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Bill Russell: Today on Newsday.

Jason Rose: I'd say with zombie apps, is that they're they're often not maintained by the vendor. And they're just sitting there waiting to get attacked. And these are probably the most vulnerable apps that there are.

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. Newstay discusses the breaking news in healthcare with industry experts

(Main) Hey, it's Newsday, and today I'm joined by Jason Rose, CEO of Clearsense. And we're gonna, we're gonna have some fun. Hey Jason, welcome back to the show.

Jason Rose: Appreciate the opportunity as always.

Bill Russell: I'm looking forward to this.

We're gonna do something a little different. I wrote an article, you wrote an article. Usually we look at the news in general and what's going on, but this is the news and what's going on. And it is the challenges that a lot of organizations are facing right now with regard to putting budgets together, figuring out where they're gonna go.

There's a potential for significant Medicaid cuts and, the talk is so varied. If this president does nothing, well, he creates uncertainty very well and so regardless of your politics, you have to agree with that. I mean, there's just there's a lot of unknowns right now, but the budget that is moving through the system represents significant cuts for healthcare organizations.

value. But I think there's a lot of the principles that just collide in this because there's just a lot of the principles. I mean, one of the things I loved when I read your article was this whole idea of zombie applications. And they're not quite alive, but they're not quite dead.

And as I have conversations with these CIOs, I still ask them, you know, what does your application portfolio look like? And it's vast and it's kind of crazy 'because some of it was from M and A, but some of it's just natural lack of good governance and it's just exploded. Talk to me a little bit about those zombie applications.

What are you trying to communicate there? What is going on at health systems that they have these kinds of applications?

Or could be systems that maybe you have a very, very few number of users that are actually accessing the system that is not getting the value that you're spending. For the number of people using or the value getting out of the system. And it could be, literally over $10 million right now in annual costs just on zombie apps.

And so if you think about the zombie apps. You know, we're talking about a lot about the economic issues and challenges there, but let's not also forget the same issues also create often cyber problems too. So these are applications in particular, I'd say with zombie apps, is that they're, they're often not maintained by the vendor.

They've already, you know, passed the support timeline and they're just sitting there waiting to get attacked. And these are probably the most vulnerable apps that there are.

And the first thing we recognized is. Like two months after we started the project, our number of applications grew and I'm like, why is it still growing? It's like, well, we're still finding stuff, like we didn't know what everything was. Then we found, like this whole group of applications, and I think this still exists in a lot of health systems that we just shut off and no one called like, it.

And maybe that's the path we should take. What happens when two organizations come together? I mean, you've been through this a bunch. So when M and A happens I think we all assume that there's these decisions that get made that it's like very clear that we go, okay, we're gonna go with this one.

We're gonna get rid of this, we're gonna do this one, we're gonna get rid of this. But that's not really what happens, is it?

Jason Rose: I don't think that the uh, those who are in corporate dev or finance or the CEOs realize how massive of a cost there is.

It's just waste is what it is. My overriding point in this article was, put it in your investment thesis because why on earth would you not, if you're not putting this as a part of your investment thesis of a rough order of magnitude.

So, we all know health systems that are, you know, a couple years, four years, five years since the actual coming together and they still haven't done the reconciliation. So these two systems still exist. You still have these bloated IT teams and portfolios and so one of the things that I'm really focusing on right now is trying to help the finance folks, corp dev CEOs, understand.

How big of a deal this is, because if you're talking, and Gartner says 20 to 30% of all application portfolios are redundant, this is absurdly high. And so I read your awesome article, which was like a real world guide to hey, if you're faced with challenges with needing to reduce costs from your staff.

It's say 10 or 15%. Well, you're still actually removing software licenses, infrastructure and personnel, or at minimum, you're actually, reducing the number of things that your team has to manage uh, in the base of things. It's such an obvious play, but it's not a strategy application archiving, active archiving.

What I've seen, I've been here about a year and a half now, so I haven't been here for 20 years doing the same thing. I've been here a year and a half, so it's a fresh set of eyes. So what I've seen is that health systems in general that are not clear sense clients. Go and they'll hire one of our competitors and it's because they did it.

We need a business strategy. Where you have it, security, finance, clinical you know, the executive team at HIM, all stacking hands and say, okay, we're going to root out all the redundancies, all the waste, and we're gonna prioritize in a supply chain format on a regular basis that these applications are the ones that need to go and the timings.

And then you are working and you mentioned something earlier, Bill. You identify, this is a contract, this is the end. Procurement gets involved, they write the termination letter. You got communications to end users making sure that they're aware this is the end date when it goes to read only and all those types of things.

Bill Russell: So that's a really important point, you know, one the premise of my article is you have to make a 20% cut in IT. What are you gonna do? And I go through prioritize what cannot break. I mean, there's a whole bunch of things that just can't, you know, cybersecurity, storage, backups, et cetera. Second thing is, you know, accept innovation shrinks.

It doesn't die, but it shrinks. But the third one is adopt a crisis governance model. I'm gonna come back to that 'cause that's what you're describing. And then communicate like it's life support. Revisit every vendor relationship. So adopt a crisis governance model, what you're describing is the biggest challenge.

What they need is a crisis governance model or, or, or what you just described. A model that says, look, these are the priorities of the organization. There's a group of high level executives that say, look, this is the direction we're going and we're not going to maintain an application that just two people use and only impacts, you know, 3% of our patient population.

It's not driving anything of substance of value. And just because some people like it. That governance model is so critical. I call it a crisis governance model, which is primarily as small a part of the organization as you possibly can, and it's a group of people that has to live with the consequences of the decisions.

Jason Rose: And the backups. And the backups of the backups and all the above.

A little controversial what I'm about to say, but you kind of set me up on this Bill is oftentimes when we go to IT leaders, we point out, unless you're some unicorn, you probably have 20 to 30% blow in your portfolio.

But sometimes these leaders have been there a really long time and I am trying to understand why would, they would not say I need to make this a project. I'm gonna be the hero and I'm gonna take the cost out. And it's hard work. What you just described is, 'cause it's not an IT project, it's a business project, it's a strategy, it's operational.

So maybe they don't wanna stick their neck out unless they're brand new. That's why I've come to the conclusion is that the rest of the organization doesn't realize how massive a cost it is, but in reality is it's because probably these products are already budgeted. It's not the burning platform.

Whereas like, the bread and butter you know, I won't say easier stuff, but the maybe not sexy stuff is actually taking all these applications that are just unnecessary and wasteful.

Bill Russell: Well, I'm gonna give you two examples. If you can give any examples, that would be great

because I know you, with the position you're in, you're not allowed to talk about some clients and whatnot. So, the first one I wanna give you is so we had a city tour in Philadelphia and Chad Brisendine with St. Luke's was in the room. And one of the things is on M and A, when they go in, they don't mess around anymore.

And they look at him like he's insane, but he's done it three times. So it's like, no, we've done it. We know how to do it, we're gonna do it. That's one story. The second is Corewell. So I interviewed Jason Joseph, and when Corwell is the combination of two fairly large systems came together and they became Corewell, but when they came together, they had, as their mantra, single system, single operating system. And they relentlessly for the last two years, just went after, Hey, we're gonna create, as if we're a brand new entity.

Like, we can't do the fun AI stuff. We can't, 'cause the data starts, right? And everything's a mess. So we have to do that. But it wasn't just these individual CIOs saying it, it was the organization going, this is a priority. This is the direction we're going.

Jason Rose: completely agree. I'll start with what you just said a moment ago and I'll go backwards. So class research back in August noted that Clearsense has done the largest decommissioning programs in the history of decommissioning. So that's across any of our competitors in the history of time.

We've done the largest and we're actually in the process of doing a case study on one in particular, which I can't name who it is, but I can tell you it's a, you know, a hundred hospital system. Over $20 Billion. We have cut 750 applications of their 7,500 that they have so far. They do a lot of mergers and acquisitions and we are right now sitting at over $65 million of permanent operational cost takeout.

And so that to me is the model. It's a business strategy, it's a supply chain, and everyone is on the same page. Lots of transparency. This has got board visibility within that organization on a quarterly basis. It's most important IT project they have and it has been for years. So, it is absolutely real.

By the way I will point out is that we haven't even decommissioned their big EHR system yet. This is before that. And then another example is TSA's could be millions and millions of dollars a month. And it's just because you're sitting on their systems. So it's not good when you do the transaction, what you're describing, where in 30 days will go right to Epic. That's beautiful. I haven't actually heard that before and that's wonderful.

Bill Russell: TSA stands for.

Jason Rose: transition service agreement. So it's the interim timeframe while you're doing the acquisition.

And again I don't think, I mean, I know the IT team knows about this. I know the finance team knows about this, but I don't know if they're tracking this as closely as they should because it's a massive amount of cost savings. I've seen clients right now that are tens of millions of dollars just in TSA costs.

Bill Russell: when we did our EHR and one of the things was ar so they were always like no, we gotta keep that system running for ar. And I kept my eye on that for a little while before, I finally called you guys actually.

Yeah. They were gonna keep that thing running. And I'm like, alright. This needs to be a larger conversation. And so we had the conversation with the CFO. I said, when it gets to what point are you willing to shut this down? So we had that conversation. Then I said, all right, we have a solution that's gonna be able to move that stuff over.

Shut that thing off. And essentially we will get outta that contract. and they'll be able to still access that through our normal system through a link. They'll be able to get to that same AR and that kinda stuff. And they were like, oh, if you're gonna do that, then yeah, we can get rid of that system.

I'm like, well,

Jason Rose: yeah, you Just have to like give the options there. So I'll tell you like another thing that I found fascinating that a lot of people don't realize this really important. when we go and do a a relationship with a health system, most of our fees are actually capital budget for the health system because they're implementation.

And it's it leaders often have much more autonomy on their CapEx budgets. But because of the way. We implement where we're doing a lot of patient matching. We're doing reporting, we're doing data acquisition, not migration, but data acquisition, all those pieces and parts.

And we've already gone to audit firms. We're gonna do another white paper on this as well. Looked at Gap. These are capital budget items. That you can invest in and drives down massive cost savings. I mean, it is a really big deal because when you're thinking about my priorities of the year, a lot of times the IT leaders, these are very smart ones too.

You know? So it's a capital budget issue. It's an opportunity.

Bill Russell: let me ask you this, 'cause this is gonna be the and we will close on this actually. So it becomes a question of, I've just been asked to do a 20% budget cut, and I think a lot of CIOs are sitting there going, look. First of all, I don't, by definition, I don't have more money to invest because it needs to go down.

Unless that ROI is extremely fast and we can move and we can set a course where we can reduce that cost and measure that cost very rapidly over time. And I think. So if I'm talking to CIOs, I'm saying, look, the easiest cut you're gonna do is to things that aren't adding any value.

That's probably what you want to target first. That's the thing I would say is what you want to target first. Now, if you have a platform in place, if you have a clear sense in place, you can start to do that very rapidly today, but you could potentially have to put a platform in place to address those things.

That's probably worth doing from this perspective. You should be doing it every day. For the rest of your career while you're at that organization? Yes, you should. You should. Bringing applications in, moving applications out,

We're looking at the whole system. And we may not have come in because of M and A or EHR, we're just coming across to take out the 10 or 20% that might include my competitors.

one, one Piece of help.

that I'll leave on is that we haven't formally announced it. I think we're about a week or two away from the formal press release on this. But Clearsense is delighted to have a strategic partnership with Nordic Global. And so, with Nordic, and we're working on some massive projects right now that we're really excited about already.

But with Nordic, we have a tool that in a matter of weeks for free. We can do an assessment on the rough order of magnitude of cost takeout for the health system with extremely low amount of input from anybody in the health system. Probably a couple hours of interviews and access to a couple systems.

Take that to your CFO. Say, okay, more than half of this is gonna be CapEx, probably way more than half. And then everyone's happy and you become a hero. We've seen this time and time again, but happy to talk about that further. But that's a in this time of economics, distress. Just getting the ruffler magnitude.

we get that done in a matter of about three weeks, four weeks at the most. And then you can actually be a hero in this economic challenge.

Bill Russell: that's fantastic. If people want access to these articles, the links will be in the show notes and obviously you could reach out to Jason and the team as well.

Really appreciate it.

Jason Rose: Thank you very much, Bill. Appreciate it as always.

Bill Russell: Thanks for listening to Newstay. There's a lot happening in our industry and while Newstay covers interesting stuff, another way to stay informed is by subscribing to our daily insights email, which delivers Expertly curated health IT news straight to your inbox. Sign up at thisweekealth. com slash news.

Thanks for listening. That's all for now