Fifteen years ago, when he was 36 and living in the Dallas area, a doctor told David Norris he needed a routine surgery to repair a torn meniscus, a piece of cartilage in the knee. Norris was in and out the same day.  

Over the next three days, the knee swelled to "twice its normal size," Norris recalls. He returned to the doctor, who removed the fluid with a large needle--and then discovered that Norris had a potentially fatal staph infection. He was immediately hospitalized. He stayed for three weeks, treated with aggressive antibiotics. 

Those three weeks are why Norris is on a mission to change how patients choose doctors. He's the CEO of Santa Monica, California-based MD Insider, a startup that has raised $13 million from investors including Tim Ferriss and Bill Ackman. The big idea is to arm patients with more useful data to compare physicians. So far, the startup has some big-name believers: Customers include DirecTV, Oracle, Starwood Hotels, and Expedia. MD Insider also sells its software-as-a-service to hospitals such as the Cleveland Clinic, Northwestern Medicine, and Mount Sinai. Here's how it got started.

A FICO for MDs.

MD Insider has created what Norris calls a "FICO score for doctors." Using analytics, MD Insider has crunched--and keeps crunching--the performance track record of every doctor in the U.S. Based on those track records--and factors like a doctor's network, education, experience, and location--the startup's algorithms produce an "MD Insider Provider Score," grading doctors on a scale from 1 to 100.

For large self-insured companies, the data helps employees find a better doctor. Employees can see, for example, if a doctor has experience with shoulder surgeries--but precious little with knees. (Which, as it turned out, was the case with Norris's doctor.) For hospitals, the data can help patients research and book appointments with the doctors, thereby relieving hospitals of high call volumes, a major administrative headache. 

The hospitals can also use the data as a metric in recruiting and retention. Hospitals can evaluate if there are specific surgical procedures for which the staff does (or does not) have high levels of experience. That knowledge can help hospitals market their specialties, compare their staff to that of other hospitals, fill voids on the staff, or refer patients to different hospitals. 

A Man of Many Startups--and Setbacks.

When Norris was home again after his hospitalization, he stored antibiotic vials in his refrigerator. He can still recall the pungent ammonia-like aroma of the fluid, which twice a day he injected into his arm. After one month, the infection was gone. What remained was outrage. The more he spoke to doctors, the more he learned staph infections weren't always accidents. "Often it's a result of bad preparation for the procedure," he says. 

At the time, Norris was leading ObjectSpace, a Dallas-based, business-to-business software provider. The 400-employee company was prepping for its IPO on the Nasdaq.

As is so often the case in life, lousy news came in double doses. The timing of the IPO couldn't have been worse. "We filed for a public offering right before the market tanked in 2000, so the IPO never happened," he recalls. 

Norris had to retrench. He sold part of ObjectSpace to another tech company, then liquidated the rest after a few years. He learned two key lessons, which he describes in an interview on Mixergy. First, every penny counts. You'll need them, if the economy goes south. Second, speed is vital. Had ObjectSpace IPO'd one month earlier, it might have had enough cash to survive.

Over the next decade, Norris would launch two successful startups: Seattle-based OnRequest Images, which sold custom photographs to large companies at stock-photo prices, and Los Angeles-based BlueCava, which offers technology to help companies target mobile and online ads. But he did not yet know how he'd connect the dots of health care, patient research, and his serial entrepreneurship.

The Right Idea, the Right Time.

In 2012, Norris met Dr. Jay Calvert, who through mutual acquaintances sought out Norris to discuss a business idea: that data could help patients make better choices than they could if they relied only on subjective reviews on sites like Yelp.

Norris spent six months researching it. Was the data out there? Could you acquire it? The answer to both questions was yes. That persuaded Norris to leave BlueCava and co-found MD Insider with Calvert. The next step was raising capital, so the company could acquire the data it needed. Norris says the company spent $6 million obtaining doctor data from "hundreds" of different billing providers, going back 10 years.

Fortunately, Norris had plenty of fundraising experience. BlueCava had raised $35 million, including $4 million from Mark Cuban. For MD Insider, Norris raised an initial $2 million from angels, then another $1.5 million on the equity crowdfunding platform AngelList. That was enough to cover the beginning of the data-buying process. (Earlier this year, the company raised an additional $9.5 million in Series A funding.)

Now, Norris is focused on growth, selling to more health systems, and continuing to expand what he believes is the company's early competitive advantage: its massive, integrated, digitized, vetted, usable set of data. (However, he declined to share the company's first year sales totals.) The company has more than 50 employees, a number Norris believes will double by the end of 2015.

Meanwhile, he's enjoying a new level of satisfaction from this particular startup. Never before has he heard such "heartwarming" stories about customers using a software tool he's helped to create. He says: "There's a satisfaction at a human level that's really, really great."

Published on: Oct 28, 2015