SA-born chiropractor sells telemedicine firm for $500m

Elon Musk isn’t the only South African making waves in the ultra-competitive US tech scene. But where Musk was on a tech trajectory from the outset, it was an unlikely sequence of events that led Joburg-born chiropractor Clint Phillips into the world of telemedicine.

In 2009, Phillips’s two-day-old daughter Gabi had a stroke that paralysed the right side of her body. Doctors told the family it was unlikely she would ever walk or talk properly.

Not satisfied, Phillips embarked on a seemingly endless round of consults with medical specialists across the US.

Frustrated by the process, he hit on the idea of 2nd.MD, a tech platform that matches patients with experts, allowing them to canvass second opinions from leading specialists through virtual consultations.

Last month, he became a rand billionaire after selling the company to a Nasdaq-listed firm for nearly $500m.

It’s an unlikely trajectory, given Phillips’s early plans. Growing up, he had dreamt of becoming a Springbok rugby player. When he realised the limits of his capabilities as an athlete, his passion for sport led him to consider physiotherapy, before enrolling for chiropractic medicine at what was then the Technikon Witwatersrand.

More than eight years on, with a degree in hand and still keen to pursue his passion for rugby, Phillips ended up in the US ski-resort town of Aspen, which has a well-established amateur rugby team. But with his qualification not recognised in the US, he had to get by doing odd jobs.

"There I was as this highly qualified chiropractor working as a receptionist during the day at the front desk of a spa because I couldn’t practise in the US, and at night working as a painter. So, you know, living the dream," he tells the FM.

After qualifying to operate as a chiropractor for limited procedures, he sourced funding to start a body and back clinic at Aspen’s St Regis Hotel, in a venue that was once a bar co-owned by model Cindy Crawford.

As the top skiing destination in the US, Aspen draws an elite crowd: CEOs of Fortune 500 companies, royalty and billionaires.

"I started to meet some very influential people who had orthopaedic issues," says Phillips.

With that, he began something of a second education.

"I was getting an MBA every day when treating these incredible people for an hour at a time. Over the course of the treatment, I would in some cases get dozens of hours with CEOs and billionaires," he says.

Then tragedy struck.

"It changed our lives," Phillips says of Gabi’s stroke. "The doctors said they didn’t know what to do and that there was nothing we could do for her."

Using his network, Phillips was able to get Gabi onto waiting lists for some highly regarded experts — but this turned out to be a deeply frustrating process. Some waiting lists were as long as four months. And when a consult was secured, it wasn’t always with a professional who could provide the necessary help.

Phillips recounts how he jumped through hoops to see one particular doctor, who informed him seconds into the consult that he didn’t specialise in stroke patients.

"We said: ‘What do you mean? We have flown across the country, we have sent you all the information, we’ve called 16 times and we have waited four months to see you, and now you tell us you don’t work with this?’"

In the process, he realised that doctors know within a heartbeat if they can help. But you can’t figure that out without seeing them.

A second frustration lay in establishing who were the top specialists in each field. From his days in Aspen, Phillips had kept a list of top back surgeons recommended to him by his wealthy clients. He had written down 140 names over five years, and only once was the same surgeon recommended by two clients.

Just as in SA, there was no way to tell who the best specialist was because the process of referral is informal, based largely on word-of-mouth or the recommendations of GPs. This, too, is flawed. Doctors often send you to experts they know, or those within their own health-care ecosystems.

"If you want your daughter to walk again, you don’t care whether the specialist plays golf with your GP, or whether they are covered by your medical aid. And if the specialist says there is nothing they can do, how do you know? How do you know that they are the best person to provide an opinion on the condition?" he asks.

It was these questions that led him to the idea of 2nd.MD. In 2010, after securing funding from some wealthy clients in Aspen, he sold his clinic and moved his family to Houston.

The premise was simple: match patients with the best doctors in the country for their particular condition. That meant finding and persuading the top professionals across all 132 medical subspecialties in the US to participate.

Phillips began by compiling a database of 22,000 doctors — from a register of nearly 1-million doctors — who he thought would qualify as experts. Then he set about e-mailing each of them, asking if they’d like to earn more money.

"That went nowhere," says Phillips. "Then we realised that top doctors are really passionate about research and conducting clinical trials, and they want cases that fit with this passion and expertise. So, we tweaked [the correspondence] and asked them if they wanted to become part of an elite panel as a recognised specialist in their field."

If we can restore the alignment that is the doctorpatient love empathy part, and keep AI as the safety backstop, we think there’s a huge opportunity to rebuild the health-care system

—  Clint Phillips

Next, the business needed speed and efficiency — doctors needed to be able to conduct informed consults virtually. For that, 2nd.MD needed its own tech platform. So Phillips roped in his brother Brent, an IT professional, to build a "closed" environment that could provide access to the necessary medical records, as well as a secure virtual connection between doctor and patient as soon as they flipped open their laptops.

Phillips initially positioned 2nd.MD as a consumer business, meaning the service was paid for by individuals outside the health insurance system. But he hadn’t budgeted for the fact that the platform would have to retrieve medical records from different doctors and institutions, and would require a nurse to manage the whole process. There were still additional costs to be absorbed.

He then tried a different tack, approaching one of his investors and offering 2nd.MD as an employee benefit, with the promise that a network of hundreds of doctors could be available within three days.

This found immediate traction, and 2nd.MD was subsequently repositioned as a corporate-facing business, with companies paying a monthly fee per employee.

In time, 2nd.MD could start showing its clients the benefits of its network in tangible metrics, including workdays saved, levels of absenteeism and significant medical savings.

Brett Moody, the founder and CEO of Moody National Companies, a Houston-based investor in real estate and technology start-ups, believes Phillips has offered something unique with 2nd.MD.

"People might say that telemedicine was available on various platforms and was a dime a dozen, but that was simply not the case," says Moody, who invested in both 2nd.MD and, more recently, in Phillips’s new venture Medici. "2nd.MD was not only innovative conceptually, it was able to put together an organisation, build the technology, and obtain medical records in a timely manner, resulting in medical consultations within 48 hours. This was a result of [Phillips’s] impressive leadership."

By the end of 2020, when the Covid-19 pandemic was accelerating the adoption and use of telemedicine and virtual consults, 2nd.MD had already grown its network to include 800 doctors, across 132 specialities, available to 6.5-million employees at some of the US’s largest companies.

Its growth caught the eye of listed health-care and employee benefits company Accolade.

"We weren’t looking to be sold," says Phillips, "but we had some clients in common and there was good alignment on all sorts of issues."

In mid-January, the companies announced Accolade’s purchase of 2nd.MD for $460m.

Accolade CEO Rajeev Singh said: "Bringing 2nd.MD’s world-class care team and digital approach with expert medical consultation into Accolade, and continuing to offer it on a stand-alone basis, will have an immediate and measurable impact for our customers, their employees, and the health plans we work with."

Phillips, who had never raised money from the usual venture capital circuit, says some early employees and investors — including his mother and brother — earned a return of 78 times their initial investment.

A few years ago, Phillips stepped aside as CEO of 2nd.MD (he remained the company chair) to start his next business venture, Medici.

Medici has a much broader and more ambitious aim: reimagining and redesigning America’s fragmented and poorly aligned health-care system.

"We want to blend on-site with online in a remarkable way, because all these old institutions are based on real estate and fee-for-service insurance that are just outdated," he says.

Medici is a technology platform that allows more than 2,000 doctors to practise next-generation medicine. By integrating with existing clinical workflows, and ensuring post-consult billing and payments management, it minimises the time and money spent on administration, and frees doctors to increase patient engagement.

"Caring and empathy have been completely stripped out [of medicine], and it’s become a for-profit industry," says Phillips. "So, if we can restore the alignment that is the doctor-patient love-empathy part, and keep AI as the safety backstop, we think there’s a [huge] opportunity to rebuild the health-care system."

Phillips’s perseverance has paid off — not just in terms of the start-ups he’s created, but on a more personal level too. While his daughter Gabi still cannot use her right hand effectively, and she requires assistance for tasks such as opening her lunchbox at school, she has progressed to the point where she can play sports and participate in other physical activities. It’s a far cry from her initial diagnosis.

For Phillips, using the 2nd.MD platform so that he, his wife and Gabi could consult with the head of paediatric neurology at the renowned Miami Children’s Hospital was a remarkable experience.

"It was amazing to speak to someone about her condition who really knew [about it]. We’re in Houston, he’s in Miami, and it was just such huge value consulting with doctors who have the time and knowledge and who are appropriately motivated. They’re not getting paid to do surgeries or sell you something — they’re just being paid for their expertise."