Meet The Disruptors: Bill Kerr Of Avalon Healthcare Solutions On The Five Things You Need To Shake Up Your Industry

An Interview With Fotis Georgiadis

Choose being right or effective.

When dealing with people, you have to decide whether you want to get them on board with the change or do you want to be right. In my opinion, it is more important to be effective than right, and being right may be a barrier to being effective. This requires me to suppress my ego.

As a part of our series about business leaders who are shaking things up in their industry, I had the pleasure of interviewing Bill Kerr, M.D., CEO, Avalon Healthcare Solutions.

Bill Kerr, M.D., is the CEO of Avalon Healthcare Solutions. He co-founded the company in 2013 and leads the Avalon team that is scaling laboratory science into the healthcare ecosystem. Dr. Kerr holds a bachelor’s degree and medical degree from the University of Arkansas and an MBA from the University of Houston.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?

As the son of a physician who practiced in a small town in Arkansas, I grew up around healthcare. In fact, my father would sometimes drop me off in a hospital physicians’ lounge while he did rounds on a Saturday. From an early age, I knew I wanted a career in healthcare but not as a front-line physician. I wanted to somehow make healthcare better.

While working toward undergraduate and medical degrees at the University of Arkansas for Medical Sciences, College of Medicine, my focus turned to research. I delved into why cancer cells spread, sequenced DNA, and spent a year as a research assistant at the University of Oxford. But it was during my residency in the early 1990s in Texas when healthcare cost, quality, and access caught my attention. Undocumented immigrants in Texas had inpatient care paid for by the state, but not outpatient care. My conversations with parents about the inability of their child to receive care upon discharge brought to my attention the impact of healthcare funding. It also was the height of HMOs, so I saw the challenges people had navigating the healthcare system and narrow networks.

It took marrying another pediatric-oncology physician to shift my career focus within medicine. When I met my now wife, she and I both intended to become pediatric oncologists −− she a clinician and me a researcher. It struck me that our life together would be easier if we were not in the same field.

I was still very interested in how to improve healthcare costs, quality, and access. I decided I needed to learn the language of business. I earned an MBA and then became a medical director in the managed care sector. I stayed with health insurers for a dozen years. During that time, I witnessed employers struggling with the rate increases in health insurance, patients struggling to secure appointments and paying out-of-pocket costs, hospital administrators trying to retain nursing talent while balancing budgets, and physicians struggling to absorb malpractice insurance rates. It was a wonderful perspective from which to engage in the challenges of cost, quality, and access.

During my dozen years in the managed care industry, I had positions of increasing accountability for cost, quality, and outcomes. As Vice President of Professional Networks at Independence Blue Cross in Philadelphia during the start of this century, I worked on pay-for-performance programs for physicians and hospitals.

As the Chief Medical Officer at Blue Cross and Blue Shield Florida, I became closer to marketing the product through consumer incentive plans to inform and educate about treatment options. In my next position at Wellcare, I was involved with integrated case management for people with complex medical and mental health issues. It was compelling to me that we were driving innovation for the sickest of the sick.

At this time, the Medical-Loss Ratio for Medicaid and Medicare (and later coverage under the Affordable Care Act) required that payers must spend 80% to 85% of premium dollars on claims expenses. This limited the amount of money a health plan could retain for investment and profit, which resulted in cuts in the cost-quality area. This is not easy to do!

About this time, I became aware that private equity groups were looking for opportunities to invest in healthcare innovation and invest in programs that drove patient outcomes. So, I joined friends who had spun out a company and began my entrepreneurial journey that led to Avalon Healthcare Solutions, which I co-founded in 2013.

Can you tell our readers what it is about the work you’re doing that’s disruptive?

Avalon Healthcare Solutions is the world’s first Lab Insights company that generates actionable lab-driven insights in real-time to proactively ensure appropriate care and enhanced clinical outcomes.

We started Avalon because lab testing is the gateway for appropriate diagnosis and treatment care planning, and it certainly impacts the goal of achieving value-based care in this country. In fact, lab results are the basis for 70 percent of medical decisions.

There is, undoubtedly an explosion occurring in what we can test in the body. It goes beyond genetics, which receives a lot of attention, but we can break down more chemical components, stain tissues differently, and much more. All this innovation needs to be sorted out by the healthcare industry. It’s comparable to the disruption in radiology in the 1990s when innovation in PET and CT scanning required education on how and when to use the testing technology.

The fact is that increasing lab testing capabilities are increasing waste in the healthcare system. Consider that 10 to 12 percent of lab units “stuffed” into testing panels provide no useful information on diagnosing or treating a patient. This phenomenon of panel stuffing is pervasive and is common in routine testing, such as thyroid and Vitamin D panels.

Through Avalon’s platforms and solutions, we are uniquely disrupting the lab testing industry to save time, reduce waste, and improve patient care and outcomes. We do that with sound science, as our independent clinical advisory board creates policies defining when lab testing is clinically useful. Avalon prepares these policies for healthcare payers to follow when managing lab testing authorization and reimbursement. Does that create disruption for physicians, health systems, and labs? Yes, and it is changing how lab tests are ordered, approved, and paid for. One of Avalon’s customers has published over $100MM in savings through its adoption of our program.

With more than 33 million lives covered by Avalon, we are now bringing together the management of lab results at scale and gaining insight into testing trends. We can show where lab tests are not being utilized — and should be — and where lab results are not being used correctly to inform care. It’s another type of disruption that will advance appropriate testing and truly inform care.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Early in my career when I was a medical director at United Healthcare, I had to review an orthopedic procedure. A nurse colleague came to me after I reviewed the case and said the orthopedist doing the procedure wanted a “real doctor” — not a board-certified pediatrician — to make the decision. I spoke to the orthopedic surgeon and explained that my decisions were based on national standards and I was well-trained to apply the health plan’s criteria to the case to approve or deny benefit coverage. While I didn’t make any mistakes in this case, I still laugh about being called out as not a real doctor. It emphasized to me that data by itself is not enough, and human connection is also very important in healthcare.

We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?

Steven Udvarhelyi, M.D., currently CEO of Blue Cross and Blue Shield of Louisiana, was my boss when I worked at a start-up Medicaid plan in Texas and Independence Blue Cross in Philadelphia. He taught me about managing people and budgets and greatly advanced my business knowledge. I was a “blank sheet of paper” early on, and Steven helped fill it in.

Adam Boehler and Ezra Perlman of Francisco Partners still inspire me. Adam knows how to build companies from the ground up, and Ezra knows technology and investing. Combined with my knowledge of building programs and services, we had the right synergy to start Avalon.

In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?

Disruption for disruption’s sake is not always good. But disruption becomes necessary to change outcomes from the status quo. The challenge in healthcare is that cost and quality are not aligning, and the American public knows it and is not happy. Americans are spending more each year for less in quality than many other countries. It’s not acceptable that the gap keeps growing, so disruption is happening.

The challenge with disrupting the U.S. healthcare industry is the inertia built from what I call “huge tectonic plates,” which are the large provider systems, pharmaceutical companies, healthcare payers, government regulations, etc. They make innovation hard and generate great force in opposing change.

Can you share five of the best words of advice you’ve gotten along your journey? Please give a story or example for each.

Choose being right or effective.

When dealing with people, you have to decide whether you want to get them on board with the change or do you want to be right. In my opinion, it is more important to be effective than right, and being right may be a barrier to being effective. This requires me to suppress my ego.

Here’s an example: A middle manager says if he is promoted to a certain title, he will be more effective at his job. His mindset is that a bigger title brings more authority, but that’s typically not true. I believe that the higher up you go in an organization, the less top-down authority you truly have, which requires more influence to be successful.

We are sure you aren’t done. How are you going to shake things up next?

Avalon’s Lab Insights program is set to manage lab results at scale, at the population level. We’re marrying large data sets from the healthcare system to identify opportunities we haven’t even thought of yet. We do know we can look at lab test ordering and see who is not ordering the right tests or making the right decisions based on the test results. As the industry works to migrate from a fee-for-service to a fee-for-value program, ensuring the right testing and right interpretation and analyzing trends over time are critical. We’re about to see this go from anecdote to reality in our programs.

Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?

Walter Isaacson’s books are some of my favorites. I recently read Code Breakers, which explains how Jennifer Doudna and her collaborators invented an easy-to-use tool to edit DNA, known as CRISPR. I also read Isaacson’s books on Steve Jobs and Leonardo Da Vinci. Isaacson tries to understand how people reach a level of excellence, while also looking at their flaws and how they mitigate them to still succeed. It’s enlightening to understand that we’re all flawed and it’s a team effort to drive innovation.

As for podcasts, I enjoy Hidden Brain, which explores the unconscious patterns that drive human behavior. The podcast has helped me think a little differently. For instance, a recent episode demonstrated how important our frame of reference/viewpoint is to our understanding of the people around us. It pushed me to see the value of looking through other people’s eyes.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Life is not hard. People make it hard.” — Charles Barkley

You see the truth in this quote daily, with people making things harder than they should be. We should all think about how we’re making things hard and work on making things easier.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I would make the “tectonic plates” in healthcare more focused on driving value as opposed to preserving their self-interest and maintaining the status quo. I truly believe healthcare companies can be viable while being innovative in the areas of affordability and improved patient outcomes.

How can our readers follow you online?

This was very inspiring. Thank you so much for joining us!

Meet The Disruptors: Bill Kerr Of Avalon Healthcare Solutions On The Five Things You Need To Shake… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.

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