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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



CEO Spotlight: Jeffrey Green, DATATRAK International, Inc.
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Angel Mehta: I always find it amazing that despite 20 years of 'reengineering', there are industries where power or hierarchy is based on the number of heads in your unit.

Jeffrey Green: It's a disease. We would waltz in and we say, "Mr. Manager, you've got a 100 people here who are double punching data from paper into a database. We can get you higher productivity with only three people so you can get rid of 97 of them."

They would freak out. They just feel completely threatened. All sorts of excuses, like, "well, it's not proven yet", even though in the pharmaceutical industry they can track their own revenue every Friday by zip code. And, technology is used here very prominently by sucking prescription-use data out of pharmacy computers. Apparently, there were no adoption problems to use technology for these purposes. No pushback whatsoever. So I guess the drug industry uses technology to check its REVENUE but it doesn't use technology to track the adverse events of what's going on in their clinical trials around the world. Which one might be more important to people's health?

It's a huge dichotomy, especially in light of the Vioxx disaster. If the American public knew (1) how the drug companies just make them pay for their own inefficiencies, and (2) how the delay of information, real time information, can affect patient safety in clinical trials, there would be an outrage.

Angel Mehta: What do you think is necessary either from a legislative perspective or from an industry education perspective to help accelerate the adoption of technology by the industry?

Jeffrey Green: At my company, I don't like it when people bring up problems with no solutions. I spoke in front of the FDA about this in May 2005. There must have been 300 people in the audience and it was to the people on the Advisory Panel on Drug Safety and Risk Management. I told them, "You guys need to raise the bar on the standard of practice. Your standard of practice is based upon old paper-based processes and that is unsafe for patients because you can't react to what you don't know about and if your information is buried in paper it's impossible for you to know anything about it." They all just sort of sat there. I said here's a solution that you could probably implement right here this afternoon. Develop an Independent Safety Committee (which is what the FDA is talking about now) and you give them 'read only" access to the database. The Safety Committee gets a password and can look at any drug. Let's just say the new standard of practice is every Friday you have to have the Safety Committee log in and check whether or not everything is okay with Drug 'X" and if the trial can continue. It must be a completely independent group from the people who are developing a drug. To me, it's a conflict of interest for the people developing a product to sell, to also be the sole determinants of when the drug should be taken off the market.

Angel Mehta: You lost me… are you saying that the people developing the drug are the ones who determine if the drug should be taken off the market?

Jeffrey Green: That is exactly what happened with Vioxx. In fact, the regulatory requirement I'm proposing, as opposed to Sarbanes, which we're living under now, saves you money and develops your drugs faster and that could be implemented this afternoon. After I got done, they said: "Thank you Dr. Green, please take your seat."

Angel Mehta: Isn't that discouraging? I don't know if I could bang my head against the wall on an idea that was so obvious.

Jeffrey Green: It's discouraging, but you have to keep going because change never happens easily. I mean, how many years were we driving cars before 1965 when somebody thought it would be a good idea to put seatbelts in. You've seen the movie Tucker?

Angel Mehta: Nope.

Jeffrey Green: You need to rent it, Angel. It's a Jeff Bridges movie about a guy named Tucker who develops a car with a safety belt but GM fights him because it's the 50s and he's so far advanced compared to where they are. These things take time -- you know that from your work with entrepreneurs. You just have to keep preaching the story.

Angel Mehta: So what's the game plan?

Jeffrey Green: Actually, I'm approaching this from two angles. I'm speaking to Marsh & McLennan, the underwriters of liability and risk management for the pharmacy industry, telling them "You need to go in and tell pharma if you're not doing EDC, you just raised your risk profile". I'm telling them, "you can use the Vioxx situation as an example, and you need to raise their premium".

Angel Mehta: Now that would give the industry more incentive to get with the program…becomes an even more clear cost-takeout scenario.

Jeffrey Green: Exactly. My message to Marsh & McLennan is that they can be the knight on the white horse who comes in, gives a premium break, and develop a whole consulting practice around how to help your clients cut their costs and lower their risk.

Angel Mehta: What was Marsh & McLennan's response?

Jeffrey Green: They're very interested. Safety is the issue. I want to do this in a constructive way, but all you have to do is think for a second of what would happen if the litigators knew about this. There would be blood in the water and sharks all over the place.

Angel Mehta: As an academic and as a doctor, tell me about your transition into the role of an entrepreneur. What was the hardest part about that?

Jeffrey Green: It was always more obvious to me that it was going to be easier to pick up the business acumen than it would be to pick up clinical acumen. I knew all about clinical trials and the process and what needs to be done. I can hire a CFO, an accountant that knows balance sheets and P&L statements and I learn from them all the time but that wasn't critical to the success of the business. What was critical to the success of the business was the proper understanding and position in the marketplace.

Angel Mehta: So you never found it to be a major adjustment?

Jeffrey Green: Absolutely not. Imagine taking an accountant and trying to teach them clinical medicine. Now THAT is a major adjustment.

Angel Mehta: DATATRAK is a relatively small publicly traded company…out of curiosity, how has SOX (Sarbanes-Oxley) affected you? I met a venture partner last year who told me that SOX has to be removed or severely altered otherwise it was going to destroy entrepreneurship as we know it. Do you agree or disagree?

Jeffrey Green: SOX is forcing us to implement process that is always painful. Usually, you don't want to do things that are painful if you can avoid it. SOX, sometimes, is painful but it's also good. For us, it's been 80% good and 20% a pain in the ass. We're going to spend $600,000 this year, which I would sooner have in EPS. But if you want to hear about something dangerous to entrepreneurship, it's forcing companies to expense their stock options.

Angel Mehta: Explain.

Jeffrey Green: You know that as of January this year, we have to place a value on all stock options, which then hits our P&L Statement and lowers our earnings.

Angel Mehta: Right, but not your actual cash position, of course.

Jeffrey Green: It's a non-cash item but it affects your EPS by removing the stock options as an incentive for your employees because they take the additional expense. You then tend to restrict stock options because what you give them is a taxable event even if they don't sell it, and, therefore, it really screws them over. Which means that suddenly, a major incentive for small companies to give people stock options is gone. The key behind giving stock options was when you hit it big you create people who are independently wealthy, which is really the goal of entrepreneurship; it's completely counter to what needs to be done. I think it's a disaster.

Jeffrey A. Green, Pharm.D., FCP, is Founder, President, Chief Executive Officer and Director of DATATRAK. From 1984 to 1992, Jeffrey served as an Assistant Professor of Medicine and Radiology at Case Western Reserve University, Cleveland, OH, where he established and directed the Cardiovascular Clinical Pharmacology Research Program at University Hospitals of Cleveland. For interview feedback, contact Jeffrey at jeffrey.green@datatrak.net

Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at amehta@sterlinghoffman.net


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