Preparing for the 900 million dollar squeeze hitting healthcare IT | Newsday on This Week Health

This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong. Scaling AI is easy to say and tough to do, especially when the cyber risk and the governance land on your desk. The second annual UST Health Summit takes on the hardest parts: cyber resilience, agentic AI governance, data modernization, all with leaders like Johns Hopkins, J&J, and Elevance. Position your organization for what's coming. Register now for the UST Health Summit. The link's in the show notes.   📍 📍 I'm Bill Russell, creator of This Week Health, where our mission is to transform healthcare one connection at a time. Welcome to News Day, breaking down the health IT headlines that matter most. Let's jump into the news. Sarah Richardson, Drex DeFord. We just, uh, got done a Chicago event. In fact, I'm still in the Chicago airport. And, uh, good event. I, I was with, uh, predominantly AMC CIOs. Sarah, you were with RevCycle and Drex. Yeah. Uh, you were in the, uh CMIO room. A- an awful lot of laughter coming out of the CMIO room. Drex, what, what, uh, what was top of mind for CMIOs these days? A lot of those folks, uh, know each other, and have known each other for years too. So the thing that happens in that room is that, it would be awesome if there was, like, one conversation going on at a time, but very often there's, like, some side jokes, and there's some digging that's going on with each other. And, so it's a great fun room to be in. Man, there were so many things that they covered in there, not the least of which was just the role of the CMIO. And given changes that are happening in healthcare and, the CIO in some cases being renamed the chief digital information officer, or that being a completely different role, like, there was a lot of conversations about exactly where does the CMIO fit organizationally, where should they be at the table? Because they feel like there's often times that, uh, checks are written that they can't cash, if you know what I mean. Um, decisions are made in other rooms that then they are compelled to, "Okay, I'm not sure how we're gonna do that in that timeframe." This sounds very familiar for all of us, though. I think this happened, this has happened to everyone. Uh, they talked a bit about tokenomics and the, the reality of the charge model changes that are happening, and things becoming more consumption-based and the effect that that's having on, on budgets. And then they talked about their role in managing costs, and the challenges often that are tied to that, that have to do with, you don't control everything that is about managing costs. So you need a lot of other people to kind of get on board and, and jump into things like app rationalization and a lot of other things. But man, it was a great conversation. They were all over the place, talking about also sort of growing this next crop of CMIOs and what does their org chart look like to create that great opportunity for folks who are up-and-comers. And we'll, and we will come back to some of those topics. Yeah. Sarah, RevCycle, completely different. What are, what are they talking about? Completely different, and I literally loved spending time with them. I was nervous going in. I had not facilitated rev cycle before. It's not my expertise. And yet what was fascinating is they weren't diving deep into rev cycle workflows. They were diving deep into conversations around how to best optimize your final denial rate, how to help people not go bankrupt getting healthcare in their systems. Mm. How do they... You know, it-- One of the things I loved was renting time on the Hubble telescope in terms of, like, how you really create value in vibe coding and the right tactics to approach inside of your organizations, democratizing AI, creating the psychological safety to be able to try some of these new opportunities fast and let us figure out what some of the hot wash or root cause opportunities will be. But the one piece that really was a huge takeaway was the durable value that you create with any solution that gets brought into an organization. The durable value being, does it outlast you if you move on? But more importantly, how it creates structures inside your organization that allow the compounding factor of trying new things and working through the best ideas. 'Cause rev cycle is a space that changes quickly. It's being disrupted In, in surmountable spaces right now, but also between regulatory, legal compliance, and risk perspectives, it's changing often. And so being able to always be adaptable and still stay on your game from a clinical, operational, and a technology perspective I like that durable value, uh, perspective That came from Eamon at Stanford. I told him, "Listen to Newsday in a couple weeks. You will be credited with your awesome idea." Yeah. Well, what happened in the CIO room, Bill? Again, a- academic medical centers are a little different, and I'm on record as, as talking about the fact that I, I served after I left St. Joe's. St. Joe's was w- at the time considered a fairly large, 16 hospital, $7.5 billion health system that I served in an academic medical center immediately following that. And, uh, about three months into it, I sat with the CIO and I just said, "Look, we had the same title, but we didn't have the same job." Academic medical centers are, are distinct in a lot of different ways. Research is, critical. They have research revenue. They have research demands. They have data demands on that research. They are aligned in some way with a medical school, in some cases with universities. And, uh, that was, that was a significant portion of the conversation because universities are struggling right now. Mm-hmm. And so there's this, uh, in some of them, I wouldn't say all of them, but in some of them there's this pull to bring the two together, and the CIOs are saying, "Gosh, I don't know if I'm gonna be able to stop this train, and I'm not sure I want this train." But is this the right, you know, what does this look like to be the CIO over a university and over a health system? They're, they're, they're similar in some ways and distinct in some ways as well. You add different systems, student information systems. You have, different, and as you know, Drex, I mean, end user profiles in a university versus a You have a lot of control In the, uh, in the medical side, but on the university side, bring your own is, like, the, the absolute, uh, requirement because every, every student who shows up is gonna be bringing their own computer. So they're, they're wondering, you know, "Hey, what's it look like? What are the models? How many, how many have actually done this?" And there was a lot of conversations around that. And then, you know, I think the, the cloud that looms over all three rooms is this financial... Uh, and I heard some numbers this time around that sort of made it real., $900 million in top-line revenue coming out over the next three years. Mm-hmm. And Drex, I, I came into your room, and I did my typical cameo, and I said, you know, they're, they s- they asked what are the CIOs talking about. I said, "Well, they're, you know, $900 million coming out." But one of the CIOs goes, "Man, I wish it was only $900 million coming out." Uh, and it was, it was a larger health system that was saying that. And yeah, these numbers are the, the numbers are staggering, and I think part of the university and the medical, and the medical institutions- Pressure ... coming together is pressure. It's financial pressure that's causing us to think differently and do things a little differently. I, I don't,, it's not permeating every health system just yet, but those that have done the analysis with the, you know, with the Deloittes and the McKinseys and the others are saying, "No, no, this is a really, this is a real number. We think it's going to follow through. There's still two years of this administration that we're... You know, this, this number, it's coming out." And, uh, they're planning for it. And if it doesn't come out, they're like, "Great, then we've, we've tightened up the ship, and we've done the things we need to do." But it's I, I wouldn't say it's, it's central to everything they're talking about, but it's, it's a cloud that's over everything that, that frames the conversation. More conversations around what does, uh, what is nearshoring, offshoring, that kind of stuff. I mean, those- Yeah, it dr- I mean, I think it drives or influences every conversation they were having this week, whether it was the tokenomics kind of conversation. There was certainly some conversation around, you know, we've kind of put all our, all of our eggs in the Epic basket, and now there's some transition at the top of the Epic, org structure. Like, are we sure we're in the right place for that? Like, there's- That's, that's- And, and the money influences all of that because that's a very expensive part of the universal budget that they're spending on. That's interesting because that was not a part of our conversation, the whole Epic interest. Interesting. But I'm su- But it probably was the CMIO. Mm-hmm. Mm-hmm. It was. I don't know that anybody, I don't know that there was any real conclusion. It was just the... I think when you make that kind of an investment and have that kind of a relationship with a company for as long as most of them, senior CMIO folks had had relationships with that company. I mean, we did the math. It represented two hundred and fif- it represented 256 hospitals across the country in that CMIO room. Uh, some was, some were one hospital, but most of them were large IDNs or AMCs and had a lot of hospitals in that basket. When you have that kind of a relationship over that period of time that has been that stable, almost any slight earthquake that happens with that company, starts to cause you to think. Like, wow, like this happens with all of our other partners. This has never really happened with this partner. What's it really mean? So- Right. So, so- ... I think for Epic, that transparency is gonna be really, really important. Yeah, next, next month. Yeah, it, and everyone's really looking forward to that meeting next month and get an understanding of where they're going, with AI, and leadership will be part of that conversation as well. I, I wanna come back, too, because I know AI came up in every conversation. Of course it did. Uh, Sarah, how is, how is RevCycle thinking about AI? It was interesting because they did not talk about it in the in-depth level that you would have necessarily anticipated because for them it was a lot of optimizing the workflow and then deciding where to add AI elements into the mix. And so they were sharing a lot of how they've tidied up everything from providing an estimate ahead of time to the patient, because half their bad debt they realized was insured, but that the patient didn't necessarily know how much they anticipated it was going to cost. And then having that as part of the registration with their appointment, and collecting things up front, or having a better understanding of where the money is flowing and how it's flowing from the procedure, from the patient, from the time that they walk in the door. So many ways to tighten up workflow. Once the workflow is something that they agree that they can, they can own, and then they decide, "Do we build it ourselves? Do we work with a partner to create that space for us, or h- does it already exist inside of our universe?" They are hesitant in some cases to say, "Let's just go vibe code and, and figure this out." Because when you start to scale it, it can get even riskier, and they're still in a space where they're trying out new ways to ensure they get r- maximum revenue capture appropriately, and then layering in other pieces. Now, things that are natively built into a lot of their product sets, they are embracing appropriately. But they're not as inclined to go out and build to solve it themselves as they are to find it inside of an existing relationship that they already have. That's really interesting because y- you're at the workflow level. The CIOs in the academic room were -talking one level below that, and that was the data level. There was a significant conversation around the data level- Yes ... saying, "How, how do we get this right? How do we, e- ensure that we are..." They're absolutely gonna overlay AI models, some within the tools they already have, some are gonna bring in other tools on top of it, and they're like, "Look, we've, we've got this. We've, we've got..." Some of it is, is pretty well defined. Some of it is, is part of, consortiums and, and, and things that they participate in that require the data to be cleaned up, and there's almost a, a governance model around it because there's a, an industry governance around how research is done and how, how pharma looks at, at data and whatnot. So you almost have to put it in that. Uh, but now a- again, they're looking at, "Oh my gosh, well, now I have, I have this data model over here, which is working really well, and now I have the university." Like,, you know, is it just a matter of plug and play, or is it, you know, do I have to rethink, the architecture? Is there a layer above? Is there an abstraction layer? There was a significant conversa- probably more of a conversation around data than any CIO room I've ever been in, uh, because that's usually left for the doers, not necessarily the CIOs. So I was, I was really kind of impressed that they, they were thinking about it because it is the founda- so data, workflow, these are foundational layers to, to make all of this stuff work. And it's, but that's what, here's what I find fascinating, and maybe I'm grateful for AI pushing the conversation further than it ever has before. I have long had to fight for the funding for appropriate data management inside of organizations, and now it is a mainstream conversation. 'Cause if you underfunded your infrastructure, and then you underfunded your data management, and now you wanna put all this new tools on top, you literally have to go back, you know, just like anything else, and, and bring these things up to par and then keep them that way. There, for, for AI or for any of these new technologies to work effectively, the foundations have to be structured in a way that they also stay up to date with all of that. That may mean you scale back on some of your initiatives, because the resounding conversation that, as we know, comes through in all of our summits is the ability to focus on doing a few things really, really well and not bringing 300 projects forward a year to founder and, and what is the cutoff? If something has been brought forward every year for X amount of years, you finally just say, "It's never gonna happen," versus it being in a queue somewhere. There was a lot of conversations in our, in our room about, nope as a- Yeah ... perfectly acceptable answer, in the- Oh ... in the construct of all the things that we're doing, still the struggle with the ability to prioritize and, and figure out the, the right things to do. And a lot of it did come back to, we've talked about sort of this Maslow's hierarchy of needs, uh, for IT in general with infrastructure and then apps in the middle and then kind of this knowledge management base on top. But that knowledge management base then turns out to be shredded into its own little Maslow's hierarchy of needs of workflow and data and now, you know, what are the projects we're gonna use for AI? And all of that is kind of around the conversation about where's the real ROI? That was the other part of the discussion. We're doing lots of stuff. I'm not sure it's doing those two things we talk about all the time, adding revenue or taking cost out, and that is still given this, you know, $900 million scaled up or down depending on the size of your organization. That's still the, like, the elephant in the room right now. And skilling the team appropriately and having the change management aspects that people want and need to be able to do certain things. Absolutely. And there's almost more demand coming in because of how easy it is to throw your idea out there. Anyone can go to Claude Code or Claude Cowork and say, "I have an idea," and either create a 10-page document to hand off to the IT teams or try to go do it yourself, and then now to a degree, there's too many great ideas. We were laughing at that cartoon, the everybody's an idea guy It's like, you know what? How many more ideas do we need? And then basically, if you throw your AI-generated business case over to me, that's fine, but it still needs to have all of the rigor and structure of whatever it is your system is trying to achieve. The revenue, the cost takeout, the operational efficiency. It does not solve for some of the problems it's creating. AMCC IOs, as you would expect, I mean, these are, fairly well-funded, uh, because they are essential in their markets that they serve, uh, have good models around governance. It was really, it was really good to hear 'cause I've been in enough CIO rooms recently where they're like, "Oh my gosh, like, slow this down. What, what's going on?" And, they have a very disciplined approach, including the AI structure and the security and everything else to vetting these. And, and part of it is to push the vetting down. Like, to make sure by the time it gets to the EBP level, it's like, "Hey, here are the 10 projects we should do Here's the ROI, here's the timelines, here's the, you know, just the resource requirements. It, it's, it's laid out pretty well. And it was interesting to hear because one of them was struggling with it, and they, the others were like, "Yeah, we feel like we have this pretty well wired." I mean, it's, you know, at this level they might come up with 150 ideas, but the chairs of each one of these subgroups is the next group up. And so even though they see 150 ideas coming from imaging, they go, "Look, I'm not taking 150 ideas forward because I'm in the next group and I'm not gonna I'm not, I'm not gonna go through 150 of ours, 150 of theirs. Like, we have to narrow this down. What's our importance?" And then they only filter up, you know, 10 to 20, and then the next group up looks at it and goes, "Well, you know, we can't, we can't fund and do this many projects, so let's prioritize and let's, let's make it," And, and it directly comes back to something that you did a while back, Punktual Drex teaching us that, you know, you need transparency in this process. Like, what did we say yes to? What did we say no to? What does the list look like? And where do you sit in this prioritized list, is something that, uh, that they made sure that the, the people who are doing the work below understood. Yeah, you push this up, but here's how it got prioritized amongst the other 150 projects. And so- You know, you had to put on the big hat, the big organization hat, and we had to make some really hard decisions because it's not only a portfolio of brand-new projects, it's also running all the existing stuff that we have today. And all of that together means there's not a lot of necessarily capacity for new projects, so they have to be really, really valuable. And a lot of the things that get deprioritized are like, we absolutely should do that. We just don't have the resources to do it right now, so we gotta, we have to prioritize. There is still amongst, in healthcare, there's still a challenge of educating up. And what's interesting to me is we probably represented three different areas where, like, your area would say, "Man, I wish the CIOs understood this." And I'm in the CIO room and they're saying, "Man, I wish the executive leadership team understood this." And it's, it's simple stuff. Pretty basic. It's the, you know, it's the fact that, you know, uh, run and operate, you know, just the, the distinction of, of the budget and how it, how it breaks down. It's like, look, you can ask me for 10%, but it's 10% of this 20% 'cause this 80% we can't touch. Is not, untouchable. It's contract. We've already agreed to pay these bills And e- every time I hear it, I'm like, how could they not understand that at this time? 'Cause we've had the same conversations since IT existed. It drives the aspiration, too, I think, of some of the stuff we heard in the CMIO room, which is, well, I think we need to be at that table so that we could explain it better, right? And I don't know if that's exactly right, when you're a leader that has leaders above you who don't seem to understand it, one of the handles that you try to pull on is just, "I should be at that table. They should put me also as a direct report to the CEO," um, or something to that effect, right? So that I can just explain it correctly. I don't know if it would work or not, though. Yeah, it's- Well, we had Carla Hack in our room. I mean, she went from being a surgeon to a chief financial informatics officer, and the amount of money that she has been able to find For her organization through lots of levers that, that are being uncovered. We're talking hundreds of millions of dollars that they have been able to recapture by educating physicians on some of the key elements of how things are coded and how things are reviewed and how things are prepared going into different scenarios and settings of care. Where she sits today, to me, ends up becoming a lot of the future of how organizations need to think about rev capture and cost reduction inside of their organizations, because the innovation that she brought by simply leaning into this space, and I say simply because she's had to educate up now for years, and yet hundreds of millions of dollars to the bottom line just by creating almost the physician operational financial efficiency awareness inside of their health system. Th- this is the big business operator skill that I think a lot of execs in healthcare really still don't have or they s- Yeah ... struggle with in some ways. And Bill, you, you know, you and I were talking about this, too. If you want to be at the big table, sometimes it's not about the org chart. Sometimes it's about being able to do the work and explain why and how your work, your team's work, is benefiting the organization: removing costs, creating additional revenue, improving patient safety, being really clear about that, talking about it. Because the person who makes themselves valuable, they're going to be pulled into these conversation e- even if, uh, uh, conversations, even if the org chart structure isn't suited to that. So we used to have this, you know, conversation about the CEO had his direct reports in my organization, but he also had a smaller kitchen cabinet, so that was his cabinet. He had his smaller kitchen cabinet, which were some of his direct reports, but also a few people from outside that direct report chain that really provide a lot of insight on, on decision-making. So, I mean, the bottom line is make yourself super valuable, tell really good stories, make sure that your work is tied to these organizational goals, and you will be pulled into the discussion. Yeah. And, and you have to take ad- advantage of those opportunities. When you finally get that meeting with the CEO, like, don't talk about the little nit thing that's going on over here. Like, think it through. What's the, what's the discussion that the, from the CEO's perspective- That would be valuable that they would want to have. 'Cause I'll tell you what, you know, one of the complaints that I hear over and over again is I- they're listening to McKinsey. Why are they listening to McKinsey? I mean, you know, they have- Because they're not hearing it from you ... because they're not hearing it from the executive team. And, uh, it's not just the CIO, it's, it's across the board. It's like, why is McKinsey, why does, why does Deloitte, why does McKinsey have their ear? And they have their ear because they s- they're talking the same language, and they're, they're framing things in a way that they can, digest them and comprehend them. And, and, and IT, it is incumbent upon us to, to, create the narrative that is, understandable, that is digestible, that is,, that's actionable, right? So the organization can act on it. It's like, oh, like everybody in the organization should be able to answer this question, and this is a big ask, but what are we doing with AI? That shouldn't be like the purview of a few people. Like, you need the entire organization to understand. Yeah, we understand that I just saw this great AI tool, but our organization, here's how we bring AI in, here's how we're thinking about utilizing it, here's... And that's, that's a communication plan. That's not just a decision plan. That's a, a broad communication plan. Hey, it is great to, catch up with you guys and look forward to the, to the next time we're together. Thanks for listening. Safe travels. Yep. That's all for now.  That's Newsday. Stay informed between episodes with our Daily Insights email. And remember, every healthcare leader needs a community they can lean on and learn from. Subscribe at this week, health.com/subscribe. Thanks for listening. That's all for now.