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In November 2009, John Nackel was named CEO and executive vice president of Ingenix Consulting, a 1,000-person firm providing advisory services focused on hospitals, physicians, health plans, employers, government agencies and pharmaceutical companies. Most recently, Nackel was Chairman and CEO of Three-Sixty Advisory Group, a business he founded to help emerging health care and medical technology companies. Nackel also served as global managing director of Health Care Consulting at Ernst & Young. Consulting recently sat down with the new CEO to discuss the healthcare marketplace.
Consulting: You're a little more than a month into this new role, what's your view of the healthcare marketplace right now?
Nackel: I am absolutely bullish on the healthcare opportunities right now. Any time there's a major change to the healthcare industry, consulting has always been there to lead the charge. In the payer sector, I see a lot of major challenges and wholesale changes, but the most significant is major cost reductions. Major players are talking about nine figure cuts in costs, we're talking hundreds of million of dollars in cost cutting. And a few are even talking about cutting $1 billion or more. That's unprecedented in this industry.
Consulting: What specific areas are clients focused on?
Nackel: I think the first area is strategy and planning that's taking place at the highest level. Clients are looking at what products they have and what markets they serve etc. The second level is around process improvement. That's a big opportunity. Clients are looking at how they do business—methods, technologies—and realize that maybe they aren't getting the economies of scale. The third are is business process outsourcing both onshore and offshore. Clients are examining where their core skills are and moving their non-core skills to entities that are better prepared to handle them. I like to say that clients are focused on growth, performance and capital.
Consulting: What about the provider side?
Nackel: There are huge opportunities on the provider side, as well. It's a multi-billion market and we should be getting half of it. There's no major player that dominates the space. In the 1990s Ernst & Young owned the provider space, but not any more. It's for grabs right now. There are maybe 10 smaller niche players, but none that offer the breadth of experience that we do. The marketplace has gotten more complex and there are more issues of risk. Risk and complexity are driving the market and that just happens to be our sweet spot.
Consulting: Given how bullish you are on the market, what kind of growth can we expect to see?
Nackel: I think we're going to grow at a very fast pace. My order of magnitude would be to double to business over the next three years. It's aggressive, but do-able. I never set the bar low, and that goes for me, the firm or my people. As a result, we're heavily focused on finding the very best talent in the marketplace right now. Our growth will be mostly organic growth, but some through acquisition. The idea with any possible acquisitions would be to fill holes in our offerings, not supplement what we already do. I'd rather not get into what those holes are right now.
Consulting: With all that's going on in healthcare right now, how would you characterize your clients' state of mind? Do they view as an opportunity or a threat?
Nackel: Many, I think, are frightened. There is a lot of apprehension and a huge level of uncertainty with what's going to happen with healthcare reform so a lot of clients are reaching out to us for our opinion. As a result, overall strategy is becoming a bigger issue for many. But the true leaders of the industry are looking at this as an opportunity to move market share. The conversation I'm having with CEOs are about discovering what the overall impact will be to them and to their competitors and how they can use this as an opportunity to gain marketshare. The same can be said, by the way, for consulting firms. Ingenix is going to come out of this in much better shape that it went into it.
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