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Xealth’s team at launch, including COO Aaron Sheedy (farthest left) and CEO Mike McSherry (second from the right). (Xealth Photo)

There is no end to pressing needs in the healthcare industry.

That’s one of the first things that tech veterans and former Swype leaders Mike McSherry and Aaron Sheedy learned when they joined hospital network Providence Health and Services as entrepreneurs in residence.

“The first six months inside Providence, we were just throwing spaghetti at the wall,” McSherry said. “We had a meeting with the chief of oncology and the chief of cardio, and they started throwing out a litany of problems at us. There’s two of us and ten of them in a room and they’re just firing problems at us.”

So McSherry and Sheedy took a big step back and started thinking about how they could use what they know — core software systems — to have a broad impact in healthcare.

They narrowed in on prescriptions — not prescribing drugs, but prescribing digital treatments like exercise regimens or educational videos.

Investors liked the idea, and today Xealth is announcing its public launch and $8.5 million in funding led by San Francisco Bay Area venture capital firm DFJ, whose team includes Seattle venture capitalist Bill Bryant, who was also an early investor in Swype.

Examples of educational and instructional material that doctors can perscribe patients using Xealth. (Xealth Photo)

Founded in May 2016, Xealth is a cloud-based digital platform that allows doctors to prescribe digital treatments such as instructional videos to patients. The company spun out of Providence in January of 2017 and now employs twelve, eleven of which hail from Swype.

Other investors include Providence and the University of Pittsburgh Medical Center, two of the largest hospital networks in the country. The two networks are also Xealth’s first customers. Minnesota’s Hennepin Healthcare System and Wisconsin’s Froedtert Health also participated in the round.

McSherry and Sheedy have been working together for over 20 years. They shared an office at Microsoft in the 90s and later led keyboard interface software company Swype, McSherry as CEO and Sheedy as COO. When Swype sold to Nuance Communications in 2011, McSherry became Nuance’s VP of advertising and content and Sheedy its VP of mobile product.

So diving into healthcare was a change of pace. Sheedy joked that it was part hubris and part aspirational.

“Healthcare’s just such a big challenge for the U.S. right now,” said Sheedy, whose wife Meredith is a dermatologist at Harborview Medical Center. She frequently provided pointed feedback to the startup entrepreneurs.

“It felt like that big problem for all of us was worth attacking, and it seemed like it was also well poised to get disrupted digitally,” he said.

Imagine a patient is going to have a joint replacement. Traditionally, their doctor would give them binders full of documents telling them what to expect, what to bring to the hospital, instructions for physical therapy during their recovery and more.

Third party vendors are already making digital materials, like articles and videos, that take the place of all that paper. But at the moment, doctors can only share those digital tools if a vendor that offers them is integrated with their hospital system. That means each piece of the vendor’s material needs to be hard-coded into each hospital’s IT system individually.

Tech veteran and Co-founder and CEO of Xealth Mike McSherry. (Xealth Photo)

That costs hundreds of IT work hours for hospitals and means vendors have limited reach.

Xealth is basically a connective tissue that lets hospitals and vendors hook up through the cloud and bypass all that work. It takes just a few days for hospitals to integrate their existing digital tools, like electronic medical records (EMRs), with Xealth.

Then hospitals can arrange to be connected to the vendors that they want to use and physicians can prescribe the vendor materials or services to patients.

Xealtlh also tracks if patients are completing tasks — for example, if the joint replacement patient didn’t watch the video instructions for their physical therapy, their doctor can see that and address the problem.

“That is significantly … improving physician workflow and improving patient engagement,” McSherry said.

Xealth can also provide a variety of other services, like shared decision making programs to help patients decide what treatment will work best for them. It can also leverage patient data that already exists but isn’t being used to its full potential.

One example is CPAP machines, devices that people with sleep apnea use to help keep their airways open while they sleep. If a patient isn’t using their machine every night or for the whole time they’re asleep, the CPAP vendor can send reminder notifications or notify the patient’s doctor, who can help them find a solution.

McSherry and Sheedy both said Xealth wouldn’t have been possible without their experience working inside a health system.

And that experience shows: Xealth isn’t a solution that a technologist outside the system would see as valuable, but after learning directly from doctors and seeing what their day-to-day was like, they understood it could have a real impact.

Sheedy said they originally asked themselves, “if we’re going to do healthcare, do we really want to go work inside of Providence? Maybe we should go check some other things, maybe be more disruptive, be outside the system.”

“And I think it’s been a great decision to go sit inside,” he said. “The knowledge we got sitting inside the innovation group inside Providence was incredibly valuable.”

“Because it helped us not make a bunch of mistakes,” McShery added.

The entrepreneurial duo also had a secret weapon in their corner: Sheedy’s wife Meredith.

Sheedy said he brought home idea after idea that she rejected. But when she approved of Xealth, they knew they were on the right path.

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