Reprinted from my Wharton Interview for India Knowledge@Wharton on August 27, 2009. Click here for original.
It’s true that being at the right place at the right time is critical for a start-up to succeed, says Raj Dharampuriya of eClinicalWorks. But there’s something more to the success of the burgeoning health IT company specializing in electronic medical records that Dharampuriya, a practicing physician, founded in the U.S. with his brother-in-law and his brother-in-law’s cousin 10 years ago. Recording a compounded growth rate of more than 100% over the past five years, the company now has 25,000 providers in more than 50 states using its software. For that, Dharampuriya gives credit to his firm’s focus on affordable pricing, customer satisfaction, high-caliber human capital and strong family values — the latter a heritage from his native India.
Now, amid the current debate about health care in the U.S., eClinicalWorks is at an important juncture as a young company. Well placed to benefit from President Obama’s stimulus package — which includes US$19 billion for a national rollout of electronic medical record systems — the software company is preparing for breakneck growth. In an interview with India Knowledge@Wharton from the company’s headquarters in Westboro, Massachusetts, Dharampuriya talks about what this means for eClinicalWorks’ strategy and U.S. health care in general, and he shares his experience as an Indian entrepreneur in America.
An edited transcript of the conversation follows.
Knowledge@Wharton: In the United States, there is a big debate over health care reform as the current administration tries to pass a bill addressing health care coverage and its rising costs. Questions are being raised over whether the bill could hamper U.S. business innovation and growth, and whether the country will be able to sustain it economically. One part of the debate revolves around electronic medical records. From where you are sitting as a co-founder of eClinicalWorks, how do you see the company’s position in the debate and its place in the advancement of health IT?
Raj Dharampuriya: Adoption of electronic health records [eHRs] is going to change the way health care is rendered in this country. Approximately five to seven years ago, the adoption of electronic health records was extremely low, close to 7% or 8%. It has increased to between 15% and 20%. By investing money [from the stimulus bill] in eHRs, we will be able to deliver better care to patients. Some [new] infrastructure will be needed, and there will be difficult decisions to make in terms of implementing electronic health records across the country. But once the electronic health records are implemented, they will provide better medical care to patients, by not only automating the workflow at a doctors’ offices, but also exchanging information between physicians…. There’s also the connectivity piece, as eHRs will be able to “talk” to each other to exchange patient information. And there will be less need to repeat tests because of information being unavailable. We will also bring down costs significantly, so that will help address one of the big agenda items — reducing health care costs.
Knowledge@Wharton: A lot of people agree with everything you just said…. One way to reduce costs is to take waste out of the system. Big sources of waste are the duplication of tests and the inability to share records. Given what you said about the pain of building the infrastructure and implementation — as is the case with any technological transition — what do you say to folks on the other side of the debate, who are either scared or skeptical and are concerned about privacy and security breaches? Obviously, one can’t create a perfect system, but if the system goes ahead, how will a company like yours manage such pushback?
Dharampuriya: A lot of education will need to happen and health care IT professionals like us will bear some of that. Certainly, other professionals in the industry will have to educate not only providers — clinicians — but also the staff who work with them to adopt electronic health records. The stimulus that President Obama is putting in will go a long way in creating the infrastructure…. Coming to the security point that you raised, electronic medical records are definitely much more secure than the paper records.
Knowledge@Wharton: You are saying that between option A, which is where we are today, and option B, which will use eHRs not paper, the latter is preferable as far as the threat of security breaches is concerned?
Dharampuriya: Absolutely, because there are multiple layers of security built into electronic medical records. When I was using paper, if somebody broke into my office, he would have access to all the medical records of a patient. If I use electronic health records [and somebody breaks in], he could not [access the records] because the records are protected by several layers of security not only in the individual hardware, but also in the network and software, which has built-in encryption. [That’s the case with] eClinicalWorks and [similar] products on the market. Protecting information is an extremely important factor to keep in mind while implementing electronic health records. The security standards are well taken care of.
Knowledge@Wharton: When you’re talking about the stimulus bill, you say there are two challenges for the health IT profession. One is the physical task of creating an architecture and having people adapt to it. And the stimulus money is going to be allocated to that task. But there’s also an education and awareness aspect. Is stimulus money going to that as well?
Dharampuriya: Yes. The stimulus money going to the physicians will be used for implementing electronic health records and will include training, support and so on. The key is having clearly defined measures that physicians have to report to get the stimulus money. There are goals set for 2011, 2013 and 2015. The providers who apply for the stimulus money can receive up to US$44,000 each for implementing electronic health records.
Knowledge@Wharton: That’s a huge incentive.
Dharampuriya: It is a huge incentive. It is something that has not happened in the history of this country….
Knowledge@Wharton: Let’s focus on the resistance from a group of people — right or wrong — who are afraid of [the] conversion. You’re saying education and awareness need to be built around the project. Can you think of another industry or [example] where people have had similar concerns and overcame them, so that people in this community can target their message and say, “Look, in the past we’ve had a similar issue where people have been resistant to this type of technology and proved that down the road the new technology was better than the status quo?”
Dharampuriya: Off the top of my head, I can’t think of as big a challenge as we have right now…. I can’t compare it to anything that has happened in the past.
Knowledge@Wharton: Turning to eClinicalWorks, how would you characterize the sources of the company’s sustainable competitive advantages? And how do you plan to defend or create complementarities? Warren Buffet says that companies need to be like castles and build a moat around themselves. Using that analogy, what would you say is your moat? Or maybe you have multiple moats?
Dharampuriya: To answer your first question, [one advantage] that we clearly offer over our competitors is that [our product] is extremely affordable. [Editor’s note: prices range from US$400 per month per provider under a subscription model, or US$10,000 for the first provider, and US$5,000 for every additional full-time provider under an upfront-fee model.] It is extremely user friendly and our customer satisfaction level is in the high [percentage range]. What makes us unique [is that we have delivered] a software product to almost 25,000 doctors across the country in a span of … ten years.
Our big advantage is that because we are such a customer-focused company, we always get feedback from customers as to where they would like to see the product [heading]. Customer feedback has played a big role in advancing the product to the next level. We did that ten years ago, and we continue to do it today by holding roundtables and invite a focus group to give us feedback on the product and having annual user groups of anywhere from 1,500 to 2,000 users sharing ideas … [about how] to make the product better…. That [is intertwined] with the focus and vision of the company to improve health care in this country.
Although there has been no study in medical literature to my knowledge showing that electronic health records improve the quality of health care, we have made significant enhancements to our version 8.0, which was released last year [that we hope will] show that certain functionalities will improve the quality of health care in this country.
In terms of staying competitive, we have always believed in staying at an affordable price point. [That has allowed us] to target smaller practices, which is the majority of the U.S. market — about 60% to 70% of U.S. practices have [only] one to three physicians. That has been one of our sweet spots…. We have been able to do that at an affordable price point by using as much [low-cost] infrastructure as we can … to build the software platform.
Knowledge@Wharton: Are you seeing any geographic trends in terms of where your customers are? Is your strategy right now to focus on the U.S. market only or are you looking to other countries where you can license your software or even set an office?
Dharampuriya: As far as locations are concerned, we see a lot of concentration on the East Coast, especially the northeast. We have seen a lot of concentration in Florida as well as the West Coast, mostly in California. We also have some concentration in Chicago…. This is primarily because in the last two to three years, we have done more implementations on a community-based model [that creates a central hub that enables doctors to share information across a community]. The New York Department of Health is one example where we have implemented approximately 1,500 physicians so far. And we are implementing another 500 to 1,000 more physicians in New York….
At a higher level, we are looking to do population reporting. [For example,] if we wanted to know if there were a swine flu outbreak, [we could gather] certain information from the community. For instance, if I’m a doctor in New York and I’m seeing more fevers, coughing and headaches [can I find out whether it means] there is an outbreak of swine flu? …Population-based reporting affects health care in a very significant way.
Knowledge@Wharton: In other words, there are secondary and tertiary benefits to having the software analyze trends?
Knowledge@Wharton: Are there parts of the U.S. that you haven’t been able to penetrate and are hoping to?
Dharampuriya: No. We have customers in all 50 states. But one of the reasons we may not have as many customers in certain states is because there are fewer physician [in the states where] the population is smaller. For example, we don’t have as many physicians in North Dakota as we have in southern California. The concentration of physicians is a big factor.
Interestingly, because our model is based mostly on the Internet, not a single person in the company cold calls customers [to sell] the product. In fact, [potential] customers search [the Internet] to buy an electronic medical record [product], getting information [about it] from the industry and then calling us.
Knowledge@Wharton: You use the Internet, or people who are wired, as a [way of attracting] your customers. Do you fear that you’re missing out on people who might not find you through a regular web search?
Dharampuriya: There is a little bit of fear. Internet- or computer-savvy providers are more likely to find us than those who are not. But because of our focus on customer care, we have built such a strong customer base and we have a lot of physicians being referred from existing users…. Our sales team keeps track of what we call “add providers”. This a group of physicians who have added more physicians to the group….
Knowledge@Wharton: They act as your sales people?
Dharampuriya: Right…. They talk to their friends, neighbors and colleagues and say this is a great company, a great product and they should buy it. That becomes essentially our sales force.
Knowledge@Wharton: Was that something you and your co-founders thought about when you started the company or did you just notice it was happening and you leveraged it?
Dharampuriya: That has been the focus from day one. When we had five customers, we took good care of those five. When we got to ten, we took good care of those ten.
Knowledge@Wharton: There’s no question about the customer service angle. But I meant in the beginning with those five or ten, did you have an idea that you could leverage your customers in that way?
Dharampuriya: Yes. Absolutely.
Knowledge@Wharton: In terms of the second part of that question — looking at global markets …. Is the debate so hot here in the U.S. that you’re just focusing on the U.S. for growth? How do you and your team attack that?
Dharampuriya: There have been some discussions about going global, but we have decided to stay focused on the U.S. market right now. Considering that the entire health care IT industry is picking up significant momentum, we are preparing our company for a big wave of adoption. At this point, there is no plan to look outside the U.S., although we have opened an overseas office to support some of our customers 24/7. [For example,] one of our customers is a jail in New York, which is a 24/7 facility. We go to urgent care centers that are open long hours. And because it is difficult to support a 24/7 operation from the U.S., we opened an office overseas a couple of years ago. It takes care of after-hours phone calls and issues.
Knowledge@Wharton: And where are they located?
Dharampuriya: In Mumbai.
Knowledge@Wharton: And is that your only international presence?
Knowledge@Wharton: Hypothetically speaking, what if this debate weren’t swirling around, things weren’t going to change very, very fast … and you weren’t preparing for massive adoption rates? If you had a bit more time and bandwidth, how would you look at eClinicalWorks in a global sense? What would be the opportunities? Would it be expansion into another country or particular type of market? Or would you license the software or make it open source?
Dharampuriya: The opportunities that we have thought about exploring have been more about having a partner [that could implement our product locally] — in this case in Europe, Canada or the Middle East. We had some discussions [with potential partners] about where our focus was, mostly to provide them the infrastructure support and training [needed] to get a core team ready…. That has been our model.
As for making [software] open source, I do not believe it has been discussed. But we have explored OEM markets. Again, no decisions have been made yet on those areas. We have been very focused on the U.S.
Knowledge@Wharton: As you get ready for what will be a boon for your company, … have you and your team looked at partnerships to handle … the scale that you’re going to be dealing with or acquisitions to enter new markets or protect current ones?
Dharampuriya: We have not looked into acquiring or partnering with another [company] in any significant way. We have always believed in trying to find a solution within the company, to get a core group of employees ready to take on more challenges as the market grows…. I can say confidently that in the last ten years, we have done that successfully….
Knowledge@Wharton: You’re saying that despite what’s likely to be unprecedented growth ahead, you and your colleagues are spending time training yourselves to be prepared for a big wave of adoption and maybe you’re hiring more people? Would that be fair to say?
Dharampuriya: Yes. The big focus for the rest of this year and next will be hiring close to 500 more people, within the next couple of years.
Knowledge@Wharton: Where will those people be will be located?
Dharampuriya: Mostly in Massachusetts, some in our California and New York offices…. We are opening an office in September in San Francisco and the Manhattan office has been functional for the past two-and-a-half years.
Knowledge@Wharton: What skills are you looking for to accommodate the growth that’s heading your way? Is the aim to take a percentage of what you have and spread it around? Or are there key things that you’re looking for?
Dharampuriya: It is mostly going to be around training, implementation and technical support. More than 70% of our employees [specialize in] implementation or training…. Although we believe we have a good product, the product is only as good [the] service [supporting] it. That’s the reason we focus a lot on adoption of the product by training at the same time as providing [customers] with the technical support so they can use it as efficiently as possible.
Within the company, there has been a look at processes to see how we can be more efficient. How can we be as agile as we were in the past when we were a smaller company and still be able to move at a rapid pace of deployment? …. We have ten cross-functional teams that … look at different processes and try to make our technical support, installation, training, billing and [so on] much more effective than they have been. The focus [up to now] has been on the same number of people [being] able to do more. When we hire more people, we should be able to do significantly more than what we are doing.
Knowledge@Wharton: You’re saying that in the expansion, one of the things you want to protect against are rising costs — even staying static?
Knowledge@Wharton: You want to use it as an opportunity even to cut some costs out of every process?
Knowledge@Wharton: Let’s focus on you. I would like to hear about your background and how you got to the desk you’re sitting today. And I’d like to hear how your roots as an Indian has played a role in your experience as a professional, doctor and entrepreneur, and how it enabled you to build a successful company.
Dharampuriya: [My Indian heritage] has played [a] significant role in terms of where we are today as a company. Ten years ago, I was a practicing physician at UMass Memorial Healthcare [before starting up the company with] my brother-in-law, Mahesh Kumar Navani, and his cousin, Girish Kumar Navani…. [Our] family values [then and now] meant that we live next to each other with [the entire] family — everyone together. Traditional Indian values play a big role because [our] families stay together…. families are very tightly knit. An Indian background [means we] want to take care of our parents [and have] our kids play with their cousins and grandparents.
On the business side, it helps the three of us stay together and focus on one goal, which is not just to build the company and take care of our employees, but to eventually make a big impact on the way health care is delivered in this country…. Our Indian background has helped us as owners of the company stay together for a very long time and work together.
At the company level, we were able to find very good Indian talent in terms of software expertise and got some extremely smart people initially to build a product. The other factor having to do with the Indian origin is that we … tried to get as many referrals from existing employees. As a result, we attracted a lot of good talent…. [who share the focus that we] have to keep growing the product and take it to the next level every week, every month….
The other thing is that I am physician … while the two other founders are software engineers. So I fill in the clinical piece and they fill in the technical pieces. And my cousin Mahesh is also the finance and operations guy, Girish leads sales and development, while I primarily manage implementation and training. We have divided our responsibilities very well [to suit] our backgrounds.
My big focus is on the product’s adoption by the providers. The product is good if they use it. If they just buy it and put it on the shelf, it is not as great. It doesn’t matter how good the actual product is.
Knowledge@Wharton: Ten years ago, how did the conversation start with your brother-in-law and cousin?
Dharampuriya: It’s an interesting story. It started, believe it or not, with a conference that we attended in Switzerland on wireless technology. At that time, wireless technology was new …. [and] when Girish heard a speaker [mention] the impact of wireless technology on health care, he [kept] thinking more about the technical side. That brought all three of us together in a room and [we decided to] take a look at the medical industry — let’s see what doctors do today, how do they treat patients in their offices, can they use a mobile computer, [keeping in mind that] at that time, tablet PCs and laptop wireless were not as common as they are today.
We tried to see if we could solve the problem of keeping patients’ medical records on a computer as opposed to in a paper file. After that, although the vision was big in terms of changing the way health care is delivered in this country, we took a lot of baby steps. We built from there. We’ve had several conversations in my basement, Mahesh’s basement or Girish’s basement about what strategy to take, how to make the company better. There have been so many occasions when we are walking outside in the evening and the walk would turn into a four- or five-hour meeting. It happened ten years ago. And it still happens. A lot of good ideas come out of those meetings…. A big factor in that is keeping the family together, keeping the Indian heritage in tact.
Knowledge@Wharton: As you and your co-founders were building the company in Massachusetts, could you describe how you leveraged the diaspora of other Indians here in the area — through networking, your experience in the medical field or your co-founders’ experience in software?
Dharampuriya: Because Mahesh and Girish have a technology background … they were able to go to a lot of folks that they had worked with before. They were able to identify talent coming from India. If someone comes and tells us, “I am from IIT [Indian Institute of Technology],” we can relate to that person much better than anybody else could because we come from that background and we know how prestigious IIT is in India. [If] we know someone who went to a certain university in India … we know what kind of talent we will be getting. Once we got the good talent in and built a good frame of reference around that, it was not as hard to attract more talent. Of course, we have had to make sure that we retain the … talent we had acquired. But again, [setting up the early team] was a lot easier to do because we came from an Indian background [that helped us have] the right mix of employees [to work] with us in the beginning.
Knowledge@Wharton: Are there any specific ways that you interacted with the diaspora already here? What about other Indians who were already here in the Greater Boston area that you had met along the way or that your co-founders had met along the way –in terms of strategic advice, talking to investors or helping with the roll-out?
Dharampuriya: We have dealt with a lot of very influential folks with Indian backgrounds in the local area — a lot of them being my physician friends who have now adopted electronic health records. Mickey Tripathi, for example, [CEO of nonprofit] eHealth Collaborative, [has been a good visionary in terms of] working [on a pilot] with a US$50 million grant from Blue Cross Blue Shield to implement eClinicalWorks. Mickey has been very instrumental in the success of Mass eHealth, where we implemented 475 physicians in almost a year and a half. And he has been a big factor in terms of the interoperability across the community. That’s where we talk about connecting physicians to get them the right information to save costs and so on. He has provided very strong leadership and an ideal model for community deployment, which is becoming more common. As you can see on my white board, we have over 50 communities that are in different phases of implementation right now. We have several thousand physicians who are part of these 50 communities.
Knowledge@Wharton: For somebody who wants to build an eHR company or something to support an eHR company … can we rewind the clock ten years and find out how you and your co-founders knew when it was the right time to launch? What was the catalyst? How did you seize the opportunity?
Dharampuriya: Ten years ago, we did not think eHR was going to be as big as it is today. Did we think it was the right way to go? Yes, we did. Did we think it would help physicians optimize their workflow? Yes, we did. Did we have a vision of physicians talking to each other through electronic health record exchange? We had some idea that we could create platform like that. But we did not think at that point of something as unprecedented as what is happening today — which will essentially mandate all providers [in the U.S.] to use digital health records by 2015. We did not think we would see the day when … the government made not only a mandate but also support for helping doctors accept electronic health records.
Yes, right now there is definitely a need for more doctors to adopt electronic health records in general. But yes, things are very different. We did believe in what we were doing. We did not think at that point that it was going to go to this level.
Knowledge@Wharton: As a co-founder and leader of this company, do you miss being a physician? Do you have more fun doing the business side and implementation or are you able to marry the two?
Dharampuriya: I am able to do both. I have not given up my practice entirely. I still see patients one day a week — two half days actually, on two different days — so my patients feel, and I feel, like I’m staying in touch with clinical medicine…. Although the number of patients is somewhat limited compared with when I used to see patients five days a week when I came out of my residency.
There are a lot of enhancements that go in the product and I’m able to utilize those enhancements; for example, accessing patient’s medical records on a mobile device, or using the functionality that let’s me make an automated phone call to patients using eClinicalWorks software to [let them know about] their lab results and remind them about their appointments. I feel like I am able to help with the growth of the core product by looking at several new functionalities [and] I’m able to keep my interest as a clinician.
I was very happy when I got a letter from Blue Cross Blue Shield of Massachusetts saying that I’m in the top 10% of performers in the state in terms of taking care of patients. So yes, I render good-quality health care to my patients and at the same time keep my mom happy, who always wanted me to be a doctor. Has it been hard wearing two hats? Yes, it has been. And thankfully my family has supported me very well through the transition.
Knowledge@Wharton: What would you tell someone who has come from India or is an Indian-American who wants to start up a company about the lessons you’ve learned? And what advice would you give if they want to do something in health IT, given your experience and your intimacy with the industry?
Dharampuriya: What we have done, which has been a key to our success, is to stay focused. There is a lot of opportunity in the health care market right now, so this is a good time to enter it and be a part of that growth. Staying customer focused is a big factor because if you are listening to your customer, you are definitely making the product better — and whatever it takes to keep the customer happy….
Knowledge@Wharton: The customers are your patients?
Dharampuriya: Customers are our patients. They are our marketing department. Our customers — our physicians — are the ones who go to their hospital board meeting and tell them that we are using eClinicalWorks — we love it. We do not need a marketing person here finding out whether a practices wants to buy eClinicalWorks software. They call us and say, “We have heard good things about you. We want to look at your product.”
For the folks starting a company, we always say you lead by example. You will not see our senior leadership — which does not just include the three of us owners — telling somebody else to do something and then going home. They lead by example. They say, “This is the job that needs to get done. I will stay here. I will make sure I get it done.” And that’s sending a message to the next employee and saying, you have a task on your table. You have to finish it. That’s the example you’re setting for other employees. You work hard and you have the same expectations from your colleagues. That has been one of [the keys] to our success.