Unlocking the Value of Data-Driven Healthcare with Keith Figlioli of LRVHealth

In this episode of the Chilcast, John Moore interviews Keith Figlioli, Managing Partner at LRVHealth and host of the Health Care is Hard podcast. Continuing the theme of the Health Impact Project series, the two discuss current market conditions in healthcare and how various stakeholders are assessing the value of digital health implementations today.

Keith shares insights from his experiences at Explorys and Premier, as well as what he learns from the conversations he has with other industry leaders in his current role. He notes we are entering the "second wave" of digital health focused on fundamentally transforming how and where care is delivered, largely driven by the macro force of ongoing clinical scarcity. 

Figlioli emphasizes that healthcare organizations must keep innovating despite economic challenges. Successful technologies will demonstrate clear cost reductions or revenue growth. He believes priorities include automating administrative tasks, improving patient scheduling, integrating medical evidence into EHRs, and streamlining prior authorizations.

Looking ahead over the next decade, Figlioli sees major changes coming in specialty care similar to recent disruption in primary care, with private equity becoming more involved. He advises health systems to carefully define their competitive differentiation and not spread themselves too thin. Partnerships will become increasingly important.

Moore and Figlioli agree the market is resetting to more realistic dynamics after a period of excessive hype and overvalued companies. But substantial venture funding continues to flow into digital health focused on true transformation.

Transcript

John Moore: 0:14

Welcome back to the Chilcast. I am the managing partner of Chilmark Research and your host today, john Moore III. This is the fourth episode of a new mini-series we're producing as part of the Chilcast that specifically delves into how different healthcare industry stakeholders think about assessing the value of digital health and health IT implementations. This series ties into a new collaborative effort called the Health Impact Project that Chilmark convened earlier this year with Pam Arlotto and Susan Irby from Maestro Strategies, Curtis Peterson of Kingfisher Advising and Marie Copoulos of Horta Health.

John Moore: 0:46

After hearing ad nauseam over the last couple of years how important it is for new technologies to show efficacy in the current economic climate, we decided that it was time to come up with a better metric for evaluating the impact of technology than a standard, oversimplified financial calculation like ROI. This series is intended to catalyze industry conversations we see as necessary to reach consensus on a new model of value that C-sweets at care organizations, payers, technology developers, investment firms and more can apply to their own initiatives. Please be sure to follow us on LinkedIn via the Health Impact Project page for updates and new content and feel free to reach out if you'd like to get involved. For this fourth installment in the series, I'm pleased to introduce Keith Figlioli, managing partner at LRV Health and host of the fantastic Health Care is Hard podcast. Go give it a listen if you aren't already tuning in.

Keith Figlioli: 1:35

Thanks, John, appreciate it and appreciate the plug on the podcast. It's always fun.

John Moore: 1:39

Yeah, you've got some great guests on there, so a quick introduction about Keith for those of you that aren't already familiar with him. Keith joined LRV Health in 2016 as a general partner, after nearly two decades of experience building and growing healthcare IT and services companies. Before joining LRV Health, keith was senior vice president of healthcare informatics at Premier Inc, where he led the company's Enterprise Healthcare Technology Business Unit and helped the company raise $820 million in its IPO. Prior to Premier, keith was senior VP of Enterprise Solutions at Eclipse, which was acquired by AllServes. He is currently a board member of IntelliCare and Upfront Healthcare.

John Moore: 2:18

By the way, check out our Medicaid Redeterminations Disaster podcast episode from October for a discussion with co-founder of Upfront, kerry Kozlowski, where we discuss the importance of effective patient member consumer engagement in healthcare and how that would have potentially helped a lot with the Medicaid Redeterminations fiasco we've been watching play out over the last year.

John Moore: 2:37

He is also on the board of Season Health, sensinet and Reimagined Care and a board observer for Diana Health, genome Medical and ZELTH. He previously served on the board of trustees at Wheaton College, the Strategy Committee of Bay State Health, the Health IT Standards Committee for the ONC and the board of directors for Global Healthcare Exchange, activate networks, good sports and mass bike. Keith earned his BA from Wheaton, his MBA from Boston University and his MPH from the Harvard TH Chan School of Public Health. Keith is also one of the co-authors of the recent LRV Report Data-Driven Healthcare Medicaid State of Play and the Next Wave of Data Innovation. I recommend giving this report a read and we'll be shorter, linked to that in the show notes. So, getting to know Keith a little bit more, can you just tell me about your career journey and what brought you to healthcare and healthcare venture capital?

Keith Figlioli: 3:29

Oh, I'm so used to asking this question on my podcast. It's going to be a lot of fun trying to answer it for myself, which is always elusive. But my journey has been weird, like everybody's journey. I think I started when I got out of undergrad in 93 to date myself.

Keith Figlioli: 3:51

It was the early days of the internet, the beginnings phases of sort of what I'll call the industrial stage of the internet not the governmental side and the federal side and what was clear was getting involved at the base level of technology was really important and I happen to have a lot of experiences there, more from a consultative capacity and a lot of different industries and doing a lot of things like large-scale e-commerce for the travel industry, doing a lot of things for CPG, consumer product goods, and then ultimately in healthcare.

Keith Figlioli: 4:21

And I don't know what happened, but it got me and hooked me up. I was like, wow, if I'm really going to spend the rest of my life doing stuff, you know my career on technology, I really want to focus in on healthcare. And so then I started that 20-year journey you mentioned, jumping over to what was sort of like any electronic health record space, like just got lucky, joining sort of Eclipsus. One day happened to be here in Boston and got connected into that and rode the wave of pre-MU through MU and then realized the importance of data through all that as we were starting to get real systems in place, and then ended up at Premier and, as most people know, at Premier it's owned by about 188 health systems and I couldn't think of a better place to spend time to really try to understand the depth and breadth of what is needed on the front lines of every major healthcare system across this country and how important the technology infrastructure was to their ability to deliver safe, low-cost and high-quality care.

John Moore: 5:23

Yeah, I've noticed on your podcast episodes you bring up the Premier work a lot. It seems like that was very influential and kind of inspirational to you in a lot of ways for what you've done with your career since then. Was it just having that access to all those different health systems and seeing all their different needs and how they approach things, or was there something more specific to that kind of drove you to where you are today?

Keith Figlioli: 5:45

Yeah, I think it again. There's a couple of phases of my career where I get hooked. I got hooked on the intersection of technology and healthcare early in my career. Then I got hooked in this idea of being on the inside and not just disrupting from the outside and hoping whatever we figure out works for players that exist, but really understanding the kind of key players, the large healthcare systems, the large healthcare payers, and understanding what they need to do to transform.

Keith Figlioli: 6:17

And I think at Premier that was like on steroids and really sitting with CEOs across this country helping them figure out at the time which this was post-meeting for use but it was pre-ACA and then through ACA. So the fun part about me is when I was at Eclipse I was pre-MU, going through MU. When I was at Premier, it was pre-ACA, going through ACA, and so I had these like really big inflection points of disruption which we always have in healthcare, as everybody knows that episodically come along and then, if you're in the right seat, you see things really differently, I think, than most do, depending on where your vantage point was during some of those time periods, and some people in this industry today never had the experience of going through some of that stuff. So it's always fun to kind of think about those different points in time.

John Moore: 7:03

Yeah, do you? I know that we've been passing a lot of legislation recently that touches on healthcare the no Surprises Act, the CARES Act, a couple of other things. Do you think that we've reached another one of those inflection points, or are we still waiting on some new piece of legislation that really does create a new inflection point that we've experienced previously?

Keith Figlioli: 7:21

I think it gets a little bit of credit. I don't know if it gets enough credit, but I think the 21st Century Cures Act is massive and the ramifications are massive, and so a lot of things that we were working on back in the day and the ONC Standards Committee really manifest itself through the 21st Century Cures Act.

Keith Figlioli: 7:37

A lot of the information blocking, a lot of the API stuff, a lot of those things that kind of really come out. And then now we have an extension, which I think is called the HTI-1 open rule. That's going to be an add-on, I think, to the 21st Century Cures Act, which is all around algorithms, llms, artificial intelligence and what is that going to mean. And so I think we're seeing the continued tail of that legislation that I think some people are myopodly focused on, others are not. And then you got TEFCA coming through. There's all sorts of really interesting things still going on. I think what Mickey Trapati and team are doing in ONC right now is incredible work.

John Moore: 8:16

I love that you just brought up Mickey, because he's actually our next recording session that we have planned. We didn't even try that. That was great. So I saw on your LinkedIn that you actually got your MPH very recently and I thought that was kind of an interesting place. You're already very well established in the industry. You have a lot of credibility, so what was your thinking behind actually going for an MPH in 2020 when you already had all the credit that you needed to have a successful career?

Keith Figlioli: 8:43

Yeah, you're not the first person to ask that question. A lot of people thought I was nuts. I think I timed it well with COVID, though, because I did a lot of it remote if you really I. I'm a big believer that in healthcare, if you're really a long-term player in steward, you never can know enough, and Every aspect of the space is kind of like peeling back the onion if you all the blooming onion, as I always say there's a bad analogy from a restaurant but the depth of what I think is a public and private good, and I really mean that when I say that, and a lot of people don't always think of healthcare that way. But I think you need. You need a public health lens, you need a Regulatory lens, you need a technological lens. These days you need every kind of angle you possibly can get, and the MPH was on my bucket list for about a decade.

Keith Figlioli: 9:37

I just happen to have some time at that time period of my life that could actually pull it off, and I got lucky enough to time it with COVID is as ironic as that sounds At the intersection of public health and COVID, which made it a lot easier for me to do remotely, but it was pretty much invaluable. And I would argue for anybody, even later career people, to consider those types of opportunities, because what you think you know versus the depth of what, the nuances of healthcare, what you know, I think can only be additive when you do programs like that and in this particular case it was, you know, I happen to take a Class with the person that was actually drafting the actual cares act at the time. Like how do you get a front row seat sitting with the person that's writing the cares act for the federal government and CMS? Like that was unbelievable to me, like that was in real time, yeah. And so, like I, you know, I I'm a big believer in continually learning and I, you know, I may pick up another degree.

John Moore: 10:36

Who knows, by the time I, my time, I pass, I don't know, who knows I'm crazy, but anyway well, it's also relevant for me because I've been thinking recently that I might want to go back for a master's and something, and I'm looking at MPH, mha or maybe a dual degree of some sort, because I, you know, I've got a really robust understanding of the industry from the health IT perspective, but not being a hospital administrator in my life I've only ever heard things secondhand. I feel like getting that training might be really useful.

Keith Figlioli: 10:58

Yeah, I went to school with people that were 20, 30 year, healthcare administrator veterans. Okay, you know. So you think about that. It's very additive. I'm a big believer.

John Moore: 11:09

Yeah, I mean things are always changing too, so the the education will also kind of stay up to date and help you Stay apprised of things that you may have missed. I mean, I feel like in both of our roles we probably stay pretty in tune with what's going on, but maybe not from an academic perspective. Okay, so you've been developing your own series within healthcare is hard for the last few months. Title of deciphering the new normal, which is looking at how health care has changed since the pandemic and how there have been some significant you know talk about inflection points some significant inflection points around healthcare transformation since that period. So what prompted you to tackle this topic now and what are you seeing in the market today that made this an active priority to discuss With various stakeholders, to share these insights with the community as we close out 2023 and go into 2020?

Keith Figlioli: 11:53

Yeah, maybe I mean a couple of comments, not to plug the podcast, but why the podcast? And that answers this question. We are very deliberate with the podcast to only interview Healthcare senior leaders At it, mostly incumbent players or people that have been in the federal government. And we do that because most times most people across the industry only get access to those folks when they go to an event or they pay to attend an event, and so this gives an open aperture, a free aperture, for people to sit down once a month for, literally, you know, 35 to 45 minutes and hear a very open, candid Discussion with a leader on whatever the current topic is getting to your question. And so we spent a lot of time, as many did during covid, with these leaders, kind of unpacking what was actually happening on the ground. You know, candidly, as we've come out of this environment and all of us start with the health providers first, start with the health providers first and the health systems we started. We have I don't know how many insider discussions we have a week, but we have 10 to 20 insider discussions a week. We try to unpack some of the themes that we hear in our inside Private discussions and bring that to light.

Keith Figlioli: 13:04

One of the things we were hearing was that people were trying to figure out the new way to operate. How do you operate if you're a health system in the financial pressures that you were seeing, where your beds were full you're having like the stay issues, you weren't having reimbursement challenges because you weren't getting the right case mix in there. How do you actually manage a system? And whether that's a smaller system or a mid-sized system, like we did with Ohio health, or how much a larger national system with common spirit we brought into that Episode. And then on the flip side, on the payer side, what a lot of people haven't been talking about. A lot of people have been talking about the dark clouds in ma. The people have been talking about the ongoing kind of small layoffs that have been happening at payers and how payers started thinking about the next two or three years and some of the challenges they're going to have managing.

Keith Figlioli: 13:49

And so we tried to bring that into the back half Of that four-part series, which was first with the shawl from humana on the Chetis strategy, and then we're going to about to interview the head of strategy at blue cross, brisheild mass to get a regional blues view, and so the intent of that was really to kind of just take out what these operators are having to do today From different angles national angles, like common spirit and humana, and then regional angles, like in ohio health and A blue cross brisheild mass to choose this, and it all came and it always comes at least we tried to from active Contemporary discussions that are going on with our network in our platform at lrv and try to bring out the lights so we can Actually share some of those learnings with entrepreneurs, other health system leaders, other research firms like yourself. You know any other constituent that's actually plugged into your point in the healthcare ecosystem?

John Moore: 14:39

Yeah well, as I've already said a few times on this podcast, definitely recommend people go listen to it because you do bring on really good speakers who have really Solid perspectives on what's going on in the industry today and some of the to your point, some of the issues, some of the struggles, but also some of the areas that are working. You know what's actually helping with technology to alleviate some of that pressure around the staffing issues and also what's a technology problem versus what's a processes and an operational problem. So I think the focus on operators is pretty critical. I actually saw a Becker's article the other day talking about how the COO role has been changing over the last year. So I think that listening to your podcast and talking to those types of people probably reflects that as well.

John Moore: 15:25

So let's move on to what LRV Health does at Beyond Just you. So, as you know, my father was friends with Trip and Will for years before his passing and he often sought their counsel on various topics around the early innovation side of this market and what your LPs were looking for. We here at Chilmark have always held a lot of respect for what LRV brings to the table. You're a much more pragmatic venture capital firm. You actually understand the industry and you're serving other stakeholders as opposed to just unknowledgeable investors that just want to return on their money. So I'm guessing that a lot of your listeners, or a lot of our listeners, aren't as familiar with what makes LRV unique. So can you share, in your own words, a little bit more about what makes LRV stand out in the world of venture capital?

Keith Figlioli: 16:08

Yeah, I'd say the biggest thing you're hitting on it is the people in the organization. You know my partner, trip and Will he mentioned, who knew your father for many years, as well as myself, and we've all been in this back to the backgrounds for many, many, many years. You know, we just recently, over the last year and a half, brought on Josh Flum who was at CVS for 20 years. So we have this operating mindset and this depth and nuance point I was making earlier about really the weeds of healthcare. Second is to your point, who invests and who partners with us. We do not take any financial, pure play, financial money. We only partner with incumbent players. So we have 30 healthcare systems and healthcare payers as our partners, and so that gives us just a different level of unique insight on the ground, sort of what we always call being inside healthcare. And third, we've been doing this for a long time. And so back to my point, back to your point about Trip and Will. You know this, this fund platform started in 2000. We were first money and get well network. We were first money in Frisia, we were first money in MedVenton before it became a big part of Change's Pop Health platform. And oh, by the way, we invested during the 01 downturn. We invested in the 08 downturn. We've seen up cycles, we've seen down cycles, we've seen sideways cycles.

Keith Figlioli: 17:24

And to your point about pragmatic, I think that's why we're pragmatic a bit about it, because healthcare is different. It's not like we're, you know, we're investing in e-commerce or we're investing in, you know, fintech. It's a very different way to think about sort of how you need to be investing here and how you know why you need to be investing here. And I think you know we simply we have kind of a three-part mission. You know there's not many venture firms that have a mission statement, but we actually have a mission statement. And that's first, you know, can we be in extensions and true partners of our incumbent players as an extension of their team? Second, we have to return capital, because that is the vehicle. We are from a venture standpoint and we're part of a venture agnostic platform, so we'll invest from seed stage all the way to kind of series C entry points. And then, third, can we create social and health impact with every investment we make? You know that goes a long way with us being pragmatic, being thoughtful about things that are going to be here for the long term and durable businesses.

Keith Figlioli: 18:17

How do we think about that over the long term? And how do we think about that with our partners in tow? And I think that's very different in the market. And there's, you know, there's a handful of strategic platforms, as you know, out in the marketplace. They're all a little bit different but for the most part, you know, a handful of us are really in this for the long term, thinking about the long, you know term changes that need to take place in transformation with the incumbent players. I think some people think the incumbent players are going away. We don't subscribe to that at all. We think that the incumbent players are here for the long term and need to work through a bunch of transformational cycles, which we'll probably talk about next, and need partners like us to kind of think through those things and help them drive some of those strategies into the market.

John Moore: 18:59

Yeah, no, that's great. That's very much how I perceive LRV, and I've seen that you guys do tend to have a nice focus on what's the social impact. I think that a lot of VCs talk to that, but you actually do it, so it's good to see that is a core tenet to your overall thesis. So you mentioned that you've been through a lot of markets and you know market cycles. So just real quick, do you think that we're currently still in a bear market or are we sitting in a crab market right now?

Keith Figlioli: 19:29

You got to define what a crab market is Sideways.

John Moore: 19:31

Because crabs move to the side. You know crab walking. I haven't heard that one. That's a good one. I listened to this crypto podcast and it's what they always use when they're talking about the crypto market sitting flat.

Keith Figlioli: 19:42

I think that's a good way to. I got to use that. Now, john, I'm going to take that for you. I'll quote, don't worry, I'll quote you for it.

Keith Figlioli: 19:48

I do think we're in a crab market.

Keith Figlioli: 19:51

I think it's.

Keith Figlioli: 19:54

You know, there's so many different tales of this market right now, on both the incumbent side as well as on what I'll call the innovator side, the newer company side, that there is not many discernible trends that are consistent, and I think that is the easiest way to sum up where we are right now.

Keith Figlioli: 20:13

Having said that, I do believe the next 18 to 24 months are going to be some of the most difficult times for what I'll call broadly, the digital health earlier stage side of the equation. Then we've seen since the amount of capital that started coming into the space over the last 15 years and that's just the natural order of things, be it the amount of capital that's gone in, the number of companies that have been created, the number of companies that are running out of cash, frankly, and different opportunities to get cash elsewhere. So I think it's going to be a difficult time. I also think that also means there's going to be a lot of opportunity. There's still, as everybody knows, a lot of capital on the sidelines, but I do think people are looking for much more durable business models as we get into what I'll call the next phase of all this.

John Moore: 21:03

Yeah, no, I definitely agree with that. I think that's kind of my take too. It seems like we've already gotten through the bare part of the market cycle and things are starting to recover a little bit, but there's still going to be a lot of companies closing their doors because they're not able to raise or they're not able to show a sustainable revenue model, sustainable business model, in healthcare. I think that as the market matures also to your point there will be more focus on the companies that can be. They have longevity. Once they get through their pilot phase, they'll actually have staying power in the industry, and I think that was something.

John Moore: 21:35

We got caught up in the hype cycle as an industry there for a while, and now people are coming at this with more educated eyes and understanding what some of the nuances and difficulties are when it comes to transforming healthcare. So back in May, you guys were able to close your latest fund, fund 5, which aligns around the theme of Care Anywhere, and with the announcement of this fund, your quote is saying we're entering a second wave of digital health innovation that will be defined by fundamental transformation how and where care is delivered, driven by clinical scarcity. Care Anywhere is about delivering preventative, personalized and seamless care where, when and how consumers want it. How does this fund differ from your previous funds and how did you decide this should be the focus of the firm's fifth fund? Like what market signals steered you in this direction?

Keith Figlioli: 22:27

Yeah, I think you know we were investing like this for a while. I think we did a better job of capturing the language around, how we were thinking about it and I think the best way to think about this and what the signal was for us is, if you know, we have a diagram and some of our core decks around care, what we call a care anywhere, evolution and if you think of the kind of industrial medical complex, back in the 1990s there was a doctor's office and there was a hospital. When you fast forward to 2020s, you have just this proliferation of care sites. You have proliferation of digital, virtual only plays. You have proliferation of outpatient ambulatory sites. You have different flavors of primary care. We have every flavor of primary care you possibly could want today. You know we have commutatized or marketized, which we often call.

Keith Figlioli: 23:15

You know different ways to actually deliver care, but that has really made people and when you really step back and you visualize that you got to think about your strategy in a very different way.

Keith Figlioli: 23:30

If, all of a sudden, I can be in Hawaii and I can pick up my phone and I get on a virtual care visit with my pay or, you know, united Optum, or I can go to Hawaii Pacific into the ED to go deal with that situation, and then I get that information transferred back to my primary care provider here in Boston more seamlessly than we've ever had in the past. Now, it's not perfect yet, as we all know, but this idea of movable care, hybrid care, virtual care, in-person care, data, moving along with all those episodes, that's the world that we're starting to live in, and if you step back and you think about the major themes shaped by that, you know we are just I'll just call it four. You know we're in this period of transition from supply-led care delivery to consumer-driven delivery, which we all know. But things like health equity, things like millennials, gen Z, they're going to accelerate this transition, more so than what we see today.

Keith Figlioli: 24:26

Like that's just the natural order of what's happening, specifically on the demographic shifts. The second thing that we're all in and live every day is just disruptive capital. So disruptive capital and you know what's up for grabs is 20% of GDP. Everybody's involved private equity's involved, venture capital's involved like every single player is involved in this and that's really accelerating things.

Keith Figlioli: 24:48

The other thing, and I think you know to put a little plug in for another research firm, you know I thought Trillion did a good job on their state of health care report this past year, talking about this idea which we agree with which incumbent strategies need to think through this care anywhere almost in a negative sum game lens and the value for money sort of transparency some of the things we're seeing early but not at scale yet. They're going to pick the long-term winners and losers in this market as it gets more consumerized. And then the last thing about your crab point, which I think we agree with in this environment, is that everybody is pursuing a different strategy and they're pursuing it under different financial constraints. So it's a really tough market, that kind of decipher, as you think about the proliferation of who's going to be the winners and losers. But there's definitely going to be winners and losers. I think that's the punchline in all of this, as we proliferate all this activity.

John Moore: 25:43

Yeah, that makes perfect sense and definitely aligns with what we're seeing. It's actually been kind of hard from our vantage point about. You know, back in the MU days it's really clear what we should be focusing on, because everybody was working on the same things and, you know, trying to implement the same types of technology. We was focused in the same area and now it's completely fractured and we have to kind of take a stab at what we think are going to be the big themes, which we're usually pretty good at. But it definitely makes it harder when everybody's kind of fractured. It's not clearly aligned around one specific goal. So, following up on what you were just talking about, are there any specific business models or kind of new plays in the industry, transformative plays that you're really excited about? That you think, you know, maybe too early for people to really get super amped about it now, but we'll definitely have staying power over the next 10 or so years.

Keith Figlioli: 26:25

Well, I mean, I think the thing we talk about often is you know, what did we just see over the last decade? And these are the at scale plays of primary care, right? So we saw Oak, we saw Village, we saw Aora. We saw a lot of these players come to market, get big, some go public, some not go public, but get a lot of capital and then consolidate into bigger platform players to get even bigger or perceived to be getting bigger. We'll see what happens. It's still TV.

Keith Figlioli: 26:53

You know the same thing is going to happen in specialty care and you start thinking about, like one, oncology. You start thinking about some of these other plays. You know whether it's oncology, neurology you know we're seeing it in behavioral and the infusement of digital, the infusement of value based care models, different reimbursement models, the infusement of what I'll call omni channel, as you guys talk about it often to. You know, hybrid care delivery, some in person, some virtual, some just pure virtual. That's all going to play itself out in a lot of these more specialty chronic care management categories. We think very similar to what you saw, we just saw in primary care. I think that is a major trend that plays out over the next five to 10 years, and not only is venture capital involved in that game, but private equity is way involved in that game.

John Moore: 27:44

Yeah, they've been goblin up practices and different. You know different things a lot.

Keith Figlioli: 27:48

So I think that you know people thinking about that and then thinking about what that means to their portfolio back to the incumbent players. So what does that mean for the average health system? Typically, as a nonprofit, typically mission oriented, can't turn care away. How do you think about your portfolio that way? How do you think of your service line development that way? How do you think of cited care that way? How do you think of how far your cited care goes as it go to the home as a knot? These are all the things back to the crab, like market People are experimenting on to try to figure out what they can do to ensure that.

Keith Figlioli: 28:25

When you think about the proliferation of the marketplace where they fit in versus where other maybe just capital centric you know players come into the market that are new codes, that are trying to move their cheese, which I always say people hate the saying, but I always say it like they're moving their cheese, like. So if someone's going to move your cheese, what's the counter strategy to what that is? And I think in specialty care you're going to see a really interesting battle take place between private equity, the incumbent health systems and new co-players over the next five to seven years about each one of the markets. Who's going to dominate, what says of category? And you've seen some major. You've seen a lot of the early stage wins here in oncology because of the amount of dollars that are associated with that particular service line.

John Moore: 29:06

Yeah, so that actually I had a whole nother question lined up to go after that. But you already addressed most of the questions, but I do want to get in this one quote that was relevant to it from the recent episode with Michael Krause of Ohio Health, where he notes that health systems are not good first movers. Most don't have the innovation assessment capabilities or risk tolerance to deal with the inevitability of failure, especially when good stewardship will always be top of mind, and I was going to follow that up with your quote about moving the cheese and these companies. They need to play in some capacity in the innovation space, but it can be difficult balancing the need to innovate with their need to stay mission focused on delivering the best standard of care that they can for their community without getting distracted by innovation.

Keith Figlioli: 29:49

What you just said at the end is such an important paradox, which is, in my opinion, there's no such thing as distraction with innovation. People who think of innovation as a separate thing, you can get distracted. People who understand that transformation and innovation are one and the same thing and it's constantly iterative, are the people that are really moving the ball down the field, in my opinion. And so we've seen many, many examples of people setting up innovation, arms, venture firms, all these things and it's outside, it has nothing to do with the inside, transformation. Those never work, in my opinion. Now there might be a couple of outliers, but most don't work. The ones that are very insular, and we have I won't say who, but we have an incredible system in our network that, literally, if you think about this really intuitively, I never thought about this until this person brought this up and I got to introduce this person. They used to run performance improvement in the health system, and what's performance improvement? Performance improvement is constant iteration, constant change, constant transformation. That person now runs performance improvement, but they also run innovation Like no brainer, like when you step in, you're like, yeah, that makes a ton of sense. That's the level of sophistication, I think, and even when Michael's quote and Michael's a very sophisticated organization and he's very sophisticated on this whole topic they've really thought through what works for the incumbent player on this.

Keith Figlioli: 31:17

And if you look at corporate venture capital, corporate innovation programs, they're up and to the right. They're actually not even slowing down in this downturn and the reason why that is is because people know in the industries that are being transformed they have to keep their foot down and if they don't keep their foot down on the pedal they're going to be left because of the amount of pace that's going into this market right now, even in the downturn. I keep saying, if you look at the venture capital, take Rock Health's chart, which is the fantastic chart which we get every quarter, and you really look at it and you really look at the last two years beside this one, so 21 and 22,. They were total outlier years as we had the big bump up in COVID. But this is just venture capital, this is not private equity.

Keith Figlioli: 32:00

There is 10 million of sustainable capital, venture capital, going into the health care industry. Still 10 billion. That's a lot of money. And so when we all say, hey, we're slowing down the investing pace, hey, we're taking a longer look. We're looking at durable models, we are but there's still a lot of money going into this market that is focused, in my opinion, on transformation. The good investments are really focused on transformation for the right kind of reasons, and that's, I think, what's interesting about this market. It's also what's durable about this market. It's also what's going to play out over the next 10 or 15 years. And then you have the wave of different activity that are going on, ai just being one of them, which we talk about later. But there's just a lot of room. I always joke. The last thing I was saying is we haven't fixed health care. Just because we have a down market doesn't mean we haven't fixed it. We haven't figured this whole thing out. So I think there's a lot of sustainability overall.

John Moore: 32:56

To hit the end point here, yeah, and to your point about the decrease in funding going into the space.

John Moore: 33:01

If you look I think that it was Pitchbook also just did a report as well, looking at money going to healthcare in general and it showed this massive spike in 2019 to 2022. And basically what we're seeing is we're almost back to 2019 levels. It's not like we're low, it's just we're getting back to a more realistic space where money wasn't completely free, they weren't printing trillions of extra dollars into the economy, and the interest rates and inflation have had an impact on that, obviously. So I think that it's getting things back to more realistic market dynamics, which I think is going to be good for the industry. It's going to help with some of the hype. It's going to help with some of the overinflation of valuing these companies that then puts added stress on the founders or the team to deliver on something they can't actually deliver on, which we saw with a few companies this year that went under. I think it's healthy for the industry to be going through this phase right now.

Keith Figlioli: 33:49

Yeah, and we're going to see more of that, I think, and to your point, I think it's a good word, I think it is healthy, because we're getting into the next phase of all this, which I think is an important component of really trying to make change happen.

John Moore: 34:02

Yeah, so, thinking about that as we look to the future, as we think about this next phase, the purpose of this endeavor, the health impact project, is to develop a new model for assessing the value that technology delivers in various healthcare contexts. As you're well aware, the use cases for tech are many and broadly differentiated, so this is no easy task. I wanted to bring you onto this show specifically because you are talking to many key industry leaders, as you've mentioned, about this topic on your own podcast, as well as internally with LRV, with your partners. So, thinking about all the conversations you're having, what are some common themes that you're seeing emerge around how different stakeholders assess the value of health data technologies?

Keith Figlioli: 34:41

I think it's really simple, especially in this market which, yes, we can come up with a bunch of calculated, lovely hardcore or some software ROI calculators. But is it a growth factor? Is it a cost takeout factor If you go into the average and come in today and let's just start with health systems? But I also think this is a political prepares and you say I have some technology or I have some technical services or I have a capability or something, and you can't say, hey, by the way, I can grow more revenue or I can take more costs out of your infrastructure. It's hard, like you don't need a fancy calculator for that. It's a pretty simple, linear path in my mind, and I think that's what we're starting to see in this crab market like state, you're starting to see a normalization about things that actually tangibly matter, and it's not about product market fit anymore, it's about how much impact can you actually get that improve operations or change operations in a way that wasn't the case anymore.

Keith Figlioli: 35:45

And again go back to the category everybody wants to talk about on the AI side. It's very early days, but, mechanically, when you think about the promise of what LLMs are and why every industry pundit is saying like look, this is real this time in terms of what these things are starting to do. It's because people can see a pathway. It's not there yet, but people can see a pathway, based on the use case patterns of what this technology can do, where you can really start automating and taking substantial costs out of various parts of the infrastructure. And again, I don't think you need a fancy ROI calc for that. You literally just have a really simple calculator that says hey, by the way, if you use something like this, it would just to say on the technology side, not services I can take 10, 15% of your cost infrastructure out in the first six months to 12 months, like that's a major impact. Now, all the issues that we have to still get through to get there are completely on the board, but we would have never gotten there.

Keith Figlioli: 36:44

What I always say we're entering in kind of like the you know, the second phase of sort of digital transformation, because the first phase was really about laying the infrastructure down and that's why I always maybe I'm on the opposite side of the trade, but actually thinking MU is worth every penny and it was because it was necessary evil Now, it's not perfect. Ehrs are not perfect. Even our leading class player, epic, is not perfect, as we all know, but let me tell you it's better than not having it. And for us to lead into the second phase of, true you know, value out of the data, you have to have that in place and I think we're about to hit the accelerator over the next decade on the second sort of dimension of what I'll call digital transformation.

John Moore: 37:31

Yeah, so you actually mentioned this on our prep call and you were calling them value unlocks that we're gonna see from putting in those railroad tracks, putting in that core infrastructure of getting everyone onto EHRs that tend to some extent standardize how we compute and track all this in a digital way. So, digging into that value unlock concept a little bit more, what are some of the like really key value unlocks do you think that we'll be seeing in the next 10 to 15 years that we were promised, you know, back when high tech got passed and we haven't actually seen yet, as well as some that we may not have predicted back then that you can now see on the horizon?

Keith Figlioli: 38:06

Yeah, I know and it's funny you bring that up because it's like there are probably a lot of the same ones, right, they just never got realized, right. So, like, online scheduling is such a great, simple example, like everybody's like. Well, why is this? You know, we still don't really have seamless online scheduling. The last time I checked, I still call my doctor's office and I, like you, probably had like one of the most prominent players in the country here in Boston, but I still have to call right To get everything kind of squared away. I do think, with the advent of some of these stacks from where the workflow goes to the analytic stack, to the workflow tied to the analytic stack you're gonna start seeing these unlocks on making everybody's life easier to schedule, to reschedule, to interact with your patient data, to understand your information. I mean, how many times you go into your Epic portal and you get something like an open note and it's still in Dr Scratch, right, chicken Scratch. And the interaction from the portal to the actual medical library or evidence base is never connected Like. These are such simple value unlocks, in my opinion, about like normalizing a lot of these patterns that we have all been frustrated for probably two decades now, and so I think there's really simple stuff like that.

Keith Figlioli: 39:27

I think there's a lot more complex stuff about what we're seeing in a lot of the manual tasks. I mean, look at your average health system, your average health payer. It's an overuse example but it's still a problem and it's in the headlines right now. But prior authorization how many people does the health system have? We have a health system, I think, that has 50 people in the prior authorization department. The amount of hunting and packing of information that actually has to take place that should obviously be dealt with from an automated fashion and there's a lot of progress being done there. And then on the health plan side, the amount of things that actually have to come together with intercall guidelines and other activities that actually happen on the payer side to make that call. And then now we have the federal government and all the advocates going. Why is all the patient prior off taking so long with medical advantage? There's a lot of reasons. Some of it might just be like the float for the payer to make some money, but I think a lot of the reasons are also technically in manual, and so I think those are more use cases that I think in time and there's a lot of people working on this right now, including Epic that I do think there's gonna be a lot of unlocking in a lot of these administrative overhang burdens which we've all been talking about for years in terms of taking it out.

Keith Figlioli: 40:42

I always give the last point.

Keith Figlioli: 40:43

I'll say here I always give the example and I keep threatening to do this and I've never had the time to do it, but I really wanna do it, which is just plot healthcare labor trends over the last two decades and let's just watch them go up into the right through the O8 downturn et cetera, and just keep going up the right and we've only had a downturn lately in terms of layoffs and things like that because of just the financial pressures.

Keith Figlioli: 41:06

But when does that really bend? So, like your point about the health impact, are all I calculated there just plot labor, like you, just look at healthcare labor trends. That would be like the biggest simple health impact and it's tough because these are some of the biggest employers in their communities. It's a very political discussion which I totally get, but I'm gonna go with Adam Smith's invisible hand. If we do some things here, some other things will unlock and other opportunities will come through, but there's no way we have a sustainable path of the amount of labor we have in the healthcare industry. There's gotta be areas there, including prior off, and some of the things I talked about that have to be dealt with over the next 10 or 15 years.

John Moore: 41:44

Yeah, especially I mean you've talked about this on your last episode of the healthcare's hard but especially in the administrative wayside, like there's so many things that could be automated or done computationally, and I think that certain things are gonna be done easily and more near term with the USCDI standards being implemented, but then other things will take a little bit longer for AI to understand. You know some of the unstructured data that may not be something that the feds put into the USCDI tables.

Keith Figlioli: 42:10

Because I thought Michelle did a great job on that right. I didn't even think about it, but I was like I was pressing him. I was like there's no new money in healthcare. He's like Keith, all due respect, all the waste that we wanna take out is the new money. I was like, oh, fair point.

John Moore: 42:23

Just reallocate it and make it better and more efficient and, you know, get people better care, cause we know that there's a lot of inefficiencies and a lot of mistakes being made currently and I mean the prior off fiasco, like I feel like that's just a symptom of this transition that we're seeing towards value-based care, where the insurers are trying to shore up their stockpiles of cash and you know they're struggling a little bit with finding the, you know, balancing that line of what is too much prior off requirement versus what is actually realistic and reasonable to expect.

Keith Figlioli: 42:54

We've seen no less than probably 10 prior off companies leveraging LLMs as of late.

John Moore: 43:00

It's mind blowing. Yeah, that's wild. One of those will succeed too, right, like you know, you don't need 10, but one or two of them will definitely take off and will be acquired by some big incumbent and become part of an HR stack or, you know, rcm stack. So I love this quote from Michael at Ohio Health about. So this is what I said it's not about managing each individual business case and trying to achieve ROI. It's about managing your portfolio as a health system. So you noted that digital is just one component of many that go into transformation. You know, piece of the puzzle, but not the entirety of the solution. And this gets to the point that none of these new projects live in isolation. So a holistic view on strategy needs to be adopted for system transformation to work. So, thinking holistically, what outcomes or KPIs do you think are key to evaluating the success of any technology implementation that you know maybe aren't as simple as just what you mentioned before, which is taking cost out or increasing revenue, like what are specific outcomes that we can look at?

Keith Figlioli: 44:02

Yeah, I mean, I think it depends on the dimension of technology we're talking about. But if you take a broader lens around cost, quality, safety, outcomes and then ultimately which we used to try to define more discreetly what is value, Right? A different way to think about impact to your point is value. What do we get for the healthcare dollar or value? And back in the premier days we spent a lot of time thinking through all that and what we came to ultimately was employee productivity. It seems really kind of odd, but right down the middle, when you really think about it, it's like how many days out of work did you have? So totally long tail on your point about an impact scale. But if you want to define it by value, that would be one way I think about from a technology standpoint.

Keith Figlioli: 44:55

But I think each technology piece has a different means to an end, right? So to our point about prior off. What does that mean? That's a reduction in time, reduction in labor, right? If you take something different like virtual care, is that back to the productivity value metric for an employee? Hey, I don't have to go to the doctor, I have to sign up, I have to get my kids daycare, all that kind of stuff. So I think to your point about how hard this is is that there's so many different dimensions of what each person wants out of the healthcare system, how we each define value. And again, I'm just going far afield, but I'm bringing it back to where we ended up after, like we're talking, two years of study on this. We kept coming back to this idea of how do you define value for each constituent, and so that is a very difficult task. And then can you apply that upstream to your point, to each technology component, right. So how would you define value on the $38 billion or so that was spent for meaningful use?

John Moore: 45:58

Well, it might just be a sunk cost, but the value is getting everybody on to systems that work. You know to digitize records right, Right In some kind of a semi standardized way. So I've got plenty more questions for you. I wish that we had all the time in the world to keep diving deeper.

John Moore: 46:13

I think that one last thing I want to bring up is Sherry Shapiro, who is the Chief Strategy Officer at one of the nation's largest provider groups, Common Spirit. She made the point that running a large system means that you need to offer some kind of benefit and competitive advantage for both the hospitals and the physicians that are in your network, as well as the patients and the consumers of your health services. To really maintain a national brand, you need to define what that is and make sure it's not overlooked as a core part of ongoing strategy decisions, and this is something I haven't actually heard anybody else speak to specifically, and I think it was a really valid point and a really valuable point for people to think about as they're thinking about their transformation efforts, and so do you. Based on all the conversations you have with your LPs and you know other industry compatriots, do you have any advice for systems, trying to figure out what their differentiator is and how executives can align their innovation efforts with their competitive advantage.

Keith Figlioli: 47:09

Yeah, I think first is and Sharon, I maybe talked about this more offline than on that interview is you know the definition of strategy, like what you're not going to do which is really hard on the health system side? Plans, I think, have been better. Most plans have been better. It's sort of defining what they're not going to be so like. If you look at Optum Strategy, pretty simple, like they're not going to be in the hospital business but they're going to do everything else to surround it. On the health system side.

Keith Figlioli: 47:39

I think each market this is over said, but it's true each market's a market how the hospitals are set up, what geographic areas are set up, what their payer mix looks like, what their ambulatory outpatient footprint looks like. Are they in home health? Are they in SNF? Are they not? Are they in alternative site? Do they have ASC set up? Every one of those things is an input to your question and there is no discernible, like, in my opinion, strategy. There's. What are those inputs? That then defines what your output should be. But there needs to be.

Keith Figlioli: 48:19

I think the punchline there, and I think what Sharon is really getting at it, is that you, even for somebody like Common Spirit, like you need to define what you want to be, and Common Spirit is really difficult because of the amount of markets they're in and every one of those inputs is different in those markets and there's some consistency but there's a lot of non-consistency there and so I think what she's doing and what that group is doing now is really thinking through all that, and I think it's ultimately about where I started, which is like what are you not going to do which is really hard for a nonprofit health system to answer? And it's not saying you're not going to deliver certain services, but you may deliver that service very differently. You may deliver that with a partner. I go around a lot and talk to boards and management teams. A lot about the mentality and this is more on the health system side is how do you think about buy, build partner, which has never been historically on the nonprofit side.

Keith Figlioli: 49:11

It's kind of mentality it's always been hey, we can build it, we can go figure this out on our own, but in the pace of this market and the pace of ways strategy needs to be developed these days, I think people have to really be thoughtful about that and it's also what Michael was getting at as well when he's talking about portfolio rationalization. He's not talking about, hey, by the way, we're going to cut, we're not going to. I'm making it up. But like we're not going to deliver neurology services anymore, he's saying, well, we're going to deliver neurology services because we have to as a nonprofit, mission-oriented organization, but some of that service is going to be delivered with one of our partners in a very different way, at a different cost infrastructure.

Keith Figlioli: 49:50

The other punchline that we haven't talked about, all this and strategy, which we keep bringing up a lot, is the other side of the capital markets and the players that are coming after some of this care delivery are doing it in ways that are higher margin than incumbent players, and that's something that's not said enough in all this strategy. Development is what happens if all the players that are surrounding you or doing different things for you are actually have figured out a way to deliver what you deliver, but in the higher margin and a better experience. That puts you in a very precarious position about thinking about what your differentiation is.

John Moore: 50:27

Yeah, I think that's a great point to close on. I think that that's absolutely a perfect kind of concept for people to leave this discussion with, because, to your point, you don't want to be like nobody wants to be in the hospital. Nobody likes going to the hospital. So if you're a hospital system, you need to find ways to partner with people that can provide better consumer experiences and maybe create more margin that they can share with you, and you don't need to take all that responsibility on yourself and can focus on your own core values and value proposition. All right, well, thank you so much for joining us today, keith, as we explore the many ways that different industry stakeholders think about the value of healthcare, data technologies and tech-enabled services. If our listeners would like to further engage with you, what's the best way for them to do so?

Keith Figlioli: 51:11

Best way is like literally DM me on Twitter, or probably the best is LinkedIn. I'm usually pretty active on LinkedIn.

John Moore: 51:17

Yeah, that's usually how I reach out to you and then I'll hit you up an email afterwards, after we actually touch base. So there you have it, folks. A big thanks to Keith for sharing his expertise with us throughout this conversation. I think that hopefully everybody else got as much value out of that discussion as I did. And to continue following along with these conversations, be sure to subscribe to the Chilcast on your favorite podcasting app and follow the Health Impact Project on LinkedIn. We have quite a few conversations planned with other industry leaders representing a broad array of stakeholder roles, who will be sharing their perspectives on the value of health tech. Feel free to reach out with any questions or suggestions for additional guests to host as part of the series. Thanks for tuning in and being part of the solution.