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Today on Newsday.

We're going to see huge shifts in that investment and spend going more towards AI, we're just getting started.

If you can wrap your head around that, that is literally a drop in the bucket My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of This Week Health. where we are dedicated to transforming healthcare, one connection at a time. Newstay discusses the breaking news in healthcare with industry experts

Now, let's jump right in.

(Main) All right. It's Newsday. And today I'm joined with Lindsey Jarrell, HealthLink Advisors.

Lindsey, welcome back to the show. Yeah, thanks. Always great to be back. Happy holidays. Happy holidays. So some of this new stuff is like breaking as we speak. I don't know if you saw that story. [00:01:00] The UnitedHealthcare CEO was shot out in front of his hotel in I, I think was fatal.

I think he died as a result of the gunshot. that's alarming. We don't know any of the details yet. This is one hour old, but it's alarming because according to the CNN article I was reading, it appears to be, He was targeted.

Yeah, that's what I saw too, a masked man shot at who knows what direction this is going to go.

It's really scary. My thoughts go to his family, of course, and I just can't imagine that kind of strategy. I was reading a little bit about him. He's used to work at PWC, my alma mater, up in, I think, the Minnesota market in payer business. And, so young too, like 50, 51 years old.

So it's my curiosity is which direction this is going to go. Why he was targeted. I just, I don't know.

I'm sure more information will come out about this. This is only one hour old, so we're not going to dwell on it or make speculations is that we do here. One of the things I do want to chat with you about,, it's been a while since I've looked at the Kaufman Hall report.

Because [00:02:00] it was so exciting over the last two years, it's a little less exciting now. But seems to be running right around. Four and a half, 4.3 to 5% for the entire year, from January to September for the operating margin on a national basis. It's interesting, they have year over year looks good, up 16%.

But then you have, this is the interesting one to me, year to date, 2024 versus year to date 21. So that's mid pandemic. Is that what we would call that?

Yeah, supposedly the recovery year with pandemic, but everybody was still struggling.

Yeah and that number, although the, year to year is six up 16%, that number of 24 versus 21.

is still down about 13 to 15%.

I was looking at that as well, it's one of my favorite things to look at to get a read on the market. It's still market dependent too, right? We've got the over performers in certain MSAs and then a lot of the more, I think what we just brush over and say, [00:03:00] rural areas.

Or not the big MSAs are still struggling a lot. So it's, when we look at that and we say who's profitable and what regions and try to map that up against business to say, do we see this really affecting our business? We don't necessarily, we work across the U S but we're not like some of the big boys out there.

But there's still a lot of markets that are just really struggling to just make ends meet. And that's pretty incredible to think we're four years after COVID, and that's still very much the case.

We are post election and we don't generally talk about politics, but talked to a couple of CIOs this week and they're concerned about, specifically, they're concerned about Doge.

D O G E. I don't need, I can't tell you what the acronym is, but it's synonymous with budget cuts. It's synonymous with efficiency and whatnot. And we were talking about it and my standard line now, and I would just want to run it by you. My standard line to them is this, they're like we don't know which way it's going to go.

And I say to them, do you expect that you're going to be getting more money from the government next [00:04:00] year than you got this year? And they said, no, I'm like. It would seem to me that's what you want to plan for because I don't see it going in the direction of all of a sudden there's going to be higher reimbursements, more money for Medicaid, more money for Medicare.

not sure they're targeting those things specifically, but don't get the sense that all of a sudden there's just going to be more money flowing to healthcare. I

agree. And, there was two groups of us who were talking about this at the CHIME meeting, because it was, literally happening while we were there.

And, I'll bite and I'll tell you what I think. I'm worried about Medicaid programs getting cut in the states and that really negatively affecting healthcare providers. for the states that really depend on that. I realize there's some states who don't. And I'm also worried about private equity growth in health care delivery, right?

I don't think private equity works well in health care delivery. That might tell you more about my political opinions that I wanted to, , but I see that being encouraged more in this administration. I think we're going to see more fragmentation. I think we're going to [00:05:00] see more kind of capitalistic ventures entering healthcare.

And I don't think they work very well because, private equity is driven by return for investors and shareholders and that's their model and that's going to cause a lot of shutdowns, it's going to cause acquisitions, it's going to cause, just look at something like a village medical entering a market, establishing primary care relationships, serving a population and then deciding we're not making enough.

So we're shutting it down and all the primary care offices go away. That concerns me because I think. I think healthcare is delivered best by the community owned health systems and so I'm concerned about what this administration may bring. But, time will tell. It's selfishly, I think, for a consulting model, that's going to go fine either way, because we're either going to be working on M& A and exits and entrances, are doing diligence for private equity, or we're going to be trying to help people get more efficient.

But I worry, I'm a softy at heart about The delivery of health care in communities and taking care of patients. And I want to see that go well.

Yeah, no, absolutely. And I think [00:06:00] history would be on your side. If we just look at historically private equity in healthcare, I can I was trying to think of the positive story around that and I, none just popped into my head Oh no, here's.

\ it's more efficient and it's good quality care. And guess, we do have publicly traded healthcare companies, but private equity itself, I'm not sure. And I,

just to be clear, like when I'm talking that I'm not talking about how HCA delivers care, how CHS delivers care, I realize they return shareholder value, but I also believe they run their business differently than a new market entrant, private equity backed.

Yeah. And I think HCA does a phenomenal job and has for years as does CHS and others. It's the kind of core private equity back. Yeah, that might slow down the number of private equity calls I get in the next month. I don't know. I

don't either. & A, RS& A is going on this week.

some of our team was up there and I did talk to some people, about 40, 000 people go to RSNA. It's in the dead of winter in Chicago, dead of winter in Chicago, [00:07:00] which I guess speaks to something. Speaks to there's profitability in imaging for sure. My team was Awestruck by the fact that the booths were massive.

It's HIMSS esque. And I think that speaks to, there's still a fair amount of money, but I also think it also speaks to this AI drive that's going on. And so the RS NA President offered six ingredients to a better AI future in an article. This is in radiology business.

And the six things are interesting to me. Number one was ditch the disk. Good care starts with good data. The CD is almost as old as the fax machine. It's just as useless. I don't know. I'm surprised we're still talking about ditch the disk. Of course, I'm still surprised we're talking about ditch the fax too.

But the fax, I understand why we've been, holding onto it. The image CD, handing somebody an image CD today Seems really behind the times.

I agree with you. I literally just had this conversation three weeks ago here in the office. We do a good bit of enterprise imaging assessment and [00:08:00] remediation work, and we're doing an assessment at a big center that's academic anchored.

And my team it just came up in conversation. They're like, it's unbelievable. The number of places that are still handing out the CDs. So they're looking at, replatforming on a new system. And I was as shocked as you were. I think it's a very much a reality of something. It's just the way business is done.

And there's there's a lot of efficiencies to be gained in enterprise imaging work. We've got a couple of my team members are up at RS& A this week as well. It's just so much layered technology that has gone on for so many years, and now we've got some really good enterprise vendors out there who can collapse a lot of that into a single platform, a little bit like an EPIC approach.

And I think there's going to be a lot of good efficiencies there in the future.

That was one of the interesting conversations at our 229 meeting. have different props that we use, and one of them is, problem or challenge that you're currently facing. And the CIO, I love this presentation, by the way, he got up, he had one slide, he put it up, he said, [00:09:00] That's my imaging platform.

There's 27 different systems. That's my problem. Have at it. And so all the CIOs sort of weighed in on the complexity that problem represented. And it wasn't just a technology complexity issue. It's a very highly political issue as well. You just can't go in there and say, Hey, we're going to this enterprise imaging thing and away you go.

There's a lot of conversations to have.

Yeah, for years as we've been chasing the dollar at the health system level, you'd want to open up a breast imaging specialty, a center of excellence, you're going to hire the best docs. Those best docs are going to want specific technologies.

Same thing for cardiovascular, right? Those docs are going to want specific technologies. And yeah, there's a lot of opportunity there. I think there were good reasons had about why they wanted that. Yeah. But, we got to find efficiencies every way we can.

going to give you these other, of the six real quick.

So I ditched the desk. Make data donation easy. So second, we should encourage sharing data to train AI. [00:10:00] Surveys show most of the patients are happy to contribute their data. Number three is improve human machine collaboration. We need much better understanding of human machine connections to avoid automation bias in other ways in which machines can degrade human performance.

Number four is modernize our regulatory framework. Our regulatory framework needs to catch up with modern reality. That's an easy statement to make. But hard to, our current regulatory framework puts too much emphasis on the pre market clearance process and not enough emphasis on what happens after models are deployed.

Our regulators are doing a good job under difficult constraints, but they're laboring under a 50 year old regulatory framework. Share objective information. about AI systems, and then number six is monitor system performance over time. So we should be tweaking those AI models as we move forward.

So those are the six things that he has in there. Any of those jump out at you?

I wonder one about the regulatory framework. I may not fully understand that. I wonder if they're talking [00:11:00] about new entrants and the ability for new businesses to come into outpatient imaging environments.

Yeah, it could be.

It's interesting. We're having this conversation about transparency and bias. These seem to be the two big things that we're talking about with regard to AI models. People want to know what's going on under the hood. How did it make its decision? How does it make its recommendation? And it's an interesting concept of having transparency of the AI model.

But when you think about it, where else do we say, okay, Oracle, you're creating a new EHR. We want transparency. We want to see all the algorithms and everything that you're doing in there. We would never even consider asking that question.

And there's even just traditional consulting that shows up that has bias. Based on personal experience, opinion, there's a bias everywhere. I think we've got to figure out\ how to manage it. As we look at AI from a consulting firm and think about how organizations hire us to study problems and come up with solutions, sometimes those problems [00:12:00] and answers become commoditized.

So you do the same thing over and over again for different organizations. And AI plays in that space and can change 800 hour engagement for us. To 15 hours, all because of the AI model can handle it, right? And so we've been trying to think about how do we adapt to that in certain areas, but at the still, at the same time, to your point, we have to know when bias comes in, or we have to know when it doesn't apply, or we have to know when it's not a perfect segue to go to AI, right?

But I think there's going to be a big change in the consulting market and some of this stuff that is just going to become commoditized.

It's specialized today. Is this imaging space going to remain hot? I assume we had the EHR consolidation, then we had the ERP consolidation. It feels to me like the next big push is going to be around imaging.

We think so,

yeah. To us, next year looks like business continuity planning, enterprise imaging, and making best use of your EPIC investment. That's where we really see the demand.

by the way, for anyone [00:13:00] keeping score at home, 26, 27, 28, 29, 30 will be making the most of your EPIC investment. Exactly right.

We will see how that plays out. Here's another one. This is Menlo Ventures 2024, the state of generative AI in the enterprise. And we'll close with this. These are these numbers that they throw out that just are staggering. So AI spending surged to 13.

8 billion this year, more than 6X the 2. 3 billion in 2023. I wish we had more time, but we could really dig into this and whatnot. We're coming up on the end here. I guess my question to you is. Six X is a steep jump from last year to this year. How long does that continue

when does

it slow down? In the grand scheme of things. I don't think 13 billion is very much money. So I think that's going to continue for a long time. I think we're going to see huge shifts in that investment and spend going more towards AI, right? I think we're just getting started.

If you can wrap your [00:14:00] head around that, that is literally a drop in the bucket from the money that's in the system and, a lot's going to AI, it's nonstop for us,

the first question I get asked by healthcare leaders, and it's because of the position I sit in the industry, they assume I'm talking to everybody, so have a wider swath, and they ask me, how fast is AI moving in healthcare?

I know the perception is it's moving really fast, but is it really moving that fast is the question they're asking me. And when I answer that question, I'm always cautious to answer that question because I think it's moving fast among certain types of systems. You see all the stuff that Stanford's doing, UCSD's doing, you see the stuff that Mayo's doing.

And, there's grant money going after that and they're. playing around with it and doing some really neat studies on it. You have people who are hiring into it. So they're putting roles in, and I'm not sure that represents progress, but it does represent a focus. And then you have people that are just saying, you know what, [00:15:00] Epic rolled out 110 new things this year.

It's going to be great. And next year, they're going to roll out another 110. And all I have to do is configure it. I don't have to hire AI specialists. I don't have to hire whatever. I'm just going to, Wait till they roll it out and I'm going to go in that direction. So is it moving fast?

It is really moving fast because it showed up in Epic. It showed up in ServiceNow. It showed up in your imaging. It showed up in all those applications it showed up in, but it's not moving fast, like we are investing in NVIDIA chips in our data centers. And we're building out those capabilities. You

nailed it, right?

We could just go down the list of the big enterprise platforms and it's permeating the health systems through all of those you mentioned, add Workday, add the other enterprise systems, even your time and attendance system is getting AI integrated. So it's permeating your health system. through your existing vendors and the upgrades that are coming.

I almost hate to say this, but it's a little bit like when the internet first appeared and we were all trying to study, what is the internet to us as healthcare providers? And we had these crazy [00:16:00] ideas, but then over time, it's just, we realized, oh we're going to become fully dependent on it, right?

And AI is the same way. I think we all thought it was going to be, Maybe more individual healthcare systems would be investing in their development of their own language models and their own development. That's very expensive and that's a very long road unless you're a Stanford or a Mayo.

I think it's really, I'm going to use my enterprise platforms and selectively pick niche systems that can help me take out expense. think it's growing fast. I know back to private equity, I know in the conversations I have with folks. If you have AI healthcare models that you're wanting to take forward and there's a recurring revenue stream and it's real you're going to get money.

Yeah,

it's got to be tied to the return. That's by the way, that's the second question I always get. What's the real return on AI. And I'm like, depends on the problem you're solving. Like we can tie it to certain problems and there's a very real ROI. The problem is when you say something like, Hey, we're going to invest in Microsoft's.

AI tool for everybody. I'm like, wow, that doesn't [00:17:00] solve a specific problem that's tied to a specific amount of money. So that's a little

sketchier. Yeah. Let's throw it against the wall and see if it sticks. And that gets expensive with a Microsoft licensing package. It does

very quickly.

Lindsay, always great to catch up. Look

forward to the next time already. Thanks, Bill.

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