Walter Porter, a principal with Deloitte Consulting LLP specializing in healthcare, talked with me about what’s driving healthcare providers to innovate, why culture and back-office systems matter when attracting talent, and how some providers are investing in the future. Take a listen here:
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If you’re more of a reader, below you’ll find the transcript of our conversation, edited for clarity. You can find our other Workday Podcasts here.
Josh Krist: You know that thing about the Chinese word for change and opportunity being one and the same? Linguistically, that’s not true, but that story sticks around because the underlying idea is true. With change comes disruption for some, and off-the-chart success for others.
I’m Josh Krist, and today I’m happy to have Walter Porter, Deloitte Consulting LLP healthcare principal, with me on the Workday Podcast. He’s going to talk about how healthcare leaders cannot just survive, but thrive in a changing healthcare landscape. Welcome to the show, Walter.
Walter Porter: Thank you. Thanks for having me.
Krist: When we last spoke two years ago, right before you appeared on our In Good Company video show, you mentioned ACA, MACRA, and the shift to value-based care. What else is new, and how have those things turned out?
Porter: It’s a two-part question there; the new that is going on is really this disruption or innovation within healthcare. A lot of organizations are asking themselves, “How do they build the ‘Office of Innovation’? How do they become more digital?” I’ve had the opportunity to participate on a number of panels with leaders of health systems around the country as well as health systems individually. They’re asking themselves, “How can we leverage technology to capture and retain customers”—and I focus on that word, and we’ll talk a little bit about that, as well as reduce their back office exposure or cost, at the end of the day. Back to your first question about ACA and MACRA. I call it the EMR hangover that’s going on.
Porter: EMR hangover.
Porter: Everybody went in and had to focus on their EMRs . . .
Krist: Electronic medical records.
Krist: Most people would know what that is, but just in case.
Porter: Yeah, thank you. Now that they’ve looked at that, they’re realizing that they have not devoted the time, the effort around their back office systems. They’re starting to really look at that, and they’re saying, “Hey, we’ve got a back office system we’ve had for 15 years and the same processes.” That’s one boat. The other boat is: We as a system came together through what I would call a holding company and behaved as a holding company. Now that they’ve gotten through that transition, they want to be more like an operating company. A way to sustain that is really through a common back-office platform. I think that EMR hangover is causing people to really go back and look at the infrastructure that they have today.
Krist: Okay. As providers shift to value-based care, how are they changing how they operate? You just talked about these common platforms, but how do you see technology supporting these new requirements?
Porter: I still talk to systems that have multiple chart of accounts, an exacerbated number of job codes and positions. No one goes through a technology implementation for the sake of technology, right?
Porter: It’s to get a consistent set of financials or a consistent view of the organization. I think the other thing that we’re going to see—that we’re seeing now—is an overall talent shortfall. We’re talking about how the baby boomers make up so much of the aging population that are going to seek care for the next number of years. Do we really have the talent to support them? What is the way that you can quickly get the right talent in the door? That’s the first thing.
The second, I would say, is how do you have the right talent on the floor on the right day for the services that need to be rendered in that day? Not so much getting folks in there that can support care, but looking at the acuity mix and asking ourselves, “Do we have the right support on the floor at the right time?”
Krist: Right, because obviously the more critical the case is, the more you’re going to need top-flight surgeons. The more it’s just changing bandages, the more you’re going to need a different kind of worker.
Porter: Yeah, right, or even certain RNs versus LPNs. One of my clients has a dashboard that looks at the acuity they have for that week, looks at their staffing, and says, “Here’s how your staffed against the procedures for the week. You’re doing well—green. Yellow, you may want to move some shifts around. Red, you’re going to have a problem, and you’re going to have agency costs this week,” which we all want to avoid because an agency cost is higher than our normal cost. They look at that, and they hold the staffing managers or the departmental managers accountable for those agency costs that are incurred.
Krist: Right. Then that also ties into positive outcomes, right?
Porter: Absolutely. Yeah, great question.
Krist: Okay. Back to M&A. I just was curious, do you ever say “MMA” for Ultimate Fighting, because sometimes it can get a little rough.
Porter: Not in healthcare.
Porter: Not in healthcare.
Krist: Alright. What are the biggest challenges, and what do you advise when it comes to going from a holding company to an operating company?
Porter: It’s all about culture, and what culture is going to lead. We’ve seen some significant mergers and acquisitions in early ’18, late ’17. Some of those are starting to come to fruition now, meaning that they’ve gotten through the legal matter. They are one system. But it really comes down to culture and bringing those cultures together. Some of those cultures can also be tied to a back-office ERP application. They may be very passionate about something that they built, and they want to retain that. That often becomes, let’s say, an excited conversation about which system is retained. Or should they look for a new system? When you look at the cost of bringing two different ERPs together, it does beckon the question, that’s a new implementation. That’s not just a lift and shift from one to the other because some of those new models are going to change. To your point, the operating model has changed for that organization too, so the processes that they’ve had to date are honestly no longer applicable. They really need to think about those new processes and how those are really going to be embedded into their technology.
Krist: Right. Then you advise: Just take a step back, look at your processes, look at your cultures, and let’s think of something new?
Porter: Absolutely, I would. You have to think about the communities that you serve, and not just from a care perspective but also from a physician competition perspective. In this competitive environment, they could easily go across the street and serve another system. I think you have to be cognizant of the disruption that it can cause to the caregivers. I don’t want to just leave physicians in there. I want to save caregivers as a whole—not upset them—and have them really be part of the journey and really have a stake in the end-state processes that are going to support their departments or their delivered care.
Krist: Okay, that makes sense. What are they asking you—because this is the kind of question that people come to you with—what are they asking you as they consider how they transform their new or newly inherited organization?
Porter: It’s interesting—the first thing I get asked is, “What are others doing?” I have to remind them, you’re actually in a good group right now. Everybody’s really looking at this. There’s a lot of peering going on right now, I would say, whether it’s standing up a shared service center, whether it’s building a center or expertise around a unique process. So, what are those things? We’re also getting folks that are looking at how do they close the books faster? How do they get the right information to the right people in a faster time? That could happen by closing the books faster. That could be getting information to the board. That could be getting information to physicians or caregivers on a more timely basis, and then getting to a common answer. Often, finance organizations can spend time refuting or solving questions that departments have come up with different analysis of the data, which could be wrong. Sometimes it’s right, but that’s not where their time should be spent, right?
Porter: Also, I was having this conversation with someone else, and I’m sorry if it upsets any accountants out there. Someone said, “Don’t let perfection be the enemy of good.” A lot of times we spend so much time reconciling and analyzing to the penny that the answer would not cause them to make a different decision at the end of the day. I’m not saying that your books don’t have to be balanced. Being a part of an accounting firm, I will wholeheartedly say your books have to be balanced. But the effort to go through that, I think, needs to be evaluated. If you’re reconciling one account to a penny, and it’s a balance sheet account, and it doesn’t cause you to make a different business decision at the end of the day, I think you have to ask yourself, “Was it worth the effort to get there?” Could we have leveraged those resources in other areas to say, “Should we be in a certain line of business? Is that line of business profitable, or should we double down on that line of business?” those sort of things.
Krist: Right, that makes perfect sense. I know that you’ve touched a little bit on consumerism of healthcare. Last time when you were on our video program, In Good Company, you talked about some of the trends you’re seeing in consumerism and these different types of care models that are popping up. I believe you referenced sports medicine for youth sports players.
Krist: What are you seeing there, and then also what are providers doing at the operational level to support this consumerism?
Porter: I have a client that has partnered with Lyft. Not to give a Lyft shout-out versus Uber, just an example. They’ve actually partnered with Lyft. I think there was a stat last year that 3 million Americans missed office visits last year. A lot of patients cannot get to care because of …
Porter: … just transportation costs—their support network. I also saw the other day that demographics of care are going to change as well. We think about the demographic of the country, and who seeks care proactively now is not going to be that same group. It’s going to be a group that has not sought care and only went to go seek care when it was an emergent episode. Because of that, I think that’s going to cause us to have to think about how do we get ahead of that group, and get out in front them, and actually proactively provide care to them. I think that’s why we’re seeing a lot of these, I don’t know if you’ve seen this, these well-being clinics. They have really taken the place of or maybe additive to emergency rooms and urgent care situations, but really trying to help a population get ahead of their care. If they’re diabetic, are they watching their insulin levels, sugar levels? Then also helping patients in that same group build a care network around them. For example, my grandfather is 92.
Krist: Wow, that’s great.
Porter: Fought in both wars.
Porter: Still eats red meat. Loves a good bourbon because we’re from Kentucky. Just yesterday I was alerted that we had to take him to the hospital, or that he was taken to the hospital is what I was saying.
Krist: Oh, gosh, sorry.
Porter: Thanks. I got that alert via this system or this technology that we have around the house. We are—my brother, my dad, my aunt—are his care network.
Porter: We’re alerted to his results per se at a level that the provider is willing to share. We’re also alerted, obviously, when he is taken to the emergency room. That’s another way, I think, that technology is playing a part. We know there are certain days that he has hospital visits. We will arrange car service to take him to the hospital visit, because we’re all alerted. I don’t live there. My brother and my father live there. They can get him to his visits when he needs to. That’s another way that technology is playing a role. Like I said, that is very much a group that just did not seek care unless it was emergent for them.
Krist: That’s great. Circling back to our intro talking about change being opportunity, how can providers take advantage of change to discover new opportunities?
Porter: Yeah, great question. I think you almost have to build what I would call a Digital Transformation Office or the Office of Innovation. It can’t be something that organizations do in their spare time. You’re really got to devote time to this, one, at the operations level, the leadership level, and the board level. The board must be committed to this because the board is going to say, “We’re going to take away investment from a new hospital and focus on the Office of Innovation,” and really be committed to it. I’ll tell you, there’s also a number of health systems that are looking, or I shouldn’t even say looking, that have already partnered with some of these new technology companies that are building very niche apps, whatever they may be, around do I use an app for being able to talk to a caregiver? Do I use an app for being able to schedule not a procedure but a visit? Obviously you couldn’t schedule a procedure, but a visit. They’re partnering with those technology firms. They’re actually taking equity stake in those technology firms, making a bet on them.
Krist: They’re really putting a stake, literally, into the future.
Porter: Absolutely. As those technology firms, albeit small now, have upside, the health systems are going to benefit from that as well. That partnering is getting to be very interesting, I would say.
Krist: That’s really interesting. Just to close out, as far as opportunities, you already hit on some, but what are the big ones that you see coming down the road the next two or three years?
Porter: I’m just going to group this in what I call “automation,” which is going to play a big role, whether or not it’s around back office processes. There’s a new concept that’s around: Care traffic control. Really saying, “Hey, looking at the beds that we have in place, are we using those beds in the right manner? Are there certain discharges that we could push through?” A lot of that comes through RPA, or cognitive, or AI, but I think automation is really going to be the next big thing.
Krist: So, really keep your eyes open on what’s going on there.
Krist: And how you can use it potentially.
Porter: Absolutely, yeah.
Krist: Okay, great. That’s all we have time for today. Thanks, Walter, for sharing your thoughts and your time with our listeners. This is Josh Krist with the Workday Podcast signing off.
Porter: All right, thanks.
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