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Lessons from Karen Murphy, Chief Innovation Officer at Geisinger, raising the standard for healthcare system innovation
Dr. Karen Murphy, EVP, Chief Innovation Officer and founding director of the Steele Institute for Health Innovation of Geisinger
Welcome back to the Pear Healthcare Playbook! Every week, we’ll be getting to know trailblazing healthcare leaders and dive into building a digital health business from 0 to 1.
Today, we’re excited to get to know Dr. Karen Murphy, EVP, Chief Innovation Officer and founding director of the Steele Institute for Health Innovation of Geisinger.
Karen has worked to improve and transform healthcare delivery throughout her career in both the public and private sectors. Before joining Geisinger, she served as Pennsylvania’s secretary of health addressing the most significant health issues facing the state, including the opioid epidemic. Prior to her role as secretary, Dr. Murphy served as director of the State Innovation Models Initiative at the Centers for Medicare and Medicaid Services leading a $990 million CMS investment designed to accelerate health care innovation across the US. She previously served as president and CEO of the Moses Taylor Health Care System, and as founder and CEO of Physicians Health Alliance. Karen has a PhD, MBA and RN degree!
Founded in 1995, Geisinger is an integrated healthcare system that includes 13 hospital campuses, two research centers, the Geisinger Commonwealth School of Medicine, and a health plan that serves approximately 600,000 members. Geisinger’s more than 30,000 employees, 2,500 providers, nearly 500 residents and fellows, and 360 medical students serve and care for the three million residents in Pennsylvania.
In this episode, Karen shares her wealth of experiences from RN to CEO of a health system, Geisinger’s exciting merger with Kaiser to form Risante Health, and key characteristics of a successful partnership between system and startup, her approach on working with startups as an innovative health system and Geisinger’s AI strategy.
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Karen’s experience as a clinical nurse really grounded her for the rest of her healthcare career
Karen was a registered nurse in the ICU for 10 years, and she calls it “the most important job I ever had.”
“That time in the ICU where I served as a registered nurse has really grounded me for the rest of my career… It was taking care of patients and understanding families, and really understanding the power of medicine.
It also was the place that I originally became interested in transformation from the standpoint that there were a lot of things that we could make a lot better. We had the will, but it was difficult to find the way.”
From there, she transitioned from being a clinical bedside nurse to many administrative roles at the institution she worked in. She continued working her way up until she was President / CEO of the health system.
Karen was a key leader at CMMI in driving $900M CMS investment in healthcare innovation
Karen shares that she always had a heart for innovation— improving the health system for employees, patients, and communities— but innovating while operating is hard to do. This ethos is what pushed Karen to pivot into public service. Her first role was at the Center for Medicare and Medicaid Innovation (CMMI) at CMS where she worked on State Innovation Models (SIM).
The idea for SIMs preceded Karen. Kathleen Sebelius was the Secretary of Health & Human Services at the time. As a former governor, she recognized the regulatory and legislative authority that state government has for transformation and wanted to use those levers to enact change.
A state government has a health department that serves the Medicaid population, an insurance Aw department, and the executive branch that houses their initiatives for population health. The idea behind SIM was to test how state governments could inculcate innovation. “How do we get states thinking about social determinants of health? How do we get states thinking about caring for the vulnerable population of Medicaid in a better way?” It was a competitive bid. At the end of the day, they had 36 states, DC, and territories.
Another important state initiative Karen led was the Maryland all-payer model, and she shares that that’s probably been CMMI’s most successful test. Maryland differs from other states in that it has hospital rate setting, allowing the state to operate in a different way.
Her second role in government was being the Secretary of Health for the Commonwealth of Pennsylvania, and Karen shares that the chance to have both federal and state experience was tremendously rewarding. At the state level, Karen began to study rural health and innovative payment and delivery models, which is where she met former CEO of Geisinger David Feinberg. As like minded people bought into the culture of innovation, David recruited Karen to Geinsinger to start the Steele Institute for Health Innovation and work on transformation.
Geisinger Medical Group is an integrated healthcare system caring for 3 million residents in Pennsylvania. Karen is the founding director of the Steele Institute for Health Innovation
“Innovation in healthcare is very difficult to be successful, and I define success as meaningful outcomes in cost or quality.”
Karen always says that this role is the hardest she’s ever had. She shares that Geisinger wants to be practical with their innovation strategy, defining innovation as “a fundamentally different approach to solving a problem that has quantifiable outcomes”. They don’t work on innovation for the sake of it, they work on problems of the healthcare delivery system. This includes innovative approaches to population health, the social determinants of health, and a lot of digital transformation.
“The work is not about digital at all, digital is an enabling strategy. But at the end of the day, we don't want to automate the processes we have now. We want to transform the healthcare delivery system using technology.”
The idea behind the Steele Institute is to solve problems in a structured, pragmatic way to have a clear direction moving forward.
The Institute has multiple teams, including an Intelligent Automation Hub where they focus on leveraging robotic process automation (RPA) technology to support the physician workforce by completing lower-level tasks. This team has seen impressive results, particularly during COVID. Karen shares that they also focus on the Behavioral Insights Team, which uses nudges to encourage patients and physicians towards better decision making. Some teams work across the enterprise, like the Data Analytics team.
Karen shares that the Institute works as a hub-and-spoke model, operating as a technical support arm. As an example, Geisinger started virtual nursing this year, and their digital team partnered with nursing on selecting technology, change management, and more.
When Karen first took this job, she traveled the country talking to innovators about their advice. This is what she learned:
“If a hospital system asked me, We're going to develop this innovation center. How do we do it? The question I would ask back is, what do you want out of it?
The most important to be successful is really at the C-suite level, to have a clear vision of what a CEO wants to accomplish, and then back into your structure that way.”
Geisinger’s merger with Kaiser, two value-based care giants:
Geisinger is going through a regulatory process to become the first member of Risant Health. Karen shares that the goal of the transaction is to promote value-based care across the country, which both Geisinger and Kaiser have been steeped in since day one.
Advice for founders building innovative models in healthcare about working with healthcare systems
If you’re early-stage and trying to tackle a huge problem, go out and find a smaller healthcare provider to start out with.
Karen shares that they’ve worked with early-stage startups and she really enjoys it. However, she always cautions founders to be realistic — they can only expand if it’s successful.
On the part of the health system, Karen shares that there’s not a recognition that startups are often evolving and not operating as a fully functioning company yet. The other important thing to know is the magnitude of the problem that you’re trying to solve.
Karen shares that she doesn’t necessarily pick high-risk problems to fix with companies that are just starting. For example: OR scheduling is very hard, and it’s a serious function that’s dependent on many other functions. It’d be hard for an early startup to take on that whole problem.
For big problems like that, Karen’s advice is for earlier-stage companies to perfect the product with a smaller healthcare provider and rapidly scale the product at a place like Geisinger.
Over-promising isn’t good. Give yourself and the health system you’re working with realistic expectations given what stage your company is at.
Karen understands that you want to make the customer happy, but over-promising is never good.
On the part of the health system, Karen shares that they have to understand the startup world— they need thoroughly understand what funding means. “You could have a great company with a great product that doesn’t have the ability to scale.” The health system has to be sure that everyone who’s selecting vendors / partnerships understands what the financial wellbeing of the company is alongside the quality of the product.
Is the question whether they have enough runway to survive while working with you? Or is it a bar, like have they raised a Series A or C or…?
Karen shares that it depends on what problem they’re trying to solve. If it’s one of those critical services, you want to be sure that they’re enough for the long run. If it’s a relatively new problem with a solution that you’re willing to take a chance on, that might be a different situation.
Instead of cold calls, try to find someone in the organization that can get you to the right person, a third-party org, or funders.
Cold calling is hard to keep up with; Karen shares that she gets 30 cold calls a day. It’s impossible to respond to everyone— send your email to the appropriate team to see if it’s in their portfolio.
Karen shares that many health systems belong to organizations that do market research for them, and demonstrating interest to them would be helpful. Avia is one example, a company that provides support for digital enablement and healthcare. There are others that are always feeding information back to health systems on technology in particular.
Lastly, Karen believes investors can be helpful. If a funder reaches out to her, she knows they’re serious about promoting the product and they believe it’s worth promoting.
Characteristics of a successful partnership between system and startup:
Aligned values. Karen believes that as a mission-driven healthcare institution, this is critical.
Willingness for co-development. By leveraging their knowledge of innovation and the clinical enterprise, your product can be made that much better. Your product can evolve towards a greater degree of success.
Lastly, Karen believes that in the state of healthcare today, you have to have an ROI. What are the benchmarks and what are the milestones?
”If you can't clearly and succinctly identify what our ROI is in two sentences, in today's world, it's going to be very difficult for startups. They have to focus on return on investment.”
In the design process of the relationship, Geisinger’s goal is to develop those KPIs that are going to be the signal for the future. The length of the pilot is determined by how long it’ll take to evaluate those KPIs before they generalize it to the rest of the enterprise.
Geisinger’s RFP process:
Identify the problem.
Do market research. “What are the companies out there working on this problem that we’d like to work with?” Karen shares that then, they’ll have an initial screening of the company to hear about their progress, their vision, values, and do this with a diverse group of stakeholders. They bring the companies in and compare the features/model, making a selection from there.
As for who these stakeholders are, it depends on the function of the company. If it’s clinically based, a nurse or physician is always helpful. If it’s a business tool, then Karen would look for someone who understood the process that they’re trying to work on, not necessarily from a clinical perspective.
Karen’s take on the healthcare startup landscape post-pandemic:
Health systems are running at 150 miles an hour trying to catch up for the 2.5 years they lost.
They’re suffering from workforce shortages and looking for solutions… But, the acuity of the issues are such that Karen shares they can’t afford to do 2-year pilots and have them not work out.
“Four years ago, I was very, very tolerant of long, long runways. I think that tolerance has dissipated with the end of the pandemic.”
Advice for innovation centers
Transformation before technology, and problem before product.
For innovation centers, Karen warns against developing an innovation, selecting a product, and figuring out how to pilot it as the last step. Define the problem first. Look for willing participants to help solve the problem. Decide what your transformation plan is going to be and how you’ll measure success. Then, start the pilot with the largest group of willing participants that will buy into this.
Karen believes that the tech transformation of healthcare will be slower than other industries’ transformations given the complexity/diversity of healthcare delivery systems. We tend to overhype that we can transform healthcare quickly, but Karen thinks it’ll take time to bring the standard operating procedure to always be digital first.
When it comes to the choice of building innovation projects in-house or outsourcing, Karen’s preference is to buy vs. build.
With the advancement of so many startups, Karen thinks we’ll start to see how health systems prioritize buying best-in-class products as opposed to growing them in house. Select your problem wisely, and if it’s a good solution, you’ll have a good likelihood of success. Building a product internally often takes a backseat to other priorities, which is why startups have a better opportunity.
Future of Geisinger Health
On the future of AI in healthcare:
Karen shares that they started their AI lab about 4 years ago. When it comes to AI, Geisinger looks at the clinical use cases— how can work in the AI lab actually get to patients? They want projects and use cases that produce clinical outcomes and can be integrated in the clinical workflow.
The generative AI hype is here, but it’ll take a long time to fine tune. How can we control it for ethics and safety but not control it so much to where it loses its function?
Geisinger’s AI pilot process:
What is the most responsible way for us to roll out generative AI?
How do we educate the organization to really get those use cases bubbling up from within the organization?
Identify companies that are already ahead of the pack using generative AI and see if we can improve either clinical or business operations.
Karen shares that the bar is high for clinical AI to create unbiased, accurate output. In other lower-risk areas, she would be more willing to experiment with.
On the expansion of value-based care:
Karen believes “value-based care is inherently the best way to go”, increasing value for patients and members. She sees an opportunity for value-based care to advance across the nation.
There’s not a one-size-fit-all model. Healthcare systems are diverse in their orientation and in their partnerships. Karen thinks we could use segments of the healthcare delivery system— for example, figuring out what value-based care is in rural communities, or critical access hospitals, or government programs.
“It’s not going to be a magic wand. It's not going to be one policy and the world is going to flip. I think it's going to be incremental as we're moving forward.”
Karen believes the other piece to really advance value-based carriers is multi-payer initiatives. You need all payers moving in the same direction with the same incentives and care models to be effective.
Be open to any opportunity.
“In order to be successful and have diverse opportunities, you have to be very open to the universe and say, I'll look at anything.”
Reflecting on her career, Karen attributes her varied experiences to always staying open. She was the CEO of a health system and then went to CMMI to work in a cubicle. That learning was rich and valuable, and you’ll enrich yourself personally and professionally by being willing to learn in new environments.
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