Making money out of Medicine

The worlds of medicine and business may not appear to have much in common, but some former doctors have hung up their stethoscopes and successfully put their skills to commercial use, reports David Butcher.

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Last Updated: 31 Aug 2010

Do doctors make good businessmen? The short answer is no. For the most part, they're trained to do a vital job, and they do it, far from the roar of commerce - except when they're off doing private work. Few of them leave medicine to seek their fortune elsewhere, and that suits the rest of us fine. We Brits like to see our physicians as Hippocratic healers devoted to the greater good, not entrepreneurs with an eye to the main chance. Like priests, we imagine they have a duty to stick to their calling. To serve.

But a handful of high-flying former medics shatter this image. Their careers suggest that the worlds of medicine and business have a lot to learn from each other. Not only have these medical men (for they are all men) transferred their skills to the boardroom, but they have each built successful companies while never, they say, losing sight of the ideals that made them doctors in the first place.

Take Dr David Landau, who founded the classified ads paper Loot in 1984.

He sold the business for £189 million in 2000 and now chairs a venture capital fund devoted to investing in 'pieces of software that will change the world'. But he says: 'I still try to make the world a better place rather than just make a buck.'

Even at the height of his entrepreneurial success, Landau saw himself as pursuing something essentially worthwhile. 'Medicine is, or should be, thinking about other people's needs and not being satisfied until you've taken care of their problem,' he says. 'At Loot, we were taking care of problems of a different kind, by selling someone's fridge, doing it for free and making people happy in the process.'

Landau came from a family of wholesale diamond dealers, but decided at 17 that he wanted to 'save the world and go into medicine'. When he became disillusioned with the way medicine worked in practice, he left to become a fine art research fellow at Oxford University. 'As an academic, I was snooty about business. I thought the whole principle of commerce was wicked,' he admits.

But some time in the early 1980s, he had an epiphany. Academia didn't pay well and his mother finally convinced him that business could be an honest calling, so he started an ice cream parlour with some friends.

It flopped, but shortly afterwards he had the idea of starting a classified ads paper for London.

Loot took a while to take off, but Landau believes the reason it finally worked was because he applied a detailed, scientific approach to getting through difficulties: 'The best doctors are the ones that really try to understand a problem - the underlying disease rather than the symptoms - and it's the same in business.'

According to Landau, newstrade wholesalers and distributors disliked the fact that the Loot team challenged the way they had always operated.

'We never believed the received wisdom,' he stresses. 'We were always looking at things anew. Great doctors question received wisdom and great businessmen do the same.'

The trouble is, questioning received wisdom isn't what most of us want from our doctors. On the whole, we'd rather they just prescribed the right drug or performed the right surgery, which is how most doctoring works.

Medical students are trained to apply a body of knowledge systematically over and over again throughout their careers.

'That systematic approach to things can be useful in business,' says Dr Guy Wood-Gush, who left medicine to work in the City and now chairs Cambridge Cognition, a cognitive testing company. 'But the flip side of it is that you become institutionalised in your thinking. There's always a set, prescribed way of dealing with any situation that you come across, and that can stop you thinking for yourself - not great for business.'

It's one respect in which a medical training perhaps makes a poor preparation for management. In fact, many believe it makes a poor preparation for anything except medicine, which is a major reason that so few doctors leave the profession - studies suggest 95% stay in medicine (excluding those who leave to start a family or retire early). 'They feel they're not fit for anything else,' suggests Professor Isobel Allen of the Policy Studies Institute. 'If you do a history degree, you can do anything; if you do a medical degree, you're stuck being a doctor.'

So the minority who break away are seen very much as the black sheep.

Nottingham doctors Jonathan Engler and Neil Rotherham, for example, instinctively rebelled against the culture of hospital medicine they experienced in the late 1980s. 'We were too awkward to work for other people,' recalls Rotherham.

'It was the worst time for the NHS,' adds Engler. 'Morale was at rock-bottom and we felt that being bright and doing a good job wasn't enough. There was a lot of arse-licking. It wasn't at all meritocratic.'

The trouble was that they found the culture much the same when they went to work for a drugs company. So they started dreaming up escape plans, working through a range of entrepreneurial ideas, 'mostly related to curry or football'. Eventually, they hit on the idea of using technology to manage clinical trials and founded Clinphone, a business that today employs 500 people around the world and turns over £30 million a year.

But first they had to make the kind of break most doctors would baulk at. 'We went from security to a situation where we stared failure in the face,' says Engler. 'We dramatically underestimated how long it would take to sell a new idea into the pharmaceutical industry.'

Agrees Rotherham: 'In the first few years we were getting nowhere fast.

Our balls were on the line and we were staring into the abyss. In the end, we got a few breaks and achieved traction in the nick of time.'

Once the business took off, the pair resisted the temptation to look too far ahead. 'We have always run the business on a six-month time horizon.

We don't believe in looking five years ahead or having a grand vision,' says Rotherham. 'It's all about being rooted in reality, being flexible and practical - using common sense and getting today's decisions right.'

It's a pragmatic approach that they attribute to their medical background, and it stood them in good stead when, at the height of dot.com mania in the late 1990s, investors tried to persuade them to float the business at a massive paper valuation. They came close to merging with a Nasdaq company, but in the end shunned the approaches: 'We saw through it.'

An unwillingness to be taken in by hot air is typical of the medical mind, according to Dr James Le Fanu, family doctor and Daily Telegraph columnist. 'One aspect of having a medical training is a powerful empiricism,' he observes. 'You like to do things that work and make things happen.

You don't like sitting around in boring committees philosophising.'

However, committee work is a growing part of the job, thanks to a burgeoning bureaucracy in the NHS. 'The frustration is very intense throughout medicine,' says Le Fanu. 'You have intelligent, motivated, practical doctors whose lives are made arduous and complicated by a management class that is the antithesis of those values: they're second-rate paper pushers.'

It's no wonder some of the best and brightest doctors end up feeling trapped. When they do, they may well glance enviously at their peers in other professions. 'Doctors have for decades been underpaid in the NHS, considering their expertise and contribution to society,' argues Engler.

'Lawyers get paid much more, for instance. There used to be an implicit contract between doctors and society that they had a certain freedom and respect, but over the last 20 years they've become state employees on a par with other state employees. This has caused huge disaffection.'

Landau agrees. 'Pure medicine has become an underpaid, overworked category that does not get the respect it used to,' he says. 'Twenty years ago, a top doctor was at the top of society; now you're just a functionary of the system.'

Says one former hospital doctor who has built up a well-known healthcare services business after a spell in the City: 'The drivers for leaving are different for different people. Most are frightened of leaving the environment they know best. But some are more aware that the health industry is going to open up to commercial opportunities, so if they can combine their medical knowledge with business expertise, that's an interesting place to be.'

This doctor turned merchant banker turned entrepreneur (who asked not to be named) quit medicine because he wanted more control over his own destiny and had a desire to achieve something on a bigger scale than he could in the health service. Yet the flame of altruism still burns in his approach to business.

'I find a pure commercial outlook quite difficult,' he admits. 'I've got friends in business who have fun thinking of lots of money-making ideas. I don't. I have to be able to see the point of what I'm doing.

I don't think: there's a great wheeze, buying this and selling that. You want to find meaning in what you do, the sense that you're doing something good.'

All our former doctors are able to point to skills they developed as doctors that have served them well in a commercial environment. 'Bedside manners are something one needs all the time in the office,' observes Landau. 'You have to listen to people. If a CEO doesn't listen to people, he's not a CEO. It's absolutely fundamental. The best ideas will come from people within the business.'

More broadly, the ability to empathise with others can be useful, argues Rotherham. 'People skills I acquired as a doctor have meant I've been able to connect with staff. As an MD, you get difficult disciplinary situations that can be highly emotionally charged. But it's never as bad as breaking the news to someone that their spouse has died. Once you've done that, you know how to keep your head.'

Equally, dealing with life-or-death situations can make doctors good at defining the issues and taking informed risks, because sitting on the fence isn't an option: they have to take a decision based on what they know. 'A medical training teaches you a lot about multi-tasking and problem-solving,' says Rotherham. 'You become good at thinking laterally. There's an agility of thought and a tolerance of ambiguity.'

Engler points to a particular aspect of problem-solving that has proved invaluable. 'There's a saying in medicine that "common things are common".

If you're faced with a problem, you go back to basics and rule out the most likely explanations first. It's a very useful skill in business generally, but particularly when you're dealing with computer systems.'

There are, however, business challenges for which no amount of medical experience can prepare you. The world most doctors move in is characterised by well-defined ranks and processes; there is little place for guile or salesmanship. 'I think you learn more about dealing with people in a day of business than you do in a year of doctoring,' concludes Wood-Gush. 'The key difference is that in business, you've got to persuade people to do things, cajole them, deal with their idiosyncrasies. And they can always go elsewhere.'

ONCE THEY WERE MEDICS... John Keats - Armand Hammer - Hugh Osmond - Harry Hill - Che Guevara Anton Chekhov - Michael Crichton - Luke Johnson -Jonathan Miller

DR MICHAEL SINCLAIR, YOOMEDIA

When, in the summer of 1971, Dr Michael Sinclair informed his colleagues at the Maudsley Hospital that he was leaving medicine to start a business, they were appalled. 'My professor really thought I was going through a psychiatric illness,' he recalls. 'He actually examined my mental state formally. To have worked this hard for that long with some degree of success and then walk away from it and risk everything - he thought I was going nuts.'

Sinclair went on to launch a series of healthcare ventures, and has become one of the most successful ex-medical entrepreneurs around, with a fortune conservatively estimated at £80 million. But his management model came from a ward sister he had known in the casualty department at the Middlesex Hospital. 'I thought to myself: who's the best manager I've ever come across? And it was this casualty sister, who was an extraordinarily capable person. She knew everyone in the department who worked for her, their personal lives and their families. She had her door open all the time and she had total control, because she could see and hear everything that went on and she communicated well. And there wasn't a job that anybody had to do, whether a doctor or a nurse or a paramedic, that she couldn't do herself. So I adopted that approach when I went into business, and that was a hugely valuable experience.'

Sinclair made his fortune by building and operating hospitals, clinics and nursing homes around the world. More recently, he has shifted his focus to interactive entertainment firm Yoomedia. He still believes that aspects of his medical experience stand him in good stead. 'The most difficult thing to adjust to has been that in a hospital team, it's impossible to operate unless you have total trust and confidence in all the other people on the team. This is the foundation of that working culture. It took me a long time to realise that this is not the case in business, particularly in larger organisations, and to learn to have a more sceptical approach.

But it can be enormously valuable in small organisations where you do all trust one another completely. It's a huge intangible asset.'

DR DAVID STABLES, EGTON MEDICAL INFORMATION SYSTEMS

David Stables is a good example of a doctor whose altruism has remained intact even as his business career has blossomed. In 1996 a drugs company offered him and his partners £100 million for the IT firm they launched in the 1980s to help GPs organise patient records. He turned down the chance to cash in his chips. 'It was an enormous amount back then,' says Stables. 'But you want to live life, not retire to some yacht in the Mediterranean.

And once you've made that decision, there's no reason to change it. Had an offer come along that had been in the interests of patients, it might have been different.'

There, in a nutshell, is the dilemma: Stables and friends could have sold out to the drugs company, but it would have threatened the value of everything they had achieved. Starting with a DEC computer bought for £20,000 in 1984 by his colleague Dr Peter Sowerby, Stables taught himself to programme it with a database for keeping details of patients' past ailments, prescriptions, allergies and so on. The idea was to replace the time-honoured system of dog-eared filecards covered in spidery handwriting.

'It wasn't done on any economic model; it was entirely a hobby, and a very expensive one at that.' They soon came to the conclusion that the new software could transform not just their practice (in Egton, Yorkshire) but others like it. So Stables and Sowerby remortgaged their homes and set up Egton Medical Information Systems (EMIS). 'We didn't expect to make a great deal of money. We were astounded by our success. GPs aren't used to selling things, but the buzz of selling is considerable.' And sell they did. From a staff of four in 1988, EMIS had grown to 50 by 1991 and today employs 650 people, turning over £60 million a year. Its software is used by more than half of all GPs' practices in England and Wales.

Now EMIS is branching out into systems for law firms and schools, a move that points up the contrast with Stables' former existence as a GP. 'The fundamental difference between medicine and business is that in medicine you are reactive,' he says. 'A patient comes through the door and you have to treat them. In business, you have to be proactive - you have to make something happen.'

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