Hall of Fame: Mark Bakken pioneers new models

Mark Bakken didn’t build a 500-member Epic consultancy by accident. Bakken, the founder of both Nordic and HealthX Ventures, saw the need for a new model for electronic health record (EHR) consulting, so he pioneered one.

Nominated by Mike Victorson, president and CEO of M3 Insurance, Bakken is credited with taking a risk and identifying a niche within the health care space and then making the right decisions at critical growth stages of Nordic, which has grown into the world’s largest Epic consulting practice. These are among the reasons he was chosen for the 2015 In Business Executive Hall of Fame by his business peers in the 2014 Hall of Fame class.

“It’s an honor to be considered at all,” he notes, “but then to be chosen is quite an honor.”

Prepared for launch

Bakken launched Nordic in 2010, and thanks to his previous experience with Microsoft consulting, he knew large enterprises needed help configuring software. He also knew Congress had passed and President Obama had signed into law the HiTech Act and the Affordable Care Act, which combined to incentivize hospitals to install, configure, and optimize electronic medical records. About $40 billion was allocated for hospitals to implement EHR software.

“The large businesses typically would spend almost $7 in consulting for every $1 they spent on Microsoft software,” Bakken recalls. “I figured the ratio was going to be maybe not bad, but somewhere in between 1-to-1 and 1-to-7, basically. I also knew that when those events happened, EHRs are viewed a lot of times as a capital expense, so when their budgets came up, hospitals would say, ‘Hey, this is a one-time thing and we’re bringing in consultants. Can you help us get it installed and configured and eventually optimized?’ Then they would take it from there.”

The reality, however, is that they never take it from there because medical software is always evolving, and Bakken knew there was going to be a limited supply of people who “knew this world.”

“With Epic, you really need to understand and be certified in the software in order to use it,” he notes, “and the only place to get certified is Madison.”

Epic, he continues, is known for hiring very sharp people, and the company does a good job of figuring out what types of people make the best worker who can implement and configure their software and work in the health care industry. While Epic has taken steps to mitigate this, one potential downside for some is that they have to pick up and move here. Others, after they move here to start their career, might reach a point where they want to settle down in a different part of the country, or perhaps move back to where they grew up.

Consulting on Epic products is a good bridge for them. “When you do consulting,” Bakken notes, “you can live anywhere and work anywhere.” This is why Nordic’s 500 consultants are spread out all over the country; about one-third of them are in Wisconsin but the company has consultants in 45 states.

The two-thirds solution

However, the lack of geographic limitation is not the only unique thing about Nordic’s business model. At the time the company was founded, a typical consulting practice was for consultants to make a salary and perhaps get a bonus based on how many hours they billed or some other arrangement. The unique way Nordic approached it was typically hourly compensation, and every employee basically knew exactly what the company charged the customer. The consultants would get a fair chunk of it.

“I would act as an agent and say, ‘Listen, I’m nothing without you, and you’ll get roughly two-thirds of what we charge to the customer, and then we will keep the rest for the company to pay taxes on your behalf — employment taxes, benefits, all this other stuff — and leave a little for the bottom line.’”

It was not only a brand-new concept in the EHR consulting world, it also tended to attract the best and brightest “who knew they were the ones kind of bringing the relationship to the table,” Bakken states. “They were the ones kind of selling themselves, and therefore they could make roughly twice as much as they could make in virtually every other consulting firm.”

That kind of concept also tends to spread by word of mouth, and with everything inbound, no recruiters were needed. With its simplicity and success, however, the model now has been copied by a number of different consultancies.

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Leaving a legacy

Victorson notes that Bakken’s legacy includes helping Madison become a technology hub in the mold of Austin, Texas, or Silicon Valley, but for health care IT. With HealthX Ventures, Bakken is building a seed and early-stage fund to invest in health care startups, the first of which is Redox, which makes an interface engine (middleware) that enables health care entities to share data across different medical record applications.

Thanks to the reputation of a certain electronic health records company, Bakken believes that making Madison a health IT hub is a realistic goal. Roughly 54% of the U.S. population has either part or all of their medical records on an Epic platform, he notes, so it has a sizeable market share in the U.S., and it’s growing internationally. “That [vision] is absolutely realistic,” he says. “In health care, almost every worker knows Madison because they think of Epic.”

HealthX Ventures plans to invest in Wisconsin companies that make software for the health care industry and that are either brand new, meaning a concept in the pre-revenue phase, or they have a few thousand dollars a month in revenue and need some help getting to the next level.

In general, Bakken says Wisconsin is further down the path than most of the country when it comes to using technology for the health care industry. Part of that is because Epic has been here for 35 years, and a number of Epic’s first customers are here, but in any event, “we are further down the path in terms of how can we learn from each other in areas such as population health and analytics,” he notes.

Fully vested

In addition to establishing unique consulting and employment models, and trying to bring more early-stage capital to the region, Bakken has been a supporter of the Madison IT startup scene. Bakken, who mentors startups, is a driving force behind establishing a Tech VC day here, which would lure venture capitalists here to network with local startups. There is still work to be done but the interest from the investment community is strong.

“There is lot of interest and lots of verbal commitments from other venture capitalists around the country that have agreed to come here because they believe that we are ground zero, and we have a lot of great ideas here,” Bakken says. “They can invest one day here, network with some of the other health care IT startups, and network with other investors that like this state.”

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