Virtual Health, Real Success

As Michigan-based automotive giant General Motors stalls and state unemployment numbers hold in the double digits, this beleaguered state is experiencing a public relations crisis: fewer and fewer see Michigan as a viable option for living, working or investing.

But that would be a faulty perception, and a dangerous one.

The existence and success of the Ann Arbor-based company HealthMedia, Inc. is evidence against the common supposition that Michigan is on a downhill path of no return. Despite being acquired by corporate behemoth Johnson and Johnson six months ago and becoming one of 252 independent companies, HealthMedia has elected to stay put when it could have relocated.

"There are no plans to move anywhere," says HealthMedia President Ted Dacko. "We'll maintain the same structure as before the acquisition, and the same location. We fell in love with Ann Arbor, where we can do something very meaningful and exciting, and also cherry pick some great talent."

The Big Idea

HealthMedia offers an unusual – even unique product. It has, in the company's words, built a methodology and technology that allows it to emulate what the industry terms a "health coach session" – without the trainer – and entirely on the web. Services include coaching for wellness (think weight management and smoking cessation), behavioral health (such as binge eating or insomnia) and disease management, with the end goal of increasing productivity and reducing costs.

HealthMedia had its inception in Michigan with University of Michigan professor Victor J. Strecher, Ph.D., Founder and Chief Science Officer of Health Media. Strecher recognized that the only way to help people was to provide personalized counseling services – and this typically meant face-to-face counseling. He noted that brochures, as they existed, did not effectively change behavior or help patients with their health or behavior. According to Dacko, these static documents served only to make the employer or health plan "feel better" about the degree of assistance it was providing, and did little for the targeted audience besides providing a fleeting palliative.

Virtual care for the masses?

Because providing a health coach for each employee or health plan member is  prohibitively expensive, Strecher wondered if he could tailor a kind of brochure-based system on specific needs, including attributes like motivations, ethnicity, and age – even taking into account past performance. Tailoring a brochure to a particular patient or client increased the treatment effectiveness rate - so much so that it could emulate the efficacy of a counselor at 95% less cost. The idea evolved rapidly from there.

Founded in the late 1990s, HealthMedia soon began to build the technology that would allow it to support massive numbers of user needs, and therefore be a useful software and service to large organizations. Starting simply – it was a tailored print company at first, according to Dacko – HealthMedia gradually evolved from a print to Internet-based company.

"Most websites are nothing more than a generic, linked up brochure," points out Dacko.  "HealthMedia strives to go beyond that to provide a unique program for each and every participant's needs. And we can do it for a massive amount of people at a fast rate and a reasonable price."

He describes it in simple terms: Today HealthMedia is to the health industry what the ATM machine is to banking, or the kiosk is to the airline. It's a tall claim, but one to which organizations all over the country are listening: Blue Cross Blue Shield of Michigan is rolling out a HealthMedia-designed plan on its website for its members this week. Indeed, Michigan clients already include the Henry Ford Health System, The Health Alliance Plan of Michigan, Central Michigan University and more.

A SaaS like no other

It's where the technology marketplace is trying to get to, says Dacko – to create a software-as-a-service (SaaS). In the words of the hallowed Wikipedia, a SaaS is "a model of software deployment whereby a provider licenses an application to customers for use as a service on demand."

It's the kind of innovation that Silicon Valley prides itself on but Michigan-based HealthMedia has dominated. Indeed, today, the company has 40 million eligible "lots" – referring to the total membership of all employer plans and customers.

"We've established a high gross, profitable business that Silicon Valley companies can only dream of," Dacko says.

Why Michigan? Why now?

"Michigan offers a nice pool of schools from which to draw resources," says Dacko, who explains that the company needs a diverse body of employees. Of its 150 Michigan employees, not only are software gurus present, but also doctors, clinical psychiatrists, counselors, and  researchers who serve as critical parts of the service's ongoing success.

HealthMedia Director of Corporate Communications Caren Kenney adds that the Obama administration's current drive to encourage employers to implement wellness and behavioral health programs has increased interest for HealthMedia's services. Indeed, the current economic climate has also done its part to push companies and organizations to innovate in the workplace to save on healthcare costs. As companies report spending up to 50% of profits on health care, employers are increasingly recognizing that investing in preventive care makes a lot of sense.

On a darker note, according to HealthMedia, the current global economic crisis has sparked increased patient demand for certain services such as depression, binge eating and insomnia.

"If you consult a health assessment you will find that right now over 30% of the population admits to some level of depression, but will not seek counseling because they don't like the stigma associated with it," he says. Incredibly, the same people will go online and take a web-based counseling session.

Enter HealthMedia and what could be the dawn of the most science-fiction-like mass health care to date.

"We can't find anything else like it anywhere, we just haven't found anyone doing what we do," Dacko agrees.  Most insurance companies and employees are still providing employees or members with the old standbys - generic web content or static printed brochures. Dacko attributes HealthMedia's success and unique product to the quality of its founder's research and the time and dedication he spent having people build the underlying technology.

As for the future, HealthMedia models its philosophy on that of Apple Computer, Inc. and its iPod. "We try to be very creative and innovative – we are constantly inventing our own products, and we are constantly reinvesting."

The Next Silicon Valley?

"The issue is that there are plenty of good ideas in Michigan, and plenty of talent," says Dacko. "But venture capitalists need to focus on the local economies and not be lured to the coast. We also need to focus on developing and importing new talents, and to think about creating tech companies that are not tied to the auto industries," he warns.

HealthMedia is familiar with the unique set of constraints afforded by the Michigan financial climate. As is true for many Michigan companies, getting sufficient investments was once a problem for HealthMedia, and the company nearly sank at one point.

"There was a time in 2000-2001 where you could just not get funds," Dacko says. The company finally received an investment from a company out of Kentucky, and another later on from Arboretum Ventures in Ann Arbor.

"They were richly rewarded in sales later on," Dacko laughs.

The trick is for investors to look beyond the pall currently hanging over Michigan and find the visionaries who are pushing the boundaries of technology and human quality of life. It is that supreme vision about the present and future of health care that will remake Michigan's image at both home and abroad.

Leia Menlove is an Ann Arbor-based writer and regular contributor to Concentrate.  Her previous story was MASTERMIND: Myra Klarman.


Victor J. Strecher, Ph.D, Founder of Healthmedia, and Ted Dacko, Healthmedia President-Ann Arbor

Healthmedia: Company of 2008

Ted Dacko's Office

A Healthmedia Consultation Meeting-Ann Arbor

The Astronaut Bear Guards the Healthmedia Sign-Ann Arbor

Ted Dacko at His Desk at Healthmedia-Ann Arbor

The Entrance to Healthmedia's Office-Ann Arbor

All Photos by Dave Lewinski

Dave Lewinski
is Concentrate's Managing Photographer.  I don't know if you this this, but he's a pretty big deal.

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