Private Equity Investee, MediSecure’s CEO discusses the rise of ePrescriptions during COVID

 

Salter Brothers Private Equity Fund has made investments in e-Health company, MediSecure since 2019. CEO, Paul Frosdick discusses the rise of ePrescriptions in Australia during COVID-19 and how this accelerated uptake, along with an acceptance of Telehealth, is positioning the company for growth in the Health-tech market, while delivering clinical professionals further innovations to assist with healthcare for Australians.

1.  Tell us a little about your background prior to starting at MediSecure

I qualified as a pharmacist in London in 1986 and spent 14 years working in the hospital sector of the English NHS. In early 2000 I moved into health information technology to redevelop the NHS national medicines terminology that was installed on all GP computer systems in the UK.

The NHS donated this redeveloped terminology to the Australian Department of Health, which was used as the framework of what became the Australian Medicines Terminology, which in turn, led me to be seconded from the NHS to run the national terminology operation for Australia, and like most POMs who find their way down here, I sensibly opted to stay.

Fourteen years later, I ended up as a Director in Deloitte Australia’s health information technology practice, before the opportunity to lead MediSecure emerged in mid-2019.

2.  What was the catalyst for starting MediSecure?

MediSecure started life long before I arrived to take on leading the business. The catalyst was quite simply a very sensible piece of health information technology policy published back in the ‘noughties’ that paved the way for prescriptions to be transmitted electronically between the computer systems used by GPs and community pharmacists.

Rather than seek to build the technology infrastructure to achieve this goal within the public sector, the Department of Health created the opportunity and funding model to allow private sector business to do so on their behalf.

3.  Tell us a little about MediSecure; what you do, what your point of difference is with your core electronic transfer of prescriptions (eTP) platform?

In simple terms, MediSecure is a health technology company that has built and runs a software infrastructure in the cloud, to do three things:

  1. At the time a prescription is created, extract all the information a GP has entered into their computer system about the prescription(s) for a patient;
  2. Send that information across a highly secure internet link to an equally secure, Australia-located, cloud-based repository where it sits until;
  3. The patient presents a computer-readable token at their chosen pharmacy. At this point, the information is securely sent directly to the pharmacy’s computer system, as the first step in the dispensing process.

At its core, the basic process is hard to differentiate, so we focus our offering on two key points of difference:

  1. Independent ownership, which allows differentiation based on a philosophical, small to medium-sized business alignment with the medical practices and community pharmacies that are our principal customers and whose commercial strategies are at times misaligned with elements within our competitor’s shareholder base;
  2. A collegiate approach which sees MediSecure’s growth dependent upon creating strategic partnerships with businesses with adjacencies to our position in the end to end process of medical consultation through to medication consumption.

This approach firmly positions MediSecure as the flexible and collaborative partner in medication supply, in a digital health market that is seeing a significant growth in the number of niche applications requiring integration to a common spine.

MediSecure is the flexible and collaborative partner in medication supply, in a digital health market that is seeing a significant growth in the number of niche applications requiring integration to a common spine.

4.  In 2018, the Government launched real-time prescription monitoring. How did this Government mandate help drive the business’ growth?

Real Time Prescription Monitoring (or RTPM) is a national response to the ongoing problem of accidental overdose deaths in Australia, killing over 2,000 Australians each year.

The RTPM systems gradually being rolled out by the States and Territories capture the prescribing and dispensing data for a defined list of high-risk medications that is generated by MediSecure and our competitors to alert doctors and pharmacists at the time of prescribing or dispensing of what high-risk medicines have been prescribed and dispensed for that individual. By providing this information in real-time, the clinician can make a judgement on whether the further supply is in the best interests of the patient at that time.

For RTPM to contribute as effectively as possible in preventing accidental overdose, the data set of prescribed and dispensed high-risk medicines needs to be as complete as possible: Ideally 100% complete. This assists the clinician and also helps drive business growth in two ways:

  1. MediSecure has partnered with its market competitors to pool the respective prescription and dispensing data for those defined at-risk medicines. This ensures that the data set used by the State and Territory governments has access to every known event, regardless of which commercial exchange handled the messages, delivering improved outcomes to Australian health consumers and a revenue stream to MediSecure through the joint venture.
  2. Because the ideal safety case needs to be supported by a 100% complete data set, RTPM drives up the number of prescriptions electronically prescribed and dispensed in Australia, and hence the number of prescriptions handled by MediSecure.

5.  What were the greatest challenges with driving market adoption in the early years?

MediSecure faced two very different challenges with respect to driving market adoption of its prescription exchange:

  1. The first challenge faced by the business was a misalignment between digital health policy i.e. the drive to set up electronic prescription transfer, and legislative policy i.e. change the law to that medication supply did not require a physically signed, paper prescription to be legal.

This significantly retarded both the adoption of prescription exchange services and the number of prescriptions passing through the exchange that met the government’s requirements to attract payment for the service provided.

2. The second challenge faced, which has been reinforced by their ownership arrangements, was the size and starting market presence of our competitor. Corporate ownership and investment, combined with a pre-existing 50% market share in the community pharmacy software space, created a persistent scale-based competitive advantage.

6. What value has Salter Brothers given as an stakeholder in the business?

Salter Brothers has assisted MediSecure in three ways.

Firstly, Salter Brothers involvement has introduced an increased degree of financial and commercial rigour to MediSecure to help the business stabilise its market position.

Secondly, its initial financial investment enabled MediSecure to purchase the Simple Retail community pharmacy software system. This allowed the MediSecure Group to vertically integrate a prescription exchange with a deployed software system, and as a result, secure the prescription traffic across hundreds of pharmacies, with the combination of ETP revenue and software fees ensuring the business’ financial viability.

Finally, the Salter Brothers second investment enabled the MediSecure Group to restructure its operations to meet current market realities, and enable the executive to reposition the business for the growth opportunities it is now pursuing.

Salter Brothers involvement has introduced an increased degree of financial and commercial rigour to MediSecure and enabled us to purchase the Simple Retail community pharmacy software system, allowing us to secure the prescription traffic across hundreds of pharmacies.

7. COVID-19 has seen an accelerated market adoption of eTP. Which segment/s of the health sector have been most proactively adopting the technology? Do you expect to see this continue?

To date, ETP services have been predominantly focused on, and adopted by the primary care sector, and to a lesser extent by the specialist sector when prescriptions are written in consulting rooms. A small niche of adoption exists within the aged care sector, though primary care physicians and community pharmacists still mediate prescription traffic.

A further (smaller) niche exists in the acute sector for those prescriptions that are written in a hospital where the explicit intention is to mediate supply through the community pharmacy network.

Historically, MediSecure has chosen not to compete in the aged care and acute sector niches. This position will change through the life of the MediSecure 2020-2023 Strategic Plan.

8. What have been some of the key strategies used to drive and respond to this accelerated adoption?

In terms of driving adoption of ETP, the necessary legislative amendments to correct the misalignment between digital health policy and legislative policy passed into law on 31 October 2019.

Adoption was anticipated to gradually increase as community pharmacy system vendors gradually released their upgraded software products onto the market to cope with the newly legal, non-paper prescriptions. However, the COVID-19 pandemic resulted in the federal government funding the fast-tracking of those system upgrades. As a result of this funding, plus the introduction of telehealth across Australia as a response to the pandemic, adoption is accelerating faster than we could have anticipated.

As a cloud-based, and therefore inherently scalable software service, there has not been a requirement to develop response strategies specifically to cope with ETP demand. That response is a strategic underpinning of the MediSecure architecture. However, the MediSecure strategy is enabling the business to accelerate our response to specific strategic objectives to create growth in ETP-adjacencies.

MediSecure’s strategy is enabling the business to accelerate our response to specific strategic objectives to create growth in ETP-adjacencies.

9. How has this adoption benefitted the health system overall during the pandemic?

The adoption of ETP during the COVID-19 pandemic has been of particular benefit in two ways.

Firstly, a fundamental part of the government’s response to COVID was the introduction of telehealth consultations. Once the doctor and the patient are no longer physically co-located, ePrescriptions proved the ideal vehicle by which to maintain the immediacy of prescription handover during a telehealth consultation.

Secondly, eScripts have contributed to protecting front line health care workers from infection. GPs and their staff are able to ensure pharmaceutical care is delivered to patients in isolation. As are pharmacists and their support teams.

In fact, MediSecure was the prescription exchange that enabled Australia’s very first fully contactless prescription supply to take place on 3 June in Sandringham, Melbourne.

MediSecure was the prescription exchange that enabled Australia’s very first fully contactless prescription supply to take place on 3 June in Sandringham, Melbourne.

10. Tell us about DrShop; how you identified the need for this add-on originally and the role it plays in the sector alongside eTP?

MediSecure brought DrShop to the market in January 2015 as Australia’s first Real Time Prescription Monitoring (RTPM) system. At its heart, DrShop is a ‘point of prescribing’ alert system, designed to improve patient safety, and has had a considerable impact.  This impact has been well recognised and so now DrShop is being superseded, state by state, by a national RTPM system co-developed by MediSecure and our ETP competitor (described above), to ensure every Australian receives the safety benefits we pioneered, regardless of which system is involved in their medication supply.

11. What’s ahead for the future? More complementary products for the MediSecure portfolio and the health sector? An expansion to new markets?

Yes and yes.

As discussed earlier, we are conscious that a prescription exchange service is a marketing challenge. We deliver a very successful piece of the national digital health infrastructure and we proved with the successful launch (and replacement) of DrShop, that introducing value add services off the MediSecure backbone is feasible. And we have some exciting developments; expected to launch in 2021.

And concerning new markets, we know we are very good at what we do: Securely interchanging prescription information between clinical professionals and the computer systems they use. The next few years are expected to provide significant opportunities for businesses like MediSecure to apply their core competencies into other information markets: And both our board and management are committed to ensuring the business is front and centre as those opportunities emerge.

Salter Brothers Asset Management Pty Limited: ABN 33 119 833 760, AFSL 308971 is the trustee of all Salter Brothers Funds.