Brad McCarty • May 3, 2018

As the Chief Innovation Officer of the University of Pittsburgh Medical Center, Dr. Rasu Shrestha plays the lead role in driving UPMC’s innovation strategy. During his talk at AngelMD’s Alpha Conference, Dr. Shrestha described UPMC’s approach, which he posits can best be described as “innovation as a strategic imperative.” The idea being that, innovation within today’s market needs to happen at a core level, instead of as an afterthought.

Dr. Shrestha said that UPMC first had to identify what it meant to innovate. The center operates as a hybrid model with 80,000 employees, 39 hospitals, 3.5 million health plan members, and annual revenues over $17 billion. As such, any sort of innovation is no small task for the company, so Dr. Shrestha’s idea to “challenge anything that stands as the status quo” is decidedly huge.

The big takeaway from Dr Shrestha’s talk is the idea of old ways versus new ways: Designing for regulations becomes designing for empowerment. Preventing burnout becomes enabling joy. Rather than adding bureaucracy, UPMC’s new goal is to enable meritocracy. By looking at the ways in which the status quo is building walls between physicians and patients, we can better understand how to innovate in ways that are meaningful.

My name is Rashu Shrest, I’m the Chief Innovation Officer at UPMC. How many of you have heard of UPMC? All right. Excellent. Go Steelers, right? Yeah. Yeah! Exactly. UPMC is a fairly large, Payer-Provider, this yin and yang of the payer and the provider. Keep that in mind, because we vehemently believe that, that really is the basis of the formulary within which we’re inventing the future of health care. My discussion today really is titled ‘Innovation as a Strategic Imperative’.

For us at UPMC, we’ve been doing this for a while, there are a lot, of provider organizations and health systems that encouragingly are actually getting into the innovation space. There are others that are also trying to invest and start company’s and working with accelerators and incubators. We’ve been doing this for a while. We’ve matured our processes quite a bit. Learned from our successes and from our failures. We’ve come to a place. I’ll paint the picture with, regards to what our priorities are. How we’re looking at innovation as a strategic imperative. We’re putting all of our chips right in this bucket. We’re saying this is the future of UPMC. For this $17 billion annual revenue company, 80,000 employees. That’s UPMC today. This is the future.

What I’m going to do is really talk about, where we are as an industry. That red dot that you’re seeing there, ‘Strategic Infliction Point’. That’s where we are as an industry. Whether you’re a small company, whether you’re an entrepreneur, or you’re a large organization or us as an industry, that’s where we are. We have a seed to growth. We’re talking about seed funding. We have a seed to growth. And there’s some level of growth that you enjoy over time, if you make the right, decisions, and you have perhaps the right partnerships. You have the right [IT inaudible 00:02:11]. You make the right progress. Then when you reach that strategic infliction point, which is, I argue, where we are right now. There are a bunch of decisions that need to be made.

Based on those decisions that get made, you either enjoy this exponential growth, or you see a catastrophic decline. There are many a company’s that have gone down the path of catastrophic decline. What I’m going to be talking about today is how we’re viewing innovation as a strategic imperative. What it means for us from a Payer-Provider perspective to really challenge the status quo. I’ll tell you the UPMC story. I’ll tell you about how we’re organized and our focus areas, when we’re co-creating and co-investing and really trying to accelerate the pace of innovation. I’ll step back and talk about ‘Old World’ in terms of health care as we’ve known it, versus ‘New World’. This re-imagined health care that we hope to be building together with the entrepreneurial community that you’re all about. Then I’m going to end with data as the basis for re-inventing the future of health care.

As we look at technology and innovation, as we’re being inundated with data and there’s been lots of discussion about that throughout the two days. How do we make sure that data becomes the basis of humanizing health care. I vehemently believe that innovation if done right, makes technology invisible. Think about that. Today technology is this barrier that sits between us and the patient. I’ll talk a little, bit more about how perhaps we need to re-think this entire paradigm. As, I’m going through this, the task at hand for you, as you’re anticipating the coffee break, do you agree with the things that I’m putting in front of you? What’s your model? Don’t just listen to the lectures to learn. I think there’s a lot of unlearning that we all need to be doing in health care today. What are your priorities? How do we build more bridges?

Let’s jump straight into this. ‘Challenging the Status Quo’. I vehemently believe, again, that complacency is really your worst enemy. Right? Even for an organization like ours, fairly large. We’ve continued to grow. We’ve continued to enjoy the fruits of a lot of the right decisions that we’ve made and lessons learned, and the things that we’ve put in place. We believe that complacency, is really your worst enemy. How do we make sure that we’re innovating fast enough and in the right direction to put ourselves out of business, before someone else comes and puts us out of business. That’s really important. Think about that, even in the things that you’re doing specifically.

A couple of quick examples. How many of you know what this is? This is a five Megabit hard drive being transported by IBM in 1956. Five Megabits. That’s right. Megabytes, excuse me. The evolution of storage. Right? Again, the storage industry didn’t accept complacency. If you look at one Gigabyte of storage, not five Megabyte, but one Gigabyte of storage, in 1984, it cost $50,000, 2012 it was ten cents for one Gigabyte. And today you get 15 Gigabytes, when you sign up for a Google drive account. Revolutionary. Right? It’s not just evolution, but revolution.

Here’s the second example. That was in the storage industry. This is not this evolution, but revolution in a city. This is Pittsburgh, or was Pittsburgh. This was where steel and coal, right? This was the epicenter in many ways of the industrial revolution that basically built the America that we know today. The new Pittsburgh is nothing like that. Right? Self driving cars, massive advancements in AI and machine learning. Working with Carnegie Mellon University, with the likes of Google and Facebook that’s in town, they acquired Oculus Rift and made their headquarters in Pittsburgh. Uber came into town and acquired 40 of the engineers that Carnegie Mellon had been building painstakingly this program around autonomous self driving cars and overnight they said “All right, Pittsburgh is going to be our headquarters for self driving car technologies”. Argo AI, yet another AI based company that’s building self driving technologies also headquartered in Pittsburgh.

The new Pittsburgh, really, is not one that’s exporting steel and coal, our new export commodity is eds, meds and tech. Right? Education, medications or medicine and technology. A little about UPMC. There’re 40 hospitals or so at UPMC. Three of the ones that you see on the top are our specialty hospitals that are based in Pittsburgh. The three others that I’ve painted right at the bottom are the three new hospitals that we just recently announced. We made a really big announcement. I don’t know if you saw some, of the announcement. I put it up on LinkedIn, and I’ve been sharing it on Twitter as well. We recently made a really big announcement that we’re going to be investing $2 billion in building three additional specialty hospitals in the city of Pittsburgh. There aren’t too many, cities globally that will have six specialty hospitals all in one city.

The new thing about this in the theme of innovation and what we’re talking about today around value based care, and the strategic imperative towards innovation is that with the building of the three new hospitals, there will be no new beds. These are digital hospitals. No new net beds, right? These are digital hospitals that will really be leveraging the capabilities that we’re innovating towards in terms of science and medicine and hopefully the art as was discussed early in the balance of trying to put all of this together. I’m going to quickly show you a video that talks about our bold ambitions as we’re making some of these bets.

Video announcer: There are days for dreaming. Days for wishing. Today we build. Not just walls and halls of medicine, but whole new ways of delivering patient centered care. Inspiring new collaborations and things yet unimagined. Today at UPMC we build the future and make life changing medicine happen.

Rashu Shrest: That’s essentially what we’re trying to do is our tagline, ‘Life Changing Medicine’. How do we make life changing medicine happen? How do we innovate to make sure that we’re able to re-invent that future and create the future that actually resonates not just with the current definition of health care, but the newer definition of health care moving forward. I mentioned earlier, where this large yin and yang of a pair provider organization. In addition to the close to 40 hospitals that we have, and the 80,000 employees, we have a health plan that actually has 3.5 million lives that we cover. It’s really interesting, this yin and yang of the Payer-Provider system. It’s not just a patient centric approach to care that we’re caring about, that we’re [inaudible 00:26:13] and we’re building into our solutions and the company’s that we’re creating. Or a member centric approach to care, which is what health plans typically look at. But, more of a person centric approach to care. Think about this.

Cause that person, consumer, could be a patient at any given point in time. Most likely as a health plan member, has some insurance coverage. As, you’re looking at the shift in risk, primarily it was being born the payers, it’s now moving toward the providers, and soon it’s moving towards the consumers. The consumers are going to be bearing the brunt of the risk in many ways in the coming years. How do we make sure that we manage and mitigate those risks? How do we make sure that we have enough data and transparency and the right tools and the innovations to actually manage that Payer-Provider yin and yang.

What we’ve done at UPMC, is we’ve focused on a number of different areas. The way that we’re organized is we’ve got the Insurance Offices Division, we have the Provider Services Division, with the hospitals, physicians, nurses. There’s the International Division and then there’s, the Enterprises Division, which is really where I park my car every morning. In addition to being the Innovation Officer across UPMC, I’m also the EVP for UPMC enterprises. And enterprises really is our innovation and entrepreneurship arm at UPMC. It was mentioned yesterday that the innovation center in, I think, Texas was a Nabisco factory, old Nabisco factory. We, too, are also located in a Nabisco factory. There has to be something about a Nabisco factory. It’s the new garage, I guess, right? Bakery Square is the name of the building that we set shop in some years back. This is also the building, where today Google is headquartered in Pittsburgh. And Google has hundreds of employees upstairs.

What’s really interesting for us, as we’re continuing to innovate, we’re continuing to look at and put our money where our mouth is. We’re also active investors. We’re founding company’s. We’re venture capital funding. We do angel investing. We’re all, of the above and none of the above. Meaning, we’re not just a strategic buyer or founder or angel investor. We’re really a strategic, if you look at it. Because we co-invest and co-create. Obviously we sign checks. We put our money where our mouth is. But, in addition to that, we bring data. We have 27 Petabytes worth of data at UPMC. That’s doubling every 18 months, across this Payer-Provider, patient enter data, all types of data. But, then we also bring in our expertise. We bring in the living lab, that’s UPMC, and say “All right, how do we increase the chances of success for that innovation? How do we increase the chances of success with the work that we’re doing with that entrepreneur, with that start up?”
There are four areas of focus for us at UPMC Enterprises. Very quickly and all of this information is also available on our website, or you can follow me on Twitter or look at #UPMCinnovates. Transitional Science, we just commit to a $200 million investment over the next five years in Transnational Science. Improving Outcomes. Clinical tools and population health really coming together, again, with the mindset of this Payer-Provider yin and yang that I referenced earlier. Consumer. Not just the next cool App that we’ll upload into the App store, into the Cloud, but really if health care is moving away from those hospitals that I talked about earlier, into the bricks, into patients homes and their Smartphones in their pockets, what does that look like? What do those business models really look like? How do we create those, company’s that actually sustain the future of this bold new world?
Then Infrastructure and Efficiencies, you heard quite a bit earlier about some, of the wastes that exist in health care. The inefficiencies that exist in health care. Whether it’s around supply chain or revenue cycle management or all of the waste that exists in the back end offices in health care, we’re trying to bring in AI and machine learning capabilities and finesse to really address those challenges. What’s also interesting is that we’re capitalizing on the fact that we’re a large strong academic medical hub. One of the largest medical training programs in the country. We’re affiliated with the University of Pittsburgh, which is top five in the NHI rankings, when it comes to research funding. Then we have Carnegie Mellon right in our neighborhood here, where we’re able to capitalize on the machine learning AI specialists across the board.

It’s interesting. Google is upstairs in the Bakery Square Building. And we’re competing with data scientists. We’re competing with data analysts and product managers and engineering folks. My innovation team today is 250 individuals. We have about 70 or 75% of them are IT focused, designers and product managers on top of that as well. That’s the culture that we’ve created at UPMC Enterprises. I’m a big believer in culture. It’s really important for you to make sure that you’re able to create an environment where the walls are much lower. You’re able to collaborate. You’re able to ask questions. You’re able to call bullshit on solutions that you think are questionable or not in the right direction. And you’re able to learn from your failures. We’ve talked about fail fast. But, that’s a culture that we’ve actually embraced at UPMC Enterprises. Agile [inaudible 00:15:10] methodologies, human centered design. These are principles that we’ve really embraced. As a result of that, the solutions that we’ve created are fairly tremendous.

A quick snapshot of some, of the portfolio company’s that we’ve either birthed out of UPMC or we’ve invested into. In all cases, we’re co-creating and co-investing. We’re building these solutions. We’re implementing these solutions at UPMC. We’re then taking these to market with the right level of partnerships, really across the board.

I’m going to take a step and really contrast the old world to the new world and give you the perspective of how we view innovation as a strategic imperative. How we’re actually looking at the design of these solutions that we’re building moving forward. A lot of you I’m sure have seen the Hype Cycle. This is the Hype Cycle for Emerging Technologies. The more recent version from Gartner 2017. There’s, all sorts of hype out there. Smart Dust is right at the start of the hype cycle there. It’s 4D printing. I know a lot of you have heard of 3D printing. I had. I thought ‘What’s 4D printing?’ Right? What’s the fourth dimension in that printing thing that you’re doing with your printer? Newer Morphic Hardware, quantum computing is coming up. Connected Home. Now, that’s becoming more of a reality. In fact a number of things that we’re innovating around in that space. Cognitive expert advisors.

My point in putting this slide up there is that there’s a lot of hype out there. But, what’s really important as we’re investing, as we’re innovating, as we’re creating these solutions is to balance that hype and the hope that exists in health care with the reality of what academic and scientific rigor can really bring to the table. With the reality of what the living lab, like one that we have at UPMC, and UPMC Enterprises can really validate and prove, because, you don’t want to be blinded by these buzz words. Right? That’s the last thing you want to invest around is a buzz word. It’s really important to make sure that you’re going in with eyes wide open.

I mentioned this briefly earlier. That’s the new reality of what we’ve created with all, of the digitization of health care that we’ve been so successful in doing in the last 20, 30 years. We’ve erected this large big wall that sits between the patients and us as clinicians. Many times … and I know the AMA agrees with me on this as well. Technology tends to be an impediment to care. How do we make sure that technology can really be an enabler of better care. Those are some, of the concepts that we’re putting into pictures.

Really quickly, I’m going to run through this, contrasting old world, with new world. In the old world, we’ve been designing for regulations. Nothing wrong with HIPAA. Admittedly, there’s a lot of HIPAA-noia in our community here. Right? Nothing wrong with ICD-10. This billing is important and coding is important. But, how do we not design for regulations, but really design for empowerment? Patient empowerment. Clinician empowerment. Designing for empowerment. Burnout. There’s a lot of mention of burnout, earlier. How do we make sure that we’re not building solutions that create burnout, but really joy. When was the last time your clinician went in or you went in as clinicians and said I’m so joyous, we’re going live with the solution today. Never. Right? Never.

Innovation today is about adding solutions. It’s about adding bells and whistles and product features. You read the release notes or you look at the new features that get added on. It should really be about simplifying. It should be about subtracting. It should be about taking things away, making things less complex. Today health care in large part is about bureaucracy. How do we get to meritocracy. How do we reward merit? As opposed to be inundated with bureaucracy? These are the things that we’re trying to think about as we’re innovating, as we’re making our bet’s, as we’re putting our investments forward.
Today health care is very application centric. Is it [inaudible 00:19:08] driven? Or risk driven? I’m a radiologist by background, right? Is it this App? Is it this EMR? It should really be patient centric. Today health care is very [inaudible 00:19:18] centric. You’re going in and you’re trying to make that diagnosis. Was it calcification, was it a nodule, was it a tumor? What stage is it? Again, that’s important. But, it shouldn’t just be about the interpretation. It should be about outcomes.
Then last but not least, today every investment that we’ve been making … the millions, billions, that we’ve been spending on Epic and sonar and enterprise data warehouses and Cloud and infrastructure, it’s been about doing digital. It shouldn’t just be about doing digital, it should really be about being digital, thinking digitally. Not just replicating analog work flows in a digital format and creating Efiles and eFolders and hanging protocols. We don’t hand film anymore. It’s not film anymore. We talk about wet read’s. Right? It’s a wet read, a quick wet read that we’re providing to the ED Physician. There’s nothing wet about that film that is not a film, that we’re not hanging. Okay? How do we make sure that we’re not just doing digital, but being digital, thinking digitally, representing data in ways that we could never have represented in the [inaudible 00:20:20] world. Think about that.

Those are the imperatives that we’re trying to really push forward with. Data has … I’m going to be really quick about this, cause I’m running out of time. How do we make technology an enabler of better care. You all know this. There is data everywhere. Data is telling stories about you and your loved ones, about your kid, about that last blood pressure exam that you had, the radiology exam that you had, your cholesterol level. Data is everywhere. But, what’s really interesting is that the data that we have to access to today. The debates that we have going on in the policy world in D.C. and in other areas around inner operability. It’s really just the tip of the iceberg. It’s the data that we have within our EMR solutions and our Enterprise Data warehouses and our data centers.

But, the data that we’re really concerned about aren’t just the data within the EMR solutions, it’s the data that’s outside of the hospital systems as well. Right? The social determinants of health care data, for example. Data around economic status, about the environment that you live in. The behavior and the behavior change that you want to try to bring in to that person, not just the patient that you’ve admitted into your hospital, but the person that you’re trying to really treat. How do we make sure that we’re able to get access to all of that data? Because today 90% of the data in the world, has just been generated in the last two years. Right? 2.5 quintillion Terabytes of data are generated every day. That’s ridiculous. Across the board, not just in health care or in my radiology practice, but really across the board. That is amazing. The tsunami of data that’s hitting us is remarkable.

It’s not just about the data though, right? Cause we talk a lot about data and we emphasize data as a basis of innovation, but it’s about information, knowledge and converting that knowledge into insights. Then marrying those insights with evidence based guidelines and best practices and clinical protocols and trying to get to behavior change. Cause that’s what it’s really about. How you get to behavior change is through nudges. How do you create those innovations that create those nudges for clinicians, for patients, for our consumers, for our administrators. That’s what it’s really about. That’s the mindset that we’re actually trying to bring to the table.

A quick example. This is one of the innovations that we’ve been pushing forward at UPMC. What we’re doing is we’re risk stratifying our patient population. And our chronically ill patients when we discharge them from our hospitals. We’re discharging them with not just a bag of pills, and a discharge summary or discharge instruction. We’re discharging them with technology. We’re remotely monitoring these patients with their permission, leveraging these capabilities, these technologies that we’re discharging them with and their risk stratified fully managed kits with the highest risk. We’ve got mobile Apps and tools and web inter-phases, where they’re actually inputting data for the rest of the population.

We’re able to send all of this data into this intelligent hub that goes in on the back end. Before the patient then falls off the guardrails and ends up back in our ED’s, we know that they’re about to fall off the guardrails. We’re then able to intervene, actively, right? Those nudges that I talked about earlier. We’re able to use those nudges to get the patients, those consumers back towards the circle of wellness, which is where we really want them to be. It’s amazing the results have been absolutely tremendous. Patients have been feeding back that I did everything that I wanted to. They’re specific preferences and what they wanted to do.

We think that health care shouldn’t just be about curing disease. It shouldn’t just be about surviving. Health care should be about thriving. Right? We believe … It’s not just about adding years to life, but really about life to years. A lot of focus on the Silver Tsunami that we’re calling, this senior long term care, post acute care, as well. We believe, despite everything I talked earlier about and announcements with the $2 billion investments that we’re putting into three new specialty hospitals. We believe that in the future, if our beds are filled, means that we failed. Those are the types of innovations that we’re actually creating at UPMC. To make sure that we’re able to really re-imagine a future that brings forward the very best of what we need for our patients across the board.

At the end of the day, it really is about building bridges, right? Pittsburgh is the city of bridges. 440 bridges in Pittsburgh, more than even Venice. It’s about building bridges between the old world to the new world, as I painted earlier. It’s about building bridges to how we’ve known health care to be. The definition of health care as we know it today, to the newer definition of health care, where we’re talking about, not the survival, but thrival. We’re talking about health care that’s well beyond the walls of the hospital. About taking in data elements that are well beyond the specifics of the data elements that we’re struggling with today. It’s about bridging the likes of innovators and entrepreneurs and those that are financing these innovations to the realities of the needs of patients and the Payer-Provider yin and yang that exist out there, whether, or not we get to a single payer reality. The reality is that providers need to work more cohesively with payers, whether it’s through accountable care organizations or value based models that are out there. It’s really about building those bridges.

With that, I know I’m out of time. Please follow me on Twitter. Engage with me, continue to have discussions with us. If there’s anything that we can do, from a UPMC perspective, even as we explore partnership opportunities with you, please let us know. Thank you.


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