Q&A with Mike Valentine

June 2021

A decade after moving Netsmart to the Kansas City area, its chief executive reflects on the challenges of revising the business model, scaling up, and the advantages of being in K.C.


Q: This issue explores fast-growth companies, not all of which were start-ups, and you’ve spent the past decade in that zone of re-scaling a business. Can you tell us a bit, first, about what you saw as the opportunity to take Netsmart, a company that in some ways had plateaued, into new directions that could create rapid growth?

A: When we looked at the needs of health-care providers and the ability of technology companies to equip them for success, we saw a massive gap in capabilities. Our strategy to scale was to develop and innovate the next generation of technology capabilities to equip care providers with the technology tools and services they need for success. The future of all healthcare was rapidly moving to reimbursement models to shift the industry from a fee-for-service model to a pay-for-outcome approach that is known as value-based care. The largest spend in healthcare is the acute market, or also known as hospitals. The second largest spend in health care is within the human services and post-acute care markets that we knew were being significantly under-served by the technology vendors in the market. Care has been shifting out of hospitals and into more appropriate venues like the home—the pandemic has accelerated this shift. Ten years after opening an office in Kansas City, we are now the largest provider of solutions serving these markets with a comprehensive platform.


Q: How important to your growth strategy was moving the base of operations to Kansas City?

A: We needed access to a robust and thriving talent pool and Kansas City gave us the ability to add top talent at the pace we needed to scale the business. While we operate across all fifty states and have multiple office locations across the country, the Kansas City-based headquarters has provided a significant ability to scale to meet the demand of our clients as the number of Kansas City associates has grown from zero to more than 900 associates of our 2,400 associate base.


Q: What were your own organizational challenges to scaling up once the company had been re-oriented under your leadership?

A: Vision: Developing a shared vision that everyone can rally around and look to as a compass to stay true to our purpose and strategy required a great deal of investment early on and continuously to provide a clear future state for the company as we scaled.  
Evolution:  As we grew at a double-digit rate every year, what made us successful at one point in our evolution was not always the best approach as we scaled 10x at different levels. Our associates had to learn, unlearn, and adapt throughout our growth to respond to the needs of our clients and their communities.

One Netsmart: While the majority of our growth has been through the development of our own Intellectual Property and organic growth, we have acquired companies along the way to help us more rapidly advance our technology roadmap and service capabilities to meet the ever-growing demands of our clients. Integrating these new companies into the Netsmart family and culture has worked exceptionally well and has been a challenge that associates have risen to the occasion to avoid a collection of companies stitched loosely together as you see in so many healthcare technology companies. We have been able to achieve a single Netsmart that has increased value for our clients, and while it has been a challenge, it has been well worth the effort.


Q: Which of those factors do you see as shared challenges for executives everywhere, regardless of their business sector or model?

A: Develop a rallying vision to serve to motivate and guide, as well as attract associates. Ensuring we hire a diverse pipeline of talent at the right time, is key to best serving our organization and the communities we serve. High double-digit growth presents an incredible strain on the business if leadership and associates within the business aren’t able to recognize and willing to evolve and pivot at different stages of business growth. A successful transition of acquired companies into your overall offering is a challenge faced by many companies today.


Q: Your growth has been a blend of both organic and acquisitional.
How do you go about calibrating the correct balance between those?

A: Organic growth is the best indicator of a healthy business, so our primary focus is on organic growth —that represents the validation of our core platform offering to the market. We look at acquisitions as a way to advance our technology roadmap and bring to market new innovations and solutions needed by healthcare providers in the field. The revenue component of each acquisition is important to cost-justify the expense, yet our focus is not on buying revenue growth and instead is motivated by adding intellectual property and new capabilities to better serve our clients.


Q: What factors are at top of mind for you when you consider an acquisition?

A: Does the company advance our roadmap or fill a gap in services and offerings that our clients need? How well will the leadership and associate base match the culture of Netsmart? Do we have common values and a unifying mission that we can rally around? This is important because we retain most associates from an acquired company to continue to deliver and advance the solutions.


Q: And what do you see as the role of culture in fostering creating a team that can assure rapid growth?

A: It’s everything. Associates thrive in a cause-connected environment where they know that their efforts are improving the quality of care in the communities we serve, through our clients work-ing alongside people that share the same values. We work hard to demonstrate, recognize and reward behaviors aligned with our values. It’s incredibly important to us.


Q: It’s been said that a company like Cerner, no matter how big it gets, can’t be an employment magnet on its own, because if someone there decides the fit isn’t right, there won’t be sufficient tech opportunities to keep that talent in this market. Netsmart certainly changed that dynamic, and others are emerging to fill the gaps. How important is it to everyone in the sector to have that shared sense of creating a diverse tech community, one that makes this the place that talented techies look to first?

A: I believe we have a solid base of talent in the city across many industries, and we are doing our part at Netsmart to contribute to the Kansas City community. One way we have worked to develop local talent is through our FUTURES program, which is an internship program that gives up-and-coming talent the opportunity to work with and develop their skills. Our FUTURES roll up their sleeves and do real work and are given the opportunity to develop innovations to enhance our offering and present to our leadership team at the conclusion of their internship.  

Not only do we put a strong emphasis on the recruitment of our FUTURES program and new associate hires, we believe in offering new opportunities for growth for our associates. Through our internal learning programs and courses, we are able to give our current and long-standing associates new opportunities to advance their careers and professional development. We strive to contribute to the talent pool, and we are thrilled to see the Kansas City community thriving in the healthcare technology field.


Q: What other pieces are missing in our tech ecosystem that prevent us from being one of those top-tier destinations, and how do those gaps get filled?

A: Companies on the coasts are discovering the value of Midwest-based associates, especially in this new virtual working environment where more companies are embracing a 100 percent virtual work force. The gap I see across the country, and Kansas City companies are no exception, is making sure that the vision and ‘why’ behind each Kansas City company is nurtured by leadership and regularly communicated with associates to ensure there’s a greater meaning behind their work and create raving fans within company ranks of associates.


Q: Fast growth presents personal challenges at the leadership level—the pressure is a constant. What tools and strategies do you, and your leadership team, employ to keep yourselves freshed for the battle and open to new ideas that can change the direction of the company?

A: We have a cause-connected ‘why’ that motivates and unites each associate and member of leadership that has a personal story of where their loved one’s care has intersected with the innovation we deliver to our clients. This provides constant motivation across our team.

Netsmart is a team sport. By that I mean we’re organized in a way that intentionally creates intersections between organizations which forces teams to work together to be successful. We’ve had virtually no attrition at the senior level. 

I attribute that to finding the right talent and keeping them challenged, growing and rewarded. I’ve heard many of our senior leaders say that one of their primary motivators driving them towards success is the fear of letting the rest of the team down in achieving our long view objectives. That kind of ‘team focus’ is what makes our team great—and it’s probably the thing I’m most proud of about Netsmart.