. You’ve successfully run a few businesses in this space as well. And I would love for you to talk about what it’s like to come into a startup as a new CEO, and how you’re adjusting ways that other potential CEOs who are listening right now stepping into new roles later this year, early next year. What is some advice for how you’re getting acclimated into the new role again?
Michael Muchnicki
I’ve had the opportunity to run businesses that have been multibillion-dollar businesses that I’ve stepped into and grabbed the reins of. I’ve also had the great opportunity of working at very small startups as well. So I’ve got a big span. And I can tell you, walking into the billion dollar plans, things like that are similar but not much different because you got to get in and you got to learn your customer, you got to learn your stakeholders, you need to learn the levers that you have to pull to make the business work. I did spend probably the first few weeks and I did have the opportunity before signing on to the job to kind of pick their brain a little bit and learn more about the business and help formulate the strategy to pivot the company from the direct-to-consumer to be and we’re not abandoning direct to consumer. That’ll probably just be a much smaller piece of our business because 80-some percent of the population is insured. And so by taking on insurance companies, we’ll be increasing that. But it really gets back to, I mean, my advice is to know your customers, know your stakeholders. The first thing I did was reevaluate the mission vision statement and value proposition. That’s why I came up and told you that we just don’t have one. We have three that kind of roll in together that complement one another. It’s doing those basic type things and then it’s also all about people. I can’t stress that enough. And whether I was running a big plan and I had six medical directors and a sales team and sales leaders and nurses and claims people and all of these different things, it doesn’t make a difference. It really does make a difference with the right people. And so it’s really important that you surround yourself with people who have the same passion that you do. I always considered myself more of an operating type CEO, who kind of understands enough into the weeds in each of the areas so that I can help lead the company and be more of an innovator to think of new ideas. So I’ve always been in those. I’ve spent a lot of my time doing turnarounds for some of the large payers as well as growth opportunities and with new products and rolling those things out, too. So that’s why when I look at, I also see beyond what we’re talking about, the scope of just health plans. There are so many other opportunities for us in this space just not to focus just on health plans, but there are other people within that are part of the whole $70 billion opportunity that we have in virtual care that we can address. But right now we’re trying to be very focused, taking the direct-to-consumer, pivoting it, and going forward. But again, people are really important. Understanding your customer and digging down into that make sure you understand.
William Leonard
That’s great insight, Michael. Around people, knowing your customer, and outlining and articulating a vision and mission statement for the business as well.
Michael Muchnicki
The first thing I’ve ever done with every company that I’ve gone into, especially in a turnaround situation, whether I’ve had turnarounds, I bring everybody together and we kind of say, okay, guys, what are we doing here? The company’s gone sideways, it’s not done well or it needs to go in this direction. Let’s start with this. And it’s a piece of paper and a whiteboard and it’s fun and that sets the tone and that’s how you get a lot of momentum behind you. And it’s the same thing in the small company, which I’ve really enjoyed so far.
William Leonard
And as we’re wrapping up the conversation here, Michael, maybe zooming out from a really you all are at the intersection of innovating, the patient-provider, the payer journey here, specifically within the world of rural healthcare. What gets you excited for the rest of this year and maybe 2024 and 2025? When you think about the possibilities that P360 here has to innovate in a post-COVID, post-pandemic world, it’s two things.
Michael Muchnicki
One is that I know we’re solving a problem, I mean, a big problem for the health plans, because I know that I was on that side of the house for so long and I would be very frustrated with, God, how can we do a better job? What can we do? What’s innovative for the rural areas? But the biggest thing that gets me excited is that right now my phone beeps every time we have a consult that comes through. And when I look and I see where they are, so many of them are in little towns that I’ve never heard of, whether it’s in Arkansas, Maine, Texas, Louisiana, Montana, Georgia, wherever it can be. And I look at and that part excites me. Because if we can get more dings on this phone every day, that means that we’re helping more people. We’re really focused on making sure that the journey that the patient has with us is easy and that is accessible and that it meets their needs. Same thing with the pharmacist. We want to make it our software because we’re basically what we’ve done, the secret sauce to all of this is we’re taking just the existing infrastructure that’s there. I mean, I’m not outbuilding clinics, I’m not outbuilding things. All I’ve done is built software that we’re overlaying onto the existing infrastructure and leveraging that and making it more efficient. And that’s the part that’s exciting too, is that we’re doing it at a much lower cost. So our cost to the patient, our savings, basically is being pushed right to the payer, to the consumer so that they have a lower cost. So, I mean, we’re lowering the cost, but we’re making a difference in people’s lives. And that’s the part that gets me most excited. Those dings I get every day.
William Leonard
We’re here at Valor to support you as well. Michael, this has been a really fascinating and enlightening conversation around your background, the space that you all are building, and how you’re innovating and reshaping how healthcare in a rural setting is being delivered. If there’s a prospective investor, partner, or customer listening, what is the best way for them to get in touch with you?
Michael Muchnicki
Find me. I’m pretty easy to find. You can find me on LinkedIn or at michael@360.co at this point, those are probably the two easiest places to find me. Also, 954-309-0770. It’s a cell number that a lot of people have, so feel free to reach out if you have a thought or opportunity.
William Leonard
Awesome. Michael, we’re excited about what you’re doing at P360 and looking forward to the future together.
Michael Muchnicki
Thank you so much for the time. I appreciate it today.
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