A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 7)

Sramana: It does not sound like you are running a typical exchange or marketplace. The industry definition of an exchange or market place involves new business procurement or referral. Places like eBay are considered marketplaces. I don’t see that happening with your network.

Bruce Johnson: Where healthcare is concerned there is a lot of additional infrastructure that has to be put in place. We have not gotten to that point yet. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 6)

Sramana: Where are you at in terms of scale?

Bruce Johnson: We handle over 52 billion dollars of healthcare supply chain orders annually. That is a significant portion of spend that we are automating.

Sramana: Are you a profitable company?

Bruce Johnson: Yes. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 5)

Sramana: In that initial 9- to 12-month period when you were able to leverage the other sales forces, how many customers were you able to obtain?

Bruce Johnson: My recollection is that during the first 12 months we signed up 50 IDNs, or integrated delivery networks.

Sramana: Those were the buyers, right?

Bruce Johnson: Yes. On the supplier side we signed up an additional 30 suppliers during that time. That would be in addition to the 14 owners we had who represented the supplier side. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 4)

Sramana: You mentioned earlier that your goal is to remove $5 billion from healthcare overrun costs and that you have already delivered on $3 billion. Can you elaborate on that? How do you quantify on that, and how does GHX make money?

Bruce Johnson: We are setup with a subscription fee model. When we were setting up GHX, part of the reason for the funding was based on the need for acquisitions to consolidate the market. One of the key areas of learning for us was that in order to create value in the supply chain, we had to create incentives that would drive utilization and participation. That is where the subscription feed model created that incentive. The more the community leverages the GHX platform the more benefits they receive and the greater the value to the other participants because we have more data and synchronization of data. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 3)

Sramana: You said the initial group of twelve employees were loaned to GHX by the founding companies. What does that mean? What were your incentive structures? Did you get any stock in the new entity?

Bruce Johnson: For the sake of speed, there were a number of us who were put on loan. What we started working on, which did not get finalized until summer, were the full-time contracts that we would have with GHX. From an incentive perspective, since our origins were from five large multinational organizations, our benefits package was fairly similar to an existing GE or J&J type company in terms of benefits like healthcare. From a compensation point of view, we were competing in a marketplace that was in the dot-com era. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 2)

Sramana: What types of companies are part of your supplier ecosystem?

Bruce Johnson: It includes manufacturers as well as wholesalers or distributors. Manufacturers will sell some of their products direct and others will go through distributors. We can automate that process in either case.

Sramana: I imagine that since this is coming out of GE, you also do equipment and instruments as well, correct?

Bruce Johnson: We actually focus more on the medical and surgical space. Capital equipment is not an area that gets as much automation as we would like. The medical and surgical products get most of the activity in this space. We are moving into the implantable space now, which includes things like hips and pacemakers. >>>

A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 1)

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Bruce Johnson is the CEO and president of GHX, the world’s largest electronic trading exchange for healthcare. Prior to being named CEO in 2007, Johnson served as the company’s chief operating officer, with previous responsibilities at GHX including the leadership of business development, professional services, sales, marketing and corporate communications. Before joining GHX, Johnson spent 12 years at GE Healthcare in a variety of management roles in sales and marketing. Johnson earned a bachelor’s degree in Electrical Engineering from the University of Nebraska at Lincoln and his master’s in Business Administration from the Kellogg School of Management at Northwestern University.

Sramana: Bruce, let’s start by reviewing your personal background. Where do you come from? What is the genesis of your professional career journey?

Bruce Johnson: I grew up in the Midwest and have a background in electrical engineering. I grew up in Nebraska and graduated from the University of Nebraska. After graduation I joined General Electric where I worked in various sales and marketing roles in the GE Healthcare business. I worked there for 12 years before joining GHX in 2000. That was at the height of the Internet craze and so myself and a handful of other GE employees started the company in 2000. I worked in sales and marketing roles until I became the COO in 2006. In 2007 I was named the CEO. >>>

1M/1M Facilitating Corporate Innovation & Entrepreneurship

Of late, you have seen a lot of corporate partnership announcements from 1M/1M, and you will be seeing many more as we go along. I want to provide an overview of our experience working with various corporate partners, and some of the thinking behind these partnerships.

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