HLTH_Kevin Grabenstatter & Joe Johnson: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
Hey everybody! Saul Marquez with the HLTH Matters podcast, recorded straight from the HLTH event this year in Las Vegas. I have an incredible lineup of leaders that we’ve been interviewing and if you haven’t had a chance to subscribe, hit the subscribe button. If you have, thanks for joining us again. Today, I have the privilege of hosting two amazing health leaders. First, I want to introduce you to Kevin Grabenstatter. Kevin is a managing director with L E K Consulting San Francisco office. He joined LEK in 2006 and focuses on strategy and growth for health systems, physician practices, and other providers and value-based care delivery and emergency technologies/HCIT. He advises clients on critical strategic issues across the healthcare value chain. He formerly held strategy roles at Kaiser Permanente, where he was responsible for designing strategic initiatives in areas such as care transitions, patient flow, and cost efficiency. His expert commentary has appeared in Managed Healthcare Executive, and I’m excited to have him with us. Along with Kevin, we also have Joseph Johnson joining us. Joe is a managing director and partner as well at LEK Consulting’s New York office. Joe leads LEK’s healthcare services practice and leads the healthcare IT and tech-enabled services sub-practice. He plays an instrumental role in helping senior executives across the industry develop and implement new strategies and provides M&A advisory support to address the changing healthcare landscape. Joe has more than 20 years of consulting experience, managing and directing clients engagements, and has worked on substantial number of strategic growth operations and commercial due diligence projects across the health services provider, health IT, digital health government programs, post-acute, and many other areas. His expert commentary has appeared in Harvard Business Review, and I’m excited to have him and Kevin on today’s podcast. So glad that you guys are here.
Joe Johnson:
Thanks, Saul.
Kevin Grabenstatter:
Great to be here.
Saul Marquez:
It’s a pleasure to have you both here. Now, LEK, you guys are doing some pretty game-changing stuff and really doing a lot of future building in healthcare. Before we dive into the meat and potatoes about what you guys are up to, I’d love to hear more about you. So talk to us about what inspires your work in healthcare.
Kevin Grabenstatter:
Well, for me, I feel really lucky to be part of a team that is at a real leverage point within healthcare, and that’s what excites me, we all know is a huge and growing part of our economy. It’s such an important element of our lives professionally and personally. And we, on the LEK healthcare team, we have an opportunity to change how patients receive care, change how physicians and nurses deliver care for the better. We get to take a look at new technologies and how those get deployed through the US healthcare system and beyond, and that’s what’s really interesting and keeps me getting up and going to work every day.
Saul Marquez:
Love that, thanks, Kevin.
Joe Johnson:
For me, it’s not entirely dissimilar, but maybe slightly flipping it a little bit, I’ve always been really passionate about healthcare because of the mission aspect of it, whether it’s improving the care for a patient or a member, or finding ways to provide care at higher quality, lower cost, delivering better therapeutics, what have you, all of that is really what inspires me, and I’m very fortunate and lucky to be able to help my clients think through some of those issues. And as Kevin alluded to, I think a lot of what we do, especially in the deal space, is taking a look at disruptive technologies or disruptive models that are allowing healthcare stakeholders alike, whether it’s a payer or a provider or a healthcare IT vendor, take those new ways of doing business and really change the landscape for the better. So it really does tie back to that mission-driven aspect for me.
Saul Marquez:
Thank you, Joe. I appreciate that a lot. And as you guys think of LEK in the spectrum of how solutions are delivered within healthcare, how do you guys deliver value in the healthcare ecosystem?
Joe Johnson:
I’ll take a stab at this one. I mean, I think a lot of what we do for our clients, again, payer-provider, healthcare IT, is helping them think through transforming their business at key inflection points or decision points. How do I continue to grow amidst the staffing shortages or the margin pressures that we’re facing? How do I think about investments through mergers and acquisitions and roll-ups? And how do I make sure that’s adding to my growth potential, but also ultimately serving the needs of the patients or the members and making their experiences as seamless and positive as possible? And I think a lot of what we do is centered around that.
Saul Marquez:
Thank you for that, Joe. Kevin, anything to add?
Kevin Grabenstatter:
What I see is often pressure building on the client side for us, and that could be because they’re excited about new opportunities they don’t want to miss, it could be because they have challenges that they know they need to address in order to make their business better. And I see us as a SWAT team to some extent going in there to help them out at the key inflection points that Joe highlighted and really setting their organization on a different course, a better course, and we pride ourselves on being able to help them do that.
Saul Marquez:
That’s fantastic. Well, it sounds like you guys are doing some game-changing work in key moments when that work is most needed. Today, healthcare systems face enduring challenges that include inflationary and operational pressures, staffing shortages, and obstacles within the supply chain. What should health systems be thinking about long and or short-term to ensure resilience and a sustained economic footing?
Kevin Grabenstatter:
This is the key question right now for many of our clients. It is so hard to keep your eye on medium and long-term strategy when you are facing a perfect storm, a very challenging labor environment of economic pressure, the removal of economic support that was put in place during the pandemic period, no shortage in demand from a patient perspective and a regulatory perspective, compliance, etc, etc. It is very hard to run these businesses today. We are seeing economic challenges coming, as earnings are released this year there’s no question it’s a challenging environment. I think though, you can put off strategy for only so long, and I think it’s critical for our health systems to continue to prepare themselves for the changing environment. And the pressures are known: the need to shift to value-based care, the need to be more productive and efficient with the workforce, and the need to deploy technology, this new telehealth world that we’re in. And so getting ahead of that, but doing it in a smart way, not moving faster than your market is going to move, but being ready for those challenges, I think is really what has to be top of mind and what we see as top of mind for our health system clients today.
Joe Johnson:
I agree, and I think maybe just picking up on that value-based care theme or topic alone, there are just so many things hospitals and health systems have to wrestle with in order to get that right. Whether you’re talking about what are the right tools that I need to better integrate the data in the silos of data that exist, or what are the right revenue cycle management partners that I need in order to capture the right clinical codes and documentation to what are the right population health tools and partners to leverage in order to really identify those populations that will most meaningfully benefit from interventions and certain specific care pathways. And so there are just so many topics and threads that we pull on as an organization to help our clients think through those thorny issues.
Saul Marquez:
Thank you, John and Kevin. You know, out of all the things going on, what’s the one thing that people need to be focused on? You cannot not focus on this.
Kevin Grabenstatter:
Well, from the health system perspective, I think it is a recognition that the health system of tomorrow is not going to look like the health system of today, and the leaders amongst us health systems are going to have a more complicated and more sophisticated stream of revenue for them to think about. We are now seeing venture lead roles at health systems. We’re seeing innovation, commercialization, executive roles at health systems. So in addition to the core patient care services that they provide, thinking about how they can diversify their revenue streams and have more of a portfolio approach to how their business is run, to me, that’s the name of the game for who we think are going to be the winners in the future era.
Saul Marquez:
Well said, Kevin. The system has been disrupted and so now we are tasked with, as leaders of these organizations, to make the moves that will make our organizations viable in the future. Well, thank you for that. Definitely, a lot to think about here, folks. And so these are the questions that we have to be asking, and it’s hard to tackle some of these strategy questions, like Kevin and Joe mentioned, when we have so many pressures, but strategy can only hold for so long so you got to take action. And sometimes it works to partner with folks like LEK to help you think through some of these drastic decisions that you have to make when you’re under a lot of pressure. Investments in technology have emerged as a priority for hospitals, whether it’s a new revenue stream or just to take care of their own needs. What are some of the critical areas within which hospitals and health systems should make outsized investments?
Joe Johnson:
I think there are a couple that really come to mind first and foremost. One of those would be, I think hospitals and health systems have really woken up to the fact that the patient experience needs to be as seamless and positive as possible. And for that reason, a lot of investments are being made in patient engagement tools, starting from scheduling on the front end to, on the back end, help with patient financial responsibility and payments and along that whole workflow or value chain, I think that would be one area of outsize investment that would really yield strong ROI. I think another one, because of the changing landscape and shift away from fee-for-service towards value-based care and also frankly, just as we continue to play in this fee-for-service world and the margin pressures that hospitals feel, revenue cycle management tools are increasingly bearing fruit. And I think in particular one area within rev cycle where we’ve seen strong partnership and continued investment has been in the complex claims space. So essentially those really hard-to-chase dollars that are very unique and specialized, whether it’s worker’s comp or motor vehicle accidents. There is a strong ability to partner with some very niche players in those areas that can yield a lot of ROI.
Saul Marquez:
Great inputs there, Joe. Kevin?
Kevin Grabenstatter:
Telehealth and remote patient monitoring are so obvious that I will leave them there, but it would be no surprise that we’re thinking a lot about that and helping our clients do so. I’ll add though, precision medicine. It is here, it is something that health systems need to be prepared for, it’s not just oncology. We have a white paper, I think, on our website by our Life sciences colleagues that is about that exact topic. This is going to change the game in my view, of how care is delivered for many years to come, and I think it behooves health systems to be ready to deploy those technologies and that data and insights in a way where they can provide differentiated care for patients.
Saul Marquez:
Some great areas to think about and to focus on for sure. And folks, that’s the beauty of the podcast. If you want to hit rewind on this and listen to that again, I would, that was value back, so make sure you do that. And by the way, make sure you subscribe to this series, because that’s the best way to continue getting these podcasts in your podcast feed. You don’t want to miss out on any of these interviews with thought leaders like Kevin and Joe. So certainly make sure you do that. Potential disruptors in consumer healthcare are rightfully getting a lot of attention: Amazon, Walmart. What does the emergence of these companies mean for traditional healthcare organizations?
Kevin Grabenstatter:
They are coming. It remains to be seen to what extent they’ll be going for that white-hot core of acute care delivery, the surgical suite, etc, but for sure, in the uptake and front door for how patients traditionally access the health system, it’s a new world that we’re in, whether that’s Walmart Clinics, CVS, Amazon, and One Medical or the big tech companies out of Silicon Valley, and what we expect Apple and Google to continue to be looking at. I think it forces the hand of health systems to continue to think like consumer companies in a way that they have not traditionally done, and to think of creative ways to give patients and consumers the experience that they have come to expect in other aspects of their life.
Joe Johnson:
I completely agree, Kevin. And, you know, we actually devoted, I think, a whole entire different podcast to this topic, you can check it out on our website. But I think another point I would make is, you know, the models that are being sought after in kind of the retail world are, at least to date, going after a specific population, namely kind of higher cost populations, seniors, Medicare, and the like. And so worth recognizing that the implications, at least for now, are stopping there, not to say that they won’t proliferate and expand to other populations, but worth knowing that those are the members or the patients that are going to be impacted the most. And as hospitals, health systems think about attracting and retaining those populations, it will be, to Kevin’s point, more difficult to compete.
Saul Marquez:
So are the retailers here to stay?
Kevin Grabenstatter:
I think so. The question is just how far into the system will they go? How broad is One Medical and is that basically going to be healthcare for the whole food set, or is Amazon going to go after something broader? I’m sure someone at this conference can answer that question, but I’m curious to know the answer, and I think it will play out over time. But I don’t think we’re going back to where we were.
Saul Marquez:
I agree with you.
Joe Johnson:
I agree, the genie is out of the bottle. It’s just a matter of, how far do those models expand and proliferate, but it’s done.
Saul Marquez:
It is, I agree. Well, it’s all about how we react to what’s happening. And so the thoughtful discussion that we’ve had today with Joe and Kevin is really an example of more thinking that we could be doing together through partnerships such as the one we’re having here with LEK. So, Joe, Kevin, I want to thank you both for your time today. Before we wind this down, I’d love if you could just share a closing thought, and then the best place where listeners could get ahold of you and learn more about your company.
Joe Johnson:
Sure, I mean, Kevin mentioned earlier you can only put off strategy work for so long. I think another take I have on strategy is, strategy is as much about what you should be doing as a company organization as well as it is what you should not be doing. And so a lot of what we do is that also help tease out lower priority things that are just not going to really move the needle.
Saul Marquez:
Well said, well said.
Kevin Grabenstatter:
Think about the amount of collective brain power just under this conference’s roof right now. We have some big challenges in US healthcare, but I think we can make the world better and not just incrementally. So that’s what I’m excited about. So keep the faith. That’s my closing thought. Best way to get in touch with us, probably the easiest way is just email Strategy@LEK.com
Saul Marquez:
Outstanding. Kevin, Joe, thank you both for your time. This has been a great podcast with you.
Kevin Grabenstatter:
Thank you.
Joe Johnson:
Thanks, Saul.
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