In Health IT, When Inertia is Your Enemy, ROI is Your Friend

Last week I had the opportunity to address 100 or so members of the Health Management Academy, a group of very senior healthcare system executives from the nation’s largest health systems (representing >1700 hospitals) who meet to “exchange best practices and benchmark information on increasing the quality and efficiency of healthcare.” The meeting was held at GE’s very cool corporate education campus at Crotonville, NY. It’s quite a place, as large as a small college campus and teeming with activity. It is worth going to just for the really good coffee and these peanut butter granola things that are breakfast swoon-worthy.

The meeting included about 100 Chieftains (CEO, COO, CIO, CTO, CNO) from a variety of large health systems, all of whom are trying to figure out how to make their programs run better to deliver higher quality outcomes at lower cost. It was a great group of people and many are also in the Academy GE Fellows program where their projects have the potential to make a real difference for patients and providers alike.

My mission in being there was to be the token venture capitalist in the room (it was East Coast humid so I left my black-hooded cape at home) but I was mostly there to moderate a panel of health IT company CEOs, each of which represents an investment that has been made by GE Ventures. In case you’re wondering, yes, it was about deep learning, machine learning, AI and all those other buzzwords that are pegging the top of the Gartner Hype Cycle right about now. Health IT bingo boards at the ready, people!

The panel included Lonny Reisman, CEO of Health Reveal, Fabien Beckers, CEO of Arterys, Tom Stanford, CEO of Nuvolo and Sean Carroll, CEO of Arcadia. Each of these companies sells an analytics product of one kind or another. Each is actually a real company with bona fide paying customers and more than hope as a strategy. I was looking at the panelists as they got situated and I realized that each of these guys is decidedly not a Millenial – so definitely not the crew from Silicon Valley technology company central casting – they even had blazers on, each and every one of them. It struck me how this is probably not a coincidence, as building a successful health IT company takes some serious chops and it is the rare ingénue who makes it through that particular ring of fire.

As even Oprah can tell you, AI and analytics is all the rage at the moment. But the truth is, at least in healthcare, there is a lot more talk than there is action. And by action, I mean health systems paying for analytics products and particularly those that feature healthy servings of AI, machine learning, blah blah, you know the buzzwords. But despite the buzziness, there is markedly real value to be gained by adopting some of these products and services. And yet, if you pin the health systems folks down and put that dark, fuzzy camera lens in front of them to preserve anonymity, they will mostly admit they aren’t using them yet. Why is that? What is the big barrier to the adoption of technology solutions that are pervasive in other industries to the point of “what new stuff have you got for us?” What is it about the healthcare world that makes adoption of analytics such a challenge when the average retailer has been using them for years?

Well that’s the question I asked my four grown-up panelists, each of whom is not riding in their first rodeo. All of these guys have been in the analytics business for a while and has managed to crack at least part of the code to separating customers from their money in exchange for software of value. But each are still relatively early in that journey with their current companies and will freely admit that gaining large new health systems customers is exactly as easy as it is to scratch the middle of your own back.

Lonny Reisman, CEO of Health Reveal, put it this way. “It’s not the money, it’s the money.” He went on to explain: health systems very reasonably want to see fast and material ROI and the incentives on the health systems side to utilize the output of these analytics products are still somewhat lacking. In addition, there is a fairly large amount of change management required to commit to this new way of thinking. As Yoda might say if he were a hospital consultant, “Inertia is strong with this one.” FYI, Lonny didn’t say that last part – that’s all me.

Fabien Beckers of Arterys generally agreed, saying that “you have to show value day one.” He went on to add that physicians are used to and generally comfortable with the tools that they have and thus you can’t overcome the inertia unless you can rapidly prove that you are making a major material difference in time and money. He pointed out that the workload of radiologists at certain health systems increases by 20% each year and, without AI and the efficiency gained through effectively turning data into a resource to speed clinical decision-making, there is no way to keep handling the work load and patients will suffer.

Nuvolo’s Tom Stanford felt that the biggest barrier to adoption is sometimes the startup analytics companies themselves. He stated that the emerging vendors offering AI and analytics solutions often don’t help customers because they just overshoot the target with too many bells and whistles. What is really needed, he says, is solutions that address simple business problems – the blocking and tackling of the everyday challenges of workflow and resource management are more important and desirable, at least today, than the more comprehensive, boil-the-ocean solutions some vendors bring to the table. He advocates a start small, build up approach to analytics adoption saying, “You can’t effectively take customers from zero to 100 miles per hour.”

Interesting, this was somewhat different than the view of Arcadia’s Sean Carroll; he felt that the lack of a comprehensive, end-to-end data strategy on the part of health systems was a big part of the barrier to success. In other words, the niche products and picking away at one problem at a time makes it hard for customers to make real progress, and sometimes this keeps them from doing anything. But for him this emanates as much from the customer side, as they have a tendency to adopt solutions specifically to address government mandates rather than taking a step back to design a broad data analytics business strategy.

However you slice it, it’s slow going for healthcare analytics companies, at least today.

I asked the room of 100 hospital execs whether companies’ ability to demonstrate and promise real ROI (return-on-investment) was an issue and the wind created by the emphatic nodding of heads nearly set off a small hurricane. There was mass agreement that ROI, and by that, I mean the ROI that reeks of cold hard cash, not the glory of implementation, must be realized within about a year, though a few kind souls said they will give vendors up to 18 months to demonstrate payback.

This is a place so many young companies fall down. They do not appreciate the importance of supporting the customer’s budget cycle and demonstrating that they money the customer invested creates a return that makes the client sponsor look not just good, but freaking brilliant. The pain of adopting, implementing, change managing, integrating, interoperating, cajoling, bullying, and every other gerund that is necessary to bring in and scale new analytics technology is so high that the reward needs to be not only seeable with the naked eye, but tangible enough to make a bottom line impact before the next solar eclipse (FYI, that’s in 2024). In fact, it kind of needs to be by Tuesday…how’s Tuesday for you? Startup companies too often forget that the promises they make in the sales process need to be equivalent to the results they deliver before the next trip around the sun is completed. But customers never forget this. Nor should they.

Incidentally, I ended the session by asking the panel and the audience a question: all of a sudden, Apple, Google and Amazon are being talked about as potentially serious players in the healthcare data world. Which company do you think has a real chance of succeeding here? The nearly unanimous answer was Amazon. As Tom Stanford said, “It’s a bad day at the office when Jeff Bezos announces he is entering your space.” There were 2-3 believers that Google will be the winner. No one wanted to bet on Apple, saying that their DNA is too heavily linked to direct-to-consumer products and that the healthcare field just isn’t conducive to that line of thinking (see one of my posts on that particular line of thinking: spoiler alert – I agree). So for those of you entrepreneurs looking over your shoulder for your competition, Bezoptimus Prime is coming for you.

‘Til then, health analytics entrepreneurs, inertia may be your enemy, but ROI is your friend.