Changing the practice of medicine
HDL provides advanced testing for a more personal style of treatment
- August 31, 2012
Tonya Mallory is president and CEO of one of the fastest growing companies in Richmond. She began Health Diagnostic Laboratory Inc. at an inopportune time — in July 2009 — at the tail end of the Great Recession. To raise startup funds, Mallory cashed out nearly all of her family’s financial assets. “We cashed in my 401(k), the kids’ college tuition accounts. We were working on my husband’s 401(k) account and had to second mortgage the house.”
Three years later, that risky move is paying off. After rapid growth, HDL is on target to hit $400 million in annual revenue. Plus, it’s in the midst of a $68.5 million expansion in Richmond’s Virginia BioTechnology Research Park that will more than quadruple its existing space and add hundreds of new jobs. HDL’s staff of 540 people is expected to grow to nearly 900 when the expansion is complete in 2014.
Mallory never dreamed that the company she started with three partners, G. Russell Warnick, Joe McConnell and Satya Rangarajan, would take off so fast. Six months after it began, an angel investor put up $4 million. On the day the company closed on the capital, Mallory bounced a check for $11 in her personal account. “It was for a t-shirt order to my son’s school. Very embarrassing,” she recalls.
Mallory, 46, credits HDL’s success to a new preventative model for treating chronic disease — a model she says has the potential “to change the practice of medicine.”
By providing advanced diagnostic testing that identifies genetic and other risk factors that could be missed by traditional cholesterol testing, HDL’s data is designed to help doctors provide more effective, customized treatment for patients in four areas: cardiovascular disease, diabetes, metabolic syndrome and fatty liver disease. HDL also hires health coaches to assist patients in meeting disease management goals.
About 80 percent of Americans have problems in HDL’s primary testing areas, notes Mallory. Right now, the company works with about 5,000 doctors in 40 states, or about 1 percent of the total market. On any given day, they send 70,000 to 80,000 patient blood samples to the lab, with testing paid for by insurance companies. “We strongly believe that if we can hit 5 percent of the affected population, we can actually start reversing the health-care expenditure trends.”
HDL’s recent acquisition of a company with technology and patents in Omega 6 and Omega 3 fatty acids demonstrates some of its advanced capabilities. Through blood samples, Mallory says HDL can quantify the concentration of fatty acids in a red blood cell. That’s important, she adds, because if a person has an 8 percent concentration, then he or she has better protection against having a cardiac event or stroke.
Mallory grew up in the Doswell area of Hanover County and is a graduate of Virginia Commonwealth University. She recently was named the Ernst & Young Entrepreneur of the Year for the Greater Washington area. Mallory worked for nearly two decades in the clinical laboratory industry before starting HDL, yet some of the seeds for her company came from personal experience.
In December 2009 — on the same day she delivered a business plan to a potential investor — Mallory’s older sister, Alisa Dyson, underwent cardiac bypass surgery. A teacher in Knotts Island, N.C., and a Type 1 diabetic, Dyson had passed out at a teacher’s conference. When she told Mallory about her symptoms, Mallory thought it sounded like a heart attack and advised her to see a cardiologist. Before the then 46-year-old could get to the appointment, Dyson experienced difficulty breathing and tightness in her chest while driving to work. She was rushed to a Virginia Beach hospital.
“By the time I got down there, they were ready to release her and said all her cardiac markers looked fine,” recalls Mallory. “I threw a bit of a fit and said, ‘No, they don’t look fine. You tested her muscle. You haven’t looked for blockage. I need you to take her to a stress lab and have her see a cardiologist before she leaves here, or may I have a copy of your badge, because I’ll be back.’”
After she pointed out to the ER doctor that her sister lived 45 minutes from a hospital in North Carolina, Mallory says, the physician sent Dyson to a stress lab and a cardiologist. “She had 95 percent blockage in two arteries, and she had double bypass surgery within a few days. Had I not pushed that physician, there is no doubt in my mind that she would have died within the week. She had already had two heart attacks in two weeks.”
As her sister underwent cardiac rehabilitation, Mallory says, “I already had the idea for the company, but as that was happening, I realized how little patients were informed of what was going on.”
During an interview with Virginia Business, Mallory talked about her mission to give doctors and patients detailed information to lead healthy lives. The following is an edited transcript.
Virginia Business: You are the CEO of one of the fastest-growing companies in Richmond. Can you tell us about the challenges of your company’s rapid growth?
Mallory: At first the challenges were actually getting the lab off the ground and getting clients. Once we had clients, the challenges were making sure we had appropriate staff. Once we had appropriate staff and we started growing, the challenges were space. Every phase that we’ve gone through, the challenges were new, and we had to address them at the time.
VB: We always hear from entrepreneurs that access to capital is a problem — to be able to keep financing the company as growth needs appear.
Mallory: An angel ambassador was our first round of capital. We intended to raise a million and a half and then grow out of revenue. That one angel investor … He gave us $4 million …which worked out pretty good because when we took off growing, we were growing so fast it was before our revenue could catch up with us … We were cash positive by April of 2010. And we hit our five-year business plan in October 2010. So we’ve actually never raised another round of capital. We’ve been growing out of cash and revenues ever since.
VB: What’s making your company grow so quickly?
Mallory: I think it’s a perfect storm … The payers cut reimbursements. We went to a fee-for-service type scenario. Fifteen years ago, a lot of the HMOs came in as gatekeepers. Everything was about cost reduction. At the same time physicians — if you remember 15 years ago you actually got 30 minutes with your physician — now you get 5. So with all the cost cutbacks from the payers, the physicians are spending less time with their patients.
Our lifestyle has definitely changed, our high-fat, high-carbohydrate diets. … It’s the carbs that contribute to the disease state. That means chronic disease has actually taken a sharp increase. So the incidence of diabetes, metabolic syndrome, fatty liver disease and heart disease is on the rise.
VB: And those are the four areas that your company targets?
Mallory: Yes. So you take all of those — lack of education by us, lack of empowerment, the lab industry over 15 years has been merging and getting bigger … Our model brings a very different approach to the market in a time that it’s absolutely needed.
VB: You’ve said previously that you want your company to change the practice of medicine. Are you doing that?
Mallory: We are. Typically in a primary-care setting, the doctors have anywhere from 40 to 60 events a year. That means a heart attack, a stroke, a death, a bypass. After about 22 months, our docs are reporting one on the average …. With more information and more guidance and instruction and education and knowledge, they can actually treat effectively. And so we’re treating the disease, preventing events.
VB: And you’re able to do this because of the sophistication of your lab testing?
Mallory: That’s correct. The information provided is very directed and actionable. We give them the information they need in order to effectively treat. … Once we teach these docs what to do, we then have our own employees who are health coaches. And these health coaches then work with the patients directly.
VB: Tell us more about the health coaches.
Mallory: We give the results back to the physician, the physician gives a copy to their patient and they say, “Call this number to schedule time with your health coach.” … They interact with the patients. They might say, “Here’s what your doc said to do. This is how to do it. This is why to do it. And these are some other things that will benefit you — low-carb diet, low-fat diet, more exercise. Here’s how to read a food label.”
VB: Where do you get these coaches?
Mallory: All over the country. They are exercise therapists, nutritionists, registered dietitians, diabetic educators, registered nurses.
VB: How many health coaches does HDL employ?
Mallory: Right now about 60, but that changes weekly … they are centered in the locales where the patients are coming from.
VB: Can any doctor take advantage of your company’s lab testing and approach?
Mallory: Yes, any doctor can.
VB: Do they pay a fee or how does that work?
Mallory: No, actually they just call our client services, and we get them set up as a client. There’s no fee for any physician. We accept the blood samples from the practice, and we test them and send the results back to the physician. The revenue is based on filing insurance.
VB: What do you enjoy the most about your job, and what do you enjoy the least?
Mallory: I enjoy the most building the team and getting to meet such great people. What I enjoy the least is making … those hard decisions with employees when you have to let them go.
VB: What about work/life balance? I understand you are the mother of two teenage sons. Tell us about a typical day.
Mallory: My typical day is work, and then right now is football practice. Then after football practice, dinner. After dinner is lounging. I don’t cook well. I barbecue a lot, so I think that’s where my work/life balance is, so I don’t have to sit there and slave over a meal. We tend to grill chicken and steam broccoli, and there you have it; it’s dinner. That’s the shortcut that I take.
VB: Let’s switch gears and talk about technology. How important is technology to your company?
Mallory: We started as a technology-neutral company. That means if it was commercially available, we brought it in. There was no need to reinvent the wheel. My partners and I understood the market and the vendors and technology very well, so we could actually pick the cream of the crop. And we would partner with other laboratories as well as technology vendors, and we would bring that in … Once we started that first phase, we actually realized there were some unanswered questions, and we needed technology to fill those gaps. So we’ve spent most of our time filling those gaps. We’ve built a culture around, “Do what you need to do and not rely on what’s out there. Don’t be confined by what’s commercially available.” That has actually led our employees to a great deal of IP [intellectual property], and we have about 30 patents in play now as a result of that.
VB: I thought technology was crucial to you getting the type of markers from your lab testing that other companies weren’t getting. Isn’t that what gives you a competitive edge?
Mallory: At first it was not. At first we brought our markers that were available to any lab in the country. It was how we made them individual and reported them and linked the doctor and the patient together that was unique. We have since layered on purchase technology and brought up technology that is not available anywhere else in the country to augment that initial panel.
VB: Purchase technology? What does that mean?
Mallory: We bought a small company that had the technology and the patents around Omega 6 and Omega 3 fatty acid testing. That’s fish oil. So with that technology, we can actually quantitate the concentration of fatty acids in the red blood cell. That’s important because if you have an 8 percent concentration, you have 92 percent protection against a cardiac event and stroke. We encourage people to take fish oil, but you never know if you’ve taken enough. This technology will actually be able to monitor — you can take any brand, any type — as long as you get the 8 percent concentration that you need for the benefit.
VB: Is there any little-known fact about you that would surprise people?
Mallory: I don’t think too many people know I paint. I paint to relax. I used to paint oil. Now I paint acrylic. And I like it very abstract. That’s because I don’t have to follow the lines and be stressful. I can paint a landscape, but I hate it, so I don’t do it.