This Week Health

Today: Focused! Our new Focus.

Digital Health investors are getting focused. Health Systems are getting focused. Are we focused?

Transcript

Today in health, it focus is our new focus is the title of this episode. We're going to look at digital health funding, but we're going to talk about a trend that I'm seeing as I'm having conversations. With more and more view. Here we go. My name is bill Russell. I'm a former CIO for a 16 hospital system and creator this week health instead of channels and events dedicated to transform health care.

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The article we're going to go off of for this conversation is a state of digital health. 2023 from gold rush to consolidated. And consolidation in a cooling market. This is a H I T consultant is the article. I don't know who submitted. That right in front of me right now. But let me grab my glasses.

Here we go. 2023, saw a shift in digital health from record breaking funding to consolidation due to market. Cool. According to CB insights, the pandemic had inflated in innovation funding. Which have to 13.2 billion in 2023, a pre pandemic level. Mega rounds exceeding a hundred million decreased. However, the median deal size remained high suggesting resources being focused on fewer promising ventures. The number of unicorn companies, decreased M and a deals nearly doubled. Pointing to consolidation focus despite the downturn opportunities for expansion and technology, refinement exist. In this reshaped ecosystem. All right. So again, If the listener to this episode is primarily in a house system. What what does this article tell us? And as we're looking at it clearly tells us, it tells us a lot about the digital health space and it had gotten really inflated prior to the pandemic.

We saw deals that didn't make any sense. We saw Evaluations that didn't make any sense. And people were pretty open about it. The

Conversations we had about the tele Teladoc Lavango clearly the valuation of olive in hindsight looked to be a little ridiculous. And a couple of the other unicorns that are no longer with us. And but that wasn't it. We saw a bunch of companies that had valuations that didn't really make a lot of sense and we're not a profitable companies.

And so with the switch up, they had to pursue M and a. Or they had to scale way back. Well, it turns out that the the investors still have money to spend and still have money to invest in, are still looking for returns. And if you were in that space, you would probably be doing the same thing they're doing, which is focusing in on the fewer number of organizations that you believe are going to be successful.

How do you identify those organizations? One is they have deals already. Right. You're not looking at you're not looking at companies that are out there selling ideas with PowerPoint presentations or even good software. You're looking for people that know how to sell into the healthcare ecosystem and have a deal flow already going. So they have the ability they've shown the ability to sell to not just one health system, because almost anybody can close one deal. The question is who can close. The second, third, fourth, fifth deal and are looking to scale, and then they're investing in that scale.

If they see that the organization has the wherewithal to succeed. At the challenge of selling, then they will invest in help them even potentially with their connections to grow their market share. I think the other thing they're looking for is leadership. Right. So you're looking for CEOs that make good decisions that not only have a good product and a good market that they've established. And good concepts, but also No, how to lead. Right.

So they're solid leaders. They hire, well, they handle their money. Well, they navigate things like Silicon valley bank. Well, They have contingency plans. They know how to make it through an up economy or a down economy. They know how to position themselves. They do marketing well.

They do sales well. And, but they are looking for leaders who have done it. Either leaders who have done it before and are doing it with a new company or leaders who are doing it potentially with this company for the first time, but show that they have the ability to get things done. So there that's where they're consolidating. There investments too is those kinds of company. In other words, they are focusing. I am hearing this word focused. A lot I'm hearing in interviews, I'm hearing it. And discussions with CEOs or we're focused in on fewer initiatives. We're focused in, on high return initiatives we're focused in, on on outcomes or whatever the specific strategy has to be. And by the way, I hope that is true. And I believe that there is a certain amount of focus that's happening. I don't know if we've been able to decrease the noise that exists within within it.

I will find out more. After I meet with 14 CIS this weekend and 15, the following weekend. But I don't know if we still have a ton of noise and we are creating that focus ourselves, or if the organization. For lack of funding and whatnot is retrenching and saying, look, let's focus in on these. Core initiatives. And I'm hoping. That it is the ladder, because one of the things we learned during the pandemic is that when we focus, we can get an awful lot of things done. And so if we step back instead of trying to do a thousand things, or let's just say a hundred, 110 projects, We're doing 40 projects, but those 40 projects have a defined ROI. That we have piloted and tested and we just need to scale and then measure that ROI after the fact. We're going to deliver what the organization is looking for. Today. Right. I'm. I know we need to be able to walk and chew gum at the same time.

We need to be able to do a hundred projects. We have staffs

Beep.

are big enough in a lot of cases to do a hundred projects. But at the end of the day, I think a lot of organizations, we would be better spent if I came in there and essentially said, you only get to do half of these projects this year. Focus focus on those half projects, identify the ones that you want to do. And it would cause organizations to be more disciplined, to look at that ROI, to really hold people accountable to the ROI they're putting in front of the organization. And to make those things happen.

By the way, you could do this on a micro scale within your it organization. I found an interesting when I did this in a form of this. When I was CIO at St. Joe's that we locked off about 20 projects without breaking a sweat, like nobody in the organization put up a fight or even noticed. It was that easy to lop off about 20 projects.

Now we had. Well over a hundred going so lopping off 20 projects. I did free up a lot of resources, but it wasn't as substantial as you would think. So we locked off 20 without breaking a sweat. And then we started to put a framework around the ones that were remaining to make sure that we were prioritizing by putting the best resources and the maximum amount of resources on the right projects.

Because think about this. Your infrastructure, people are going to pull them 15 different directions. What if you told your infrastructure people, Hey, focusing on this project first, this one second, this one, third, this one fourth. And they were able to prioritize their time based on the value and the return to the organization.

And therefore. Your investment in those resources would be you know, would be warranted and would be rewarded. So anyway. Focused is our new focus is what I'm hearing over and over again. And we're hearing that in the investment community and I'm hearing it from the CEOs and I hope it's the case.

And I hope we can leverage this new found desire for our systems to focus, to actually do that. And deliver the return that we know we can. With these technology projects. All right. That's all for today. Don't forget to share this podcast with a friend or colleague. You said as a foundation for mentoring and keep the conversation going. We want to thank our sponsors who are investing in our mission to develop the next generation of health leaders.

Short test are decide parlance, certified health, notable and 📍 service. Now check them out. If this week health.com. Slash today. Thanks for listening. That's all for now.

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