Business Elevated Podcast (Episode 9)

This podcast series features business and government leaders discussing what it’s like to live and work in the great state of Utah.

This episode includes a conversation between the Utah Governor’s Office of Economic Development’s Life Science Cluster Director, Clark Cahoon, and Dan McMaster, 3M’s director of strategy and business development.

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The Business Elevated Podcast is also available in iTunes.

Audio

Transcript

Introduction

Welcome to the Business Elevated Podcast, where we discuss what it’s like to live and work in the great state of Utah. Did you know Utah is frequently ranked the best state for business by Forbes? This podcast is a production of the Utah Governor’s Office of Economic Development. Thanks for joining the conversation.

Conversation

Clark Cahoon (0:00): Hi. My name is Clark Cahoon. I’m with the Utah Governor’s Office of Economic Development, and you’re listening to the Business Elevated Podcast. Today, we’re going to be talking with Dan McMaster, who is the director of Strategy and Business Development at 3M Health Care. They have a large presence here in Utah, and we’re looking forward to digging in and learning a little bit more about their business and how it integrates with the overall healthcare system and get a little bit more context of the work that they’re doing here in Utah. Dan, thanks for joining us. Really appreciate it.

Dan McMaster (0:53): Yeah. Happy to be here

Clark Cahoon (0:57): Thank you. I understand that your background is you have an engineering graduate degree from the University of Utah and you’ve lived away for 20 years, but you came back to Utah.

Dan McMaster (1:04): That’s right, yeah, just a couple of years ago.

Clark Cahoon (1:06): How was that coming back to Utah after being away for a while?

Dan McMaster (1:11): It’s a transition, but it’s great to come back. I’m a winter sports person, so I just traded the cross-country skis and ice hockey for downhill skiing again, so it’s good to be back.

Clark Cahoon (1:22): Sounds like it was a good trade-off. To start off, we want to talk a little about a brief overview of 3M. I know most people probably recognize it from Post-it notes or Scotch tape, but what are some of the other areas that 3M does business in?

Dan McMaster (1:38): Yeah, people know us from the Post-It notes, for inventing sandpaper or, like you said, blue painter’s tape or Command hooks. Actually though, that consumer business is really less than 20 percent of 3M’s business.

Clark Cahoon (1:50): Wow.

Dan McMaster (1:51): Most of our business is really sold through large businesses or embedded in other products, and then that’s the way people see it.

Clark Cahoon (1:55): Just 20 percent?

Dan McMaster (1:56): Yeah.

Clark Cahoon (1:58): That’s fascinating.

Dan McMaster (2:03): Yeah. Essentially, at our core we’re really a collection of science nerds or inventors that try to use science to impact everyday life. That’s how I would describe 3M, but it’s been said, “You’re never more than 10 feet away from a 3M product.”

Clark Cahoon (2:16): 10 feet.

Dan McMaster (2:17): I know that that kind of seems hard to believe it, but if you actually think about some of the products we make, for example, brightness enhancement films that are embedded in smartphones, that’s one of 3M’s products or technologies. How we make the reflective tape that you’d see on highways or also all the traffic signs.

Clark Cahoon (2:37): That’s actually a hotbed topic right now in Utah as we’ve had some weather this last winter and rain. I know there’s been people calling for Utah to utilize more reflective paint, so good for business, hopefully-

Dan McMaster (2:47): Okay. That’s good. That’s great.

Clark Cahoon (2:48): … which is interesting.

Dan McMaster (2:51): Right, so you take products like that. We actually invented the tooth-colored filling, so we’re in people’s mouths. We make the securement tape that hospitals use to keep IVs on or make surgeries more safe. When you start thinking about all of that, it becomes a little… you realize how ubiquitous the 3M products are and how embedded we really are in everyday life.

Clark Cahoon (3:13): That’s really interesting. Fortune 100 company, is that correct?

Dan McMaster (3:18): Yes.

Clark Cahoon (3:22): There’s kind of a unique statistic. You’re one of just a few that have been around for a number of decades. Can you give a little bit more?

Dan McMaster (3:25): Well, when you talk about the Dow industrials index in the 1970s, we’re one of three companies of the original Dow that’s left over all of these years. I do think there’s some staying power in 3M and reinventing itself, really, with new products year-after-year.

Clark Cahoon (3:42): That leads me to believe that there’s probably a large research and development arm that you’re focused on. Can you talk a little bit more about that?

Dan McMaster (3:49): Sure. Like I said, science is the core of everything we do, so I think if you looked at our company versus maybe other companies, we invest about 6 percent of our research and development, of our revenues into R&D, research and development, which is high compared to most companies. It’s the lifeblood of 3M, and, yes, we like to invent new products and reinvent ourselves.

Clark Cahoon (4:12): Excellent. Now one of the unique things about talking about 3M here in Utah is that you play a really large role in healthcare technology, and just want to hear a little bit about that side of the business that you’re over here in Utah, that sounds like it brought you back here to the state.

Dan McMaster (4:30): Yeah. I think most people don’t realize that one of 3M’s most profitable, and actually fastest-growing businesses, is actually headquartered here in the Salt Lake Valley, and that’s the 3M Health Care software division. This division, 3M Health Care Software, will actually do more than a billion dollars in sales this year and, yeah, we employ about 2,500 employees around the world.

Clark Cahoon (4:53): Not just valued at 1 billion, but you’re…

Dan McMaster (4:56): No. No. It’s our sales revenue. Right.

Clark Cahoon (4:58): From this side of the business, that’s centered here in Utah?

Dan McMaster (4:59): Yeah, that’s right.

Clark Cahoon (5:00): That’s incredible.

Dan McMaster (5:03): Yeah. I think, in some regards, we’ve been invisible. People don’t realize what’s going on, but it’s a great industry to be in. It’s an exciting technology, and we have about 500 employees of those 2,500 that are right here in our headquarters here in Salt Lake. That’s R&D. Our core R&D and software development is here. Our management leadership team, strategy, marketing is all housed here in Salt Lake. I think what’s more exciting is, if we look at the next five years, we have plans to hire probably over 200 people a year for the next five years.

Clark Cahoon (5:37): That’s just overall in-

Dan McMaster (5:39): In this healthcare software division.

Clark Cahoon (5:42): Right.

Dan McMaster (5:53): Yeah. Exactly.

Clark Cahoon (5:45): It’s a growing business.

Dan McMaster (5:46): We have some pretty aggressive hiring plans and, yeah, we have offices all over the country, in the world, so not all of those will be in Utah, but, frankly, we’d love to get as many as we can that are here…

Clark Cahoon (5:53): Yeah. Yeah.

Dan McMaster (5:54): … but it’s a challenge, as you know, with much technology going on and just the growth and the entrepreneurial spirit here.

Clark Cahoon (5:59): Yeah. With low unemployment and everyone’s chomping at the bit to get the best and brightest in the workforce to work for them, it’s a competitive landscape, but it’s encouraging to know that side of your business, which is centered and located here in Utah, as a multinational footprint has the potential to have some of those jobs maybe come here.

Dan McMaster (6:19): Absolutely.

Clark Cahoon (6:20): Can you talk a little bit about the history of how that side of the business was implanted or grew here in Utah?

Dan McMaster (6:28): Sure, and I love that part of the story because I was a University of Utah graduate, a former Ute that, actually, the University of Utah played a role in our history. Essentially the technology here, we use data science and clinical intelligence is what we call it to solve medi healthcare problems and I’ll talk about that maybe later but, back to the history I think. Homer Warner (senior), some people know his name around here, brother of Rick Warner, but he was the head of medical informatics program at the University of Utah and one of his PHD students in the late 70’s by the name of John Morgan was working on his thesis project in medical informatics and really he has an idea for how to automate and digitize some of the processes that were going on in a hospital that were manual, where they were using coding books and other things and so that was his thesis. He was so passionate about this that he actually started his own company. He outfitted an RV with a main-frame computer because it took that much computing power in those days.

Clark Cahoon (7:39): This was in the 70’s again? Right? Okay.

Dan McMaster (7:40): Yeah. We’re talking late 70’s, early 80’s now, where he outfitted this RV with a main frame and he drove around the country and went to hospital by hospital and pitted his computer algorithm, against what folks were doing inside of the hospital, with coding books and manual processes.

Clark Cahoon (8:00): That’s really interesting, it sounds like he kind of started the van life trend, but also added a road show. Let me show you this technology and see how it can disrupt and do something interesting in a really fascinating industry. That’s really cool.

Dan McMaster (8:15): I just love his passion. I think that when anyone gets that excited about a cause. I’m not sure how well that would work now if someone drove around in a dark van in front of buildings asking people to come out into it but hey it worked.

Clark Cahoon (8:29): It worked for that, those early days.

Dan McMaster (8:31): And it worked for 3M. But I think what’s so interesting about that for us is, he had so much success with his head to head bake off of his technology versus these hospital coders that he started to grow and started to sell this software. What happened is that was actually starting to take sales away from another 3M business.

So in those days we were in the microfilm business.For those that remember microfilm or microfiche, we made all the film and we made the microfilm readers and we saw that the software was starting to eat away at some of our business and we saw the trends. So what we did is we acquired the company, we bought his company so in the mid 80’s that brought 3M to Salt Lake and brought us into healthcare software.

Clark Cahoon (9:16): That makes me remember back to trying to do research on a paper in college and using the microfiche and just being like oh man this is a really unique way I’m just going kinda focus on in on it. But, back then, that’s how records were stored and the main way to access data. It’s really fascinating to disrupt potentially your business in making that film and just integrated that into your business.

Dan McMaster (9:39): Yeah. Its just in 3M’s DNA. We invent a category, we invent a business, and then as it goes we kind of reinvent the business.

Clark Cahoon (9:47): Sounds like it

Dan McMaster (9:48): I worked in a business in St. Paul, ran a business for a number of years in oral care and we invented the goop, the impression material that you put in your mouth.

Clark Cahoon (9:58): Okay.

Dan McMaster (9:59): Before you get braces or a crown and that was 3M’s business, but we, part of my business was disrupting that. We actually invented a digital 3D scanner to take away our own core business.

Clark Cahoon (10:10): Wow.

Dan McMaster (10:12): It’s just kind of in our nature to always be thinking about something new and innovative and try to come up with the best and newest way to do it.

Clark Cahoon (10:19): And technology disrupt is such a buzz word and it’s I think over used sometimes but,

Dan McMaster (10:24): Absolutely.

Clark Cahoon (10:25): I think, in your case, with you disrupting your own businesses and iterating on that and kind of creating new business opportunities. That’s a really unique way to look at things. I don’t know of a whole lot of businesses that really focus in on that, so that’s a unique feature.

So looking back to the acquisition here in Utah, what’s happened since then with that side of the business for 3M?

Dan McMaster (10:49): Yeah, I mean it’s just been a fantastic success story. If you think about us going from a start-up company, very small, few employees, to essentially a billion dollar plus company, growing rapidly with 2,500 employees. It’s been a huge success and there’s been a lot of growth, particularly in the last I’d say five-to-seven years, it’s accelerated at a faster pace.

What we’re doing, we’re really trying to solve I think what motivates this team. There’s three big meaty healthcare problems we’re trying to tackle now as a division. The first one is just trying to eliminate all the waste in what is called the healthcare revenue cycle. That’s a fancy word for essentially trying to, hospitals getting paid by insurance.

Clark Cahoon (11:33): Right.

Dan McMaster (11:34): So there’s over 300 billion dollars of waste today and our healthcare system just associated with all of the inefficiencies of coding and classifying what actually happened.

And, so we’re very passionate about trying to simplify and streamline the entire process using artificial intelligence, natural language processing to really take waste out of the system. For anyone who’s had that pain of going in for a healthcare procedure and then weeks later, or sometimes a month later finally getting your bill and having all the confusion. It’s just something that hits home with a lot of people.

Clark Cahoon (12:19): A lot of moving parts and a lot of middle-men kind of in the middle of that process and so you’re really trying to find those efficiencies.

Dan McMaster (12:26): That’s right, we’re behind the scenes, we sit behind the scenes in between hospitals and health plans and we’ve got lots of opportunity to work on that. So that’s one big problem, I think another problem that you may have read or others read in the news or if you’ve got a friend who is a doctor, you hear it, but essentially trying to free up doctors time and creating time so they can care for patients.

Clark Cahoon (12:49): Doctor burnout is a big thing. So, if you can make them focus on the things that they are best at, where they’ve gone to school for, and where they’re educated instead, of all the other administrative kind of rolls. Is that what?

Dan McMaster (13:00): That’s it yeah. Physician burnout but essentially doctors are spending almost twice as much time documenting in their electronic health care record than they are actually focusing and spending time with a patient. Yeah, that’s demotivating for them, it’s a frustration for a lot of folks and the patients want more time with the doctors.

Clark Cahoon (13:20): Right.

Dan McMaster (13:21): So, we have technology that is trying to do more-and-more behind the scenes to eliminate all of the queries that happen to physicians after they see a patient, and a lot of this back and forth. Kind of like your Gmail, if your typing into a search in Google it will be able to autosuggest, well 3M technology uses natural language processing to try to decipher all of the complexities and the rules.

Clark Cahoon (13:49): Okay.

Dan McMaster (13:51): …Behind the scenes, so that while a physician is typing or dictating or talking on their electronic health record, it can give auto suggestions for them and minimize all of the queries and the waste and start doing more and more of that for them.

I think what’s very exciting is in the future what we look at is ambient technologies. So kind of like your Amazon Echo, but a healthcare version or that. We see an opportunity to start essentially picking up and recording the conversation and starting to document for the physician.

Clark Cahoon (14:22): Okay.

Dan McMaster (14:22): ..in an automated fashion and then letting the physicians just review that after the fact.

Clark Cahoon (14:26): Okay. Saving them a lot of time and energy.

Dan McMaster (14:27): Saving them a lot of time. So that’s our goal, that’s our mission, that’s kind of the second big problem we’re pretty passionate about trying to solve.

Clark Cahoon (14:35): Okay. Are those the main two? Is there anything else?

Dan McMaster (14:37): The third one is really around driving to value based care. So, if you’re reading the paper about Medicare for all, and all the debate about health care, one of the fundamental flaws and challenges of the U.S. healthcare system is that it’s mostly designed around a fee-for-service.

Clark Cahoon (14:54): Right, right.

Dan McMaster (14:57): .. healthcare system. That means the more procedures a hospital does, the more they get paid. There’s many efforts to try to move towards more of a value based care system, which would be paying on the healthcare outcome, not on the number of procedures. But, essentially giving a payment based on how well we cared for the patient.

Clark Cahoon (15:15): I see,

Dan McMaster (15:16): And so underly.. oh sorry, go ahead.

Clark Cahoon (15:21): I heard a statistic that 18 percent of the U.S.’s GDP is tied to healthcare. Which is huge.

Dan McMaster (12:24): And that percentage has been growing rapidly over time. So, 3M behind the scenes has what we call methodologies or ways to measure all of this care using more of these value based measures, to reduce preventable complications, preventable readmissions and to really measure and classify on value.

So we have a group in Washington DC actually that’s really working closely with legislators trying to help move more of this to a value based payment system. And it’s slow, people have been talking about it for years.

Clark Cahoon (16:03): It’s a big system, it’s hard to move and change.

Dan McMaster (16:06): That’s right.

Clark Cahoon (16:08): Between your presence there in DC and I know the good work that Leavitt Partners is working on as well, I really feel like Utah has a unique position to be at the center or at least a really intricate part to value-based healthcare and where that plays in an overall role nationwide. Anything you can talk about with that group in DC, and what they’re doing in that space?

Dan McMaster (16:29): Well, I was, I think it’s interesting you bring up Leavitt, I think Utah plays a big role in this. So, Intermountain Healthcare was one of the pioneers of delivering higher value care at a lower cost. And a lot of these principles are really what was driving them many many years ago and what they’ve been known for and looked to nationally as an example.

And then you’re right, Leavitt Partners is in the middle of this and we work closely with them on a number of topics. But there are other technology companies here in Utah that are start-ups and others, that are really working also at tackling these problems.

So, I again, we are a global company, But, we are headquartered here, and there are some assets here in Utah that I think make it quite strategic for us to be located here.

Clark Cahoon (17:15): That’s really fascinating and encouraging for me. I think everyone probably has a personal story of maybe going to the doctor, having some type of medical care, and being confused about the process, or wondering why it took so long to get the invoice, or even understanding who they need to pay or when. Let alone just getting that care from the physician and feeling like you matter in some way. So, it’s great to hear the work you guys are doing here in Utah.

So, Dan, I understand 3M makes investments in healthcare technology. Can you tell us more about the venture arm of 3M here in Utah, and what some of the companies you work with invest in look like?

Dan McMaster (17:54): Sure and I think that I was eluting to some of these technology companies, I do think that’s an exciting part of our growth story. I mean, we started here by an acquisition, we tend to acquire a company every two years, but we also have a venture capital arm where we’ll invest and take a small equity investment in start up companies that are doing things that are advancing, aligning to our mission and these problems we have.

As well as potentially maybe moving faster than we are. And so yes, we’ll take an equity investment in the company, and we’ll partner and collaborate with them. Two of the companies in our portfolio are actually located here in Salt Lake City.

Clark Cahoon (18:32): Oh really?

Dan McMaster (13:33): So you know Health Catalyst and Collective Medical are two names people might of heard of that are just fantastic, exciting companies that we’re honored to partner with and we’ve invested in.

Clark Cahoon (18:45): Yeah, those two alone have been getting a lot of headlines lately with the work that they’re doing and the opioid crisis, and then just again working with the large amounts of data tied to healthcare.

Dan McMaster (18:54): Right, so you know we’re all essentially trying to solve these bigger problems, to the extent we can partner and use our assets together to go after what we want.

Clark Cahoon (19:03): Great, thanks for touching on that. Dan, from what I understand as we wrap things up, it’s not just you, but a number of employees that have relocated here to Utah from 3M. How do they enjoy living and working in Utah and what is your personal experience here in the state having grown up here, leaving and then coming back?

Dan McMaster (19:22): Yeah, actually happy to talk about that. So, you’re right, you mentioned earlier I started at the University of Utah. I was an undergraduate, you might have mentioned graduate but I don’t want to claim that.

Clark Cahoon (19:32): Okay.

Dan McMaster (19:33): So yeah, chemical engineering student here at the U. I lived in San Francisco for about five years and then Minnesota almost 15, I did an MBA in Michigan in between there but essentially, coming back to Utah after 20 years was a big change. Utah has grown.

Clark Cahoon (19:50): Yeah.

Dan McMaster (19:51): That’s the first thing is just how much growth there is, but honestly I think it’s evolved in a really positive way. I personally of course love the outdoors, like I mentioned, so it’s easy for me just to do biking or skiing or whatever else and love it here. But I think there’s five or six of our executive team now here at 3M HIS in Salt Lake have relocated in the last two-and-a-half years from St Paul, Minnesota.

It’s really interesting to watch their feedback, but you know honestly they all love it here. We’ve got one that lives downtown and really love the energy and feeling downtown. We’ve got a few living down south, one that just loves to fish.

Clark Cahoon (20:32): Okay. Off the Wasatch Front a little bit.

Dan McMaster (20:36): Fishing is big in Minnesota but I think that the outdoors, the way people have been welcomed in their neighborhoods, generally it has been all very positive. In fact, one of the colleagues moved here just intending to stay for two or three years and his since decided.

Clark Cahoon (20:49): This is the place for him.

Dan McMaster (20:51): He wants to stay longer.

Clark Cahoon (20:53): Oh really, excellent. I moved here in 2012 thinking it would just be a year or two and then I’d split. But, I’ve fallen in love with it and it’s definitely home. It’s great getting that feedback and hearing about people that have moved over here into Utah, and then found it a really great place to stick around for awhile.

Well as we wrap up Dan I just want to thank you again for coming on the Podcast. One last thing, what does 3M’s future in Utah look like?

Dan McMaster (21:18): Well, we’ve talked about it a little bit and I see it as very bright. As I mentioned, we’re one of the fastest growing divisions inside of 3M. I feel like we’re trying to solve and have an ability to make a real difference in healthcare. Then as I mentioned, we’re needing to hire, and aggressively hiring so ideally we’re looking for almost 200 people a year for the next five years.

Hopefully there’s some smart, talented engineers out there that are interested in 3M that we’d love to talk to.

Clark Cahoon (21:48): Excellent, well I wish you luck in hiring those people and continuing growing in Utah. We obviously love hearing that and again thanks again for joining us, really appreciate it.

Dan McMaster (21:51): Yeah, really appreciate your time. Great to spend some time.

Clark Cahoon (21:59): Thanks.

Conclusion

Thanks for listening to the Business Elevated podcast, a production of the Utah Governor’s Office of Economic Development. Listen to other episodes where you get your podcasts or at business.utah.gov.