November 23: Today on the Community channel, it’s an Interview in Action live from CHIME’s Fall Forum with Tim Zoph, Senior Advisor at McKinsey & Company. What are the economic headwinds that healthcare is facing right now? Health systems are worried about cost challenges at a time when there is a record need to treat patients post pandemic. What are some strategies that can help to weather the storm or even thrive in the storm?
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All right. Another interview in action from the Chime fall forum, and today we're joined by Tim Zoph with McKinsey. thanks for joining the conversation.
Good to be here.
Talk a little bit about the stuff you do for McKenzie. We're gonna talk about the economics of healthcare, which should be a fun conversation, but go ahead.
Sure. You know, after my CIO with Northwestern Medicine, I went on to a consulting career now with McKen. And my role there as a senior advisor, senior expert is I'm a resource to the company. It's, you know, it's, it's a healthcare division inside of 30,000 consultants, and therefore I get an opportunity to work not only with providers, but life science industry, even on the private equity side. So I get a lot of touches in terms of what's happening in the healthcare marketplace, not only in the United States, but globally.
Well, this should be a fun conversation. So you're seeing the. One of the things I loved about being a, a consultant as opposed to being within a small organization is you touch a lot of things, plus you have access to a lot of research, right? That your organization's doing whatnot. Talk a little bit about the economic headwinds that healthcare's facing right now.
Yeah, and I think there, there's a couple things we ought talk about. First of all, at a macro level, just what we're seeing as we're coming out of this pandemic. You know, we're seeing sort of a multifaceted challenge within healthcare cause we inflation in the broader market. I think economists agree now that some consensus agreement, we may be facing a recession next year, and the costs we're seeing in healthcare are escalating across the board with labor being the top of that, almost a 25% increase that we're seeing in labor. But that's also true with, with supply and other aspects of healthcare, right?
So really the dimensions of healthcare as we know it, we're seeing really broad based challenges. You couple that, you know, the workforce has, has then said we have, you know, less workers to treat patients, which are now coming back to us sort of with almost record capacity. So when you talk to healthcare systems, not only are they worried about cost and cost challenges, but it comes at a time as well when we have, you know, record need to treat patients post pandemic.
So, so pandemic created a, an economic imbalance if you. And then we're heading into recessionary times. And we've never, by the way we've never come out of an inflationary time without a recession. So I'm not as optimistic as others that we're gonna somehow skate through this and just whatever. And the other background I will give you is a lot of the CIO's not on the air, but I'm saying, Hey, how does it look?
And they're saying, I've just been asked for an 8% cut in. I mean, this is an area where typically we've seen investment or growth and the contracts aren't getting any smaller either. What are some of the strategies that we're talking about in healthcare to to weather the storm and maybe even thrive in the storm?
Yeah, and I think I, I would put it in almost two dimensions. What is it we're doing with the health system as we know it today, right? In the environments in which we treat patients, and then the bets that people are making about what the future might look like, And I think both things are happening.
simultaneously But If you look at how we're trying to weather the storm right now within existing health system, I would say that, you know, we do have technologies that allow us to be more efficient, right? You know, we have, we still within healthcare, hang on to estimates of, you know, 30% of what we do, right? And the cost of what we do still are there for the taking.
That is we can simplify our processes, reduce the tasks, right? Really automate everything that is really. routine And what's interesting is sometimes people say, well, healthcare is really unique. You know, our data within McKinsey would say there are a lot of administrative processes. Think about revenue cycle and elsewhere that if you look at the automation that's happening across other industries, they've done those tasks.
So I think part of it is applying existing technology to even non-patient care tasks, to really create, you know, some immediate value in the system. And I think that's good from a cost per. . But importantly, what we have to do is say, how do we reduce all of the administrative and technology burden we have on caregivers because they're leaving the workforce.
The jobs they have today are not the jobs they wanna sign up to for tomorrow. And so it's both taking the cost out, but it's really reimagining what our workforce needs. Assuming that those, you know, hundreds of thousands of workers that are now leaving healthcare for something. They're not gonna come back to us, or we're not gonna keep them unless we really rethink how it is.
They want to provide care and they wanna work in healthcare.
Can't deliver healthcare without clinicians and nurses and whatnot. And I'm, I'm a little concerned at this point from, you know, the economics and you hear things like, Hey, 8% cut. Technology is one of the areas where we. Create efficiencies, lighten the burden, and those kinds of things.
But traditionally in healthcare, we've missed that Mark. We've added technology and added burden at the same time. Yes. and now we really have to make the technology work for the clinician. Are we are there strategies, are there approaches where we're, we're finally getting more efficiency out of the technology that we've put in?
Yeah, and I, I do work with some early stage companies and Lumion being one of them, but we. Are now technologies for which, you know, we're showing that you can do that, that you can reduce, you know, really reduce the, not only the task, but improve the coordination. And by doing so, then you release the, relieve the technology administrative burden.
You know, I, we think, you know, sort of a little history lesson, you know, and how we created even electronic records, you know, and thinking about really replacing paper processes, we didn't really rethink how we capture the data, how we serve up the. How it's actually used intelligently, predictively proactively, right?
So I think now is the time to really step back from that and say, you know, maybe we didn't get all that right. And there's a, there's a brighter side on brighter opportunity on the other side of it. So in some ways it's, my answer would be we're not gonna replace the, a lot of the stack of the systems that we have.
We're gonna simplify many of them, but now we need to surround them with really intelligence that says what tasks can go. What task can we automate, right? What technology burden can we relieve then from especially the top of licensed caregivers, right? So that maybe we surround them with a different workforce. That's how we really have to go about thinking about it.
One of the things as I look at this, you know, if we, we can easily make the mistake of reducing costs and creating more burner and the, I mean, what about the workforce that remains. Both on the IT side and on the clinical side. I mean they're, how do you make sure that the workload just doesn't overwhelm that and exacerbate a problem amongst your employees?
Yeah, and what I'm seeing leading health systems do is say, look, we have to think about the experience more broadly. You know, you just can't internally and external, internally, externally. So is it working for the the patient? Is it working for the caregiver? Is it working for the staff? And make sure you're really measuring all.
Because we could right now, and I see strategies out there, let's just improve that patient experience or maybe provide more access. But if the, if the downside of that is it, it, it creates more burden. Right? Right. Or puts more demands on clinicians cuz we don't have the capacity to do it, then we haven't solved it.
So experience is really a, a, a multifaceted issue that we now have to look at more holistically. So are we really measuring, you know, what these changes in technology now are? Not just the patients, but clinicians and staff and, and really treat that as a equal part of the problem.
So you're looking at the data and is the clinician burnout getting worse or getting better at this point based on, on the data?
Yeah. I think unfortunately it is getting a little worse because of the capacity issues we have and just not enough clinicians to care for the demand that we have in. So I think we're almost at the nexus point now of, of saying, you know hopefully it doesn't get any worse than it is. And that I think the data would say we've kind of settled out some of the, you know, departures and leaves of, of caregivers, but those that are left are, as you know, it's not a satisfying job.
No. Most people will say, how do I get through the day? And, they're still paying. Very high cost for temporary staff and labor to come in and meet the demands they can't meet. So it's, it's very challenging, but it, it is, I think a call to action from the industry to say, technology now needs to work for caregivers.
We've gotta turn, return them to the practice of medicine. We've gotta really rethink processes and roles holistically. And as I said before I don't think technology's the fundamental issue. I think there is technology out there can really improve and simplify and reduce costs in. It's just that we need to rally in a different way about how we do it.
📍 📍 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.
I was talking to a partner vendor for an organization and they said, you know, we went into this organization, they want us to solve this problem. And what we identified was, you don't even need our technology to solve this problem. You just need to be attending physicians. What was happening is the discharge for the patient that was ready to be discharged was taking eight hours and they didn't have bed space. They didn't have. And they're like, look, you just need to get to the attending seven and a half hours earlier. And that, and it's like, you don't need technology.
You don't need, but you need to really take the time to look at all those processes and look at all those things. And you would think that all that has happened, by the way, this is a large academic medical center that has that problem. You sit there and go, really? I mean, this is our, these are our best and brightest and we're not solving some of the, some of the basic.
And I, I think it's, it's sort of human nature and I, you know, I was in an academic institution for 20 years. I think healthcare oftentimes thinks, is, thinks very incrementally and is, and is risk averse. It's like, why would I change something that actually worked reasonably well tomorrow? Maybe I make some incremental improvements around it.
Yeah. And that works for a while. But if in fact the net result is you're just layering more function, more technology around processes that need to be really rethought or roles that need to be re. Then we're not doing our job. So I like to think that the optimistic side says with our backs to the wall, knowing that in fact, you know the economic headwinds will remain.
We've got these workforce challenges. I'm seeing Boulder steps in health systems. They're really standing back and saying, you know, what causes our workforce to stay or go? Can we really, you know, rethink how it is we deliver? And, and to my other point about not only what's happening inside of the health system, but our health systems placing more bets on ambulatory, more bets on consumer based care, more bets on hospital, employer, hospital at home.
More bets on where the employer, how the employer plays into this role. So the where we need to, you know sort of reestablish what automation and technology looks like in the as-built health system as we have it. Importantly, place bets on where healthcare's really headed. The growth and profitability, by the way, is not in the traditional health system.
It is being built on from the outside and oftentimes with competitive forces, you know, being the key actors in that arena
fertile ground for change,
fertile ground for change.
Tim, thank you for your time. All right. Thank you.
Another great interview. I wanna thank everybody who spent time with us at the conferences. I love hearing from people on the front lines and it is Phenomen. That they have taken the time to share their wisdom and experience with the community, which is greatly appreciated. We also want to thank our channel sponsors one more time, who invest in our mission to develop the next generation of health leaders. They are Olive, Rubrik, 📍 trx, Mitigate, and F5. Thanks for listening. That's all for now.