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Jay Hoffman,
the former Vice President of Business

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Development at Henry Ford Health System.
Jay,

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thank you so much for joining us today.

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Thanks for having me.

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So for those who don't know,
Henry Ford Health System is a 4,

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600 bed health system headquartered in
Detroit, Michigan, with 10,

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000 providers supporting 20 hospitals.
Today,

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we're going to be discussing mostly the
Ascension joint venture that Jay sourced

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and ran with at Henry Ford Health System.
And in discussing that joint venture,

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hopefully Jay will be able to provide the

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business development perspective to our
more technically inclined audience.

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So Jay, the floor is yours.
Tell me about sourcing the Ascension JV

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and all the different elements of that
deal.

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So I think the evolution of that deal
really came about from a variety of

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discussions we had been having in the
market with other health systems and

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looking at opportunity to partner and to
get scale. Ascension had embarked

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Mhm.

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Mhm.

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on looking at their portfolio of markets,
I'll say hospital markets across the

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country and was electing to get out of
some markets like Illinois,

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double down in other markets like Austin
and Nashville. And in Michigan,

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they had a long history and they weren't
so much looking at

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exiting as finding a relationship with an
organization that could support the

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mission of their facilities,
some of which had been in the Ascension

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system since the inception of Ascension
from a variety of things.

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So it was really a, I will say,
less a sourcing effort than an ongoing

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conversations

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Mhm.

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with their leadership,
particularly at the CEO level,

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Joe Impicciche and Bob Riney, our CEOs,
having conversations at a very high level

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to start the process of putting together
a partnership that is very unique in the

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industry.

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So I'd like to consider this deal.
It's now,

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there are conversations going on between
the Ascension and Henry Ford Health

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System CEOs,
and they're looking to potentially create

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a partnership. And of course,
there's going to be a lot of impact of

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that partnership on IT systems.
At what point do you bring in IT

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leadership into the conversation,
and how can they make themselves

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Useful,
more valuable to facilitate this

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transaction.

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You have to be very careful in terms of
the timing of those discussions,

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because in a very complex transaction
that impacts the lives of a lot of team

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members on both sides of the partnership,
you know, I think at the time,

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Mhm.

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We had roughly 20, call it 25 to 30,
000 employees,

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Ascension had somewhere around 20,
000 employees, 18 to 20,000, you know,

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so there was a lot of people to be
impacted.

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What you don't want in a transaction like
this is it's always a fine line between

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the number of people that are, quote,
under the tent at any particular time and

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have knowledge of the deal,
very confidential discussions,

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Mm-hmm.

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versus the people that you need to be
under the tent to actually execute on

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things and provide you.
So there's never a right answer in terms

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of the timing of that.

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But, you know, we got fairly long,
far long in the process until such time

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as we widened that scope. Not by much.
I mean, on both sides of the equation,

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Mm-hmm.

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this was a very small group of people
because of the, again,

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the nature of the transaction.
But probably,

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I'm trying to think when we did this,
probably a

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about,
I'm going to say four months prior to the

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actual execution of a definitive
agreement, and it could have been five,

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you know, somewhere in there,
is when we brought in our CIO to start

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Mhm.

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looking.

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at the impacts and the potential
transition of IT services and what that

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would take.
We didn't allow him to bring in team

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members at that time. Basically,
we just needed a high level view until we

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could move forward so that we could move
forward and verify some of the

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assumptions

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about the cost to implement a effectively
a conversion of IT platforms from what

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Ascension had,
which was across the hospitals we got,

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which was a mixed bag of systems from
Cerner to Athena to

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even all scripts. You know,
so you had a mixed bag of systems across

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those hospitals that were going to be
part of the partnership versus us

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operating kind of on one instance of Epic
across our entire platform. And the idea,

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French.

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go ahead.

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Yeah, so Jay,
I just think that our listeners may be

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wondering a few things. Number one,
you know, if I'm thinking, I'm a CIO,

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I'd like to get involved more quickly.
Some things to consider are,

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how long would you say the Henry Ford
Health System and Ascension CIOs

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How long did they have to begin to
complete implementing this deal, right?

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Because the problem is saying, hey,
we're going to execute this deal in four

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Just.

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months, but 60 days after that point,
we need all the systems go live,

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everything migrated and converted.
But if you say, you know,

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So.

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you have two years,
that's a different story.

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So yes, so very good point.
So a transaction works very different,

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right?
So we knew that four month deadline or

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five months that we gave time was really
around kind of

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Yeah.

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Hmm.

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looking at a high level,
what the potential cost of implementation

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Mhm.

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would be and what the potential synergies
from implementation would be.

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What we actually did is we signed a
definitive agreement in October,

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Mhm.

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I think October of 2020.

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for, get my dates right. However,
we did not close on the transaction

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Mhm.

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because of regulatory approvals that were
needed and other things that were needed

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Mm.

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until September of

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Twenty-five.

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25, right. So I might, yeah,
I think that's the right timeline.

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I have to go back and check my facts.
But it's basically,

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it took us a year to get to closing.
We used that year.

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That is when everybody was under the tent,
right?

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Because we actually announced the
defendant agreement.

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Now we could bring everybody in.

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And so the CIO and his team and the
Ascension team worked out, you know,

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here's the plan. Two big pieces of that.
What is the transition services agreement

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Mm-hmm.

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from Ascension Technologies for
supporting those hospitals before those

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implementations could take place?

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So basically continue to support those
hospitals for a fee for a period of time.

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Mhm.

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Mhm.

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And what would the implementation look
like once the deal closed? So there was a.

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..

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full year of planning between the teams
that went into process before the deal

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00:07:47.539 --> 00:07:48.019
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/54-1
00:07:52.280 --> 00:07:55.259
actually closed. And so, Steve, go ahead.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/56-0
00:07:53.739 --> 00:07:59.334
And Jay, just on that part,
we're a little bit less than a year out

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/56-1
00:07:59.334 --> 00:08:04.023
from the deal closing last fall.
Now we're in July 2026.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/56-2
00:08:04.023 --> 00:08:08.219
How long was the implementation projected
to take?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/55-0
00:08:06.619 --> 00:08:06.859
The.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/59-0
00:08:08.699 --> 00:08:13.108
So we got the,
we've got the years wrong and I apologize

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/59-1
00:08:13.108 --> 00:08:19.141
for that. So we must have signed in 23.
We closed in 24. So now we're a year,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/57-0
00:08:18.499 --> 00:08:18.939
Uh-huh.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/59-2
00:08:19.141 --> 00:08:23.781
we're a year and a half in, right?
We're a year and a half.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/58-0
00:08:20.699 --> 00:08:20.819
The.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/59-3
00:08:23.781 --> 00:08:27.339
And so we started implementing this year
with

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/62-0
00:08:27.499 --> 00:08:30.907
put installing Epic into all of those
sites.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/62-1
00:08:30.907 --> 00:08:34.542
And this is a massive number of sites.
So they,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/62-2
00:08:34.542 --> 00:08:40.676
there was the plan was laid out and you
would have to talk to my CEO about this,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/62-3
00:08:40.676 --> 00:08:45.447
but the first we call it,
we call the project Luminate, right.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/60-0
00:08:41.179 --> 00:08:42.859
About 2 years, basically.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/61-0
00:08:45.059 --> 00:08:45.259
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/62-4
00:08:45.447 --> 00:08:46.659
And essentially,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/64-0
00:08:46.939 --> 00:08:54.920
We implemented the first phase,
all the ambulatory sites of the Ascension

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/64-1
00:08:54.920 --> 00:09:02.469
facilities early this year in 2026.
We just did in June of this year,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/64-2
00:09:02.469 --> 00:09:06.459
we did the second big wave, which was

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/63-0
00:09:03.659 --> 00:09:04.299
Mm-hmm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/68-0
00:09:06.619 --> 00:09:11.519
all of the hospitals, right?
So now all of the ambulatory sites and

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/65-0
00:09:08.619 --> 00:09:09.019
Right.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/68-1
00:09:11.519 --> 00:09:15.915
all of the hospitals except one are in
our instance of Epic.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/68-2
00:09:15.915 --> 00:09:21.679
There are some other things that we're
doing in what we're calling a wave three

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/68-3
00:09:21.679 --> 00:09:26.219
that will take place in November,
early November of this year.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/66-0
00:09:23.179 --> 00:09:23.379
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/67-0
00:09:26.299 --> 00:09:26.939
Mm-hmm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/69-0
00:09:26.339 --> 00:09:30.866
which will pick up the last hospital,
which was on a different platform from

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/69-1
00:09:30.866 --> 00:09:34.276
everybody else,
and some ambulatory sites related to that

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/69-2
00:09:34.276 --> 00:09:38.097
facility and some other physicians.
We are also throwing in some

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/69-3
00:09:38.097 --> 00:09:42.623
non-Ascension facilities that have joined
us that they all put in, you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/69-4
00:09:42.623 --> 00:09:45.739
get the benefits of doing that all in one
way. So by

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/71-0
00:09:45.859 --> 00:09:50.670
November of this year,
slightly over two years from the actual

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/71-1
00:09:50.670 --> 00:09:54.946
closing date,
we will have everybody on our instance of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/70-0
00:09:52.179 --> 00:09:52.699
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/71-2
00:09:54.946 --> 00:09:56.779
Epic as I understand it.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/72-0
00:10:05.659 --> 00:10:05.739
The.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-0
00:10:05.779 --> 00:10:09.355
before the deal closes prior to the year
of regulatory approval,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-1
00:10:09.355 --> 00:10:12.711
you're going to reach out to me to ask to
evaluate the deal.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-2
00:10:12.711 --> 00:10:16.177
I'm going to spend time on this.
And then that following year,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-3
00:10:16.177 --> 00:10:19.643
I'm going to spend a lot of time and
resources, because again,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-4
00:10:19.643 --> 00:10:23.384
everyone's under the tent.
How frequently do deals fall apart prior

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/73-5
00:10:23.384 --> 00:10:25.419
to that initial close five months in?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/76-0
00:10:25.659 --> 00:10:29.844
and how frequent do they fall apart in
the ensuing year of regulatory approval,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/76-1
00:10:29.844 --> 00:10:32.459
because that represents, to me,
wasted resources.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/74-0
00:10:30.459 --> 00:10:30.859
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/80-0
00:10:32.539 --> 00:10:39.079
So when you say that that first close is
actually a signing of the definitive

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/78-0
00:10:38.939 --> 00:10:39.339
Right.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/80-1
00:10:39.079 --> 00:10:43.523
agreement, right?
So really the only conditions in a

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/80-2
00:10:43.523 --> 00:10:50.064
definitive agreement like that are really
around regulatory approvals, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/80-3
00:10:50.064 --> 00:10:52.579
So why does a deal fall apart?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/79-0
00:10:50.139 --> 00:10:50.579
Okay.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/81-0
00:10:52.779 --> 00:10:55.899
And there's histories of this around,
right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/85-0
00:10:58.459 --> 00:11:02.758
Regulatory approvals sometimes don't
happen, right? In particular,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/82-0
00:11:01.379 --> 00:11:01.859
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/85-1
00:11:02.758 --> 00:11:07.890
the Federal Trade Commission has blocked
a number of transactions over the past

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/83-0
00:11:07.499 --> 00:11:07.979
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/85-2
00:11:07.890 --> 00:11:12.830
few years related to combinations.
So you'll see deals fall apart because of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/85-3
00:11:12.830 --> 00:11:15.653
regulatory approvals. Sometimes,
not often,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/84-0
00:11:14.219 --> 00:11:14.699
Got it.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/85-4
00:11:15.653 --> 00:11:18.219
because there might be a disagreement or

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/87-0
00:11:18.339 --> 00:11:24.578
failure of a party to, you know, deliver,
be able to deliver what they said they

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/87-1
00:11:24.578 --> 00:11:29.507
were going to deliver in the definitive
grant. So for instance,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/87-2
00:11:29.507 --> 00:11:35.745
one thing we struggled with and we all
struggled with as IT people is you had in

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/87-3
00:11:35.745 --> 00:11:41.059
the middle of all these conversations,
you had to change healthcare.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/86-0
00:11:41.899 --> 00:11:42.379
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/88-0
00:11:42.379 --> 00:11:46.052
situation, right,
which impacted all of us.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/88-1
00:11:46.052 --> 00:11:53.147
Ascension also had their own cyber attack,
which impacted the whole process as well.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/88-2
00:11:53.147 --> 00:11:56.820
So we had a period of time where,
you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/88-3
00:11:56.820 --> 00:12:00.659
we had to work around Ascension cyber
attack.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/90-0
00:12:00.779 --> 00:12:05.284
Fortunately, we were able to recover.
We were able to have a workout plan,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/90-1
00:12:05.284 --> 00:12:08.287
but it did impact several things within
the deal.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/89-0
00:12:05.579 --> 00:12:05.899
Ohh.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/90-2
00:12:08.287 --> 00:12:13.212
And I'm sure from it certainly distracted
Ascension's ability to focus on some of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/90-3
00:12:13.212 --> 00:12:17.657
the things we were doing around IT,
because clearly, you know, they were,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/90-4
00:12:17.657 --> 00:12:20.059
they and the hospitals were overwhelmed.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/92-0
00:12:20.099 --> 00:12:23.739
By that situation, which was horrific,
right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/91-0
00:12:22.299 --> 00:12:22.859
And just...

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/93-0
00:12:24.139 --> 00:12:28.666
As background, Jay, quickly,
prior to the signing of the definitive

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/93-1
00:12:28.666 --> 00:12:31.662
agreement,
how frequently would that sort of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/93-2
00:12:31.662 --> 00:12:34.059
scenario fall through? Infrequently?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/96-0
00:12:35.099 --> 00:12:39.217
I mean, you know,
it's a strange world right now. So yeah,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/94-0
00:12:38.019 --> 00:12:38.379
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/96-1
00:12:39.217 --> 00:12:43.265
look, you could, yes,
there could have been things in the

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/96-2
00:12:43.265 --> 00:12:48.709
control of both parties that would have
led to the deal that in the run up to

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/95-0
00:12:43.819 --> 00:12:43.979
Mm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/96-3
00:12:48.709 --> 00:12:53.315
signing a definitive agreement,
that's a very touchy time, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/96-4
00:12:53.315 --> 00:12:55.339
People can agree to disagree.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/98-0
00:12:55.499 --> 00:12:59.921
things fall apart and people walk away
from deals. So yes,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/98-1
00:12:59.921 --> 00:13:05.541
and that is the reason why we only
involve a very limited number of people

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/97-0
00:13:05.099 --> 00:13:05.579
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/98-2
00:13:05.541 --> 00:13:11.012
in that particular time frame,
because you don't want to absorb a lot of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/98-3
00:13:11.012 --> 00:13:14.759
resources.
We wouldn't want to have our entire IT

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/98-4
00:13:14.759 --> 00:13:15.059
team

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-0
00:13:15.139 --> 00:13:18.972
focused on a transition of services for
that four month period,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-1
00:13:18.972 --> 00:13:22.505
knowing that you don't have a signed
definitive agreement.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-2
00:13:22.505 --> 00:13:25.619
So until you have that signed definitive
agreement,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/99-0
00:13:23.659 --> 00:13:24.299
That's it.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-3
00:13:25.619 --> 00:13:30.469
that's when you really are going to start
absorbing resources because you have a

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-4
00:13:30.469 --> 00:13:35.440
deal that few people are going to be able,
want to walk away from or can walk away

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/100-5
00:13:35.440 --> 00:13:35.739
from.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/101-0
00:13:36.379 --> 00:13:40.219
except for exceptional third-party
approvals and things like that.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-0
00:13:39.339 --> 00:13:41.710
Shay,
that's a really interesting perspective

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-1
00:13:41.710 --> 00:13:44.391
for the listening audience of Healthy
Data Podcast,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-2
00:13:44.391 --> 00:13:47.844
because you have some VPs and directors
in here who say, you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-3
00:13:47.844 --> 00:13:51.246
we need to be looped in a little bit
earlier in the process here.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-4
00:13:51.246 --> 00:13:54.236
And the idea is,
but looped in means allocating your time

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-5
00:13:54.236 --> 00:13:56.968
and attention,
which is already stretched thin for a

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/103-6
00:13:56.968 --> 00:13:59.339
project that may never ultimately go
through.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/105-0
00:13:59.779 --> 00:14:06.165
So I'd like to pivot there and ask you,
what factors do deal guys like you need

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/102-0
00:14:00.699 --> 00:14:00.979
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/105-1
00:14:06.165 --> 00:14:12.551
to hear about from the lead IT people
about processes that would be required to

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/105-2
00:14:12.551 --> 00:14:18.219
be completed in order to ensure the
smooth flow of this joint venture?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/104-0
00:14:17.099 --> 00:14:17.499
Yes.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/107-0
00:14:18.539 --> 00:14:21.810
So I would answer that in one way.
It really,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/107-1
00:14:21.810 --> 00:14:25.935
and I'll broaden it out beyond the joint
venture and say,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/107-2
00:14:25.935 --> 00:14:31.055
it really depends on the size of the
transaction, right? Interestingly,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/106-0
00:14:27.539 --> 00:14:28.059
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/107-3
00:14:31.055 --> 00:14:35.819
the smaller the transaction,
the more information I need up front,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/107-4
00:14:35.819 --> 00:14:38.379
because, you know, the variable, the

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/109-0
00:14:38.579 --> 00:14:45.201
ability to impact the future financial
performance and capital required to

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/109-1
00:14:45.201 --> 00:14:50.322
operate are really, you know,
sensitive to change, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/109-2
00:14:50.322 --> 00:14:56.945
In a large transaction, you know,
the margin for error is a lot wider. So,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/108-0
00:14:56.859 --> 00:14:57.339
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/109-3
00:14:56.945 --> 00:14:57.739
you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/111-0
00:14:58.459 --> 00:15:02.168
I can say,
give me an estimate on transition costs.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/111-1
00:15:02.168 --> 00:15:06.732
And it can be, you know,
$100 million plus or minus 10 million,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/111-2
00:15:06.732 --> 00:15:11.368
right? Or plus or minus 10%.
And I might be fine with that as an

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/110-0
00:15:08.739 --> 00:15:09.219
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/111-3
00:15:11.368 --> 00:15:16.859
initial forecast that we're going to fine
tune later. That probably gives me

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-0
00:15:17.139 --> 00:15:20.821
efficient, you know, amount to say, okay,
here's that,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-1
00:15:20.821 --> 00:15:26.243
here's the synergies coming from that.
Does that on a relative basis make sense,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-2
00:15:26.243 --> 00:15:29.389
even if we're off a little?
On a smaller deal,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/112-0
00:15:27.779 --> 00:15:28.259
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-3
00:15:29.389 --> 00:15:32.536
that margin of error becomes magnified,
right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-4
00:15:32.536 --> 00:15:36.820
If it's a 5 million IT conversion and
you're plus or minus 10%,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/113-0
00:15:32.539 --> 00:15:32.939
Correct.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/114-5
00:15:36.820 --> 00:15:39.899
that might throw my whole entire
transaction.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/115-0
00:15:40.219 --> 00:15:43.105
off.
So I may want more of your people's time

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/115-1
00:15:43.105 --> 00:15:47.746
and attention on a smaller transaction
earlier on than I would in a large

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/115-2
00:15:47.746 --> 00:15:51.259
transaction that has, you know,
where I've got cushion.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/116-0
00:15:52.219 --> 00:15:55.823
So,
as we kind of edge towards the end of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/116-1
00:15:55.823 --> 00:16:02.259
this particular podcast episode,
I'd like to give you an opportunity to...

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/118-0
00:16:03.019 --> 00:16:10.195
kind of explain your perspective about
the business rationale for these sorts of

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/118-1
00:16:10.195 --> 00:16:16.573
large transactions. As you know,
many health systems across the country

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/118-2
00:16:16.573 --> 00:16:22.419
are undergoing a great amount of M&
A activity. I guess, like

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/117-0
00:16:20.899 --> 00:16:21.019
****.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/119-0
00:16:22.499 --> 00:16:25.606
Like,
where are you seeing healthcare in

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/119-1
00:16:25.606 --> 00:16:29.243
America go? What kind of, what would you,
yeah,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/119-2
00:16:29.243 --> 00:16:34.699
what message do you have for people who
are working in the IT vertical,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/119-3
00:16:34.699 --> 00:16:36.139
the provider space?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/122-0
00:16:36.539 --> 00:16:40.897
I think what is really driving a lot of
this is, you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/122-1
00:16:40.897 --> 00:16:44.443
we all have a high fixed cost structure,
right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/120-0
00:16:44.419 --> 00:16:44.899
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/122-2
00:16:44.443 --> 00:16:50.205
And reimbursement for healthcare services
is not getting any better. In fact,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/121-0
00:16:49.739 --> 00:16:50.219
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/122-3
00:16:50.205 --> 00:16:55.819
you know, the margins are razor thin.
You know, and I think it's the effort

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/125-0
00:16:55.859 --> 00:16:59.879
in the back office infrastructure to get
scale, right,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/123-0
00:16:58.419 --> 00:16:58.899
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/125-1
00:16:59.879 --> 00:17:05.434
to lower the unit cost of delivery.
So obviously, you know, IT convergence,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/125-2
00:17:05.434 --> 00:17:11.427
IT platforms, ERPs, very expensive, EMRs,
everything is very expensive from an IT

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/125-3
00:17:11.427 --> 00:17:15.301
standpoint.
But if you're spreading that over a much

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/124-0
00:17:12.699 --> 00:17:12.899
Yeah.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/125-4
00:17:15.301 --> 00:17:15.739
larger

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/126-0
00:17:15.859 --> 00:17:21.504
base of patients or employees, right,
you're lowering the per unit cost.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/126-1
00:17:21.504 --> 00:17:27.535
And that's really part of the driver,
right? And it applies across the board,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/126-2
00:17:27.535 --> 00:17:32.484
not just IT, but it's, you know,
supplies and purchasing power.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/126-3
00:17:32.484 --> 00:17:35.499
It's capital power. It's the ability to

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/128-0
00:17:35.539 --> 00:17:42.543
negotiate better with equipment suppliers
and others because you are bigger, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/127-0
00:17:42.259 --> 00:17:42.539
Now.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/128-1
00:17:42.543 --> 00:17:46.379
You have scale and it drives more
efficiency.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/129-0
00:17:46.619 --> 00:17:51.586
So sometimes when people are listening to
episodes like this and you hear, well,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/129-1
00:17:51.586 --> 00:17:56.675
I know that acquisitions definitely drive
more scale and reduce the unit costs and

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/129-2
00:17:56.675 --> 00:18:01.458
the way they get more efficient is by
eliminating redundancies like firing me

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/129-3
00:18:01.458 --> 00:18:05.259
and taking my salary.
And that's an efficiency that's gained.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/131-0
00:18:05.659 --> 00:18:09.053
So that's obviously a concern that some
people may have.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/131-1
00:18:09.053 --> 00:18:13.519
What should listeners be excited about?
What are the new opportunities for

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/131-2
00:18:13.519 --> 00:18:18.163
employees of these health systems and for
IT leaders in these health systems?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/131-3
00:18:18.163 --> 00:18:22.569
What are the opportunities when you see
this kind of joint partnership or

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/131-4
00:18:22.569 --> 00:18:23.819
acquisition activity?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/130-0
00:18:24.299 --> 00:18:24.779
Well...

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/134-0
00:18:26.219 --> 00:18:29.785
I think the employee question is
overblown. We typically,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/134-1
00:18:29.785 --> 00:18:34.151
and we did this with Ascension,
we took on all of their associates who

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/134-2
00:18:34.151 --> 00:18:38.394
wanted to join us for a, you know,
guaranteed period of time, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/132-0
00:18:37.979 --> 00:18:38.459
Mhm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/134-3
00:18:38.394 --> 00:18:43.620
I think there are, you know, IT is tricky.
I'd be more worried about AI than I would

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/134-4
00:18:43.620 --> 00:18:48.539
about hospital mergers and acquisitions
if I, quite frankly, was in that space.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/133-0
00:18:46.139 --> 00:18:46.299
No.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-0
00:18:48.859 --> 00:18:52.287
But I think what's exciting about it is,
look,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-1
00:18:52.287 --> 00:18:55.715
we are spending a significant amount of
money,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-2
00:18:55.715 --> 00:19:00.529
time and effort to do this implementation.
And I think, you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-3
00:19:00.529 --> 00:19:06.217
as long as I've been in this business and,
you know, it's over 40 some years,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-4
00:19:06.217 --> 00:19:09.791
you know,
the one thing that I will say and make

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/135-5
00:19:09.791 --> 00:19:11.979
your IT guys feel good is that

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/136-0
00:19:12.699 --> 00:19:17.805
IT has only become more, you know,
important and more impactful on the

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/136-1
00:19:17.805 --> 00:19:22.047
delivery of care than ever before.
So it's not going away.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/136-2
00:19:22.047 --> 00:19:27.153
It's only going to become a bigger and
bigger piece of this. You know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/136-3
00:19:27.153 --> 00:19:31.899
technology is driving everything.
I think that it will, you know,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/138-0
00:19:32.059 --> 00:19:35.744
it continues.
I can tell you when I was first buying

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/138-1
00:19:35.744 --> 00:19:41.166
hospitals back in the 80s and early 90s,
we hardly ever talked to the IT guys

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/138-2
00:19:41.166 --> 00:19:45.824
about a deal. You know,
they were the afterthought because it was,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/137-0
00:19:42.819 --> 00:19:43.499
Mm-hmm.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/138-3
00:19:45.824 --> 00:19:50.899
you know, the EMRs were, hell,
we were doing this stuff on paper. It was

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/139-0
00:19:50.979 --> 00:19:54.468
You talk to the IT guys,
it was about financial reporting.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/139-1
00:19:54.468 --> 00:19:57.957
It wasn't about clinical reporting.
Now look where we are.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/139-2
00:19:57.957 --> 00:20:02.391
Look how important IT has become,
both on the clinical side and on all the

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/139-3
00:20:02.391 --> 00:20:06.294
other aspects of our business.
We can't manage without it, right?

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/139-4
00:20:06.294 --> 00:20:10.019
And so all I can see is it's becoming
more and more essential.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/142-0
00:20:10.579 --> 00:20:15.713
to drive value in healthcare.
So you remain being the most significant

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/140-0
00:20:12.899 --> 00:20:13.299
No.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/142-1
00:20:15.713 --> 00:20:18.099
part. Doctors first, now IT guys.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/141-0
00:20:17.059 --> 00:20:17.179
Uh-huh.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/144-0
00:20:18.739 --> 00:20:22.579
Jay, I appreciate your time.
Thank you so much for joining us today.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/145-0
00:20:23.059 --> 00:20:23.539
Sure.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/146-0
00:20:23.859 --> 00:20:27.279
And for our listeners, again,
this has been Jay Hoffman,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/146-1
00:20:27.279 --> 00:20:32.019
the former Vice President of Business
Development at Henry Ford Health System,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/146-2
00:20:32.019 --> 00:20:36.759
discussing essentially the take away is
IT is becoming ever more important and

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/146-3
00:20:36.759 --> 00:20:41.259
essential to every transaction in the
provider space in health care in the

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/146-4
00:20:41.259 --> 00:20:42.339
United States. And

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/147-0
00:20:42.779 --> 00:20:47.567
They have a seat at the table and
increasingly they're becoming more

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/147-1
00:20:47.567 --> 00:20:51.660
frequently and more quickly brought into
the tent. So Jay,

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/147-2
00:20:51.660 --> 00:20:54.019
thanks again for joining us today.

eb851505-6cc9-44f6-8a9e-8b6f9c673d2d/148-0
00:20:54.339 --> 00:20:56.019
Great. Thank you for having me.