If you ask Kent Gale what he thought KLAS would look like in 2016, he envisioned a room with 10 people “high-fiving each other after we got some great information.” What he never imagined was having the CEOs of the top health IT companies flying into town in corporate jets for a summit, or lawyers threatening to shut down his shop. No doubt it’s been quite a ride for the founder of KLAS, has has become an industry presence that is looked upon to rate the best vendors. In this interview, Gale talks about how KLAS was conceptualized, the early tweaks that ended up being game-changers, and how he leveraged his relationships to get providers talking. He also discusses his passion for interoperability, what he loves most about his job, and the role that mission work plays in his life.
- Working with Sunquest in the mid-90s
- The concept: “A company that transparently measured how well vendors kept their promises.”
- Recruiting Leonard Black & Scott Holbrook
- Building a provider database — “It’s a great symbiotic relationship.”
- From 130 questions to 30
- Vendor pushback — “This data has absolutely no value if there’s bias.”
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I wondered if other companies made decisions that were poor for the customer, and nobody knew it until it actually hit the customer. And I thought, wouldn’t it be great if there was a company that monitored whether companies kept their commitments to their customers.
They were not getting anything out of this initially, but I promised them that as we gathered research, we would turn around and give it back to them. And that model works really well today where we have tens and thousands of providers who share with us their opinions, and in return, we give them free access to what we’ve found.
There is no lack of energy in this industry for us to go measure, and we’re just sprinting. It’s probably one of the more thrilling times that I’ve ever known and I’ve been in the industry for almost 40 years.
Some of the vendors that have paid KLAS by far the most money have never scored very well. And that’s not good news because I’d rather that everybody up their game and do a great job, but at least it validates that you can pay a lot of money and it won’t move your score.
When they come and sit down with us, we are brutally honest with them about what we’ve found. We watch for the vendors who have an appetite to get better to help their customers succeed.
Gamble: What I’d like to do first is get into the history of KLAS and talk about how this came about. So first, can you talk about what you had been doing at the time that this came together?
Gale: Back in the mid-1990s, I was working for a company called Sunquest. We had over 1,000 hospitals — most of the larger hospitals had Sunquest for their lab system, and Sunquest was expanding into orders, physician orders, clinical event monitoring and stuff like that. So it was an exciting future. At the same time, there was a move inside of Sunquest where the owner was going to take the company public and divest himself of the company.
As that was transpiring, I was on the management team, and we were debating how do you structure the financial side of the company so it’s as healthy as possible, and what could be done to make it look even healthier. And as part of conversation, there was a discussion that maybe there were some things we ought to stop doing, and some of those things I thought related to quality. As we had that conversation, I wondered if other companies made decisions that were poor for the customer, and nobody knew it until it actually hit the customer. And I thought, wouldn’t it be great if there was a company that monitored whether companies kept their commitments to their customers, especially in the healthcare area, and especially in patient care areas.
So at that time, I just toyed around with it in my brain and thought, that would be cool to have a company that transparently measured how well vendors kept their promises and met expectations. That was the genesis of it. And as part of that, the interesting thing was I had two really good friends, Leonard Black and Scott Holbrook, and so as I was talking to them about it, they thought, ‘hey, it sounds like a really fun idea too.’ And we used the letters in their names, L and S and K for mine, and I thought, Kent, Leonard and Scott, that would be a fun name for a company, KLAS. Come to KLAS to get educated on what’s happening in the industry. So my brain just took off on that and as that got explored a little further downstream, my son Adam got involved in the company. And as we officially registered the company in Utah, it represented Kent, Leonard, Adam and Scott, so that’s how the KLAS came about.
Gamble: The timing is certainly something that worked out, as a few years later the industry really started to boom. I’m sure that’s something that was part of the discussion with the founders that this industry is going to take off, so we really could have a unique role in it.
Gale: Yes, in fact that’s a great question, because there are two elements that were critical to this. First off, both Scott and Leonard had other jobs, so as the ideas started to roll forward, I was in a position where I could actually do something about these ideas. At the time, there were seven or eight major companies that were investing millions and millions in these patient care systems, and to measure them was going to be exciting, but our first couple of reports that came out were all paper.
I remember my family had this copy machine and it did not have a collator on it, so we’d print out a bunch of each page and then we just put them around the living room or on the table and we’d walk around and collate as a family, and that was kind of how we got the first reports out. That would be a dead end if we tried to model that into the future. So about that time in 1996-97, the internet really came into play, and we had some technical people who were able to help us distribute these reports via the internet. And around the year 2000 when almost everything was going electronic, that really exploded the information we had so that you didn’t have to have paper sitting on a shelf; you could look at a PDF document and thumb through it as opposed to having us ship you documents.
I remember SMS was one of our first big customers and we printed a bunch of these reports and put them in a box and shipped it out to them and we were so proud of ourselves. But SMS cancelled the next year because they found that they’d set these documents on the shelf — many of them represented information from a year or two ago and they needed information today. The internet brought us the opportunity to update the performance of these vendors in real-time, so it was exciting to have that come together at the right time because without that blessing, KLAS could never have survived.
Gamble: Sure. When you think about the early reports, what were some of the focuses of those?
Gale: It’s interesting because back in the late 90s, there was a huge competition between HBOC, which was acquired by McKesson, and SMS, which was acquired by Siemens in the year 2000, and you had Cerner, you had IDX, and you had Epic just showing up. It was just fascinating — all these companies were coming out of the woodwork, and most of this was around the nurse and doctor getting involved in looking at patient results at the nursing unit and electronically having patient records.
For 24 years before that, I’d been around in many, many hospitals and gotten to know lots of CIOs and executives, and we leveraged those relationships to have those people participate initially. Can you imagine someone spending half an hour to an hour on the phone with me for no real reason? They were not getting anything out of this initially, but I promised them that as we gathered research, we would turn around and give it back to them. And that model works really well today where we have tens and thousands of providers who share with us their opinions, and in return, we give them free access to what we’ve found.
It’s a great symbiotic relationship that creates loyalty. We’re very loyal to the providers. We have to get them real information that’s meaningful to them, and in return, they’ve been very loyal to us, because some vendors have literally tried to sue us out of existence and wanted to squash us so that we could not tell the real story. So it was kind of exciting when I think back on it.
Gamble: Right. You talked about the relationships with providers — now it’s something where obviously KLAS has been established for so long. But I imagine that at that point, it really was a bit of a leap of faith for them to take some time to actually speak to you and believe that they would actually get something really useful out of it.
Gale: It is fascinating to me that they actually did this. Our initial survey had over 130 questions and that was a killer, because I remember Bob Blades, Mike Smith at Lee Memorial, and some others said, ‘look don’t ever call me back. There’s no way I could do another 130-question survey.’ So over time, we’ve vetted it down to about a 25 to 30-question evaluation. That typically doesn’t take as long and has the data we need, and we have just thousands and thousands of providers who continue to provide us insights and that’s been exciting.
Early on, it was around the patient care side, even though there was obviously HR and payroll and a bunch of other financial applications that we measured, but the real interest in the industry was around patient care applications. Now, there’s an explosion around security. We have lots of measurements we’re taking in security, interoperability is just booming with data we can gather, and value-based care/population health. There is no lack of energy in this industry for us to go measure, and we’re just sprinting. It’s probably one of the more thrilling times that I’ve ever known and I’ve been in the industry for almost 40 years.
Gamble: Yeah, that’s pretty telling. In addition to vetting down the questions, I’m sure that there is other things you had to tweak, especially early on, to try to get this model right?
Gale: Yes. The basic set of questions for either the IT side or the consulting side have been modified slightly over time, but what really makes a difference is what we call piggybacking. If I’m on the phone with Jim Turnbull up at the University of Utah and I’m talking to him and asking him about what’s going on and he may rate certain vendors that they’re using, I can also throw on some piggyback questions if you would. For example, if we’re trying to explore security, I could say, ‘So what security companies are you looking at? Who have you engaged? How well have they done?’ I can ask four or five questions and immediately get a flavor of what’s going on in the security side and start understanding and measuring who the players are, if the early indicators are good for them, etc. And so we have the basic study questionnaire and then we have piggybacks that we have all the time. In my drawer, I probably have 20 of them, and anytime I get on a phone call, I can pull out any one of those 20 and add context from that piggyback.
Gamble: Right, it makes the best use of everyone’s time.
Gale: Yes, and now we’ve got, obviously we’ve got CFOs if we’re talking about full IT outsourcing, or if we’re talking about management consulting, we can talk to COOs. We can talk to pharmacy about medication cabinets, and HR about talent management. It just goes on and on the places we can drill down and understand what’s going on in the industry.
Gamble: And as far as the model you use for getting feedback, I can see why this is translated so well from a transparency angle. But I’m sure that, as you alluded to, that also opened the door to criticism from vendors. How have you dealt with that over the years?
Gale: Well, I think that is probably the best question, because this data has absolutely no value if there’s bias in it. If a vendor can buy attention from KLAS to get scores better — if any of that were to happen, it’s just useless, absolutely useless. There have been vendors who have literally shined a light on us to try to find out if you can pay to get a higher score, and we’ve had government agencies pay attention and see if there’s some kind of a scam going on behind the scenes. We have about 140 employees and we have vigorous quality control inside to make sure that this is real and that we get to report what’s going on; what’s really happening in the industry. Some of the vendors that have paid KLAS by far the most money have never scored very well. And that’s not good news, because I’d rather that everybody up their game and do a great job, but at least it validates that you can pay a lot of money and it won’t move your score.
In terms of what moves your score, I think if you were to talk to a majority of the vendors, you would find that behind closed doors when they come and sit down with us, we are brutally honest with them about what we’ve found. We watch for the vendors who have an appetite to get better to help their customers succeed. And so, if you’re to interview us about each of the vendors, we could probably give a scorecard back to the industry on the vendors who really care and the ones who don’t. We don’t do that, but it literally is obvious to us if a vendor’s heart is in the right place.
Now, if this is a commodity market, it’s different. If we’re buying toilet paper, cornflakes, or whatever, and we know what we want and we can decide if we want to pay a lot more or a lot less, that’s different. But most of this is high-cost, intense effort, and it’s important to know who’s delivering and who’s not. And so, the vendors have tried — there are a number of them who have tried valiantly to get us out of this industry. Thank goodness we’ve survived, and what’s protected us is the provider community. They just won’t let the vendors stomp on us, and we owe everything to the providers for keeping us in the space we’re in to transparently monitor and measure and report what’s happening.