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 Welcome to this week in Health it. It's Tuesday News Day where we look at the news, which will impact health it. Today we take a look at work from home fatigue. Executives weigh in on healthcare budget cuts. Walmart is a healthcare company. I just thought I would drive that point home once again.

Actually, there's a handful of stories that link together around that, so we're gonna take a look at that. My name is Bill Russell Healthcare, CIO, coach. And creator of this week in Health it a set of podcast videos and collaboration events dedicated to developing the next generation of health leaders.

This episode and every episode since we started the C Ovid 19 series has been sponsored by Sirius Healthcare. Now we're exiting the series, and Sirius has stepped up to be a weekly sponsor of the show through the end of the year. Special thanks to Sirius for supporting the show's efforts during the crisis and beyond.

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Well, I have 20 some odd stories here. You can tell I took a week off. Uh, let's see. Let's just get started and see how far we get the first story. Wall Street Journal. So work from home. We've been doing this now, uh, for a little while, and it says that the title for this Wall Street Journal story is Four Months Into Corporate America's Working From Home Experiment.

Some cracks are emerging. Okay, so a few companies expect remote work to go away in the near, uh, near term, though the evolving thinking among many CEOs reflects a significant shift from the early days of the pandemic. Okay, so, and I like, I like the way these stories are written. There's a bunch of little stories here that sort of illustrated, uh, an executive from Cannon talks about the fact that they employ 15,000 people.

Their US headquarters in Melville, New York houses about 11,000 of those people on a 52 acre campus with a couple of lakes. And they have since allowed their employees to start returning voluntarily. Now there's a check-in process and make sure they're well and . There's, you know, procedures they've put in place, but interestingly enough, 50% have chosen to return voluntarily to their campus.

And I think that's, uh, that's an interesting statin. Something to keep in mind, I think if you are a pro work from home person, I think sometimes we get into that mindset that everybody wants to work from home, and that is not necessarily the case. Another story here. Let's see, CompuCom, which is a division of Office Depot, it's a, um, corporate reseller of technology and equipment to, to enterprise clients.

So more companies now envision a hybrid future. And so they talk about the hybrid future. And I think it's interesting 'cause they give this concept of office hours much the same way that you have office hours for a professor in college or a college campus, they have office hours. Uh, that we might go to that kind of model.

And I've heard that from some CIOs if we've been talking about that. Through the, through the pandemic. Uh, final story they have here is I, I think another point that's worth making. This one's from, uh, Stifel Nicholas, our Stifel Financial Corp. They've been renamed The toll of extended work from home arrangements is likely to affect career development, particularly for younger workers.

Several executives said, uh, which employee? Uh, so Comp com employs about 8,000 people. Or, I'm sorry, Stifel employs about 8,000 people. I am concerned the executive goes on to say, I'm concerned that we would somehow believe that we can basically take kids from college, put them in front of Zoom, and think three years from now, they'll be every bit as productive as they could have been if they had personal interaction.

Okay. So, and it goes on to talk about what they have done. What's the so what of this story? Uh, you know, at when I was ACIO. And a lot of you do this, you do this exceptionally well. Uh, I'm gonna just tell you my story, and some of you do this a lot better than I did, but we, we had a team whose role was as ambassadors, uh, for certain parts of the organization.

They weren't elected or anything like that, but they, they really were like the mayor of a group. And, uh, their job was to go out and keep their finger on the pulse of what was going on. Within the organization and to bring feedback to the, to the IT executive team so that we can continue to evolve the co-culture and, and do things, you know, change, uh, the work environment.

We, we, we set up a, a workout facility in our, in our location. I, we, we, I. Set up an area with tables where people could, uh, work on puzzles, which, you know, sounds kind of interesting when you hear about it at first, and I was sort of skeptical when we started doing it, and then I would see people sitting around, you know, over their break building puzzles and they were talking, you know, they were, they were coming up with ideas, they were sharing ideas and things.

They were excited about it. It ended up being a really cool collaborative . Area for us. So, you know, as I said, most of you already do this well, but I wonder if you've taken the time to update those practices post covid. Right. So we had a monthly breakfast with the CIO, which was a smaller setting for people to ask me questions.

Um, and I'm wondering, you know, are we still doing this? You know, culture doesn't just happen and it never stays the same. My theory is that culture is either progressing in a positive direction or a negative direction, and a leader's job is to intentionally make sure . That we are taking steps to keep it moving in a positive direction regardless of the work situation.

That is sort of thrust upon us. Right. I think the other thing is that, that last comment of education and career progression are also extremely important, especially to this next generation. And I think we need to be intentional about this. We need to be thinking about getting people the opportunities to grow and shine.

And I guess my, so what is just a reminder that that is what our job is as leaders, is to make sure that that culture keeps progressing? I. All right, let's, I'm gonna hit the Walmart stuff. All right. So there's really two stories here, and then I'm gonna link a couple others. But the first one is A-C-N-B-C article.

And co-create with the big box retailers. All right, so let's start with the CNBC story. Uh, Walmart confirmed to CNBC that the grant open six additional stores. We know that the big box retailer announced this week that they will enter the Florida to market next year, and the company is hiring employees focused on finding ways to get more customers through the door and turn the clinics into profitable and scalable businesses.

Right. So Mar, so here's some more from this article. Walmart is already the largest private sector employer and the largest grocer in the us, but it's looking to become a major healthcare player as well. The clinics, as we've talked about before, have. Uh, a bunch of services, right? So primary care, dental, x-ray, hearing services, mental health counseling, optometry, and obviously they still have the pharmacy and the Walmarts themselves.

So, uh, a lot of, a lot of services there. And they're also looking to differentiate themselves from, from Amazon with a, a thing called Walmart Plus. I'm not gonna go into that too much. You know, again, they're, they're standing these things up. Standalone clinics prove the model and then they'll grow them.

So David Chow off of that article. Essentially wrote something and he challenges us as CIOs to consider partnerships with big box retailers. And he's right in that we should always be looking for strategic win-win partnerships. Right. And you know, as a case in point, I've talked about Best Buy in this and he talks about Best Buy.

And I think it's a great example of an organization that has really a natural connection to health systems as we move into the home and need to wire up the technology in the home. And, you know, there's gonna be, uh, age in place. There's gonna be a whole bunch of technology that we want to get into the home.

Not only that, we have workers that are now working outta the home and, and, you know, that Geek Squad is really well positioned to go into the home, set up technology, make it work for our staff as well as our potential patients. But, but you know, before we go off, really half baked on this, we really have to put on our business hats for, for just one second.

Right. We have to know what we bring to the table. I'm not gonna get on the phone and call, you know, the NFL and say, Hey, I, I'd like to do a co-sponsorship agreement with the, this weekend health it in the Super Bowl because I really bring no value to the NFL. I don't bring any clients to the NFL and I, I just, there's, there's no real partnership.

The key metric. Is who influences the, the customer buying decision or the value, the cost over quality equation, uh, of the service. Right. It's easy to assume that we have that, that health systems have acute services and they need acute services 'cause they're not gonna do that. Therefore, we have a match.

I. , but the calculus for each of these partnerships is very different. And you may want to identify Walmart either as a, uh, competitor, as as somebody you're gonna cooperate with, coopetition, whatever the word is there. It's a made up word to begin with. So whatever the competitor, cooperate or partner, if you will, it really depends on what you bring to the table and who you think has the most influence in the buyer's behavior.

But I wanna make this case, you know, Walmart is payer. They're setting up a, an insurance product that they're gonna take out to their, to their customers. Walmart's also creating a one-stop shop for a range of services that we just talked about, which includes some of the profitable services from healthcare.

And I think by definition, that would make someone who's taking profitable revenue from us, uh, uh, as a competitor. They're gonna do care navigation and utilize their, and I've heard this talk many times from the, the Walmart people, right. Talk about the database of information they have. They're the largest employer.

They've been sending their employees to various physician groups and physicians, uh, and, and health systems around the country for many years. And they have a great . Uh, read on which providers are the most customer centric, which ones provide the best care, what's the best cost, and the quality equation.

They have that information. And so they're gonna utilize that to really, uh, do care navigation with that database, right? And they're going to guide their customers to the highest quality, lowest cost, and most customer friendly experience. And, you know, you, you may want to position yourself as a place they send their customers.

Two, but, but, but know this, that the point, you become a supplier of acute services to Walmart. Walmart, you know, Walmart got to be Walmart because they're masters at managing the supply chain. If they own the customers, they will control the customer experience and you will play by their rules. Either way, I would put Walmart in one of the competitor categories.

Even if they refer patients to you, you may wanna start building out the specific experience for your customers and the one that they're looking for, an easy to understand insurance product, transparent pricing model that values the patient's time more than the physicians, high quality healthcare and affordable costs with an ever improving, uh, not only physical experience, but also a digital experience.

Right? So, you know, again, I think this is something I would keep a very close eye on. If I were you in, in in healthcare today, what is Walmart doing and where are they going with this? All right, I'm gonna drive this point home a little bit, drive the point home a little bit more. The next article is really a shout out to Ed Marks, who's been a guest, uh, on the show.

And he wrote an article on LinkedIn called, uh, disintermediation of Hospitals Begin. And I, you know, it's, it's a fantastic article. I'm gonna encourage you, I'm not gonna cover it in detail. I'm gonna encourage you to go out there, find it on, uh, LinkedIn. Disintermediation of hospitals begins, he starts off with, in the classic and time-tested predictable formula.

Retail and payers are aggressively disrupting at the core level of healthcare today. Primary care is the battlefield. And we've talked about that on the show. That is absolutely true. Why is primary care the battlefield? It's because that's where the customer relationship lies for healthcare and all these, all these players are trying to get in between, right?

They're actually take over primary care and then they've established that they're the point of relationship and if they're the point of relationship. Then they can direct care, uh, in the best way for the consumer, but also in the best way, uh, for them and not necessarily for the best way for the healthcare provider.

Uh, he goes on to say the primary care foundation is quickly shifting from the hospital to payer retail and virtual. Without primary care foundation to direct patients and secure contracts unprepared, hospitals will wobble, new entrants, will work their way up the value chain from this basis. Surviving hospitals will become centers of excellence and compete nationally for patients at the direction of retail and payers.

Payers and retail direct care, uh, role reversal. In one generation, initially stealth-like experimenting with their own large employer base, the invasion has begun to open. That whole paragraph could essentially become from that story right before it, right, that that is Walmart. That is the Walmart story.

That's what they're doing, and they're not the only ones. As we know, uh, remaining hospitals will specialize in high acuity care. Hospital chains will centralize everything from operations to clinical care via digital command centers. Uh, there will be no urgent care. There will be limited primary care, and he goes on.

The next section is titled, digital is No Longer a Differentiation. It is Survival. So I'm gonna point you to the story. You're gonna wanna check it out. Ed goes into detail and offers some quick hits. On, uh, what can be done here. It is really thought provoking piece and I believe it's, uh, it's spot on. You know, so what's my, so what if I were in a system that isn't, isn't really talking about digital or asset light, reducing debt and competing for the customer?

Mind share? I would, I would be concerned. And, and I, I'm gonna try to be pragmatic here because I've seen this, this exercise really work. There's a question that we use sometimes to get people to start thinking in a disruptive way and throw this question out. The next time you're having a conversation with execs and the question is, put them in the other role.

So they now work for your health system, put them in the other role and say, if you were going to disrupt our health system, what would you do? I. , it's a great question. I, I've seen it used several times. The team gets all ramped up. They, they really enjoy the process of, of being the underdog. And they come up with about, you know, six ways to disrupt the health system.

And then when they, when they get done and you, you, you grab those six things, you're, you might wanna remind them that every one of those ideas that they just came up with are probably already in motion and well funded by disruptors. And it, it might be time for your organization to start thinking like a disruptor.

And I found that question to be a, a really good one, really thought provoking. Uh, sometimes people do it and they sit back and they go, oh gosh, this is, it's not that hard. As hard as I think it is, we don't have, our moat is not as big as I think it is before people get to our, you know, the castle wall, if you will.

All right, so, . Piggybacking on one of Drexel's points from last week that m and a has started in earnest. There's another story out this week. Huntington Hospital signs an agreement with Cedars-Sinai, uh, I'm not gonna go into the article. That's it. I mean, Huntington Hospital signs an agreement with Cedars.

You know, I'm, I'm just letting you know that it has begun. Direct's covered a story last week in Seattle. This is a story out of la uh, this isn't a small deal either. Huntington is a well run standalone hospital that has, uh, significant presence in LA County. Really covers the Pasadena area. It's one of the primary providers in that market.

Uh, I think they're well over a billion. Uh, this is a great move by Cedars and one that further consolidates their market. And I know what you're thinking. I can hear it now. I can hear the questions. . Wait a minute. Aren't you saying that we need to disrupt the big business of healthcare just a minute ago and now you're saying, Hey, this m and a has started and it's a great move for Cedars?

Uh, yes, I did, but I also, I also think that, you know, health systems should play to their strengths. The other thing is I think you need to. Uh, I when one of the, the concepts I was introduced to in healthcare was essentiality and it's essentially a market share kind of metric, right? Essentiality is a great equalizer in healthcare.

We had a market where we had 70% market share of all the healthcare spend in that market. Well, if there was a, a bit a blip in any direction, we were sort of insulated 'cause we were getting 70% of that market either way. We were the dominant player. And you know, I'm sort of saying that this is a great move for Cedars because if anyone can get to about 35% market share in LA County, they're gonna be insulated from a lot of the factors that are coming after healthcare.

Essentiality is a great equalizer, but you know, not only that, Cedars is also a, uh, destination medical center. They're also an innovation hub. They really have it all going on. But, uh, I think the most important thing is to get. Direct relationships with as many customers and potential patients as you possibly can, and this move accomplishes that goal.

All right, let's see. All right, this is gonna be the final story. Final story is, uh, charter group. I don't, I don't know how I got this. Somebody sent it to me. It's a great, it's a great piece. Charter Group did a survey and it's, uh, the, uh, title of the PDF is Health System and Financial Recovery Survey finds a challenging balancing act.

So I've told you on this show that we're in the midst of two crisis right now. We're the pandemic and the subsequent financial crisis, which followed our, our, our actions as we stepped into the public health void. You know, it was expensive and it took time to recover and charges, went out and interviewed a whole bunch of executives, which was great.

Let me pull this thing up. Otherwise it's gonna be hard to talk about without looking at it. There we go. Health systems and financial recovery survey finds a balancing act. So here's some of the key metrics that they found as they talked to these healthcare executives. 85% of health system executives surveyed identified cost reduction as one of their top three priorities.

I. All right. That's probably not a huge surprise. 90% of the respondents aim to meet their cost reduction targets in less than 12 months. 90% less than 12 months. That's aggressive. All right, so let's delve into this a little bit. So, key findings, cost reduction is critical to recovering from the initial shutdown and mitigating future uncertainties.

So one of the things they're saying is essentially that, uh, volume recapture alone will not be as sufficient to, uh, return to prior levels of liquidity. . Okay. So they think it's gonna take a little while, at least about 12 months to return to those, to those same volumes that we were looking at. And they say it's not gonna be enough.

We're gonna need to pursue other cost reduction strategies in parallel to strengthen the balance sheet. Next thing, they intend to reduce their expense base by more than 10%, which is, uh, what I'm hearing in the industry. I've got some, some of my coaching clients are coming in at five to 10%. And actually that's pretty much the norm for my coaching clients, but there are others that are looking at 10 to 15%.

We'll get to that in a minute. Um, about 90% aim to achieve the cost in less than 12 months. We talked about that earlier and now a successful execution. And I think that's worth taking a look at. We'll dive into that a little bit. So the volume recapture alone, so let's see, let's just say it was, uh, March timeframe.

To, uh, the same volumes. About 38% think it's gonna be about, uh, 12 months. 33% think it will be within the next six months, and 21% think it will be within one month. And I would, you know, again, that essentiality thing I think plays a role here. You might be able to get back to, uh, the same volume levels given what's going on in your market.

Let's take a look at the, uh, cost reduction targets. So there's five categories. There's . Alright, there's four categories. The fifth category is unsure. There's 3% of the people that aren't sure what target they're gonna set for a cost reduction strategy, and I would call them laggards and potential m and a candidates.

Candidates. At this point, if you can't make a decision that fast, it's not like this is snuck up on us. We've known about this since late fall of last year, and we had a good idea of how it was gonna impact us financially, probably by May. So May, June, July, you've had three months to figure out what your target is.

It's a little slow if you're, if you're not sure. But the good news is 90 some odd percent are sure. And it's a classic bell curve, right? One to 5%. 14, uh, 14% of the organizations or executives I are interviewed, uh, think one to 5% cuts. 38% are at five to 10, uh, 36% are at 10 to 15, and 9% are at 15 to 20.

So classic bell curve. . for those kinds of reductions, and that's what I'm hearing in the industry as well. So that's pretty, pretty. Accurate. So cost reduction strategies. So they've listed six cost reduction PR strategies, and they vary from 50% saying we're gonna do that to down to 26%. Uh, the, the highest one being streamlined management structures.

There's been some title bloat within healthcare that's not a shock to anyone, but it also exists within, within health it. You may wanna start asking the question. If you could do with without one chief or without one vp. Uh, which one would it be? That's what it they mean by streamlined management structures, rationalized clinical programs.

We were doing this, I don't know, a decade ago. I would assume that, uh, this is gonna only increase in, in its, uh, velocity. I. Rationalizing clinical programs across the health SI health system. I reduced fixed asset base. This directly impacts health. It, we are a significant contributor to the, uh, fixed asset base.

I had a conversation today about operating versus, uh, capital. I think our, our appetite for capital, uh, well, it's insatiable for that. I mean, the appetite is insatiable, but I think our access to capital. Uh, it's gonna go down as a result of covid and I think more and more of the IT operation is gonna be an operating, uh, budget.

Not only because of the move to cloud, which operationalizes a lot of that budget, but because I think the CFOs wanna see it there, right? It's more manageable if it's in that, in that category of operations. Plus the, it doesn't matter. You're gonna depreciate eventually, and that's real dollars that you're depreciating against.

Next one, optimize informatics and technology that is directly related . To, uh, health it. And that's just a, an acknowledgement that we are not as optimized as we could be in those spaces. Uh, restructure provider enterprise is the fifth category, and then the sixth develop a corporate services model. Okay.

How quickly are you aiming to meet your targets? Six to 12 months. 55% within six months. 36%. So there's your, a majority of, uh, organizations are thinking this way. Very short-term financial focus. . Okay. If you sell into healthcare, and one of the things I've been telling vendor partners is, uh, really tight.

ROI models, crisp, tight, ROI models. Think about one year return. What are you gonna give back in a year if you're trying to sell a big capital intensive, uh, big bang type project? This is gonna be a tough year. I think there's gonna be a lot of financial scrutiny. Within health, it, there's gonna be a lot of m and a work.

I think there's gonna be a bunch of, uh, contracting work, to be honest with you. One of the odd paradoxes that as you go into these things, when you're not able to hire employees, when there's a hiring freeze, the number of contractors actually does go up. And I don't know. Well, actually there's a lot of reasons for that.

I'm not gonna go into 'em. Here's the, and I thought this was a, and this is the last thing we'll cover. Uh, internal factors may delay or derail execution while organizations simultaneously manage dual systems of care and potential covid 19 surges. So these are the factors with the greatest potential to delay or derail a successful, uh, execution.

Uh, number one, manage future c Ovid 19 surges. , right? So this is smart. We, we don't know where this is gonna go. There could be another pullback from elective surgeries, which would significantly impact the financial, uh, outlook for health systems. We're gonna have to see how this gets managed in some of the places that are surging, uh, right now.

And if they pull back and if they have to pull back, you know, do they have the capacity to handle that? 43% of the executives are saying, Hey, that's a, that's a significant concern. So let's just hit the rest of 'em real quick. . We have, uh, lack of resources, bandwidth to manage implementation. Uh, a lot of organizations have furloughed employees or even made some of those furloughs permanent.

And, uh, so there's a concern. Do we have the, uh, staff to continue to, to do the, the level of projects that we have? This is why I continue. To, to encourage health IT executives to look at platforms that require less maintenance, that require less handholding. You know, when you, when you are looking at a new technology platform, one of the biggest costs you should always consider is labor.

And this is one of the challenges I have with an Epic implementation, is that the labor costs on it alone is extremely high, especially for a small health system. And, and it's just required. I mean, if you, if you wanna be on honor roll, if you wanna be, you know, copacetic with, with Epic, you have to have that staff.

And I'm not saying you don't need that staff to run Epic. I'm just saying if you're running Meditech, that number's half. It just is. And I, I can back it up because I, I lived it, so, and I'm living it on both sides. I have clients that have Epic and I have, and I've run a extremely large, uh, Meditech shop in the United States.

So. So anyway, consider the labor costs, find platforms that, you know, look for creative deals. We're gonna, we're gonna have some of these interviews over the next couple of months with some, some organizations that are offering some creative solutions. And I think it's, uh, I think it's, uh, that's what we need to be looking at going into next year.

Uh, lengthy multi-level, uh, decision making process. 29% think that'll derail it. Uh, that just means we make decisions too. It takes us too long and too convoluted, competing priorities, and we struggle to keep our priorities aligned for data or lack of information to support decision making and monitoring.

Uh, lack of alignment with strategic priorities, engaging providers as part of the solution. So these are the things that could derail any projects that we, you know, that we come up with to reduce our costs. You know, I think that's sobering. This, the, so what on this is you're not alone. I, I'm telling you what you already know.

There's gonna be a cost pressure on healthcare for the next, um, at least 12, 12 months for most health systems. You're gonna see some health systems. Uh, . You know, show a profit. HCA just showed a profit. But if you dig into those numbers, you're gonna realize that they had a, you know, a 10 to 12% reduction in their overall volumes.

The profit really came from cost reductions, and it came from, it came from the government money. Quite frankly, $500 million goes a long way in, in writing the ship. So that's where their profit came from. I think that's gonna be true across the board. You know, your, your healthier systems are gonna be able to show a profit with that government money as some of the less healthy systems.

Are gonna struggle. Operational excellence will show itself in the next 12 months. That's all for this week. Don't forget to sign up for clip notes, send an email, hit the website. Uh, we want to help you . And make your health system more productive. Special thanks to our sponsors, VMware Starbridge Advisors, Galen Healthcare Health lyrics, sir Healthcare Pro Talent Advisors, and our newest sponsor Health Next, and you'll hear more about them in the coming weeks.

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