We sat down with Bob Chaput, the CIO of Healthways—one
of about 20 publicly traded companies headquartered in Nashville—to find out just how important
technology is to Healthways' mission and success. A disease and health care management company,
Healthways provides health care solutions for hospitals, health plans, employers and health care
providers to improve patient health and reduce medical costs.
Q Why is investing in technology important to Healthways' mission and
success? Chaput On a very basic level, we intake a lot of data
about people's medical costs and claims, about lab results, about prescriptions and pharmaceutical
information, about their health in general. We probably handle more data than any other entity in
the state of Tennessee. We intake that data and use it to identify the people to whom we're going to
provide services. We then populate our application systems that we use to provide those services and
deliver them. Finally, we have to go back to our customers and validate and demonstrate to them that
we have actually delivered the services we indicated we were going to provide—that we made people
healthier, we helped them reduce their medical claims costs and we made both physicians and patients
feel better about the health care system. In many respects, the information technology that we use
to support our business is analogous to what Nissan in a manufacturing plant would have in the form
of manufacturing. For us, information technology pretty much represents our manufacturing floor.
Q How much do you invest in technology each year? Chaput Of our annual capital expenditure, technology is probably 75% of what
our company would expend on a capital basis. Many industries measure technology expenditures as an
operating expense, as opposed to capital expense. In my previous life and experience at GE and
Johnson & Johnson, which are largely manufacturing companies, if we spent 3% or 4% of revenue on
technology, that was a banner year. Here at Healthways, we probably spend north of 10% of revenue on
technology. This year, our revenue will be more than $600 million, and from an operating expense
point of view, we'll spend north of $60 million on technology, on an operating basis. And then we'll
probably spend $50 million in total in capital this year, and the preponderance of that is in
technology. We make huge investments for the purposes of staying well ahead of our competition and
also for purposes of staying, in many respects, ahead of our customers, so that we can create value
for them in unique ways.
Q How many technology employees does
Healthways have? Chaput Right now, it's a little more than
400. That number is going to grow, coincidental with our business growth, our revenue growth.
Probably about 300 or so are in Nashville.
Q At a Nashville
Technology Council meeting last year, Healthways Chairman Tom Cigarran said Healthways will need
about 1,300 technology professionals by the year 2010. He estimated that IT spending would increase
from $60 million per year to $180 million per year in 2010. Are these goals/numbers still
accurate? Chaput They are probably reasonably accurate. We
continue to grow at a clip of more than 25% a year. When Tom was speaking at the NTC meeting, we
were focused on what we call Vision 2010. We don't really quote those numbers publicly in terms of
revenue, but he was reflecting on where we were at that point in time, what revenue we were
anticipating growing to by the year 2010 and what the implications were for technology jobs. We're
absolutely heading in that direction, but it would be hard to pin it down to a precise number by a
precise date.
Q What are your current technology needs? Chaput They're pretty significant. Around the country, we probably have
50 different technology positions that are open, roughly half of them, I'd guess, here in Tennessee.
In Middle Tennessee, the skill set that is in greatest demand, and probably one of our biggest
challenges, is for Oracle PL/SQL programmers. We are also placing a lot of emphasis from a skill set
perspective on systems analysts and project managers.
Q What
challenges do you face in finding technology professionals in Middle Tennessee? Chaput We have a health care-intensive economy here in Middle Tennessee. That
said, I think we have a challenge here in finding people with technology skills. The primary mission
of the Nashville Technology Council is to increase the number of tech jobs that we have here. That's
a great mission, but that needs to include bringing the people here. So it can be a
chicken-and-egg situation. If there aren't jobs, people aren't going to come, and if there aren't
people, industry isn't going to move here and have those jobs filled. It's a practical reality
of business today that we can't find all the people we need in Middle Tennessee, so we do indeed
look for those skilled resources offshore. We have made a fair amount of progress this year in
working with two different Asian-Indian firms. For us, it has been a positive experience, not only
from a economic point of view but also in that for our colleagues in technology, this translates
into opportunities to do higher order work. For example, if I were a PL/SQL programmer, and I report
to work every day and diligently go about writing programs, that's a very gratifying and satisfying
kind of work. But if I can manage my own team of programmers, whether they happen to be sitting in
Mumbai or Chennai or Bangalore, India, then that's an opportunity for me as an individual to grow in
my career and take on broader project and even supervisory responsibility. So we look at it as a
win-win situation for the company, as well as for our colleagues. While we have challenges filling
those roles, we'll continue to do more of it next year, as well.
Q When trying to draw talent to Middle Tennessee, do you have a sales
pitch? Chaput I say a little bit about my personal story. My
wife and I relocated eight times in 16 years before we relocated to Middle Tennessee. We arrived
here and concluded that this is a place and a point in our lives where we're going to live here
because it's such a great place. The economy is terrific—it's growth, but it's quality growth. The
access to entertainment for a community this size is just spectacular, ranging from fine arts to
sports. The tax situation—I had an immediate 10% pay increase just by relocating here from North
Central New Jersey, not to mention real estate taxes and other costs of living. So, I've recruited
some very significant executives that work in the technology group here from the West Coast, Atlanta
and St. Louis, and they have similar things to say about Middle Tennessee. Once they get here, it's
not hard to sell them on the area.
