Executive Q&A: Consulting group finds right mix in Nashville (The Tennessean)
Published: Sunday November 16, 2008
Categories: In the News
Take four former Ernst & Young executives with a thriving consulting practice in Chicago, transplant their talent to the fertile economic soil of Nashville, and you've created Cumberland Consulting Group.
Starting in 2003, these four ex-Ernst & Young managers — Jim Lewis, J. Brian Junghans, Matthew Abrams and David Vreeland — decided they'd had enough of working for a giant accounting and consulting firm. The entrepreneurial bug bit them, and they headed to Nashville to focus on providing management and technology consulting to the vibrant health-care industry here.
Lewis serves as CEO of Cumberland Consulting. He and his colleagues made the leap not long after Cap Gemini, a rival company, acquired Ernst & Young amid upheaval in the accounting world.
Now, Cumberland (with annual revenues approaching $8.5 million) is building a reputation as one of the best small firms to work for in the nation. In fact, Consulting magazine ranks it No. 5 on its list of the best small consulting practices in the country.
Lewis discussed the company's niche and its growth prospects with Tennessean Business Editor Randy McClain.
Why did you start a firm on your own?
I was not pleased with where Cap Gemini was taking the consulting practice. As time went by I felt more and more disenfranchised with where the practice was moving and decided it was time for us to go our separate ways.
How much have you grown?
At Ernst & Young, I became a specialist in big, mean, complex technology implementation projects. I would generally get the call on the 50-plus consultants' teams serving big companies.
At Cumberland, we are a virtual company; we pretty much bring folks on board saying you're going to go where the work is.
We've got 50 people right now, including the four partners. About a third of our people live in Nashville or Middle Tennessee; and a third live in the Chicago area, where we all came from and have solid networks; and about a third are scattered throughout the U.S. from California, to Atlanta, to Pittsburgh. What we tell new folks is if you live near an airport and you're ready to get on a plane, you're fine. Live where you want to live. We'll go where the work is. About a quarter of our billings come from Nashville-based health-care companies.
What are your annual billings?
We're looking really good to do $8.5 million this year. We are very focused on project management and technology implementation for health-care providers. Period. We mostly focus on practice management and electronic medical records.
Is the health-care business recession-proof?
Health care is not immune to the economic downturn. I'd have to say it's going better than many industries, but there is a definite impact. In our business, too, a lot of what we do could be considered infrastructure projects. There's pretty much nothing we do that couldn't be put off until later. I think that's really been how we've seen the uncertainty in the marketplace manifest itself in the last year. We're not getting a lot of clients saying no. We're getting a lot of maybes, and we're getting companies taking six months to a year to a year and a half to make a decision. We used to get an answer in two months or less.
Electronic medical records are gaining a foothold, but they aren't being universally adopted. How much does it cost a hospital or large group doctors' practice to install a system?
It represents a pretty substantial investment. It depends on how you do it. Lots of times a medical organization that goes this route has to add IT people for the first time ever to support their clinical processes. A lot of doctors' offices were familiar with IT support for the financial side of the house, but not for the clinical side. It's a whole new set of disciplines.
I've heard statistics that talk about $10,000 plus per physician to do these sorts of implementations. But that number comes with big caveats. For one- and two-physician practices, they can hire a service bureau to outsource it. There are numerous levels. E-medical records can be as simple as the file system on your Windows desktop to discrete data that you enter for every patient. There are dozens of variables. But for a smaller doctor's office there are cost-effective ways to do it.
Is it bigger hospital systems, though, that are most willing to buy into it and make the plunge?
It is a complicated and a fast-changing market. One of the things we've found is that academic organizations are pretty much on the leading edge. One of the reasons is that the medical schools believe that in order to train physicians for the future they can't send them out in the world with paper and pen any more. That's undeniable. We tend to work with larger group practices and hospital systems of five or six facilities or more.
How competitive is it for talent these days? Are you able to pick up good workers, consultants as Wall Street firms or other big consulting practices downsize?
I'd give you a "yes" to that, but it's also very much a matter of extent. If I look at our sales process, as times have gotten tougher, the sales process has gotten tougher. But if you look at our (employee) recruiting process, as times have gotten tougher, recruiting has gotten a little bit easier. It's still quite a challenge to make sure you hire the top people who can provide the highest value.
Your operations are far-flung geographically; how do you rate Nashville as a center of information technology talent?
When we worked for Ernst & Young, we'd come to Nashville on projects, and we kept seeing the same folks in the hotels from companies based in Atlanta, New York and Chicago, serving a lot of the health-care companies here.
We did some research — and even the firms like Deloitte and Ernst & Young and other firms with a good presence here were doing a lot of accounting work for clients, but ... nobody at that time really had a solid consulting presence in town, we didn't think. We felt like it was an underserved market. And we saw it as nothing but a positive to have the Nashville brand attached to what we were doing. One interesting thing is that for a number of our Nashville clients, though, we're working on projects outside Middle Tennessee. For instance, we've done work in Phoenix, Arizona, and Springfield, Missouri, for Nashville clients who are expanding in health care.
How quickly do you see electronic medical records gaining market share?
If I had to look at the rate of adoption in the past 12 to 24 months versus the two years before that, there's been a substantial increase. There's a long way to go, but there really are lots of folks doing this now.
How fast do you hope to grow internally?
Our strategy right now is to preserve capital. Our investment and growth is at a measured pace, and we hope to stay self-funded. We're not out there looking for venture capital to grow. We want to be really careful. I'd rather be good than big. A nice byproduct of that is we can pretty much let our existing business fund the acquisition of new resources and any moves we make.
I would never entirely rule out acquiring another consulting company in another city, but it's not the channel we're after. We have a high-touch, personal value consulting approach. We love pulling in alums from the big firms who have kind of gotten tired of all the bureaucracy.
We're also recruiting off campus. We think that's just a terrific opportunity to get new people in and teach them this trade. We just hired a Vanderbilt grad, in fact. She was highly motivated to get into this business. Her background was in communications.
We get half of our people through recruiters and about half through client and internal referrals — folks who come to us.
Consulting magazine just put us in their top 10 of the best small firms to work for, and that certainly has increased the resumes coming to us. That's created a lot of excitement.
Copyright (c) The Tennessean. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc.
