2. Another HBO Pioneer
• Thanks once more to Dan Mowery at McKesson for
introducing me to HBO’s 14themployee: Dan La Benne
“Vince,
You may not remember me but we have met a few times at different
industry functions like HIMSS, etc. My first recollection of you goes back to
SMS days when you taught the installation training classes I attended in
King of Prussia. I was an Installation Director working for Fred Abel in
Atlanta, shortly after the SMS acquisition of American Hospital Supply's
ISD division, which included the HCC (Hospital Computer Center) out of
Flint Michigan. That company was founded by Bob Gillowand David Wright
who were well known competitors to Jim Macaleer and Harvey Wilson. I
attended those classes with Lloyd Koenig and others. After training we
returned to ATL and converted all of the old Georgia Hospital Association
hospitals to the SMS system. In 1976, I left SMS and went with a little
known start-up out of Peoria: HBO and Company. I believe I was the
14th employee. This was just before Larry Gerdesjoined the
company, but after Dennis Crean, John Lawless and Rae Bell.
- Dan La Benne”
3. First “Headquarters”
• Dan sent me a treasure trove of pictures including those on the
first slide which are the original trailer Walt, Bruce & Dick worked
out of in 1973, vs. HBO’s 1989 headquarters in ATL. Other gems:
Left = Walt’s first desk
Right = Four Phase mini in
the other end of the
trailer – no monster
mainframe wouldfit!
Left = Hard at work on
the Four Phase mini
Right = John Lawless,
HBO’s first President
under Walt Huff,
Chairman.
4. HBO Is Born
• Walt Huff continues his story of how HBO was originally a
partnership among he, Bruce and Dick, started with $30K in
capital out of their own pockets. They agreed to work together for
one year with no salary and see just how things would go...
• Bruce Barrington made great progress programming MEDPRO,
and they soon gave a demo to their first prospect hospital:
• Galesburg Cottage Hospital - about an
hour away from Peoria, who loved the
demo and couldn’t wait to buy it. Walt
came up with an ingenious sales plan:
he leased the hardware & software to
them for 7 years, rather than a sale.
• Sounds like IBM’s leasing-only policy prior to their 1960’s consent
decree, and an excellent business model for a start-up firm as it
guaranteed a steady cash flow during those tight early years…
5. Key to MEDPRO’s Success
• A prime reason for MEDPRO’s popularity was in recovering the
≈3% of lost charges that most hospitals experienced in those days
of paper charge tickets. Only large hospitals could afford inhouse
mainframe clinical systems like TDS, NadaComand DataCare that
computerized the Order Entry process (aka data collection) and
automatically posted charges to patients’ billing accounts.
• What would your hospital lose today if
every patient test, procedure and
medication had to be manually stamped
with an addressograph plate with
(hopefully) the correct patient’s number,
priced (eventually) by some clerk in the
ancillary department, and then keyed into
the billing system in the Business office to
the (possibly) correct patient’s account?
6. How Well Did MEDPRO Sell?
• Small and mid-sized hospitals had turned to shared systems like
McAuto and SMS for their financial system needs, but sharing
offered very in the mid-1970s for order entry (data collection)
systems, so MEDPRO had a perfect “shared” target market!
• MEDPRO sold so well that SMS
licensed it as ACTIon (episode
103 at hispros.com), and
Waltalso sold marketing rights
to Source Data Systems (SDS)
in Cedar Rapids, Iowa, that was
eventually bought by Keane.
• To see how well MEDPRO sold,
check out HBO’s market
dominance in Sheldon
Dorenfest’s 1982 Guide:
7. MEDPRO’s Market Share
• In case you can’t read the small print on the preceding chart,
that’s a growth rate of 44.7% for HBO, from $19M in 1979 to
$27.5M in 1980 – hot stuff! Below is another chart from Sheldon’s
1982 Guide that shows the number of hospitals on each vendor:
• SMS was almost all
ACTIon 1100 (DEC
PDP) and 1500
(DEC VAX) by now,
as their deal with
HBO ended c.1978
• IBM was mostly
self-developed.
• McAuto was their
Four Phase/DEC
combo of HDC.
8. HBO Product Growth
• Dan La Benne points out that MEDPRO was relatively thin by
today’s standards, comprised of ADT, Census and Order Entry. Dan
personally headed up the addition of nursing modules to assuage
the needs of early progressive clients like Providence in Portland
OR, Concord in NH, and United in Minn. Dan was very proud of
the ADL (Activities for Daily Living) reports for nursing diagnosis.
• And the very same Dan Mowery, who introduced me to La Benne,
added RX functionality, being a former Pharmacy Technician.
• HBO’s biggest gap was financial systems,
which most minicomputer HIS competitors
offered by the mid-70s, like Dynamic
Control, Saint, JS Data, etc. This would be a
huge project, requiring mucho dinero!
• As well as a move to Atlanta that Walt & Co.
were contemplating in the Peoria winters…
9. Financial Challenges
• Adding new products, expanding the staff and moving that trailer
down to Hot-lanta cost so much money that Walt & Co. had to
turn to banks to get funding for all this growth. HBO’s local bank
in Peoria had a 22-year old financial analyst who was tasked with
researching this nearby start-up company asking for a $1M loan.
HBO had a number of MEDPRO clients at the time, and he called
several and got such glowing reports that he convinced the bank
to approve the loan. And who was this young banker?
• Larry Gerdes, who was so impressed by the
start-up that he left the bank in 1977 to join
Walt as HBO’s CFO. Larry grew up on a farm
in nearby Walnut, IL, and earned his MBA at
the U. of Illinois. He subsequently helped
HBO get additional loans from banks in
Chicago & NY, and led their IPO in 1981.
10. HBO’s Biggest Competitor?
• An old friend from SMS named Charlie Covinonce told me an
hysterical story of when he worked for HBO’s NJ office in those
early days and received a call from an irate customer complaining
that their screens only worked on their first floor, not the 2nd.
Charlie had her turn screens on & off, etc., only to eventually
figure out she was talking about Home Box Office!! He adds:
“IDX had a similar problem; originally named Interpretive Data Systems
(IDS), they were confused with American Express' Investors Diversified
Services. They lost because Amex had more lawyers and deeper pockets.”
• Larry Gerdes adds how his HBO actually called Ma Bell’s directory
assistance line to correct the error for both companies, who were
receiving many of each others’ calls. They even negotiated an
$800K price tag with a senior VP at the “other” HBO for rights to
the acronym, but the offer later got rescinded. So, “our” HBO
became known as “HBOC” to try to end the name confusion…
11. Next Week…
• So there it is, right from the horses’ mouths: the earliest days of
HBO. Next week we’ll pick up the inside story from Walt, Larry &
Dan about how they grew HBO’s product line to include a minibased financial system and more from their photo collections.
• But first, more feedback from HIS-Talk readers about Bill Childs
picture portrait puzzle – starting with another HBO veteran:
– “Vince, I just checked out Episode #112 on McKesson. I worked there for
23 years, from MediFlex Systems to HBO & Company to HBOC to
McKessonHBOC to McKesson. The person in picture E is John Kerr. He was
the President of MediFlex Systems when they were acquired by HBO &
Company. Also in Walt’s feedback on the C-Suite Timeline, he stated that
in 1990 Robert Murrie was named President of MEDILEX. It was actually
MediFlex and in addition to Facilities Management, the division was also
responsible for the mainframe Patient Accounting System called
MediPac. The division changed their name to HealthQuest shortly
thereafter. Great stories, keep them coming!”
– Gary B Gerber, CPA, Logicalis, Inc. (no relation to Urban…)
847-748-2521
gary.gerber@us.logicalis.com
12. Updated
Portraits
Mark Gross
John Kerr
Art Randall
Steve Huseing
Frank Russo
Steve Macaleer
Peter Marsh Ford Phillips Shirley Hughes Mark Fidler
• So here’s how things
stand identifying these
faces in Bill Childs’
challenge from an article
in his Computers in
Healthcare magazine from
the late 1980s.
• Surely someone in our
industry today recognizes
these few remaining unnamed faces? We might
still get Bill to cough up
that $250 Savings Bond…
