This Startup Wants To Replace Your Doctor With A Chatbot

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ondon’s luxury district of Kensington is an odd place to base a technology startup, but Ali Parsa, Babylon Health’s founder and CEO, prides himself in finding unconventional routes. In his third-floor open-plan office, the ceilings are bedecked in artificial flowers and vines, and a software engineer walks across Astroturf to grab something from a fruit bowl. Helping the tropical-hanging-gardens vibe is the body heat generated by the scores of programmers and designers stuffed into the large office. “He’s only been here two months,” says the 53-year-old Parsa under his breath, pointing to a coder splayed out on a sand-colored Ikea couch. He gestures to two other staff members. “I don’t even know who they are.” Babylon Health has grown quickly with little marketing. Parsa oversees 350 software engineers and a tiny team of 10 sales staff (one whom is his wife), but the startup’s medical-advice software has found its way into Samsung’s latest Galaxy smartphones and one of China’s most popular apps, WeChat. He has raised $85 million from investors including the founders of Google’s AI company DeepMind and expects revenue to be in the tens of millions of dollars for 2018. Clients like Barclays and Bupa pay a quarterly subscription fee for access to Babylon’s doctors and medical-advice software that consumers can use to investigate an ailment.   

They are attracted to his success modernizing a swathe of Britain’s National Heath Service, the country’s famously inefficient state-run healthcare system. Many have tried using technology to make the 70-year-old NHS work better, and most have balked at the byzantine array of 17,000 commissioning groups who decide how $164 billion in  state money should be spent each year. Parsa has made substantial progress. His software schedules video consultations with doctors through a mobile app and includes an increasingly intelligent chatbot that gives medical advice (though not a diagnosis—yet). On Wednesday Babylon announced that its AI bot had achieved a “world first” in identifying medical issues as accurately as a human expert. British doctors get an average score of 72% on the Royal College of GP’s MRCGP exam; Babylon’s bot got 81%.

Two years ago the NHS took pitches from hundreds of companies to replace some primary care services; among them was Babylon, whose diagnostic bot hadn’t been built yet. “They were honest about what it could do and couldn’t do,” says Sam Shaw, who was on the panel that heard Babylon’s pitch. Today more than 26,000 citizens in North London access the NHS through the Babylon app, getting mobile-video appointments on demand from a network of 250 salaried doctors who work full-time for Babylon, mostly from home, earning around $112,000 a year. Patients get prescriptions sent to their nearest pharmacy or can meet a Babylon doctor at one of six clinics in the city if they need to (around 10% do).

Some 20,000 more people are on the NHS’s waiting list to replace their normal GP clinic with the Bablyon app, and NHS England is poised to reallocate $26.5 million from the physical clinics losing those patients to help pay Babylon for the high demand.

The NHS pays Babylon about $80 a year to look after each patient, the same it would pay a physical GP practice. Parsa admits he’s not charging the state any less, but patients get a more accessible service, and over time the government will save money elsewhere. That’s a potential flaw down the line if another digital health service comes in and undercuts Babylon with a cheaper service. But Parsa points out that nearly a third of Babylon’s users see its virtual doctors outside of the working hours of physical clinics, at night or on weekends. Many of those people would go to a hospital emergency room at an extra cost to the NHS of $130 per visit. In the U.K., visiting Accident & Emergency is free, and many flagrantly use hospitals as an out-of-hours GP service. Parsa has meanwhile built a healthy side business licensing access to his AI-powered chatbot software, but the higher margins are in delivering end-to-end care for providers like the NHS. “The dollar-per-person” is higher with clinical services, he says.    

Now, with another $100 million software licensing deal in the pipeline, he’ll use the new funds to plump up his tiny sales staff. He’ll also pitch Babylon, which has small offices in San Francisco and New York, as a part of the solution to America’s incredibly convoluted and expensive (the U.S. spends $3.3 trillion annually on healthcare, a third of the global total) healthcare system. American insurers like Aetna, UnitedHealth and Kaiser Permanente are already working with an array of telemedicine companies, which can now be reimbursed in more than 30 states. One of the biggest is Teledoc, based in Purchase, New York. Its revenues doubled in the first quarter of 2018 to $89.6 million as subscribers rose to 20 million.

In this crowded market, Babylon is the most futuristic option. Parsa has invested millions of dollars in artificial intelligence trying to replicate a doctor’s brain with a vast knowledge base and inference engine. Only 15% of Babylon’s users end up seeing a doctor in person, but in the same way Uber is building self-driving cars to replace drivers, he wants fewer people seeing doctors on video and more getting their problems resolved by Babylon’s clever chatbot. The bot offers medical advice before a doctor consult, and since the company launched in 2014, there’s been a 40% drop in video-call requests because it’s been getting smarter, Babylon says. “Nobody in the world has built that entire, end-to-end platform in AI,” says Parsa.

In Silicon Valley, Parsa would sound like your garden-variety technology revolutionary, but with his colorful outfits and forays into hyperbole (“If we play our cards right, . . . we should be one of the world’s biggest companies”), he sticks out in buttoned-down Britain.

His competitors, and even investors, are wary. “Ali fundamentally doesn’t distinguish between today and tomorrow,” says one early backer. “What he’s really telling you is something that’s going to be built in the future.” Digital health competitors say that boasting about Babylon’s AI-powered robo-doctor will erode trust in telemedicine if it doesn’t work properly.

Britain’s conservative venture capital community prefers safer bets like Kry, a small Swedish telemedicine service with estimated annual sales of around $20 million. Kry isn’t investing in high-end AI, but it’s also not stirring up political debates about the end of socialized healthcare, says Babylon investor Hussein Kanji of Hoxton Ventures. “In the U.K., who the hell writes him his check?” 

Put this to Parsa and he turns dark. Those critics are entitled people “whose mummy and daddy put into the best schools and universities,” he says, fiddling furiously with a metal ring that is meant to be measuring his heart rate, now likely up a few beats. “They never took any personal risk. And then they come to people like us, who had to get to the other side of the planet ourselves, live on our own, on the poverty line.”

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arsa was born and raised in the province of Gillan in northern Iran to middle-class parents who owned a detached house and who took Parsa and his sister on summer beach holidays to the Caspian Sea. They were also left-wing political activists, and Parsa became an opposition party youth leader as a teen, a highly risky pursuit as the 1979 revolution saw the Shah throw activists in prison, or worse. When the Ayatollahs shut down the universities, Parsa’s father drove him to the border disguised as an Afghan peasant to meet a people smuggler. The 17-year-old Parsa was stopped from hugging his father goodbye and climbed onto a bus that drove him north into Afghanistan, and then to Karachi, Pakistan. There he met an uncle who flew him to another world: Swansea, Wales.

Among the rolling hills and sheep, Parsa became highly self-sufficient. He taught himself English using books from the library and put himself through British high-school exams while surviving on welfare. Believing incorrectly that it would look more prestigious on his record, he travelled across the country to take the exams in the city of Cambridge. Though he ended up qualifying for Oxford and Cambridge, he thought he’d have more of an impact in the U.K. capital and studied engineering at University College London. He jumped into student politics again, joining the board of the National Union of Students, a collection of students’ unions, and jostled with others in debates. Mairi Johnson was a blonde Scottish-Canadian student activist when she met the Iranian with an unplaceable accent at a meeting in 1989. “He was mouthing off about criticisms of North Korea,” she remembers. “He chafed against authority.”

They traveled to protests around Europe, then got married. Leaving his left-wing student days firmly behind, Parsa did an about-face and became an investment banker in the city, advising on M&A deals in media and telecoms for Credit Suisse and Goldman Sachs. He left banking in 2003 and started Circle, a healthcare company that ran hospitals for private patients and on behalf of the NHS. In 2011 Circle went public, with half its equity owned by staff and clinicians and annual revenue at $265 million. A year later Parsa fell out with the board after pushing too hard for risky initiatives like a partnership in China and, according to one person with knowledge of the situation, was fired. Parsa denies that he was fired. “They didn’t like that he was outspoken,” says Johnson, who heads up partnerships at Babylon. “He picks controversial grounds to fight battles on.”

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s more public and private clients use Babylon’s platform, they’ll experience the perennial challenge that AI often brings: confusion on its true return on investment. The NHS has a history of trying to cut costs by replacing experts with cheaper workers. In 2010 the government replaced a telephone hotline staffed by nurses, called NHS Direct, with call-center staff reading scripts, called NHS 111. The goal was to get costs per patient down from £27 ($36) a call to £6 ($8) a call. “It was a disaster,” says Jean Challiner, the former director of NHS Direct. Research shows the closer you put your skilled staff to the front door, the better the outcome for patients. Instead of going down, expensive referrals to clinics and emergency rooms went from 12% to “north of 20%,” Challiner says.

Something similar could happen to Babylon’s robo-docs despite the fact that many people are already conditioned to Googling their health problems. “I skip the triage and go straight to the doctor,” says Laura Winn, a 25-year-old Londoner who uses Babylon Health’s $80-a-year subscription service to get the medication she needs for migraines and hay fever. “If I understood the benefits of Babylon’s triage, I’d use it more.”

Winn’s experience runs counter to Babylon’s claim that people are requesting fewer video calls with doctors. Competitors like Eren Ozagir, the CEO of Push Doctor, a telehealth service, suspects Babylon is being gamed by its users. Insurers make money because usage is low and nonparticipation is high, he says, but offer a doctor 24/7 and that flips. “You have to stop providing doctors,” he says. “You start introducing chat because it’s more efficient, but it’s not. It takes longer to convert to chat than to video.”

The answer to all this, of course, is to make Babylon’s medical chatbot so intelligent and interesting that people won’t try to bypass it the way most people try to bypass automated telephone customer service calls. But Babylon has a ways to go. In the fall of 2017, Hamish Fraser, a lecturer in eHealth at the Leeds Institute of Health Sciences, tested Babylon Health against rivals Ada and Your.MD on a series of diseases, using clinical data from the NHS. “The results are fairly clear,” he says. “Babylon didn’t do well at all.” On Twitter, doctors and users have taken to gleefully posting glitchy responses from the chatbot, including one that misdiagnosed a potential heart attack as a panic attack.

A spokesman for Babylon insists the system is getting better and points to the recently released study as evidence. By the end of 2018 Babylon will be selling access to an artificial doctor’s brain that can also act as a nutritionist and psychologist. “At the end of the day we are an accidental technology company,” he says. He claims that Amazon’s heart was never in cloud computing but in retail. Babylon, aiming to be as big one day, has a similar perspective. “Our heart is in the delivery of care.”

Reach Parmy Olson at polson@forbes.com or follow her on Twitter @parmy. Cover photo of Ali Parsa by Levon Bliss.