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August 31: Today on TownHall Reid Stephan, VP and CIO at St. Lukes speaks with Chuck Podesta, Chief Information Officer at Renown Health. How did Chuck take his organization's IT department from 7% of operating expenses down to 4%? Why is it essential for CIOs to evaluate the relevancy and cost-effectiveness of innovation, like AI, against the organization's size and budget? In what ways can managed services be leveraged to achieve both savings and improvements in non-core areas, like nutrition and environmental services? How does focusing on core IT competencies impact other departments or units within a healthcare organization?

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Today on This Week Health.

People were just out there going around IT, buying whatever they want to buy. We had to really put in tight governance, to stop the bleeding, certainly, of buying things, Our software we actually found 50 applications that were running on a system that nobody had signed onto in the last month. think about cybersecurity. Old product, old oss, just waiting for something bad to happen.

Welcome to TownHall. A show hosted by leaders on the front lines with interviews of people making things happen in healthcare with technology. My name is Bill Russell, the creator of This Week Health, a set of channels dedicated to keeping health IT staff and engaged. For five years we've been making podcasts that amplify great thinking to propel healthcare forward. We want to thank our show partners, MEDITECH and Transcarent, for investing in our mission to develop the next generation of health leaders now onto our show.

welcome to the This Week Health Town Hall Conversation. I'm Reid Steffen, VP and CIO at St.

Luke's Health System in Boise, Idaho. And I'm joined today by my friend Chuck Podesta, the Chief Information Officer at Renown Health. in Reno, Nevada. Chuck, welcome and thanks for making the time.

Thank you, Reed. No, I appreciate uh, you having me on this Friday, and it is Friday, so I'm happy about that.

Yeah, so Renown Health, we're, I've been here for two years. At Renown Health, I am the CIO, as you mentioned. Renown Health is the only integrated delivery system Nevada. And in Northern Nevada, we're the only not for profit healthcare system. We do have a children's hospital. We have two other healthcare facilities.

Regional which is in Reno proper. And then in the south part of Reno we have a South Meadows campus as well. We also have an insurance. Company called Hometown Health and we have a really tight affiliation that started in 2021 with University of Nevada, Reno medical school.

So, we're rapidly moving into more of an academic medical center type of environment for Renown Health. So, we're super excited about that because my background, at least in the last 15 years or so, has been in academic medicine. So, I'm excited about the journey. Yeah, so I mean, I started in healthcare, gosh, over 40 years now.

And, I usually, when I introduce myself I tell people that just makes me old, but somebody stopped me one day and said no, no, no, that, that means you have wisdom. And , so I tend to, lean towards wisdom rather than age. Yeah.

Wise means better than old, so yeah, I think that's good.

Yeah, so I'm wise now, so that's but I started off actually as a computer operator. My degree in college was education, elementary education with special needs and, at the time, programming, BASIC, COBOL, all that kind of stuff was really getting big, and you know, so I went back to night school and then got a job as a computer operator and worked my way up.

I think I've had every Job in it, which actually, even though a lot of it's aged it, it's still relevant. But, 'cause I was a computer operator, I was a programmer. I actually was a C T O before it was called a C T O. Then I ran applications. As a director and then moved into an interim CIO role and then the CIO role all within healthcare at multiple organizations, mostly in New England.

Although I've done 5 years in Southern California, I lived in Huntington Beach, worked for University of California, Irvine, that system. Prior to that, I was at the University of Vermont. And then during COVID, I did an interim gig at University of Connecticut another academic health system. And then, yeah, I wasn't really sure I was going to continue to be a CIO, but COVID really, you know, I'm glad I didn't miss that from a CIO perspective.

I mean, as you know, it was crazy. But it was a time to lead. It was you could really hone your leadership skills and the wisdom that I had. I could use that. We were all focused on a common enemy, so it was kind of cool to see how the organization coalesced. There was no job descriptions anymore. People worked long days, nights without complaining, did whatever, volunteered for everything.

It was just so nice to see, and I'm hoping we can keep some of that, going forward. It was just amazing to see yeah, so I've been here for two years now at Renown we've done a lot here um, as I talked to you previously when I got here, we were at 7% of OPEX, and uh, yeah, which you know is way high and in two years, we're at 4% of OPEX, and you would think, well, oh, you must have, like, terminated everybody, and you probably have all kinds of morale problems.

But no, it's just the opposite for us. Of course, we had to go through some cuts to get there, but we also did some other kind of creative things around that. But we have higher employee engagement scores. We were in the bottom 5 of the organization. When I first started and now we're in the top five departments over that two year period with all those changes.

And so, to me, there's a formula around how to make that happen. Also, our customer service scores have gone up as well and working relationships with the organization. Our culture has completely changed to more of a culture of kindness, IRIS. As opposed to a dictatorial type of culture. Yeah, and so, you know, and I've had ideas about how to do that, but this is the 1st time where I kind of brought it all together because I had that 7% bogey out there that I knew was not sustainable.

And we were losing money. It's a lot of people were postcode anyway. 📍

  📍 We'll get back to our show in just a moment. I'm gonna read this just as it is. My team is doing more and more to help me be more efficient and effective. And they wrote this ad for me, and I'm just gonna go ahead and read it the way it is. If you're keen on the intersection of healthcare and technology, you won't want to miss our upcoming webinar, our AI journey in healthcare.

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that's, that's, so let's, let's talk about that for a minute. That's super interesting. So 7% your IT budget is a percent of opex, and you got that down to 4% in a couple of years, and you said that you have a formulary.

What is the formulary? How did you do that? What are things that others might learn from as we all kind of struggle with cost pressures and trying to really be efficient with our being good stewards of our resources?

Yeah, so, so what we focused on first was the things that don't affect people per se, right, is that's the last thing you want to do.

You don't want to have a reduction in force. You don't, you know, you might have to do a reorganization because people are in the wrong jobs, things like that, right? And that's fair, but so we focus on application rationalization, right? We had 728 applications. We were spending over million on just software maintenance, way higher than where we should have been.

There was no governance in place, per se. People were just out there going around IT, buying whatever they want to buy. And so we had to really put in tight governance, to stop the bleeding, certainly, of buying things, and then really focus the team of finance, supply chain, IT, legal, and really looking at uh, Our software and who's the owner of that software and getting to them, and are you actually using that software?

We actually found 50 applications that were running on a system that nobody had signed onto in the last month. So, and think about cybersecurity. That's effective. Yeah, right? Yeah. Old product, old oss, just waiting for something bad to happen. Along with just the software maintenance.

So, so we started down that path. In two years, we've cut about 4 million out of that 28 24 million. It's ongoing. We continue to keep going with the program. We have a whole formula of how we do that, people assigned to it. So that's been cool. That's been a big hit on the 7% without really affecting people in the organization.

But we did have to do, yeah, we did have to do, reduction in force. I focus more on leadership. What I did was, a lot of times staff get the brunt of reduction in force, and in a lot of ways it's not fair. Typically, leadership, certainly you're making more money. So, if you do a cut in a management position, you're going to get a bigger saving.

But what I did was called a span of control. You look at who reports to who and how many people a manager has under them. If you've got a manager who's got a supervisor and everybody reports to the supervisor, you don't need the manager, right? Or you don't need the supervisor. Somebody's got to go, right?

So, you start looking at, we were somewhere around one to five, one to six. Spanning Control, and now we're in 1 to 9, range. And so, again, you're cutting people, but you're doing it in a scientific way of making the organization better. you know, you know, organizations grow organically.

You get a person here, you don't want to lose them. So you make them a manager over here. And, so it's time to take a step back and really look at that. So that was a component. Another piece we looked at was core competencies, what should in IT should we be doing and what should we not be doing?

And the way I looked at it was like, are there companies out there that can do it better, faster, cheaper? Yeah, and if they could. Then we need to talk to them. So when you look at data centers, right? We had already had a lot of our data center outsourced to NTT, so that was good. That's not a core competency.

We shouldn't be running data centers, and I know we're all moving to the cloud, but we shouldn't be managing that either. Other people can do it faster, better, cheaper, right? Desktop support. Now, helpdesk. Now asset management, right? Other people can do it better again, faster, cheaper so we looked at all those areas and we did a couple of things.

Some areas we just did straight managed services. Here you go. Asset management, for example you got an India operation. Awesome. You can get people in India to do our asset management, right, at a much lower price point. So, boom. Other areas like desktop support, we liked our services. We have a bunch of people doing that, very committed, very good at what they do, known by the customer.

So, what we rebadging. So, we batched a company called R4 Solutions. They have an India operation, and what we found is, because they are a for profit company, they tend to manage people on metrics better than not for profit companies do, right? And it's just, I think in healthcare, from a leadership perspective, when it comes to actually managing by data and metrics, we're not as good as For profit, right?

Because they, that's where the margins are for them. So what we found is we, we started looking at, for example desktop support people, how many helpdesk tickets they close in a day, right? And some were very high and some were only very low. And we're like, okay, you start looking at that and now you work with those individuals.

And what you find is that now you can do a lot more work. With less people, right? And by rebadging, they manage all that for you. And then you share in the savings associated with getting that work done, meeting the SLAs and having, a better product in the long run. So that rebadging, it's not 100% savings as you would get if you cut.

An individual, but it is a higher percentage than an FTE. They managed all the you know, transition over. We did transition bonuses to keep people whole and, they were able to do, use our insurance company if they wanted to for their health. So we did a lot of things there. To do that. The other thing we did was what's called a professional employment organization.

We're trying it where now we can hire from all 50 states because, as we know, we're all pretty much remote now with COVID and so that's helped us a lot. Get rid of consultants, right? You couldn't find people to move to Reno. To work on Epic, for example, right? So, when I got here, we had 40 consultants working in the Epic and some other areas just doing, like, maintenance items and, not really project related stuff by hiring and letting people work from Florida or wherever we were able to reduce that, right?

Because now we can recruit and not have people move to Reno. You might have the same issue in Boise. I don't know. I've never been to Boise. So, but, you know, it's those types of things that you need to really look at is that span of control. It's application rationalization. The things that you are good at.

Yeah, kind of that

buy, build, bridge kind of concept.

Yeah. Yeah, yeah, exactly. Yeah, exactly. So, it's not just one thing that does it. Now, in the meantime, while you're going through this, you've got to be communicating. Every day, right? Because people start making up their own stories, right? When you have a void of communication.

And, you do a span of control and you start, yeah, you just laid off 5 managers. All of a sudden your management team is like, okay, is that we're done? We're going to work. Yeah. So you've got to talk to them about, no, this is what we've done. This is span of control, how it works. And so I'm very transparent, and people get it.

They're, they're adults. They're human beings. And if you're straight with them, they might not like what you're saying sometimes, but at least they'll respect that you're being honest with them. And that's why I find a lot of organizations, when you start hiding things, and, they just make up their own stuff, and that's the morale issue.

What I found being very transparent, people on board. The other thing I did was educate them on our finances, not just IT. We're at seven percent. Our goal is four. Let's rally around that, right? Oh, where is it this month? We're at 6. 2. Where is it? Oh, 5. 7, right? You give people a challenge and a goal.

People love that. Even though it's kind of has a negative connotation. And then in the organization itself, I mean, we were losing loads of money, 21 and 22. We've turned it around in 23. But every month, whatever month we've closed, I would present all of our organization. I would present our EBITDA. I teach them what EBITDA was how they look forward to that every month because we're actually turning the corner and instead of, and they can see now that, you know, what, we're probably not going to have to cut as much anymore.

1, we're at 4% now. And two, the organization's better. Now we can start planning for the future. You've got your whole team around that now, and that's, I think, where our engagement scores went up because they felt communicated to, part of the solution, they were able to come up with, if they found something, bring it forward, we'll get our savings things like that.

So, multi faceted, but... You could definitely lay it out into in a plan, and I could definitely, like, work with somebody and say, okay, this, a new CIO going into an organization, 7% or 6% or whatever it is. Here's step 1, here's step 2, here's step 3. Here's, so there's a model now, and I'm actually going to Becker's, and I'm going to talk about that model, and I've got a podcast, another podcast coming up in September to talk about that model as well.

The other thing I would say, too, is We need to, and I mentioned this to you in the last conference we were at, as CIOs, we really need to look at the size of our organization and stick to the knitting, right? We're 1. 7 billion or so. We shouldn't be doing AI innovation spending money on shiny bright objects.

We should understand it, see where it's going. But I'm going to talk to my friends over in Cleveland Clinic and Mayo, and what are you doing? I'm going to talk to Epic. What are you doing with Microsoft? Let them do all that shiny bright object innovation stuff, and then share with me what works. and then I'm going to be much more successful, and I'm not spending money on things that may not work.

I'm a big believer in pilots, and I think that we should do those as long as it's, very low cost or no cost. But some of this innovation stuff. And to get from seven to four percent, you can't be focused on AI and some of these other things that are out there. You need to stick to the knitting to get to that.

And that's why I'm trying to get to CIOs. Stop building your resume off of shiny bright objects. Looking at, oh, I need to get Epic into Azure so I can get my next job. No. How's that helping your organization? Go from 7% to 4%. You'll be best friends with the CFO and the CEO, and then when you want to go to your next job, you're going to have so many references that you're going to blow away the competition, right?

So that's the message. Yeah,

we can have a whole different conversation on that, the CIO resume building versus like really working for their employer. It's a fascinating topic, but I think Chuck, you use the word formulary. I think that's really applicable here. So I love the really simple formulary you laid out.

So as you look to be a good steward as the CIO of an organization. There's a process you can follow there. There's a roadmap or a framework app rationalization, and none of this is new. And none of this is like, oh, we should have thought of this, but it's just putting it in a sequence, logical order, app rationalization, Spanner control, buy versus build versus bridge solutions.

I think he's done a nice

job. Core It's actually interesting. Some of the things we did about core competency and IT actually spread throughout the organization. We, as part of the process, we started looking at other parts of renowned for core competencies and we were doing our whole nutrition services and our environmental services, right?

We're all in house and getting bad scores and patients and all that. We ended up going to a managed service on that and not only saving, seven figures per year, but we've gone live. I think we've only been live about three months now. And our scores are actually going up. So, cooking food and cleaning floors is not a core competency of healthcare, right?

Other companies can do it faster, better, cheaper. So, when you lead the way in IT with these things, other people pick up on it. Yeah.

Well, I think, you know, stick to the knitting. I think I'm going to borrow that mantra. So, I think that's a great great way to kind of wrap up this brief conversation.

Chuck, wonderful, as always, the business with you. Thanks for making the time, and enjoy the rest of your Friday. Thank you,

Reid, and thank you again. Have a great weekend.

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