Andrew Dick:  Hello and welcome to the Health Care Real Estate Advisor Podcast. I’m Andrew Dick. I’m an attorney with Hall Render, the largest healthcare focused law firm in the country. Today, we are broadcasting from the Health Care Real Estate Legal Summit in Scottsdale, Arizona. My guest today is Kirat Kharode, the founder and CEO of Healtor. We’re going to talk about his career and how he ended up founding a tech startup company. Kirat, Thanks for joining me.

Kirat Kharode:  Thanks so much for having me, Andrew.

Andrew Dick: Before we jump into your business, talk a little bit about your background. You have a unique story to tell, and tell us a little bit about.

Kirat Kharode: Sure. I started my career in hospital administration. I went to a grad school at Johns Hopkins School of Public Health. Started my career at the VA hospital in Pittsburgh. I had the opportunity to work with the transplant program there and separate the transplant program to be the first independent in-house liver and kidney transplant program based out of a VA hospital in the country, and that was my administrative residency. Kind of opened my eyes to compliance world regulatory issues and fostered my interest in going to law school.

Kirat Kharode: But coming out of grad school I didn’t really have a whole lot of funds, didn’t want to pay for law school. I was fortunate enough to find an opportunity where a health system, the University of Pennsylvania, paid for me to go to law school at night across town in Philadelphia while I was working at Penn.

Kirat Kharode: After that, I continued in hospital administration, did law school while I was working. Completed law school. Learned a lot about compliance. Regulatory health law was my particular focus, and it helped me understand a lot of the nuances as I was going through different business development and operations roles, to understand the complexities and also have intelligent conversations with the general counsel in the facility so that we could have some healthy discussions about what was appropriate and what wasn’t appropriate in the risk spectrum.

Kirat Kharode: I stayed in hospital administration for almost 20 years, working in all kinds of different organizations, both nonprofit, for profit publicly traded, for profit privately owned. It just opened me up to a gamut of sort of issues, both from a strategic perspective as well as an operation perspective that really kind of set the stage for the creation of Healtor.

Andrew Dick: You have this health care administration background. You have a law degree. At what point did you say, “Gosh, I want to start a technology company.” I mean, that’s a pretty big transition.

Kirat Kharode: Sure, sure. Well, you know, I think the theme throughout my career, regardless of the setting that I was in, was really focused on making convenient ambulatory care settings for patients. With the physician shortage that exists nationally, to me, it’s very important to foster that medical office ecosystem because I think the medical offices are really the unheralded hero to me in the whole health system. Everything that you do from the most complex of procedures to the very basic. The birth of a child doesn’t happen in a medical office, but certainly the first conversations do.

Kirat Kharode: The NRC actually just put out research that 80% of decisions that patients make are based on convenience of the provider location. To me, medical office locations was always extremely critical.

Kirat Kharode: As a hospital administrator, I feel today too, that there almost should be term limits on how long you stay in hospital administration before you’re forced to do something that really changes the world because, as an administrator you see all kinds of issues that you know that, hey, if somebody had a solution like this, this would solve a problem. I think that too often hospital executives stay in positions. They move from one facility to the other. They come up with these realizations, and it just kind of goes out the window.

Kirat Kharode: I really wanted to focus on this because I see it as an important issue, especially as we move to more of a value-based world. As more services are done outside of the hospital facility, I think it’s critical to have a technology where it makes it easier for doctors and hospitals to access and create timeshare spaces and places where patients want them to be.

Andrew Dick: Let’s stop there. Hospital administration, you find a pain point with how hospitals are managing, owning the real estate. When did the light bulb go on and you say, “Here’s a problem. I need to find a solution.” Talk a little bit about that. What was that moment like and talk about the pain point that you’re trying to solve for.

Kirat Kharode: Sure. To boil it down to just one or two might be a little difficult. I think there’s a whole … There’s a whole subset of problems that kind of compound the issue of medical office timesharing.

Kirat Kharode: First is just basically that right now, like 50 years ago, if a physician wanted to look for a medical office space in a new community, and they didn’t want to spend an inordinate amount for capital cost and leasing out the facility for 10 years, there’s really a few options that exist besides calling around to every building in town to try to find space.

Kirat Kharode: On the front end, there’s that problem that exists. On the back end is the bigger issue of whether hospitals are … When they enter arrangements with physicians if they remain compliant with stark and anti-kickback statutes.

Kirat Kharode: And both of those issues kind of came up in various points of my career a number of times as both we were trying to place physicians out into communities that we didn’t have a presence, hub and spoke type of strategy as well as issues where we have timeshares with physicians and we’re trying to manage it as best we can. But there’s just a whole host of compounding issues that take place and make it a little bit complicated to manage that process for both the administrators as well as the physicians, which leads to lapses in payments, and potentially down the road could lead to [inaudible 00:06:55].

Kirat Kharode: So, I can’t pinpoint a moment in time necessarily that I came to the realization. I think it was over the course of a few years that I realized that this was really something that needed to be addressed and was extremely important.

Andrew Dick: So, getting those specialist out in the community, trying to document those arrangements, trying to ensure that they’re fair market value, and you’re really focused on the timeshare space, is that correct?

Kirat Kharode: That’s correct. Yep.

Andrew Dick: And so, for our listeners, a timeshare space being a physician can go use some clinical space for a half a day, a day, a couple of days throughout the month, but there’s no longterm commitment. It’s just buying blocks of time. Is that what-

Kirat Kharode: That’s right. I mean if it’s a hospital leasing to the physician, there’s the commercial it has to be set in at dance in terms of the rate, and it has to be a year long in terms of the lease, depending on who the owners are and the relationships, those factors change a little bit have a different … They can lease it at different amounts of time than hospitals can when they have a referral arrangement with the physician.

Kirat Kharode: So, it’s certainly a very small amount of time, or it could be two, three days, but right now there’s no technology platform. If you wanted to buy a building, you could find that online. You could buy a medical office building. You could lease a 10,000 square foot space that’s completely shell and build it out yourself. You could find those opportunities. But if you wanted to look for a second generation space per se, one day a week or two days a week, that’s going to be really hard unless you’re picking up the phone and calling around at this point.

Andrew Dick: So, timeshare space is the area you’re working in, and you recognized really maybe two pain points. One is there’s not a way to connect landlord and tenant who wants to enter into these type of timeshare arrangements, at least not efficiently. And then there’s that compliance issue. Stark, kickback, if it’s two providers who want to enter into these arrangements. There’s often not a lot of money exchanging hands, but the risk is a quite great if they get it wrong.

Kirat Kharode: That’s correct.

Andrew Dick: Right? And you witnessed that as a hospital administrator, healthcare professional.

Kirat Kharode: That’s correct.

Andrew Dick: So, talk about Healtor and how does it solve for those problems?

Kirat Kharode: So, we essentially solve for six different issues, and those are pain points that we’ve learned through, not just my own experience, but countless conversations with hospital executives, medical office owners, physicians, and as we’ve developed the product, and we’re still very early stage, but as we’ve developed the product, we now have 70 customers around the country. We have three health systems in the pipeline as well for our compliance product. So, we’ve had the opportunity to talk with many executives, and I think it’s extremely important as we grow that we keep that alignment and discussions with the customer very close to what we’re trying to build.

Kirat Kharode: Those six pain points that we’ve encountered are a lack of accountability on who owns the timeshare. So, in a health system, there’s multiple different angles by which a timeshare becomes active. For example, business development may bring the doctor in. They court the doctor for a couple of years, then they hand off the arrangement to maybe a practice administrator who has a space that’s there for employee doctors. The actual leasing goes to the accounts receivable department and finance who’s tracking payments.

Kirat Kharode: There’s all these different hands kind of involved in that process, and when there’s a breakdown, there’s really few people that are accountable in terms of who’s actually responsible for that. So, that’s the first one.

Kirat Kharode: That triggers things like payment lapses, which is the second issue that we’ve heard quite a bit. So, physician either forgets to pay or now they’ve been there for a year, and Dr. Jones has decided that it’s time that he stopped paying because he’s doing a lot for the hospital, and as an administrator I’ve heard that quite a bit as well.

Kirat Kharode: The third is the lack of communication that exists between tenants and the physicians who are valuable parts of this ecosystem, and hospitals often look at medical offices as being an incubator to build a broader relationship with the doctor within the inpatient facility. And yet the lack of communication about the space issues that exist themselves, if something’s broken or not fixed, that could also ruin strategically the relationship with the doctor.

Kirat Kharode: The fourth one that we’ve heard quite a bit is a space creep. So, physician has space, and they decide they’re paying for two exam rooms. They decide that, yeah, take a third because nobody’s there. That’s obviously not okay either. We’ve also encountered a lot of organizational history gap that exists when there’s mergers and acquisitions and people who have an Excel spreadsheet somewhere are no longer a part of the organization, and now many hospitals are combining it to one and centralizing their real estate function and have no way to sort of track what’s going on in these new facilities that they’ve acquired.

Kirat Kharode: And then finally, it’s really the core issue of the front end piece, which is underutilized medical spaces not being optimized by the hospital. And often, employed medical groups that are affiliated with hospitals either through a captive PC or another arrangement often have specialists that they have out in the communities and they’re willing to take a loss on those employed specialists, but a big part of that overhead is where their offices are located. And when a physician is out during surgery or they’re rounding at the hospital, in days when those offices are not used, those lack of optimization creates overhead challenges for the medical group.

Andrew Dick: So, I’m hearing … You hit on a number of points that I’m very familiar with. One, the compliance issue but also the timeshare arrangements historically haven’t gotten the attention they deserve. The whole health system administrators will say, “Yeah, a couple of hundred dollars a month even if we don’t collect or we mess this up. It’s not a big deal.” When, in reality, is a very big deal.

Andrew Dick: And then, you’ve also talked about efficiency of timeshare spaces. So historically if a hospital has some timeshare space, you’re right, maybe they rent out a couple blocks of time throughout the month, and the rest it’s just sitting idle, right? Not generating any revenue, not helping further the health system’s mission, and that’s what you’re hitting on, right?

Kirat Kharode: Absolutely.

Andrew Dick: You’re hoping to make that space more efficient. And how do you do that?

Kirat Kharode: Right. So we have three basic products within our technology that we’re building right now. Healtor market is the front end piece of it and relates to onboarding. Healtor recon is our compliance engine. And the third piece is Healtor MD, and that’s more of our management function. Each of those plays a different role.

Kirat Kharode: The front end marketplace is like an Airbnb for medical offices if you will. And, as we’re building this … We’ve started … I wanted to point out we’ve started … As a non technology person, I’ve now surrounded myself with a lot of resources of really experienced technical people. But my goal from the beginning was really to be very basic and prove out the concept and really figure out our product market fit in terms of what we’re doing so that we’re not spending a whole lot of money and resources to build the technology that’s fancy and really doesn’t serve anybody’s purpose.

Kirat Kharode: So, what we’ve done is really create a basic front end splash website right now to prove out the concept around Healtor market. Right now we have 70 customers. We’ve already started generating revenue, which is really exciting. The Healtor … The recon piece of it, which is a compliance engine is where we’re working with health systems to figure out ways to take their best practices from across the country, and the health systems that we’re working with all have these pain points and so they’re really willing to work together in terms of building a product and improving our product from what I believe is the ideal to really what the customer believes is crucial in terms of making the compliance product effective.

Kirat Kharode: And the third piece of it, Healtor MD, is going to be further down in our technical development but really deals with how are we going to manage that space creep issue effectively and use technologies appropriately, whether it be machine learning, whether it be some sort of distributed ledger, a combination of those including IOT, things that we can use to basically take our technology and make it easier to manage the utilization of these spaces and do it in a compliant manner. So, those are the three basic areas that we’re, we’re working on.

Andrew Dick: So the marketplace idea is pretty interesting. So Airbnb gets a lot of attention, but this product will allow a physician, for example, to potentially find unused or available timeshare space. Is that the right way to look at it?

Kirat Kharode: Absolutely. So, available timeshare spaces and areas where they’re looking. We also give the control … I mean a lot of the control in that process is obviously with the physician that has a space, the landlord, so to speak. So, the physician landlord really has to make the decision about who they want to welcome into the space.

Kirat Kharode: And so, in these conversations that we’re having, and it depends on area. There’s some specialties that really aren’t welcome from a competitive perspective or from a perception perspective, and we honor those requests as we’re developing our protocol to make those arrangements.

Kirat Kharode: So, it’s not completely … It’s not exactly like Airbnb in that there are certain restrictions of who’s coming into the space that we allow, but we are creating that mechanisms to be able to bring physicians into communities and into spaces and blocks of times in these timesharing increments that they’re looking to come into.

Andrew Dick: What would that look like? You log … You get online, and you’d log into Healtor, and depending on what market you’re in, at some point, I know you’re company is relatively new, but as you grow out in certain areas around the country, someone could either list I guess or find available timeshare space. Is that right?

Kirat Kharode: Yeah. Ultimately that’s what’s going to happen. I suspect that this summer we’re going to be doing some private launches in particular regions of the country that we’ve already realized are pretty hot areas from the 70 customers that have signed up so far. And those are areas where we’re really going to fine tune the product itself and make sure that it’s delivering and the quality’s high before we kind of roll it out to five or six markets and so forth and so on.

Kirat Kharode: So, we’re really excited about some of the partnerships that we’re creating, some of the things that we’ll be announcing very soon about alignments we’ve made with really prominent members of the real estate community. Really a who’s who of BOMA [inaudible 00:18:25] if you will in terms of who’s helping us and is already on our board.

Kirat Kharode: And so we are envisioning a scenario where it’s an alignment both with brokers, with physician liaisons and hospital executives as well as the general marketing to the community of physicians at large that are looking for spaces and have spaces.

Andrew Dick: So let’s talk about the second component, the recon component, compliance. It’s a big deal in the timeshare world. What will the Healtor platform offer a healthcare provider in terms of compliance?

Kirat Kharode: Well, it’s really the management and the ability to account for, on a monthly basis, the transactions that are happening and any changes that might create a trigger. For example, if a physician stops paying in the middle of their lease, that sort of compliance alert and that chain of command at a very basic level will be a function that we’ll have a through the Healtor recon platform, but the compliance engine is being built to track those payments on a monthly basis.

Kirat Kharode: We’re also looking forward to building APIs with different data sources around the fair market value specifically so that if there are changes, so that these quote-unquote … Some of these in a discussion I was having the other day, there’s a physician who had a space, had a lease that was an evergreen for 20 year, and now they’re paying significantly and have for many years been paying significantly under fair market value. With Healtor recon that won’t be possible because we’d have caught that at the beginning. And I think that’s an important piece to highlight because in my experience and the experiences that I’ve heard from hospital executives, it’s one thing if you approach a physician who hasn’t paid a month in and say, “Hey doc, you’ve forgotten to pay. Something must’ve gone wrong with the setup.”

Kirat Kharode: It’s a very different conversation 18 months later when the person hasn’t been paid, and now they’ve incurred thousands of dollars in fees and penalties that they now owe the hospital, and they’ve also been bringing a ton of admissions, and they’re now the rock star of the hospital. And so, that immediate communication component is going to be a big part of recon as well.

Andrew Dick: Yeah. Because those noncompliant arrangements can really create tough conversations between providers and jeopardize those relationships.

Kirat Kharode: Right. And it’s also who … Going back to the point earlier about accountability. If there’s a clerk in finance who realizes that there’s been a non-payment, they might try to escalate it through the channels that they have, but they get buried with work. They’re trying to reach out to a business development person who, really what they’ve been spending two years trying to recruit those physicians. Do they really want to be shaking that person down now for a lack of payment along with kind of just the culture that often is created. As you pointed out earlier about, is $200 is really a big deal here and there? If you really think about the downstream revenue, which even though many hospitals don’t want to talk about really, that’s really what it’s all about is the downstream revenue that these physicians are bringing to the hospital, which is millions of dollars in some cases, and are they really going to irritate the physician about $200 here or there? It’s something that’s difficult to have when you don’t address it right away and proactively.

Andrew Dick: So, the way I envision this platform working almost like a … Not only do you have this Airbnb type component where you can shop for space or list space, you’ve got this compliance component that helps you manage the space. So, almost like a property management type platform. Is that a way to think about it?

Kirat Kharode: Yeah. In some ways it’s a bit of a property management platform, but really it addresses this particular pain point around timeshares and these arrangements that exist. So, we’re not trying to do everything to everyone. We’re really trying to address this … Property management, as you know Andrew, is such a wide span, a spectrum of things that get covered. And what we’re really trying to do is provide a specific value set around this pain point that everybody seems to have. And everybody seems to hate medical office timeshares, but the phrase that keeps coming up to me is necessary evil. Medical office timeshares are something that every hospital needs. Ever hospital wants to have, but it’s just a pain to manage. And that’s really the specific property management issue that we’re trying to tackle.

Andrew Dick: So, the third benefit, which sounds like will be developed maybe a little bit later on, this Healtor MD, that will help you manage the space. Give us a little bit more information about what that might do when you build that out.

Kirat Kharode: Yeah. I think that with Healtor MD, there certainly is going to be an integration beyond just the online technology but into more of a hardware integration. So for example, the monitoring of the spaces itself, and for the folks that really are … The health systems that really are on the Uber end of being compliant. these are the folks that we’re talking to about, what can we do about space to (a), from the get-go, create a 3D visual of the space, of what it looks like, what it looks like today, what’s in there, having a potentially [inaudible 00:23:54] some of the equipment that’s in there, looking at the activation and the doors as a key component of who’s entering the space, when they entered, how long they were there and tracking that utilization.

Kirat Kharode: And it also ultimately, if things go according to plan, will also be an automatic indicator that would prompt us to alert the medical office owner that they have under utilized space. If they have blocks and weeks and weeks ago by without a room or two rooms or a part of the space or all the space not being utilized on a particular day of the week. And so then it basically will fuel the Healtor market and get us more activity on that end too.

Kirat Kharode: So, Healtor MD is really going to be one of the things that we will build out over time once we really have the first two components built out. But I’m really excited about it. I think there’s a lot of the application that will come, and depending on the needs of our customers, we’ll adapt and we’ll speed up the development timeline to address those needs sooner rather than later if we have to.

Andrew Dick: Well this is fascinating. I think there is definitely a need for a product like this. Talk about you founded the company not so long ago have made quite a bit of progress in a short amount of time. Talk about that from the point when you founded the company. How long ago was that?

Kirat Kharode: Yeah, so we started the company in January of this year, so not too long ago. I’ve obviously been thinking about it a lot longer than that, but we became a C-Corp in January and started at that point, but since that time, we have, even though we’re a small team, a set of developers, there’s a few people that are helping me out. We have annual goals, and we have a quarterly goals that we track weekly in terms of the progress. And in the first six months, one of the things I really wanted to do is make relationships with the industry. There’s a lot of stuff, even having done this for almost 20 years, there’s a lot of things that I don’t know, and I’m learning things every day. And so really getting closer to the customers, whether they be the physicians, the hospital executives, the property management companies, the brokers, and really understanding what these pain points were from a macro perspective so that I’m that making assumptions about what the product should be or should ultimately look like.

Kirat Kharode:  And so, I’ve really been thrilled. I’ve met a ton of people. I’ve had hundreds of conversations about medical office timeshares. I joke around. I’m like the Bubba Gump shrimp guy for medical office timeshares because I’m always going around talking about medical office timeshares. But it’s really been fascinating, and everyone has a different perspective, and everyone … The common sentiment is that these are pain to deal with, but if we have a solution that comes in and can fix this, it’d be extremely valuable to a lot of people.

Kirat Kharode: And one of the very interesting things … I was so focused on the United States, and last week I was contacted by one person in Canada and one person from Australia. And so, as we are looking at our addressable market, it’s a lot larger than I initially expected this would be.

Kirat Kharode: So, I think there’s a lot of applications that we are probably not even thinking about when we look at the global market just yet. But we have to walk before we can run, and that’s exactly what we’re doing right now.

Kirat Kharode: So, the first six months have been really busy and active, and we value the key KPIs around revenue as being our North star in terms of how we’re developing the company and what metrics we’re looking at to grow. And so, we wanted to get to having revenue, ideally even before the technology was completely rolled out, which I’m thrilled that we’ve done. The traction from having customers join as quickly as they’ve been joining and the health system’s interests and just the tremendous amount of interest and activity as will be reflected in our announcement of our advisory board very soon, which really reflects a whole a spectrum of thought leaders in the healthcare real estate world.

Andrew Dick: So as we wrap up here, talk a little bit about your vision over the next five years and what does Healtor look like five years from now?

Kirat Kharode: Yeah, I think five years from now, five to seven years from now, there’s going to be … Ideally it’ll be …. In the medical office world, It’ll be a household name, if you will. Everyone will know that this is the gold standard to turn to as it relates to medical office marketplace and compliance.

Kirat Kharode: Marketplaces aren’t easy to develop. There’s just so many different factors in there, and there’s a lot of things that could trip up our success, but I think if we stay grounded and we really stay close to what the customers need and really keep fine tuning the product market fit, then I think that we’ll get to a place, in five years, where it’s very possible that we are, not only in medical office a household name for medical offices in the United States, but around the world.

Andrew Dick: How can our listeners find you and Healtor if they’re interested in the product?

Kirat Kharode: Sure. I think the easiest way is probably just email me. My email is Kirat, kirat@healtor.net. Please feel free to email me and share your thoughts, or any questions I can answer, I’m happy to do that.

Andrew Dick: And so if providers want to try the product out or be involved developing the product, they can just reach out to you.

Kirat Kharode: Absolutely, yep. Right now we have a very basic splash website right now where we’re lead-generating through a contact form, and I’m having discussions even through our chat rooms sometimes where I’ll take the helm and be answering chat questions from folks who interact through our website, and the questions range in spectrum from compliance issues to what they’re actually looking for in terms of space.

Kirat Kharode: And so, if they want to reach out to me they can certainly reach out through our website, healtor.net. We have a contact form on there. Again, it’s a very basic site, but it’s up and running, and my email would be the best way.

Andrew Dick: Terrific.

Andrew Dick: Kirat, thanks so much for being on the podcast. I want to thank our audience for listening as well. On your Apple or Android device, please subscribe to the podcast and leave feedback for us. We also publish a newsletter called the Healthcare Real Estate Advisor. To be added to the list, please email me, Andrew Dick at adick@hallrender.com.