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October 10, 2022: Charles Boicey from Clearsense joins Bill for the news. Healthcare venture capital has potentially peaked. Now what? A lot of the big healthcare finance headlines are 1.8 billion, 1.1 billion, 600 million in losses etc. CommonSpirit just posted an operating loss of $1.3 billion. But there are healthcare systems out there with strong finances. What differentiates the systems that are doing well from the systems that are struggling? How is data either contributing to health equity disparities or helping in the area of health equities and disparities? 

Key Points:

  • 10,000 baby boomers are aging into Medicare each day through to 2030
  • For the last 5 years, investments and government dollars have been sugar coating poor operating performance
  • A data set that's been anonymized, de-identified and obfuscated to the point where I don't know where it came from, is not very helpful
  • Clearsense


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Today on This Week Health.

Let's talk about health equity well, you better have a data set that actually is representative of that, which you're trying to take care of, to mitigate. So if we're using data sets that are not represented And we're building out algorithms and everything that's not gonna help us.

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 ๐Ÿ“ leaders.

All right. It's News Day. And today we are joined by Charles Boicey, Chief technology officer, Chief Innovation Officer.

Chief Innovation Officer

Yeah, you started off at Clear Sense as the chief technology didn't.

Yeah, it kind of was both. And we do have a ctl, so that's allowed me to go on to research more research and development.

Research and development. Fun times. Anything exciting happening at Clear Sense these days? We're gonna talk about startups, by the way, you guys are, you guys are beyond the startup phase per se, aren't you?

Well, you never know? I like to think of ourselves as a seven year startup. Cuz we keep that startup mentality that way. You don't end up sitting on your laurels or whatever. Yeah, yeah,

yeah. Cuz you, you have a good, good list of clients. I'm not gonna list them off cause I don't know which ones you're allowed to talk about or not, but you have a good list of clients, a good number of people on your platform, A lot of different use cases.

Seven years old, but you know, until I, I, I don't know when you shouldn't feel like a startup. I, there's a case to be made that, that young and hungry and every client matters. Every deal The organizations that have been able to keep that the longest, like the Amazons of this world have been successful.

Yeah. I, I hope in 14 years we talk about a 20 year startup .

That would be fantastic. All right. So you and I we're both in Florida. this will date this episode. Right now we're actually doing this interview on Tuesday. That hurricane will hit me in southwest Florida. on Wednesday morning, but we're just gonna get touched. I mean, based on all the spaghetti diagrams and all the the models that I've seen we're just gonna get the outer bands and get a bunch of rain where I'm at in southwest Florida I don't think you're gonna get hit much at all in Jacksonville, Are you?

No, we're so Northeast Florida will get wind and rain and it's gonna come in and high tide. So that downtown area the St. John's River, which is one of the few rivers in the world that actually flows upstream flows north. So yeah, they expect to get hit pretty hard there just from rain and wind and the tide.

Everything I'm seeing right now is really Tampa North and then sorta sort of jaunt up towards South Carolina and the edge of Georgia. I'm not even sure it's heading towards Atlanta anymore. It looks like it's heading more over, so ๐Ÿ“ we'll see.

While we thought we put this update in there, as you know, that storm kept heading further and further south. So that's why you don't wanna listen to Charles and I when it comes to weather. That storm, which was slated to go north of Tampa, ended up moving. South going over Cbell Island, Ket Island, and hitting Fort Myers straight on it impacted the coast from Marco Island through Naples where I'm at, and we're fine. Powers are restored after about four and a half days we had a generator, so we were able to get through that. Many people don't and there's been a lot of damage up and down the coast. You probably know more than do because our cable was out for two days when the majority of the damage was happening. So I saw it secondhand and heard stories and got to see the, just the amazing outpouring of support and help from communities. There's a steady stream of people coming across alligator reality. To help out in sport. There was teams out on the beach yesterday just picking up debris and cleaning things up. It's gonna take a long while for this area to return, but we thought it'd give you an update that that storm actually ended up going straight up Orlando and hitting Jacksonville, Swamping Rivers along the way. And impacting many families. So I wanna thank everybody who reached out, really appreciate it. But clearly this is why you do not listen to Charles and I with regard to weather. And we'll get back to the show and listen to some things that we have a little bit more expertise on. Back to ๐Ÿ“ the show.

Alright, so we got a lot to talk about healthcare wise. Let's see. there's a startup healthcare venture capital potentially peaked.

Now what That's modern healthcare story. We can go in that direction. Common spirit post 1.3 billion Operating loss. That's a Becker story. We can talk about that. Lot of different things going on. where do you wanna start? You wanna start with the, let's start with the venture capital's. I mean, the capital spirit one will take us in a different direction, but let's start with the Yeah.

We'll do capital potentially peaked now what, what's, what's going on?

We'll do venture capital for 200 then.

All right. So what's going on in this space? It's essentially the gold rush is,

And we deal with that. I deal with that on a daily basis. So from a private equity perspective it was all about in the last year, year and a half or so. Yes, a whole bunch of new entrants and whatnot from startups. But it was all about growth, funding for growth. But that is now switched to. Funding for how close are you to profitability? So they're really looking at the books a lot more than they had in the past. They're not getting excited about the shiny object.

And then even in, in some cases they're going to, what would it take you to get to steady state? So steady state is basically, What do you have to do to reduce costs so that you can be profitable today or as close to profitable today as possible? So from a startup perspective that puts some constraints on a lot of these startups, especially on the healthcare side.

And again steady state and or how close are you gonna get to profitability before you know anybody's Gonna be funding any additional rounds and whatnot. And you haven't seen a whole lot of IPOs this year have yet?

No. The IPOs have dried up. And so let me, let me give you some of the things. So since Covid 19 pandemic more. 40 billion has been invested into venture backed healthcare companies. This 400% increase from Preem Times has generated a gold rush. This article is written, by the way, Eric Epstein is principal at SANE Ventures, and Doug French is the founder, managing director of San Ventures.

And I've spent some time with Doug because at St. Joe's, we actually invested it in SANE Ventures and I've had several conversations with him the impact of venture capital on the industry over the past decade, a confluence of factors drove massive investment into the healthcare venture sector, robust tenure bull market, decade long tech, venture capital, outperformance, and historically low interest rates.

Created significant amount of capital looking for early stage investments. He goes on, gives some numbers down here. Let's see. As capital retreats from the sector, it's exciting to think about the potential investment opportunities. Healthcare venture capital is not for the fan of heart. Reviewing the data over the last 30 years, over half of all venture backed companies return less than one time one times.

And 90% of the value created comes from only 31% of the invested capital healthcare's role in the economy. Currently, the United States spends nearly 20% of GDP on healthcare, nearly a hundred percent more than average than the average of all OE CD nations. Roughly 10,000 baby boomers are aging into Medicare each day through 2030.

Wow. That is big number. And then they go on. What's next for healthcare investment? The rapid rise of healthcare investment experience during the pandemic will not be without consequences like crash. 20 years ago, many companies will be washed out from a regime change, moving from unbridled exuberance to financial stability.

And so what I've been seeing over the past couple. Let's call it six months, is that you have private equity and venture capital coming into their portfolio companies and saying, Look, extend your runway. we have to extend the runway because you either have to do that through profit, well, you have to do it through profitability, right?

So it's either profitability, you have to reduce your burn of the capital that you've already raised, cuz there's not gonna be a lot of capital coming down the, the pike. My concern on this, if I'm just talking to healthcare provider, Is, I would look at all the companies I've invested in that are in that category and I'd be talking to them about their financial position, how they're doing because that could mean I could see a company go out of business that is a key integration point between my EHR and something else.

Or it's providing something around value based care or something around our social determinants. I mean, that's generally the startups play in spaces. Or I bought them in spaces that were in between the cracks of very large systems that I was running. So I'd be looking at all those contracts. I'd be talking to those organizations about their, their finances.

But longer term, I think you make a great point, which is I don't think it's gonna be the companies that come in who are, have a thousand employees and like no revenue, no profitability. Those are high risk. Companies going forward? I think I would, I'd have to have some strong conversations with those companies or avoid them in the future.

I'd be looking for companies that have some health systems that are working with them already. A proven solution. And those kind of things. Definitely don't wanna find those companies that are still searching for what's our, what's our space in the world. Those, those are, those are a little scary.

Yeah. The other thing I would look for Bill, is from an IP perspective, from a tech perspective, look at some of these ended up being asset sales, where from a tech perspective, you can go in and pick up that IP and bring it into your product and whatnot. And we've seen that over Three months or so, and you can continue to see that in the next 12 to 18 months. And I totally agree with you From an healthcare investment perspective, if one of these, these organizations are part of your portfolio, it's time to really pay attention to them. And if you've contracted with them as well.

Yeah. and if we're talking to any startups we're not telling them anything that they haven't heard from their investors or their board. Oh, absolutely. they've heard it, They don't need to hear it from us again. ๐Ÿ“

๐Ÿ“ We'll get back to our show in just a moment. I'd like to share with you an upcoming webinar we have on October 13th. We have delivering better patient experiences with Modern Digital Infrastructure. During that conversation, we're gonna talk about multi-cloud. We're gonna talk about modernizing health IT infrastructure, and a blueprint for creating an agile digital infrastructure without impacting quality of care. The webinar has five campaign episodes you can view. Before the webinar and you can find all that stuff on our website this week. Also, join us on November 3rd for cyber insecurity in healthcare, the cost of impact on patient safety and care. Cyber criminals have shut down CRI clinical trials and treatment studies and cut off hospitals, access to patient records demanding multimillion dollar ransoms for their return. Our webinar will discuss it budgeting project priority and in distress communications to serve our patients affected by cyber criminals. You can register for both webinars at this week, Just click on the upcoming webinar section in the top right hand corner and I look forward to seeing you there. ๐Ÿ“ ๐Ÿ“

let's go to the next story, which is from the other side of the equation, which is essentially healthcare is struggling. 1.3 billion. Dollar Operating loss from Common Spirit. This follows 1.8 billion from Ascension, 600 million from, and for the first half of the year, 600 million from Providence.

Before we go too far into this, it was interesting cuz just yesterday I got this article in Becker's 10 Health Systems with Strong Finances. Yeah. Banner Health, Brian Health, Deaconess Health System, Inova Health System, Intermountain Healthcare, Nebraska Medicine, New York Presbyterian, Parkview Health, Sharp Healthcare Point Health.

and these were all organizations that have had their Fitch ratings and Moody's ratings. Improved, increased. elevated, whatever you wanna say. And it's interesting, as I was sort of looking through this, I was trying to look for the commonalities because this would tell me that not all health systems are struggling.

Although if you the, I mean the big headlines are 1.8 billion, 1.3 billion, 600 million in losses. What do you think differentiates the systems that are doing well? And this is a tough question, I get it. But what, what do you think differentiates the systems that are doing well from the systems that are struggling

I think one of the and I'm just gonna tell you from a, technically enabled perspective those that are actually know what's going on from a day to day perspective as opposed to those that are working on data from three months ago. So if you're able to make those

so So real time, you're working on real time.

As, as close as possible. All those that you've spoke of have had initiatives in place for two plus years that allow them to make those type of decisions. And from an m and a perspective, they are making very good decisions. In that regard as well. When to close certain clinics down, when to open them. They're just making really good operational decisions.

Yeah. We had a conversation with Rob DeMichei former CFO for U P M C and we were talking about this and one of the things he brought, cuz he came in from outside the industry and he came in from GE and he put in cost based accounting and he was able to.

That building, that practice, that thing, they're not making money. And it was, it was a foreign concept. And this is U P M C. I mean, they're pretty sophisticated from, from our perspective, from a healthcare perspective. And he put those things in and he was able to identify that and help them to become much more profitable and focused in on the things that were delivering value.

It's not only profitability, by the way. I mean, he would be the first to tell you we focus in on quality the same. But from a, from a measurement standpoint, they knew what drove good quality. They knew what drove profitability, they knew what drove all those things. And they, they essentially identified how we get those metrics together.

And then the team, as you've mentioned, the team was looking at real time. Hey, here's what's working in the system. Here's what, what's not. I've heard of health systems that are, are still struggling to generate reports that'll tell 'em how they did three months ago.

But Bill, this is a fantastic opportunity for us, right, from a technology perspective, for a a vendor perspective.

If you have solutions that offer immediate ROI within 30, 60, 90 days, that can actually offset the cost of implementation, then you can really get in, get sticky and really help these organizations turn themselves around. And I think this is a great opportunity for a lot of us.

Yeah, I think people think a lot of this data resides in the EHR and some of the data does reside in the ehr, and then some of it resides in the billing systems, the e r p, some of it in the claim systems and that kind of stuff. So it's not it's not as straightforward.

Like when I came into healthcare, I'm like, well, let's let's just pull all this stuff together and make it all work. It, it does take some work, but it's, it's not, it's not outside the realm of possibility to pull it together. And I think the other thing I would say is these health systems that I just, I just rattled off here. New York Presby Nebraska Intermountain, Brian Health Banner. it's not like, Look, you can go back. We're coming up on our five year anniversary of the show. You can go back five years and listen to the show. And we knew where healthcare was going. We didn't know the pandemic was gonna hit. Yeah. But the pandemic only accelerated what we knew was happen.

We knew that margins were getting tight. We knew that we were losing to ambulatory surgery centers. We, we knew we were losing imaging business. These are both very profitable lines of business. We were losing our orthopedics to orthopedic institutes and other things were standing up to compete against us.

They were just sitting there looking at the integrated delivery network or the large health system, and they were saying, Hey, you know what they're making. Tens of millions of dollars from this. We're gonna break this off, Go into this building not having an an incredibly expensive EHR implementation, and we're gonna have good parking, good customer experience.

We're gonna take all that stuff away. So we saw that eroding. Five years, 10 years ago, for heaven's sake. It's not like it was new. And so the organizations that got ahead of it and said, Look, we have to optimize around the things that, that we do well. We have to we have to rationalize the things that we don't do well, or at least deliver them in a way that meets the needs of the community, but not as as expensive as they once were. And we've gotta find new ways to make money. New lines of business.

And Bill, some of those organizations that you mentioned are both providers as well as payers, and they've been able to make that work as well, so they understand what's required to deliver care properly, but minimize costs at the same time.

Yeah, and that's one of the things we saw through the pandemic. Those that were payers, providers systems that were payers and providers did better through the pandemic than those who weren. Now all of them, all systems received a bunch of money from the government during the pandemic, which made the financials look better.

But for the most part through the pandemic, even before the pandemic, it was investments and government dollars that were sugar coating, poor operating performance in a lot of areas. Yeah, for the better part of five or six years. I mean, we see it every year at the JP Morgan conference where people get up there and say here's our numbers.

And then when you really get down to the operating numbers, in a good year. It's 2% operating profit in a bad year, it's six or 7% loss. Anyway, I'm not sure there's a question there. I'm just sort of, Yeah. Throwing it out and saying there are systems that are doing well. So if you're sitting there saying, Hey, all of healthcare is broken there are problems with the business model for sure, but there are health systems that are making this work.

And doing some things to be successful. Let's see. what direction do we wanna go Here we've got eight ways health leaders can strengthen their workforce according to Aha. Invidia partners with broad Institute making AI tools available for life science research projects.

Don't overlook these. What I wanna talk to you about? I mean, these are all interesting stories. Sure. I wanna talk to you about data. Okay. Let's go. All right. So when I get the cybersecurity guys on, I talk to them about cybersecurity. When I get you on, I should talk to you about what's going on in the data world and we see a lot of this work going on around health equities.

Right. And so I'm, I'm just, I see a lot of chatter, a lot of talk around this. How is the data either contributing to health equity disparities or helping in the area of health equities and disparities There?

Yeah, let's start off with something a little bit more even in Invidi even put that, that I can bring that Invidia thing in here. Harvard's mentioned some of the larger academic environments are mentioned why isn't some of the underserved healthcare organizations or academics mentioned. So they need to reach out to these folks.

So let's talk about health equity well, you better have a data set that actually is representative of that, which you're trying to take care of, to mitigate. So if we're using data sets that are not represented, And we're building out algorithms and everything that's not gonna help us,

so how do, how do you do that? Do you compare it with the demographics of the community that you're serving?

Absolutely. Absolutely. So if I'm going to take let's say Nashville, Tennessee, for instance I would knock on the door of Maher Medical College and say, Hey you have a data set that's representative of your community. Let's use that. For our work going forward. Let's not go to someplace in Iowa and take that data set and try to make it representative of the population and so forth. So what I'm seeing is those that are doing this type of work are actually reaching out and making sure that the data sets that they're using are representative of the US are representative of the geolocation that the patients reside in.

How can we figure out from an equity of health and whatnot, how can we figure that out if we don't have the requisite data sets that are actually representative of the population I think I talked to you once about covid and what we learned. From a disparity in not only diagnosis, but also in treatment. We didn't recognize that from a US perspective until we actually had those data sets from those geolocations where there was diversity disparity and so forth.

when you read these reports and these studies and whatnot, and you're looking at the data, what things do you look at? I remember talking to. A CPA wants, who did a lot of writing of reports, the annual reports for Fortune 500 companies. And I asked him this question, like, How do you read annual reports? And he went through it and he goes, glance through the annual report. He goes, then go to the, the footnotes.

He goes, Read all the footnotes very carefully. He goes, Cuz we can write the inner report in like a day. And the footnotes are the things we talk about for weeks. And say, All right, how are we gonna communicate this? What are we gonna put? And we put the footnotes in there. Is there, when you read these studies, and why not?

I mean, clearly you look at the total population that they're covering. Are there other things that you can dig into and say,

I'll take your footnote analogy. Go back to the the page of references and I look at where that came from and the timeliness of it. Somebody's producing something.

Let's say it's 2022 and half the references are 2016 and lower that's not gonna be very helpful. That's not gonna be very helpful at all. But if you ask me, when I look at a data set from a population I want to know Where it came from, given me a, just a data set that's been anonymized, de-identified obviscated to the point where, I don't know where it came from, is not very, very helpful.

If you're looking at disparities in health and so forth, you need to know where that data came from and determine whether it's really representative of a certain group and or geolocation and you can still do that and then maintain the anonymity of the patients and whatnot. that's kind of what I look for. I'm not into synthetic data and I'm not into giving me a data set and. Don't know where it came from or it's just not very helpful.

I was looking at the Clearsense cohort building tool that you guys have. it was really fascinating to me how you could, you could really build out those cohorts pretty quickly from that data set.

If it's been, if it's been acquired by Clearsense And then you, you build out these cohorts, you can do all sorts. Interesting studies are, was that anonymized data or? I think it was anonymized data.

Yeah. So, so let's say it comes from the healthcare organization of course, or the academic environment. Yeah. It's de-identified anonymized and whatnot. So the researcher doesn't see it, but let me tell you how this kind of works from a research perspective. So we had a bench researcher that noticed that at the cellular level patients that of high cholesterol also had a high affinity for opioids at the cellular level.

So that researcher his hypothesis was that it's gonna be very, very difficult to get these patients off of opioids if they have high cholesterol. And he was able to see that within. Discover tool. He then went to the irb, got the requisite charts, did all the research and whatnot, and then went right into human subject.

So he is able to bypass mice models. And that's a year, year and a half, maybe even two years. So what we're seeing is we're able to conduct. Research within the data without having to do know, some of the other mundane maybe not mundane, but we're able to accelerate into actual clinical trials and human subject studies and whatnot.

So yes, the data can be an extreme accelerator to either thumbs up or thumbs down on hypotheses

so you are bullish on the concept that data. It still holds an awful lot of power to transform how we deliver care.

Yeah, but we need, as a, as healthcare, we need to understand that what you said was a really bold statement. And it is, but we really need to understand that collectively data literacy, I guess is the term now. So we absolutely as a group, need to really understand how data can be applied and the various ways that data can be applied to benefit us. I'll give an example.

Maher Medical College in, in Nashville they have a program where now their medical students are graduating with master's degrees in data science and. At some point in time in the future when the the faculty's built up you as a medical student will also graduate with a PhD in data science. So we're getting there. So clinicians that are steep in data science kind of will be the future using data to apply data practices to treat.

That's interesting. Alright, let's close with this. What are you doing this fall? Are you going to any conferences this fall?

I'm gonna go to Chime and then we'll hit the Hlt h stuff going into next year.

So you'll be at chime, fall form and you'll be at the health conference. I will see you at both of those. Cool. we'll have to do a live episode at one of those, we'll do a, we'll do a news day episode while we're at one of those.

That seems to be a tradition where we're just sit in the lobby and have people throw. Just hang out, hang out, talk, have people throw stuff at us. It's a lot of fun. I like it. I like it. Charles, always great to have you on the show. Thanks again for your time. We really appreciate it. ๐Ÿ“ Thank you.

What a great discussion. If you know someone that might benefit from our channel, from these kinds of discussions, please forward them a note, perhaps your team, your staff. I know if I were a CIO today, I would have every one of my team members listening to show just like this one. It's conference level value every week. They can subscribe on our website They can also subscribe wherever they listen to podcasts. Apple, Google, Overcast. You get the picture. We are everywhere. Go ahead. Subscribe today. We want to thank our news day sponsors who are investing in our mission to develop the next generation of health leaders. Those are CrowdStrike, Proofpoint, ๐Ÿ“ Clearsense, MEDITECH, Cedars-Sinai Accelerator, Talkdesk and DrFirst. Thanks for listening. That's all for now.


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