Once a basket-case health directory ASX listing, Visionflex has quietly pivoted into high functionality telehealth, potentially changing the game for aged care, and rural and remote providers.
News this week from Rural Flying Doctor Service Victoria announcing that Visionflex has won the tender for its primary and allied health telehealth platform (in partnership with an EMR built by MMEX) belies a much bigger story of a small cap ASX group once directionless and in serious financial trouble and now with a rapidly expanding virtual care business model that a lot of people didn’t think was possible in our current funding environment.
The story would be in all those press releases we seem to have all missed from the company on their bevy of new virtual care contracts, except it appears that Visionflex, busy in its new-found focus on building out a much more robust growth model, didn’t put out any press releases on what it was doing.
What did it do?
In a nutshell, in the last 18 months the group has won contracts with at least 15 PHNs to deliver highly functional virtual health capability to a huge number of aged care facilities around the country.
- This article first appeared on Health Services Daily. Read the original here, or sign up for your discounted GP subscription here.
In WA alone, where once there were virtually no aged care facilities with a capability to conduct structured telehealth between the facility and an offsite GP, nurse, allied care or specialist group, now that state has 180 homes with the capability.
That’s most aged care facilities in that state.
It is estimated that through the rapid rollout of these contracts via PHNs Visionflex has, or will, provide equipment and/or software enabling aged care facilities to connect virtually to more than 500 facilities across Australia. That’s a significant chunk (nearly 20%) of the estimated 2600 commonwealth subsidised facilities in the country.
Visionflex believes while there is much work to do on its existing installations in terms of education of use and proving out ROI to these facilities, there’s also a lot of upside in those parts of the country, and those PHNs, that haven’t yet used funds to build out the capability in their region.
Visionflex already had an interesting set of contracts with about 50 rural and remote hospitals – mostly in western NSW – which installed its technology as far back as 2017 with a view to optimising their workforce problems.
Western NSW is using the technology to reduce FIFO locum costs and assist those few doctors who actually are on-site with doing rounds and dealing with certain procedural problems virtually, using doctors based out of a major city centres, where doctors prefer to work.
Some of these deals were struck during covid, which severely exacerbated workforce issues in the country, and changed significantly policymakers’ attitudes towards the investment return on virtual technology in the system.
In one sense the aged care rollout that has happened is an extension of this initial capability proven out by the company in rural and remote hospitals.
The Visionflex story is interesting in respects other than this rollout.
It started as a privately funded group solely focused on developing sophisticated telehealth technology, in an attempt to predict the friction in the system over workforce over time.
Despite nearly $20 million in R&D funding, by 2017 Visionflex was still struggling, mostly to convince policymakers of the virtue and potential return of virtual to the system.
In between a lot has happened to change the direction of the group, including, but not limited to, covid.
One of the main things was a decision by the backers of the group to take over a publicly listed health directory company called 1st Group.
At the time of the takeover, 1st Group had revenues of just over $4 million and losses approaching $7 million. From the outside looking in, it appeared to be in a death spiral.
But the board of Visionflex must have thought that there was enough synergy between the groups – customer base, cross selling, cashflow and cost synergies – to make the move worthwhile.
It was pretty bold given the loss that 1st Group was incurring and its trajectory.
Initially it looked like a really bad decision as once the new owners got under the hood of the 1st Group business they found a lot more problems than they had anticipated.
According to CEO Joshua Mundy, who conducted a strategic review of the group early into the reverse takeover, there was virtually no realisable leverage in the assets of the directory business for the virtual care part of the business.
Following that strategic review a decision was made to divest or close down nearly all of the original 1st Group business, and within a reasonably short period of time, the major directory asset, MyHealthFirst, was sold to another directory-based group, Healthshare.
The group leadership, by then under current CEO Mundy, set about restructuring to refocus the group almost entirely back on the virtual care opportunity, at the time focusing on what many of the PHNs were planning in order to prime the quality of care and productivity in their local aged care facilities.
Proof that the new strategy and focus is working well seems to be in the company’s latest half-year financial report.
Some highlights include close to 170% revenue growth to create annualised revenues of over $14 million, a six-month period loss of only $700,000 compared to the 2022 full year loss of the 1st Group of over $7 million and a previous period loss of $3.2 million, and a prediction for the group to be profitable next year with an escalating annualised recurring revenue base.
To underline that the market has changed its attitude to the group, it recently completely a large and successful capital raise, something that has helped it clean up its balance sheet and significantly improve its debt position.
All that, and pretty much no press releases or market promotion along the way, despite winning some high-profile virtual care contracts – values ranging from $200,000 to over $400,000 – which is a little unusual for a public company.
When asked why the low-profile approach, Mr Mundy told Health Services Daily that by the time he was in charge nobody was believing anything 1st Group was saying anyway, and given that Visionflex, as a private company, had virtually no profile, he felt the best thing to do was focus on the business and the customers first and worry about profile later.
He now sees that some form of profile on what the group has done is going to help the business because getting all that gear into so many aged care facilities is only the starting point.
“The whole reason for popping up and talking now is I’m at the point where it’s the right time for the business to do it,” he explained.
For the installed infrastructure to work, Mr Mundy points out that people are going to need to start using it regularly at both ends – dedicated and trained people within the aged care facilities, and appropriate providers at the other end of the virtual calls – and in doing that ROI will need to be proven out.
“As a vendor, it’s our job to put resources on working with individual sites and regions to help drive adaptation, to make sure that they’re driving an ROI,” he said.
Mr Mundy’s biggest potential issue is that PHN funding is very often ephemerally directed downwards to them from the Department of Health and Aged Care.
Related
In two to three years’ time, the focus of funding can easily shift and if the current round of funding doesn’t provide enough pump priming of the technology for the centres to see the ROI going forward, there is no ongoing funding model to support aged care centres to continue such program within the system (which doesn’t make a lot of sense, by the way).
One aspect of the problem Mr Mundy is frustrated by is the highly varied approach taken between PHNs in trying to crack the aged care problem in their region with what funding they have.
He points to WA, where the whole program has been coordinated across the state by WAHPA – the alliance of the three PHNs in that state – as an example of optimising funding by centralising resources and effort to create synergy and efficiency and drive data to provide evidence of efficacy.
Other PHNs opted to offer the money directly to facilities and let them choose what to do. What some ended up doing was using it to do uncoordinated things like upgrade their wi-fi and buy a computer and webcam.
Mr Mundy says that in most of these cases nothing really got done in terms of sustainable ongoing virtual care infrastructure because there wasn’t coordination or centralised help.
“[In these cases] there’s not consistency in the framework of the program.
“You’re not giving yourself a [proper] platform in order to drive synergy and standardisation of the data and so there ends up being little to no certainty [of the program] or [the] funding for following years.”
Either by coincidence or not, DoHAC put out a tender last week for $30 million for one or multiple suppliers to deliver virtual nursing services to approximately 30 residential aged care homes. The tender specifically rules out that the tender includes any technology that is assisting the virtual care service within facilities.
One of the aims of the project, according to the tender documents, is to evaluate how virtual care via telehealth (video conferencing) services in residential aged care can contribute to residents having access to quality clinical care 24/7 when and where they need it.
Thanks to Visionflex, having an installed base of technology in order to do stuff like this is not a problem now in at least 500 aged care facilities around the country, although it’s unknown if the 30 DoHAC has in mind have any installed virtual care technology base and if they do who would be coordinating that within the aged care facility itself.
The other interesting aspect of this tender is that it is funding only 30 aged care facilities to the tune of $1 million per facility to provide someone at the other end of an installed virtual care piece of infrastructure within an aged care facility.
According to Mr Mundy the hardware and software for their system as a starting point is only $15,000 per facility upfront and $5000 ongoing for the SaaS-based software component of the service.
Quick question: what if Healthdirect, which already has a significant nationwide virtual nursing, GP and soon to be specialist workforce, connected to the Visionflex facilities for free, because Healthdirect is essentially a state and commonwealth-funded free virtual triage and provider service?
Note: Visionflex is sponsoring the upcoming Wild Health Summit breakfast session on 22 October in Melbourne, looking at all current policy and funding aspects of our connected care system infrastructure, including a plan to introduce a nationwide Health Information Exchange to the system.
HSD readers have a 20% discount on any ticket type using the discount code HSD20 which they can use HERE. There aren’t many tickets left.
