A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX (Part 3)

Sramana: You said the initial group of twelve employees were loaned to GHX by the founding companies. What does that mean? What were your incentive structures? Did you get any stock in the new entity?

Bruce Johnson: For the sake of speed, there were a number of us who were put on loan. What we started working on, which did not get finalized until summer, were the full-time contracts that we would have with GHX. From an incentive perspective, since our origins were from five large multinational organizations, our benefits package was fairly similar to an existing GE or J&J type company in terms of benefits like healthcare. From a compensation point of view, we were competing in a marketplace that was in the dot-com era.

At that time we did not have ownership, it was still owned by the five multinational companies, the way they structured short-term and long-term incentives were meant to make their offers competitive with the dot-com era. That is something that has evolved. Essentially I was able to keep some of my GE stock in play, which was very unusual, but they did that to create a safety net to encourage folks to move over to the new entity. They also added ways to get higher multiples on the short term and long term incentives, based upon deliverables that the board created.

Sramana: Did you have bonus-style incentives or stock option–style incentives?

Bruce Johnson: They were bonus-style incentives.

Sramana: So the twelve people who came from the five different companies did not have stock options or restricted stock in GHX?

Bruce Johnson: Correct. For me, there was a bonus structure that is a long-term incentive that would pay out every few years based upon the GE stock I had. There was not a GHX stock ownership.

Sramana: Did GHX as a corporate entity have funding from the five partners?

Bruce Johnson: Yes. All of the initial funding came from the five founding companies. Then they expanded it out to a larger group of companies, healthcare manufacturers and distributors, that put in smaller amounts of money.

Sramana: What kind of investment went into GHX?

Bruce Johnson: It was several hundred million dollars to get the company started.

This segment is part 3 in the series : A Successful Corporate Innovation Effort in HealthcareIT: Bruce Johnson, CEO of GHX
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