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TownHall: The Fragile Healthcare Balancing Act with Zafar Chowdhury and Majdi Daher: Part One

Speaker: Today on Town Hall,

Majid: we're seeing a lot of very large healthcare systems doing unnatural things to save cost, but that's not the answer. Healthcare providers should not be struggling to deliver care. They should be rewarded, not be punished for doing the right thing.

Bill Russell: My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of this week Health, where we are dedicated to transforming healthcare one connection at a time. Our town hall show is designed to bring insights from practitioners and leaders on the front lines of health care. Today's episode is sponsored by Meditech and Dr.

First. All right, let's jump right into today's episode.

Zafar: Welcome to Town Hall, a production of This Week Health. I'm Dr. Zafar Chaudry. I'm the Chief Digital Officer and CIO at Seattle Children's. I am honored today to be joined by Majdi Daher, who is the board member and co founder of Denali Advanced Integration.

Welcome to the show.

Majid: Thank you, Zafir. Thank you so much for having me. It's an honor to be talking to you about this important topic.

Zafar: We will dive into what's really happening in the industry today. How can we be at the right place and the right time to deliver the right tools? How do we invest in the right tools, especially when hospitals are so under resourced?

Majid: Great. Thanks again, Zafar, for having me on this show. It's important to have these topics and discussions, but back to who Denali Advanced Integration is. Denali Advanced Integration is a family owned IT consulting services and products company. We've been in business for a little over 32 years. We started back in 1992.

I always say we're the other IT company based in Redmond, Washington. So that should give you kind of a, what we really do, but really our goal has always been, how do we partner with our customers to leverage technology to drive their business forward? And how do we solve problems, leveraging technology instead of creating problems using technology?

A lot of the customers that we work with are Fortune 200 clients. Very large scale companies, they work on very large problems, whether it's in retail, finance, transportation logistics. We have quite a bit of healthcare clients based in the Pacific Northwest. We're also a global company, so we partner with U.

S. based companies to expand their presence and services and what they do on a global scale. And when I say we partner, it's really we try to understand the business of our customers and figure out how we can come with solutions that can really deliver a great business outcome. Microsoft I think that's why Zafar, you invited me, because we've had a lot of rich dialogue about where we see healthcare and how healthcare, um, really has over the last 30 years, in my opinion, was disadvantaged with technology.

And we'll get to that. Deeper into that, but that's what Denali Advanced Integration is. I was a CEO up until about a couple of years ago, and now I stepped back and I'm more working on strategic strategy and vision and where we need to invest to drive our business forward.

Zafar: Thank you for that. And yeah, absolutely.

So I wanted to have you on the show because I know you've been in this industry for such a long time, and I've been on the other side, on the provider space for a similar amount of time. And it's really interesting to see how. The healthcare industry from a provider, payer, vendor perspective has changed over the last 30 years.

So what are you seeing in the industry or what have you seen over this period of time?

Majid: Everybody says healthcare is unique. I think healthcare is extremely complicated, not just unique. And there are so many layers and it's like an onion. The more you peel the layers, the more you tear up and cry. And that's really what I think I found out.

As I prepare for this session, I did quite a bit more research about the complexity of health care, because think about it, it's the only industry, pretty much, where the receiver of service is not 100 percent responsible. for the cost of receiving the service, right? And that's where, whether it's Medicaid, Medicare, private insurance, or actually state insurance, cover the majority of that cost.

And then as we move, payers have found ways to drive what they pay out to providers, which basically caused a lot of tension between the payers and the providers. That necessarily has impacted the service that the patients are receiving, but it's really impacted how the patients receive those service, right?

So it created a lot of complexity and a lot of weird dynamic that you don't see in other industries. So if you want to go buy a car, or if you want to go to the store and buy grocery, You're paying for that service and you're receiving it. So that creates a really unique dynamic that a lot of people just simply don't spend the time to understand.

Zafar: Yeah, and certainly post pandemic, it's been an interesting journey in terms of we see the payers They're profitable, and we see health care providers seriously struggling in this space in terms of margin. And of course, if there isn't margin, certainly here at Seattle Children's, there's no mission, because we need to generate some money to take care of the kids of the Pacific Northwest.

What do you see around this, right? Because certainly I can tell you at Children's, we are really struggling with the reimbursement to then generate enough revenue to pay for the services. And the cost of delivery Of services post pandemic has significantly gone up. Staff are demanding more salaries, better benefits in this new world that we move towards.

And I'm in that technology space in the middle of. I don't generate any revenue myself as an IT person or an IT group, but I'm very good at the L in the P& L, right? Because I'm consuming, and everybody wants huge amounts of technology. What are you seeing? Since you're servicing lots of folks like us, are you seeing the similar trend in the industry?

Are providers struggling to fund their technology resources?

Majid: Absolutely, and it's been a trend downwards from a profitability perspective for healthcare providers because you have such a demand to use technology to communicate with your patients, to deliver the service, even doctors and nurses and bedside services.

There's a tremendous need to leverage technology to deliver the service. However, The reimbursements or what insurance or Medicare or Medicaid is paying for those services, you don't get rewarded per se for implementing technology and driving better patient outcomes leveraging technology. And if you think about specifically, just talk a little bit about insurance or payers, they're really, they make their money when they don't pay the providers.

So they are working really hard to find ways To not just not pay the providers, but pay them very little for the services that the providers are doing. And that is creating so much pressure on providers. If you look at the profitability, and it's easy to Google these things or look up there, you look at the private insurance in the last five years, they've made more money from a net profit perspective than they have done the last 20 years.

And if you look at providers, There actually have been operating in the red, and if the government didn't come in during COVID and do a lot of grants and support, a lot of hospital systems would be actually bankrupt. And now, that was temporary during COVID, and now we're seeing in two years out of COVID, we're seeing a lot of very large healthcare systems doing unnatural things to save cost.

But that's not the answer. That shouldn't be the answer. Healthcare providers should not be struggling to deliver care. They should be rewarded, right? Not be punished for doing the right thing. And I think that's where the dynamic is really unique. And that's what I see, to be honest with you, the failure, in my opinion, of what the government is doing to healthcare overall.

I'll just give you small numbers, right? You think about, everybody says, is healthcare a right? I think the US government decided it's a right, even though a lot of people think it's a privilege. You think about how much money we spend out of our GDP. The US spends 17 percent of our GDP, close to 4 trillion on healthcare.

And you go to a place that is the most socialist medicine in the world, which is France. They spend 11 percent of their GDP. So we're almost double what the biggest socialist modern system is in there. And yet, there is still a debate whether healthcare is right or not. And I really think this private public combination just doesn't work.

We have to either be 100 percent private where the government is out, or we have to be 100 percent socialized and private sector is out. And I think really that's going to make it where providers get rewarded for the work they're doing. And then this whole idea about taking care of the human overall, and this whole idea about rewards for care, that idea just died on the vine.

And we still do time. Doctors go in and they bill and they get, they go fight with the insurance providers or the providers do, right? So it's creating a lot of pressure. On providers to do unnatural things. And I just worry about our healthcare system. I really think it's starting to crumble. Soon in the near future, hospitals are going to cut critical services because those services cost too much money to deliver, and they're going to walk away.

That will be a disaster for our country.

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Zafar: So we in information technology is the icing on the cake. So people look to us to say, how do we bring solutions that will improve productivity, improve pre authorization and insurance billing and throughputs.

But at the same time, our, I would say sometimes adversaries being the health insurance companies, are more powerful in the technology space because they have already launched their AIs that deny claims, that fight us on everything that we put through to them in terms of a claim. And we certainly on the provider side have fallen behind.

Since we're talking to the audience, typically of technologists, what are you seeing in terms of a company around This magical word AI and how that's going to have an impact on how we do things in the future.

Majid: Yeah, before we jump into this big topic of AI, just I want to touch more on the payers and the capacity to invest versus the providers, right?

You think about it, Instead of being a symbiotic relationship between the providers and the payers, it's a very actually combative relationship because the payers don't want to pay, right? That's how they make their money. So they are leveraging technology to get a leg up. on the providers and they're using it, I hate to say this very intelligently and under the covers and it's not so obvious, obviously the providers feel it every single day.

And they're using technology, AI is a big tool in that, but they're using data. Let's just kind of park AI for a second, right? They're using data. To deny claims, they're using data, especially patient records, to determine how much somebody should pay for insurance and not pay for insurance. Whether it's pre existing conditions, or whether it's common diseases, or whether it's lifestyle.

They're using that data, our data, against us to determine what the insurance that they pay you as a provider. And that's where technology plays a role, because you can't Do that manually. Humans just are not equipped to crunch that big of a data together. And then you add now the component to have AI, which now not just looks at data, but then helps you make decisions about what to do with that data.

So there are years ahead of where providers are today. From a decision making perspective and then putting things in place where providers are, are handcuffs. Providers don't have the resources. They don't have the capacity to invest. We just talked about how they're not making money. They're losing money.

They're cutting critical services. Meanwhile, payers are investing heavy. We hire very smart people, data scientists and engineers and stuff like this. Before five years ago, we used to compete with technology companies. Today, we compete with insurance and payers. They're hiring technologists, pure technologists, and the intent of them hiring these folks is literally.

Do not pay claims or to make their insurance premiums higher and the payouts lower, which is last time I checked revenue, less expenses equals profit. So it's really contentious. And like I said, it's tearing our system apart.

Zafar: For our audience. And myself included. My challenge is, I'm trying to give my organization the tools that they need to move forward in the technology space.

But at the same time, I'm being told to set up cost improvement programs, reduce the costs of my technology service since I'm a system service. What advice can you provide our audience around the CIOs and CTOs out there? What should we be thinking about? How can we? Leverage investments or make investments.

What should we be thinking about as we're trying to navigate the murky waters of not enough money to do what we need to do, but at the same time the demands are high from the health system to build tools to then challenge the problems that we have in the payment space as well. What would you say to the audience?

Majid: Yeah, to be honest with you, healthcare is also a need because it's the only business where ROI is measured and has no clarity, for lack of a better term, right? How do you measure the investment that you're putting in a new EMR system? Right? How do you measure the return of an investment of a better communication with your patients?

How do you make it easier to, for your doctors to work in the hospital or nurses to deliver bedside service, right? It's not purely financial. So if I'm the CEO of a healthcare system and you're my CIO, I'm going to hold you accountable to give me a return investment every time you ask for more spending.

It's not that way. It's the only industry, again, that's not how it's measured. So to me, there has to be a clear identification of what is the return on investment in technology? How do we go and spend a million dollars, 10 million, 50, whatever the number is, what are we spending on and how do we prioritize?

What is the objective of the hospital system or the healthcare provider leveraging technology? Are we doing it to be cool? Or are we doing it to be efficient and productive? Or is it going to be a cost center? Or is that a place where we're going to leverage to drive better health care and better engagement in our community?

And I fundamentally think that sometimes technologists, and this is to the audience who's watching this, I'm not going to be popular after this. Technologists love technology for the sake of technology. And I think that's just a wrong thinking. If you're a technologist in healthcare who loves technology for the sake of technology, you should not be in healthcare.

You should go somewhere else. Go to a technology company, a manufacturing company, or something like this. Because your purpose is to serve the mission of the healthcare system that you're working at. Not to go implement technology for the sake of implementing technology. So you have to have very hardcore metrics to your team, to everybody involved, and you have to be the guy leading the torch, carrying the torch, for advocating for that.

And in my opinion, there should be ways to look at where is waste. Where are you spending money where the return is not there, or is just window dressing, right? And you think about it today, for the longest time in technology, I've been around for 34 years or whatever, and everybody's talking about operational efficiency, operational efficiency.

That's where we, 80 percent of your budgets go, and that's where you spend a lot of money, and there's no innovation. We're not spending money on innovation. And I think in healthcare, innovation is really limited by how much money you have. So I don't mean to be dim and grim, but it's really a challenge.

And it's a different thinking because cutting costs will result into eating your own flesh kind of thing. And that's just never a good, it's not even healthy. Like it just should not be that way. So I really think. To the audience who's watching this, really be very critical about where you're spending your money.

Prioritize, align your priorities with the mission of the hospital, with the other executives or what you're delivering care, and figuring out how truly you're serving those departments or those areas. Cool factor, I'm sorry, as a patient, are you really going to go to a place because it's cool, or because they have great doctors, great nurses, and they deliver great patient care?

And I know Some people think it's synonymous. Technology equals great patient care. I disagree. I've been to places where they have all the bells and whistles, really high, cool wifi, gr, great TVs and all these things, but the service was terrible. I'm sorry. The nurses are overworked, the doctors are overbooked.

You know this, Zafar, you you're deploying, you're a very smart person of how you deploy technology inside Seattle Children's, and you're very frugal for lack of better terms. How has technology been serving Seattle children from that perspective? Does your cost continue to go up?

Zafar: That is a very interesting concept, right?

So obviously, if you're sitting down with the next cool vendor, they're always selling you on the fact that if you have this, you will revolutionize healthcare. And what you tend to find is you buy something, you license something, you subscribe to something, Year one is happy days because everybody's all excited.

Then in year two, when the renewals come and the increases come, it starts to become a harder and harder lift to justify why you'd made that investment in the first place versus what are the positive outcomes. And certainly in my career, I've seen that most of healthcare technology investments are more, Cost avoidance type models than they are real cash in your pocket.

When people write business cases that say I'm going to buy an EMR and it's going to cost me a hundred million dollars and I'll get my money back in two years, that's just not real, right? You might see benefits, you might have a better work experience. You might impact physician or nurse burnout, but you're certainly not going to get a cash back check.

That says, here's your money back because it was such a great tool. And I think that's the balance we don't necessarily have. And I totally agree with you. The industry is very driven by the next shiny toy, but then again, you have to put yourself in the position of. Are you really in the business of technology or are you in the business of patients?

And I agree with you, we should be in the business of patients. And if we do that, then every single investment should be focused on, is it really going to benefit that patient, doctor, nurse, or is it just very sexy because we bought it and we can talk about it at the next big conference? And I see a lot of that around this AI swirl.

Can you automate certain things? Yes, you can. Can you use these new technologies to provide guidance? Yes, you can. Will AI replace the physician? I don't believe that to be the case. Right? We're far from that. Lots of development work has to happen, but it is a very complicated scenario of cutting yourself to success isn't going to bring success.

I agree with you. And if we're out here hoping, hope's not a strategy, right? That's right. So that's really where we sit, CTOs, C level in technology are facing massive financial problems. Challenges because most health systems are, but at the same time, we do get a lot of pressure that says. But why aren't we innovating?

And the question would be, so how do you find that balance between innovation versus keeping the lights on doors open?

Majid: You touched on AI and I know it's a pretty important topic because to me the way we have to look at AI, To me, I'm not a technologist, by the way. I know I work in the technology world.

I'm not somebody who's going to sit in front of a computer and code and create code. I'm a business person. I'm a capitalist at heart, right? But with a social conscience, let's put it that way. That's how I call myself. But it's really important that we look at AI and what AI is. You think about every innovation through humanity, whether it's Combustion engine and what it did to transportation.

Combustion engine was a platform, if you think about it. Electricity was a platform. What, how people leveraged it and use it in their industries, in their work, what that meant. If you think about the internet itself, internet really doesn't solve anything, but it's what people build on it is what makes it And all the revolutions that we've been through the last 20 plus years was really driven by the presence of the internet.

Jeff Bezos, famous word said, without the internet, there will not be Amazon. He came on and he leveraged the presence of the internet to build Amazon on that. And so many other companies that did that, whether it's Uber or Airbnb. So you think about AI, we have to look at AI as a platform where we can build things on to serve our business.

The big question, really, for healthcare specific providers, do you have the capacity to really build the application to transform AI in your business? And to be honest with you, from my perspective, it's a resounding no way. You don't have money. It's impossible. You're competing with all the big companies that are hiring the smartest people in the world.

And newsflash, you still need people to build AI. AI is not going to build AI, at least for now. We'll see how that goes. You need people, and that's your biggest cost. And you need to provide them the environment where they can be creative. So, you still have to leverage on partners and outside people, or third party people, to take action.

The AI platform and build an application to really drive your business. And I go back to what I said earlier, your business, the healthcare, whether it's the CEO or the board have to determine what role technology will play inside our organization, the healthcare organization. And I think CEOs or boards think they need to know technology to make that decision.

I disagree. I disagree. I think you just need to know what technology needs to do for you. Is it something that you need to connect better with your nurses and doctors? How do you measure data? How do you deliver better care? They're really simple concepts in my opinion, but the challenge with it is we create this mountain of uncertainty and then everybody just goes, okay, fine, just, we'll give you a little bit of dollars.

And to me, No dollars is much better than little dollars because with little dollars, you're going to deceive yourself of saying, Oh, I'm going to go somewhere, or you're going to be stranded halfway through. Might as well never start the journey. And I know, again, this is maybe different than what a lot of technologists who come in and say, just buy my stuff.

The world is going to be a better place. Healthcare is unique. Private business. If you think about what technology did and history is important. If you think about what technology did to travel and leisure. Manufacturing, banking, and how technology truly drove the cost down and us as consumers, our experience is significantly better because of technology.

You think about it, today, we can go book a flight, book a hotel, book an Airbnb, or anywhere in the world and show up and everything is going to be there. 30 years ago, that was almost an impossibility. Like, you couldn't do that. And we can do it at a very affordable cost. Go back 30 years ago to healthcare versus today.

I still go see a doctor now. 30 years ago, I saw a doctor. The difference, the cost is 500 percent more.

Zafar: And that's with the use of technology. That's with the use of technology, right? We've gone off the path, right? Somewhere we've gone off the path.

Speaker: Exactly. Thanks for listening to this week's Town Hall. A big thanks to our hosts and content creators.

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