Dr Frank Pyefinch, who created MedicalDirector, is the closest thing we have to a founder of Australian digital GP medicine
Dr Frank Pyefinch, the founder of both MedicalDirector and Best Practice, is the closest thing we have to a founder of Australian digital GP medicine. His story and ideas tell us a lot about how we should be embracing a rapidly unfolding digitally connected world in Australian medicine.
Only about three years ago, in a Telstra head office boardroom in George St, Sydney, the glitterati of Telstra Health had gathered to present their plans and visions to Lorraine and Frank Pyefinch, in an effort to get a not-insignificant cash offer for Best Practice, one of our two major patient management systems serving GPs, over the line.
Controlling Best Practice or MedicalDirector was, at the time, the centrepiece of a plan to pull together an eclectic collection of acquisitions in the e-health space. Having, at first, significantly underestimated the market share and power of the growing Best Practice business, the senior managers at Telstra Health were determined to impress and get this deal across the line.
According to Frank, the money was fine (it was multiples of $10 million), but what he and Lorraine wanted to know was: “Could Telstra Health take Best Practice to where it needed to be and did the company have a good plan?”
Things didn’t start well. To set the scene, the senior manager at the time explained that Telstra Health started a couple of years prior when Telstra had excess cash it didn’t want to give to shareholders in dividends.
Frank, who is quite well known for being frank (excuse the pun), commented to the effect that he and Lorraine were both Telstra shareholders, and that next time the company didn’t know what to do with its money, he could assure Telstra, that he and Lorraine, as shareholders, would know what to do.
Things then went pretty quickly from average to bad.
Frank had already been through one corporate sale, with MedicalDirector, to a group called Health Communication Network, where he felt that executives who didn’t understand the basics took control of the product and nearly ruined it. And if he was going to do it again, no matter how much money was on the table, he needed to know if there was a sensible plan for the future health of Australians and of his company, Best Practice.
Some of what was then said in that room, Frank has politely declined to provide to TMR, but from his body language he was clearly less than impressed with Telstra’s grasp of how our healthcare system could be improved.
The Telstra managers outlined plans which seemed, to Frank, to fundamentally misunderstand a system whose safety is underpinned by GPs, who have much more than just a passing relationship with their patients.
“They (Telstra Health) were suggesting that it didn’t actually want someone to regularly measure blood pressure, or do a check on general health and see if everything is going all right, and do other things like diabetes checks, lipids et cetera, that should be done a periodic basis at least once a year,” Frank said.
“They didn’t get at all that even if my patient is turning up for something which, to them, seemed basic and transactional, like a script, my relationship with that patient over the years might lead me to notice something, and ask a question that might eventually save their life.
“They were nuts. As a GP, I wasn’t going to have anything to do with what they were thinking”.
The episode underpins much of how Frank thinks about the role of GPs and digital healthcare delivery, and where big corporate, new innovators, government and the GP fraternity seem continually to come unstuck. Digital technology can’t replace what GPs do, because GPs have ongoing relationships with patients and are trained to see what their patients don’t see. Their role is to develop these relationships and be interpreters. Digital can make that vastly more efficient, says Frank, but it is just too complex a job to take over entirely.
Around 1990, Frank knew nothing at all about software programming. His wife Lorraine was a nurse, and, after a recent break to have one of their children, she had decided to return to study. Part of that study involved some basic programming, and Frank was helping.
His first programs stored readings on his rain gauge and statistics about his burgeoning wine collection.
But then a medical efficiency problem surfaced around Frank’s desire to save time and make things safer in script writing for his 25 nursing-home patients at the time.
“I used to spend hours after work writing Panadol scripts, so when I got a letter from Queensland Health saying ‘scripts could be typewritten’, I immediately thought of a database and ‘computer type written’.”
Later, another GP friend, who wanted to use the software, suggested Frank should think about selling it. And he did.
So MedicalDirector, the business, was, in essence, an accident of Frank trying to make his GP life more safe and efficient.
MedicalDirector wasn’t an instant success. As Frank says, doctors are a conservative bunch and the idea of using a computer to write scripts and reference drug information seemed, for some, to carry a high element of risk. Looking back, that seems insane, especially if one remembers the number of incidents of mis-prescribing caused by handwritten notes.
A modern-day analogy might be the fear many of the GP fraternity have of “the cloud”. The fear is mostly around security, which is ironic, given that we all trust the cloud with our life savings and banking, and a printed-card system, or a local computer server, are far more susceptible to a security breach than a modern, encrypted, cloud-storage system.
At first a labour of love, involving long trips to GP conferences and waiting on stands for the odd interested GP, as time moved on, the advantages of a desktop computer for doing drug referencing, script writing, and a few other functions, started to become obvious. And the business started to move.
In an episode which would repeat itself for Frank and Lorraine over time with bigger corporates, during these early years they decided that they needed a more rigorous drug database for their product. So they called up MIMs, which at the time was owned by a global corporate.
The reply came back: “Ring us when you get an office in Sydney”. The movers and shakers in the big city clearly didn’t think that something started in the regional town of Bundaberg, by a small-town GP, would ever make the grade.
Ironically, MIMs would come to regret this early underestimation of Frank and his vision. Many years later, MIMs had spent more than $20 million and was employing over 30 software developers in Canberra, in a desperate attempt to outbuild the rapidly growing MedicalDirector. Too late, as things turned out, but MIMS recognised the disruptive threat MedicalDirector presented to its business model.
A year or two after this, and a few more million dollars sunk on the project, MIMS surrendered, and did a deal with MedicalDirector to hand over all its sites, so long as MedicalDirector signed a long-term use deal with the company, and handed over a few shares in the group.
The idea of using a computer to write scripts and reference drug information seemed, for some doctors at the time, to carry a high element of risk.
After that, MedicalDirector had somewhere upwards of a 90% market share of GP computer desktops in Australia and was wholly dominant. At that time, the company had already been sold to Health Communication Network, a group that, before its acquisition, of MedicalDirector, was a rapidly failing dotcom, originally started by the government as a universal network provider for the healthcare sector.
The MIMS-MedicalDirector story is a salient one. Although the MIMS patient management system project was being led by a doctor, Dr John Ainge, it was being driven on a vision of modern medicine and a timetable that turned out to be unrealistic. It burnt cash, like Telstra has burnt cash, acquiring seemingly unconnected e-health businesses, and MedicalDirector is now burning cash, racing to develop a “cloud” version of its software in a hurry.
Frank says these things take time. They are complex, with many nuances. And their development needs to start with a very clear purpose.
Today, two large projects in the patient management software sector are showing the same signs of timetable and complexity strain.
MedicalDirector, which was acquired by the Affinity equity group last year off Primary Health Care for about $155 million, last week apparently closed down its Helix development team in Perth and all 40 contractors lost their jobs. The project is relocating to Sydney, according to insiders.
Helix was supposed to be ready months ago. MedicalDirector had been spruiking it at last year’s GPCE conference in Sydney as early as May.
One year later, it doesn’t feel like it’s anywhere close to being market-ready.
The other big project experiencing teething difficulties is MediRecords. This is a group that splintered off MedicalDirector and three years ago started writing a completely new, fully cloud and mobile-architected system offshore, using more than 30 developers. After spending a relatively thrifty $5 million or so, MediRecords, was released, largely in full working order, late last year and is the only real mobile and cloud-based system on the market.
Its launch is what analysts think prompted MedicalDirector to go to market early with the promise of a cloud and mobile version of its product.
But as in the past, the market is fickle, conservative and, above all, complex. MediRecords didn’t count on having to talk to a myriad of old secure-messaging systems and ran aground early by having to go back and program connections to things such as Sonic Healthcare’s bespoke Fetch system.
The slow progress is forcing it to have to go back to market and ask for more money help to establish share. The bet that it is, by a long margin, the first fully secure cloud-based and mobile patient management system, is still just that: a bet. MediRecords is way ahead of MedicalDirector and Best Practice, but in business, timing is everything. Being just a little too early or a little too late can be the graveyard for some very well-designed and working pieces of software.
In late 2002, Frank abandoned Health Communication Network, which owned and ran MedicalDirector, largely out of despair at how the group was managing the product and throwing away money. Health Communication Network had raised more than $40 million and burnt most of it by the time he left, but very little of that money was actually spent on developing MedicalDirector. Frank was on a one-year non-compete, and wasn’t completely sure what he wanted to do.
But after the year was up, he had so many people asking him to come back and do something new, he started again – this time with Best Practice, which started in 2004.
His second time around was, as per his wisdoms on the topic, a slow and complex build. He knew it would take time. But he had lots of ideas for improvement, and, according to Frank, a lot of dissatisfied MedicalDirector users willing to give the new group a go.
Fast forward until today and Frank believes that Best Practice is the strong and growing market leader. It has Sonic Healthcare as a 30% strategic stakeholder, and is, in the background, building its next two big iterations – a fully functional cloud and mobile version of its product, and a multi-functional patient app that talks directly to the system.
When asked about all the noise around the rise of digital medicine, the capital-letter consulting firm advice to big health corporates on strategy, the venture-capital funding starting to flow, and of course, all the hype, Frank’s mind seems almost to be wandering.
It’s not that he isn’t focussed. It’s just that he has a plan. His own plan. And a lot of experience and a track record that says he might just get to the end of that plan. He’s genuinely not that interested when I talk to him about things such as the MediRecords cloud-based system, MediTracker, medical artificial intelligence robots, and the like.
On the MyHR, he is a little animated. His best guess is that technology may have already bypassed the project. He says that things such as the upcoming Best Practice mobile app for patients, and the recently released MediTracker patient mobile app, may make a lot of the MyHR the project redundant in the not too distant future.
MediTraker is downloadable through Best Practice, and both it, and the new patient app (not out yet), talk directly between a patient and the Best Practice patient management system, so patients already can have a form of their medical record with them at all times. Eventually, they will be able to most of the things they need as a patient, says Frank, such as bookings on the fly, and, eventually, telehealth.
As with his competitors, Frank doesn’t follow the MyHR project that closely. He first got involved when NEHTA, the predecessor to the Australian Digital Health Agency (ADHA), approached him, and other vendors with a request that he write a link to the PCEHR (predecessor to the MyHR). In Frank’s typically laconic style, his first response to the Department of Health at the time was, “no thanks”, as he saw very little utility in the project for either his doctors or his patients.
That he was disinterested in the project should have rung alarm bells for NEHTA. It didn’t. The original argument was that it was for the public good. Frank didn’t think so. And he does consider the public good, because the public are the patients on his system.
Eventually NEHTA caved in and paid all the major patient management system software vendors to write links to the MyHR. Frank is still a little annoyed he had to do it, as he thinks it was a lot of work for not much progress.
It looks likely that the ADHA may have to pay the major pathology providers to do the same thing to get them to talk to the MyHR.
What is intriguing is that no one senior from the ADHA has contacted Frank and attempted to sit down with him and ask him why he is so disinterested. After all, he is at the epicentre of medical data and communications in the country. That is, if you believe that GPs are that major hub – the fulcrum where prevention keeps people away from the expensive tertiary system, and gets them out of there much quicker when they are unlucky enough to have to visit it.
But for some reason, still no one is interested. Maybe they don’t want to hear the bad news?
Although he has been known to be cantankerous from time to time, Frank is perfectly open and pleasant during this interview. He is on his own timetable and he seems pretty confident on all his settings. He’s not focussing on competitors. He’s focussing on his patients and facilitating the GP-patient relationship to make it even more efficient.
Half his development team is an office away from him (the other half is still in Bundaberg), and although he says he doesn’t understand a thing they are doing now that the software technology has shifted so substantially to the cloud-version development, you know that he is riding the fundamentals very hard.
At the core of those fundamentals is that GPs should be freed of anything and everything they can to develop their patient relationships because improving this dynamic is at the heart of building a better healthcare system.
Given the current trials of his two major competitors, MedicalDirector, and MediRecords, you do get the sense that things are under control.
Being just a little too early or a little too late can be the graveyard for some very well-designed and working pieces of software.
What’s at stake here?
From the big-end-of-town perspective, the numbers are starting to look very inviting. Exactly the reason Booz Allen suggested originally that Telstra spend its excess cash on getting into the sector.
A history of those numbers is interesting as well. When Frank and his two partners in MedicalDirector originally sold their business to Health Communication Network, they received between them $6 million in a mixture of cash and shares.
At the time, Health Communication Network was struggling. But soon after the launch of the government’s ePIP scheme to get doctors computerised, things took off. Not that many years after, Dr Ed Bateman paid about $120 million to buy the company for Primary Health Care.
Most people thought Bateman had overpaid in his bid to get in front of a competitive pathology group whom he thought might use MedicalDirector’s hold on referrers to squeeze his business.
Some people think Affinity has overpaid for MedicalDirector, because of the relative position of Best Practice and the emergence of competitors such as MediRecords.
TMR estimates that the offer for Best Practice three years ago was probably around the $50 million mark. Today it would be well over $100 million, if you consider that Telstra very nearly paid $55 million for half of MedicalDirector before Affinity scooped it up for $155 million.
MediRecords, which has only a minor percentage of the market, did a funding round a year or so ago which valued the start-up at more than $20 million.
It might be struggling with that valuation today, but if it got any momentum share, you could envisage it being more valuable than the rest put together.
What is the prize for a system that becomes the live gateway of most of the important healthcare information in Australia? A cloud-based, mobile, interoperable, GP patient management system that owns much of the market and talks to everything – hospitals, specialists, the MyHR, allied health, patients, the lot. That is worth well over $1 billion according to most analysts, and why Telstra, Affinity, Sonic Healthcare, the backers of MediRecords, and quite a few others, are pursuing this market.
Although he’s getting on, has made a small fortune already and then had a few chances of making a second one, Frank doesn’t look like he’s vacating the CEO chair any time soon at Best Practice.
A mobile app for patients, and a fully functional cloud and mobile version of Best Practice’s patient management system, figure hard in his near-term vision.
“There’s unfinished business here,” he says to me, smiling.
Disclaimer: The author owns 0.8% of MediRecords (for what that is worth). Best Practice has never paid The Medical Republic any money for advertising, and certainly not for this article.
