Movers & Shakers Interview: Mr. Todd Cozzens - CEO, VP and Chairman, Picis Systems
Mr. Todd C. Cozzens officially joined Picis in May 1995, having founded the company one year earlier. He has more than 20 years of experience in the medical devices/clinical information industry, having served as president of a division of Marquette Medical Systems Inc. (now GE Medical Systems) and in several other senior management positions, including vice president of sales, from 1983 until 1995. Cozzens graduated from Marquette University and from the Harvard Business School Executive PMD Program. He was a four-time member of the U.S. Olympic Sailing Team.
What are some of the key benchmarks you could attribute to Picis' growth within the past few years?
Our growth can be attributed mainly to our focus in the high acuity, hard to automate areas of the hospital. There is clearly a lack of companies that can match our expertise and depth of key functionality in these critical areas. We have added over 500 hospitals to our installed base in the last three years alone, which I believe is a testament that these hospitals did not have a reliable source for ED, OR and ICU automation systems prior to us.
Joint collaboration of some form seems to be occurring more often today as healthcare centric technology firms strive to offer holistic solution platforms. Picis recently partnered with Ibex Health Data Systems in 2004. What was the motivation behind this merger, and what have the results been thus far?
What we are trying to do is automate the high acuity, most difficult to automate areas of the hospital. High acuity care - the Emergency Department, the Surgery Department and Critical Care - is the fastest growing part of the hospital today, comprising over 60 percent of a hospitals revenues and cost basis. This area is expected to grow to 80 percent of hospital facility operations in the next five years, according to the American Hospital Association. So it really is the primary business, and the main driver of profitability within hospitals.
We have a proven track record in delivery in these areas. We believe that smaller companies have been under-capitalized to be able to develop competitive systems. We have about a thousand developer years within the continuous development and evolution of our products. We believe that is a significant barrier to entry for anyone, including the larger players. It is not a question of hiring a thousand developers for one year. There are many components that must be built sequentially. The configuration and device connectivity aspect is an extremely daunting task. Very complex dynamics that are necessary in an ICU such as fluid management, complex algorithms, and intricate software all must be built from the ground up.
We believe the large enterprise IT vendors are very busy with what they have to work with today. There are over 150 to 200 vertical applications in a hospital to automate. Its been proven time over time again, in several waves over the last 30 years, that nobody can do it all. In order to provide truly enterprise wide solutions, you have to be on top of your game in each one of those areas. Invariably, some companies have done it by trying to acquire and some have done by trying to build from within. Either strategy leaves you with a non-integrated product or something that becomes obsolete fairly quickly. So what we see customers moving to is a new trend toward enterprise cluster focus, where one major vendor covers specific areas. You might pick a Cerner for your enterprise clinicals, Philips for your cardiology, GE for your radiology, Epic for ambulatory systems and Lawson for your financial and supply chain systems. That same hospital would be best served by picking Picis for the critical care, OR, and ED areas.
Why is the Peri-Operative sector such a hot area in terms of automation today? How does Picis plan to evolve IT innovation within specialty care healthcare departments?
Peri-operative is a big driver of revenues today. As a large cost basis for hospitals, making this area more efficient is a top priority in many healthcare facilities. Before administrators really understood what their business was, the peri-operative area was somewhat untapped. Now they have realized what a cash flow generator it is for the hospital, and what a significant area it is for patient outcomes and patient safety. The OR and critical care areas, are where the majority of medical errors occur. This is also where staff shortages are the most acute, and is drawing substantial focus from JCAHO and other regulatory agencies.
It is high growth because previous attempts to automate these systems only did part of the job. We are the first ones to incorporate every aspect such as: the clinical, financial, administrative (OR scheduling), inter-operative nursing documentation, pre-operative evaluation, inter-operative anesthesia, legal anesthesia record, PACU vital signs flow sheet, and physician documentation throughout the process. All of this is included within a single database with analysis tools that allow you to predict your best practices, predict outcomes, and analyze efficiencies of your surgical team, thus revealing suggested remedies that really help you guide your business better.
From an end-user perspective, clinicians today are utilizing IT more frequently but the process is still a slow one. What is it about your technology that drives physicians and nurses to continue implementing and utilizing these applications regularly within the delivery of care?
We have 400 people in our company. About 1/3 of our staff are former OR, ED, or ICU caregivers. These include physicians, nurses, CRNA's, physician assistants, and nurse practioners among others. We have people that have installed and used products of other vendors. We also have employees that have built and designed these systems continuously for 7-8 years with very little turnover. So we really have an incredible amount of domain expertise. What we really focus on is the very interactive nature that these systems have to have, which requires a very intuitive approach that can only come from a lot of domain knowledge. I'm sure that the number of caregivers that we have on our staff outnumber our competition by a large magnitude.
President Bush recently requested $125 million for fiscal 2006 to support U.S. healthcare IT adoption. How viable do you feel this allocation will be for the industry, and what effect do you foresee it having for Picis?
The fact that the government is even talking at all about standards for healthcare interoperability and promoting the fact that this will have a profound effect on the overall cost and efficiency of healthcare, as healthcare's percentage of our GDP becomes more prominent, was inevitable but it's also very refreshing to me. Especially that a Republican administration is really behind this as a way to help to see our way out of some of the big dilemmas that we have coming up in healthcare cost represents a huge shift in the Washington mindset about healthcare IT.
I have met with secretary Thompson when he was in office. I have also met several times with David Brailer and am very encouraged by what they are doing. As far as the actual money being allocated, I think the biggest effect right now is on the mindshare of hospital CEO's. I think that IT is a way to solve their issues. I recently came back from a large conference where I was able to speak with many hospital CEO's of large integrated delivery networks. Their mind is currently on the fact that competition and limited government reimbursement is limiting what they can take in on the top line for the foreseeable future. Therefore, when you know that it will be difficult to grow revenues on a "same hospital” basis, you have only one choice operationally - to get more efficient in how you deliver care. You have to have to put repeatable, sustainable processes in place and utilize business performance monitoring systems to drive steady improvement - the same way private sector businesses do. IT plays a major role in that it is the main tool to automate processes. This has to happen. Every successful industry that's transformed to sustainable growth and profitability has followed this path.
We are in the cost revolution today. Everything is based on lowering cost and nowhere is that going to be more prominent than in healthcare.
As to the grants themselves Picis has benefited already. Some grants have trickled right on through to purchases of our product. A million dollar grant paid for a big system we're contracting with in Kentucky. But we are not the UK with a national health system that can fund the widespread adoption of IT. However, I think the most important aspect is that hospital CEO's are understanding that this is where they have to direct some of their investment and attention not just to be competitive but to survive.
What is your long-term vision for Picis? What needs to be done to ensure this vision truly becomes a reality?
I am focused on what we are going to be doing over the next three to five years partly because I'm not smart enough to look beyond and partly because healthcare economics and dynamics tend to change dramatically every couple of years. Because of the low penetration of automation systems today in these high acuity areas, I think we will have plenty of room to continue growing at 35 percent a year in just the ED, OR, and ICU and related areas.
We have been good in the past by staying very focused, far more focused than our competition. I think by continuing our investment and putting every penny back into R&D that we earn, which is what we've done, we are going to see our product lead in these areas stay far ahead. There are similar areas that we have not yet gone into that still qualify as high acuity and have low penetration of automated systems. We are going to stay pretty much where we are because we believe that this is where the footprint of the hospital is evolving to: to high acuity care, as all the other lower acuity and lower cost services move out to ancillary clinics and other types of specialty facilities.
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