Pioneers of the First Virtual Hospital

Raphael Rakowski, Executive Chairman of Medically Home, sat down with me to explore the concepts of “virtual hospitals” and “hospital-at-home,” including current barriers, benefits, and the many considerations for making this a reality for all patients who want it.

Here is a sneak peek of our conversation:

Q: You absolutely have an interesting and very colorful background history. I would love to dig in and find out if you can give us a summary of your career, the trajectory you took, and how you landed in the place that you are today.

A: It’s just been more opportunistic and being willing and open to be guided rather than having a plan because I didn’t have a plan for my career. I started in engineering and got really comfortable with developing new ways to think about manufacturing. That was the earliest part of my career. I lived and worked all over the world and redesign factories, mostly large-scale production processes, everything from automobiles to food to primary metals, and paint. It had been about 212 factories during that period of time.

What I discovered was that every manufacturing system, when it was originally designed was very integrated and holistic. All of the thoughts around materials, machinery, labor are all integrated. Over time, as the company and the plant iterated, it lost its integration and became more of a siloed operation. That was really the first spark of understanding that when you build a system, any kind of system, over time it iterates and in the iteration, it loses its integrity. Those are the early days.

Back in the day, I put a salad in a bag. That was my first venture in California and then from there, I started an incubator where I would develop new business ideas in partnership with large global brands. One of them was with Dupont Consumer Health which led to a company called Empower Health which was intended to identify patients that are on a trajectory to having a medical episode. In other words, either not adherent to the standards of care or have other issues, a lot of them are socially determined. That led to a company that I merged with, a public company, called American Healthways. I ended becoming President, not CEO, of American Healthways. That was a public company, we enjoyed a significant amount of success and growth, ultimately had 3 million patients under our care.

That’s when I really learned about the driving challenges that patients and families have with the social issues that really drive their health. It’s not that they don’t know what to do. They really don’t have the wherewithal in many cases to do what they know they need to do. That was a business that was founded around the Command Center with clinicians centralized to deliver and support the care of patients that were remote. That’s kind of the first step in the evolution of merging my work in engineering with my thinking and work in healthcare.

Along the way, I had some success with American Healthways. Along the way, I did a number of other ventures. I started a number of other companies basically in the environmental area. It’s a big passion of mine, I believe the earth and the people that are on the earth are a single ecosystem. You can’t separate them, so to me, healthcare and ecology are the same things, just expressed differently.

Then about 13 years ago, I was joining the board of an Academic Medical Center. My friend had the board seat there and I was going to take that seat. Just by coincidence, my father was admitted to that hospital while I was going through the interview process and unfortunately, he lost his life from three medical errors while I was going through the interview process. That’s how Clinically Home was born, which was the predecessor company to Medically Home. The root cause exploration I did around that was, I didn’t know that 65% of the cost of a hospital estate was bricks and mortar overhead. That leaves only 35% for actual medical care for patients; which is inadequate; which causes a hospital, reliably, to rush the patient through the process because they really can’t generate a profit margin after four and a half or five days in the hospital.

A lot of the processes that hospitals adopted starting about 30 years ago are industrial processes. Words like workflow, handoffs, transfers, are industrial terms. Those are not terms that we traditionally would think of as terms associated with healing people that are sick. Those are things you think about when you’re making transmission for a Chevrolet not with a human being sick. That was all territory for me. I’m very familiar with industrialization and processes and it just felt completely wrong to me.

I had a lot of personal issues with my parents’ health, both of my parents were Holocaust survivors from three different concentration camps for six years and my brother passed away of Tay-Sachs disease. Then my mother had a whole series of miscarriages after he passed. Health, suffering, pain was a big part of my childhood and a big part of growing up. I integrated all of these thoughts around what happened to my dad in the hospital, my background in engineering, my experience with my parents at home, and the thought popped up, “Why not move all the care out of the hospital, move into the home and in essence, take the 65% that we’re spending on the buildings and provide much more care over a much longer period of time in a site that patients preferred, which is the home,” and this was exactly 13 years ago.

The number of issues Natalie, to actually do that idea was formidable, not the least of which were logistics and software technology. The biggest part of it was not that there was no payment or there wasn’t a regulatory framework. The biggest part was the commitment to get it done and the willingness to stay with it until it actually became a viable way to deliver care. At the time, I had a close relationship with Bruce Leff, he’s a physician at Hopkins and he’s the father of Hospital Home Research and he convinced me that the benefits to patients are real. They sleep better, they have fewer infections, they fall less, cognitive decline is reduced, mortality and morbidity are reduced. Every clinical measure is beneficially improved in the home setting and that conversation with Bruce 13 years ago really had a big impact on me.

We set out to create the world’s first virtual hospital but the real idea, Natalie, was never a virtual hospital, it was to decentralize care. Thinking of Amazon as a very specific and easy example to relate to. They decentralized retail.  They took the retail that was used to be in stores that were making customers come to the store and they moved the products and the model to consumers’ homes. The same way, as it was my view and still is my view, that we don’t need to make patients come to doctor’s offices, we don’t need to make patients come to hospitals, we can come to them. The logistics and the technology are now in place to do that.

The model was decentralizing care delivery with the first overt expression of that would be virtual hospital care at home. From the emergency department to the Med-Surg floor to specialty care to cancer care to clinical trials, all brought to the patient at home. That’s the short version of about 13 years of work.

For more of our discussion, you can watch the whole Fireside Chat with Raphael Rakowski, or listen to the podcast version, below.

To check out previous Fireside Chats and to make sure that you don’t miss any future updates, subscribe to our newsletter or follow us on YouTube, LinkedIn, Twitter, Facebook or our podcast. If you enjoyed this episode, kindly leave a review on iTunes.