Q&A with SJRMC CIO John Gaede: “Community Hospital Cash Crunch Can’t be Solved Without EHR Competition & Excellent IT" | healthsystemcio.com (2024)

The community hospital market is struggling with razor-thin margins, according to John Gaede, CIO, at San Juan Regional Medical Center; the result of increasing payroll and technology costs, along with the sunsetting of pandemic-related government programs. CIOs, he says, are in the critical position of making sure every dollar of those technology costs is spent wisely, with a strong focus on increasing operational efficiency. In this interview with healthsystemCIO Founder & Editor-in-Chief Anthony Guerra, Gaede discusses where he’s looked to make a mark at SJRMC; why he’s routing for Oracle Health to flourish, and the reasons health systems should revisit their cyber-related business-continuity planning.

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The community market, 200 beds and below, about 6,000 hospitals in the US., we represent about half that market, and we provide care to the people – the farmers and ranchers that are providing our food – and so the role of the community hospital in the United States is absolutely critical. We must have competition in the EHR space so that we can drive down costs and increase efficiency.

Community Connect is a good way to get Epic into smaller organizations, but I’ll just tell you this, I’m just going to say it: I’m a fan of Epic, however, it’s just too expensive, even the Community Connect model.

San Juan has been here for about 116 years, since 1910, the story of this hospital is remarkable. I see my charge and my watch now here at San Juan is about how do we have the organization go another 116 years. What I can tell you is, if we don’t have excellent IT, we’re not going to get there.

Anthony: Welcome to healthsystemCIO’s interview with John Gaede, CIO at the San Juan Regional Medical Center. I’m Anthony Guerra, Founder and Editor-in-Chief. John, thanks for joining me.

John: Anthony, an absolute delight and pleasure to be with you today.

Anthony: I appreciate that. We actually have been together before and this makes me feel seasoned, I think is the good word – seasoned. I was looking, doing some research for our discussion today and I saw that I had actually interviewed you in January 2011. That is a bit of aways back, long before anybody thought of a pandemic and lots of other stuff. Pretty cool, right? We’ve been kicking around awhile.

John: Absolutely. You think about all that has happened and transpired between then, quite remarkable, for sure.

Anthony: Very cool. A couple of things we talked about back then were you were moving from QuadraMed to Siemens and keeping GE in the OR and possibly using Midas which is another company that has changed owners and names, or a product that has changed owners and names. Anyway, those are some interesting names and thoughts, right?

John: Absolutely. You know what? It’s remarkable to me, when you look back, that we have many of the same challenges today. Some of those vendors have just changed names and some of them don’t exist.

Anthony: Yes, it’s interesting when you mentioned that. It seems to me that being passed around as a product or an application, it doesn’t usually do much to enhance the product or the service that someone is getting from it. Some of these things, again, have been passed around to different owners.

John: There’ll be a couple of examples of that. One would be Midas. They’ve gone through several owners since 2011, but you think about even Nuance. Nuance transitioned to Microsoft and then another very interesting one and relevant to our conversation today is the whole Oracle Health strategy now with Oracle acquiring Cerner, right?

These are examples of that. How it goes with Oracle Health will remain to be seen, what happens from that, right? I would argue that there’s huge potential in that acquisition. I don’t think it will be just a stopping point. When you think about the challenges in healthcare, when it comes to the IT side and the people side – so it’s people, process and technology.

On the people side, hospitals coming out of the pandemic are faced with this challenge. We had all the traveler, contract, agency nursing, the cost associated with that, are hospitals still trying to come down out of that and reduce the agency dependency because of the expense tied to that. You’ve got the people side of IT. Now, you have a company for the first time that will have both, potentially, on the same database, both running Oracle, your ERP solutions – so finance, supply chain and HR, now sitting on the same database as your electronic medical record.

This will be a first for the industry so it’s going to be interesting to watch what happens with Oracle Health. The reason I am even interested in this right now is because of the position I’m in as the Chief Information Officer at San Juan Regional Medical Center, we’re a Cerner shop. The hospital went live on Cerner in 2019, just right before the pandemic kicked in. Of course, now this has my interest and I’m watching this very, very closely.

Anthony: Well, I hate to bring it up, John, but I would be remiss if I didn’t; there’s not a lot of good press going around right now about Cerner/Oracle. I mean, that’s in the press right now that there’s some issues over there. I assume you’ve seen some of that stuff and I assume you’re watching it very closely.

John: Most recently, Yahoo Finance had an article about Oracle Health losing market share.

Anthony: Yes.

John: I’m a big believer that leadership is everything in organizations and vision. Without vision, people perish, and so when I look at the future, and even if you think about this in the context of our conversation from 2011 when I was at El Centro Regional, all the way to now and the investments we’ve made in technology and then understanding the value of those investments, that pulls us into cyber conversation. When you lose every system in your health system and you’re trying to take care of patients and that’s happening right now with Ascension. They went offline May 8 and are still offline. This is unbelievably painful, and it hurts my heart to think about what they’re going through, having been through something like that myself.

But when I look towards the future, I look at the most important, the most valuable asset any health system has in this country; its people. People make healthcare happen and yet, on the other side of that coin is the most expensive part of providing healthcare are its people. Oracle Health has an opportunity to bring in a system where they can come in because they have a blood bank so they meet some of the FDA requirements within that portfolio. They have an opportunity if they do this right, there’s huge opportunity to actually have a strong competitor in the marketplace.

Anthony, if I could just make a comment there on that.

Anthony: Yes.

John: I’m passionate, I’m honored to be here at San Juan, a standalone, not for profit hospital. It’s regional. You have to drive many miles in a lot of different directions to get any healthcare. The community market, 200 beds and below, about 6,000 hospitals in the US., we represent about half that market, and we provide care to the people – the farmers and ranchers that are providing our food – and so the role of the community hospital in the United States is absolutely critical. We must have competition in the EHR space so that we can drive down costs and increase efficiency.

We need Oracle Health to survive so that we have a healthy competition. You’ve got Meditech, Epic, and Oracle Health. We need competition in the marketplace to make those companies better but also to provide resources to the community market so that we can take care of our patients, to provide the highest quality care. We need Oracle Health to success in this. It’s going to be interesting to watch what happens and see what happens.

I’ll just tell you, I’m an optimist because I see a day where Oracle Health – to be able to walk in to a hospital and say, ‘here’s your system.’ That means the entire ERP along with all your EHR inpatient and outpatient systems and you’ve got supply chain tied to it, you’ve got your people tied to it, the potential is huge and time will be the test to see how it all ends up panning out.

Anthony: Because if Oracle health doesn’t success or get their mojo back or whatever you want to call it, momentum – the size of the hospital you’re talking about, that health community hospital, Epic may not necessarily want to play there. I know they got some programs, Community Connect. But I don’t think it’s a place, their sweet spot, right? They’re looking for the bigger organizations. You might just, if Oracle doesn’t get it going and Epic doesn’t want to play there, You’ve got Meditech and that’s not much competition.

John: No, exactly. I’m hearing some good thing about Meditech Expanse. I try to keep my nose to the ground and interact with colleagues in the industry and so I’m hearing that there’s some advance happening there. I can tell you as being both in an organization that used Epic primarily as its HER at UC San Diego Health and then Sky Lakes Medical Center as a Community Connect customer. I’ve lived in both of those worlds.

I’ll just tell you, Community Connect is a good way to get Epic into smaller organizations, but I’ll just tell you this, I’m just going to say it: I’m a fan of Epic, however, it’s just too expensive, even the Community Connect model. My entire career, over the last 27 years, when you look at our budgets, every community hospital I’ve been in is about a 1 to 3%, 0 to 3% margins; and if you have a 3% margin, you’re having an incredible year. How many industries operate on 3% margins?

The community hospitals, the CEO is thinking about: I need to put in that new MRI, we need to make the investment in cancer treatment, and then I have these IT investments and then when you wrap around that the cybersecurity aspect, we now have a new slice of the pie that, whether you like it or not, investment has to be made. Investment has to be made there, not only in technology but also in people. That bites into the 1 to 3% margin.

This brings us back to that central point where we need competition in the marketplace. We need Oracle Health to succeed to make Epic better to make Meditech better and it will give options for that community hospital market.

Anthony: Let’s talk more about the cash crunch. As you said, expenses are going up – for people, due to inflation, due to costs also in IT and cyber. And I don’t know too much about the reimbursem*nt side, but people always say that’s getting worse too. It sounds like a prefect storm. How can CIOs help?

John: First of all, you recognize this as an acute challenge within healthcare, especially the community hospital market, and I affirm that. I agree. Sky Lakes Medical Center, where I recently came from, I know they’re facing challenges, we’re finishing our budget cycle here at San Juan and it’s exactly the case. Balancing the capital needs and the operational needs and the expense side, yes, absolutely, a challenge, then the reimbursem*nt doesn’t match the increased cost. I think those are all true statements and then you add one more factor, one more flavor to this and that would be some of the programs that the federal government was putting out there that were really sustaining hospitals coming through the pandemic, those programs are coming to an end or ended. That’s big because you had millions of dollars flowing into even community hospital markets and it’s shut off, that spigot shut off, that really puts the community hospital in a tough situation.

How do we address it from a CIO perspective and from an IT perspective? One of the words you mentioned was efficiency. I’m going to give you a couple of examples of that that we’re currently working on at San Juan. We’ve hired Premier to come in and help us do an assessment, and we’re really targeting length of stay. If we can increase our OR utilization by becoming more efficient, and if we can decrease our length of stay, we can drive additional revenue into the organization. I would argue that IT plays a critical role in that. IT plays in all of those systems, the hand-off, the communication, the documentation, each of those pieces play critical roles in driving the efficiency.

Again, we mentioned earlier, Anthony, it’s about people, process and technology. Especially if you’re looking at patient flow from admission to discharge, if you’re trying to decrease your length of stay, all of those transition points involve communication and those are systems that IT provides, all of those systems involved getting clear, concise, accurate information at the right time to the right person in that flow and process, and this where our EHRs really come into play, and this where our technology comes into play because it’s feeding each of those systems.

San Juan, we went live on Cerner in 2019 and then the pandemic hits. Our hospital did not have an opportunity to go through the change (in a normal way). San Juan was a Meditech customer. You’ve got to go through that change or process and then the pandemic hit and you take out three years of no optimization, no opportunity to really fine tune the system. In order for us to effect this, and I see that as one of my task here at San Juan now is to really drive the efficiency side of this, resulting also in quality, better patient outcomes through technology to tap into that. We’re really poised where we know we have to do that next phase of optimization in order to get us to where we need to be, to drive those efficiencies.

San Juan has been here for about 116 years, since 1910, the story of this hospital is remarkable. I see my charge and my watch now here at San Juan is about how do we have the organization go another 116 years. What I can tell you is, if we don’t have excellent IT, we’re not going to get there. That’s really the task that I’m pushing Oracle Health on and saying, ‘look, we have to partner in such a way that we can drive efficiencies, reduce our costs,’ so that this community – in this region of the country, in the four corners, which is absolutely beautiful – can go for another 116 years. I’ve been here for two months. I’ve fallen in love with the people and the hospital and the community, and just all the activity that you can do here, outdoors activities. We put all that together and we need good, efficient IT that effects patient safety, meets regulatory and, most importantly, helps drive the bottom line.

Anthony: That’s got to be a mindset of the CIO today, right? I talk to a lot of people, they say things like, ‘I am a business person. I am part of the operational leadership of this organization. Now, my angle is bringing technology to help solve business problems. That’s my angle but, nonetheless, I am here to help run this business and this business needs to be more efficient.’ It’s a mindset, right?

John: You’re 100% correct. I’ll just tell you, IT is an area where if you make the right investments in people, you’ll be successful. It’s the people that run the technology. Technologies are getting better and better, such as AI and other things, but there’s always people behind it. So that efficiency is reducing waste, we learn in our lean principles, those kinds of things, but it’s driven through investment. I would argue it’s driven through wise investment, keeping the right systems in place, and then I would say it’s not just having a system in place but it’s having systems in place, and I’m guessing if we went back to our archives, 2011, I might have talked about this.

But having partnerships with vendors where we’re not in a vendor-client relationship, but we’re in a partnership in the truest sense of the word, is critical, where we say, ‘Here’s our mission, here’s our vision, will you join us in this mission and vision in driving care for our community? You’re going to have to give some, we’re going to give some, but we’re going to partner so we can drive the efficiencies that we need to have a decent bottom line.’ Absolutely, having that business mindset is critical and we can’t do it without the CIO engaged directly in that, participating in that process.

Anthony: This is usually where I always think about the lead versus follow dynamic of IT leadership. You have to bring ideas to the business and not just respond to requests, correct?

John: You’re exactly right. I’ll give you an example of that here at San Juan. The communication platform, we don’t have a unified communication platform across the organization. What I learned through our ordeal at Sky Lakes around the ransomware attack where we were offline from Oct. 26 to Nov. 18, that 23-day period, 100% of our systems offline. I learned that clinicians will do whatever it takes to take care of patients, but if you can provide them communications, that’s the number one way to help them.

So I get here recognizing how important communication platforms are within the organization and the EHR, and I find that we have multiple systems. That’s where that consolidation of systems and having the CIO that can come in and strategically look at it. But also come in and just say, ‘hey, there are systems out there that we can comprehensively do. We can consolidate the platform, we can save some money, we can save on the support side and the number of people it takes to run all these systems, and we can synthesize and bring them together on a platform.’ They’re going to really assist you and come alongside you in that core communication element, just as an example of that. But you’re exactly right.

Another example of that recently here; we’re in the process of rolling out a tele-sitter program with AvaSure. The organization did not have a CIO at the time and clinicians went through a process to purchase the technology, and I happen to use that technology at Sky Lakes. It works very, very well. We have robust savings with it. You’re saving on not having to have staff sitting in every single room where you need observation, eyes on a patient, you can now have a robot in there. You can now have one person to multiple patients to have that conversation. It’s very good technology. That’s a wise use of technology.

But the project was underway, I get here and I’m sitting in one of the meetings and I look and I know that they have a fully redundant system. We went and renegotiated the contract and they stepped up to the plate and they help us keep it within the same cost. It was a great partnership.

But we went back and put in an enterprise solution so that we’re not going to have downtime when we’re patching, doing windows at the back to cybersecurity when we’re doing our cybersecurity patching every month and then having to staff up in those periods that we can patch the systems. We went to an enterprise solution, this is an example, came in and suggested, ‘hey, we can make this better for you in providing a technology that we can build on an enterprise system so we don’t have downtime and we can have the system over here patching while running on this system, right, and then move back to the other system.’ That’s where the CIO can come in and provide leadership to their wonderful colleagues and friends, the chief nursing officer, nursing and other areas of the hospital. That’s a great example to that point.

Anthony: Let’s talk a little bit more about cyber. When I read about the Ascension stuff, it sounds like the clinicians are having so much trouble working through the outage. My guess is no matter how much you plan, it’s almost impossible to work as a clinician when all your systems are taken away. And you talked about a communication system helping, but that could be out too, right?

John: Well, you’re getting to the heart of the issue. If I would have one message to anybody listening to this podcast is I’ve been in healthcare, doing healthcare IT 25 years, and we had our downtime processes. The downtime process worked great for the first 48 hours, after 72 hours it starts breaking down and, after that, they completely break down.

The first point, no you wouldn’t have a communication system up. I’ve gone to Vocera and said you guys need to figure out how to have an immutable system. I realize there’s no one immutable but God, but we need a communication system that’s immutable. But what you discovered – and I’m going to take a quote, I’m going to steal this from Ron Woita, the Chief Nursing Officer at Sky Lakes Medical Center, he said, “John, what I learned through our ransomware attack was we worked downtime out of the process.” We worked downtime out of the process.

Here’s what we mean – you can remember, even back in 2011, we had a number of paper medical records. We still had a lot of paper as well as electronic systems, and now we don’t. You can walk into HIM medical records and we don’t have a room filled with files any longer, it’s all electronic due to the investments we’ve been making for that last 18 to 27 years. Those investments are incredible. They’ve helped with efficiency. They’ve helped drive patient safety. They’ve helped with the people aspect. So in the paper world, when that order gets placed in the ED, that order needs to be faxed up to the lab or somebody has to take that order up to the lab. In this new world, that’s all done electronically. When you go offline, all of a sudden you’re moving paper through the entire organization.

So our backup strategy for that was the fax. What we discovered is that faxing totally broke down. I’ll give you an example. We had two fax machines in the lab, literally one of them overworked and started smoking. We had to shut it off. But when you start getting orders, stat orders coming from ICU, from med-surg, from the ED, from your clinics, you get all these orders, You’ve got diagnostic imaging, pharmacy, laboratory, all of a sudden, that stat order down in the ED, you could put it on the fax machine, it could be 30 or 40 minutes before that fax kicks out on the other end because of the sheer volume and the time it takes for a fax to run. We ended up having to have any staff that weren’t doing clinical roles become runners.

So think of it, you’re down in the emergency department, you draw that rainbow set of tubes, you have a tube system. Oh that’s offline. Johnson controls is now offline, your tube system is offline. Who is going to get those tubes from the emergency department back up to the laboratory? Guess what? You’ve got to have somebody do that, a human do that. We got to the point where we had to have people just running a stat order, had to have a human take it up to the laboratory to get that done or that stat order over to diagnostic imaging. We’ve worked downtime out of our process.

In our case at Sky Lakes, we were 100% offline for every system. All of the ERP, all of the EHR, we weren’t sending bills out. We weren’t receiving invoices. No email. No communication systems. That was brutal, it was rough. What it caused me to do was really reflect on what if we ended up surviving on our cellphones. Then you realize, you don’t know people’s numbers, you can’t call people, and you can’t call vendors to notify them because you don’t have them in your contacts. Then you find out that your cell service doesn’t work in the center of the hospital. In order to even text and those kinds of things, you have to go towards the periphery of the hospital and have that communication.

But I began to reflect on what if there’s some natural disaster where we wouldn’t have cell service at all. If I can leave one nugget for anyone listening to our conversation today, it would be this – think about your long-term outage. Because someone in this country is going to get hurt in this process. I’ve recently watched two interviews with news agencies, interviewing nurses that are at some of these Ascension hospitals and this traveler (nurse) said, “you know what, I quit, I’m walking out because my license is going to be on the line when you get down to these paper systems.” I can’t say enough about sitting down and a least having the conversation around your long-term outage strategy.

As an example, do you have enough scripts? Do you have enough pharmacy scripts, paper scripts? We didn’t at Sky Lakes. These inventory systems that are just-in-time inventory, all of those processes now fall apart and we break down. I’ll give you one that you may not think about. When we were prioritizing bringing our clinical applications back online in our outage, cancer doesn’t wait. What about radiation oncology that’s given day after day after day in a series? So we knew that system had to come back online towards the top. We were prioritizing all of our clinical systems and then the director of facilities come to me and goes “John, it’s starting to snow outside, we can’t get patients into the emergency department because we can’t heat our sidewalks because Johnson controls isn’t online.” So it’s examples like that, right, that show the value of the investments that we’ve made in IT, the need for health systems to talk through and think about losing all your systems for extended period of time.

Chris Van Gorder, in their outage at Scripps in San Diego, they were hit like a year after us and there’s an article in the San Diego Tribune where he just said we discovered that our downtime process has broken down. When you add time to the outage, it’s having even enough paper. We went and bought out all the paper at Staples and Walmart in our community because we didn’t have enough paper just for managing all the paper processes. Those are the things that our industry needs to talk about, and I appreciate you having this conversation with me. I had the privilege of sharing the story at HIMSS. I think this needs to be talked about and I don’t think our industry talks about this enough for fear of legal implications, but it’s not going away. Because flat out, there will be all kinds of things, and I hope Ascension chooses to be transparent when they come on out of the back side of this and to talk about it, because anybody who hasn’t been through something like this, these are the conversations we need to be having so that we can strengthen and make sure we take care of our patients even in times like this.

Anthony: Great point. From what I’ve heard, it’s not the IT executives that are reluctant to talk. Maybe when it started, there might have been a stigma around, ‘oh you’ve gotten breached, you failed.’ I think that is gone. I think if anything we look at people who have gotten breached and say, ‘share and help us learn.’

John: Yes.

Anthony: It’s no longer a negative thing in a sense. The assumption is that good work was done and that there was no negligence and that it can happen to anybody. It’s not the IT executives I think that are afraid to talk, it’s the lawyers. I think everybody knows it’s the lawyers that tell them not to talk, right?

John: Yes.

Anthony: They don’t want to create jeopardy. I want to ask you one more question and I’m going to let you go because we’re about out of time. You talked about things breaking down after 72 hours, and the possibility of having no cell service at all. I mean, you can’t plan for extremely unlikely scenarios because it would take a lot of resources and the chances of them happening may not warrant all that effort. What are your thoughts?

John: I think it’s a good point. I’ll just say this. It’s hard work and it’s more work than you think. Yes, it’s never going to happen. I’m giving – a perfect example of this, Christie Wiles, who is senior director of inpatient nursing at Sky Lakes, is a wonderful colleague and nurse leader. She said, ‘John, if you had to give me a choice, I wouldn’t want the choice, but if you did give me a choice between a novel virus and a cybersecurity outage over extended period of time, I’ll take the novel virus. We’re scientists, we can figure it out. But when you remove all the tools from me doing my job, all the patient safety checks, all that. The stress and strain it puts on nurses is just incomprehensible.’

Here’s what we did at Sky Lakes, I actually went to my boss and asked for another FTE to do this process, to go build this extended downtime playbooks within the organization. Well, the organization couldn’t do that. We couldn’t go hire another FTE to do that. What we did is I got together with my team and said, “Look, we just went through a cyberattack, we saw the impact to patient care, let’s take some of our time, a portion of our time and let’s go help operations build playbooks so that if something like this happens, they can open it up, they can look at a one pager and say, ‘Here’s the things I need to think about. These were the things that we learned in this outage.’”

To your point, it took us two years of meeting one on one with all the departments and we began to build out that playbook to retain those key learnings before that organizational memory was lost, we built those things out. That’s most effectively seen in Christie. She had a drawer that she kept in her office and says, ‘here’s all the things I need to put together to prepare for something like this,’ and she put it in a drawer and that drawer was never opened. It’s just a reality of life. But IT, we took some of our resources and say, “‘We’re going to dedicate, if it takes us two years or five years, we’re going to start putting together these playbooks so that if something like this ever happens again, Christie can open it and go, ‘Okay, I need this, this and this. I need a file system here. I need to do this. I need to rearrange my staffing like this.’” We did it. It’s hard work. It’s not easy, but organization need to at least have the conversation.

Anthony: Great stuff. I could talk to you for another hour but I won’t because I’m sure you have things to do. Thank you so much for your time today. I really enjoyed it.

John: Anthony, thank you, a true pleasure. Blessings to you.