2013 Virginia Business Person of the Year
Tonya Mallory wants to revolutionize the practice of medicine in the U.S.
The day Tonya Mallory closed on the capital for Health Diagnostic Laboratory Inc., she bounced an $11 check for a T-shirt order to one of her sons’ schools. “We were down to zero. I was actually going to apply at Wal-Mart the very next weekend. That’s how close to nothing we had,” recalls HDL’s CEO. “I was going to stock at Wal-Mart on [midnight shifts] so I could keep trying to get the company going during the day.”
She and her husband of 23 years, Scott, already had spent much of their savings caring for his late mother during a terminal illness. So there wasn’t a reserve to dip into for her business. “We essentially bet the farm,” Mallory says. “We agreed that we would cash out our 401(k) accounts, the kids’ college accounts, and we second-mortgaged the house.”
Mallory estimates that she pitched her vision of a new type of medical laboratory corporation to about 500 investors for about a year before landing a $4 million angel investment from Tipton Golias, the founder and president of Texas-based Helena Laboratories.
“Driven” is how most people describe Mallory. It’s a pretty apt characterization of the Virginia Business 2013 Business Person of the Year. While in college and graduate school, Mallory worked full time and volunteered 12 hours every Sunday for her local rescue squad.
Her drive, a vision to create a new model for treating chronic disease and the impressive ramp-up of her Richmond-based company — which spurred one of the biggest expansions ever in the city’s biotech park — were all reasons why the magazine’s editors selected Mallory as its sixth annual winner.
HDL co-founder Joe McConnell, the director of cardiovascular laboratory medicine at the Mayo Clinic before joining HDL, describes Mallory “as one of the most amazing people that you’ll meet. I don’t think she ever sleeps or if she does, she sleeps very little … At the same time, she cares about people, but she doesn’t let people get in her way when she wants to do things. She’s got a vision and a plan. HDL wouldn’t be where it is today without Tonya.”
Mallory, 48, founded HDL in the summer of 2009. Since then, it has grown from a kitchen-table business plan to a corporation earning more than $420 million in annual revenue, employing 750 people, processing 4,000 lab samples and running more than 60,000 lab tests each day. HDL has driven nearconstant construction at its home in downtown Richmond’s Virginia BioTechnology Research Park, where a $68.5 million expansion soon will triple the company’s footprint to 280,000 square feet.
Last year Mallory received the Ernst & Young National Entrepreneur of the Year award in the Emerging Company category. One of the country’s most prestigious business awards for entrepreneurs, it recognizes leaders who demonstrate innovation, financial success and personal commitment as they build their businesses.
HDL is the largest cardiovascular and diabetes testing lab of its type in the world. It hit its five-year goal in its first 10 months of business. The company hires a person a day on average; in some months it adds as many as 50 workers.
Partnerships are fueling some of the growth. HDL is the official health and wellness partner of the Washington Redskins. Under the arrangement, HDL provides health testing and consulting services for the Redskins organization and works with the team to promote diabetes awareness. The sponsorship also grants HDL some branding promotion at the Redskins’ home stadium in Landover, Md., and its new training camp in Richmond.
HDL also is known for its corporate largesse. It gave $2.2 million to the Science Museum of Virginia (the largest corporate gift in the museum’s history) and donated $4 million to the athletics department at Virginia Commonwealth University, Mallory’s alma mater. A huge fan of VCU Rams basketball, Mallory keeps a photo of herself with men’s coach Shaka Smart in her office.
HDL’s primary revenue stream comes from a panel of comprehensive lab tests that allow early detection of cardiovascular disease, diabetes, metabolic syndrome and fatty liver disease. In October, HDL acquired the assets of a British company that produces a blood test for early detection of lung cancer.
“Tonya is an absolute visionary,” says Dr. Shaiv Kapadia, a cardiologist who is chief of staff at Bon Secours St. Francis Hospital. HDL’s stoplight-coded tests are easy to review for patients and physicians. And compared with HDL’s tests, he says, “conventional cholesterol testing probably misses almost half of the folks who are at risk for cardiovascular disease.”
Mallory, however, considers HDL a health management company, not just a laboratory. HDL offers patients free health coaching services, including smoking cessation, dietary and behavioral change, in an effort to improve patient health and prevent heart attacks and diabetes. Kapadia calls the health coach program “genius” and says that — combined with HDL’s testing — it has been “a very powerful” tool for reducing cardiac events in his cardiology practice.
HDL also has begun offering its early detection and health coaching services as a paid service to private companies so corporations can improve employees’ health and keep insurance costs down. So far, HDL’s clients include Markel Corp. and Bon Secours Richmond Health System in addition to a pilot program with the state government.
Tests are confidential and not shared with the employer, says HDL Marketing Program Manager Jeff Kelley. The employer sees aggregate data about employee health “in order to implement initiatives to move employees, on the whole, from red to green. Test results are used to help lower overall claims/health-care costs and provide a tool for employees to help them manage their health.”
An independent study published in September in the health-care journal Population Health Management found that HDL’s testing and coaching reduced patients’ health-care costs by an average 23 percent over a two-year period and also improved patients’ lipid profiles.
“HDL is a game changer,” says Dr. Sam Fillingane, a Mississippi physician who specializes in cardiovascular risk reduction. Previously, the kind of testing that HDL offers wasn’t covered by insurance and only wealthy patients could afford the out-of-pocket expenses, he adds. (HDL’s business model is predicated on accepting whatever insurance companies will pay for tests; patients pay only co-pays or deductibles.) Plus, physicians would have to send tests to multiple labs because no one lab offered all the specialized tests that could be done by HDL.
HDL’s array of tests gives physicians ample warnings to conduct behavioral and drug interventions that could virtually eliminate heart disease and Type 2 diabetes, says Fillingane, who has worked as an educational consultant for HDL. Insurance companies and health-care corporations are skeptical about spending money for prevention up front, he notes, but the tests cost far less, for example, than heart bypass surgery, which can run more than $100,000.
An average primary-care practice might have dozens of patients with cardiac events each year, but through using advanced biomarker testing and health coaching, “it is very rare for a heart attack to occur in my patient population, which is high risk,” he says. His patients routinely see a regression of arterial plaque buildup.
“Some people think that this approach is too expensive,” says Fillingane, “but I say it’s too expensive not to take this approach. I personally think if we beat cardiovascular disease in the United States it’s going to be through efforts like that of Health Diagnostic Laboratory.”
Jeffrey Gallagher, executive director of the Virginia Biotechnology Association, says Mallory is an inspiration to others in the industry. Biotech entrepreneurs in Virginia routinely talk about wanting to be “the next Tonya,” he says. “She’s been a terrific champion of research and commercialization of innovation and entrepreneurship. … She’s just been an inspiration to us all. … This is a very difficult way of life, to do the research that might not have any friction for years or to start companies or products that are going to have a 10- to 15-year path to get to the marketplace, and I can’t underscore strongly enough how … [HDL’s success] fuels them and keeps people going.”
Robert Skunda, CEO of Richmond’s biotech park and a former state secretary of commerce and trade, calls the company’s growth “astounding.” He has received “quizzical” questions about it from business leaders who wonder how long HDL can sustain such rapid growth. He thinks HDL’s growth will level off eventually, but that HDL is a “bona fide, homegrown success.”
McConnell, HDL’s co-founder, says Mallory “has a philosophy that’s sometimes scary to me: That is, leap and the net will appear. It’s going to be down there. You’ve got to take that leap and it will appear. Sometimes I worry, but there’s always been a net. We’ve always managed to build that net … and if we have to build the net while we’re falling, that’s good, too, because it happened. It’s really been an exciting time, and Tonya pushes the envelope all the way.”
Her early years
Tonya Mallory grew up in the rural Doswell area of Hanover County and graduated from Patrick Henry High School. Her father was a welder for Philip Morris; her mother worked as an accountant clerk for Bear Island Paper Co. At age 13, she doctored a job permit from her pediatrician to say that she was 18 years old so she could work in the restaurant kitchen at the Kings Quarters, a hotel connected to Kings Dominion theme park. By the time she was actually 18, she was managing the restaurant.
She attended Virginia Commonwealth University, paying her way through school by working full time at restaurants. On Sundays, she volunteered 6 a.m. to 6 p.m. for her local rescue squad. She received her undergraduate degree in biology and chemistry in 1988 and went on to earn a master’s degree in forensic science a year and a half later.
“I was going to graduate school from noon until 10 p.m. and working from 10 p.m. to 8 a.m. at what is now LabCorp but was then Hoffmann-La Roche Laboratories. I was sleeping about 8 hours a week,” she recalls, laughing. “Believe it or not, I graduated with a 3.9 average or something like that.”
Mallory had wanted to pursue a career in medicine but was concerned that the managed-care environment would make it difficult for her to pay back school loans. So she decided to become a DNA fingerprint examiner for the state forensics lab. (She’s a fan of best-selling mystery novelist Patricia Cornwell, who was working at the state medical examiner’s office when Mallory was taking classes at the forensic lab in graduate school: “She was working at the lab … I was a student; I was a nobody but [I would see her] in the halls.”)
Due to budget cuts at the time, the forensics lab wasn’t a good prospect, so Mallory took what she thought would be a temporary position at Richmond-based Wako Chemicals USA, a Japanese manufacturer that produced chemicals and reagents used in laboratory testing. She wound up working there for more than 17 years.
Put in charge of Wako’s chemical diagnostic division, Mallory says she built its annual revenues from about $4,800 to $21 million. “I figured out what the market needed,” she explains, and created marketing materials, pursued FDA approvals and allowed larger companies to rebrand and resell Wako’s chemicals.
“In a Japanese company, it’s very common for everyone to wear many hats. Mallory says. “If you take those 17 years of experience, it’s probably equivalent in an American company to 40 or 50 years.”
Then conversant in Japanese, Mallory was accustomed to company managers in Japan telling her that goals she set and changes she proposed were impossible. “Of course I loved that, and I had to prove them wrong.”
The department had been in the red for more than 10 years before Mallory took it over, says Hiroshi Shima, her former boss at Wako.
“What she did was to set goals, motivate her staff members toward them and take aggressive actions to increase sales,” he recalls. “She has unsurpassed physical and mental toughness as well as a strong will with which she carries out whatever she is required to do. Moreover, she has ample and broad knowledge about the industry and has outstanding ability to absorb new knowledge. Yet she is always kind to whoever is in need of help.”
For example, Shima says, “One of our employees had chemotherapy after her breast cancer surgery and showed up to work wearing a cap. Next day, all women in the office started wearing a cap. That turned out to be Tonya’s idea.”
After Shima was transferred back to Japan in 2004, the company’s new, more traditional Japanese leadership told Mallory flatly that because she was a woman and below age 50, she would not advance farther in the company, she says. When her mother-in-law was dying, the company denied her requests to work at home. Mallory instead took vacation leave to care for her mother-in-law, who died 11 days later. The incident influences Mallory’s attitudes toward her employees at HDL, who have flexible schedules, no time clocks and generous leave.
Less than a year later, G. Russell Warnick — another HDL co-founding partner who was then vice president of laboratory operations and chief scientific officer at San Francisco-based Berkeley HeartLab — recruited Mallory to build a second Berkeley lab in Richmond. From 2005 to 2008 Mallory commuted back and forth from Richmond to San Francisco, but when Berkeley was suddenly acquired by Celera Corp., the Richmond lab project was killed. Mallory and Warnick both left, unhappy with the conservative management of Celera, which Warnick says discouraged innovation and entrepreneurial attitudes.
At that point, Mallory began writing the business plan for HDL.
Down-to-earth and quick to laugh, Mallory is an iconoclast who is likely to show up at business meetings wearing jeans and Birkenstock sandals. She’s a “Bazinga” T-shirt-owning, “Big Bang Theory” fan who has a toy figure of über-geek Dr. Sheldon Cooper perched above her office computer monitor.
An open book, she volunteers that she loves Stella Artois beer and likes fishing in the pond behind her family’s Goochland County home. Besides being a busy executive, she’s the mother of two sons, Jace, 15, a student at Richmond’s Benedictine College Preparatory school, and Adam, 20, a VCU exercise science major who works at HDL as a personal trainer in the employee gym.
Mallory also is creative outside her business innovations: She enjoys painting abstract portraits, and several of them decorate the walls at HDL. “When my stress goes up, the paintings start multiplying,” she says.
Asked whether she would ever consider taking the company public, Mallory says she’ll never say never, but she doesn’t see it happening anytime soon because HDL hasn’t reached its goal. That goal is nothing short of revolutionizing the way American medicine is practiced.
When Mallory’s mother-in-law became ill with leukemia, it took a year before a doctor did a test that revealed that she had a fatal kidney disease. “I went back to her primary-care physician and asked, ‘How come you didn’t have her pee in a cup the day she walked in the doctor’s office?’ and he said because insurance wouldn’t cover it. So I spent a year of my time chasing an answer that he could have had had he made a good clinical decision … regardless of what the insurance paid for or didn’t pay for.”
Mallory encountered a similar problem in late 2009 when her older sister, a Type 1 diabetic, had her second undiagnosed heart attack in two weeks and passed out. In the emergency room, the doctor was ready to release her because her cardiac markers looked fine. But Mallory realized they had tested the heart muscle and didn’t look for a blockage. She threatened to report the doctor to the hospital administration if she didn’t refer her sister to a cardiologist for a stress test. It turned out that Mallory’s sister had 95 percent blockage in two arteries; four days later she underwent double bypass surgery.
“It was the lack of understanding of the disease and the disease process,” Mallory says. “There’s no doubt in my mind that had she not gone down to that stress lab that she would have died.”
Mallory attributes HDL’s success to a “perfect storm” of conflating factors: Sedentary lifestyles and poor diets have led to an obesity epidemic, which in turn has led to high rates of Type 2 diabetes and cardiovascular disease. Plus, some patients feel like they don’t get enough time with their primary doctors to discuss medical problems. HDL’s easy-to-understand, comprehensive tests “empower the patient and the physician,” she says.
Still, Mallory acknowledges she’s a long way from reaching her ultimate goal. Depending on the source, there are an estimated 208,000 to 352,000 primary care physicians in the United States. About 18,000 of those physicians use HDL’s tests and only 15,000 have received advanced training on reading the tests.
“It’s really important for physicians to be armed with information and to make clinical decisions that they believe in. So a lot of our business model is built on that,” Mallory says. “If you look at the real value of lab tests, they’re 3 to 5 percent of the cost to the health-care system, but they control 70 percent of the decisions. It doesn’t matter what lab test you do. Do them all — they’re so cheap — and make very good clinical decisions.”
Of all the perks that have come with being the CEO of a fast-growing, respected corporation, Mallory says the most valuable to her is having a say. “I didn’t have a voice before,” she says. “And no one’s ever told me I’m short on words.”
She’s used that voice to help direct the biotech park and to innovate at VCU, offering direction to VCU’s School of Business and pumping up the university’s clinical chemistry program.
She’s used it to support local and national nonprofits fighting obesity and promoting health prevention.
More importantly, she wants the entire medical community to hear her.
“I started HDL in order to impact medicine,” Mallory says. “I definitely understood that medicine had gotten to a place in the United States where it was quite reactionary, and we want to be a catalyst to change that.”