Guest Article: Headbanging No More, by Retiring Sales VP

It has been a good ride. I wish you all the best. I have bought a newer whaler and will be fishing with my grandson enjoying sunsets from our dock at Martha's Vineyard. A very few there in the midwest will know me. It has been great working with you. To you new pups out of college going to work in sales, I provide you with a little reality that can be overcome, but you have to know what has been of this industry, especially of late.

First, there were paper medical forms. You (patient) go to the hospital, you fill out paper forms. Doctors scribe medical notes on paper forms. There were more than 20 of us selling these triplicate carbon paper forms for (with inflation) $3 - $5 a piece. Then, one of the companies says that they are going to bring in technology and automate the process with computers for their hospital clients who previously bought paper forms. I was an advocate. Change is sometimes good. The company spends a million on developing a technological tool. We think we will be the only one, or at least the best.

A few mistakes initially, then a Windows patient information entry system. Initially, the sales pitch to the hospital client is that they no longer have a warehouse down the street full of paper forms, easy access, legible, etc. They can quickly pull up a patient's record. The hospitals see value at this particular concept, so they shift (albeit slowly as takes them 15 damn years to adjust) from the paper forms to the EMR.

The other paper form companies are afraid to be dinosaurs, so they begin shifting and investing in designing and developing their own systems or get bought out by bigger companies trying to go to EMR who need a client base. So, now you have 20 companies trying to develop virtually the same damn thing. Most will not succeed. Hundreds of millions go into these companies. Possibly the most diificult businesses to try and make succeed given the indecisiveness of end users, the politics, the non-existent budgets.

Our competitors from the old days either do not have the tech understanding, do not know how to retain the right development people, or they try outsourcing development and get completely screwed by the outsourced overseas developer (pardon the statement, but no better way to describe it). Why is outsourced bad? Because they then owned us. They will own you too if you outsource. How's it going, Neal?

If something breaks, no matter what the contract says, outsourced overseas developers will put you to the wall with service and maintenance fees. Soon, where you saved by outsourcing, you end up spending ten times as much as you would have if you owned the employees who can fix problems whenever you want. But in the development rat race, our competitors trying to create an EMR may not have realize this and stumbled through it.

Next in the timeline, there were four companies that actually succeeded in their development attempts and offered electronic systems that resulted in boycotts by clinical staff being forced to use them (by some CFO who got a cruise to Hawaii from some euro conglomerate.)

Then there are 15, and then 20 offering the same product, plus a "coed" at Stanford who develops some nifty application. Everyone is negative selling. Oh what fun.

Next, we all have the same or very similar systems, each differentiated by only the look and feel and maybe colors... minor differences. None of us know how to install the systems anyway, so what does it matter? We can always outsource implementation for 100x the actual application cost, so that is refreshing.

The market is confused. All products seem the same. Which one is better? Well, there is a "CLASSy" little outfit that will tell you if you pay them (even though they have never used any of the products). All the new products slow the sales cycle, because now the decision makers are not just buying forms or easy to comprehend technology, they are buying complicated technology. So, hospitals or their IDNs have to hire consultants (i.e. add 12 months to purchase decision sales cycle and delay my commission some more, why don't you? The "unbiased" consultant comes in and, golly gee, they have an "arrangement" with an enterprise provider so the enterprise provider wins the deal (thank goodness it was me that had the arrangement).

In addition, each competing company had to train their employees to not sell simple paper forms, but now they had to teach them to sell, explain, train, and service even more technological benefits. I not only have to know medicine, I have to know my niche of medicine and I have to keep my techies mouth's shut because in their efforts to be helpful they usually kill the sale (DEATH OF A SALESMAN.) Each time we upgrade our product, some employees will make it, some will not (others will join our competitor). When employees leave, we have to replace them with higher paid tech-savvy sales and customer service employees (this results in a massive dent in profits as salaries increase). We as companies are not actually making any more revenue per patient (we were getting $3 to $5 per paper form before and now we are getting $3 to $5 per patient entered into the system). Our revenues are not any higher per hospital client as the clients do not increase their budget for this service... did I say "budget?" Pardon me, now my CFO is not paying me until the client check clears because hospitals don't actually think they are going to pay when they sign a contract!

So, phase two of the rat race begins… they (each competitor) try to come up with new actually beneficial features (as opposed to just better colors) that differentiate each other’s electronic system. Examples here are instead of mouse or keyboard computer entry, we advance to touch screen. Instead of writing the ailments of a patient, we create that Dragon voice that is coded real time to meet insurance reimbursement guidelines.

Each company continues to one up the other. Many times, companies claim they have features that they really don't, just to make it appear they're still in the game. Did I say "many"?  I meant "most".

As it is software and changes so fast, there is not time or value in filing patents. By the time a patent gets filed, there will be newer and better technology than what the patent covered. So, each company begins, in essence, copying what the other has in their product and service offering. They (competitors) each have to go out and raise millions from investors to fund this software development rat race under the belief that the company with the most bells and whistles wins the contract. In actuality, it does help them win, so you have to keep developing despite the reality that the clinical end user ends up never utilizing ANY of the bells and whistles, just only the original core functionality of ten years ago that allowed them to quickly call up medical records from a database.

At the end of the day, there are five companies left. All others have gone bankrupt trying to keep up as software development is so expensive and complicated (a deadline was never a deadline and was rarely ever met by developers) or we acquired so many companies we drowned ourselves.

Instead of fighting for market share, the competitors have been fighting each other for the newest latest tricks and features. In addition, the software employees behind the development get traded like baseball cards, each company hiring away from the other’s software developer pool (non-competes and trade secret protection in employment agreements have rarely been enforceable). All this, only to realize that to stay in the game, to continue to meet the ever-increasing demands of an end user (doctors) who think they know everything about technology (AND medicine too), they have to come out with a new version every quarter.

This is what most industries get caught up in when they go electronic, whether it is healthcare (electronic medical records), retail (online shopping), entertainment (downloadable music), etc. The companies forget their core purpose of the job they are actually supposed to be doing because they have migrated from serving a beneficial purpose of a particular industry to being software development companies. Their profits plunge (if profits existed in the first place and most hospitals never get their vendors to guarantee in writing that they have the cash on the books to fund the company for the life of the contract) and then the company gets bought out for a dime on the dollar. I hate negative selling, but it makes me furious when we were beat by a deeply-in-debt, money-losing company that will not be open the entire life of the contract. You would think with all the angst contract negotiators put into the process that they would at least get a personal guarantee from a vendor CEO.

There needs to be massive consolidation in this industry, folks. The best-of-breeds need to be in the hands of the enterprise providers that have no clue what they are doing in the OR, ICU, and back office.

You also have to take baby bites in development (before there were jet engines, there were propellers). It cannot go faster than what your end user client can understand. More often than not, technology is “concepted” by programmers and not sales. Yes, you are rolling your eyes, techy, but listen up... Marketing has to be the concept (as sales are what matters). If programmers concept the project and are not marketing savvy to your customer's specific application needs, you wind up with something we cannot sell. Too often, developers get territorial.

I had a great run over 22 years. But it was slow. I take most importantly great friendships in this battle for technology. I wish you all well. I have oh so many wonderful stories. Tomorrow is my last official day, but I have been here for a week. Come for a visit, the Vineyard is a wonderful place.

Sunset is just beginning. Good Night and Good Luck.