Jan. 6, 2021

Money, Data, Product and Healthcare. By Abboud Chaballout

Money, Data, Product and Healthcare. By Abboud Chaballout

Abboud Chaballout, Co-Founder at Diagnoss talks about working in a heavily regulated field and what it takes to get into healthcare space. We also talked about fundraising for Diagnoss and how he approached it during the pandemic.


Abboud's LinkedIn: https://www.linkedin.com/in/abboud-chaballout-207484a/

Diagnoss: https://www.diagnoss.com/

If you would like to learn more about diagnoss here is an article in which they were featured in: 

https://techcrunch.com/2020/11/19/diagnoss-launches-its-coding-assistant-for-medical-billing/

Here is an article to learn more about where AI can make the biggest difference in healthcare today: https://electronichealthreporter.com/tag/abboud-chaballout/

Transcript

And today is a guest speaker, have a CO founder at diagonal and base episode.

We'll talk about the healthcare industry how a small startup can get through all those regulations along sales cycles and fundraising you are in deep and dynamic and to get to success.

So, let's kick it off by giving us some background on yourself and on diagnosis.

Thanks so much for having me on today. Um, a little bit about myself. I am an attorney.

By education, um, but I've also been a healthcare entrepreneur a, for a number of years.

Actually launched a few other healthcare companies prior to diagnose.

Uh, 1 of, uh, uh, the interesting ones was, uh, a company where we were buying, um, mitigating unpaid.

Medical bills, a owed to providers from insurance companies.

Um, I learned a lot about how money flows in our health care system and a lot about the pain points that providers face in the operation.

Of their medical establishments, and during that same time, I got into the provider side of the business and.

Started to manage an urgent care and a pharmacy. And, uh, discovered very quickly that.

The, the provider side of the business is very challenging for for a number of reasons that we can get into later. Um, if, if there's time.

Um, but, uh, kudos to all the healthcare providers, uh, who are surviving out there, um, in in terms of, uh, maintaining their own clinics or hospitals. Um, it's, it's, it's, it's a difficult business.

Um, and I also, uh, during that same time.

Ran and operated a medical billing company and learned a lot about how the service side of health care operates.

And how often times the, the, the vendors incentives are misaligned with that of the providers incentives. So, uh.

What I'm doing that diagnostic today really is informed by all of these experiences and all. And all of these viewpoints from multiple aspects of our health care system.
And my goal with diagnostics is to, uh, bring efficiency.
In areas that aren't really.

Um, sexy, so to speak and but but areas where I believe.
Um, we'll we'll, we'll create a a big impact, um, a big impact in terms of.

Revenue and a big impact in terms of reducing administrative burdens that providers are facing on a day to day basis.

Right. That's a really cool goal. And can you tell us a little bit more about what specifically? Do you.

Yeah, so.

Our technology helps providers, select better codes with a AI.

Better codes better. Yeah. Better medical codes.

And the best way to the best way to think what is a medical code.

Great question. So.

The best way to think of medical coding is to think it to think of it as a translation exercise.

Between providers and insurance companies.

So, the next question is, well, why do we need to translate.

What providers are doing for insurance companies? And, and the answer to that is is is, uh, uh, a few things number 1.

At least in the United States, the vast majority.

Of, uh, of of health care.

Um, reimbursements or or a health care expenses.

Are paid by insurance companies on behalf of patients to the providers that are delivering those services. So, uh, if if if our healthcare.

If if in the US, we're spending 3 milk through 1T dollars on health care, almost all of that is paid out and dispersed by an insurance company.

And when you think about the process by which.

A healthcare insurance company is going to pay trillions of dollars. You'll quickly realize that there needs to be a system behind it.

Health care system is not going to have time to read doctor's notes and figure out how much they're going to need to pay that doctor.

Uh, but but what what can happen is the doctor can translate.

What they did for a patient and what's wrong with the patient into a series of.

Procedure codes and diagnosis codes that an insurance company can understand very quickly.

And then disperse, uh, money based on that.

So, medical coding is essentially that translation.

Exercise and and there's.

There's another way to think about it as well and that way is not it has nothing to do with money. It just has.

To do with healthcare management. So if you think about how do we manage.

Health care as a country, or how do we manage population? Health.

We have to have way, have to have a way of seeing what's happening on the front lines of our health care system.

So, these codes help governments understand the, the, just the general.

State of of the populations health on a national scale and also we can start to zoom out a little bit and understand.

Population health on a global scale, using these codes. So the United States is not the only country that uses these because there are many countries across the globe.

That uses a a similar structure.

To a record and manage healthcare encounters.

It sounds pretty complicated, so let's not go any deeper into the technicalities of the those codes and talk about how someone would know legal experience. So you, you actually had some law experience in the past.

You were in the medical field before, and that's why you kind of understood the field. Do you think it's. Somehow possible for someone who is not in the medical industry, get into that the industry.
As a started founder, it's a good question and.
My answer to that is it depends.

My journey was as a as a founder was 1, where.

I started building companies and I started to learn more and more about an industry and and the more that I uncovered.

Um, the more that I found gaps and and basically, my decision would diagnostic is to just go deeper into into what I had started. Uh, uh, previously.

But, but I went into a space that I would argue, requires that domain knowledge. However, healthcare is a.

Big industry there are many aspects of our healthcare industry. Where do you do? Not need.

Uh, domain knowledge, um, and and the health care, you know, when you think about health care, you can think about it.

In terms of building a company that's B to B.

Um, or you can think about building a company that's B to C. so there's a lot of movement movement in our healthcare industry that that is.

Is is trying to make some aspects of the industry a little bit more retail. So, and a little bit more consumer facing.
And those,
I would argue,

you don't need as nearly as much domain experience to be involved with for for example,

there are telemedicine companies out there that are making it very easy to get the prescriptions.

That you need as a patient without forcing you to have to.

Book an appointment with your primary care provider actually go to the clinic and wait in a waiting room. Then see a doctor in order to get the prescription that you already know that you need.

So so those,

those are a little bit more retail facing that kind of I'm not as complicated when you talk about the world of revenue cycle.

Um, and, you know, this is where you get, you get very niche. Um, and and and things get obscure very, very quickly and I wouldn't necessarily recommend getting into it without prior exposure in that world.

Right, absolutely. That's actually a good topic to discuss the sale cycle. I know that usually they're very, very, very long and complicated. So how do you approach this process of actually selling to hospitals to individual doctors?

How how do you do this?

So, we're figuring this out as we go, but.

In my experience, especially in the world of health care revenue cycle.

When do you prove that you can do something.

That will lend itself to.

Um, let's call it inbound traffic. That's gonna ease the, the sales cycle.

And why is that? I mean, revenue cycle is such a pain point.

That once you prove that you have something that's generating some value, then then the, the, the, the.

The ability to sell, it honestly is accelerated in, in ways that actually would counter this. Assumption that it's going to be a long sales cycle. However.

How we're getting to that point is is the key, right? Because at the beginning, you have to be able to sell a vision and that can take a long time.

Um, especially when you're thinking about building an artificial intelligence product. Which has a massive chicken and egg problem.

Which is data in order to build an amazing product you have to have the data to do. So but in order to get the data in the health care setting, you almost need a product.

Um, to to ease all the, all the concerns, and you actually have to have an infrastructure.

To make sure that you are staying HIPPA compliant and that you are minimizing risk for all parties involved. So.

So, I would say that the primary thing is validations figuring out how to validate your technology. As quickly as possible, we'll lend itself to really figuring out sales.
Um, in in, in a way, that is not gonna be as complicated as, as as you think it will be.

Right that's actually another very, very complicated subject to do in the healthcare space, validating the need for the product through developing because, as you said, the chicken and egg problem so, on the example of diagnosis, how do you approach that problem?

So, how do you make sure that people actually need the product that you're developing right now? It's funny, like, the way that we started thinking about it early on.

Is similar to how we were thinking about.
Fundraising, so, you know, we would we call it a data raise.

So, we would go and we would find interested parties or maybe we would find publicly available data sets and then we would work on product. And then.

Use that incremental progress that we made to really get buy in, from others that we were talking to get more data and then so on and so forth. Right?

It was it was very much an iterative process.

Um, every time we made progress, we were able to unlock, we were able to unlock opportunities.

Um, downstream that then gave us more data that then internal allowed us to make more progress. And then, which then enabled us to raise money, which then enabled us to get more data. You know what I'm saying it was this kind of like.

You know, this, this triangular journey that that, you know, we were going on with the triangle, including.

Money, uh, data and product.

Right, and we have to kind of go around, uh, the, the triangle, um, in in kind of a, in, in, in, in, in in kind of a cyclical fashion.

Um, in order to, to to make progress.

Nice I like the quote, money data product. So speaking of money, let's talk about the fund reason for diagnosis. Have you raised any money? Yet? We have.

So, we, we raised our 1st round from the house fund. Which is a fun focused on Berkeley.

Entrepreneurs, a broken entrepreneurs being, um, either graduates from UC Berkeley, or affiliated with UC Berkeley in some way, or fashion.

And, uh, they, they have a I mean, they, they invest in in a variety of of industries and verticals, but but they like, they do have a focus on.

And, Ah, we're we were very happy.

To get them on board, right? And how do you get in touch with them? Do you just literally go through the investors who focus on those Berkeley graduates and reach out to all of them?

Or do you re, having previous connections with that specific fund? Yeah, it's it's so, I mean, I was fortunate to be in law school at the time.

Um, so I already like, I had that connection there. I was in the community, and, you know, when you're in in the Berkeley community, there, you, you just know about the house.

Fun especially if you're if you're if you're a founder and you're an entrepreneur and you're and you're moving in those circles, there's 1 other.

Uh, um, uh, fund slash incubator in Berkeley called sky deck. So it's really those 2 organizations that that make their rounds at Berkeley. So we just just heard of them. And at the time.

Um, we were talking to, uh, Y, C and we were talking to some, some other investors and, uh, you know, just naturally having those conversations leads you to more investors and we eventually got connected.

Um, to the team at the house, and we, we talked to them about what we were doing and and the jumped on boards.

Nice. That's that's the quick fundraising I like. How it sounds. So speaking of fundraising going back to that process, do you think you would change anything at all?

So, maybe you would raise for more than 1 investor, or you would go out to other angel investors or strategic investors or anything that you would change at all.

You know, it's, it's hard to it's hard to say. Um, I think.
If if anything I would have probably focused a lot more on.
Just working on the product um,
I think I think that,
that,
you know,
when you're 1st,
starting out and your super early stage,
I would,
I would still define us as early stage but when you're,
you're at the idea stage,
just just trying to figure out.
What you're doing whether or not what you want to do makes sense.
It's very easy to get sucked into this idea that you have to go raise money.

Like, any like, all these other companies doing, you're reading tech crunch and you see all these headlines and you're like, hey.

You know, if, if if this is what everyone's doing, I should go do it. Um, but the reality is, is that. Those companies that are raising at the idea stage.
And and raising from top investors and cough funds.
Either already have a name for themselves in the Bay area, or in Silicon Valley, or in whatever. Um, you know, community that they're that they're that they're building their company.

Or they've, they've done something in the past.
Um, that lends itself to raising at such an early level.

So so if you're not that, if you don't fit in those 2 buckets, either being in the community, like, being in that circle or someone who's already proven that they've done something before in in a big way.

Then then I would focus a lot more on product. And validating. Product in the cheapest.
Um, most way possible.
Um, and and getting buy in from a customer.

Uh,
in in,
in,
in,
in,
basically,
at that point,
start your fundraising,
because when you have that data when you have data to show,
and I'm not talking about data to build an product I'm talking about data generated from a, in a,
a,
a,
a validated product or,
at least a,

you know,
minimally validated product.

Plus a customer who's working with you that speaks for itself and when you're sitting in front of investors, the conversation.

Is no longer a defensive conversation? It is it is an offensive conversation. So, that that's what I would have done early on is I, I wouldn't have necessarily bought into that. I need to raise right now and focused a lot more of my energy on figuring out.

How do I make this product work with whatever resources I have today.

Right that's good advice. People should definitely follow it, because a lot of founders feel like, as soon as they have done their pitch deck and that's the good time to go race.

But speaking of the customers and getting them early on our printer, you call, you mentioned that you actually have some cash January in contracts with the government over the United States. So, I'm curious. Now, how do you manage to get into those.

Yeah, so, you know, in in the fundraising.

Process so we, we raised from the house and then we, we decided we wanted to raise again.

I realized very quickly that, you know, the fundraising sometimes.

Is not the way to go. Um, so I started looking outside of your, your traditional VC circles and then I learned.

That the government actually is is very interested in early, early stage technology, especially if you have some proof points.

And and depending on the department, whether it's the.

The, the, and for example, they will have, uh, these, these programs called.

And that those departments within the department will basically issue contracts.

Um, for innovative, technological advancements and and and and basically they will, they will fund.

The innovation on a commercialization truck, so you can actually get a contract from the government and it's not necessarily going to be a commercial contract, but it'll be an innovation contract.

So I highly encourage.
Um, you know, all of your listeners to to.
Search those websites find the government entity.
Um, that may, or may not be sorry? Not that may be interested. In your type of technology and make sure you're monitoring.

Um, the type of announcements that they're making, and the type of contracts that they're putting out on their websites.

Because you may actually find 1 that overlaps with what you're building and then you essentially will write a proposal.

Um, and, uh, um, and if if if if they bite that can, that can turn into a contract that that's going to, uh. Uh, fuel the growth of your company.

Right that's a very accurate government does like those projects, especially if you already have something proven out, if it's not too risky, then definitely. Take your time to try. At least to work with the government.

The United States government is pretty generous. So, let's move on to the last 2 questions of today's episode. What's your major advice to the early stage? Founders listening to this episodes and not necessarily in healthcare or deep tech.

I would say my, my number 1 advice.

Would be to focus on your psychology.

During this during this time, it's very easy at.

Early days to in a.

The quintessential kind of quintessential way.

You know, describing the journey of a founder is, is that it's a rollercoaster, right? There's, there's really high highs and really low loads.

Um, and, you know, my advice is.
In order to get through it, especially in early days, especially in a situation where.

You know, you you believe and what you're building, but you're not necessarily getting the traction that you want.

Is to kind of step back a little bit and start to think about what you're doing.

As a journey, and really appreciate the journey for what it is and why is that important? Because when you're looking at what you're doing as a journey.

Then it's not life or death anymore.

Right. It's it's basically you're going through the process and that process.

Is intuitive just like building product is.

Like, your experience in and building this company is additive.

Every time you talk to somebody, you're just going to get better at how you think about building your company and you're going to get more tactical.

Um, but if if if you're going to let, you know, your your psychology drive, you. Meaning the highs and the lows.
Then, you know, in my opinion, you're, you're not, you're not going to be able to.

Grow as fast as an entrepreneur, because you're too busy.

Uh, um, being driven by your emotions, rather than, um, you know, really, you know, looking at it as a journey.

And, and figuring out what the next part of the journey is going to look like and, and being tactical about it.

100% good to call. That's very important. I mean, yeah, everyone knows that starts is just like a rollercoaster going up and down. Well, literally, every single week molecule deep, small, so that's definitely good. Advice.

Tried to follow it. Even though, I know that most of the time you cannot, but at least try at least pretty positive note where moving onto a last question of today's app is a, which.

I do have I do for 1, I do have 1 other piece of advice, and I think this was for for. Key for us that diagnostics is.
Just talk to anyone.
And everyone that's willing to listen to, you.

And, and literally, that was my number 1 strategy and building the company and getting.

To the point where, uh, we have the funds to build out a world class team and and and and build the product, um, that I envision building.

And it's literally came from talking to anyone and everyone.

That would listen, because, because each person that.

You speak to is is is potentially an opportunity to.

And to basically meet someone else or get an idea, that's going to help you move what you're doing, further down the road and you asked me about, um.

Getting into the healthcare space, even without any experience and I, I would say that if that's if that's something someone is doing or wants to do in a.

Talking to people is going to be that much more important even if your immediate circle is not 1, that can help just remember that. Everybody knows somebody.

And and moving moving through those connections.

Um, is is is absolutely critical. Um, and and doing that can take you from being in a place where you literally just have an idea.

All the way to having a product, and then being featured on tech crunch, fierce health care, whatever other, you know, at least that for us, that was a pivotal moment.

Um, whatever other journals or magazines in your space that are critical and and you can get there. I, in my mind, it's just.

Basically, a series of conversations and iterative growth as a founder That'll get you there. Absolutely, talking to people is essential especially if you don't know something about the field. So

that's that's an even better advice. And.

Yes, very helpful. And that point we're moving on to the last question of today's episode, which is a call to action. So.

What is the 1 thing you want to listen to to do? Right? As the app is over. So, 1 step is stops. What was the 1 thing you want them to do?
I, I would want them to take.
More action in.

In renewing.

Let me, let me kind of collect my thought here.

Go for it I would I would want them to take. I would want them to renew their intention.

Behind what it is that they're doing, and what it is that they're trying to build, um, and that.

You know, as as founders as entrepreneurs are moving.

A 1M miles a day.

And, uh, it's it's very easy to get caught up in your to do list. And it's very easy.

Um, to to get stressed about what you haven't yet accomplished, but but just take a step back.

And renew your intention about what you're doing.

Um, and That'll give you a renewed sense of clarity of where you're going, which in turn will help you make better and better decisions.

Um, on a daily basis, and I'm talking about operational decisions. So that's that, that that's an action that I would like.

Everyone to take, which is just take a step back.

Take a deep breath and renew your intention. Right? That's actually good. Since we're talking about, you know, reviewing what you're doing. How you are doing this. My call to action is going to be.

Trying to put a very short elevator pitch for your meetings with people. A lot of the problems that I see with the founders, when I meet them is, they're, they're struggling to explain what the hell they're doing.

You know, I don't need 5 minute pitch. I need.

Just a couple sentences that should give me an idea of what are you up to? So, my call to action is give me try to do that. B***. Of course listen to a bugs advice and as usually have a good date.

Learn more about Abboud Chaballout from the following:

“Abboud Chaballout Is Using AI to Revolutionize the Healthcare System”

https://www.wfmj.com/story/42806904/abboud-chaballout-is-using-ai-to-revolutionize-the-healthcare-system

Where AI Can Make The Biggest Difference In Healthcare Today

https://electronichealthreporter.com/tag/abboud-chaballout/