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Today on This Week Health.

Capital is not readily available as it used to be. And if you decide you can get access to capital, you're paying a lot more for it than you used to cuz the interest rates are so much higher. So it does focus the mind, right? You have to be much more targeted and much more considered in your investment.

It's Newsday. My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of This Week Health, a channel dedicated to keeping health IT staff current and engaged. Special thanks to CrowdStrike, Proofpoint, Clearsense, MEDITECH, Cedars-Sinai Accelerator, Talkdesk and DrFirst who are our Newsday show sponsors for investing in our mission to develop the next generation of health 📍 leaders.

All right. It's another Newsday episode and we are joined by the incomparable Ryan Whit. You don't mind if I call you incomparable, right?

I to call a lot worse, even .

That's, that's the right response there. I love it. Man, we've, we've had a lot going on. I was at the chime fall forum. I was at the Health H Lt H conference as well and got to talk to a lot of people and the story I wanna start with you on. I mean, we have a security story here. We're gonna talk about Senator Warner and some of the stuff that's going on there, but the. And I'm gonna encapsulate it in the five takeaways from the health conference.

Now, I know you weren't at the health conference, but these takeaways are common across, I think, all the conferences that we just went to. Yeah, sure. We're not gonna talk about these stories specifically, but they're wrapped up in the first takeaway from the health conference.

Common Spirit reports 227 million quartered loss, Memorial Sloan Kettering to lay off. 3% of staff Advocate Aurora Post 310 million. Q3 loss. And then you have the five takeaways from the health conference. And the first one is that the economic troubles loom large in digital health. Now they're not talking about providers, they're just talking about digital health, which is a different segment altogether.

But I sort of wanna talk about both segments because the chime fall forum, that, that the inter, I did 29 interviews and I say, what I wanted to do is talk to you about what's top of mind. And everybody's joke was the same, which. Well, it's financials, right? But I don't wanna talk about that. So we'd always talk about what was second top of mind, because otherwise we would've talked to 29 systems about the financial pressure that they're under. Is that what you, you heard as well at the Fall forum and others?

Yeah, I mean, I think it's, that talk track or that theme is becoming pervasive. I mean, right across the marketplace right across industries. But particularly in healthcare where, I mean, some various leading institutions of very large institutions are making fairly strong statements about their earnings and their, their need to go make cutbacks and is that a lingering sort of covid pressure of not being able to do elective surgeries and all the the kind of the high return sort of procedures they were not able to do.

Kind of, it's kind of taking effect. Is that also a statement about the prevailing economic headwinds, which I think we all now, now really see. I mean, I'm, I'm calling you right now from Silicon Valley and we're seeing headwinds that I can't recall for, for many years now. I mean, good more than a decade.

That's what we've seen this sort of job pressure. So I feel like it's across all industries and healthcare is definitely feeling with very low margin industries failing the brunt of it. Right.

Yeah. I. Big tech. I mean, we saw what MEA was. Was that 10,000 employees? Maybe even 11,000. Yeah. Yeah, 11,000 at mea. You saw you saw Google tighten it up. I don't know if they did layoffs per se. And you're, you're seeing that just across the board, all these Amazon doing cuts for the, the first time and whatnot is a more

doing cuts. Companies like that who are just been rocket shifts essentially.

Yeah, it's, I mean, that's really interesting and that's the takeaway from health is that digital health also has seen a significant contraction. And they talked about the players that used what did Jonathan Bush refer to it? He goes digital health used to be the land of milk and honey. You just go out and essentially find, find money off trees and just pull it down. And life was good. And that was just two years. And what he is saying now is and their second thing is profitability is the new king.

It's not about growth at any cost. That used to be the model, let's say two years ago, is get as much money as you can grow, grow, grow, grow, position yourself for a sale and do your exit and that kinda stuff. And now what they're saying is now the model's changed pretty dramatically. And it is extend your runway, get to profitability.

And make sure that the profitability sustains you for as long as you can with and, and no one's really telling me, no one's saying, Hey, we expect this to end. In 12 months or 24, no one's really giving that, the exit

even the feds even being a little bit clear about that, the feds saying this could last three years. Like we, the Feds saying we collectively as a body need to get control of inflation. And so one, one of the ways we're gonna get control of inflation is we're going to keep interest rates. Probably higher than they even need to be, so that when we have an opportunity to make adjustments, we actually have, we, we put ammunition back into the, to the chamber, so to speak.

And we are probably moving into an era right now where the headwinds are gonna be severe and I kind of fear for healthcare cuz I fear like they might pull back on that digital health spending. But I think you do soil your. Because I still think those large bohemus are out there. The interlopers want a piece of the healthcare pie.

The healthcare pie is not growing. So if you're a Walgreens or if you're a cvs, if you're a Walmart, if you're an Amazon and you're able to go take a segment of that pie in the form of doing vaccinations or becoming like the go-to sort of, Distributor for all the pharmaceuticals, as our low level sort of urgent care type procedures, that's just a part of the business that's no longer available to traditional providers.

And I think when you're on that already in, in single digit margin territory, how do you lose that sort of of operational how you, how you lose that sort of business and keep going. I think it's gonna be difficult for them. So I think you have to keep investing.

Yeah. some of the optimism was from investors. The HLTH conference, the H L T H conference has a lot of investors there, and I interviewed at least one, if not two or three of 'em at least two. now I think about it. And the thing they said is in the, in the highly hyped times, it's hard to see what is real and what is. hype And when you have this economic downturn, there's sort of a clearing of the air.

It's like, oh, that's delivering value. That's not delivering value. And they're kind of excited cuz they're like, look, the, the market will take care of those that don't add value and they will go away. They're also excited that the organizations that they are working with are getting much more focused. Their message is getting focused. This is what we. do This is who we do it for. So,

well I think, I think a lot of that boils down to lack of access to capital, right? So not, there's not, capital is not readily available as it used to be. And if you decide you can get access to capital, you're paying a lot more for it than you used to from cuz the interest rates are so much higher. So it does focus the mind, right? You have to be much more targeted and much more considered in your investment. So We So I think we don't know what this economic climate's going to look like compared to the previous sort of cycles, but we certainly have these downturns previously. Some fantastic companies have been born out of this, right?

Some great innovations been born out of that because the, the wind does clear away. The fog and the value then kind of rises to the top here. Like I mixing a lot of metaphors by think you get my point?

Yep. Absolutely. There was one interesting announcement, I thought that was Amazon launched their virtual health platform essentially they launched their, let's see, virtual health marketplace that would feature third party direct consumer telehealth providers to potential customers. And so this direct, I saw a lot of pivots or pivots that have happened and that are starting to really take root. And a lot of organizations are focusing on the employer market and they're focusing on the payer market, or they're focusing on the direct consumer.

And the direct to consumer one is, is interesting to me cuz we have traditionally not been able to get consumers to pay for health cuz they're like, I already have insurance. Insurance should pay for it. And if it doesn't I'm not gonna pay for it. And people who have an alternate form of monetizing that like Apple has phones.

And if they sell more phones because they're doing digital health, they win. And if, if Amazon sells more prime memberships, they that's how they can monetize some of these things. Amazon's making some interesting moves. I mean, the, the pharmacy. Direct to consumer pharmacy business.

They have just done a significant marketing push. A lot of people in my community are saying, Hey, what do you know about this Amazon pharmacy and whatnot? And so they're gonna compete with Express Scripts and others that are out there. And then you have this this marketplace. To potentially utilize the platform that they already have. Relationships,

a hundred percent. A lot of it comes down to do, do you buy into the business model? Cause the business model for this could be a generational thing, but a business model that works really well, or at least so it seems to, is this idea that I'm gonna use Instacart now to go grocery shopping.

I'm gonna use DoorDash to feed myself. I'm gonna use Amazon to go. Shopping for, for goods and presents, why couldn't you then extend that sort of business model to provide healthcare services as well? I, I think we have shown, we have seen through other industries that there's an appetite for these types of services, particularly, I think with, with younger.

Younger sort of generations and so they, they don't feel the same sort of pangs about. I must go have that physical encounter with my primary care physician that maybe people from. Our generations, if I could use that phrase have that sort of and so I think why, why, why wouldn't those models work?

And I, I think if healthcare, if traditional providers don't get into that business, then the Amazons of the world who already have that platform or already have a trusted relationship, I mean, love 'em or loath them Most people have substantial relationships with Amazon these days, right?

Yep. They should show up sometime today. And you know what? I know they're showing up sometime today cuz they already notified me that they're coming sometime today and they're really good at that kind of stuff. Good about it.

And why can't my healthcare experience be something similar? Yep. Every time I go to the hospital, the doctors, I'm filling out that same form again, again, and again

and again. 📍 📍 All right. We'll get back to our show in just a minute. We have a webinar coming up on December 7th, and I'm looking forward to that webinar. It is on how to modernize the data platform within healthcare, the modern data platform within healthcare. And I'm really looking forward to the conversation. We just recorded five pre episodes for that. And so they're gonna air on Tuesday and Thursdays leading up to the episode. And we have great conversation about the different aspects, different use cases around the modern data platform and how agility becomes so key and data quality and all those things. So great conversation. Looking forward to that. Wednesday, December 7th at one o'clock. Love to have you join us. We're gonna have health system leaders from Memorial Care and others. CDW is going to have some of their experts on this show as well. So check that out. You can go to our website thisweekhealth.com, top right hand corner. You'll see the upcoming webinars. Love to have you be a part of it. If you have a question coming into it, one of the things we do is we collect the questions in the signup form because we want to make sure that we incorporate that into the discussion. So hope to see you there. Now, back to the show.

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I wanna get you into your wheelhouse here. So, Senator Warren, Mark Warren seems to be the patron saint of cybersecurity on the hill. Democrat from Virginia, a healthcare cybersecurity white paper with policy options, aptly names, cybersecurity. In is patient safety. Cybersecurity is patient safety.

The insights make key recommendations to address systemic challenges, including the creation of a workforce development program, targeting the sector and the use of incentives and requirements to improve cyber hygiene. Now, I've heard people refer to this as meaningful use for cyber cybersecurity, which.

Man, anyone who's doing marketing knows that that would be a mistake to call it meaningful use for cybersecurity. But when you see the incentives and the requirements, you, you can see the shadows

of, you can see the connection. You could see the connection. Sure.

What are your thoughts on incentives and requirements around cybersecurity and in his terms to protect patient safety?

So, I'm gonna get into the land by perfectly here for a second. I think maybe one of the most important developments in healthcare cybersecurity in the last five years is now this common or increasingly common acceptance that there's a direct connection between cyber events and patient safety. We used to particularly in the meaningful use era, we used to really think a cyber in terms of a compliancy risk.

How do I mitigate my compliancy risk? That's how I make sure I have the right sort of security audits so I don't end up on OCR as well as shame. And of course, nobody wants that, but that was never the right way to look at. Then it became a reputational harm and a financial harm. And again, nobody wants those sort of things.

And certainly there's been big losses seen for, for cyber events and healthcare. But I think what it really cuts down to and what we, what we're moving to now is that there is a connection and a recognition that if you have a cyber event, you can't deliver the patient care experience. That you're trying to, that your mission said you're trying to do.

And in more extreme cases, patient safety is at risk and, and really acute cases, it could adversely impact patient outcomes. In fact, we've seen some surveys, and it is survey based, it's not clinical data, but survey based research that said, yes, this is happening today. And even if you don't wanna listen to.

Kind of pay too much he to a survey. It doesn't take a lot of sort of common sense to realize that if you're a health system and your systems are effectively shut off for, for a month, that's gotta adversely impact patient outcomes. It just got to, right?

Yeah. Well it, so here's some from the article, the transition to better cyber security has been painfully slow and inadequate. I think we all agree. Yeah, it has been slow. The federal government and the health sector must find a balanced approach to meet the dire threats as partners with shared responsibilities. It goes on later. Stakeholder support incentives rather than mandatory mandates on cybersecurity.

So providers are struggling to better adapt. Their cyber capabilities and fully build a robust response system in order to efficiently recover from a tax. This can be seen with the recent and and outgoing outages face that mul multiple healthcare providers. Common Spirit is still working to fully recover. So they, they are pretty much recovered at all of its hospitals. One way to better support provider organizations is through incentives. I wanna talk to you about incentives. Yes.

I wanna go there too.

So where, where will incentives work and where will incentives not work? And how do we determine if they work? Are we gonna. If you take these incentives, you have to measure against the, this framework or if I, I mean, this is where we got in trouble with meaningful use. I understand it's different and it's. But it does have, again, complexity. The complexity of meaningful use was massive.

And we have to remember meaningful use was put in place as a economic recovery program. Sure. Right? Sure. That that's not what this is. This is saying no. Let's, let's get the right things. Where will incentives work? Where will, where do you think they may not work?

First of all, let, I mean, even take a step back. Do we have the political climate? On the hill to allocate funds. Can we get both parties to agree to, to offer funds for incentives? I, I would wonder that so even though this legislation is being, is going through it, sort of consultation sort of phase, I would still wonder where the appetite is, is particularly when we're facing a debt stealing and do we or do we not fund the go.

Through the back end of this year. So we have a lot of looming challenges politically. So put that aside though incentives would work in this case when they are much more tied to the security or the robustness of security posture of the institution. I mean, where, where a meaningful use. Fell down a little bit from a, from a security standpoint.

And again, that wasn't the main thrust of that sort of legislation for sure, but where they had attributes or in the legislation that, that you can get money for it was all around compliancy and that was just always the wrong sort of metric. Making sure that you were keeping in, in tune of the of HIPAA and, and related regulations.

Great from a compliancy standpoint, but it doesn't solve at all for security. And I think it gave a lot of institutions the cut air cover to say, we're secure, knowing pretty full well that you, you really weren't. So. I think tying it back to, to NIST is, is the more, the most logical thing to do. I mean, the 4 0 5 D program, which is also fairly aligned to n and that's very much about cybersecurity preparedness for healthcare.

So that might be even a better sort of model. But I like those are two sort of frameworks that you could tie it back to and, and measure against those sort of frameworks. But I think then that would be impactful. It is a little bit regrettable, however. That healthcare, we've, we've trained the healthcare industry to rely on incentives to go and do meaningful things or to make big sort of transformations.

And we, I don't know if that's the right model going forward. Apple, Amazon, the Googles of the world. Figure out where the marketplace, where the ball's going or where the in the way Wayne Greski sort of Parlin, it's where the, where the puck is going to. And they try, they try to navigate towards that and I think healthcare needs to kind of be of that mindset.

Yes, they might need help again on the way, but there is too much sitting on the sidelines waiting for government. Put their hand out. I don't, I dunno if it's,

As you read the circle some are suggesting the, remember the cash for clunkers. Program. They're essentially saying, look, there's a lot of insecure, older pieces of equipment.

Why don't we just have sort of a trade in program or trade up program? We give people cash for these pieces of equipment that are end of life or whatever. I, I just don't know, , I just dunno where that would end. I mean, I inherited. A data center that had 90 plus percent end of life equipment.

I mean, are they gonna replace every piece of equipment in my data center? Absolutely not. Absolutely not. I mean, that's a, that's a, that's a big number by the way.

They're gonna replace all those out date modalities that are still providing patient care, even though they're, they're security risk. And

I think it depends on, on what the, what the intention is. Trying to think where I want to go. There's a big article going back and forth, and it is on Becker's. Giles Bruce wrote an article, is Epics Dominance Good for Healthcare? He interviewed a bunch of CIO's and Tony Ambros from Baptist, Baptist, south

Florida.

Yeah. Florida and Keith Perry early clinic and I think a couple others in here. Yeah, there's a couple other CIOs in here and they just, they get there are various opinions, and this is always a difficult conversation to have and the reason I, I don't mind doing it at the end is cuz I don't wanna give too much time to it because it's almost a, it's, it's a moot point, right?

We can talk about it all we want, but at the end, end of the day, it's not gonna change. Epics dominance, right? And healthcare is it good for healthcare? Or is it not good for healthcare? the general consensus that we're reading in social media and whatnot is anytime an organization has that much power and sway in an industry, you have to be concerned about prices and pricing going up and their control of the market and, and keeping people out.

But on the flip side, people are saying, You have to remember what life was like before Epic, and we had a lot of failed EHR implementations we had. When you do an Epic implementation, one of the things is you consolidate like. 50 to a hundred apps and that's good for healthcare. You have a fully integrated stack from ambulatory to acute, and then you have sharing across all of these epic instances.

So people are making the case, hey, it's good from that perspective and it's bad from a market penetration perspective. Any thoughts? I mean, we, we always have to be careful here cuz we know people on, on both sides of this argument,

right.

I agree with all that. I mean, epic has helped move the needle significantly in healthcare and that whole digitization of the patient record has, has been a massive change.

And at the same time, we haven't really realized the benefit of it yet. I mean, we talk about being able to exchange patient data across Epic ecosystem, but not always. Right? Right. Not always.

Not always. . And if you. God forbid if you are epic and then you go to a Cerner and then you go to an Allscripts and then you go to a Athena and then you come back. It's like never, the tweens shall meet in a lot of cases, right?

I dunno. Does my Apple phone talk to my Android phone?

Yeah. It depends on what app you're using, right? Absolutely. You can send email, you can send, I assume you can send texts. I've, it's hard to find an Android user in my world.

I know. Same here. it's good for healthcare in that moved the needle significantly in a way that that needed to be moved. And it would also be really good if a non-standard player got traction in the marketplace. To help move the needle further, particularly around interoperability of these, of these systems and making that data much more shareable and accessible.

Yeah. here's my anecdotes on this. One is I played golf with a CIO from a small health system and they went to Epic. And I'm curious when a small house system chooses to go to Epic, not Community Connect, they go to Epic. Yeah. Yeah. and I what's the benefit? Well, we consolidated a lot of applications.

I said that's interesting cuz you went from a system that I was on. So I'm sitting there going, I know that my costs were like a third to operate my EHR than it would be to operate Epic. And sure enough, he confirmed that he had to increase his staff by two thirds of what it was before he said, you know what, we started, we had like 35, 40 people in that clinical informatics side of, what do you have now?

120. Wow, that's like an ongoing fixed cost forever. He goes, yeah, but we consolidate all these apps. I'm like, yes, but you're essentially what you did is amortized the cost cuz you're gonna pay for those people forever. And with their honor roll system, he can't cut those staff later either. I mean, or he loses incentives.

So that was, that was one anecdote. I'm listening to it going, is that really better for that health system? Maybe. Maybe I'm not, I'm not entirely sure it is. The other is, I was talking to an integrator and when, at the health conference and when you talk to, at the health conference, you're talking to people that are trying to innovate and gain access to the Epic ecosystem, and they refer to it as the epic toll.

And the epic toll is if you wanna be in the app store, if you wanna access that data and whatnot, there's a toll to be paid. And it fluctuates between 10 and 20 someo percent of your total revenue. Total revenue. It's like, it's not a small number. And they're like, look, as long as there's that tax, there's always gonna be a.

It's gonna keep innovation from happening if you could reduce that tax. I'm like, okay, I understand that. And then somebody told me that they changed, and I know this is true, they changed their model for API usage. It used to be like $2,000 per health system to connect to the APIs, and now they're doing per API call.

And somebody gave me the math and they said, look, it used to be $2,000 and this is the cost the health system's paying, and now it's $42,000. And there's like, and so those are my three anecdotes where I. Yeah, I, I see all the good that they've done. I have the utmost admiration for Judy. She is a phenomenal business person.

Yes. And she's distinct in the industry in terms of how much she cares and trying to do the right thing. But it's a big company and some of the decisions they make have far-reaching impacts, like increasing the cost of healthcare. And I don't know, we've gotta got away all those things. And I hope we can have the conversation and not, like, every now and then I'll, I'll bring this stuff up and people will send me angry emails.

I'm like, send your angry emails as long as you wanna have a conversation about it. But if you just want tell me I'm an idiot. I have enough people that do that in my life, so. Right, right.

monopolies good mono.

Yes. Yes. And more power to 'em. If you can do the monopoly thing, more power to you and I think the, most exciting thing I saw out of the health conference, I saw the Google search bar integrated into the Meditech Expanse system, and then I saw the Meditech Expanse announcement that HCA is gonna stick with Meditech and they're gonna do expanse across the board.

I was pretty, that was pretty big. Yeah, because, because people don't know this, they have instances of Epic in their environ. Yeah. Right. And they're going to move them out and go to Meditech Expanse. And anyone who hears this is probably just scratching their head like, what are they doing? Well, they're a for, for profit system.

They can't go without making money for too long and they can't sign on to that kind of increase in the overall cost of ongoing maintenance for that. So I, it's gonna be interesting, interesting to see. Ryan, as always, great conversation. I love our conversations and really appreciate you coming on the show.

Enjoy it, Phil. 📍 Thanks a.

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