What Your CEO Shared at #JPMHC2020

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Bill Russell

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January 20, 2020: It’s time for another Tuesday Newsday and in today’s iteration, we will be doing a debrief of the last two years of J.P. Morgan Healthcare Conferences. This annual event is the largest and most informative healthcare investment symposium in the industry, bringing together industry leaders, emerging fast-growth companies, innovative technology creators, and members of the investment community. Joining this episode, you’ll hear the biggest themes and takeaways from this year’s presentations in the nonprofit track, along with a recap of the major ones from last year too. Unsurprisingly, there was a major carryover of many of last year’s themes: things like trust, partnerships, and efficiency. Some of the exciting new areas of discussion that have come to the fore in 2020 are topics like asset-light solutions, customer experience, and the ‘He Who Must Not Be Named’ of healthcare that is making all of the old players rustle their feathers in a major way.

Key Points From This Episode:

  • An introduction to the J.P. Morgan Conference: a healthcare symposium merging many fields.
  • Today’s agenda: to recap highlights from last year and this year’s J.P. Morgan presentations.
  • A rundown of the 27 healthcare institutions who did presentations at the conference.
  • 2019 presenters: mergers, traditional players, specialty providers, and innovators.
  • Two types of specialty players: the global player and the research player.
  • Themes from the 2019 conference: good financials, mergers, self-disruption, trust, and more.
  • Other themes from 2019: efficiency, social determinants, and partnerships.
  • Reasons for a theme overlap: issues typically move in 18 to 36-month cycles.
  • Why mergers as a theme did not carry through into 2020.
  • New themes from this year’s conference.
  • How the topic of risk, covered lives, and getting paid to keep people healthy cropped up a lot.
  • A welcome rise in conversations about how customer data is being used.
  • How mega hospitals are giving way to asset-light solutions like retail clinics.
  • A shift to prioritizing customer experience in healthcare which is still four years behind though.
  • Huge steps that are being taken in the category of expense management.
  • Other themes from this year: diversified revenue, and strong balance sheets.
  • The amazing developments in the field of applied genetics and gene therapy.
  • A mysterious force that is arriving in healthcare which is making current players readjust.

What Your CEO Shared at #JPMHC2020

Episode 176: Transcript – January 20, 2020

This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong.

[0:00:05.0] BR: Welcome to This Week in Health IT where we look at as many stories as we in 23 minutes or less that will impact health IT. My name is Bill Russell, healthcare CIO coach and creator of This Week in Health IT, a set of podcasts, videos, and collaboration events, designed and dedicated to developing the next generation of health leaders.

It’s Tuesday news day and this week, the JP Morgan conference episode. Wouldn’t it be interesting if you got to sit down and listen to 24 to 27 healthcare leaders share their accomplishments, their financials, their strategies for the next year? Well, I just did that and what I’m going to do is I’m going to share with you what I learned from my notes from that conference, this is likely to be a little longer episode, actually, I’ll probably spilt it into two episodes, that’s what’s going to happen.

This episode is sponsored by Health Lyrics. I coach healthcare leaders and all things health IT. Coaching was instrumental in my success and it is the focus of my work at Health Lyrics. I’ve coached CEOs of health systems, startups CIOs and CTOs. If you want to elevate your game in 2020, visit healthlyrics.com to schedule your free consultation.

[0:01:07.5] BR: Okay, here we go. JP Morgan conference, hopefully you listened to last year’s episode but I want to give you a really quick rundown of what goes on. The JP Morgan conference is a whirlwind of activity scattered across all of San Francisco. There is a startup health conference, farm and life sciences track, there’s really a million meetings happening all across the city between investors and startups, between collaborators and partners.

Every Starbucks, every hotel lobby, you name it, and there’s a lot of sub events that go on as well. You know, I don’t participate in all of that or even a lot of that. I situate myself at the nonprofit track. This is where health systems CEOs and CFOs from 27 health systems stand up and put their best foot forward for really bond holders and investors. Because, you know, you have to remember that these health systems have billions of dollars in debt financing and at some point, they’re going to have to go back to those bond markets for financing their growth and so what you end up with is a financially-minded presentation that also has some strategy in it but it’s an important strategy. It is not to be taken lightly.

The track was on the 32nd floor of the Westin St. Francis. No rain this year which was great. I’d like to think that I had a little bit of influence on the conference because last year, I told you that they had these wooden chairs, they’re really tiny wooden chairs and there was no space to really sit between the two people.

I mentioned how uncomfortable they are and I guess, someone must have listened to the show because this year, they had really comfortable, little wider chairs, a little different configuration than the room, much better configuration in the room. Who knows, maybe Jamie Dimon, the CEO of JP Morgan listened to the last year’s podcast and shot a note over to somebody saying “Hey, can we get these people some nice chairs.”

[0:03:00.3] BR: If that happens to be the case, if he happens to be listening to this time, any time you want to come on the show and discuss healthcare and digital health, love to do it. All right, let’s get to the episode. With this episode, we’re going to do three things. I’m going to briefly remind you of what we talked about last year, what were the key themes from last year. That way you can sort of measure the progress that was made.

Then I’m going to give you the main themes from the presentations this year. That will probably be this episode and then the next episode that I will do will be highlights from the individual presentations, okay?

I have comment – I took a couple of highlights out of each one of the presentations that I want to share with you, that I believe that we could replicate across the industry that are of interest and if you know anybody at these health systems, you can reach out and ask them about some of the strategies that were there.

Here it is. Here are the 27 presenters for this year. 27 presenters. Inner Mountain, Bons Secours Mercy, Baylor Scott and White, CommonSpirit, Mass General Brigham. Which is new, it’s formerly Partners Healthcare. Advocate Aurora, CHOP, Children’s Hospital of Philadelphia, Northwestern Medicine, Henry Ford Health System, NYU Langone.

If you’re thinking, “Boy, that’s a lot of health systems.” That’s all the health systems that present before lunch on the first day. Okay, then we have lunch, Jamie Dimon presents on the economy in a session that I thoroughly enjoy every year having my degree in economics. I just love listening to him talk about, not only the US economy but the world economy, different market economies.

[0:04:30.4] BR: It’s just the trade deals, you name it. Very fascinating. After that, we move to the afternoon session, kicks off with Geisinger then it goes to Seattle Children’s, Jefferson Health, City of Hope, new presenter. Hospital for Special Surgery, we’ve had them on the show for medical health and then the day closes out with SSM Health out of Saint Louis.

That’s the first day, then we get to the second day and you have Ascension kicks it off and Christiana Care, Providence Saint Joseph Health which is no longer Providence Saint Joseph Health, they are now Providence. They’ve shortened the name. OSF Healthcare, Mayo Clinic, Cottage Health, North Shore University Health, Oregon Health Science University and Seattle Cancer Care Alliance and UC Health as well. There’s the 27.

There was 27. I sat through 23 of them. I did have some meetings that I had to attend. So 23. I sat through the majority of them which I think gave me enough time to really get the gist and the themes for this year’s conference. Each of the presentations is 30 minutes, so they’re given 30 minutes to present and it usually – no, it’s always 30 minutes. It never goes over 30 minutes. If your CEO or CFO is still talking at 30 minute mark, they will politely finish the presentation for you.

Now, the good news is, I saw 23 of them, none of them were yanked off the stage with a hook so everybody understands that it’s really important to finish on time. Last year, I gave a framework and the framework was, I thought there was four types of presentations, right? There was the merger presentation which I think is obvious, you know? These were the presentations where people were talking about, “We brought to our organizations together. Here’s how we’re going to gain the operational efficiencies it.

[0:06:15.4] BR: Here’s how we’re going to integrate the culture. Here’s how we’re going to go forward,” kind of thing. The merger presentation. The traditional player, and this is the player that hasn’t really done a big merger, isn’t really looking at changing the game. They’re just looking to expand the market with a new set of strategies and call them the traditional player.

Then there’s the specialty provider and I put the branded players in there. I put the Mayos and the Clevelands and the Children’s hospitals and the cancer centers like an MD Anderson would be in there. I mean, they didn’t present but it would be an MD Anderson or a City of Hope for that matter, would be a specialty player. And then there’s the innovator. So there was four categories they gave you last year: merger, traditional players, specialty player and the innovator.

The innovator is somebody who has one foot in the present but really is leaning more towards the future. They are very heavily weighted in terms of their presentation and their thinking and their investments, in the future and what they see is that health system revenue models, specifically fee for service and hospital revenue models, are under attack and they need to find new revenue models and so they are leaning pretty heavily on the innovation side.

You know, that framework was pretty good. It held true for the most part this year. I might split the specialty player, really into two camps. The camps are: a global player, and that’s probably a little too grandiose. Probably the best way of saying this is the healthcare player that doesn’t see geography as a boundary to their growth, right?

[0:07:43.6] BR: It’s people that are planting hospitals in other countries. It’s people that are using tele health to reach areas that they haven’t before and really expanding their services through non-traditional means, through digital means and other ways. Let’s call that the global player, just for grins and the last one I’ll call the research player and these were the people and that’s probably not a good term either. I got to think this through.

Research player is somebody who is doing research and coming up with new treatments and really differentiating themselves based on care that can only be provided at their location, right? They’re coming up with new gene therapies and those kind of things.

Treatments and research matter and it’s creating this – the specialty player is really breaking into those two types of camps if I really thought about it.

All right, I’m going to give you a brief rundown of the themes from the 2019 conference. Hopefully you listened to it last year or listen to it again this year before the conference to remind yourself of what we were talking about last year.

Here’s a brief rundown of the themes. Number one, I said, if you didn’t make money in 2018, you have a serious problem, okay? 2018 was a really good financial year. A lot of people posted really good financials. Very few of the presentations did not make money. In fact, I can only think of two or three that didn’t make money of the 24 to 27 last year

[0:09:04.0] BR: Second theme, mergers were a thing. A lot of merger presentations, merger conversations, completing mergers, CommonSpirit just completed that time and there was a lot of talk about implementation and how implementation had to go well, obviously.

As I told you last year, the financials will tell the story this year. Well, they did tell a story and I’ll tell you some of them are good stories, some of them are opaque stories, let’s just say it that way. Number three, virtual care is a thing. We saw a lot of virtual care movement last year and continues to see movement this year as well.

Self-disruption from a position of strength, a lot of health systems wanted you to know that under the old model, the fee for service model and even under some of these value based care models, they were making money but that they were looking at new models and new revenue streams as well. Self-disruption from a position of strength was the them.

Trust was a theme, this was an interesting one because it wasn’t that the word trust was used but they talked an awful lot about the community and really, holding on to, or worried about losing the trust of the people they serve. There’s a raging healthcare debate that was going on about affordability, accessibility, diversity, just a whole bunch of things were going on and they were worried that they were worried that they were going to get dragged in and really thrown under the bus.

[0:10:22.7] BR: There was a lot of conversations around how they were positioning themselves, the conversations they were having in the community and the things they were trying to do. Trust. Number six was simplify, integrate, consolidate, automate, and efficiency and cost reduction strategies were everywhere in 2019.

Number seven, social determinants are increasingly a part of the scope of the health systems. We’ve heard a lot about social determinants last year and in number eight, partnerships are the new norm. There’s a lot of interesting partnerships across the board and that continues somewhat.

Okay, those were the themes for last year, let’s talk about which themes carried forward and which themes went away? All the themes carried forward really, except for one and I’ll hit on that one in a minute but remember, these are 12 month strategies these people are talking about. They employ tens of thousands of the people, they have billions of dollars in assets, they’re serving millions of people in their communities and they don’t move over 12-month cycles, they move over 36 month cycles. 18 to 36 month cycles.

If they’re nimble, they move that quickly. We’re seeing a continuation of a lot of these themes and then we layer on some additional themes that we’re looking at for 2020. Let’s talk about some of these, so not much changed in 2019. If you didn’t make money in 2018 and 19, now you really have problems. These were two good years for healthcare.

[0:11:43.2] BR: Some did and while almost all the systems shared their financials, two of them did not and I would assume that they didn’t make money because they left me no choice but to make an assumption. More on that later actually. Virtual care, self-disruption, efficiency, social determinants, partnerships, are still front and center.

The Civica partnership, which is the joint venture on generic drugs is going well and it is reducing costs. So these partnerships are going well. Trust is still a major concern if not more of a concern during an election year. So you hear things like the number one cause for personal bankruptcies is health care. Health system leaders are worried about this and they are trying to position the debate, trying to be a part of the debate that is going to go on. Which one fell by the wayside?

Mergers, mergers fell by the wayside. Not that they are not implementing mergers but we didn’t hear much about new ones. No talk about new ones, no talk about something on the horizon. That is not to say that scale isn’t critical. Scale is critical to success. That was reinforced. Perhaps it is just a digestion period, right? We have consumed so many mergers that it’s just time to operationalize all the mergers that have occurred. So anyway, this conference didn’t have anything in the way of new mergers for the most part.

So let’s take a look at some of the new themes that came about during this conference. All right, so we’re at the 15 minute mark trying to do this in eight minutes and less, here we go. Risk, covered lives, getting paid to keep people healthy. Whoever accepts risk for the population is in incented to address the health of the community. All others are just offering services to the risk-bearing organization. Healthier systems are in a weird place.

And, you know, they are viewed as the trusted source for health in the community that they served but they aren’t compensated for that work in many cases. You know social determinants work is really done out of kindness or ahead of the mission of the organization but unless they are risk-bearing organizations they aren’t compensated for it and they can only take it so far before they run out of money. So to address this there’s all sorts of strategies for increasing the number of covered lives, taking on new risk. This has been true for some time but it was really prevalent in this year’s conversations. So first theme risk, covered lives, getting paid to keep people healthy.

[0:14:02.0] Second theme. Technology was elevated but the EHR took a backseat. Okay, so what am I talking about? The last three years, it was an indirect marketing event for the EHR providers. It really was – it was almost odd to be honest with you. If I asked Jamie Dimon to stand up and to talk about JP Morgan’s strategy and their financials and where are they going to go to a bunch of people that are going to invest in them, he wouldn’t stand up there and start talking about his back office system in a strategy presentation.

He just won’t do it because it wouldn’t inspire, it wouldn’t really tell people what they are going to do and yet we as health systems got up there and did it over and over again. If on the other hand Jamie got up and start talking about, “Here are the investments we have made in technology and here is what we have done with them to improve our outreach, our services, our availability. Here are the things that we did and we are going to make additional investments to do these kinds of things.”

You know, that is what you would expect in this kind of presentation. Well, the good news is that’s what happened this year. Healthcare finally started talking about what they’re doing with the data. What they are doing with consumer facing digital strategies. What they are doing in precision medicine. This is a good movement and it was an interesting theme. So technology was elevated but EHR took a backseat. So technology was elevated far and you are going to hear this in a lot of different areas but anyway, I will get to them in a second.

[SPONSOR MESSAGE]

[0:15:30.0] BR: We’ll get back to our show in just a minute. As you know, Health Catalyst is a new sponsor for our show and a company I am really excited to talk about. In the digital age, cloud computing is an essential part of an effective healthcare and precision medicine strategy and we’ve talked about it many times on the podcast but healthcare organizations themselves are still facing huge challenges in migrating to the cloud.

Currently, only 8% of EHR data needed for precision medicine and population to health is being effectively captured and used. That is 8%. One of the things I like about Health Catalyst is that they are committed to making health care more effective through freely sharing what they have learned over the years. They published a free eBook on how to accelerate the use of data in the delivery of healthcare and precision medicine.

You can get that eBook by visiting thisweekhealth.com/healthcatalyst and this is a great opportunity to learn how a data platform brings health care organizations the benefits of a more flexible computing infrastructure in the cloud. I want to give a special thanks to Health Catalyst for investing in our show and more specifically, for investing and developing the next generation of health leaders. Now back to our show.

[DISCUSSION CONTINUED]

[0:16:38.5] BR: Third theme, asset-light growth strategies. I heard the asset-light probably about five or six times and it is not a common term in this setting. So hearing it five or six times led me to believe that health systems are thinking this way even if they didn’t use these terms. Telehealth, digital, patient medical home, retail clinics and small hospitals, also employer partnerships are just some of the examples of people employing asset-light strategies.

You know, the mega-hospital is being dismantled brick by brick. It is not to say that they are going to go away but new big hospitals are only appropriate in certain use cases and certain strategic situations. You know, we saw one health system talk about hospital for special surgeries going to increase their footprint in New York City. You know, in a location like that, given their specialty, it makes sense. It absolutely strategically makes sense.

But you have Baylor Scott and White going into Austin making a play into Austin, which I am going to share in the next podcast, which is fascinating and really should be replicated an awful lot and then you didn’t stand up a massive hospital. They stood up a lot of different care venues and we are really able to take that market by storm with an asset-light growth strategy. So again, very fascinating good approach. I think it is good approach.

So, five or six minutes. Let’s see. Five minutes actually.

Experience. The consumer is being heard in two directions, the internal and the external consumer. So, health systems are paying more attention to their consumers. They are paying more attention to their clinicians and they are paying more attention to their patients. There is really one approach to the clinician experience that I am going to share probably in the next podcast that I really think is going to move the needle.

[0:18:21.9] It is actually really exciting. If you took all of these presentations at face value, the consumer was a big winner this past year from a focus standpoint, from an investment standpoint, from an emphasis standpoint. However, here is the caveat I would give that. Compared to healthcare last year we made huge strides. Compared to the digital experience in other industries, we still lag four years, five years-ish in that space. So experience is a focus. It is a theme and we need to continue to push boundaries on that.

Expense management, cost reductions, strategic placement of assets, targeted improvements in AR and supply chain. I will put all of these into the category of expense management, right? So there is still significant cost reduction strategies going on, significant work in the operational side and I am not talking like we are going to reduce a million here and a million there.

I am talking hundreds of millions and billions of dollars over multiple years and it could be because this was the JP Morgan conference. You are presenting to bondholders and you want to show fiscal responsibility but it was really prevalent. I mean this was a lot of health systems that are really doing a lot of good work in this area and you know what? It shows. It absolutely displayed in the operating income of a lot of these systems.

So that was a theme. I think it is going to continue to be a theme and it is important on this show, This Week in Health IT, to recognize it as a theme because it will continue to be a focus for health IT and by the way, I still think there’s tens of millions, hundreds of millions, billions to be taken out of health IT and still provide a higher level of service than we are providing today. So it is something to think about. Health systems are talking about it. We need to be participating in that conversation.

[0:20:03.2] Number six, diversified revenue. It is one of the key strategies, is to monetize all the assets, especially research. So diversifying revenue is a new – diversifying revenue was interesting to me in that it was almost every health system is talking about diversifying revenue. So this is a theme, clearly a theme.

Number seven, really strong balance sheets. It was a good year in the markets, a really good balance sheets. People with a good portfolio management strategy really benefited well from the strong markets over the past two years really. Two years, eight years, whatever. It’s been, markets have been doing well for a while so strong balance sheets.

Number eight, applied genetics and gene therapy. So, great stories, great movement in the space. Personalized medicine, applied genetics. Exciting stories. Great time to be alive. It really focused in on health. So health systems have great really heartwarming stories around people that didn’t have hope and they were able to through some of the things that we are doing today in this space provide them really targeted therapies to their specific condition, which gave them hope and gave them really in a bunch of cases a completely normal life. So very exciting movement in that space.

And then the last thing is we know that they are coming. Whoever they are, there is this ‘he who must not be named’ in healthcare kind of thing going. The Voldemort of healthcare. It is not mentioned by name but it is influencing strategy, actions, investments. You know there is new entrants making their way into the healthcare markets and health systems are starting to take notice and in some cases, they are doing defensive strategies, which is taking them into some digital investments and new venues for care.

They are hiring sales people to talk to employers directly, not necessarily waiting for the broker to knock on their door. So a lot of interesting things. We know they are coming, whoever they are and it depends on market who they are but it is recognized and known that they are coming and we have to change. So that was a common theme.

[0:22:09.3] These were the themes. Those were the basic themes for the 2020 conference and in the next episode, I want to go to the individual presentation. So you’ll hear about Intermountain, Bon Secours, Baylor Scott & White, CommonSpirit, Mass General, Advocate Aurora, CHOP, Northwestern Medicine, Henry Ford, you get the picture. I have individual notes from all of these phenomenal presentations from Ascension.

I can’t wait to share a bunch of that with you. I got to see the video of their Google Health partnership, their Ascension Health record presentation. I have some notes on that for you and a couple disappointing presentations. I will let you know what those are, running the risk of offending people here but I was a little disappointed in a couple of presentations. I will share that with you and hopefully in a constructive way and a productive way.

So that is all for this week. Special thanks to our channel sponsors, VMware and Gilden Healthcare and StarBridge Advisers for choosing to invest in developing the next generation of health leaders. This show is a production of This Week in Health IT. For more great content, you can check out the website at thisweekhealth.com or the YouTube channel as well. If you want to support our show, the best way to do it is to share it with a peer. Shoot them an email and tell them, “Hey I really enjoying this show,” and the best way that you can support the show.

We are going to be back every Friday for another great interview with an industry influencer and don’t forget every Tuesday, we take a look at the news that is going to impact health IT. Top 10 stories, my take on it, 23 minutes or less.

Thanks for listening. That is all for now.

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