Healthia's IT consulting business has prospered by focusing on the health care industry, where electronic records improve efficiency and accuracy.
Glenn Galloway and Jim Zerwas started their IT consulting company just in time for the dot-com collapse that sank a fleet of competitors and put several thousand local tech people out on the street.
Galloway and Zerwas not only survived the crash, they thrived with uninterrupted, double-digit growth thanks to a growing market niche, smart employment policies -- and a bit of good luck.
"I'll concede that there was a certain amount of luck involved," said Galloway, CEO of Golden Valley-based Healthia Consulting Inc. "But there was some foresight and planning in there too."
Maybe so. But no matter the reason, the fact is that Healthia -- a specialist in the growing field of health care electronic systems -- has grown at an annual rate of 39 percent since 1999, its first full year.
And that's not just a statistical anomaly calculated from a low, start-up base: Healthia's gross jumped 39 percent in 2004, to $7.8 million, and 38 percent in 2005, to $10.8 million. And sales so far this year are on track to hit $15 million, another 39 percent leap.
Both Galloway and Zerwas were IT directors at different companies when they started Healthia in 1998 -- then known as a general IT consultant called the StoneBridge Group.
But because Galloway had worked for a pharmaceuticals insurance firm, their initial search for clients naturally tapped his Rolodex packed with the names of medical companies around the country -- potential clients that increasingly were seeking electronic help to streamline their business systems.
That's where the serendipity comes in. In 2001, a combination of economic recession, the end of the Y2K tech bubble and the Sept. 11 terrorist attacks sent the IT consulting business into a tailspin.
But about the same time, soaring medical costs and growing concern over patient safety were triggering a wave of investment by Healthia's health care clients in technology that went far beyond business-management systems.
As luck would have it -- never mind foresight and planning -- Healthia's early focus on health care business systems placed it in an ideal position to latch on to a growing market.
"Paper medical records were inefficient and expensive to create and maintain," said CEO Galloway. More important, paper records often were inaccessible for rapid consultation, at times producing medical errors.
At first, Healthia's contracts involved developing and installing electronic systems for individual clinical departments -- surgery, X-ray, pharmacies, laboratories. But that quickly evolved into contracts to integrate departmental systems so that records could follow a patient from department to department, hospital to hospital and clinic to clinic.
Healthia not only helps clients select and install electronic records, but it also develops training programs for medical personnel using a cadre of specialists that includes former nurses, pharmacists and radiology technicians.
"It's not an overcrowded niche," Galloway acknowledged, but there are some muscular competitors. In the Twin Cities and in Chicago and Denver, where Healthia has opened regional offices, it goes head-to-head with the likes of First Consulting Group, a California company with 2005 revenue of nearly $280 million. Ditto for Texas-based Healthlink Inc., which grossed $65 million in 2004, the year before it was acquired by IBM.
Yet, Healthia has assembled an impressive client list, including California's Kaiser Permanente, one of the nation's largest HMOs; University of Chicago Hospitals, and Denver-based Catholic Health Initiatives, the second-largest Catholic health care system in the nation. Local clients include Allina, HealthPartners and North Memorial Medical Center.
What accounts for the success? A key factor is the company's drive to promote superior customer service, an objective backed by an incentive system that bases half of quarterly bonuses -- in effect, 10 to 20 percent of total pay -- on interviews with clients to gauge their satisfaction with the work being done for them.
Another factor might be Healthia's employment policies and benefits, which early this year won one of 12 "Minnesota Work-Life Champion" awards given by the University of St. Thomas Center for Ethical Business Cultures.
Healthia offers three weeks' vacation to new employees and up to four weeks with tenure and promotions. It also provides long- and short-term disability insurance, a 401(k) plan to which it contributes the maximum allowable and health insurance plans for which it pays 90 percent of the premiums.
The result is an employee turnover rate below 10 percent, less than half the industry rate.
Healthia was started with Galloway's and Zerwas' savings and their willingness to work without salaries for a year. There has been no debt and no outside investors.
"We've been comfortably profitable since 2000," Galloway said, "and having a lot of fun in the process."