B.J. Schaknowski, MBA is president and CEO of Symplr of Houston, TX.
Tell me about yourself and the company.
I’m a 25-year software veteran. I was with big publicly traded companies like Intuit, Sage Software, LexisNexis, CA Technologies, and Vertafore prior. I had done primarily go-to-market roles. I’ve done operations, M&A, strategy services, almost any job you can have inside of a software company. I spent about 10 years in the last two companies prior to this in vertical software. Legal for about four and a half years with LexisNexis, trying to help large and small law firms run better, and then the last almost four years at Vertafore, trying to help independent insurance agencies modernize their technology.
Symplr felt like an obvious opportunity, because at least from my diligence, there’s no more inefficient operational entity than some of these big healthcare systems. I thought it would be a great opportunity to bring my technology background and help modernize what is effectively the healthcare operational landscape at Symplr.
That’s really what we do. We cobble together, consolidate, and standardize everything between ERP and EMR, where today there are hundreds of point product solutions, small companies all over the board on data migration, data security and privacy, and look and feel. We believe we can consolidate that into a single operational platform that allows CIOs, CMOs, and COOs to better run their healthcare systems to the benefit of not only the top and bottom line, but also operational efficiency as well as patient safety.
Can a company that has grown by acquisition keep all of its three constituencies of customers, employees, and investors happy?
It’s the imperative. The investment thesis for Symplr from our sponsors is exactly that. At the end of the day, world-class run companies with successful, happy customers are the ones that get world-class valuations. Our backers literally have a vested interest in making sure that we are solving for our healthcare systems.
There are only 1,900 acute care systems in the United States. We have 85% of them as Symplr customers. If we’re not providing extraordinary value, if we don’t have good customer Net Promoter Scores, if they’re not really happy with Symplr all day long, this thing isn’t going to work regardless. Believe it or not, I 100% stand behind the fact that we as Symplr and our sponsors have to make this work for customers. If not, our sponsors won’t get the financial results that they want.
The company is looking for a financial transaction at a multi-billion dollar valuation. How would you characterize the health IT investor market?
You have three or four driving forces relative to the healthcare IT market today. The first one is that the pandemic shone an absolute spotlight on the fact that healthcare operations are wholly deficient. You’ve got physicians who can provide COVID care that can’t get tagged in from the sidelines because they can’t get credentialed for three or four months. You’ve got nurses on the evening news who are working 12- to 15-hour shifts without lunches because their staffing and scheduling systems don’t talk to their HRIS system, and that’s criminal. So now you have this imperative because of the spotlight on healthcare operations, and as a result, you’re seeing those companies inherently become more valuable.
The second thing is the cost of capital is still relatively cheap, and healthcare has always been a great place for investment. You are now seeing this modernization initiative take hold and consolidation within many of the largest systems, which will be good for technology providers.
Third, you’ve got some market conditions relative to what likely will be perceived as enhanced regulation, which typically is addressed with software businesses, particularly the governance and compliance area.
Those three areas are driving what is an incredibly hot healthcare IT market right now. Frankly, we don’t see that slowing down. It’s interesting because it’s making multiples meaty, to say the least. But Symplr’s strategy is to look for the right companies that add additional value to the portfolio that we’ve already built and strengthen our position in healthcare operations. We’re taking the more long-term views, and sometimes we might be willing to look into investment differently because we can look at it over time, not just in the next 12 to 18 months in terms of our returns.
Do those meaty market multiples give you an urgency to act quickly to find a buyer or investor?
The short answer from my seat is no. I have the benefit as the CEO of Symplr of making it the best healthcare IT software vendor provider in the world. If our sponsors look at high multiples and say, now’s the time to look for a new partner to change hands, I leave that in their hands, frankly. But I will tell you that I think it’s more indicative of the value that software modernization, technology modernization, can provide to healthcare systems.
I don’t see healthcare technology multiples fading, because there’s so much value to be brought here. We are just cracking the surface on the potential of improving operational effectiveness of healthcare systems. I think that will only continue to rise as these systems truly embrace what technology modernization can mean for them. They start to stitch it together. They don’t have the data security and privacy risks any more. They have the data and insights to make intelligent decisions. They understand where they fit relative to other systems and peer community. I only see them going up.
People keep expecting technology to reduce costs, reduce inefficiency, and improve outcomes in healthcare, but somehow that never seems to happen at a macro level. Are prospective customers becoming more demanding?
Yes. People were still looking at this whole middle infrastructure realm in a point product way. The reality is you can keep investing in point products all day long, but if you don’t have better interoperability, if you don’t have a common look and feel, if you don’t have a common data layer that gives you better insights in how to run your healthcare system, you’re not going to see the benefits.
We’re seeing these top-down initiatives that are starting with some of the biggest healthcare systems in the world moving down into what I’ll call the more mid-market or mid-tier size healthcare systems. I’ve talked to some CEOs and CMOs who would reinforce this. As recently as seven or eight months ago when I joined, the theme was, we just let our facilities and our teams pick whatever solutions they want and we just make sure that we get the right price on them. Maybe there’s some data security and privacy standards, maybe there aren’t, which is frightening on so many dimensions.
But now what you see is these large systems that keep getting bigger, they know they can’t run with 100, 200, 300 different point product solutions, many of which are trying to achieve the same outcome. They are now driving this consolidation standardization, not just as a technology, but of workflow and processes, such that you can have a facility in Oregon and a facility in California and you can transfer an employee. A lot of those systems and tools are made the same way, so you can onboard them immediately and they’ll understand the look and the feel and the healthcare system’s way of doing things.
That’s going to be better for business. Number one, you get the obvious financial impact of system consolidation. But beyond that, it’s going to be so much better for the frontline workers who live in those in those tools for a couple hours a day who need to be as efficient and productive as humanly possible. When you’ve got a nursing leader who spends three to four hours a day of his or her time in systems instead of providing care or mentoring younger nurses, that’s horrible for your system. The ability to reduce that to an hour or hour and a half a day provides meaningful time back. That’s why you’re seeing a lot of these top-down down initiatives that previously had just been left to a fragmented, decentralized decision-making process. That’s the way of the past.
Has Symplr’s acquisition and operation of Phynd given you an appreciation for the challenges involved with the seemingly simple task of provider data management?
It’s so strange coming in from the outside. It’s a plumbing problem. If your pipes are set up the right way, your data flows. This shouldn’t be that hard. But because of the way credentialing takes place, because of the way a lot of these systems do provider data management, it’s been wholly inefficient. We look at Phynd as another part of provider management, which is one of the core categories that Symplr operates in as part of healthcare operations and GRC. If that front door doesn’t work, it impacts the entire downstream operational landscape.
Phynd was so obvious for us. What had been Cactus and all the other provider applications we have that – Symplr Provider – and we saw the opportunity to bolt Phynd — now called Symplr Directory — into that and extend the operational wherewithal and competency in through the digital front door. Systems are now able to identify and convert more of those patient opportunities. It just made a ton of sense to stitch the whole thing together. It’s one plus one equals seven with those products together. It was a great opportunity for us to add a lot of value by simplifying something that shouldn’t be that hard.
You’ve said that companies need leaders who can stop debating and instead take action based on the 80% of information that is known. You’ve also said they must get along with each other. Did that mindset come from your military experience?
It’s this whole concept of task and purpose, and it really comes down to alignment and goal setting. If you have an organization that is trying to do too many things and doesn’t understand collectively what winning looks like or what success looks like, that’s when you get these rogue individuals who are well-intentioned, but are off doing their own thing.
At Symplr, we have three strategic priorities — grow organically, become one Symplr internally and externally, and then win with mergers and acquisitions. The individual goals of everyone in the company, including me, ladder up to those three objectives. If you have continuity and consistency of purpose, the organization is able to better win together and remain aligned. We also have to know what right looks like, such that if someone is off doing something, the rest of the organization has a mandate to say, wait a minute, I think we’re out of balance here. How does this align back to our common objectives?
Whether it’s in the military — where you basically have tasks and purpose, you have very specific missions with a specific purpose and clarity around mission intent – or in business — where you have three strategic goals, here are measures for each, here’s how your job ladders into each of those, here’s how we collectively in a system achieve those — it’s much easier to create organizational alignment.
I say I joined Symplr for four reasons, and one of the primary ones was the culture of Symplr when I walked in the door. This was a company that had grown up through acquisition. I was shocked to learn that the employee engagement was as high as it was. We had world-class Employee Net Promoter Scores the day I walked in the door, which told me you’ve got a workforce that wants to actually understand and solve for customers. That it’s looking for singularity of purpose, if you will. We’ve done a pretty heavy internal transformation to become one Symplr — our own infrastructure, our own processes, a common way of doing things. We do EMPS every quarter and we’re still world class. The organization was hungry for that kind of goal-oriented management and I think we have thrived as a result.
You are early in your first CEO job, but have already been involved in acquisitions and presumably some discussions about the possible change in company ownership form. What are you learning as the person who has to make those big decisions?
The two observations that I probably reflect upon the most are, number one, you can’t undervalue the importance of having an incredibly strong executive team. Do the leaders of the functions of our organization all understand what the goals are? Do we ladder up against them? Do we have the right culture on the executive team such that the organization sees us working together, challenging each other, but always being professional and having a ton of fun doing it?
I probably believed this before I took the Symplr job, but now I very much understand it because I own it as part of my job, but having the right executive leadership team, senior leadership team creates wonderful opportunities for engagement, for alignment, and for internal employee mobility. That’s what it looks like done right.
The other piece is that you never know, until you sit in the chair, how amazingly complex and varied the different parts of the business are. In the same day, I’ll go from evaluating our return to travel and the office COVID policies — relative to vaccinations and who is, and who isn’t, what do we do — to incredibly important diversity and equity and inclusion initiatives that we’re overseeing, to product strategy, to facility rationalization, to sales bookings growth. You get everything in the same day. If you’re not intellectually curious enough to be able to pivot five or six times in a given day and focus on different things, this could be exhausting. If you enjoy that, and thankfully I do, it’s exhilarating. But until you sit in the seat, you have no idea the amount of variety that goes into the day-to-day.
Some technologies found their way to success being led by top executives whose temper, insults, executive turnover, and micro-managing control were legendary. Does that approach still work, where one person’s force of will pushes the company forward even while alienating many of the people who work in it or with it?
A majority of those examples involve founders and majority shareholders, so they could get away with it. I would argue that nobody wants to work for a jerk. There are too many options, particularly in technology. If you are good, you can go work in a million different places and be treated really, really, really well. Our philosophy as an executive team is that we are ruthless in our decision-making, but we’re nice to everyone all the time. Because why would you not be? No one wants to do this if it’s not fun and enjoyable and if you don’t trust the people that you work with and for.
That other way may have worked. It may still work for some folks. It’s never been my style. You learn early on in your career that you can rattle your saber, shake your fist, and pound the desk and nobody cares. You’ll end up seeing higher degree of turnover and maybe the enterprise will be successful, but at what cost? As opposed to a place that is welcoming, nurturing, and accepting of all. That has high standards for performance, but just as an expectation of the role, never an indictment of the individual.
We don’t yell. We don’t scream. Sometimes people work really hard, but hopefully it’s never all the time. This is not sustainable. I believe that the better financial outcomes come from happy and engaged employees, because then they’ll take incredibly good care of our customers, write great code, sell really hard, and market really well, and that will lead to the financial outcomes that you want. I hope those days are gone and you see more of a accountable, but accepting kind of leadership in technology.
Where do you see the company in the next 3-5-years?
I get this question a lot because of our size, growth trajectory, and profits. The financial profile at Symplr is just wonderful, so we have a lot of options. We might go public in a few years. We might remain privately held via a private equity sponsor. We may find a home with a very large strategic partner that thinks we can be accretive to their healthcare IT strategy.
More than anything, we’re focused on creating incredible healthcare outcomes for our customers, driving great growth as a result of that, and maintaining our financial discipline relative to the profit that we put off. If we do those three things, the options for Symplr will be unlimited. But the reality is that we’ll continue and maintain and extend our market leadership position within healthcare operations.
My dream is the day where healthcare systems, CMOs, COOs, CIOs, wake up and say, you know, we’re a Symplr shop. We use Symplr for provider management, workforce management, contract and spend access, compliance, quality, and safety. We’re a Symplr shop, which means we’re a best-in-class healthcare operation or healthcare system with our operations. If that happens, Symplr’s corporate outcomes involve a ton of different options, but that’s how we think about driving business.
Do you have any final thoughts?
It’s funny that probably 90% of the folks today are using a Symplr product and may not know it because we’ve grown through acquisition of brands like Cactus, API, TractManager, HealthcareSource, and ComplyTrack. We have all these wonderful point products that for years were best-of-breed in each of the categories they served. What we’ve now done at Symplr is to begin to stitch them together and create common workflows across systems, a common look and feel, and interoperability, We are making game-changing operational improvements.
I would encourage folks to come talk to the business and come talk to Symplr to learn a little bit more how we can benefit them, because it’s probably not the same collection of point products that they once knew. There’s meaningful value to be had.
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