Andrew Hines, Canvas Medical, on building a platform to solve the EMR problem

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In this episode, we sat down with Andrew Hines, Founder & CEO of Canvas Medical. Andrew and his team at Canvas Medical build software and APIs to power collaboration between caregivers and developers. Prior to Canvas Medical, Andrew created one of the largest real-time analytics tools in healthcare at Practice Fusion and led large-scale data science teams in the advertising and travel industries. Andrew holds an MS degree in management science and engineering from the Stanford School of Engineering.

Canvas Medical raised $17M in Series A funding in April, 2021. Inspired Capital and IA Ventures co-led the funding round. Other investors included Upfront Ventures, IronGrey, and iSeed Ventures.

We discussed:

• Canvas Medical’s vision of building a software platform that connects electronic medical records (EMR) with clinician input that allows software developers to collaborate closely with practitioners and adapt workflows to accommodate evolving care models.
• The potential for Canvas Medical to facilitate idea exchange between ambulatory clinics and accelerate clinical research development by breaking down data silos.
• The importance for digital health startups to identify the user and the purchaser, and be critically honest about who would pay for the product or service.

Start to 9:22: The genesis of Canvas Medical

• An early start to entrepreneurship: An avid surfer, Andrew started his first company at the age of 13 using computer-aided design systems and robots to design and manufacture surfboards for professional surfers. His company was called “Apex Precision Surfboards” and was intended to push the edge of performance technology for surfing. Today, Andrew still surfs in his free time. And yes, there is surfing in San Francisco.
• On the origin of Canvas Medical: Andrew was first alerted to the problem of EMR and data management in healthcare when his partner, a family nurse practitioner, trudged through the arduous process of untangling data and data requests. The process drove overtime hours, and took a real toll on their lives. Andrew was also interested in solving the software technology part of the problem. Streamlining healthcare data presented an opportunity to alleviate a personal pain point and improve clinical medicine.
• On the state of the healthcare data industry: The EMR industry was rapidly developing and attracting more attention when Andrew was preparing to enter the market. IT and data management had become an increasingly sore problem for healthcare companies. The recent passage of the HITECH Act injected ~$35B of funding to boost efficiency and interoperability, lower costs, and elevate overall care in the U.S. In addition, Flatiron Health acquired Alto Solutions, an EMR developed specifically for oncology conditions. As a result, the EMR market was saturated with many players. But Andrew and his team realized the key to cutting through the noise was to focus on a better experience for the end user.
• On charting his own approach: Andrew had worked at other EMR startups, but found that misalignment between business objectives and resolving the core problem of untangling data systems made it difficult to fully buy into the mission. In addition, Andrew’s background in data science motivated him to apply his skillset to build his own solution.
• Elevating the role of software engineers: Historically, software developers were not part of the core team in healthcare delivery companies. As the healthcare industry experienced significant growth from new startups entering the market, software engineers began to work more closely with frontline clinicians. This dyadic partnership has enabled greater collaboration between the traditionally back office IT functions and front office clinical staff.

“Our real growth ambition is to power every single one of those new entrants so that they can run, bring their care model to life in the market, and experiment with different business models. So we can ultimately figure out how those commercial models impact quality of care.”

9:22 to 30:16: Building a comprehensive platform for software engineers and clinicians

• On building a solution that services multiple needs: Healthcare delivery companies must manage a plethora of functions, from identifying patients, tracking patient info, completing follow-ups, and collecting payments. While some services furnish spot solutions, few provide a comprehensive platform for healthcare delivery companies to build data and IT systems. Canvas Medical provides the depth of capabilities to service a wide range of needs across a wide selection of business models.
• On the Canvas Medical offering: At its core, Canvas Medical is an integrated care delivery environment for digital health developers. Canvas provides tools and software for all users within an ambulatory clinic, from the billers and coders to the clinicians. Canvas also provides the software platform for users to set up a variety of capabilities, from patient onboarding, scheduling, results analysis, claim submission, and subscription management, among others.
• On reimagining the care model: Unlike legacy systems that facilitate one-way communication and selective customization, Canvas provides a new way for software engineers and clinicians to collaborate to improve care delivery. With Canvas, clinicians can work with software developers to architect live workflows that can be adapted based on user feedback. In this way, Canvas provides the software platform that allows its customers to build their own protocols based on business needs. Canvas can also help customers design new ways of working by elevating data that may have historically been stored in silos.

“We have spent years developing a specialized asset focused on developers, in part because that’s our DNA as a company. We’ve effectively revealed our internal developer capabilities to the market, and we find ourselves in a position where we have the depth of incumbents and the breadth to replace them.”

• On the choice to focus on ambulatory new entrants: Canvas Medical targets new entrants in ambulatory medicine. Instead of replacing legacy IT systems, Canvas focuses on onboarding new companies to its software platform. These new entrants may be bootstrapped physician entrepreneurial ventures, but may also include new initiatives from established players. For example, Canvas Medical partnered with Anthem to expand Anthem’s abilities in digital health.
• On Canvas’ role in supporting small businesses: With the growing tail of smaller businesses splitting from institutional clinical practices, a new group of outpatient care delivery companies are looking for full-stack solutions that provide the breadth and depth to service various evolving business models. Canvas Medical aims to enable these players to update their data management and IT systems.

“New entrants are coming from many different places, and they take many different forms. And one thing they have in common is they all have developers as a core member of their team.”

• On aligning incentives to build companies that grow value for all: In an industry where the stakes around patient health are so high, it is critical for companies to not only consider profit motives, but also ensure the safety of patients and a high standard for clinical care. In Andrew’s experience, this can be achieved by ensuring alignment between your business model and your customer’s business model as well as ways of doing business. Guardrails should also be in place to reinforce patient safety and care quality.

“The adoption of a core system of records and system of work is a massive, sort of company-defining bet. Whether you’re a large health system and you’re trying to choose between Epic and Cerner, or a homegrown system or venture-funded company making a bet on Canvas, it’s a huge decision. For us, getting adoption has always been reduced to trust.”

• On cultivating trust to build consumer adoption: Selecting a data system to drive operations is an incredibly critical decision for healthcare providers. Understanding this, Canvas Medical emphasizes spending time with customer teams to collaborate on a software solution that addresses their needs. Canvas also highlights its track record of partnering closely with customers to build solutions prioritizing clinical safety and integrated delivery as further evidence to entrust Canvas.
• On the potential of sharing workflows between customer organizations: While Canvas Medical does not share source codes customers develop on the Canvas platform, there is tremendous potential for information-sharing across Canvas, especially in areas that relate to public health. In response to COVID-19, a Canvas customer developed two protocols that facilitated on-site screening for COVID and designed an outreach campaign for the elderly and immune-compromised, two groups with the highest risk of suffering adverse health effects from COVID. The ability for customers to share their source codes to enable other practices to adopt best practices to advance public health goals has the potential to lift the tide on the quality of healthcare and save many more lives.
• On the implications for improving clinical research: Canvas Medical can also accelerate the pace of clinical trials, drug development, and broader clinical research. Canvas allows groups to more dynamically test hypotheses and run experiments by improving workflows. Given the importance of EMR in these studies, platforms such as Canvas will be instrumental in enabling the proliferation of important studies contributing to improving care quality.

“Growth for us is 100% tied to growth in the number of new entrants and the amount of experiments folks are running in terms of business models and care models. It’s time to hit the reset button — it’s absolutely happening.”

30:16 to 40:45: Commentary on the digital health industry

“In our industry right now, we have massive excess demand and a huge problem on the supply of talent. The only way we’re going to dig out of this as an industry is to be able to do more with what we’ve got. And software developers are a huge part of that.”

• On Canvas’ goals: Canvas Medical seeks to not only support the rise of new ambulatory practices and novel initiatives from incumbents, but also to accelerate the pace of change in the healthcare industry by improving care models to elevate care delivery.
• On trends to watch in 2022: Andrew predicts telehealth and hybrid formats of dispensing healthcare will continue to grow. Successful practices may need to develop the ability to support both virtual and in-person ways of delivering care. There may also be more resolution around regulatory uncertainty in 2022, such as the rollout of TEFCA. The surge of VC funding into digital health will likely continue through 2022.
• No perfect business models: Having collaborated across many different business models, Andrew surmises that there is no silver bullet to creating the optimal healthcare system. Recently, direct-to-consumer and value-based models have gained more attention. However, there is still more to figure out, from how to attribute value to how to allocate the burden of healthcare costs. New entrants are creative, and eager to experiment and figure out the right balance.
• Advice on how to create a successful practice: According to Andrew, the first step new entrants should take is to define their care model. In a recently published white paper, the Canvas Medical team shares tips on key elements of a care model founders should consider. After defining a care model, the team should select a technology solution that enables their ideal care model. Throughout this process, founders should remain vigilant about identifying risks and investing in core differentiators to separate their business from competitors.
• On common mistakes to avoid: It is difficult for new entrants to estimate the resource requirements for building technology safely in a healthcare setting. Healthcare technology must protect patient safety and adhere to regulatory guidelines such as HIPAA. Often, firms may select a tech stack without fully understanding the costs required to set up the proper controls and guardrails. These early mistakes can result in a higher overall bill as companies discover gaps in their technology capabilities and have to reinvest in building out tech.
• On the key components of tech for healthcare companies: Maintaining the privacy and security of patient data against breaches is one main pillar of technology platforms supporting healthcare companies. Another patient-centric element is ensuring the accuracy and timeliness of data to preempt and inform clinical decisions for patient care. Strong technology platforms promote greater visibility into patient safety risks and can prompt clinicians to act accordingly.

40:45 — End: Advice for entrepreneurs

“Invest in the vitamins of entrepreneurship: sleep and getting support…Even in the best case, it’s a long journey to create something enduring and important.”

• General advice for entrepreneurs: Resilience is key, especially in the complex world of healthcare. The journey is long to build an enduring solution, and entrepreneurs should invest in sleep, personal health, and a support system to help them along the journey.
• Advice for entrepreneurs in healthcare: It’s critical to understand who the users are and who the buyers are. In healthcare, users and those who are paying for the product or service may not be the same. Incentives are tricky in healthcare, and founders should honestly ask themselves why someone would be willing to purchase their product or service.
• Building a team as a technical founder: The key is to break as many of your own boundaries as possible. In Andrew’s words, a technical founder should “become untechnical.” This entails getting comfortable with the aspects of starting a business that may be uncomfortable due to lack of background expertise. In addition, look for team members who can complement your skills and have the grit and resilience to go through hurdles with a smile on their faces.
• On criteria for investors: The average relationship with an investor outlives the average American marriage. Knowing this, it is important for founders to put in the diligence up front to ensure they are partnering with investors who are truly aligned with their mission and vision. When the balance between providing guidance and allowing the founders to flourish is right, it’s magic.

“Clarity on the users and the difference between that and the buyers is key. The incentives in healthcare are all over the place. And it’s worth that extra intellectual honesty on why someone would buy this. How does my solution solve an important and difficult problem in a simple way that appeals to a rational economic buyer?”