Rae Woods: From Advisory Board, we are bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. After a truly crazy year in health care, I'm sure that many of you are setting your sights on 2021 and even beyond. And with a new year comes a new strategic plan. Today, I want to talk about what executives must be focusing on in the new year. What might be the same from years past, and of course, what has to be different this time. To have that conversation, I've brought strategy expert, Dave Willis. Well, Dave, welcome to Radio Advisory. I'm so happy that I finally got you on the podcast. It's been awhile, but I'm glad that you are finally on. Dave Willis: Super excited to be here. Can't even begin to tell you. Rae Woods: I'm curious, since we're going to be talking about plans for 2021. Do you have any plans for the new year? Have you thought about resolutions, things you plan on doing differently next year? Dave Willis: Well, sort of the cheeky answer is, as soon as I'm allowed to get back on a plane, it's going to be Katy, bar the door. I am that crazy person who just loves to fly and to travel, and I can't wait to do it again. But I think the more sobering and appropriate answer, if 2020 has taught me anything it's that I need to reflect and spend more time on gratitude. That's my 2021 resolution, is more gratitude in my daily life. Rae Woods: I love that. Because you get on planes and travel often in normal times, you spend a lot of time talking to healthcare leaders and strategy executives, who right now are designing what their organization will focus on in 2021. Why is that process particularly difficult this year? Dave Willis: I've been doing this for 23 years. And there's no year that I can remember that compares to this one. You've got the obvious pandemic, throw in a challenging economy, bright spotlight on the issue of health equity, presidential election, one in which Congress is going to be divided. There's way too many crazy variables that you have to account for here. Rae Woods: And typically this is something that I think organizations do annually. We've talked about this a couple of times on the podcast, and I just want to get ahead of it here. Is this something that we want to continue doing just once a year or has COVID changed the pace for which executives should be looking at their strategic plan? Dave Willis: It's a really interesting question. I think if you asked 10 chief strategy officers that, you'd probably get 10 different answers. The nuance that I will put to it is this, strategic planning is a lot of work. I'm not sure that I buy into the need that it has to be done quarterly or semi-annually. But I think it is certainly a good time to revisit all of the assumptions that were baked into our last plan, and that we probably have to do more often. Rae Woods: And that's because our industry has gone through an incredible amount of change over the last year. I actually don't think that there's a better word to describe what has happened in healthcare than change. So when it comes to setting strategy, I do have to believe that there are some areas of focus that maybe remain unchanged from pre pandemic times. Do you agree with it? Dave Willis: Yeah, I do. And I'm really glad that you asked that. The other person who would agree with that is our colleague, Ben Umansky, whom I know you've had on a couple of times. He points out that everything we would've said you need to pay attention to, if we were having this conversation last January, is still there. It might be in the background, but it's still there. Rae Woods: What are some of those things? Dave Willis: Well, a couple of examples, the rise of the activated consumer, the adolescence of digital health, the courting of physicians by non-traditional partners, the continued shift of care away from costly inpatient settings. And maybe most important, the razor thin margins that most providers have to deal with. All of those things remain really important. Rae Woods: And that's a lot. And I want to take a moment to say that that probably offers a little bit of comfort to leaders who are facing all of this change, to say there are still all of these evergreen challenges that you can continue to improve upon and continue to tackle. Is there anything that might fit into this evergreen category that you might suggest leaders prioritize more now in this peri COVID world than maybe they would have 10 months ago? Dave Willis: Yeah. There were so many things that you still have to pay attention to. Everything to do with your costs of care, everything to do with being the most accessible healthcare system so you can compete for patients. Here's the one, and it's totally me geeking out, Rae. I get that. But here's the one that I would say it's evergreen, but it needs to be more green than it ever has been. And that's supply chain optimization. Get your supply chain team out of the basement, whether they're there physically or metaphorically, get them out of the basement, and recognize that a strong supply chain can not only be a significant competitive advantage when it comes to costs. It might be the most important thing you have to do when it comes to ensuring the safety and reliability of your people. Rae Woods: And that's a really good example of something that I think probably would have been on the to-do list a year ago, but I do not think it would have been at the top. Whereas, now we might say this needs to be perhaps in the top three of the things that you're focusing on in the new year. Dave Willis: I guarantee you every clinical person at your organization now knows the name of somebody in your supply chain organization as a result of what they've had to go through this year. Rae Woods: That's right. Are there any others that you might put in this evergreen, but let's prioritize more, category. Dave Willis: Yeah. The one that I don't think enough people are thinking about or talking about, but it's related to this, is safety. Most years we of course kind of take for granted that everybody's doing that. Ever since the first Institute of Medicine report came out, To Err Is Human, we've been focused on preventable errors, adverse events. Nobody's really talking about that this year. And my fear is let's not let the urgency of COVID take the spotlight off of all of the adverse events that still happen, that are still preventable. Let's not wait for the next IOM report before we shine a spotlight on that. Rae Woods: I think that that is right. I think the one that I might add to the list here is probably the value proposition that every single health system has with their physicians and with the physicians that aren't necessarily in a W-2 relationship with that organization. Is that something you're tracking as well? Dave Willis: Yeah. And that's such a good point, Rae. For every conversation I have with a chief strategy officer, you probably have one with a chief physician executive. So you hear all the same stories. Rae Woods: That's right. Dave Willis: But I think what people are finally realizing is that we're not headed for a world where there's this bifurcation between the completely independent physician group and the fully employed medical group. That there's a lot of gray areas in between there and a lot of entities that are trying to play in that area. Whether it's private equity, whether it's non traditional employers, like health plans. Whether it's these national players like ChenMed or Aledade that are stepping up and saying, "There's a really compelling value proposition here to keep you from being employed by the health system." Rae Woods: And since you teed me up, I'll go ahead and take this moment that it's just important to remember that loyalty among your physicians is not guaranteed. Especially right now when we're seeing so many clinicians leave the workforce, because they're going through something that none of us can possibly understand. They're going through true trauma in this fight against COVID-19. And some of them are switching to an organization that perhaps did better, or has the perception of doing better, or they're leaving. Physician loyalty is absolutely not guaranteed right now. By the way, I think that it's pretty comforting to think about those moments of consistency from years past, but we are living through probably one of the most disruptive moments in our industry. Maybe even in our world. What new and different things do you want to make sure our listeners are placing their bets on next year? Dave Willis: I love this question, Rae. The way that I think about these is each of these are opportunities. And I mean that in two senses. One, there are places where you might recognize that your old assumptions no longer hold. But they also might be a place where this is a moment of time for you to get a leg up on your competitor. If your competitor has taken their eye off the ball, these are areas where you might be able to leap frog them. And I've got three just to put on people's radar screens, if you'd like to go through them. Rae Woods: Let's do it. What's the first one? Dave Willis: All right. So the first one is a direct-to-employer models, like centers of excellence or ultra narrow network ACOs. The reason that I want to put this back on people's radar screens is there's a lot of interesting data coming out this year about how employers are likely to behave. That suggests they're going to approach what's happened this year differently than they did the global financial crisis of 2008. Specifically, they're almost certainly not going to be as aggressive at pushing cost onto their employees, but they are going to consider being more aggressive about things like steerage and reference pricing. So if I'm a health system, even if I had this conversation with an employer five years ago and found they weren't interested, it's a good year to go back and take another bite of the apple. Rae Woods: Yeah, I definitely agree with that one. What else is in your top three? Dave Willis: Second one is telehealth. And now you've had our colleagues, John and Andrew, wanted to talk about this. They can be so much more erudite than I am. But my challenge for the strategist here is this is a moment to realize we have to stop waiting for reimbursement parody. Rae Woods: Yes. Dave Willis: And realize that if we don't provide this service, somebody else is going to. That's an assumption. And the other assumption that you need to tackle here is really stop assuming that this is only for the under 30 crowd. Rae Woods: Absolutely. Well, first of all, the under 30 crowd has less predictable health needs than everyone else. There's a lot of running room when we think about virtual care and telehealth. Dave Willis: I am 51. And when I'm choosing a provider, one of the first things I look for is the willingness and ability to engage with me virtually. If I can't do a video visit with you or send a secure instant message to my physician, that's two strikes against you right off the bat. Rae Woods: And clearly a good example of an area where institutions can get out ahead of their competitors, because there are such strong consumer expectations. You said there were three. We've talked about direct-to-employer and telehealth. What's the last one? Dave Willis: Third one, and it's another very personal issue, because of some things I went through with my parents this year. But it's behavioral health. And again, I think the key lesson from the age of COVID is waiting for the economics to catch up is a losing strategy here. When you think about the impact of social isolation, and depression, and loneliness, and dementia, and let's just say it's substance abuse, those are going to show up as comorbidities with a much greater percentage of your patients than they ever have before. You have to be prepared to provide behavioral health care to your patients. Rae Woods: I am also pretty bullish on this one. We covered behavioral health in a very, very early episode of Radio Advisory. And if I am remembering correctly, the stat that we referenced was that an estimated 80% of Americans would have a behavioral health need. And I honestly think that is dramatically low given everything that we've gone through, the effects of social isolation, you mentioned substance abuse, deaths of despair, et cetera. I think 80% is low. I think this is going to be 100% of Americans, certainly in the healthcare workforce, are going to have a behavioral health need. And we are not even close to having the capacity to managing that. Dave Willis: I'm so glad you mentioned that, Rae. If you want the first test case, the first place to pressure test your assumptions, I would look at your own clinical workforce right now and see what they are presenting with. Rae Woods: These are all examples of areas where we really want to push our listeners thinking. Again, as someone who's having conversations with chief strategy officers, I'm curious if you have any examples of organizations who maybe are already proving that they're not slowing down in the face of unprecedented uncertainty and they're using this moment to really get ahead of their competitors. Dave Willis: Yeah. I've got a couple there, Rae. And one of them, frankly, is courtesy of you and the podcast. So just a couple of weeks ago, you had Mark Harrison from Intermountain on, and he spoke, I think very eloquently and passionately about the role of telehealth and virtual care in meeting their mission, in meeting their margin targets, and as part of their longer term strategy for how they think about building out access. So certainly an organization that I think is taking the telehealth challenge to heart. Dave Willis: The other one, and of course, strategy is very personal. I don't like to name names of organizations here. The Intermountain story is different because that was a public conversation on the podcast. But just in the past two weeks, I've had conversations with health system chief strategy officers that are very clearly revisiting their direct-to-employer opportunities in recognition of some of the forces that we just talked about. I think we will see some interesting moves in that direction. Rae Woods: This reminds me of something that I've said before on the podcast. I've referenced that in my most optimistic moments, I'm really proud of the agility and innovation our listeners have demonstrated. You referenced some of those conversations just now. In my darker moments, I think about that level of innovation, just kind of fizzling out. And that's a real concern to the leaders who are pushing the pace of change. They're making big bets right now. Do you have any advice? Dave Willis: Again, it's probably stating the obvious on this one, Rae. But the big thing that I worry about here is fatigue. People in healthcare are tired. Your clinical staff have never been stressed or stretched as much as they have been this year. Your administrative staff have had to come up with new processes and revamp everything to try to meet the needs of the pandemic. People are really tired. And I know it's very easy for me to be talking on a podcast about all the different things we need to do. If I were a leader right now, before I push go on any of those things, I would be stepping back and saying, "How are my people doing? How are we showing up for our workforce right now?" Rae Woods: Especially in a moment where the workforce is really not going to get a break. If you think about the fact that this time of year is always extra stressful for the clinical workforce. We see lots of rushing to get procedures done and appointments done before the end of the plan year. It's flu season. And of course, COVID is raging across the United States. Dave Willis: Yeah, no doubt. The way that I think about this one, Rae, every health system's website that you go to, there will be a mission, vision, and set of values. And two things you can always predict will be in there. They want to deliver high quality care. And people are their most important asset. And it's that second one that I'm suggesting now is the time to prove it. If you can't demonstrate this year, what that means in a very tangible sense, I don't bet on your ability to be successful at any of the other things that we've talked about today. Rae Woods: Yeah. I think that is exactly right. My other concern is that even some of the elements we talked about that are at the top of the to-do list, they're not necessarily ones that leaders haven't attempted before. Do you have a message for who are maybe coming at, let's say, direct-to-employer for the second time and an effort to push them to continue forward and keep doing better? Dave Willis: Yeah. It's such a great point. It all goes back to something I said at the very beginning, I don't know that we have to do the strap plan more frequently, but I think we have to pressure test our assumptions more frequently. And this is one where the assumptions that you make or that you made five years ago may not hold. The economy is humming on all cylinders and employers are going to say, "Yep, I get that you are great value, quality for the dollar, but I'm not willing right now in a tight labor market to go in front of my employees and say, I'm going to reduce their choices." Different world in 2021. And employers are going to face some really tough decisions, and employees are going to be in a different place than they were before. This is a time where their appetite for making these more dramatic changes to benefits design is going to look different than it did five years ago. Rae Woods: That's right. I have to say, I agree with everything we've been talking about thus far, but I have this little voice in the back of my head that's saying, "Gosh, it's got to be so hard to prioritize efforts in this moment." I never want our listeners to hear this conversation and think, man, Rae and Dave are telling me I have to do everything that I was focused on in 2019 and 2020, and add new things to the list. How can we help our listeners actually prioritize where to start? Dave Willis: Yeah. Let's go back to Maslow's hierarchy. I think that's the right framework to use here. Number one, take care of the safety and security of your people. If you can't do that, if you haven't done that, don't even bother with the other things. You're just not going to get it done. Second level is get our own house in order. That's the no regret stuff we were talking about at the very beginning, Rae. Focusing on those things that are core to margin performance, keeping the doors open, being accessible to consumers and to patients. You got those first two things down, okay. This is where I take you back to there are opportunities. Pick one of those things that we discussed earlier, direct-to-employer, telehealth, behavioral health. Is there one where you're excited about the opportunity to bring something new to your market? Don't feel like you have to do everything, but I would tackle them probably in that order of priority. Rae Woods: And to your point, there's actually still a lot of running room when it comes to those more traditional strategic priorities. There's a lot that can still be done there. Dave Willis: No question. No offense to the revenue cycle employees out there, who are doing incredible work. That's not the topic that gets me out of bed excited every day. But every single time our colleagues in revenue cycle research do their analysis, health systems are leaving tens of millions of dollars on the table because they still haven't optimized their revenue cycle. So that no regrets stuff is where you're going to find the running room, find the financial cushion to do some of the other things that we talked about. Rae Woods: Yes, absolutely. I'm a little bit surprised that you haven't brought up something else. Something that's maybe top of mind for folks right now. COVID-19 has certainly not been kind to healthcare finances. And that is one of many reasons why some are predicting greater levels of M&A in the coming years. Is that something that should be on the priority list? Dave Willis: Well, I think it's going to happen, Rae. The question is, to what end? I'm not talking here about what I would call very strategic M&A. I'm talking about horizontal consolidation that is born out of financial desperation on the part of one or more of the health systems. And my question for everybody who's thinking about going down that path is, where's the evidence that, that actually works? Rae, I've written about this, maybe in the show notes, we can put a link to it on the website. But it's not just the advisory board. Multiple studies in the past four years have looked at this from a variety of angles. And the next study that shows that horizontal integration actually creates financial value will be the first one to do so. Rae Woods: Well, Dave, I want to thank you so much for coming on Radio Advisory. You were at the top of my list for a very, very long time to get on the podcast. So happy that we finally got to connect. Since you are a listener of Radio Advisory, you probably know what's coming. It's the question I ask every single one of my guests at the end of our episodes. What is the one thing you want healthcare leaders listening to this podcast to focus on right now? Dave Willis: Well, I'm going to cheat, Rae, and I'm going to give you two. Because I already had my plea to step back and make sure that you're doing everything that you can to listen to and take care of your people. Basic Maslow's hierarchy is the most important. But if you've done that, it's really time to go back to your most recent strategic plan. And you started with a set of assumptions. Whether it was a SWAT analysis, a set of expectations about consumer behavior, what have you. This is a good time to look at those in detail and ask yourself, how confident are we that this still represents our reality? Rae Woods: Yeah. Thanks, Dave. Dave Willis: Thanks, Rae. Glad to be here. Rae Woods: The good news is there is a lot more that can be done when it comes to health systems traditional evergreen priorities, getting costs down, focusing on rev cycle, top of site care. But leaders can't lose sight of the new set of strategic priorities that have become real as a result of this pandemic. The important thing is to use this moment to continue to pursue change, and maybe even get a leg up on your competitors. And when you do that, remember, we're here to help.