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January 29, 2024: Laura O’Toole, CEO at SureTest joins Bill for the news. They discuss the challenging landscape for startups, emphasizing the shift from rapid growth to profitability and its impact on venture capital and business sustainability. How are companies like SureTest navigating these changes while maintaining growth and profitability? What does the future hold for healthcare IT in terms of investment, client expectations, and the evolving role of technology in healthcare delivery? The conversation also explores the implications of generative AI in both personal and professional realms. Is AI poised to redefine workforce dynamics and ethical boundaries? How are health IT leaders preparing for the future challenges and opportunities presented by these technological advancements?

Key Points:

  • Startup Landscape Challenges
  • Investor Relationships
  • Moral AI Implications
  • Energy Consumption Management
  • Future Healthcare Predictions

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Transcript

  This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong.

Today on This Week Health.

I think investors. have lost their patience. So if you were not able to demonstrate growth and strong pipelines I think the money just gave up on folks. Welcome to Newsday A this week Health Newsroom Show. My name is Bill Russell. I'm a former C I O for a 16 hospital system and creator of this week health, A set of channels dedicated to keeping health IT staff current and engaged. For five years we've been making podcasts that amplify great thinking to propel healthcare forward.

Special thanks to our Newsday show partners and we have a lot of 'em this year, which I am really excited about. Cedar Sinai Accelerator. Clearsense, CrowdStrike,. Digital scientists, Optimum Healthcare IT, Pure Storage, SureTest, Tausight,, Lumeon and VMware. We appreciate them investing in our mission to develop the next generation of health leaders.

Now onto the show.

(Main)   📍 all right, it's Newsday and today we are joined by Laura O'Toole with SureTest. CEO, is that correct?

I am. Yes, I am,

that your team a very flat organization and everybody. Relies on everybody else.

CEO, sometimes, I know, because I'm CEO over here sometimes means that I get to do all the stuff nobody else wants to do. That's it, for sure.

We try to keep everybody on the

same page. Yeah, exactly and communication is a big part of it, you guys got a, couple of awards for best places to work.

That's quite the accomplishment. That's not easy to pull off, is it?

No, I was pretty pleased. It was the first year we were eligible to apply. You have to be of a certain size and been in business for a certain amount of time. So I was thrilled. And then to be on the top 10, I think we were number nine.

It was a great accomplishment for us. We're really proud of it.

All right. You don't report to me, but number nine is not going to cut it next year. Eight, seven, six, some sort of progress. No, I'm just kidding. I hear you. if you need any more pushes.

So we've got a couple of stories here. The one I want to talk to you about first is the pitch book. 3, 200 startups have gone out of business this year and 27 billion in venture capital has been wasted. And, they go through some of these things. Now, this isn't just healthcare and health tech startups and whatnot.

This is across the board. They obviously talk about WeWork and some of the other big name blowups, but that's a lot of companies going out. 3, 200 startups have gone out of business and 27 billion in venture capital. Those are big numbers. you're in this space, so what's the landscape for this startup world right now?

this article talks about the fact that The game really changed on people. It went from, hey, here's money, keep growing. And then all of a sudden it was like, hey, be profitable. And that was a big shift. And for some, it was a bridge too far to try to change course that quickly.

Yeah, I think it's really a couple of things that are going on and I sit on a couple of boards that are venture backed. We are not, we did a small angel round, but we've managed both through growth and profitability to not have to go out and do that round yet. At some point, we obviously will.

when we really, expand to the next level. But we're not quite in that category, if you will, but we would definitely have considered ourselves entrepreneurs in that kind of startup space going out at some point to go get more money to expand our business. And what I think has happened is just a lack of tolerance.

If you look at what happened, let's talk about healthcare and you had all these. Startups that were trying to, make their way over the last few years. And they were getting their investment from these firms. And then the sales cycles elongated so much because of what we're seeing in our space and all the competing priorities that our colleagues have and all the operational spend that happened, from a staffing perspective, from a clinician perspective.

And I think you saw budgets get pushed, you saw projects get pushed. And I think if you don't have a solution. That really can demonstrate an ROI and is going to make a difference for the problems that our clients were trying to solve in last year, they just put it on the back burner. And so I think a lot of these firms weren't even seeing, forget about profitability, they just weren't seeing enough growth and progress to have confidence.

And they just said, you know what, we're not going to keep investing when we don't see a shift happening.

never really understood the business model. I talked to a bunch of these startups actually in my daily operation. And invariably what I hear happening is you end up with two sales organizations.

There's one sales organization that's out selling to your clients and selling your product and growing the business. And then usually the CEO leads another sales organization, which is the money. Sales organization. and I'm like, I can't tell you the number of times I've heard this. Oh, congratulations, you just closed a round.

And they'll say, yep, we've already started raising our next round. I'm like, oh, you got to be kidding me. They're like, yeah.

Exactly right. I probably get, and I'm not even exaggerating, 50, 75 emails a day. Either inquiries or a push. You're constantly talking to the investment world because you want to establish those relationships because you have to set up for what you're going to scale your business to be.

We were in a really unique situation in terms of how our business got started and the money that we had to start it and had some really trusted angel investors. So it was a little bit different for us, but yeah, as you go out. And you get to that evolution and you need to start bringing in more money.

It is a full time job. Even just the investment bankers that I talk to on a regular basis, I have to carve out a certain amount of hours every week in my

calendar. being bootstrapped. So we're bootstrapped over here. You're just a couple of angel investors, mostly bootstrapped over there.

It was never a question of, Hey, grow at all costs. It was always. Grow responsibly, make sure, and responsibly might be the wrong word because people might take offense at that, but, grow within your means, is the way of saying it now, obviously, if there was all of a sudden a huge demand for the things that we're doing, we're going to go out and tap into those capital markets to meet that demand.

But for the most part, if there wasn't that demand, it was like, all right, create the demand, grow the organization, create the demand, grow the organization, and

exactly right. And I would even take it a step further, Bill, at least for us, it's not about grow responsibly. It's about grow to make sure that you remain highly referenceable.

And I was a firm believer from the beginning that We did not want to go out and just spend a ton of money to acquire clients just to acquire clients. It had to be about quality of delivery and let the work, stand on its own and the growth would come. And that's what started to happen for us.

And when you grow incrementally like that you're able to manage your cash, especially with the types of solution that we are. And then when you're ready to go out and get it, go out and get that next round of cash. Your growth looks so good and your profitability looks so good that it becomes an easier task to

do.

Talk to me about this environment. The sales cycles have elongated, but is there less risk tolerance from the clients? Are they doing more due diligence and saying, no, look? We need to know that you're not banking at Silicon Valley Bank. We need to know, just those kinds of questions that you didn't get before that they're now like, hey we want to make sure you're here a year from now or two years from now, because this is an investment for

us.

Absolutely. They want to Not only the viability of your business, but what are your growth plans? Where are you planning to be in five years? And, you have to be prepared to answer those questions and I certainly understand them. So it's not just the elongated sales cycle now, I think it's a lot more consensus driven.

And so it takes longer just because I think that our CIO colleagues are holding, really holding their next level accountable to say, if you're going to choose this solution, you're going to make sure you can measure the ROI, and you're going to come back and you're going to let me know, how it's going and whether or not we really got the return on investment.

So I think there's just multiple more steps in the sales cycle. Along with just the challenges that they have in terms of getting things done. I was talking to a client the other day. We've got verbal commitment. We've gone through the red line process. And they implemented a new ERP system.

And now all of a sudden, all just requisitions to get started. And the legal connection is just backed up. So contracts, they got so backed up. So now it's just a matter of getting the contracts through the process. So it can be a number of things.

as a CIO, one of the things I addressed that specific problem. we we had 130 projects going at any given time, and we're kicking off 50 new ones a year. from an IT perspective, and so many of them ran into this problem that I sat down with Legal, and we said, alright, so why does this take so long and whatnot?

And then we created a multi tiered process so that we could actually get our partners started in their work without a full blown contract and all the things that were associated with that, because we had these phased contracts, like they could come in and they weren't working with our live data.

They were working with synthetic data. Then they were working in our sandbox environment that, and we realized, hey, there's different risk tolerances for those, and there's different contractual requirements for each one of those. And so we were able to, to, by breaking those things up, we were able to get started a lot quicker on these projects.

When I throw it, I just, I, every time I get the opportunity to throw that out, I throw it out because. I can't tell you how many health systems still struggle to get projects off the ground, and they're just like that's just the process. It just takes that long for legal to get set up. I'm like, no, you can solve that process.

Yes, I agree. I agree. And I think some of our clients have solved that problem. They've solved it really well. And whether they start with a smaller scope we're doing a lot of work in the test environment, but now that we've moved and our clients are looking to do more RPA, there is a different level.

And I think that vendors can also be very prepared from a risk perspective in terms of making sure they have all their cybersecurity policies documented, that they have you know an assessment that's done on their organization. I think that's another piece. So as a vendor, you've got to get your ducks in a row too and anticipate the questions that are going to come to you.

You just hit on another hot button for a lot of organizations that there, there used to be this idea of, Epic first, right? That's the big terminal And it really, I use it as a term to say. Platform. Platform is what more and more health systems are looking for.

And it's interesting that you guys made that maybe not that pivot because you already had this capability, but you now have expanded it, that it was like, hey, we're a testing platform. We can automate your testing. And the team steps back and goes, hey, you know what else we can do? We can actually do RPA in the live environment on this, and this, because the tool's already built.

It's already there. And I'm hearing more and more CIOs say, That's a strategic value. I don't have to do another contract. I don't have to do another vendor relationship, and I can create value for the organization. That's think, a major movement for 2024.

I agree, and I think it also supports the strategy around application rationalization, which they're still dealing in a significant way.

My favorite, AppRat.

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Gartner, Top 10 Strategic Predictions for 2024 and Beyond. These are fascinating. So let me rattle off a couple of them for you and then we'll dive into them. 2026, they're saying AI makes us seem better than we are. Number two, AI productivity shifts geopolitical balance.

I'll skip that one. Energy aware operations are a competitive advantage or a failure risk. JNI supercharges legacy modernization. Robot workers outnumber people, machine customers force CEOs to embrace new channels. I'll skip that one. CISOs get more power. I think that is absolutely happening.

And then, unions for people form to combat machines. These are obviously really big predictions. These are far ranging predictions. Let me give you a little bit of a breakdown. Gen AI makes people better and more powerful personally and professionally. They give a couple of examples. Individuals can use Gen AI to create better resumes, reports, work products, and interactions with others.

Because AI can boost the output of the entire workforce, countries with large, inexpensive workforces will not have as pronounced an advantage. And Gen AI can help create a more diverse workforce. inclusive of those in a wide range of age groups. They're predicting Gen AI is going to have significant impact, not only on individuals, and we can feel that a little bit today companies and creating a competitive advantage.

They're also saying geopolitically, it's going to have ramifications on countries. Is this just another bullish prediction on this? How do you feel about this one?

I think it's bullish, but I think like anything, there's cornerstones and nuggets of reality in it.

If you think about what you can do with some of these generative AI tools, I do see where some of these underserved communities, countries are going to have more of a leg up because of these tools. Absolutely, I agree with that. I think there's a flip side to this, and it was actually in one of the other articles, I think that talked about is AI the new truth detector?

So with all this, think about the flip side that's going to come with this. And, where's people's humanity going to go, right? So now people are going to use generative AI to decide how they want to craft a message and how they want to be able to, talk to somebody about a particular issue.

I think you're going to see people using AI to drive manipulation. And that to me is a little bit scary because what's going to happen with. Humanity. So I think it's coming. I think there's going to be enough regulations and regulatory components that are going to make there be some pause that this doesn't happen as fast as everybody thinks it's going to happen.

But I agree with it directionally.

I was chatting with Kevin Malloy, a doctor at George Washington this morning, and he's one of those computer nerd doctors, and I appreciate him because he's playing around with the APIs on OpenAI and a bunch of other such stuff. And I just, love comparing notes with him.

I just decided to record it today because it's so fun to talk to him. And and it's going to be an episode that we put out there. But was interesting to talk about the OpenAI Keynote this year had a feeling of the iPhone announcement all those years ago, which Steve Jobs said, Oh, my gosh, you're going to get a music player and an email and an internet communicator and a phone.

And I watched that. Yeah. Yeah. And then he goes, and it's all gonna be one device, and that's when people are wrapped. They're like, oh, the world has changed. And the world has changed. That was the advent of something new. asked him, I'm like. I was watching that keynote by myself in front of this computer and was sitting there going, oh my gosh, this is that moment.

This is that moment where I saw the iPod and said, or that iPhone. I'm like, I have to have one of those. And I'm looking at this thing going, Oh my gosh, this is, I have to get this into the hands of every one of my workers and train them how to use it to be more effective because if I do, that one person is going to become three people.

I think it's going to be really important. Like we already have a policy and procedure. company on the use of AI, because if you think about some of these tools that are out there, we have some proprietary frameworks, some of the things that we do to have to be able to jumpstart the automation is based on what our developers have done.

So you have people that are putting in code and having it spit back what you want. we got to be careful in terms of what we put In these, spaces to make sure that things that are proprietary to us stay that way. There's certainly some governs around that.

But I think it's gonna be really important for everybody to have some rules of the road and some policies around how your teams are using AI and making sure they're using it for the good. And it doesn't cause any harm, not only to the company, but I do worry about the humanity of this piece.

And a, I think it's a great tool for certain things, but my son was saying to me the other day, he was using chat GPT, right? Had a fight with his girlfriend and was using it to go in and say, what's the best way for me to say this? Or whatever it is that he said.

And he said, mom, some of the stuff that it came back with was so calculating like It was like trying to manipulate her based on him saying something that she would like to hear. And so now with this authenticity, where's your sense of humanity?

Yeah, we are all going to have to figure out how to utilize it as a tool for sure.

the iPhone is the same way. there are those people that are glued to it and, they get lost in it. I have family members that they're playing a game on their iPhone and they're home for Christmas and, we're only together as a family for five days a year and they're on their phone playing their game.

And I'm sitting there going, have we lost something the iPhone didn't exist. Would we have a better family situation, a family dynamic potentially. But I think everybody, absolutely, everybody has to learn how to use it and grapple with it. I want to close, close with this.

You and I could talk we could hit a lot more, but they have this one on electricity. I just want to touch on it's fascinating to me. There's a rapidly growing need for more electricity to power computers. AI amplifies energy costs and availability. By 2026, half of the G20 members will experience monthly electricity rationing, turning energy aware operations into either a competitive advantage or a major failure risk.

I read that and I was reminded of two conversations I had. One was with B. J. Moore, at Providence, and the other was Mike Pfeffer, CIO at Stanford. And they didn't point to that specifically, but they were pointing to This idea of a sustainable IT operation has to take into account how much fuel you're using and that fuel is electricity.

And where you get that electricity from, is that electricity always going to be available and that kind of stuff. And I think the really forward thinking CIOs are starting to look at that as, it's supply chain. Electricity is part of your supply chain. Absolutely

it is. Absolutely it is. I don't think we've begun to even think through a smidge of the ramifications of this.

everyone's so excited about it and wanting to jump in and use it. Like just even reading, like I said, that article on, wow, what is this going to do to humanity? Are people going to be manipulating other people? Can you trust people? What's going to happen to the trust factor? That's just one component.

What you're talking about is another. And I, like anything, there's balance, but. We got to be taking a step back and

giving some thought. Have you received emails yet that you scratch your head and go, I'm pretty sure that was Gen AI created. Oh,

absolutely. Absolutely, I do. Absolutely. Yep.

For sure. Definitely.

And they're building it in! Copilot with Microsoft is designed to help you with your email. And so is, I don't know if Google's calling it yet, but it's built into Workplace. Yeah. The other thing is, The cost of it, I think we're going to get nickel and dimed here.

So it's going to be, Hey, for co pilot, it's 10 per month per employee. And then you go wait a minute. We have 60, 000 employees. That's a big number.

Bill, to your point, go back to the iPhone. Remember the iPhone? The plug was different than every other normal, whatever, is it USB C? I don't know, all the USBs, whatever, and now over in Europe?

So now Apple has to go back to the generic. You know how every time you would have a different Oh, yeah. so that's, what, look at the money that was made on every time you got a new iPhone, the different charger connection, they would change the shape they could do that because it was Apple and everybody wanted it.

So I think your point is very valid what's going to happen in terms of the cost of this thing, because it's going to be about supply and

demand.

we're in for some really dynamic and interesting times, I

think. 2024 is going to be an interesting year. And we can't even fathom what the next five years are going to look like.

I played a little game this morning with Kevin on the recording of what's healthcare look like in 10 years. And he just laughed. He's just Oh my God. You're, he's an ED doc in DC. I'm like, I think we can, unfortunately, I think we can assume the building's only going to get older.

the ED is still going to look the way it looks. We're not going to redo it. So there's still going to be, patients in the hallway and that kind of stuff. But the technology around that should get a lot better. More care should be delivered outside the ED so that we don't have to.

Have that kind of situation as often,

think we'll see a significant impact, at least this is my hope, to our rural communities, who, just do not have the same level of access to care, period. We could, I don't want to get into a whole, debate, political discussion or whatnot, but you probably saw what happened with my dad.

Now, granted, that's a little bit different. He had a daughter that was his advocate. Certainly didn't live in a rural community, but that's what's starting to happen. And it's exciting. I hope we take the good, more of the good

for sure. Absolutely. Laura, always a pleasure. Thanks for coming on the show.

My pleasure.

Thank you, Bill.

  📍 And that is the news. If I were a CIO today, I think what I would do is I'd have every team member listening to a show just like this one, and trying to have conversations with them after the show about what they've learned.

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Cedar Sinai Accelerator Clearsense, CrowdStrike, digital Scientists, optimum, Pure Storage, Suretest, tausight, Lumeon, and VMware who have 📍 invested in our mission to develop the next generation of health leaders. Thanks for listening. That's all for now.

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