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Change Management

Healthcare Predictions for 2023: Hard Choices and Working Smarter

Every December, between shopping for gifts and finalizing open enrollment selections, we check in with our expert healthcare friends to learn what forces will shape the industry next year.

We asked four broad questions to veteran advisors across legal, operations, innovation, digital, strategy, patient experience, marketing and more. Big takes: More of the very Hard Choices healthcare leaders are already navigating…and being ever smarter with the limited resources that remain. Welcome to 2023.

Read through it all, or click on the headshots below to skip right to each expert’s insight.

Questions for the Experts

  1. What’s the primary force that will influence healthcare next year?
  2. What big change will result from that force’s activity?
  3. What topics, trends and opportunities are hot for healthcare provider organizations in 2023? What’s cooled off?
  4. How does the public feel about healthcare provider organizations today? Do people trust, appreciate and support their hospitals and health systems?

High Level Themes

We asked intentionally broad questions to give each expert latitude to answer based on their own perspective and professional expertise. The diversity of perspective and nuance among responses was clear. And yet, there was dramatic overlap in the themes highlighted by each panelist. That triangulation – seeing similar answers from, say a transaction attorney and a digital expert – points directly to the themes healthcare providers will want to focus on in the new year. Here are those themes.

Note: In January, we’ll share findings from our 5th national survey of healthcare consumer perceptions, touching on many of the themes identified here.

Primary Forces

Workforce Crisis

The persistent shortage of healthcare workers was a universal theme. The issue is acute across the care continuum, but particularly challenging at the level of primary care – where pent-up demand is highest and the where the patient journey typically starts.

Green circle with a white dollar sign symbol in the middle

Financial Headwinds

Full stop. Lower incomes and shrinking margins, along with reduced investment returns, either lead to every other issue or make solving them difficult.

Results of the Force

Hard Choices

Provider organizations will have to evaluate every investment and partnership. Tradeoffs loom. Health equity and workforce support are necessary – how do resources for those priorities get allocated? It will be a year of frank talk and tough decisions with a fierce need for clear and transparent communication from leadership.

Yellow lightbulb icon with navy blue detailing

Smarter, Not Harder

After making hard choices comes taking action on them. Provider organizations can’t cut their way to success. They also need to “actively create what’s next.” That means no favoritism towards legacy solutions and openness to those delivering the highest impact at lower cost. Even if there’s an initial investment in time, money and training.

New Relationships

Or better ones for provider organizations. Whether through M&A, joint ventures or with payers. Though opinions vary on the likely pace of M&A activity in 2023, our panel agrees that mergers, acquisitions and partnerships will continue to make headlines as provider organizations seek the most efficient and sustainable path forward. Financial challenges will also push more productive conversations between providers and payers, perhaps spilling over into collaborative innovation. (One can hope!)

Opportunities

Digital

The challenges present an opportunity for transformation of tools and overarching digital strategies. It’s far more than telehealth – which is necessary and no longer a differentiator. Transformation means everything from saving money by reallocating print resources to digital marketing, to allowing patients greater access to their PHI through technology, to evaluating patient usage of mobile apps and improving ADA accessibility on web properties.

A hand icon holding an orange heart

Health Equity

It’s part of the patient experience, it’s part of supporting the healthcare workforce, it’s part of fulfilling the mission to care for the whole person. And now, it’s also a business and regulatory imperative with ratings and credentialling agencies using equity as a metric.

The Patient Experience

This runs the gamut from the tangible – useable digital tools – to the conceptual – full transparency. Patients are looking for convenience to make accessing healthcare easier and more consumerized, ways to expand the front door of primary care, and clarity about how things work in healthcare and what they cost.

Mental Health

The mental health crisis – for the public and for healthcare workers – had been a topic of conversation for years before soaring into view during the pandemic. The issue of addressing people’s needs in a holistic way so they can live well and be productive – and be happy while doing it –remains in 2023.

Trust

People like and trust those who deliver care. While they value the role of hospitals and health systems – especially since the pandemic – the highest praise goes to caregivers themselves. However, our experts noted that some people don’t – or would prefer not to – think about their local hospital. And there’s also a just-under-the-surface skepticism about transparency and accessibility efforts, as well as lingering suspicion from days of rampant COVID-19 misinformation. That flashes a yellow light to provider organizations, and should compel them to frequently ask themselves the question, “Is what we’re doing operationally and conveying publicly truly representative of a patient’s experience at our system?”

Panelist Answers

Want to learn more about the details of each theme referenced above? Here are the responses provided by each panelist.

Jennifer O’Meara

SENIOR DIGITAL STRATEGIST

Eruptr

What is the primary force that will act on healthcare next year?

Workforce and Inflation. The first thing people do when costs rise is put off caring for their own health. Additionally, with all facets of healthcare struggling to keep up with demand, staffing will continue to be one of the most important challenges to tackle.

What big change will result from that force’s activity?

In terms of staffing, I hope to see better pay and working conditions along with an increase in young people going into the medical fields due to the demand and opportunity for a solid career trajectory. But the U.S. needs to make it a financially viable career path, especially for PCPs, OBs, etc. One major concern regarding staffing is people – who already put off care due to COVID and may be behind in receiving simple wellness checks – not being seen in a timely manner. Additionally, the continued struggle for people to find PCPs who are accepting new patients.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Transparency for patients regarding health records and costs, especially with institutions potentially charging money for sending messages to doctors via patient portals in the coming year. No more excuses for not being able to provide information about cost of procedures. Make that information readily available to patients via patient portals – especially if you are going to start charging to simply answer a patient’s question.

In terms of what’s cooled off, telehealth – it’s expected and offered by everyone and no longer a differentiator. Now, it’s about how you improve upon the experience and make it easier for patients of all ages to receive care remotely.

How does the public feel about healthcare provider organizations today?

There is certainly increased trust and respect for the work of hospitals, health systems and the medical field in general. But I think patients, aka consumers, are increasingly frustrated by a system that makes it incredibly difficult to find and receive the care they need in a timely manner along with a complete lack of transparency when it comes to costs for procedures and services. The insurance companies blame the health systems, and the health systems blame the insurance companies, and patients and clinical providers are stuck in the middle. This is something marketers need to especially keep in mind when it comes to communications and marketing materials: Is what you’re conveying truly representative of a patient’s experience at your system?

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Jordan Shields

PARTNER

Juniper Advisory

What is the primary force that will act on healthcare next year?

Inflation, workforce challenges and investment losses dominated 2022. Along with recovering from the pandemic’s impacts on operations, these forces are leading well-positioned hospital systems of all sizes to seek increased scale providing operational, financial and clinical efficiency. Hospital transactions, which have been down since 2019, are roaring back in 2023 as organizations prioritize patient care, quality and access over historic governance structures.

What big change will result from that force’s activity?

The fragmentation of the American hospital system bears significant responsibility for its high costs and middling quality. Consolidation leads to more profitable hospital systems with higher quality and better patient outcomes. Scale benefits can take time to materialize, especially when the consolidation is the result of a weak organization that delayed partnering as long as possible, but improved quality will be the result of this trend towards larger, more efficient hospital systems.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Multi-region transactions will be a hot topic in 2023. For example, as Advocate and Atrium stated in their merger communications, the Midwest and the MidAtlantic are now adjacent healthcare markets. While the scale benefits of hospital transactions can include in-market clinical and referral synergies, those tend to be secondary to the market-independent structural synergies of best practices, corporate finance, population health infrastructure, purchasing and other synergies. However, to fully realize those benefits, organizations typically need to undergo structural and ownership change, indicating that loose affiliations and other “dip-the-toe-in” partnerships are likely to cool off in 2023.

How does the public feel about healthcare provider organizations today?

People are expecting more from their hospital systems. While they trust, appreciate and support their care teams, they are increasingly skeptical of the organizations for which those clinicians work. Layer in front-line labor challenges and patients directly shouldering an increasing share of the healthcare dollar and the frustration becomes palpable. However, the industry remains filled with folks who entered healthcare to help others. Organizations that can build environments where those folks want to work will be successful going forward.

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Mike Cole

Mike Cole

MANAGING DIRECTOR

Alvarez & Marsal

What is the primary force that will act on healthcare next year?

Inflationary pressures (including the cost and access to capital) coupled with skilled labor shortages should be the predominant headwind in 2023. Our practice diligences healthcare services in a broad swath of sectors – big and small – and these trends, unfortunately, continue to worsen as we enter the new year. Perhaps in a distant second is the likely increased regulatory focus that usually accompanies a split Congress.

What big change will result from that force’s activity?

Unfortunately, there is likely to be some distress followed by restructurings – both in and outside of court. Those acquirers whose balance sheet and operations allow are going to have some compelling M&A opportunities.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

The M&A landscape has cooled from a record 2021 and hot 2022 (through Q3). That said, healthcare M&A is nothing if not resilient and, as we know, recession resistant. The march towards value care and innovation through healthcare consumerism are also poised to make some big leaps in 2023 with ‘real’ capital lining up to advance their efforts.

How does the public feel about healthcare provider organizations today?

The public values and trusts their physicians and care teams, including their local hospitals. I think there are other players in the healthcare ecosystem that are less trusted, and there are going to be some questions brought to the forefront about how the pandemic was handled in connection with the aforementioned divided Congress. That could exacerbate the shaky footing.

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Bob Wilson

Bob Wilson

PARTNER

Nelson Mullins

What is the primary force that will act on healthcare next year?

If picking just one thing, it would be a continuing workforce crisis for all our healthcare clients, particularly hospitals and health systems. We simply don’t have enough front-line healthcare providers to meet the demand.

What big change will result from that force’s activity?

The shortage is causing crippling labor costs, and there’s no significant mitigation of this problem on the horizon. In addition to stripping hospital margins, workforce shortages in key areas will likely continue to drive a shift towards access through digital healthcare platforms.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Again, there should be an uptick in telehealth services and remote patient monitoring. There are some very innovative solutions available that could continue to change the way healthcare is delivered.

Also, expect new rules related to HIPAA and information blocking – healthcare data privacy and security will continue to be huge.

On a different note, it’s tough to ignore what looks to be a continuing crisis in mental health – more people are being impacted, and it’s a continuing need that must be addressed.

Finally, I see a continued trend toward more non-traditional companies getting into healthcare.

How does the public feel about healthcare provider organizations today?

Our client hospitals and health systems have rallied public support well in the COVID era and have burnished their reputations as critical community assets.  This could be one of the major lasting impacts of COVID – additional well-deserved respect is accorded our local healthcare systems and, in particular, our community healthcare providers.

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Emily Evans

Emily Evans

SECTOR HEAD, HEALTH POLICY

Hedgeye Risk Management

What is the primary force that will act on healthcare next year?

Workforce development and labor shortages. It is underappreciated how durable the labor disruption will be. Healthcare has not faced a shortage of resources in 50 years and, as such, has not been forced to make hard choices and/or innovate its way into less dependency on human capital.

What big change will result from that force’s activity?

It will vary between non-profit and for-profit or, perhaps more accurately, between health systems that are prepared for and actively engaged in cost control, including healthcare’s most significant input, labor. The only answer, ultimately, will be innovation – particularly that which saves time. In the near term, there are likely to be reductions in service lines, backlogs of cases and even reduced access. Ongoing labor disputes are also likely.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

The most important trend we see that will aggravate labor and workforce issues is payer conflict. That will probably lead to more health system consolidation, about which the FTC will have fewer arrows in their quiver than they would like. Ultimately, health systems that control their markets will be price setters, and that is the direction many will head.

How does the public feel about healthcare provider organizations today?

The public generally supports their doctors and, to a certain extent, the dominant hospital in their region. However, that trust is eroded by a lack of transparency on price and, often, quality. Payer conflicts with employer plans are going to drive even more people into high deductible plans where price really matters as most people become cash payers.

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Regan Chris

Chris Regan

MANAGING DIRECTOR AND PARTNERSHIPS CO-LEADER

Chartis

Robert York

Rob York

DIRECTOR AND PARTNERSHIPS CO-LEADER

Chartis

What is the primary force that will act on healthcare next year?

Workforce/labor in every way imaginable – cost structure, retention, burnout, training/development, pipeline, staffing models – has to be put at the top of the list right now. This was mentioned in last year’s predictions for 2022 and it carries forward into 2023.

Another force to highlight is the ever-expanding world of partnerships and M&A activity beyond traditional hospital-to-hospital transactions. Hospital transactions are still a big part of the landscape as we move into 2023, but we are seeing a wider variety of joint ventures and other arrangements in areas such as ambulatory access, digital health, high-reliability care, health equity and payer/health plan products. Our clients are investing heavily in partnerships that fortify their presence across the ambulatory ecosystem surrounding their hospitals.

What big change will result from that force’s activity?

One anticipated change from workforce challenges will be the continued evolution of new care delivery arrangements including alternative sites and care models. The advancement of digital and key strategies such as Hospital at Home are part of the solution.

We will continue to see health systems focus on building scale and capabilities outside of the traditional hospital component of the healthcare ecosystem. They will not be short of options and partners in this effort, but the challenging economy and limitations to accessing capital will determine how extensively and quickly many organizations collaborate.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

All of the areas mentioned above will continue to be hot throughout 2023. In addition, health equity, digital health and programs/models that truly integrate care financing and delivery (especially with managed governmental payer lives) will continue to be top of mind in 2023.

In general, opportunities that are capital intensive and have a long time to market or realization of value have cooled off.

How does the public feel about healthcare provider organizations today?

In many ways, the pandemic has fortified the trust that patients have for their providers and health systems. There is considerable admiration for all that providers have done to help us through the pandemic. At the same time, as traditional aspects of inpatient care melt to ambulatory settings and as ambulatory care melts to virtual and at-home settings, the need to expand the health system footprint to offer easy access across the continuum of care is greater than ever.

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Marquise Stillwell

Marquise Stillwell

FOUNDER & PRINCIPAL

Openbox

What is the primary force that will act on healthcare next year?

Digital transformation, which will include affordability and accessibility, particularly with underserved and rural communities.

What big change will result from that force’s activity?

It would help to close the digital divide. If we can start to think about better broadband access for the most vulnerable, we begin to close that divide. This would also allow more access to high-speed internet for educational and entrepreneurial uses.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

The trend of care centers specializing in wellness has cooled off. A lot of them never differentiated themselves enough to make strong strides in the marketplace. My hope is that we get back to basics. I don’t need fancy couches and cappuccinos in the waiting room, I just need good, affordable healthcare.

How does the public feel about healthcare provider organizations today?

There’s a lack of trust. I think COVID really exposed the misalignment of info. We’re at a place now where we don’t necessarily know which source to trust. But we’re now dealing with fear-driven policies that are forcing individuals and families to make tough decisions. We need people-centered policies that support healthy outcomes for all.

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James Cervantes

James Cervantes

SENIOR VICE PRESIDENT

Jarrard Inc.

What is the primary force that will act on healthcare next year?

The workforce is the primary force that will drive healthcare next year. The needs of physicians, nurses and employees should serve as the North Star for all healthcare systems if they want to weather the financial headwinds and be successful. Without a healthy healthcare workforce, there’s no ability to deliver care. There’s no ability to realize and drive innovation. There’s no way to create healthier communities and improve the healthcare system.

What big change will result from that force’s activity?

It’s not one big change that will solve the workforce issue. Rather it will require HR, Operations, Communications and other areas working together to create a culture where people want to stay and where top talent wants to come to work. There’s a real need for health systems to solve for burnout, address recruitment and turnover issues, find ways to unlock the full potential of the resources they have and create a culture that is rooted in inclusivity and belonging. Not to mention, a reimagined strategy for how they communicate and connect with their workforce. These are the changes that need to happen to build a sustainable workforce and will be the most important work for healthcare organizations next year.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Beyond the workforce, there will be a heightened focus on financial improvement initiatives, including labor and non-labor expenses, patient access and acquisition and health equity. In a sea of strategic priorities, health equity has not been at the top of that list. But with this year’s release of CMS’s framework for health equity and US News & World Report’s unveiling their health equity methodology – not to mention the healthcare disparities and inequities that were illuminated and worsened by the COVID-19 pandemic – it will be interesting to see if health systems finally address this issue and start investing in it.

How does the public feel about healthcare provider organizations today?

Honestly, I don’t think the average patient or consumer pays a lot of attention to their local hospital or health system. Especially if they don’t have ongoing healthcare needs. Sure, they trust their provider. But beyond that, how often are they thinking about and engaging with their clinician’s organization? I would wager very little. I think people also view the healthcare system as wildly inefficient, costly and confusing. If we truly want to improve the health of communities and solve some of the underlying causes of our unhealthy nation, provider organizations need to be collaborating with their communities and addressing social determinants of health. Maybe then, patients and consumers will start to see hospitals and health systems in a more positive, visible light – as a place that helps you be well and takes care of you when you’re sick.

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Kerrin Slattery

Kerrin Slattery

PARTNER

McDermott Will & Emery

What is the primary force that will act on healthcare next year?

“Financial headwinds” will be the primary force and continue to exert outsized pressure on healthcare in 2023. These headwinds, which collectively include things like increased labor costs, inflation, access to capital, reimbursement, and so on, make it challenging for health systems and other industry players to execute on more strategic and innovative strategies.  Notwithstanding that, collective demand for improved performance across the industry remains high, which will require health industry players to evaluate their portfolios, geographies and partnerships to enable improved ability to provide accessible, high-quality care to the patients and communities they serve.

What big change will result from that force’s activity?

With every challenge comes an opportunity, so these financial pressures are motivating organizations to move more quickly on strategies across the care continuum. This pressure will hopefully result in innovations to address a lot of pain points providers are currently experiencing, from labor force to patient experience to cost management. We’ll see a lot of healthcare organizations looking beyond their own four walls to outside collaborators to harness the power of their own data, work more efficiently and develop solutions that “work smarter, not harder.”

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Even as the economy presents challenges, expect healthcare mergers and acquisitions to continue in the year ahead. For those in the position to buy, this opens the door to acquiring distressed assets or consolidating with others. For others, portfolio reassessment will result in divestitures or joint ventures of assets that organizations no longer feel compelled to wholly own and operate.

What has not cooled off is the conversation about workforce wellness, as providers and staff remain stretched. That conversation should continue as there is no substitute for nurses, doctors and those on the front lines in caring for the population, even when that care is becoming more virtual in some instances.

How does the public feel about healthcare provider organizations today?

We’ve certainly learned over the past several years that healthcare workers and healthcare organizations are essential. While patients may have trust in their individual providers and maybe even their local hospital or health system, there is great dissatisfaction with the incredibly complicated puzzle of providers, payers, pharmaceuticals and the sources of healthcare funding. The increased focus on well-care and not sick-care will enable different engagement between consumers and the health care system, which raises the prospect of a healthier health system for all.

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Jesse Neil

Jesse Neil

PARTNER

Waller

What is the primary force that will act on healthcare next year?

Workforce/labor will continue as a singular challenge for healthcare systems and providers. It adversely impacts access to care, quality of care and financial well-being of organizations. Many hospital systems will still not be able to open all their licensed beds due to the inability to staff them.

What big change will result from that force’s activity?

Within the sizeable group of hospitals that already operated at single-digit or negative margins, many will seek to consolidate with other systems or dramatically restructure. I’m optimistic that for hospital systems that have proactive and engaged leadership, this dynamic will lead to innovation in delivery models and technology – perhaps even in collaboration with payers and employers.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Payers, providers and investors continue to focus on delivery models and technology that allows healthcare to be delivered at home or otherwise outside the hospital or physician office. Consumerism and “bending the cost curve” will drive this trend through 2023 and beyond. Provider organizations will increasingly assume financial risk, and payers will continue to build out provider-side capabilities. Ironically, dedication to outcome-based reimbursement models such as improved clinical outcomes, preventative care targets or reduction in medical errors, seems to have stalled a bit and isn’t perceived as a solution to the near-term existential threats providers face.

How does the public feel about healthcare provider organizations today?

I can honestly report that I have seen unprecedented community support for and goodwill towards their local hospitals, health systems and providers. This is particularly true for hospitals and health systems that are transparent about industry challenges and aggressively engaged to tackle them. In my experience, community stakeholders want to be part of the team and the discussion.

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Expert Quotes

Rex Burgdorfer

Rex Burgdorfer

PARTNER

Juniper Advisory

What is the primary force that will act on healthcare next year?

Our health system M&A clients are most concerned with achieving financial sustainability and addressing quality-of-care issues in the face of organizational stress. These forces have caused a significant increase in parties considering transactions.

What big change will result from that force’s activity?

We sampled ~15 health systems that our team is working with around the country in evaluating M&A opportunities.  Two-thirds are hospitals seeking a larger partner.  One-third are larger systems pursuing growth. 20% are local government-sponsored, 20% faith-based, and 60% secular. Local Governments are the category most likely to undergo change in the coming years.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

The high degree of variance in the regulatory environment from state to state cannot be overstated. Our bankers are working on transactions in 13 states and involve 35 hospitals. The difference in pace and stance toward business in markets like California, Illinois and New York is vastly different from states like Alabama, Georgia, and Kansas. That has a bearing on partnerships motivated by a desire to construct new facilities or pursue vertical integration.

How does the public feel about healthcare provider organizations today?

Many of the independent hospitals we are working with are seeking partnerships that address community relations, transparency and patient experience. The role of foundations has taken on greater importance. Nonprofit acquirors are now more commercially skilled and are utilizing structures that create meaningful proceeds to further support health needs in the community. Some of these resources are filling a void that exists in lower acuity, non-hospital settings.

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Pete Lawson

CEO

Lawson & Associates

What is the primary force that will act on healthcare next year?

Significant operating income losses coupled with declining investment returns will force hospitals and health systems to reduce non-corporate initiatives and staffing.  Over the last few years significant effort has been placed on health equity efforts, so health systems will need to reconcile the costs of those endeavors with increased salary demands by clinicians.

What big change will result from that force’s activity?

Significant and strategic communication resources will be needed for public and internal communications should health systems trim back social initiatives. It’s easier to initiate on these than retreat. Threading the needle will require outside communication assistance.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

Quality parameters will become a priority for antitrust regulators looking at mergers and collaborations. Health systems will need to match quality measurement variables to insurance company models long before requesting mergers. Health systems will also need to reach across the aisle to insurers to start building trust early rather than ending up in what are too often combative negotiations.

How does the public feel about healthcare provider organizations today?

As both a current, long-term patient and a healthcare executive I respect both sides of the equation. Patients trust the health system as long as their care team is supportive. When healthcare workers are negative towards a health system – in public or private – then the public’s opinion will turn. It’s one thing to address public protests, but more difficult to assess and manage are private bedside discussions between caregivers and patients. That’s where the focus needs to be both short and long term.

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Abby McNeil

VICE PRESIDENT & REGIONAL HEALTH SYSTEMS PRACTICE LEAD

Jarrard Inc

What is the primary force that will act on healthcare next year?

Ongoing financial constraints caused by inflation, rising costs of labor, etc.

What big change will result from that force’s activity?

We hunkered down and got through the pandemic but have emerged with seemingly more intractable issues to face. Something has to give: Providers can’t just grind through or cut their way out of financial challenges. Healthcare no longer has the luxury of maintaining the status quo, doubling down on what’s always been done or wasting precious time overly focused on what competitors (or Amazon) are doing. In 2023, healthcare providers should focus as much energy and as many resources as they can muster in creating what’s next, getting clear on what they do best and carving out a brand position and strategies that are laser-focused on who they want to be and leaving behind who they’re not.

We all need to continue investing in the transparent conversations that started in 2020. After all, there’s a reason that the consumer brands that invested in communications in 2020 and 2021 increased in value by an average of 43% during that time.

What topics, trends and opportunities are hot in 2023. What’s cooled off?

What’s hot: Responses to all the tough forces at play, such as…

  1. How to invest increasingly limited resources – I heard a healthcare leader ask, “If I have $1, do I invest it in compensation or wellness/ engagement?”
  2. Patient acquisition – How do providers get more patients who can pay?
  3. Access – Can we actually get patients in the door?
  4. Marcom structure and staffing – How many people do marketing and comms teams need and in what roles? Are they focused on the right priorities?
  5. Health equity, especially now that it’s required. How do providers translate nice, fuzzy statements into actual progress with limited budgets?

How does the public feel about healthcare provider organizations today?

People don’t think about hospitals and health systems unless they have to. People “in the real world” are busy with their own lives, struggles and priorities. Most only think about provider organizations when they need care. They may think about provider organizations as they consider their skyrocketing insurance premiums, but otherwise most would prefer to think about the hospital only when they need it…which they hope is not often.

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Durable Optimism and the Importance of Healthcare Boards Taking Informed Risks

Orange rectangle with a white-lettered "J" in the middle, adjacent to larger text that reads "Insights" on a navy background

Change is hard and, these days, it’s compounding. Big disruptions layered with small pivots have led to a tough environment where “one more thing” is a burden, not an exciting opportunity.

In this environment, healthcare executives and hospital board members are challenged with walking a fine line – guiding their organizations through disruption while acknowledging the uncertainty, making decisions when the path forward is foggy, and processing their own exhaustion, too.

Jarrard Inc. CEO David Jarrard and McDermott Will & Emery partner Michael Peregrine – both of whom have a deep interest in helping healthcare executives and boards navigate change – sat down to talk about the situation. They first acknowledge the challenge, then provide some historical context, then offer a few ideas for getting through it all.

Here’s an overview of the conversation. Listen to the whole thing or read the transcript below.

The Challenges:

It’s natural to wonder about the point of making long-term plans when we’re experiencing constant upheaval and uncertainty, when change has worn us down, when so much is out of our control.

In healthcare this is borne out as we see increasing responsibility – and opportunity – arrive at the door of provider organizations. And, some of the forces that have been serving as accelerants of change over the past few years have grown to be more disruptive. These factors are like the lighter fluid that started a campfire in a dry forest.

The Risk:

The tendency is to focus on and do what is doable. We tend to act on what’s right in front of us. And, while that is right and necessary in a crisis, it is not sustainable long-term. Spending too much time in the short-term leads to susceptibility to competition and disruption.

The Solutions:

Read the Transcript

David Shifrin: Michael and David. So, a lot of change disruption happening these days, and it’s happening in ways that put pressure on us and on health care leaders, both personally, as well as professionally.

I guess just a few things to note, to run down the list; although this definitely isn’t comprehensive, we’ve got the Dobbs decision, which is just one of a number of significant Supreme Court decisions this term. We’ve got the great resignation and kind of the workforce reshuffling, we’re facing down the prospects of massive inflation, which continues, as well as a potential recession. We’ve got the ongoing epidemic of gun violence. We at Jarrard just put out some resources to help healthcare providers be involved in that conversation. There’s the political divide; there’s lack of trust that we’re seeing. And then, Michael, you even mentioned the shakeup in college sports recently, with schools moving between conferences as something to flag. So, there’s so much, it’s exhausting.

And so, I’ll just kick us off here and then let you both converse with each other and bounce ideas back and forth but to start with, just talk about where that overwhelming collection of change is leading us and how people are processing it, or maybe failing to process it.

[00:01:54] Michael Peregrine: I think that’s right. You mentioned the change in college football. I think that put the capstone on it for me in terms of, it’s not that people and leaders are afraid of change, per se. I think they’re, to use your word, exhausted by this pace and the profound nature of the change. Too much, too fast change to traditions on which people counted on as normality in their lives, as predictable in their lives.

And one by two by three they’re being taken away from folks. So, I think, and David, I’m interested in your view. I think it’s a question of losing faith in the ability to control events. I know that I was particularly shaken in this environment of violence. The Abe assassination was one that I put down on my list because, again, I always thought we could count on living in a global society where we were civilized nations. These things don’t happen. And that’s really,

I guess the question, David Jarrard, I have is, I’m wondering if our leaders are saying that “when will this stop?” These things that we, these guard rails of society, these guard rails of organizations, seem to be eroding. And if we can’t count on them, and David Shifrin, going to your point, what’s the use of trying? What’s the use of planning? What’s the use of looking forward? You know, we talk about the three-year strategic plan being superseded by the five-year strategic plan, being superseded by the never-ending or ongoing strategic plan. Why even engage in strategic planning, if we’re just getting pummeled on a daily basis with things that we’ve counted on being obliterated? David, what’s your take?

[00:03:43] David Jarrard: Yeah. And in that environment, it’s the latest change that gets the greatest attention because it’s the latest change. It’s right in front of you. And everyday can begin to feel like a fire drill because you’re, as a leadership group, as a board, and even as a staff member.

I’m thinking of, of course, our hospital health system client, you run from event to event. It’s like having moved from a surgery suite, where everything is well planned and coordinated. And a good surgery, runs like a ballet. You know exactly what you’re doing, how you’re doing it to the ER, where you don’t know what’s going to come in the door next and you are running and gunning. You’re looking for supplies and trying to take care of people and keep folks alive and make it through the shift. It’s a whole different environment and way of thinking, and ER nurses and ER physicians, they have a different mindset than that orthopedic surgeon who’s been around for 30 years and knows exactly what they’re doing and how to do it.

It’s, and to your point, it’s not just the change. It’s the culmination of a whole series of changes. And it’s that sense of a lack of control where you can, you can begin to think, “what’s next? Why even act?” And I’ll add one more that we’re really paying attention to. It’s the decline of trust in organizations, in institutions. And healthcare systems continue to be very trusted organizations. And so, as other organizations become less trusted, more responsibility seems to land at the doorstep of our hospitals and health systems.

[00:05:09] Michael Peregrine: Yeah, from a leadership perspective, what troubles me is the concern that leaders for both executives and directors to pull back from engaging more fully in issues.

This is something that you, as you and I have talked, that Mitt Romney recently wrote about in the Atlantic. A concern that it’s easier to take the easiest, most simple solution to complex problems even though you have a fair likelihood of believing that it’s the wrong solution. But it’s easy, it’s quick and it’s available. Whether it’s denying that a problem exists or taking a shortcut. It’s this loss of a willingness to engage. Because again, we can’t count on traditional traditions. We can’t count on traditional guard rails to hold up. So, we’re playing short term ball. We’re making short-term decisions. We’re allocating capital on a short-term basis. We’re not planning for the future. So, when we come out of the current combination of crises that our clients are going through, will we be prepared for the next phase? Will we have prepared strategically? Will we be more susceptible to disruption and competition and regulation?

You just worry about this wearing down on our executives and our board members and it being just, when have we really hit the last straw? You’ve talked about it.

[00:06:32] David Jarrard: I agree. We, particularly, our leadership teams in healthcare systems are used to a strong sense of agency. Like driving forward and shaping the delivery of care and having some control over what happens next. And so, we are all built, particularly in healthcare, but other industries too, to do what’s doable. What can I do today that’s actually going to make a change and make a difference?

And Michael, I think you’re exactly right. Things have become so chaotic beyond our vision. That we act on those things that are right in front of us. So, we become tree people instead of forest people when we act. Which can be helpful short term; it can maybe be great in a pandemic, great in a global crisis, but not in a long-term event. It’s not a long-term solution to the crisis. That doesn’t seem to end.

[00:07:18] Michael Peregrine: And also, David, I’m concerned that if this is affecting our colleagues in the boardroom and in the C-suite, it’s got to be affecting the workforce as well. What do you say?

[00:07:28] David Jarrard: Oh, for sure. You know, our hospitals and health systems, they are not immune. they’re not an island. I mean, all the things that we experience in our communities are happening in the halls of our facilities as well. And we see it play out like position by position, job by job, in our hospitals.

And you see that in nurse staffing issues. You see it in labor activity. You see it in consumers being more and more reluctant to go spend that money, to receive the care that they should receive that would be helpful to them that will forgo longer-term health care costs. But, because they can’t see the future, they don’t know if they’re going to continue to have a job. They don’t know if they can live with continual 9% inflation that erodes their wages. They’re not seeking the care or may not seek that care in the future. Which has this cyclical effect, it reduces the revenue hospitals receive, which reduces their ability to pay nurses at a wage that is in competition with Chick-fil-A, for goodness sake. And so, it begins to build on itself into a significant issue.

[00:08:27] Michael Peregrine: And I guess the one thing that I worry about, particularly with respect to the board, is it’s trying to be a true partner in management and help lead the organization through all these very difficult times. Including the extraordinary economic issues that they’re having right now. Will board members be up to making the commitment to invest? And looking towards the future, in being an effective partner again if they are concerned that those things they knew and counted on are no longer reliable? And will there be another shoe to drop in terms of one of these change curveballs?

I particularly am concerned that what we see in the polls is about a lack of trust in democratic principles. At some point, is there a line that we’re crossing where our leaders will look to themselves saying, “after this, I know there’s really only one thing I can trust and it’s my judgment. It might not be the judgment of my collective group. My fellow executives, my colleagues on the board. I’m going to go with my gut because I know that’s not changing even though everything else around me is changing.” And that’s just antithetical to effective governance. And it is not what our industry needs at this time. And again, I’m sure you’re seeing this as well with the people you deal with in crisis management and communications.

[00:09:44] David Jarrard: That’s such a good point. Because we as a board, although the last, 20 or 24 months through the pandemic have been a very challenging time, we’ve been able to talk about the pandemic as an accelerant of change. What the pandemic has really done has made things that were already changing, just move faster.

So, telehealth, telemedicine, all the elements that are part of that new evolution of healthcare, are just occurring faster. And in some cases, that was a good thing. This strange environment gave us permission to move in the direction we wanted to go anyway. In the last year though, it’s felt like the changes have not been accelerants of change. They’ve been almost purely disruptive. And it’s impossible to anticipate. And so, the result is the bets are bigger. The risks feel higher. Because, as you say, no one has a model to predict this one outlier after another. There’s not necessarily math you can run. There’s not an analysis you can do that will give you a margin of error. So, you have to lean more on, and I love the way you say, you have to lean on your gut. What you believe to be true. And that seems to make ultimately the real job, the ultimate job of a board.

[00:10:51] Michael Peregrine: What worries me too, and has to be corrected, is the concern that the foundational principles, the core understandings of the industry, that our volunteer directors, or even our compensated directors came on board. And there were those principles or those operating guidelines, those basic understandings about the healthcare industry that they were weaned on, that they came to understand. The foundational principles and the understandings and the stipulations that underscore the strategic plan. Again, if we lose confidence in these types of factors because of the Powerful rapidity of change, we’re again, operating on an “I’m taking it one day at a time” basis. And that can be catastrophic for an organization’s future. And we, and that to me, that shift from a focus on the long-term vision to the “I just have to get through tomorrow” vision, that’s what we have to protect against.

[00:11:49] David Jarrard: And I know you work with so many boards, and I know how seriously they take the idea that they are trustees. That they are entrusted with this extraordinary organization, you know, often times hundreds of millions of dollars or multi-billion dollars of revenues and thousands of jobs. I know that weighs heavily. And so, they take seriously the ability to plan for the future and invest in the future two years, five years, 10 years out. I’m curious, as they are thinking today, how are they beyond their gut thinking about the future, sort of, envisioning about what the future is going to bring so they can plan for it?

[00:12:24] Michael Peregrine: It’s got to be a frustration again, because they contribute to a strategic vision in a variety of perspectives. They’re making bets on certain developments. And again, if they find out that they’re really unable, that change is coming too fast and too strong, their willingness to take informed risks, David, I think we’ll be limited. And that is, I keep coming back, that will be the greatest harm of this. And this is why, this kind of a miasma has to be stopped before it gets much traction.

And I was thinking about something. I saw a blip in the paper the other day. We just passed the 43rd anniversary, and I’m sure you have this on your calendar, of Jimmy Carter’s malaise speech. There’s been a lot of anniversaries this summer, with Sarbanes, with Watergate. But I thought to myself, wait a minute, as someone who waited in line for hours at the gas station during that period of time, and remembering a speech, I thought, there’s a little bit of similarity there. You had back then, as I recall, this overarching sense of an inability as a country to control our own destiny. We were no longer in charge of events, and to a certain extent, I’d be interested in your view, that seems to be where we’re headed right now with this change fatigue. We can’t stop these things from occurring. Things that we relied on are no longer reliable. We cannot control events. Do you see that as relevant at all?

[00:13:56] David Jarrard: I do say it’s very relevant. And I do remember that speech and I do remember the heckling he got afterwards. I have two thoughts about that. And the kind of communications that leaders are and could be delivering today. When I think about Carter’s comments, he wasn’t wrong to call out that this was an issue; that there’s a concern. And recognizing how the voters at the time, at least how he felt the voters at the time were feeling and thinking. I think it’s right for a leader to see the folks that they are asking to follow them. Is that recognition? I think that’s really important, and I think that’s what he was attempting to do.

But the other element of that message was there’s a problem, and I don’t know what to do about it. I’m not sure, I feel helpless, just like you. And that was, that’s the disconnect right there, that that can’t be the message leadership delivers. So, it’s great to recognize it. It’s great to call it out. It’s great to show appreciation for it and sort of shared empathy. But then, as a leader, therefore here’s what we’re going to do. Here’s how we’re going to tackle this problem. Not that I have the answers, but I know how we’re going to get into it together. I think that’s an important element for leaders today.

[00:15:07] Michael Peregrine: I agree with you. And as I thought about it, and again, I know that half of our clients have no idea what we’re talking about. But I think part of the problem, again, Carter did have his finger on the pulse. There was a crisis of American competence, and communication was what failed him. The communication of his vision failed him and ultimately failed his presidency.

And as I recall, David, this is germane to the subject of, how do we address this in the context of our clients? Somehow, he allowed the conversation on his message to shift from “we need to work together for the common good and make some self-sacrifice” to “Mr. President, you’re criticizing our way of life. You’re making moral judgments on our consumerism. You’re suggesting that we’re overly reliant on materialism and you’re blaming us for the problem.” And that, I think, as inaccurate as it was, took over the dialogue. I come back to your expertise in response to change fatigue as it may be creeping in with an organization just seems to me, not just what the message is, but how it’s delivered.

[00:16:19] David Jarrard: Yes, very much. And some of that message has to be action. So, it’s the recognition that there’s this issue. It’s acknowledging that there’s a challenge with creating a vision in such a cloudy environment. How do we see past the fog into the future? So therefore, and here’s the key, it’s always the, so therefore what? So therefore, we’re not going to cross arms and go into our boardroom and worry about the future. So therefore, we’re going to create teams. We’re going to involve you. We’re going to create a dialogue. We’re going to construct this and reconstruct it together. So even if the answer is, we’re not sure about the future, it’ll be an answer we all came to together.

So just the action of pulling people together in concert can be hugely energizing. Because then you’ve set the organization up for whatever direction you need to change. And because we will need to change, but you’ve set them up to acknowledge their own consensus building in that work. And that’s the right place for leadership right now.

[00:17:15] Michael Peregrine: Not to be Pollyannish, but I think that there’s an element where leadership here, it has as an opportunity to, through a durable optimism approach, say, “let’s take a look at what we’re dealing with right now. Maybe we can’t be, here’s where we stand in the industry. Here’s our financial position. Here are the things that are positive about this organization. Here are the tools we have to work with and here’s our position within the industry, and here’s what we do know.” And create a vision in saying that “we here at this health system are actually in a relatively stable position. These are things that you, the workforce, you, the board, us, the management team, we can count on this universe of knowns. And therefore, we are to a certain extent, maybe better than others in a position to control our destiny, even if that destiny is in the near term.”

So, I come back to your point about energy. When I’m tired, when I’m down, when I’m lazy, when I just don’t feel up to it, something energetic snaps me out of it. And I think that the energy, David, of the communication, as much as the context of the communication, is what may be necessary, in part, to counter this fatigue. The sense of loss of faith that nothing matters anymore because the future is changing every day.

[00:18:34] David Jarrard: I love the phrase durable optimism. I wrote it down as you said it. I think that’s so important to this. And to your other point, which I fully agree, and as part of our change management work is, before you can really talk about change, you have to talk about those things that aren’t changing. That will never change. This is what we know to be true.

And if you worry about all the changes that are happening, you can begin to worry that everything is going to change. That these shifts are going to change, this floor is going to change, and our mission’s going to change. And we know as an organization that short of something truly extraordinary, these things aren’t changing. This is who we are and who we’ve been for a hundred years or whatever the message is.

So, that ability to ground those things and put off the table those things that can bring some foundation and some solid ground, I think is a really important part of the message.

[00:19:30] Michael Peregrine: Don’t you think that’s a message that has to be delivered not just by the CEO, but by the linked arms of senior management and the board?

[00:19:37] David Jarrard: Yes. And the important role of the board here can be overstated to deliver that message to senior leadership. It’s the board’s commitment to this direction or these fundamentals that is key to unleashed leadership to get into this work.

[00:19:54] David Shifrin: All right. For the last couple of minutes here, let’s get very tactical. How do healthcare boards and executive teams deliver those messages? What are the tactics that are needed right now to make that connection with employees while also providing an opportunity for feedback and acknowledging the personal stress that leadership is undergoing themselves? How do you roll that in what’s the day-to-day for delivering these? Michael, I’ll start with you here.

[00:20:19] Michael Peregrine: Well, David, from my perspective, it has to start with leadership in the boardroom. And basically, the board chair and other leaders saying, “this is not a soft issue. This is a big deal. In all of our lives. We need to realize that we need to confront it, and we need to understand that for the potential risk, it is to our organization and our culture.”

So, David, I would start off by saying board leadership has to own the issue and convince the board that this is something that they must attack as a strategic concern for the organization. It’s got to start so that it’s buying in with the tone at the top. That’s job number one for me.

[00:20:57] David Jarrard: Very much so, and to affect that, is to recognize the needs of the senior leadership. And it’s, we talk about the mental health of our staff and colleagues and physicians and nurses and burnout and stress. It happens at the top, too. And as we move through dramatic things like this, recognizing that’s a need. And this group needs to be together and solid and comfortable addressing those things before they can be who they need to be within their organization.

[00:21:25] Michael Peregrine: That’s why I think that the board has to shift into high gear if it’s not already in high gear already. And begin to take a series of steps that represent a visible demonstration of their leadership and their buy-in on this issue and send that message of durable optimism. Meeting more as a board as opposed to meeting less. Having more sessions with the executive leadership team. Being visible in the institutional community. Having more town hall meetings between management and employees. A visible demonstration of board’s commitment and belief. And belief in the future and stability of the organization, not just the economic and quality and delivery of care stability, but the mission stability. As you said, David, we continue to stand for what we’ve always stood for, and you can count on that. That isn’t changing.

[00:22:21] David Jarrard: I remember years ago, during another sort of economic downturn working with a number of Catholic hospitals who were run by a group of sisters. And even though things were hard and there were questions about the future, they would tell stories about selling the chandeliers and selling this piece of land, that piece of property, or doing away with this practice because we will always support this. We will never not be that. And it was such a grounding story that they told that reminded people that we’re committed to this, no matter what we have to do to get there. I think that the level of commitment and that storytelling and remembering who we are, remembering why we are is really important.

And I really want to highlight a message you just delivered about visibility and that visibility through personal engagement. One of our core beliefs is that communications happen in a lot of ways. And part of it is the words that you use and the emails that you send out. But the messages that are delivered through the theater of physical interaction, walking the halls, body language in a presentation, being so optimistic that you’re willing to be present with people and shake their hands and hear their concerns, and cry with them, or pray with them, or be with them is hugely impactful. And it creates a kind of trust that is gold in times of change like this. Really want to highlight that point. I think it’s fundamentally important here.

[00:23:50] David Shifrin: Well, Michael and David, thanks so much for your time. It’s always fun. Always fascinating. And look forward to our next conversation. This has been great.

[00:23:57] Michael Peregrine: Thank you both.

[00:23:58] David Jarrard: Thanks, David. Thanks, Michael.

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DigitaLee 12: Poetry vs Prose

Orange text that reads "The Digital Future of Healthcare" with smaller text at the bottom saying "DigitaLee with Lee Aase" on a navy blue background

DigitaLee 12: Poetry vs Prose

This week on DigitaLee, David Shifrin and Lee Aase talk about a potential reset in the startup economy, some of the digital apps and therapeutics that are making care more efficient regardless of the economic outlook, and then notes for healthcare provider organizations looking to implement or partner with those digital health tools.

Listen and subscribe to the podcast, or read the transcript below.

Read the Transcript

David Shifrin: Well, it’s no surprise to anybody that we are likely, or at least potentially, staring down the barrel of an economic downturn, possibly recession. And that has huge implications for everybody, of course, but also the investment community because when money is cheap, when interest rates are low, it’s easier to invest. And so there’s an interesting article in Fierce Healthcare titled “Here’s why some VC investors say an economic downturn can be good for digital health.” The general point of this article is that when it’s harder to build something, better things will get built. It’s the cheap and easy stuff isn’t as likely to be built. And so I think it’s exciting and also challenging because it means that innovators and entrepreneurs and startup founders and all the rest, people who are looking to make change, they’ve got to work harder and really find that product market fit, make sure it’s sustainable and all that. But talk a little bit about, you’ve got so much experience in the startup world as well as the digital world. What do you think about this idea that a downturn may be helpful in resetting the market?

Lee Aase: Yeah. Oh I think it’s, I think it’s right on because it really does impose a discipline on the startups to be having a product that people are willing to pay for that is meeting a real need that they’re eager to have. And it’s not just built on fluff and hope and hype, given what the project that I’m personally involved in right now, we’re focused on providing real value to patients. And as I look at it, we have concerns about a downturn, but we’re also saying, if you’re a low cost provider of a good service in a down economy, that actually creates big opportunity.

Because if you’re able to do that and then to scale, that’s meeting a real need, people will need healthcare, they will need health-related services. That’ll be something they’ll be likely to prioritize.

And what’s remaining to be spent after the doubling of gas prices and all is something that will be probably disproportionately skewed toward healthcare. But so then it makes the value delivery proposition really all that much more important.

You know, you don’t want a downturn, you’d rather, you’d prefer there not be. But given that’s a reality, and I think it’s everybody’s pretty much saying it’s a foregone conclusion that this is going to happen, so you might as well embrace that and understand what the new terrain’s going to be like.

And that really is putting constraints on an enterprise, causes it to need to be much more resourceful and need to make sure that everything you’re doing is contributing toward value for the customer. And it’s like in poetry versus just prose, okay? Poetry puts a limitation on it, and that’s why poetry and music, songs, can be much more meaningful is because it sets rules around you, that in terms of how you have to present your thoughts and your ideas versus rambling on a podcast like this.

David Shifrin: That’s so interesting because somebody I was talking to a couple weeks ago used a similar analogy. He was actually talking about a wedding toast that he had heard, and he made the point about the difference between being contained or having a container, rather than a cage. And those can seem very similar, but they’re not. And the guy I was talking to referenced it and said it’s like poetry and prose.

Lee Aase: Yeah I mean, I’m about to have the sixth of my children get married at the end of July. And what I’ve done for the others is that the father of the bride, father of the groom always, often, gives a toast or gives a speech. I’ve always done a poem, you know, it shows some thought going into it and a caring, actually, about – not to hammer on anybody who doesn’t do poetry in their wedding toast – but it’s just a way of showing that, yeah, I spent some time thinking about this and so I think it’s that same way with an enterprise that those kind of constraints, those rules and the rules of cash flow, as well as profitability, are things that impose a discipline that will, that can be very constructive.

David Shifrin: So let’s focus specifically then, Lee, on some areas where it does seem that there’s great value. And you’re talking about being able to deliver care more efficiently and cost effectively.

And so as you and I were prepping for this, bouncing some articles back and forth about the rising value of digital therapeutics and mental health apps, and then you also sent over a couple of ideas around digital diabetes treatments.

Lee Aase: Yeah. Well, when you’re talking about the things that affect the healthcare system, diabetes and diabetes related illnesses are just massive in terms of the impact on mortality, on morbidity, on just the finances of the healthcare system. And so Virta health is one of those startups based out of San Francisco.

And they’ve had about 50% of their patients be able to reduce or eliminate medications and get blood sugar normalization through dietary intervention, but it’s a real, it’s a high touch by high tech kind of approach. At Indiana University, Dr. Sarah Halberg led the research on this, where they did, it’s not a randomized control trial, but it was a targeted intervention where they were able to take patients who had type 2 diabetes give them this app-based interaction where they’re getting coaching and support from professionals who are able to help them in the behavior change, and to give them advice and help them to make these changes. And when you look at the amount of money that’s being spent on diabetes, medications and complications of diabetes, there’s a reason why I think the last I saw was that the market valuation for Virta health was $2 billion.

And so it’s all…the point is there’s a lot of opportunity there and that’s one in particular that I’ve seen. Levelshealth.com is another really interesting one. It’s more on the…the idea behind it is providing a way for people who are interested in blood sugar control, interested in their metabolic health, to be able to get a continuous glucose monitor, which ordinarily is only prescribed for people with diabetes as a way of monitoring their blood sugar day to day.

But a lot of people are becoming convinced type 2 diabetes doesn’t happen overnight. And by understanding better how our bodies react to different kinds of foods, we can maintain better blood sugar control for a lifetime and avoid the type 2 diabetes.

David Shifrin: So it becomes proactive rather than responsive.

Lee Aase: And there’s a, they’ve set up really an elegant platform.

A couple weeks ago that I went and signed up on their site, they have a waiting list. Okay, you sign up and you’re on a waiting list, which seems really weird for a company that’s selling the ability to have continuous glucose monitors, but then I think the point of that is that it’s membership based. So there’s a couple hundred dollars annual membership fee for this, then you go through a health questionnaire and then they do have a physician or medical licensed medical professional who’s able to prescribe a continuous glucose monitor. And anyway, I just got notification that my unit is shipped and I’m going to get to use it, but they did a really…I think there’s some interesting parts of this, by having the waiting list, it does create a scarcity sort of a feel. Also helps them monitor or make sure that they can manage a really good experience, that they’re not going to get overwhelmed with it.

David Shifrin: Just considering what we were talking about earlier, I mean, if you’re going to do this, you’ve got to do it, you can’t just pull in a bunch of money and then grow and then realize that you can’t sustain it. This has to be done well.

Lee Aase: Yeah. And then I think the other part of it is, by creating that scarcity, once you sign up, then you’re on their list and you get emails, and they get educated about it. Because I could see how some people might have misgivings at first when they say, oh, there’s a membership and that’s before I even get a CGM. And so giving people a little time for it to marinate a little bit is like a sales funnel, an extended sales funnel, for this that is creating an aware, a better understanding of the model and how their system works. So by the time, you know, it was like last week I got the email saying you have a chance to actually get into this, now you can get off the waiting list and get into it. And I was ready to do it, but I also wanted to experience what this platform was like.

So that I could have a better understanding of what’s happening in these in these startups and how they are. Really I think it’s a really interesting way, and we’ll have a really high impact on people being able to take charge of their own health.

David Shifrin: Yeah. And again, so much of this and so much of digital therapeutics and digital health in general is avoiding problems before they become problems. and that lowers costs down the road. That improves the economic balance in healthcare and society in general, so it makes a ton of sense.

So then Lee, as you think about a potential reset in the market and providers of all types are always looking to partner implement new software solutions, digital options, to improve care delivery all the rest, what does the process look like for that right now to make sure that you’re improving the patient experience and delivery of care, keeping costs down and frankly, picking a solution that’s not going to vaporize in two weeks because they ran out of money?

Lee Aase: Yeah. So I think it’s important for the clinical folks to be really bought in on “this is something that will be good for patients.” This really makes sense, from the patient care perspective or from the prevention perspective that this is something that they believe in.

And then being able to evaluate it in the context of so what are the costs of this? Is this going to add to us being able to provide this kind of care? Where can it save us money and some of the other things that we’re doing that will enable us to deliver a better value?

And then yeah, right, looking at the financial situation with the company itself and saying, does this model look like something that is not going to be gone tomorrow? That it’s something that if we’re going to go to market with it with our patients, that this is something that’ll stand the test of time, or at least make it as far as we can tell. Like stand the test of time sounds way…first of all, it’s a cliche story about that. But that it will stand the test of the current turbulence. And that this is a company that is likely to be able to sustain the value and sustain the services to our patient.

David Shifrin: Cool. Thanks, Lee.

Lee Aase: Thank you. I always love this.

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