An exclusive interview with Howard Messing, MEDITECH President and COO

I've mentioned before that some high-level folks in the industry are fans of HIStalk (well, they aren't all fans, but they read.) A few months ago, Howard Messing, President and COO of MEDITECH, dropped me an e-mail after being amused by a little jab I'd taken at the company in good fun. That was pretty heady stuff, so I figured I'd really push my luck. I asked Howard if I could interview him for HIStalk.

Put yourself his position. He's running one of the most successful and historically significant companies in our industry. He doesn't have to deal with anyone, particularly an anonymous, cynical blogger mostly known for braying to the world that he doesn't see the emperor's clothes. Of all the real reporters out there, pleasantly timid guys in suits who fill your trashcan with free copies of their harmlessly bland rag, why waste time yakking with HIS's version of The Unknown Comic?

Howard's a pretty cool guy, because he happily agreed, saying he enjoys reading HIStalk and would make an exception to his practice of never being interviewed. If any of you vendor types have a top dog who's that cool, I'd be happy to interview them, too (please, no run-of-the-mill sales VPs or HIMSS booth fodder.) Send me an e-mail. But, they gotta be cool like Howard, mano a mano, no spin doctors or handlers (I figure that eliminates anyone involved in a publicly traded company right there.)
 
In the mean time, here's what Howard and I talked about.

What was it like watching MEDITECH grow over the 30 years you’ve been there?

It’s been wonderful. It’s trite to say that the best thing about a job is the people you work with, but it’s really true. I only intended to stay at MEDITECH a year, earn some money, and then go back to graduate school. Obviously, I’ve never gone back. The company has changed dramatically. When I joined, we had sixty employees and weren’t making any money. The industry was just coming out of the teletype age and into the CRT age.

One of the problems with high tech is that you love the feel of a small company, but you want to make your company big. We’ve gotten the company to a good size, but we’ve maintained the small-company feel. We have hands-on management and other advantages because we’re not publicly traded. We’ve managed to stay connected to ourselves, our roots, and our employees.

Were there times when you were tempted to take the company public?

Not really. In the early 1980s, there was an IPO boom and we were approached. We thought about it, but didn’t see any reason to go public. We thought we could have wonderful careers and provide a good return for our investors without going public. We saw no reason to cash out. We generated all the cash we needed early on, and while we had a venture capital firm involved in the early stages, they gradually sold their stock back to the company. So, we were never forced to go public.

It almost seems like the money was not anyone’s main consideration.

I don’t know anyone in my life who set out to make a lot of money who was successful at it and happy. Neil Pappalardo, our found, is an amazing man. He wasn’t trying to become rich, even though MEDITECH has made him relatively wealthy. I love taking care of my family, but money was never the primary goal and I don’t see that changing.

Neil gives a lot to charity and comes to work every day. He has a workstation out in the middle of the floor like everyone else. He programs all day long, except for the one day a week he spends at MIT, where’s he’s on their executive committee and chair of their audit committee. He works on software tools, internal products, and ideas that will eventually show up in our software. He wrote a spellchecker not long ago and maintains the word list himself.

What about the other folks involved in founding MEDITECH?

Curt Marble retired about five years ago, but he’s still around and is a friend of the family. Ed Roberts is a professor at the MIT Sloan School of Management and is still on our board. Mort Ruderman is a real estate developer. Jerry Grossman was on our board and I believe he’s retired after being CEO of New England Medical Center here in Boston.

Neil and Curt worked together at Massachusetts General back in the 1960s, where Neil developed the MUMPS language there. Most of the early contacts that brought people into MEDITECH were through Mass General.

We believe that MEDITECH is one of the oldest, if not the oldest, independent software companies in the world. It’s certainly true in our industry. When the company was formed, people didn’t even know what software was. The state taxing people didn’t have a business category for software, so they classified us as manufacturing.

It seems the founders have had lot of influence outside of MEDITECH.

We encourage staff to be involved in charitable work, which can take many forms. We think outside interests are important. Neil, our vice-chairman Larry, and I try to set an example for our employees.

Is MEDITECH a small hospital system?

Over 1800 hospitals have our software, of which we are the primary vendor in 2/3 to ¾ of those. We’ve never pursued the prestige of going after the teaching institutions. I think that’s where the reputation has come from. Our product is certainly very scalable and we have no problem supporting the needs of large organizations. If there was any truth to the small-hospital reputation, it would go back maybe ten years ago.

Reputations take a long time to change. One of my frustrations is that people aren’t aware of how large a presence we have. I struggle with how to change these perceptions without changing the culture of the company. We’re not about sponsoring golf events, but I do wish we had our story out there a little bit better. We’ll make some attempts, but you won’t see any dramatic changes.

Vendors who are reselling systems developed by teaching hospitals or who are targeting them as high-profile customers don’t seem to be very successful at it.

I think that’s true. And, anecdotally without mentioning names, we get approached by our competitors very often to see if there’s any way they can buy us or merge. They all tell us that dealing with the large teaching hospitals is a nightmare. They often say we were wise to stay away from them. We don’t have a policy of not selling to big-name institutions; we just don’t actively market to them. When you’re trying to satisfy the needs of a teaching hospital, who is the user? You meet with a physician who has a keyboard on his watch and 82 PDAs hanging from his belt, but that’s not the normal doctor who wants to get the job done. If you build for that doctor, you end up with a system that’s complex and hard to install as opposed to one that’s easy to use and delivers results.

What’s your pet peeve about the HIS industry?

People who say they have CPOE when all it does is print the medication order in the pharmacy. That’s the case in even some highly regarded academic medical centers.

Is MEDITECH an inflexible vendor?

I think we’re flexible, but we do shy away from large-scale customization. We are very careful to instruct our sales people to not sell futures. We really want to sell what we have today, and I sometimes think that’s viewed as inflexibility. If someone says “does the system do X,” we don’t say “it will do X in the next release.” But, over the last 5-6 years, unfortunately, the marketplace has changed and people area really buying futures more than they ever did.

At one point, MEDITECH had never lost a customer.

We throw around a figure of 98% lifetime customer retention. Certainly we’ve not lost more than a couple of dozen of those 1800, and the bulk of those occurred when a large hospital absorbed a smaller one and replaced their systems. Our pricing and our customer service is oriented toward keeping customers.

I’ve heard that MEDITECH wants a steady and conservative 10% annual growth.

The goal is not to grow the company. The goal is to have a successful HIS company that produces good stuff for the customer and good returns for the investors over the long term. But as a non-publicly traded company, we don’t have to worry about specific growth numbers.

The strategy of keeping your customers and growing slowly seems to be working. MEDITECH must have one of the largest customer bases in the industry.

Controlled growth is what we’re interested in. I think there will be many opportunities over the next 10-15 years. For the first time, information systems aren’t being viewed as back-room systems, but as real, competitive tools that can make a difference in the quality and efficiency of healthcare. Even hospital CEOs are interested, which would never have happened 15 years ago.

Is high visibility good for MEDITECH?

Yes, as long as the visibility is in the form of real, concrete stuff you can do and not just putting your name on the side of a bus at HIMSS.

Big vendors can work the CEO on vision, especially conglomerate vendors who try to impress prospects with high-profile executives.

I’m a big shot … I can close a deal (laughs.) It is tough to compete against that approach, but our culture is what it is, we’re happy with it, and we aren’t going to change it. It’s hard to sell vision and executive personality without undermining your accountability to your customers. If we don’t make all the sales, that’s OK. We’re in this for the long haul.

Does the CFO often make a MEDITECH purchase decision?

We think we’re the low cost vendor and have produced papers showing the cost of ownership. I guess that makes us CFO-friendly.

Is MEDITECH’s technical architecture a strength, a weakness, or irrelevant?

I think it’s a strength. We’re in control of our own architecture. We never have to tell a customer to call some third-party vendor or advise them that there’s nothing we can do. We have independence with regard to releases from Microsoft or Oracle. We can have our own development timeline. We can also optimize performance.

Is having two platforms a sustainable position for the future?

Three quarters of our customers are using the Magic product line. We’ve put lot of effort in keeping that and our client-server platform in sync, other than some differences in look and feel. Sometimes we develop in Magic first and then make the change in client-server, sometimes we do it the other way around. While we have ten or so customers each year who move from Magic to client-server, most of our Magic customers have made it very clear that they’re happy with the product and don’t want to be forced into a change. We have no plans to change anything.

What do you think about NHII and the efforts of David Brailer?

I am extraordinarily excited about the concept of interoperability. I can’t imagine our grandchildren growing up in a world where their medical records can’t be moved around electronically, perhaps even to the point of having a virtual medical record. I’m also convinced there’s no technical reason that can’t happen. The technology has been there since the Internet.

It’s really a matter of whether we have the willpower and the money. David Brailer is a step toward making that happen. Will he be successful? I hope so. That is one area in which you’ll be seeing more visibility from MEDITECH. We are getting involved in some of those organizations because we believe it’s important for healthcare in general. My only fear is that it could get oversold.

David Brailer is doing the right things. The rubber will hit the road over the next couple of years.

Many hospitals can’t even move information around internally.

I agree. It will be a challenge to make all the systems, such as physician and home care systems, talk to each other. But, if we don’t start now, we won’t get it finished ten years from now. Let’s get some standards and some pilot sites and see what we can do. I recently found that my travel clinic couldn’t get immunization records from my doctor, even though they’re both part of the same Boston health system. That has to stop.

HIS vendors seem to be struggling with the ambulatory and other non-hospital points of service.

We have had a partnership for over 20 years with LSS, which writes physician office systems using our technology. PTCT is a homecare software company that is a friend of the family, whose president has been involved with MEDITECH longer than I have. We think we’re well positioned. We aren’t worried about market share. We’ll build a good product, sleep well at night, and make sure our customers sleep well at night.

How would you describe the MEDITECH culture?

We are long-term and family oriented. Many of our rewards and benefits are for long-term employees. We are relatively conservative financially, relatively liberal socially. We promote only from within -- we never hire a supervisor from outside. That fosters the growth of culture, since our supervisors have grown up here. We certainly don’t discriminate on age, but we do end up hiring a fair number of people fresh out of school or with maybe just a year or two in another job. Turnover peaks at 18 months. Once they hit three years, the turnover rate drops dramatically. We don’t have an HR department – the supervisor handles the problems of their employees with guidance from management if needed.

Who wouldn’t be a good MEDITECH employee?

Some people don’t like the open atmosphere we have. We have workstations with a lot of square footage per employee, but no cubicles or walls. We like great programmers who aren’t tied to a particular technology and who are willing to learn any language. Everyone has to have either a healthcare or a technology background. Rarely do we bring in people from competitor organizations since we only promote from within. We don’t have salespeople running the company. We have a great sales team and we respect them, but we don’t let them run the company like some competitors.

What’s the coolest thing about working at MEDITECH?

The wonderful people I work with. It’s very much like extended family. Many of us have been here for a long time and grew up together. I’m looking forward to having an impact on healthcare, something I thought we were going to do 30 years ago. I look forward to getting doctors and nurses involved in clinical systems and the impact that will have.

Where do you want MEDITECH to be in ten years?

In some ways, I want it to be just like it is today, just bigger. We will remain dedicated and focused on providing software to healthcare and nothing else. We don’t sell pharmaceuticals, we don’t consult, and we don’t manage facilities. We’re good at writing, installing, and servicing software, and our expansion will be in those areas.