UPDATE: Cohealo CEO Mark Slaughter has left the Boston-based start-up to pursue other interests. He retains an ownership stake and could remain involved with the company in another role.
Jonathan Bush, 46, is related to two former U.S. presidents (and one presidential aspirant), but that's not why Mark Slaughter, 29, was so excited to meet him. Bush, you see, is co-founder and CEO of Athenahealth, an 18-year-old cloud-based medical records and billing company intent on "virtualizing health care," while Slaughter, co-founder and CEO of Cohealo ("It's like Uber, but for medical equipment"), is one of the young entrepreneurs driving that transformation.
They met at Athenahealth headquarters in Watertown, Massachusetts, not far from Cohealo's new digs in Boston's financial district, for an hour of spirited conversation -- about overcoming resistance to change, anger as a motivational asset, the benefits of time off, and the perils of going public. What follows are edited highlights.
On the obstinacy of hospital bureaucracies.
Mark Slaughter: We look at hospitals as very militaristic in the way they've been designed. They feel like barracks.
Jonathan Bush: Yup. They still do the buffer on the linoleum! Just like boot camp. You ever heard of that expression, minimax regret? Minimize the scenario of your maximum regret. So in a hospital, you get inspected and checked on, "Will you have a bad event? Will you kill someone? Will you have a malpractice?" There's this ocean of inspectors and inspections and rules and standards that creates almost a white noise of rules you can't break. Even when we in the health care world try to get it simpler, we get it down to the idea of the "triple aim." Can you imagine trying to run your company with three equal goals? That's the equivalent of no goals.
MS: Yeah. Let me ask you this: Do you see health care in general being almost like an exclusively outsourced shop? Outside of the clinicians focusing on care, they turn to others to really understand and execute different pieces of their business really well.
JB: Medicine's always been this kind of a chunky sausage of inventions and consistent processes all mixed together. Not everything a doctor does all day long is like a one-of-a-kind separation of Siamese twins, OK? Some of it's just ear infections. The goal of entrepreneurs in health care is to go into those mixed-up combinations of rare, new inventions and just badly delivered processes, carve out the regular old care that we know how to do, and start doing it massively well.
Health care and the sharing economy.
JB: What do you do, exactly?
MS: We're a software company. We built a platform that enables big hospital groups to quantify what they own in terms of big medical equipment. And then we enable their different locations to tap in and consume excess capacity. So think of it as like Uber, but for medical equipment. If there's a device that's half a million dollars, and it's only used twice a week, why would the sister hospital 10 miles south buy the same thing and only use it once a week?
JB: So theoretically you could actually start renting across competitors?
MS: We think that's a natural progression for us. They're already collaborating through the GPOs [group purchasing organizations] on consumable products. Why would they not do this on clinical capital? We can make a $50 million budget feel like a $100 million budget.
JB: Could you actually rebundle fixed-cost equipment as variable-cost equipment? Could Siemens come to you and say, "Here, put these on the floor and, you know, tell us every time they use it and we'll charge 'em fifty bucks?"
MS: Equipment as a service.
MS: The market's going there. There's no margin left in "selling metal."
The baby with the Uzi.
JB: One of the many reasons that entrepreneurs aren't here -- which is one of the many reasons why I am here, because real entrepreneurs would be better than me and I want to be better, at something -- is just this political risk. There's a giant baby with an Uzi sitting in the corner of the room, which is the federal government. If she cries or get confused or touches the wrong button, there's shrapnel flying everywhere.
MS: We've taken in about $10 million in venture capital over the last two and a half years. You guys went public. Looking back, how would you do it differently?
JB: I would not have used investment banks, because they have such a strong incentive to screw you. But being public I like a lot. Being visible and transparent helps with your awareness, it helps you with your stature. It makes you be more credible and careful with the way you operate. And as a CEO, you can be rich without exiting. You can sell a few shares every month and buy a boat, or, you know, take a vacation. Before I was CEO of a company, I was theoretically rich, but not the kind that you could spend.
MS: Did it change the way you manage the company or thought about strategy?
JB: You need to make sure you've got the independence of spirit or grit or strength of your convictions to stand up to a lot of scared people saying, "Well, maybe we should show some more profit next year. Maybe we shouldn't have an airplane because people don't like that you have an airplane." No, let's have two! Because we're growing! And if they don't like it, they can sell the stock. We've been attacked headlong -- some kooky guy's huge public short of Athena. You can see a little wobble inside Athena nation on that.
MS: How do you react to that?
JB: Free advertising! On CNBC! I get a huge opportunity to tell our story and show our vision to millions of people.
Small is beautiful.
JB: I don't know about you, but entrepreneurial ventures are typically fundamentally outsiders as they start, and I found that to be lovely. I love the Shackleton story. I love Revenge of the Nerds. I love the Princess Bride. I love the outcasts storming the castle. In life there's nothing more joyful than setting out on impossible noble missions with people I love. Doesn't matter what it is, doesn't matter if we succeed. Did you get that? Do you sort of put it on your chest and say, "Yeah, baby!"?
MS: I go on almost every sales call we make, even though we have 10 guys out in the field.
JB: I feel you man!
MS: I enjoy the leading-from-the-front type of mentality.
JB: I miss that!
MS: We're still small is beautiful right now for us. We're about 50 people. Every sale is a massive win, it's a huge party every time. You got to ring the bell.
JB: Do you actually have a bell?
MS: We've go a 13-inch marine-grade bell in the office.
JB: We had a bell for implementation. We call implementation the last stage of the sales cycle, and every time someone went live, we were ringing the bell. But then it was like, all morning long! Ding, ding, ding! Too many!
Purpose and meaning.
JB: It's almost stealing to be able to have a mission that young people are excited by. Because we have this free piece to our compensation package.
MS: Yeah, we've been able to bring people in from consumer internet and enterprise health care, an interesting band of folks. A lot of these people are brilliant. They're tired of optimizing ad revenue in Twitter.
JB: We still have millennial issues. Everybody wants a freakin' medal every day, and health care is ugly and long and slow and some days there are no medals. And I am a self-loathing individual who doesn't ever want a medal, and so I struggle with that dynamic.
On the upside of anger.
JB: I think if I'm totally honest with myself, I'm just sometimes so angry at the way the health care system works. Do you feel like part of what fuels you every day is a little bit of rage at what you see every day?
MS: I pull my hair out about why they do certain things the way they do it. It's not logical, it's not reason-based, it's because "We've always done it this way." There's a lot of people in the system that want to change but a lot of people are just so content with not rocking the boat.
JB: Yeah. Or they're just sort of applying to the next level of certification, you know? Everybody in the health care system puts letters after their name. "I'm an MA or RN or MD." It's like, "I want to get to the next level of certification and so I am working directly with the given wisdom every day." I'm like, "What if it's dumb?"
Real health care reform.
JB: I'm always appalled at the amount of media attention we give to the Affordable Care Act. What I think of as the real health care reform will be the virtualizing of health care. Where a radiologist can sit in front of a flat screen and crank out so much more work, so much better. Let's say a primary care guy says, "You need to see a cardiologist, hold on a second" -- beep! -- "Here's one!" The cardiologists will like it more because they'll make more money. The patients will like it more because they'll spend less money. It'll be convenient -- we're Americans, we're impatient.
On sabbaticals and pacing yourself.
MS: Where did you go, eight weeks off? Disconnected, hopefully.
JB: We have a sabbatical program at Athena. I spent three weeks doing stupid boy tricks. I went to Sochi with my brother, who was covering the Olympics. I went to El Paso with my friend who's commanding an armored infantry. I went skiing with my best friend in Wyoming. And the rest of the time I did much more challenging work, which was stay at home, pick up the kids from school, make dinner, pay attention.
MS: Felt recharged?
JB: Well, it was toxic for a while. I was freaking out. I actually started running more and more and more, and I ended up running the marathon when I got back -- it's the new form of bloodletting. But it was incredibly valuable. I didn't make one decision for eight weeks, and things were going great when I got back. It's easy for a founder to end up accidentally in the way. So I recommend it. It forces you to document process and governance so people know what to do. Investors love it. Just kidding! What's your work life like? So, 50 people, you've been doing this for what, four years?
MS: Three years.
JB: Is it one of these dawn to dusk, all-nighters? You look rested and actually immaculately dressed.
MS: Thank you. A lot of travel. I like to go out and meet every health system executive, every hospital CEO, that's going to be involved. I feel like I've got to be the one to bear that torch, and I enjoy doing that. I was on 134 flights in 2014.
MS: I knew all the Jet Blue flight crews by name, which was a little depressing. Part of the move up here [from Florida] was to build on a really solid leadership team. I have an executive team now.
JB: Mazel tov! An executive team!
MS: We were 10 people a year and half ago.
JB: You 5-xed in a year and a half? Good god, you should be in Inc. magazine.