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Saul Marquez:
Hey everybody. Welcome back to the Outcomes Rocket. And today I’m so excited to kick off a fantastic five-part series called The Future of Health. And we’re doing this in collaboration with Deloitte. Today I have the privilege of hosting Neal Batra on the podcast. He is the Healthcare Strategy Partner, Global Future of Health Lead and co-author of Deloitte’s Future of Health Perspective. Neal is a New York-based principal focused on healthcare and life sciences strategy. He serves clients across the healthcare ecosystem on strategy challenges related to business model and operating model transformation. As I mentioned earlier, he’s a co-author of Deloitte’s Future of Health Point of View, which is what we’re going to be talking about today and in this five-part series. And it outlines the breakdown of the current industry structure and the emergence of a new healthcare ecosystem oriented around dynamic, new value drivers. He leads the market-facing practice that helps clients apply the FOH frames and concepts to make critical strategic choices. Neal, welcome to the podcast. So glad that you’re here with us.
Neal Batra:
Well, I’m so thrilled to be here. Thanks for having me.
Saul Marquez:
Absolutely. And so we are going to be addressing how change accelerates disruption. And before we dive into that, can you just ground us in how you would describe Deloitte’s vision for Future of Health?
Neal Batra:
Yeah, absolutely. And it’s something we’ve been at since 2018. And the simplest concept in a nutshell, if you will, it’s the recognition that we’ve been a very sort of delayed late-stage, late-intervention healthcare model globally. Nothing happens until a patient shows up, and that usually means that they’re deep into some form of disease or distress. And then we rally a system to get them back to recovery. So it’s a break-fix model. Fundamental view from Deloitte’s Future of Health perspective is we no longer need to play the game that way. Through technology, through more activated, more aware, more engaged consumers, plus robust data, right, there are lots of reasons, but those three things, primarily, through those levers we don’t have to be a pulse in and out reactive model. We can be an always on, always visible model where I can monitor health and I can see disease emerge as it comes, and intervene much, much earlier, often with much greater precision and wildly less expensive. So, we think there’s a way out of this that’s not just save money on the back end, we think you can actually go do this thing differently.
Saul Marquez:
Think that’s great. And it’s a future that we’re all after. It’s less reactive, it’s omnipresent, and it allows us to do more. And so, as you reflect on some of the learnings of the work that you’ve been doing with this particular initiative and the work that you do with clients, what do you think will catalyze industry changes to redefine health?
Neal Batra:
The biggest hurdles, I think, on this transformation are a couple of things. One is the data has never really been robust enough to trust to intervene sooner, right? And you’re still seeing organizations that have senior clinicians, physicians who worry about, for example, clinical grade data. What we know though, what you’re seeing in the market is there’s lots of data that may not be clinical grade per se, but is widely insightful. So I think one point here is organizations getting more sophisticated around what data can tell them and being willing to engage at that level as opposed to holding a sort of classical high bar, which basically prevents any real model transformation. I think that’s one thing. I think the other thing is we’re spinning off new data about the body at a really high rate right now. And so, frankly, I know more about the human condition now than I have previously ever, but I don’t see happening or organizations keeping up to date with what these new data sets tell you about the patient or the individual, and alter your business model and your solutions to adjust accordingly. If I can see cancer as it emerges, then frankly, as a broader ecosystem, I should be flowing more investment towards hyper early-stage intervention as opposed to the billions that chase late-stage oncology drug creation.
Saul Marquez:
And Neal, so, with regard to that, sometimes you don’t know what you don’t know. And so, what are your thoughts really kind of these waves of innovation, maybe we could dig into that, but how can people open up their eyes if they don’t know?
Neal Batra:
It’s interesting. As I make my rounds, I spend a lot of time making a comment around disruptive technology. And I think more than ever, the ability of an organization to adopt and apply disruptive tech to the problems of health, not just sick care, but the broadest definition of health, wellness, well-being, disease avoidance, earlier line of sight, a broader definition that’s not just physical sick care, but also mental health and these other elements. I’m not seeing enough experimentation and the application of disruptive tech against those problems. What I’m seeing are large organizations still committed to their legacy model, they’re hyper-incremental in the ways in which they’re thinking about these disruptive tech – generative AI is another example, and I don’t get the sense that organizations really understand it’s a chance to rethink the whole thing, not just an incremental improvement on the existing thing.
Saul Marquez:
I love what you said, experimentation. And just really for everybody listening today, you got to ask yourself that question. Are you and your organization from the top to your management ranks and the front line, are you experimenting enough? Are the things that are coming up? Are you saying, oh, that’s not going to do anything? Will you be the Blockbuster or are you actually experimenting like Neal’s saying? And so, I think that’s a great point. How do you measure that and how do you embed that into the organization?
Neal Batra:
Lots of ways. I mean, one would be looking at your investment portfolio and making sure you have enough on the frontier pushing stuff.
Saul Marquez:
Yeah.
Neal Batra:
It gets you smarter as an organization. The risk here, and there’s lots of literature on this over the years. I mean, the most well-known is probably Clay Christensen’s and Michael Rayner’s Disruption Theory. And basically the point is good managers will always make bets that have a more certain return. But what that does is it lends itself to more incremental innovation, more incremental risk. The problem in the moment we’re in now for those organizations in that mindset is we’re in a hyper-change moment with unbelievably disruptive tech coming online and becoming commercialized. So in a rapidly changing, hyper-transformational world, an incremental mindset is a bad strategy, right, to say simply. So one way is are you putting enough of your investment portfolio against the frontier? You’re pushing stuff knowing you don’t know what you’re going to get out of it, that’s one. I think the second is you got to look at your personnel and make sure you have enough people who are untethered to the core and give them some space to experiment as well.
Saul Marquez:
That’s fantastic, Neal. And these are very tangible things that could be weaved into your organizational strategy, so something to think about for sure. So, where are we today, Neal, and what are the signals that indicate the industry is evolving?
Neal Batra:
Yeah, you know, I use lots of metaphors as I describe it. Maybe the one I’ll use here is, if you think of this journey as a baseball game and I’ve talked about this previously in other places, but I think innings 1, 2, and 3 are really around data collection, data collection, and just being able to capture more granular data and maybe connect it to one another. We’re probably in inning 2 of that 3-inning run. I think innings 4, 5, and 6 are really around generating insights where that data tells me something really novel and important in a precise way. And I think then the back third of the game, if you will, 7, 8, 9, is converting those insights into very clear, actionable approaches to address the illness or the approaching sickness and intervene. And so obviously.
Saul Marquez:
I like that wording.
Neal Batra:
Yeah. And look, nothing’s linear, right? It’s not. So you’ve got some folks who are probably playing later stage in that game, but as an ecosystem, I think we’re probably still in the first 3 innings in terms of really figuring out the data capture stuff and knowing what to do with it. And so as I kind of point towards large incumbents that have been winning in the classic model, they’ve got time here – a little bit, but not a lot – because we’re still sorting out what data is available, what to do about it, how to approach it. And what’s interesting is, by not having the big incumbents and the ones with a strong balance sheets really engaging here aggressively, what’s happening is, is you’re leaving enormous white space for disruptive entrants, either in the form of sort of novel called venture-backed startups that are being born around these disruptive tech or the non-native healthcare businesses that are beginning to flock into healthcare and see if they can help address some of the problems and shift some of the profit and the revenue their way. And, you know, smart devices are a great example of that, these smart wearables and I won’t name them, but you all know what they are. In some cases, some of the most successful med devices ever, and almost none of those organizations are native healthcare businesses or medtech businesses. They’re either been playing elsewhere or they’re new to the game altogether. And that’s a real signal that the change is upon us. And the incumbents either now need to respond aggressively or recognize that there’s probably going to be a slow erosion of their classic position.
Saul Marquez:
Totally. And there’s warning flags. And if we don’t respond to them, it will be problematic. But it’s also an opportunity. And a lot of these companies that you talked about, Neal, are those consumer companies that are fusing that consumer experience, that understanding of the ecosystem overall, not just sick care. Because you think about consumer companies, they’re very focused on where are you spending time, what platforms, where are you geographically, what are you eating, drinking, reading, all of these things are contributing to overall health and definitely gives them an advantage. You know, the thing that I liked about your baseball analogy is that while it is linear, it speaks to a cycle. And when you have command of a cycle, you could really affect change.
Neal Batra:
Without a doubt. And the dynamic of a cycle also maybe gives you some comfort around timing. It shows you pace and if you’re paying attention, right? But the other concern I have is a lot of these organizations are watching the wrong mileposts or the wrong beacons or the wrong signals, right? I still have clients who ask me, hey, what are my three most classic peers doing around this? I think that’s part of the right question. I think the more important part of the right question is, hey, who are the disruptive entrants coming in and doing this completely different, that maybe aren’t on my radar at all because I’m dismissive because they’re small right now? But you know what? The dotcoms that became dominant hyper scalers were all pretty small when they started too, obviously, so …
Saul Marquez:
Very true.
Neal Batra:
There’s a danger there, right? To continue to think that the players on the field are the same players that they’ve always been. I just, we fundamentally believe they are new players flocking in, a lot of the value that’s going to be had in health over the next coming years are going to flow to these new entrants because the incumbents have been so slow and tepid in their response.
Saul Marquez:
Couldn’t agree more. Thank you for that, Neal. And so how have external pressures accelerated the time horizon toward the Future of Health?
Neal Batra:
Yeah, external pressures are interesting because on one hand you’ve got the fact that how much more can budgets take flowing dollars to health? Where it’s 16 to 17% of US GDP, it’s a freight train of 20%. And if you look at other projections, you see some organizations even projecting out to 25%. I mean, if one out of every $4 that moves in the US is health-related, we got a real problem because it means you’re starving other things that are really important and really matter. So I think that’s a massive external pressure and everyone’s been talking about money and the size of the cost or the intensity of the cost for years, but budgets have been able to absorb. I think what we’re observing is we’re at a point where I don’t think budgets have much more room to go, and I don’t think starving other areas of spin is going to be reasonable. So I think that’s one major dynamic. I think another major dynamic and maybe even more importantly, frankly, is the notion of the activated consumerism. What we’ve observed, and we do a biannual survey on consumer health folks and ask them a wide range of questions, and this survey is telling us a couple of things, not the least of which is the level of engagement and activism amongst health consumers now is greater than it’s ever been, and it’s moved tremendously in the last handful of years. And what that means is on my topic of health, whereas I historically might have been like, I’m going to go to the doctor and I’m going to do what she tells me to do. Now it’s, I’m showing up, I’ve got a real strong opinion. And it doesn’t mean I’m well informed, doesn’t mean I’ve drawn the right conclusions, but I’m activated on my issue of health in a way that I was really deferring to experts historically. And that level of activation puts enormous strain on all the players in the system because it drives expectations, it drives consumption preferences. And it also means if you step in and address unmet needs as they’re defined by consumers, you have a real chance for a foothold and to drive growth.
Saul Marquez:
That’s great, Neal. And both that increasing cost and the consumer are very much linked. And so that Consumer Health survey would be very interesting, I don’t know if it would be possible to maybe even link it up to the show notes, I think that would be really great. Love it. Thank you for that. Very insightful. Folks, by the way, all of the things that we’ve discussed, we’re going to be linking up in the show notes. So whether it’s a way to find out more about Deloitte, way to find out more about Neal, all the show notes are going to have what you need, so don’t worry about that, everything is available. Okay, look, at the end of the day, what we could do to act for a better future is what we all want. So what are some actions that organizations could take to accelerate the path forward?
Neal Batra:
Yeah, think more than anything, it’s have a point of view here. What I’m seeing is disjointed, disconnected initiatives inside larger organizations, and you’re not having the top of the house lay out a set of views in terms of what’s the business model of the future. And so if you don’t have that overarching vision, I think it is a challenge. And if you find yourself as an executive embedded in the organization and you’re basically listening to this and saying, well, that’s not happening in my organization. I think the other point is really figuring out a way to place investments and make bets that serve both the near-term model, but also accelerate your transformation forward. So it probably means better consumer engagement, it probably means leaning out of your digital core so that your technology is more modular and allows for maybe more ingestion of data, better interoperability as that plays out, these types of things, making bets on products or services that stretch away from just a classic sick care set of markets and opportunities and begins to move into more earlier diagnosis, earlier intervention, consumer oriented health and wellness. It’s hard as a sick care business to change your mindset, but I do think even at the BU (business unit) level or some type of operating structure within an organization, you can begin to hedge your bets, to stretch your model, even if you don’t have the directives coming from the top.
Saul Marquez:
I love that, Neal. And that’s so tangible. So folks, let’s take a note here, I would honestly hit rewind on this point because that right there is worth, the time you spent here on this podcast, have a vision, a point of view, where are we going? If that’s lacking, it’s a problem. And your investments, near-term and future, are key and you can’t dig your head in the sand. If you see a problem, you got to call it out. Otherwise that’s it. So thank you for that, Neal.
Neal Batra:
Yeah. Actually now, I might just actually just give you an example, sort of.
Saul Marquez:
Yeah! I would love that.
Neal Batra:
So let me give you a real example here, and these are conversations I’ve been having over a couple of years now, specifically with hospitals and hospital boards and management teams. So we’ve got a call, and it was a management team, they said, hey, we’re about to spend x-hundred million on a new hospital. I heard your talk, we’ve been in these conversations, I don’t think it’s the right move, but I don’t know how to convince my board it’s not the right move. And the challenge you have there is you have a set of board members and you have a couple of folks on the management team that had the legacy milestones of what a healthy hospital looks like and what growth looks like. And for them it meant square footage, it meant visible presence in the community, it meant tangible investment in the facilities and the campus, right? These were the sort of markers that drove, in their view, progress and heading in the right direction. And as we were talking, I said, look, the error here is you don’t need more brick and mortar because frankly, volume to the hospitals are going to be challenged increasingly as we go because so much volume is going to get picked off either in clinics or other facilities or frankly, the early intervention can actually be done by the individual at home. And what we ended up getting down to was having them split the investment where they built a much smaller new facility and they spent the other half of that investment on their virtual health hospital at home offering.
Saul Marquez:
I love that.
Neal Batra:
They created this digital mechanisms. It was big enough that they had to train their clinicians on how to engage remotely. It got them smarter and how to capture data, read data, monitor, and engage when there were certain triggers or warnings and they got them moving in the direction that model, you were still able to scratch the itch on the physical and visible investment. But at least they got moving in a direction that also served their business. And by the way, looking at them now for a couple of years on after the hospital came online fairly recently, they’re doing great in both channels.
Saul Marquez:
Oh, man, Neal, I love that. That’s a great story. And one thing to call out on there, folks, is it doesn’t have to be all or nothing. You know, like this is a great example that Neal just shared with us, that you can actually do both and take care of that short, the near term and future term, and fantastic example. I’m so glad that you shared that with us and I’m glad they did it because fast forward to today, I’m sure that investment in the digital side and the virtual care is paying them multiples.
Neal Batra:
Have to agree. And I’ll linger maybe on one point you just made, which is it’s highly unlikely it’s all or nothing right now, right? Because if you’re a large business, you have a core business. You’ve got to serve.
Saul Marquez:
Totally.
Neal Batra:
Customers, core relationships. There’s no chance you’re walking away from that, nor should you, because you’ve got to deliver the mail on the commitments you’ve made to your employees, to your community, to your investors. So this is certainly not an all or nothing. But what I would say, going back to maybe an earlier point, look at your investments and I would make sure it’s not 95-5 old model, right? Get it closer to 80-20, get it even more aggressive, 70-30. Invest in the new to the point of it hurting because if you don’t, you’re simply ceding that white space to disruptive entrants who are going to come in and a lot of them are going to be really effective at it.
Saul Marquez:
Love that. Thank you for that, Neal. And this has been an incredible conversation. I got one more for you. And the question is, when you think about Future of Health, what are you most excited about?
Neal Batra:
What I’m excited about is finally aligning incentives in the model. And what I mean by that is, and this is some ways, this is the invisible hand shifting and putting pressure on the system to get more alignment. And what I’m really saying here is organizations that play in health will make their most money by keeping people well or intervening earlier, as opposed to what we have now, where there’s almost strong incentives to wait until people are deep into disease to make your money on late-stage intervention. So the alignment of keeping people well or engaging earlier and that being the revenue and profit driver is what I’m most excited about. Because when that wheel gets turning and everybody understands and sees the possibilities there, I think it’s going to starve this sick care investment business. And I think it’s going to drive enormous innovation, enormous energy to earlier stage interventions, which I think moves everybody forward. It should have people sick less frequently, I think the duration of sickness and illness is lower. I think it keeps folks healthier, it allows us to go after things that are not just physical health, but we’ll be able to pivot attention to things like mental health and emotional health, which drives so much of wellness as well. So, I’m just excited because I think we’re getting to the things that matter and we’re moving away from what I think has been a pretty misaligned in system in terms of incentives.
Saul Marquez:
Nail that. That is a fantastic close to today. I want to be alive and I want my son to be part of that when he grows old. I’m inspired by your words and thank you for that. And look, folks, this conversation, as I shared with you, with the outstanding Neal Batra, is one of five. And one of the things that we covered today was cost. And in the next podcast episode that we’re doing, it’s going to be about breaking the cost curve. We’re going to have Andy Davis, so make sure you tune in to that one. He’ll be joining us. But Neal, I can’t thank you enough with everything that you shared with us today, and let’s make this Future of Health happen.
Neal Batra:
Absolutely. Thanks for having me, real thrilled to be here. Thanks so much.
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