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Utah Business

Utah-based 3M makes more than adhesive tapes, over the last few years, they've also grown into one of the largest healthcare software companies.

The world’s “invisible” healthcare software giant lives in Utah

From adhesive tapes to the reflective strips that line highways and traffic signs—and even the tooth color-matching filling material used at virtually every dental office in the world—one company is responsible for it all: 3M. 

At some point today, you likely interfaced with a product manufactured by this “invisible” giant. So, ironically, the “invisible” giant is anything but invisible. You just may not realize how visible they really are.

Behind this vast onslaught of manufacturing prowess, 3M has built a behind-the-scenes software empire within a nearly $10 trillion marketplace: healthcare. And it all began right along the Silicon Slopes. 

In the late 1970s, a Ph.D. student at the University of Utah’s Biomedical Informatics program was pursuing his thesis work attempting to pioneer an automated system for some of the more archaic, manual medical charting practices at LDS Hospital in Salt Lake City. John Morgan essentially believed that computers could be engineered to think like doctors rather than the other way around.  

His belief in this theory was so fierce that he built his “prototype” mainframe in the back of an old RV, and toured around the country in the early 80s pitching his radical new coding platform to clinics still using old manual systems. It didn’t take long for healthcare organizations to catch on to the value of digitizing medical records and begin redirecting their budgets to Morgan’s new medical coding software. 

That’s when 3M caught wind of Morgan’s technology. Tapping into 3M’s resources and commitment to innovation, their proprietary platform now had an accurate and efficient way to categorize a patient by diagnosis. Then, the company leveraged the technology to evaluate the average resource utilization to treat the diagnosis, essentially creating a base unit cost for healthcare. This turned out to be such an impactful breakthrough that in 1983, Medicare adopted it as the basis of the inpatient prospective payment system for federal reimbursement in all 50 states.

Not surprisingly, a lot more has happened in 3M healthcare software innovation since the 80s. This sector of 3M’s corporation—labeled 3M Health Information Systems (HIS)—is housed (and thriving) in Salt Lake City, where it all began several decades ago. 

“Most people don’t realize that one of 3M’s most profitable—and actually fastest-growing—businesses is headquartered here in the Salt Lake Valley: the 3M Healthcare Software Division (HealthIT),” says Dan McMaster, director of strategy and business development at 3M Health Information Systems and graduate of the University of Utah.

3M Health IT employs upwards of 3,000 employees, many of whom reside in Utah and plan to hire hundreds of people per year over the next five years.

“Our core R&D and software development is here. Our management leadership team, strategy, marketing is all housed here in Salt Lake…[and] we have plans to hire over 200 people a year for the next five years,” McMaster says. 

That is a ton of healthcare bandwidth pulsating throughout the Beehive State and driving innovation from its humble roots as a thesis project at LDS Hospital. 

Looking toward the future of 3M HealthIT’s innovation landscape, their goals are three-fold: 1) Improve revenue cycle, 2) Create time to care, and 3) Drive value-based care. Concerning the first goal, massive loads of medical waste are generated worldwide (with the United States leading the charge, forming upwards of $900 billion on an annual basis). 3M HealthIT hopes to optimize the original theory from Morgan’s Ph.D. project at the U by creating artificially intelligent, computerized systems that can think like—and keep up with—innovative doctors. 

The second goal highlights the incredibly burdened system of physicians spiraling toward greater rates of burnout every year. Depending on the specialty, some recent surveys capture physician burnout rates upward of 60 percent. And these rates aren’t expected to go down with the upcoming generation of physicians entering the workforce (i.e., millennials), likely demanding more fair work environments and adequate compensation for their efforts. 

3M Health IT is looking to alleviate some of that burden, likely contributing to the rising burnout rates by decreasing the time physicians spend away from their patients handling administrative payloads within the complex, convoluted medical billing and coding systems. 

In turn, 3M’s third aim will become more achievable, emphasizing the value in healthcare rather than production units. These are human lives, after all—not just units of adhesive tape in a 3M factory.

Jeremie is an experienced MedTech and healthcare consultant, research scientist, entrepreneur, and clinician-in-training. He is passionate about identifying clinical shortcomings and developing patient-centered solutions through novel therapeutic approaches, healthcare delivery optimization, and translational research innovation.