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Digital Health Leaders are leaving. Is this a signal of a strategy shift?

Transcript

 today? Five Health system digital chief exits for the industry. And does that mark a change in our direction in terms of our digital health strategies?

 my name is Bill Russell. I'm a former CIO for our 16 hospital system and creator of this week Health. A set of channels dedicated to keeping health IT staff current and engaged. We want to thank our show sponsors who are investing in developing the next generation of health.

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 All right, let's get to it. Becker's posted that five Health System Digital Chiefs exited the industry. I'll just give you a little taste of this. Several ho high profile Chief Digital officers and digital leaders have left their health system roles for positions with industry disruptors and startups in the last year, last March, Renton, Washington based Providence, former Chief Digital Officer, Aaron Martin, left his post to become Vice President of Health at.

Where he previously led the self-publishing and media manufacturing on-demand businesses in his current role at Amazon, Mr. Martin strengthens the company's partnerships with healthcare providers. Number two, Oakland, California based. Kaiser Permanente, former Digital Chief Pratt

Pratt Vena also exited the system last October for a role as Executive Vice President and Chief Digital and product Officer at Target, and he sits on a Board of Frontier Communications. Nick Patel, MD Left Greenville, South Carolina based Prisma Health, and October after 17 years. With the system and four years as Chief Digital Officer, Dr.

Patel is now working on several projects, including spending time as a digital strategist for Aegis Ventures Digital Transformation Officer for Upfront Healthcare Services. He also advises Title Care, IRIS and more. In December, Morristown, New Jersey based Atlantic Health System, lost its Chief Digital and Information Officer Benjamin Mazano.

To Tendo, a tech company working with health systems to connect patient and organization's insights. And finally, let's see, Taha MD probably said that last name wrong, is the most recent high profile digital chief move. Dr. Cuss, how left his role as Chief Digital Officer and analytics officer of Trinity Health, based in Livonia, Michigan, to join GE Healthcare as Chief Technology Officer.

, let's see. All right, so that's essentially it. And the question of the day is, does this signal a change in healthcare strategy or healthcare's approach to digital innovations and that strategy? And I think the answer to that question is absolutely. It does. , I think there was a time where we were thinking that there was gonna be another revenue stream and a significant revenue stream for healthcare, and it was gonna come from this digital innovation side.

And so, especially the larger organizations invested heavily in this space, they went out and got a high profile, , digital officer. Somebody generally from outside the industry who. , some big tech or other background, and they were going to come in here, identify all these opportunities for the digital transformation of healthcare, and they were going to, , understand, , either operate as a VC or as private equity and they were going to fund these organizations.

They were going to back them with health system investment dollars. And the, , belief was that you would see. , maybe those exits would be in five years, maybe they would be in 10 years, but you would see a growing valuation over time, which led to exits, which led to an additional revenue stream for the, or at least investment dollars for those health systems.

I don't believe that is panned out. , , I think we were, I'm gonna have people say, well, but we had this exit and that exit. We have not had a ton of exits in the healthcare space for starters. Second, I don't see a lot of exits on the immediate horizon. And, , third, , These exits would signal to me that the health systems, again, that are fairly cautious organizations, risk averse organizations, went down this path hoping for, , hoping for return, did not see it, and maybe their expectations were wrong.

Maybe they needed to have a longer. Window in order to let this play out. But at the end of the day, I think we're seeing a pullback. I think we see a pullback here. I think we, , at, at these organizations, , somewhat. I think we're seeing a pullback in, , some other organization. I think Jefferson's one of those that we're seeing a pullback, , from this, at least this VC type model.

So what model is taking over the, and, and, and the model that is taking over is one, I believe. I believe this is happening, and it is that health systems are identifying their core business as healthcare and saying, what technologies can help us in the delivery of care. , and I'm not sure this shouldn't have always been the model and the approach, , identify when you're running a multi-billion dollar business, starting a new business is extremely hard and requires the right culture.

We see this in Amazon and we poke fun of it in healthcare. We poke fun of it all the time. It's like, oh, they tried and they failed. Oh my gosh, they're back again. What did, what, you know, gluttons for punishment. Oh, they tried and failed again. And we keep pointing and laughing. , but it takes that, that kind of culture.

Failure is not the end. Failure is a step to the future in order to really make it and, and, and build out another multi-billion dollar revenue stream. Amazon's gonna do that. They have the right culture, as are others. Quite frankly, I think CVS has that culture and I think they're going to be able to do it as well.

, our business is healthcare. Our culture is not one that rivals the tech startups. We don't have that risk profile. We don't, we don't instill that kind of culture. , mostly cuz it's. , it's almost diametrically opposed to our healthcare culture. We're one, , we're a culture that mitigates risks in people's lives.

In disease management, we mitigate risks, and so we naturally hire a lot of people that are in the risk mitigation business. And so when we say phrases like, fail fast, they, they cringe. They just look at us like we're. And they should, because from their perspective, you would never do that with a, with a human being, with a life on the line, you would mitigate those risks.

And so it, they almost look at it as sort of haphazard and, , almost irresponsible to say those kinds of phrases. And so the cultures don't match. So what, what takes over? What takes over is one in which we go back to our core business and our core culture and we say, what is the thing that is going?

take us to the next tier, either in terms of efficiency, in terms of quality, in terms of, , outreach and access, in terms of experience. What's gonna take this whole thing to the next level and make it more sustainable over the long term? That's not to say. That we won't venture out in the future and look for things.

It's to say if we are going to find another revenue stream, it will be very healthcare related, and I think it will be some sort of a r r model. This is what insurance is. Insurance is an a r model. , annual annual recurring revenue, or monthly or r monthly recurring revenue Insurance is a monthly recurring revenue.

right? And so healthcare has to get into that model of keeping people healthy for a monthly recurring fee, and then utilize technology to keep people healthy. And so you end up with a more sustainable, , model for revenue. and you end up with a more sustainable use of technology in order to support the core business.

So yes, I think these five health system digital chief exits do signal a change in our industry. I think there are some people still going after that that are gonna hear this and say, oh, no, no, no, no. I would say evaluate now. Because what you're looking at is likely a bunch of organizations that have gone farther than you down this road and gotten to the end and said, Hey, there's no gold at the end of this rainbow.

So just something to consider as you move your digital health investment strategy forward.

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