Up Close: CEO of Implantable Provider Group
Jay Ethridge, Chief Executive Officer, Implantable Provider Group
Age: 50
Hometown: Summerville, S.C.
Current residence: Johns Creek
Family: Wife, Jan; daughter, Kate, 22; and son, John, 20
Education: BS, The Citadel; MBA, University of Georgia
Hobbies: Golf, UGA football and Atlanta Braves
Favorite philanthropy: Atlanta Food Bank
What he's reading now: "Execution: The Discipline of Getting Things Done" by Larry Bossidy and Ram Charan
Favorite travel destination: San Francisco
Favorite quote: "Creating is the greatest proof of being alive."
It has taken Jay Ethridge a few years to hone a cocktail-party explanation of what he does for a living.
Here goes: Ethridge is CEO of Alpharetta-based Implantable Provider Group, which manages the purchase of implantable medical devices on behalf of the insurance companies and patients who pay for them. IPG’s business model is based on capturing data about what implantable devices do, who makes them, and how much they cost. The company uses that data to buy and distribute implantable devices on behalf of insurers and patients, gaining consistent pricing and volume discounts along the way.
In March, IPG raised about $25 million from Silicon Valley venture capital heavyweight Sequoia Capital, which has provided early- and growth-stage funding to companies such as Google, Apple Computer and Amylin Pharmaceuticals. IPG plans to use some of the funding to grow from about 50 employees today to 200 by 2012.
IPG’s 2009 revenue was $15 million, up more than 30 percent from 2008. Ethridge says he expects greater growth this year, in part because the company’s business model fits well with a market adapting to new federal health care legislation.
“The people who are paying the bills right now need to expect more in terms of understanding what they are paying for,” he says. “People on the delivery side need to do more to justify the cost.”
Q: Do you think there is an uptick generally in the capital fund-raising environment?
A: I think the private equity arena is definitely getting stronger. … I still think the angel/venture market is soft.
Q: Is there still strong investor interest in health care?
A: One of the concerns that I’ve heard in health care from the venture side is whether the returns are going to be what investors have typically seen for biotech, for [medical] devices, the technology side of things. . . . The real question is: Will the market give these investors the same type of return that they’ve been used to? And I think the general consensus right now is that it will not.
Q: What’s changing?
A: There’s obviously been an explosion in biotech and the [medical] device arena in the last 20 years. I think our market will continue to reward innovation, but I’m not sure that it is going to be at the same level that [investors] have been used to seeing. I think that gives some of the venture companies, and others, pause. … I think they are being a lot more particular about where they’re putting their money.
Q: How has the economy affected your business?
A: In late ’08 we probably had one of our biggest months on record because people were highly concerned about whether their medical benefits were going to be intact going into the 2009 year. So, we probably saw more consumption of health care in late 2008 than we had seen in awhile. . . . We’ve seen some softening in worker’s compensation claims because as unemployment goes up, the number of worker’s compensation claims goes down. . . . We are exposed to patient deductibles and coinsurance. So, we do have a little more exposure to the private paying patient, and given the economic situation some are in right now, the ability to collect is a little more challenging.
Q: How much of your business involves a direct relationship with patients?
A: Insurers pay their portion of the responsibility [for an implantable device], and then the patient has their deductible and co-insurance responsibility. . . . We have the same responsibility to collect from the patient as a hospital would, or a doctor’s office would. . . . Probably 80 percent is paid by the insurance company, and then the other portion is paid either by secondary insurance coverage or the patient.
Q: Can you already tell what the federal health care legislation will mean to your business?
A: Part of what we’re trying to ascertain is the impact of health care reform on our clients. What they have to do to adjust their business to the new environment will impact their ability to implement programs with IPG. It could increase their prioritization of a program like IPG. I think a lot of it depends on an individual plan’s business.
Q: Your business is narrowly focused on implantable medical devices. Do you envision taking your business model and applying it to other medical processes that could benefit from cost controls?
A: No. We feel like there are plenty of opportunities in this space right now. . . . There’s a $40 billion market for implantable devices. That’s what we’re addressing now from a cost perspective. We do believe there is an opportunity to affect 100 percent of those dollars being spent.
