While some IT companies have found success by zeroing in on a specific segment of clinical care or operations unique to healthcare, others have done well by taking an area of operations common to numerous industries, and optimizing it. Such is the case with Chelmsford, Mass.-based Kronos, whose total revenues in the second quarter rose to $161.3 million, 12 percent above the $143.5 million of a year ago (and which recorded $578 million in annual global revenues as of October).
One element that could potentially affect operations is the acquisition of Kronos by the San Francisco-based Hellman and Friedman LLC private equity investment firm in March, in a transaction valued at $1.8 billion. Kronos executives have declined to be interviewed with regard to the acquisition. But in making the announcement, Mark Ain, executive chairman of Kronos' Board of Directors, said in a written statement that “Our Board of Directors believes this transaction is in the best interests of our shareholders and affirms Kronos' tremendous value, market-leadership, and the exciting growth opportunities in front of us. Hellman and Friedman will be a great partner for Kronos,” Ain continued in the announcement, citing the company's “tremendous capital resources, significant expertise in software and technology, and a proven track record of building leading global companies,” and asserting Kronos' commitments to its currently served markets.
In any case, the acquisition demonstrates how far the company — which began many years ago as a timecard management firm — has come. Kronos now describes itself as a “global provider of human capital management solutions, with the company's Web site declaring that “Kronos' vision is to be the universal experts in helping organizations effectively manage their workforce.”
And it is in workforce management, a broad term that encompasses numerous concepts, where sKronos has done very well in healthcare, adapting general principles that also apply to managing employees in the manufacturing, retailing and other industries. In fact, says Brian Graves, the company's global practice leader for healthcare, the healthcare industry is now the largest vertical market for Kronos, representing 25-30 percent of its revenues at any one time, with manufacturing a very close second, also accounting for 25-30 percent of revenues, and retailing representing about 16-20 percent.
Is healthcare harder to support than other industries? “Well, let's just say what healthcare says, that it's different,” Graves says. “And our approach to healthcare is rooted in the domain and processes unique to healthcare. What we do is to take domain expertise and apply what we know of processes and pain points; and while some processes are the same or similar, others aren't.”
So while traditional “time and attendance” management remains a major element in Kronos's offerings in healthcare, the company offers particular value to healthcare in such areas as supplemental labor management (think nurses), talent management (assessing and filling skilled staff needs), and labor analytics (examining what an organization's unmet needs are, and strategizing on how to meet them).
“Some of the biggest problems in healthcare are around the nursing shortage,” Graves says, “but it's actually about all skilled staff who encounter a variable workload. So it's nursing, but it's also pharmacists, radiologists, lab technicians, where their work increases or decreases based on whether a patient is in a bed or not.”
Graves adds that what Kronos' solutions can do for hospital organizations is evidenced by a company study that found that, “We typically see a 1-5 percent reduction in payroll costs because of the improvements in productivity we're facilitating, because of how they're staffing, deploying, and managing to budget.” With such results, it's little wonder Kronos has done well for some time.
Consequently, the company has shown 108 consecutive quarters of year-over-year revenue growth, and 79 consecutive quarters of profitability.