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Mike McSherry, second to right, and Mary Haggard, far right, are technology veterans working to disrupt healthcare from the inside out. (GeekWire Photo / Kevin Lisota)

Tech is all about disruption. It’s the poster child of the innovation economy: Tear everything down and build it over again, newer, brighter and shinier.

Tech disruption has changed how we do a lot of things, from buying everyday items to interacting with our loved ones. But there’s one area that it can’t really touch: Healthcare. After all, when you’re seeing millions of patients every day, disruption isn’t a good thing — it’s a public health crisis waiting to happen.

Introducing GeekWire’s Health Tech podcast, exploring the frontiers of digital health

On the other hand, the healthcare system is in desperate need of innovation to battle rising costs and a confusing patient experience. So how do you make those two worlds work together?

For Mike McSherry and Mary Haggard, the answer was simple: Instead of innovating from the outside with a burn-it-all-down approach, disrupt the system from the inside.

Haggard is an Amazon and Microsoft vet who leads the internal startup incubator at Providence St. Joseph Health, one of the biggest non-profit healthcare organizations in the country and the sponsor of this inaugural season of GeekWire’s Health Tech PodcastMcSherry is the co-founder and CEO of the incubator’s first spinout, Xealth.

They’re also the guests on our most recent Health Tech episode, recorded live at Providence’s headquarters in downtown Seattle.


McSherry is no stranger to the startup world: He is a longtime technology entrepreneur and startup executive, who most recently led mobile tech company Swype to its $102 million acquisition by Nuance Communications.

When he started talking to Providence about joining the organization as an entrepreneur in residence, he thought it would be a piece of cake. “Everyone’s got a screwed up story about healthcare. There must be all this low-hanging fruit — we’ll solve something,” McSherry said, recalling his thought process at the time.

Alas, as the U.S. is constantly hearing, healthcare is complicated. For one thing, it’s enormous — if the U.S. healthcare industry were its own country, it would have the fifth highest G.D.P in the world, just ahead of the United Kingdom and behind Germany.

McSherry and his team soon discovered that innovating in healthcare would be more complicated than they could have imagined.

They spent months inside Providence, going into hospitals, meeting with doctors and executives and generally trying to find the place they could have the most impact. With guidance from Haggard, they eventually decided to stick to their area of expertise, core software.

They created a platform called Xealth which lets doctors prescribe digital treatments, including things like educational videos, apps that help manage health and even devices. The platform ties natively into a hospital’s electronic health records (EHR) system and its patient portal, so patients and doctors don’t need to go to a third-party provider to use the service. It also returns data to the doctor so they know if a patient has completed the treatment.

Haggard said Xealth gets at a big challenge in healthcare: The patient experience.

“You have a consumer market that’s extremely confused,” making decisions on how to stay healthy every day, she said.

“So how do you get that trusted advisor — who is your doctor or your clinician — to help you on an ongoing basis to do that? You can use digital tools.”

That’s the same path that several other Providence-incubated startups are taking. One, called Circle, is an app that guides mothers through the birth and healthcare of their children, from infancy to age 18. Another, Optimal Aging, connects seniors to in-home services so they can safely live in their homes longer.

McSherry, left, and Haggard agree that entrepreneurs should work inside the healthcare system to make change, and that the system needs to be more open to creating those opportunities. (GeekWire Photo / Kevin Lisota)

Even though being inside a large system limits how you can innovate, McSherry said it’s well worth it for health entrepreneurs.

“These problems are like peeling back layers of an onion, so when you’re close to the inside, the better off you are,” he said.

“We always said, ‘Well, what would Elon Musk do? … Would he innovate from the inside?’ No, he would build a brand new hospital and he’d reinvent diagnostic machinery and he’d have AI tools, etc.,” McSherry said. “But healthcare still requires the human touch.”

“I think you need to work with the existing system and incrementally innovate from the outside in. And there are ways you can leapfrog that incrementalism, but to blow up the whole system and rebuild from scratch is untenable in healthcare,” he said.

Haggard said the industry needs to be more open to entrepreneurs who want to make change in healthcare.

“I must talk to one a day. I love all the energy that’s out there, of people who really want to come in and solve the problems,” she said. However, she explained, “I think that healthcare does a really terrible job of helping people understand the mountains you have to climb in order to succeed.”

“The way things are right now, people say, ‘Ah, I’d love to work in healthcare, but I never would.’ You see that as a constant theme out in the entrepreneurial community. Healthcare has a responsibility, the industry has a responsibility, to fix that,” she said. “We could bring the U.S. healthcare system a long, long way if we could do that.”

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