HIStalk Interviews Richard Caplin, CEO, The HCI Group

Richard “Ricky” Caplin is CEO of The HCI Group of Jacksonville, FL and CEO of healthcare and life sciences of Tech Mahindra of Pune, India.

Tell me about yourself and the company.

I’m married to Danielle and we have three children — Callie is eight, Rilen is six, and Brooks is three. I started the company 12 years ago at the height of Meaningful Use. We began in strategy implementation and training on electronic health records. We grew to be one of the largest firms in our space. 

I sold the company about four and a half years ago to Tech Mahindra. which is a leading firm in the digital transformation and managed services space. At the time we sold it, we were about 1,000 employees plus a bunch of contractors. The idea was that we could bring their services and use our domain expertise and clients. We have done that successfully. We are one of the largest consulting firms in healthcare. We still do a lot of implementation and strategic roadmaps, but it’s more project-based work or large-scale managed services. As a matter of fact, we just closed one of the largest managed services deals ever in the application space. 

We also do a lot in the digital transformation space, such as robotic process automation and digital charters. We do automation as a service. We have launched a new company called HealthNxt, which is an enterprise-wide virtual health platform. So we started in the strategy and implementation space and today we are known as one of the leading innovation and visual transformations firms in healthcare. At the end of last year, ISG, Forrester, and Black Book all had us at the top in innovation and digital transformation categories.

What do you think will change with whatever the post-pandemic normal looks like?

I think we have already started to see change, both in health systems and in big cities. You might have had 500 employees in your IT organization in New York City, Chicago, or San Francisco, and all of a sudden you went virtual overnight. A lot of those people are never moving back into the cities and the office space isn’t needed. I have talked to many organizations that are working on new design layouts that are more of a hoteling system with innovation and collaboration space.

Once you have a relationship with someone, it’s a lot easier to conduct virtually. But still, as you are hiring new employees, you need to build that rapport and chemistry. People are emphasizing that team-building aspect in the way they are laying out their office space. But it also changes the way you pay your employees and where you recruit from. You can be in New York City and hire someone in Mobile, Alabama, so it is readjusting the entire pay school for people in big cities and small cities since all of a sudden you’re in a more national and even international hiring environment.

The way we work and interact day to day are also changing. When you look at how healthcare is being delivered, there’s all of a sudden a window to do things that really hadn’t been focused on before. A lot of organizations didn’t have digital charters and roadmaps, and all of a sudden that’s the way of the future. You are seeing huge upticks in telemedicine, and while we know it is coming down some, there will be a new normal. You’ve seen organizations do remote patient monitoring. We’re going to see a lot of stuff around virtual hospitals and eICU. A lot of organizations are focused on their digital front doors and you are seeing that in the way healthcare is delivered. Health systems are becoming more like technology companies first, and they have to be to compete in the new world.

You offer a fixed-price digital transformation strategy. What results are you seeing?

The first category is the operations of an organization and how they can do things more efficiently. What processes can be automated? There is a lot of opportunity in HR, payroll, revenue cycle, and even facilities and maintenance to automate processes and run more efficiently.

Beyond doing things better and cheaper, you look at the delivery of healthcare. What does your current landscape look like? Organizations may be using multiple telemedicine platforms or may not be doing remote patient monitoring, or if they are, only for a very specific use case or two. A lot of them got into it around COVID, but there’s so many different disease states with use cases for remote patient monitoring. Very few use virtual hospital, eICU, or virtual physical therapy. Many organizations are just starting the journey of deciding what their digital front door will look like and how they will engage with consumers outside the walls of the hospital. That’s a huge part of the strategy.

How are you seeing health systems using robotic process automation and what benefits are they realizing?

I’ll give you a basic example. When you are onboarding a new employee, you may have a bunch of paperwork that needs to be done. You may need several approval signatures. That’s a lot of manual work and a lot of processes. You’ve got orientation, things like that. You might have seven, eight, maybe even more people who touch that process and it takes up a big piece of their time. There’s a lot of paperwork and approvals moving back and forth. If you can automate that process from start to finish, where humans don’t need to even touch it but instead maybe click on an approval button when it pops up, things will be done faster, cheaper, and more efficiently.

That’s a basic example. But think about any process where people are involved — especially things like revenue cycle and facilities – and the size of some of these hospitals and health systems. You have many people monitoring and touching their electrical and lighting facilities, and a lot of those processes now can be automated as well.

Outside of healthcare, I’ve had a conversation with the CIO of the state of Florida, which has a budget of about $100 billion. He gave me an astounding number. He thinks that through automation, we can take something in the neighborhood of 30% out of our state budget. I also got together with a gentleman who is running for mayor of New York City, Andrew Yang. He’s a former presidential candidate. I had dinner with him last Friday, and we talked about the city’s permitting process. For anyone who has dealt with big government, how long does that take and how many people have been doing it for years? You can automate that entire process. Andrew Yang thinks there’s significant savings, similar to the state of Florida, that could be achieved in big government.

We have always had screen-scraping tools and basic automation tools. What has changed from a technology perspective to suddenly make RPA a hot topic?

That’s a really good question. I’m not an expert by any stretch of the imagination, but from my high-level view of what’s possible now, I think there’s a willingness for organizations to try it out. You have a lot more automation companies as well. There’s a whole bunch of them that have emerged and grown. The technology is advanced and there’s tons of applicability. We are winning some of these large-scale managed service projects, but a big piece of what we’re doing isn’t just the labor arbitrage, it’s the process transformation. We are taking a forward bet on what we will be able to automate.

How do you see health system C-suite roles changing now that chief digital officers and chief experience officers are joining CIOs?

We looked at the transformation over the past five or 10 years. The CIO has become a much more important executive role, really one of the leading executive roles in any senior leadership team. Technology touches everything. But now we are seeing the same thing occur, where this consumerism that you talked about, or this chief digital officer role, is driving everything. It’s a strategic role, it’s an operational role, and you have technology. So you will see one of two things happen. The CIO is either going to become a functional role reporting to the chief digital officer, or chief information officers are going to evolve into chief digital officers and they are going to own IT. But it’s a more strategic role where IT is a component of the digital strategy.

Health systems are outsourcing their IT work to offshore firms and in some cases to Optum. What trend do you see?

I think you hit on this earlier. There may have been some movements earlier in automation, but now you are seeing a much bigger uptick. The majority of technology has migrated to the cloud and it is more readily available. I think you will see a permanent shift in large-scale managed services or outsourcing. COVID shed light on that. Organizations had new pressure to decrease operating expenses and run more efficiently, and you saw a big uptick in these large-scale projects.

We won a couple of large deals. We’ve been able to save organizations in excess of 30% of their operating costs while giving them a better service level agreement than they were doing internally. As I speak to CFOs and CEOs — not just CIOs — they don’t want to be in the business of commodity IT. They want to be in the business of delivering world-class healthcare. It has been proven by from organizations like ours and others that you mentioned that the savings is there, and if we can deliver a high-quality product, there’s no reason for them to go back to want to run IT, especially with the pace that technology is involving.

You can’t keep up with some of the things that are happening with cloud. With the cybersecurity risk, it may not be the best thing for you to do. You may want a partner that has a balance sheet that’s going to own those processes, even just from a de-risking standpoint. But I think the pace of change, the amount of risk, and the opportunity for savings are all permanent changes that we didn’t see before. The adoption of technology in 10 years has been tremendous. I don’t think a lot of that will go back. We will see more and more of it.

Do you have any final thoughts?

It’s going to be exciting to watch. Tech Mahindra is positioned very nicely to be a leader. We are hopefully going to continue to grow our managed services business and deliver value, but we are also all in on being a digital leader and with our virtual health platform HealthNxt, which I see becoming one of the largest platforms in this space. Time will tell. COVID served as a catalyst, where we saw a lot of innovation happen in one year that might have otherwise taken multiple years, and that will continue. As the new normal comes back, technology is going to lead the way in how we deliver healthcare.