Credit Suisse https://www.credit-suisse.com hosted Jim Brady, CIO at the Los Angeles County Department of Health Services (LADHS) http://dhs.lacounty.gov/wps/portal/dhs for a virtual meeting with a small group of investors. LADHS is the second largest municipal health system in the U.S., with an integrated system of 19 health centers and four hospitals, annually cares for about 600K patients, employs over 26K staff, and has an annual budget of $6 billion.
Mr. Brady reports that IT spending is on hold for now as the focus is to address COVID-19 cases. The focus is on repurposing beds, in hospital rooms and working to get biomedical equipment, ventilators, workstations on wheels set up.
As for the public healthcare sector, significant financial changes are currently taking place. Over the last 20 years, public health systems have been very reliant on the 1115 Federal Waiver Program which has accounted for about $800 million to $1 billion in revenue for LADHS.
LADHS is different from private health systems in that 95% of patients can’t pay or are on Medicare/Medi-Cal. Mr. Brady notes there has been a shift so these programs are no longer operating. As of 1/13/20, the federal government has moved the federal waiver to the states and therefore it is projected that 33% or less funding will go health systems.
Because LADHS is 95% managed care capitated, the Federal waiver program did not require a lot of reporting which resulted in LADHS data platforms not being as robust as data platforms in other companies. This means that their IT systems might need some revamping.
As for the LADHS experience with EHR vendors LADHS is focused on a long-term relationship with Cerner https://cerner.com. Their contract with Cerner was an original 10 year contract with 5 one year optional extensions but the health system is looking to expand to other Cerner capabilities.
LADHS also uses Cerner for data/analytics on the clinical side (Healthy Intent) and is looking to expand to Cerner’s other capabilities. Right now, LADHS uses Cerner only in the clinical space but at one point, there was an attempt to do revenue cycle management but that development never moved forward,
As for the adoption of telehealth, Mr. Brady believes that telehealth reimbursement has been a problem for many health systems. Without the reimbursement for telehealth, it has been difficult to get telehealth moving since LADHS is largely capitated, it hasn’t been a driving factor. But now LADHS is starting to look at telehealth and is assessing whether it makes sense to expand the use of telehealth.
As for Cerner’s use of telehealth, the company has a strong relationship with Amwell, which LADHS can leverage. Mr. Brady notes that Cerner had an internal telehealth platform but wanted to add functionalities to their platform so to do so, Cerner chose to partner with Amwell.
LADHS found that once patients realized they couldn’t get all they needed in using telehealth, the patients would then physically come into the health facility which defeats the purpose for using telehealth. Mr. Brady then realized that if you don’t have a fully integrated system, telehealth will fail.
Today, LADHS is using Fuji as their enterprise imaging platform since the platform can be used for ophthalmology, radiology, cardiology, and dental. LADHS has a cloud strategy and is focused on virtual which Mr. Brady believes will eventually get to the cloud.
For more information and to provide feedback, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.