A healthy dose of new contracting

Perot reshapes government business to focus on health care opportunities.

Perot Systems Government Services is reorganizing and expanding its health care business by hiring new employees and taking advantage of parent company Perot Systems Corp.’s commercial expertise. The goal is to be ready with information technology solutions when the Obama administration tackles health care reform.

The reorganization and new strategic thinking began last year, said Lee Carrick, president of Perot Systems Government Services. The idea “was to rebuild the team, get us focused, have very clear ideas on our strategy and roll that down to a very tactical implementation plan so we would know what we were going after,” he said. “We’ve done that.”

Because Perot Systems Government Services is a relatively young organization within the corporation, it requires tweaks and changes from time to time, Carrick said. The acquisition of QSS Corp. in 2007 expanded the unit’s health care business, so “a lot of this [assessment] is just learning what we’ve got,” he added.

When Carrick and his team looked at Perot’s experienced commercial health care sector and its capabilities, it was “kind of a no-brainer,” he said, adding that he wanted to adopt the company’s best practices and take advantage of its sales and marketing expertise.

“I thought government clients would be very interested in the things that we could do and were doing in hospitals at all different levels,” he said. “And I thought that’s also something that my pure government [contractor] peers can’t say and can’t do. So to me, it was just a real logical fit.”

Asked whether the expansion plans are a reaction to the Obama administration’s pledge to create a health care system that will provide coverage for all Americans, Carrick said, “I would say the simple answer is yes.”

But he added that Perot Systems Government Services had been making plans and setting goals before the election, including hiring executives with health care credentials. “We suspected that whichever way the election went, it would be a great investment,” Carrick said. “I would say the election [and] the stimulus bill propelled us even faster.”

The company’s moves appeared vindicated in January, when the Health and Human Services Department announced new mandatory interoperability standards for all federal agencies implementing any type of health care IT system. Among other things, the new rules aim to facilitate the national adoption of electronic health records.

“If we want interoperable health care and want Obama’s vision of e-health records by 2015, we don’t need islands of hardware and software; we need a coordinated health care system,” said Dr. John Halamka, chief information officer at Harvard University’s Medical School, in announcing the new rules. Halamka was chairman of the Healthcare IT Standards Panel, which established the standards.

In September 2008, Perot Systems hired Dr. Harry Greenspun, formerly chief medical officer at Northrop Grumman Corp., to be CMO of its government health care group.

Hiring a CMO was not new or innovative. Some government contractors have been bringing medical expertise onboard for several years. For example, BearingPoint Inc. had hired Dr. Michael Cowan, a former Navy surgeon general, in 2005. Computer Sciences Corp. hired Dr. Robert Wah in January 2007. One month later, Northrop Grumman hired Greenspun.

As a member of Perot’s health care leadership team, Greenspun will provide global strategic direction to drive technological improvements in clinical care, among other areas of e-medicine, Carrick said.

The company also hired health care veteran Elizabeth Smith as executive vice president for federal health care global sales. Maggie Bauer, who came to Perot with the acquisition of QSS in January 2007, was named senior vice president. Smith and Bauer are leading Perot’s health care sales and coordination efforts companywide.

Smith’s mandate is to build and oversee an expanded sales team. She has worked at the National Institutes of Health, HHS and the Veterans Affairs Department. She also worked in health care sales at EDS Corp.

“We are essentially transforming our whole sales approach,” said Smith, who is responsible for capitalizing on the health care sales assets in Perot’s government and commercial sectors.

The sales force will no longer sell only when opportunities arise, she said. The goal is to create a consultative and strategic selling focus in which “we understand what the customers’ needs are and then what is the value that Perot can bring to them.”

“On the operational side, we draw both from Perot Government Services as well as our commercial health care [business], which is 57 percent of our company,” Smith said.

Perot Systems works with about 4,000 U.S. hospitals, many of them part of large multihospital systems.

One of Bauer’s tasks is to assess the technologies, architectures and expertise in Perot’s commercial sector and determine how the company could adapt them for federal clients. Her portfolio of health agencies includes HHS, the Public Health Service, the Centers for Disease Control and Prevention, NIH and the Food and Drug Administration.

As an example, Bauer cited Perot’s work at the National Institute of Allergy and Infectious Diseases, a unit of NIH. “We work very closely with the researchers and the scientists to help them better understand how IT can enable what they do,” she said. “That [work] is going to help better inform and support what we do on the public health side.”

NIAID turned to Perot Systems to help it convert its desktop computers in developing countries to thin clients. “Thin clients have many benefits…including a 90 percent reduction in desktop power consumption, the elimination of data islands on desktops and less back-end infrastructure to manage for patches, antivirus and application deployments,” said Michael Tartakovsky, chief information officer for NIAID’s Office of Cyber Infrastructure and Computational Biology. “Perot Systems managed the large scale deployment of a desktop virtualization solution to the NIAID International Centers of Excellence in Research in Mali, Uganda, and India.”

In February, Perot won a five-year, performance-based CDC contract worth more than $119 million to provide IT infrastructure support to the center’s IT Services Office in Atlanta and its offices worldwide.

In assessing the health care contracting market, “I always look at it as strong competition,” Carrick said. “You have to take the approach that we’re going to try to bring our best game, and they’re going to bring their best game.”

HHS accounts for about $50 million of Perot Systems Government Services’ revenue, he said. “I’d say we’re just shy of $100 million if you add [all federal sales] together,” he added.

Carrick declined to set a five-year revenue target for the company’s government health care contracting. “A lot is going to depend on, as we understand the stimulus bill as it’s flowing out, how much of it is really going to hit on [health] IT, what’s going to be available and addressable for our part of the market,” he said.

For now, Carrick and his team — and their competitors — are examining the $787 billion stimulus package to find contract opportunities. “I would like to believe that we could win our fair share,” he said. “I think [health care] is going to be a very large breakout [business] for us.”

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