Hi everyone, this is Erica Spicer
Mason with Becker's Healthcare. Thank you so much for tuning
into the podcast Today, I'm thrilled to be joined by Dave Lamar,
the Chief Growth Officer at Quant. Today we're going to discuss information
technology as it relates to mergers and acquisitions. Dave, thank you so
much for being here with us today. Thank you, Erica. Well, we are excited to dive into
this topic. Mergers and acquisitions, certainly a hot issue right now.
Um, but before we get started, I'd love to have you just share a
little bit about yourself and your role. Well, um, as you stated, I'm Chief,
chief Growth Officer here at Quant. I've been here coming up on
seven years. I've seen a lot of, a lot of change and a lot of, uh, a lot
of activity in the m and a space and, and how it's impacted. Um,
it stacks of, of both the, the system sold and the, and,
and the acquirer. So, um, I lead sales and marketing here, uh, and client services and primarily
drive the go-to market strategy and execution for the organization
over the last seven years. Great. Thank you so much for
sharing that. And seven years, that's definitely enough time
to see a ton of change happen in this industry, um,
during that timeframe. So I'd like to just get us started
with talking about how healthcare mergers and acquisitions are really
benefiting organizations and their ability to scale, reduce
costs, improve care. I know that that is the case based on
what we've seen and read and heard from health systems and hospitals, but we know that these deals do
come with challenges as well. So, can you describe for us some of the key
issues that you are seeing hospitals and health systems face in
mergers and acquisitions, especially as it relates to technology? Yeah, I, I, I would, um, I would say that the m and a process has, in the 30 years I've been in
healthcare in general, uh, I, I think the m and a process has come a
long way and they do a fairly good job of identifying and valuing
the efficiencies that, that they would expect to gain through
these transactions. However, I, I think the most change I've seen in, in
an area where I think the most change, uh, that I've seen has been in
really understanding the
technical debt associated with each organization is these
organizations get bigger and bigger. There's more and more of this debt,
um, when these organizations merge. Um, smaller organizations, not so much,
but, uh, the, the bigger organization, there's a lot of that debt out there. Uh, and the size of the application
inventories that are on the shelf in these health systems, it is,
is immense. It's in, in hundreds if not
thousands of applications. And so I think what's, what, uh, the process still lacks
is a really good way to understand that tech technical debt, uh, as it's represented in
different applications that
are sitting on the shelf that may or may not be used
or are underutilized, kind of the application
rationalization space. And I think there's a great opportunity
within that m and a process to dive deeper into that information and, um, really identify what can be
tens of millions in hard savings and efficiencies gained
during these applications, both before the understanding those
cost savings, before the application, before the, the, the acquisitions
as well as understanding, um, what needs to be done after the
acquisitions to maximize those savings. I, I think it's a lot of
work to pull thousands, hundreds, at least of contracts and inventorying them to the detail they need, that you need to inventory them
to really understand when and how applications can be archived and, and applications can be de decommissioned. A lot of that work doesn't get
done during the m and a process, and I think it's missed opportunity. Mm-hmm. , thanks Dave. And I'm so glad you mentioned the word
inventory because as you were describing these opportunities that you're seeing
in m and as as it relates to technology, I was thinking it kind of sounds like
these organizations really need to do a thorough inventory, um,
during this process. So, um, I appreciate you sharing that perspective. And so how are you seeing
organizations address these challenges, especially understanding that,
you know, or I should say, addressing that lack of understanding
of technical debt? Yeah. So can you share some examples of
effective approaches here and maybe the benefits that could follow? Yeah, I, I, I think,
um, the, the volume of, of systems to decommission and the
variability between the systems, I've seen folks, and this is more
of an ineffective way to do it, but I've seen folks take a
more cost approach, uh, I, and, and, and really attack the high value systems
and push the low sa the low value systems, the systems that have a, a
lower r o i to pull off the shelf, uh, pushing them off to later
phases. And, and ultimately what's, what's happened, and I've seen
this over the last seven years, is you have a lot of applications that
have been pushed off and that they ultimately are accumulating now
at, at high rates and creating, uh, a growing, growing data loss exposure as well
as some security issues because they're either gone, they've
gone unsupported or they've gone, they've not been upgraded, they've
not been actively managed. Um, and so you've created some problems
there. So I think that the, the approach it doesn't work
is just grabbing the, you know, the high dollar ones and, and,
and, and realizing the r o I, uh, I think when folks where it's worked is
when folks have built a, a, a program, you know, a permanent program within
their organization to build
core competency around handling these system
transitions and m and a activity programs that are chartered with the
duty to remove all the systems, um, not just the high dollar
ones. These, these, these are the folks that understand
that, that, that to do it right, they need to remove, uh, a hundred percent of those
systems and they need to justify that upfront
early in the process. Um, there is plenty of r o I for these
systems to be entirely removed, and instead of taking the large ones off
and leaving the other ones for another day, that never comes. A lot of health systems are left with
large amounts of these systems sitting on the shelf under people's desks. And,
and, and really it's a, it's a problem. It's a growing problem, and with every,
every change in ownership and every, um, acquisition, the this pile
just continues to get to get worse. The other successful, really the strategy
that that that's most successful is, um, folks are learning how to do
this on the hospital side. We've, we've been doing it for 20
years, so we know how to do it. And what's been challenging is folks
really haven't understood and had, had appreciation for a scenario where
they have 20 years of millennium data, uh, sitting on a Cerner system, and
they want this, you know, the, the, the data pulled off and they wanna
put it into a another system, uh, that supports patient care and they
want want it done in nine months. Um, it, it, it's just kind of, when you,
when you say it out loud like that, it, it sounds kind of ridiculous, um, but there are still folks out
there with that expectation. So setting realistic timelines is huge. And then getting help, um, staffing
right now is a real challenge, challenge in these large organizations,
especially in the IT space. We're seeing whole
departments, uh, going un um, unstaffed, um, and understaffed, uh, and really tough cuts on the budget end. But given what these ROIs,
uh, represent, um, there is, you know, there's an opportunity to get
some help to do some of these projects, accelerate them, and really produce a significant amount
of opportunity for the budgets, um, in, in terms of cost takeout. And, uh, so I, I think folks that have realized that
and are starting to get some help from outside parties, um, uh, not, not medic want for example, but a third party that would
do the hospital side of
the business to accelerate it. Um, so we're seeing some, some
real good success on that front. Uh, data variability, missing data, uh, poorly exec executed extracts, um, and there's a lot of vendors that aren't
interested in making this real easy to leave them. Um, so those are, those
are all the kind of challenges that, that both us and a lot of third
parties out there understand and, and can, and, and have
strategies and, and, and experience moving through them
real quickly. So by using that get, by getting help, oftentimes you can
accelerate the r o i, it's a big win, bad ideas and other things
that, that, that haven't worked. We've got quite a few folks in this space
that are relatively new to this space and vendors and pitching
some really bad ideas, some really inexpensive ideas that
are getting folks' attention. Um, we are seeing that those,
those those approaches are, are failing and we're coming
in behind them. So, um, don't underestimate the work effort
associated with some of these things and don't think it's a short time
project. Uh, make a commitment, fund it with the dollars
that are available, and, um, and you'll be much
happier down the road. So, I dunno if that answers
the question. Mm-hmm. , absolutely it does. And I appreciate you highlighting what
can happen when this strategy is not approached in the right way. You know, you mentioned security
issues being a potential, uh, consequence of not approaching this
with enough intention and resources. So I know that that's a, a big concern
for a lot of our audience right now. So I appreciate you highlighting that. Well, and, and I left something out, I, a big piece of what we're not seeing
clarity on is data retention requirements. Mm-hmm. , and we
certainly don't, as an industry, have a really good history of maintaining, uh, data retention requirements and being
in compliance with our data retention requirements. I think that's changing
pretty dramatically in large
health systems are trying to get their arms around that where
their data is and maintaining only the data that their, that their retention
requirements, uh, contemplate and, and doing a good job of, yeah.
Hold, hold onto your hat. Good. Doing a good job of purging data. Um, not something that folks in health
systems were keen on doing. Uh, that's changing, which, uh, I think is, it bodes well for our industry and,
and for quant, because that's a, that's the, that's the main part
of what we're trying to accomplish, is help folks being stay in complex and
compliance with their data retention requirements, which,
which isn't easy to do, given the complexities associated with
hundreds of different systems and where the data is, but it, but it is
ultimately the goal. Mm-hmm. Mm-hmm. . Yeah.
Thanks Dave. So if I'm following, it sounds like a sound it
strategy during an m and a would have something like
a realistic timeline. It would have a program dedicated to it,
the system would ask for help , whether that be outside or
internally, and then of course, they carefully consider data
compliance considerations. So I guess considering all of that, what initial first steps do you recommend
to hospitals or health systems or any organization that's currently engaged
in or planning to engage in a deal? Well, I, I, I think, again, back
to the inventory, uh, I'm not, certainly not an expert in, in this space. I'm not an m and a expert. I am an expert on what happens when, after a transaction, when when somebody's put into a
transition services agreement. And the, the timeline is,
you know, six months. Uh, oftentimes these transition service,
transer, transition services agreements, uh, come, come at a very heavy cost
if, if you exceed the timelines. And so I, I think the first thing you
do is negotiate a really
strong transition services agreement that does
the things I mentioned, and that is gives you the time and
makes sure accounts for the kind of help you need to make the
transition. Oftentimes, you, you will acquire a hospital that's being
managed by a for-profit in, and you're, and you're pulling it into
your, your health system. And that for that organization has a
managed services organization that handles all the, and an IT organization.
They are, you're off, they, they want you off in six months and over
in past six months, you're gonna pay, you know, $200,000 a month
until you're done. Well, if these projects take 18
months or 12 months to complete, you know, the, the 45 projects that
you have to do with the acquisition, that that can add up to
a, a whole lot of money. So negotiate a good transition
services agreement that starts with the inventory and understanding
the number, the, the types of applications that you're
gonna need to transition from and to, and so understand those
things early and again, get help, get help on, on doing that inventory and understanding
the interdependencies of a lot of these applications. Folks like WAN have
done this for 20, like I said, 20 years, and we can, we can see a handful of applications
that if they're all together and they all have to be done at the same time, we'll understand the
interdependence interdependencies, and these applications have
maybe even better than, than the folks that are
running the applications given
the amount of times we've unwound most of these
applications. So, get some help, get some insight in those areas,
and, and I think you'll, you'll, you'll have a lot better visibility
into the work that needs to be done post acquisition. Yeah. Thanks Dave. And that transitions me nicely
into the next question that I had. I know what you were just saying kind
of speaks to the earlier stages of an m and a or even the preliminary stages, but I'm curious to know about
post merger or acquisition. What trends do you usually see related
to data and software applications in that post phase? Well, I, the obvious ones, I
think everybody's aware of, there's a pretty heavy focus on supply
chain early on and some of the natural, um, efficiencies that are expected.
You know, the systems that support the, the areas where there's natural
efficiency gains. And, um, and so you see, you see those moves. So those would be the first applications
you would be looking to consolidate where they're mostly on the e
r p front and then, you know, you're looking into the clinical and, and, or patient accounting first and then
second, and then then, you know, further down the road you're looking at
clinical consolidation. So, um, that, that's not, I don't think news to
anybody, but that's typically the, the approach. Um, I will say that one of the more
successful strategies that I've seen since I've been here in these
scenarios is to include your patient, patient accounting system. At the same time you're inc you're
including a transition off of your e r P system. I know that, that, that may,
that's difficult at times to do, but it could, uh, it could
easily, uh, save you, um, a a significant amount of headache and
a, and a and a whole lot of issues, uh, with cash. So there's a, there's some real efficiencies on the
patient accounting front right outta the gate that, that may, uh,
may approach similar, uh, similar efficiencies that you get
on the e r p front. Other trends, you know, other than there's a lot
of it going on out there. And there, there are a lot of, uh, I, I think there are a lot of health systems
that based on what's going on with reimbursement, uh, and with
budgets and labor costs, I think there's a, a lot of
health systems that will be, will be joining other
health systems. Um, and, and there's a lot of
struggling going on out there, so we expect a lot more of
this in, in the coming years. Yeah, absolutely. So I know you kind of touched on a
successful strategy that you're seeing, including the patient
accounting system concurrently. So considering approaches like
that, and based on your experiences, what else do you recommend
that organizations consider
or perhaps do differently than they are today in
this phase of an m and a? That's a hard question to answer, but
outside of the context of my business, and I don't wanna overly focus on, on,
on our business, I, I think that the, the, the, um, the managing that data and managing
that technical debt and doing it very aggressively, I is something that everybody that's
involved in these act in these activities, um, tries to
avoid. It's really complicated. There's a lot of political leverage behind
maintaining applications in different areas, in different situations where,
you know, you could put individuals, you know, at risk from a,
from a employment perspective,
you know, folks just, you know, key individuals potentially, but aggressively consolidating those, those systems aggressively
rationalizing the, you know, the, the stack of applications that are, that
are being used. Um, you know, there's, there's, there's nothing,
um, you could do, um, to improve the quality of the merger
better than to do that and to do it aggressively. Uh, there are a lot of, uh, benefits on the patient side with
respect to patient access to their own information, and there is
a lot of opportunity to, to run a much tighter IT
organization with, with, with far less applications in it.
So it's just across the board. It's, it's something that, that I think is
it, it seems o obvious in a lot of ways, but it also is something that, that, that is relatively new given the volumes
of data, uh, that continue to grow, um, that data continues to pile up, and we're seeing real desire
to manage that data in a way to, to ensure that you're not keeping
data that you, that you don't need. Um, and we all understand the, the
costs and the risks associated with, with maintaining data that,
that you don't necessarily need. So the active management of that data, I think is relatively new in a lot of
ways. I mean, storage is inexpensive, but now that we we're talking
about a, a, a very high level of, of data breaches, um, that, that are ongoing in individual health
systems due to some of their challenges and, and, and from a, from a, from
a security perspective, uh, I, I think that, uh, you know, some of the things I've mentioned
here can't be overemphasized. Yeah, absolutely. Thanks Dave. And just to kind of
close out our discussion, I would love to get your kind
of high level perspective on how you see m and a activity really affecting hospital and health systems, bigger
picture data and technology strategies. You know, m and a activity has
slowed a little bit this year, but it is expected to ramp up again. So would love to just hear any final
thoughts you have there on future outlook for this trend. Well, like I said, I, I, I do think
it's gonna pick up. I, I, I think it, it can be a very good thing in, in, in
a lot of areas of the country. And, uh, you're gonna see that there, uh, the, the access to information
from the patient or patient access to information is
going to increase pretty dramatically. Um, you're gonna see an opportunity for a
very large health systems to do a better job of managing costs,
given their visibility. They'll have to patient to the full, uh, care continuum for a patient
because they're, you know, the, with a smaller health
system, there'll be less, um, less activity going on
outside of your health system. So you're gonna see service, you're
gonna see really clean and easy, um, uh, uh, insight into your patient
population and how to manage them. Um, obviously we've all been talking
about the value of the E H R, the value of clinical analytics, uh,
and predictive analytics specifically. Something I had a lot of
experience with at, at, at Optum, my years at Optum. I think there, there, I think this data and
the consolidation, um, that we'll experience will
just, you know, really, really improve our ability
to do potentially for our
grandkids to be able to predict, uh, a a lot of, uh, the
health issues that they'll have over, over their lifetime. So we're building
kind of the foundation for that today. And I, I do think, uh, a a lower number of overall providers, um, is gonna allow us to, to stretch the, the healthcare dollar a little bit
further and to consolidate data to the benefit of everybody really. Uh, so I, I think there's lots of opportunity there.
Um, and I'm kind of an old man, so I, I don't know that I'll see it, but
again, the foundation is being built. Yeah. Thank you so much, Dave. I really appreciate all of
the perspectives that you've
shared today and kind of that final outlook that you just
gave m and as are a big trend. But I've appreciated hearing
kind of your, you know, your very unique perspective from
the technology and IT standpoint. So thank you again for being here
and for sharing all of this with us. You're welcome. Thank you. Thank you. And we would also like to
thank our podcast sponsor today, quant. You can tune into more podcasts
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+Listen as Dave Lamar, the Chief Growth Officer at MediQuant, discusses the various data and IT challenges that occur throughout mergers & acquisition processes. Tune in to hear how to maximize potential value in M&A, and ways to keep your organization’s and patient data safe.