Catching up with Royal Jay, converting health care from Blockbuster to Netflix

It’s not easy for Jarod Ferguson to explain what Royal Jay does.

“We help health care companies improve performance in value-based contracts,” said Ferguson, founder and CEO of the Boise-based company.

Value-based, as opposed to fee-for-service, is a relatively new paradigm in an attempt to deal with the spiraling cost of health care. Instead of being reimbursed by how services are provided, providers are reimbursed by outcomes, a method intended to reduce health care costs.

“I’m going to pay you $300 a month for 10,000 people, and you are responsible for taking care of them,” Ferguson said. “If you manage them well, there’s a huge upside for you.”

Health care isn’t the only industry being disrupted by moving from the transactional business model to the subscription model. “Before, if we wanted to rent a movie, we’d go to Blockbuster and pay per each,” he said. “Today, we subscribe to Netflix for $10 a month.”

Artificial intelligence

Where Royal Jay comes in is using machine learning to look for problems before they happen, when they’re cheaper to deal with. “At the core of this is data alignment,” Ferguson said.

Inflight Analytics ingests data such as health records, claims, supply costs, resource planning, physicians’ salaries and equipment. With that information, the system identifies not just sick people, but “rising risk” patients likely to get sick with chronic conditions such as heart disease and diabetes.

In addition, the system looks at providers to see which ones are high-value – that is, higher quality and lower cost, Ferguson said. This is made up of three separate factors: Cost, utilization and care sequences. Cost refers to aspects such as which providers used more affordable supplies, utilization means who prescribes fewer drugs and procedures, while care sequences means who refers to specialists more often for the same diagnoses.

Finally, the system looks for ways to close gaps in care through wellness checks such as screenings for alcoholism, depression, breast cancer, colon cancer and diabetes to help diagnose chronic conditions earlier.

“All of this can be done so much better when you understand the data and the patterns in the data and trends and project what might happen in the future,” Ferguson said.

Serial entrepreneur

Ferguson, a serial entrepreneur, “learned a lot about the right way to conceptualize an idea, validate if it’s a problem customers have and go through the market fit process,” he said. Royal Jay, founded in 2011, started out as a software development house, working for companies such as LeanLaw, Direct Local Food and Kno2.

It was the Kno2 partnership that got Ferguson involved with health care.

“We learned a tremendous amount about health care data standards, health care interoperability and how data is transmitted and stored between different health records systems and exchanges,” he said.

The company partnered with St. Luke’s Health Partners to help them with similar data challenges, moving data from payers into analytic solutions, he said.

“We saw in this process that value-based care analytics was something that was going to be super powerful in the future,” Ferguson said. “We decided we would start building our own platform to store claims and clinical information.”

What next?

Now, Royal Jay – the company is named after Ferguson’s grandfather, who helped raise him – has 18 employees, some of whom are remote. In addition to Kno2 and St. Luke’s Health Partners, the company is also working with Primary Health Medical Group and is in discussion with several other regional medical groups, both inside and outside Idaho. The company has grown 20% per year for the past two years and earned $2.7 million in revenue in 2018 with around a 20% profit margin.

Ferguson might spin off Inflight Analytics and keep Royal Jay as a holding company for his future endeavors. “Designing for never retiring is a lot smarter than some date in the future,” he said.