Scots IT talent can make US firms great, says software entrepreneur Cormack

Since its acquisition in 2005, Mr Cormack has grown Brightree, an IT company focused on the US home healthcare market, from a $1 million turnover business to one generating sales of $120m.

In that time staff numbers have grown from 12 to around 450, a third of whom work in product development in roles such as software engineering, quality assurance and product management.

And as the company aspires to double its product development team, from 150 to 300 in the next three years, Mr Cormack is confident that around of those new roles 100 will be based in Scotland.

The entrepreneur, who spent a year on the board of Aberdeen Football Club, is surprised that more US companies are not using IT skills in Scotland to fill key positions.

“I think Scotland should do more to sell itself, because there is a huge opportunity in the States to bring jobs to Scotland for software engineering,” Mr Cormack said.

“I think there is an opportunity for Scottish universities, maybe with Scottish Enterprise, to collaborate more with people like ourselves.

“Scotland has got some really good people and I think there is opportunity for Scotland to do more of this.”

Mr Cormack admits that building a workforce in Scotland is not cheap. But he highlights numerous attractions to the strategy, chief among which is the talent flowing out of Scottish colleges and universities. Added to that is the fact that unemployment is extremely low among software workers in Atlanta, described by Mr Cormack as the “healthcare IT capital of the States”.

“What we wanted wasn’t a cost effective solution,” noted Mr Cormack, whose firm is one of the top 100 healthcare IT companies as defined by the influential, Healthcare Informatics magazine. “We wanted a solution where we hired quality people that were well educated.

“We came to Aberdeen, and now to Glasgow, and we brought high-value jobs.

“The reason we are here is because, one, there are some great engineering universities here. There is a good education system, there is good availability of software engineers for us to be able to hire who have got similar culture and a good work ethic.

“Our retention in Scotland has been 95 per cent.”

Mr Cormack, whose firm is backed by the $4 billion Battery Ventures investment fund, added: “There is no unemployment for it in the States.

“We’re I healthcare IT, and Atlanta where we are headquartered is the healthcare IT capital of the States, so there is no shortage of companies there looking for talent.”

The time difference between the US and the UK also brings Brightree closer to a 24-hour operation.

“We are a mission critical application,” he said. “So today we have 83,000 people all day, every day, using our application, whether it be a nurse doing an assessment in a home health setting, or someone doing cash posting at the back-end of the product. We have $14 billion worth of reimbursement go through our platform every year, so it’s a big application.”

Mr Cormack was speaking during a recent visit to Brightree’s office in Glasgow’s St Vincent Place, where the company employs more than half of its 35-strong Scottish workforce. Around 20 have joined the office since it opened six months ago.

The businessman, who is a member of the GlobalScot international business network, has aspirations to add 300 staff to its current 450 global roster. And he expects around half of those roles to be in Scotland.

Such growth will be driven by the massive opportunity he sees in the home healthcare IT market, currently worth $7bn but expected to grow to $20bn in the next five years.

Powering that expansion are the shifting dynamics of the US healthcare sector driven by the ageing population, with as many as 10,000 “baby boomers” joining the “market” every day. People in that bracket could be patients recovering from acute illnesses, those requiring daily treatment for different ailments, or people who need palliative care.

“You’ll have a larger elderly population with less people working to support it. Unchecked, this 18 per cent of GDP (spent on healthcare) will get to 35 per cent in 20 years, which is clearly unsustainable,” Mr Cormack explained.

“The industry’s response in the US to this is to have a performance or outcomes-based model, where they are trying to drive up to, over the next few years, 80 per cent of hospital bed stays into the home, versus in the hospital.

“The reason for behind that is that is $3000 on average a day for somebody to be in the hospital, versus maybe $300 on average a day for someone to be cared for in a home setting.”

The software created by Brightree allows healthcare providers to assess patients at the point of care, while the “back-end” of the product can be used to order equipment such as wheelchairs – and take payment for it. Mr Cormack, who describes it as a “complete mission critical application”, said he invested in the sector because it was “the least invested in from an IT perspective”.

But he points out that it is not without its challenges, observing that the systems used by the three main elements of the systems – the hospitals, doctors’ practices and home healthcare providers – “don’t talk to each other”. This is something Brightree is keen to rectify.

“One holistic view of the patient will allow the physicians to see what is going on with a patient in any setting, and be alerted if a patient is being readmitted to hospital,” Mr Cormack said.

“All of that means from an IT perspective is that we are three years into a 10-year cyclical change in healthcare where these systems all need to talk to each other and be able to provide outcomes data.

“We at Brightree are the largest independent provider of clinical and back office applications in the homecare setting. We are setting about working with partners in the hospital setting and physician practice setting to connect all of this together.”

Brightree, which is an internet-based platform, is seeking to fulfil that ambition as the market it operates in continues to consolidate.

He said it currently operates in a market with around 30,000 providers, which is anticipated to shrink to about 10,000 in the next five years. That number is expected to reduce further as the need “automate” gathers pace, as many of the incumbent providers will not have the resources to deal with the transition.

Asked if Brightree would consider acquisitions as the market consolidates, Mr Cormack said: “We’ve done some acquisitions where we have actually bought competitors that have basically had legacy products, older products that are not going to be sustainable.

“What we do is continue to maintain those systems but encourage the customers to move over to our platforms, and we have had really good success at doing that.

“If I look one segment of home health – the hospice in the home setting – there are 25 competitors in that field that are left. There might be four of us left in five years’ time.

“So we are going to aggressively go after their customers, number one. But for the right price we are going to look at doing some inorganic acquisitions as well.

Mr Cormack first worked in the US after Soft Systems, a business intelligence specialist, was acquired by an Atlanta-based public company, IQ Software.

The deal led to Mr Cormack becoming chief operating officer for IQ, which then founded an e-recruiting business – focused on the healthcare market, it was then sold to the Nasdaq-listed Careerbuilder.com in 2000.

“At the core of what we do is people,” Mr Cormack reflected. “I wish I had known what I know today 20 years ago, because it really is all about making sure you hire and retain great people.”