Digital Disruption in Healthcare, by Bob Ghafouri, Senior Managing Dir., Co-founder, Accenture|Bloom

all right hello again it’s my pleasure and I’m delighted to introduce our first keynote presenter mr. Bob Caffery Bob is the founder and senior managing director of bloom the digital strategy and transformation unit of Accenture which integrates digital assets analytics software and services to help clients drive growth and create new sources of value so in this role mr. de fooi bob oversees a global team that provides a portfolio of business and technology services to clients prior to his current role bob was chief client officer of Accenture interactive with broad responsibility for the group’s digital marketing offerings and strategy let’s give a Shiller College warm welcome to Bob Capri you know what Professor Wahby didn’t share with you is that I actually I joined Accenture because of a couple of alumni from Georgia Tech so David David Rolland our chairman Jimmy Etheridge our CEO here of North America Mike’s a cliff my boss and who leads our digital group actually acquired a company I started in my basement when I was a little bit older than some of the folks in this room my 20s focused on shopper marketing or so retail analytics and trade optimization so so that’s how I I kind of came into Accenture I’m now part of the Accenture Global Leadership Council and and we launched bloom about two years ago really with the understanding that there’s this digital disruption that’s impacting all of the businesses we serve at a different pace and speed and it’s all so impacting the value pools that those organizations those corporate partners depend on to create value for their stakeholders whether they’re shareholders their employees their customers etc and so Bloom was really a response to that and what we thought was we could bring up together all the elements of Accenture and help these organizations make what we call the wise pivot so pivot their businesses to become more relevant in a world where things are getting disrupted at a faster and faster pace so today I’m going to talk to you about disruption and in healthcare and so one of my other kind of side roles I’m a venture partner at a VC in DC called next-gen Ventures and I was just looking through our portfolio I was sitting over here and we’ve actually invested in seven different VCS so we’re actually actively investing in startups that are going out and disrupting different elements of the the healthcare ecosystem whether it’s the payer provider or making things a lot better for for patients when it comes to pharmaceuticals and so I think there’s a lot of dollars going into this industry and if you think about it there’s three and a half trillion dollars of in terms of our GDP is going to healthcare and that’s going upwards a lot of that is trap value its inefficiency and different elements of that system so when venture capital its private equity firms others see that they’re like how do we target those dollars and how do we release that trap value so today what I was going to do is quickly talk about my perspectives as a consumer of healthcare and in terms of the market I was going to talk a little bit about disruption and the elements of disruption and how disruptors are unleashing some of that trap value and then pivot and talk about the incumbents that are out there that are doing things that are unique monetizing assets they have and then finally close with a framework that I think a lot of the the big incumbents the actors in that ecosystem can leverage to really think about how they frame their kind of pivot to took the kind of digital transformation and managing the disruption they face so first I’m a consumer of health care just like everybody in this room and and you know

recently my mom got cancer and and went through this process and my younger sister and I became the caregivers or the program managers basically of her disease of her fight with cancer and and it’s amazing you wouldn’t think that you know someone with no healthcare background would have to suddenly become you know 17 different types of spec learn about there 17 different sites with specialists learn about equipment in a medical in a hospital in her room but there’s all these questions that came through our head as we went through that process and it made me think there is nothing human about the current healthcare system there’s nothing human about it and and so when you think about it when we went through that process there was always this question of who should we trust does is this doctor saying the right thing I remember we went to a on Colleges office and you know in the middle of the and it wasn’t it just his demeanor in the middle of our discussion around chemo he started laughing and you know and then did it again and I do couldn’t understand why and then after I left I was like can we trust that individual but there’s a lot of people in that process that we’re giving us different bits of information and some of them were conflicting so who can we trust you know how does my mom get back to normal how does she actually get through this process and survive it and what is life after chemo you know look like and cancer look like how do i balance all these healthcare demands with everything I’m doing at work with my three kids that are under aid you know all the other things I have going on how do you balance all that and manage this for a loved one how much will all this cost I had no idea what the cost would be what we were paying for the services she was actually for over a month in a coma so she we had that we had to go through the process of trying to understand what that costs but what is the cost of all this is she getting better why aren’t my doctor payer in the pharmacy in sync on anything they’re just not working together and so I think these are all the questions that all of us are asking about health care and we’re wondering why isn’t this human why is it almost industrial and why is our experience so limited and then so with the BACtrack of that that’s the experience there is there are other concerns as well I mean my my one-year-old just went he had RSV respiratory virus went to a hospital for one night I get this like charge on my credit card I see like $1,400 for from you know Johns Hopkins Sibley so I texted my wife I was like what what is that she’s like that’s our copay for the one night I’m like what did the one night cost he’s like sixty-five hundred dollars for one night at you know the Children’s were awarded Sibley so you know even so in the back of my head I was thinking okay something like that I mean I’m I’m okay we can pay for it it’s fine but if if you look at the median income of an American that’s what fifty eight thousand dollars most are living paycheck to paycheck two thirds of bankruptcies are due to healthcare for someone else that could have been a lot of money and and so the system is not focused on us the consumer like other industries are there’s massive amounts of our wealth being transferred to healthcare you know seventeen percent of GDP premiums and co-pays are going up and so this is the backdrop of what we’re facing but the exciting thing is a lot of the the things that we think about in terms of digital disruption are opportunities to unlock this trap value and what I’ll do first is just talk to you about what those elements of disruption are and so the way I think about disruption and talk to CEOs and boards about it it’s really there’s three elements to disruption the first is experienced disruption I can make an incredible experience like an Airbnb and own the travel experience end to end and I can convince you and get your loyalty and bring you over to my brand even if I’m brand new I can get you to come over Airbnb ‘zed on that Casper’s done that movers done that they don’t have some long 100 year legacy of serving customers but they’ve created

these incredible experiences so customer experiences can disrupt the profit pools of existing incumbents and pivot them to you know to new services second is business model and innovation and business model disruption so if you think about it you don’t always have to come up with the next version of AI or blockchain or whatever to disrupt an organization I can come up with something simple Dollar Shave Club came up with a way to deliver shaving goods to lazy guys like me through a subscription and so what they did was they actually got rid of the distribution channel and they mail you the razors and they changed the revenue model it’s a monthly amount that you pay others are doing some things that are similar Volvo with their pilaster cars is rethinking car ownership there they’re thinking about creating a rental model where you actually pay you know a monthly subscription you get insurance other elements and they bring all those things together and you you actually pay one fee but you don’t buy the car so there’s there’s innovation in terms of capital allocation innovation in terms of distribution innovation in terms of pricing all those things to that model so the second way that you you can disrupt is through business model innovation then finally there’s ways that we can leverage technology to drive disruption and so I’ll give you a really really simple example and then I’ll apply it later on when we talk about some healthcare examples I was with the the the head of drive capital he’s from Sequoia he moved to Columbus Ohio at dinner and he has an incredibly successful VC in Columbus and he’s come up with something called route insurance they incubated it in the VC and then launched it and he’s like Bob I went to the insurance companies the car insurance companies and said hey the current way that you’re doing you know you’re you’re basically assigning price to your insurance policy is antiquated meaning it’s using a foundational set of data that’s static and so some people are covering the cost for other people and there’s a better way to do that so he started harvesting the things that you have in your cell phone that can actually tell us whether you’re going fast or slow and he used a I to create a dynamic insurance product that basically determines for Avery and and Joe a different price based on their basic they’re driving attribution and so technology is Drent dramatically enabling us to transform you know how we disrupt an environment a buddy of mine also sold this company Accenture he’s a mathematician he called me he’s like he’s down in Australia he’s like you know mate we we have no good kombucha down here and I’m like well what it’s Steve Kirkby he I was like well what are you gonna do about it Steve and he’s like I’m starting kombucha company down in Australia I’m like you know nothing about kombucha how are you gonna do that but what he did is through ecosystems and the democratized access to data analytics and the cloud he launched that on Google Cloud he started marketing on Instagram he sourced you know the manufacturing through a on demand platform and lo and behold he sold the kombucha business Pepsi and Coke bid to coke right down the street here and so he built the largest kombucha company in Australia and so technology also disrupts the profit pools that we see our clients depending on to create shareholder value other types of value and so these are the three elements that every industry we serve at Accenture is is facing in terms of disruption and I think it also applies in a big way to healthcare so let’s talk about three things two of which I actually use and these are just three startups that I thought I’d throw that screen forward health has anyone heard of Ford health okay so I I just decided to subscribe to it it’s you got you had a membership fee its primary care powered by AI and I was like okay this is cool and someone on my team said you got to go check it out it’s like it’s like being in an Apple Store but you’re in a doctor’s office so I went in there

happens to be one in Washington do you see where I live I signed up I put all my information into the forward half half you go through an initial visit where they take blood other things and then they actually put your button they have these massive – words so think Tesla Apple but for healthcare and they put the screen up and they say hey based on everything we’ve learned from the the tests we’ve done on you here’s the likelihood that you’re going to have a heart attack here’s the likelihood that you know you for me you know and maybe a little bit away from eating too many Oreos at midnight so so basically they put together this picture of you and they use AI and other data to kind of formulate what that looks like and so that’s when you’re in the room then you actually have a proactive app that’s telling you and you can now you can opt into this when you actually need to do certain things interventions to help and they’re tracking all different types of information through a device and so there’s devices you can sign up for and so it’s almost a proactive management of your healthcare and so you can talk to doctors online you can schedule visits it’s 50 bucks a month no insurance and so what they’re doing is they’re disrupting primary care in an effective way and the and the founders here founder worked for Eric Schmidt at Google on special projects and it’s funded heavily from with Eric Schmidt and some of the others but the goal here is can we actually disrupt healthcare in a in a fundamentally different way so this is business model disruption the second is Roman who’s heard of Roman okay so Roman is focused on guys and it solves different problems for guys and and this is experience disruption so their big partner is Pfizer and so they picked a whole bunch of issues that are they’re a big deal for guys and they you know everything from helping guys stop smoking to to to hair loss which I have I’m slowly growing to to erectile dysfunction to other to other issues that they deal with you actually go in if you do an online exam and then you you can actually immediately start getting care and what they’ve done is they dramatically changed the experience for a set of issues the guys deal with that are incredibly personal and and sometimes embarrassed to talk about and they’ve created an incredible experience to do that so there’s no radical change in in how they’ve in the technology or other things that they’ve created but they’ve just created an incredibly human experience for men for a set of issues and this has been incredibly successful they’ve raised a lot of money there’s there’s another round I think 85 million but it’s an experience led disruption in how we deliver healthcare and then finally bind does anyone know bind okay so bind is an insurance provider but I’ll give you a hint so root is an insurance provider they’re using AI and attribution from your phone to dynamically price insurance products and bind is using AI and a kind of simple set of services to dramatically change how we think about health insurance and so and you can go out there there’s massive amounts of monies being spent by ecosystem partners like Amazon and others Microsoft Google Apple there’s massive amounts of money going into stock startups and all of them are looking at those three elements can we create some type of experience disruption for all the folks in this room can we rethink a business model and make it more relevant or can we use technology in some unique way or AI to change the dynamics of the industry and and so those are the startup folks doing that so the question becomes how do incumbents actually play so any of the folks in this room that work for large corporations know that most incumbents are focused on optimizing their core

products customers the core business and that’s what shareholders expect they want a certain return over time you know and it’s incredibly inflating difficult to pivot that kind of business and focus on disruption and so the best example of this and some of the folks on our strategy team our bloom strategy team put this together is Netflix so Netflix kind of articulates the incumbant challenge in a great way so how many people have been following there’s anyone in investor netflix i’ve been following the stock a user of netflix probably everyone in this room so netflix stock is through the roof they burn a ton of cash so if I’m a competitor to Netflix Netflix it’s really too expensive to replicate to diluted to acquire and if I partner with them I’m ceding to them and you even see this recently AT&T has been making investments in media assets and there’s a there’s a company called Elliott management that’s come in and taken a stake in AT&T and basically said focus on the basics and stop wasting our money on these dreams around around media and new services and so the incumbents have this fundamental challenge how do we actually pivot and how do we actually defend and win in an environment that has an incredibly harsh investor environment which is preventing us from doing that and investing in these new things and then to an environment where our own organizations have disincentives because the structure of those organizations to actually do things that are disruptive and transformative and so the incumbents have a set of assets they can leverage to do this and so what is the incumbent advantage you can use these examples for I’d say a lot of the incumbents that have pivoted and a lot of these are relevant in health care too so hard assets can we use our physical locations to differentiate and win so Walmart health is a great example of this so I was down there with the with the leadership team they’ve actually created a health business and they said we’re gonna take this physical footprint and everything we know about creating efficiency at scale you know across our retail business and our grocery business and we’re gonna apply that to health care and so Walmart health has on some was launched the first actual Walmart health pilot was here in Georgia and what they’re doing is they’re dramatically reducing the cost associated with all the elements of health care so like dental a doctor’s visit iCare pharmaceuticals etc and they’re bringing all those together in kind of a unique way so you can use your physical assets to differentiate and create new services customer relationship so I can use the demand side of my network my platform to create new opportunities a great example is Best Buy so they’ve taken this massive subscriber base in you and me and they’ve started building health services that they can deliver to that network so Aging in Place is the first one so you can leverage your customer relationships to build new services that you deliver on the supply side to the demand side of your network I can leverage my brands I can leverage data like the panel said earlier to do things that I otherwise wouldn’t and there’s incumbents like Mayo that I’ll talk about later that are doing that data monetization isn’t just about selling that data to third parties it’s about creating new services new products that are powered by that data like route has and then finally I can use decades of institutional knowledge Mayo is doing this to create a platform to serve the you know planet and provide you know kind of relevant healthcare at a broader scale and I’ll talk about examples so incumbents can use assets that they have and those assets can be under valued to create new services that defend and win against the disruption they face and so what are three examples that I wanted to cover the first is Mayo Clinic so we did some work with the folks up at Mayo and one of our our health innovation leaders Brian Callas was involved with this what Mayo wanted to do was you know what are they known for they’re known for as

a destination for met for serious complex diseases and they wanted to determine whether they could build a platform like like Airbnb but to serve the world and solve for those those those need states and and so Mayo went out and and they’ve been in the process of building out that platform but if you think about it there’s a for everything from diagnosis to other forms of care can happen digitally now through you know video FaceTime chat other mechanisms digital tools and so Mayo has done that and I think it’s fairly unique I don’t think I’ve seen anything else like this but they have an innovative team of leaders and they’re looking really you know broadly at that goal can we solve some of those complex serious disease states and do that for everyone all seven and a half billion of us Comcast basically if you look at Comcast’s business what’s happening well OTT sir over the top services are dramatically reducing the profit pool they have from subscriptions so people aren’t willing to spend 150 dollars on a cable bundle anymore they’re going over the top with Netflix and other things an Apple TV and they’re dramatically reducing the cost they spend on that so comcast has 85 million households and they have a two-sided network proprietary that’s not much different than Amazon’s or any other two-sided network so became can we build a platform business that provides other types of services to those households some media services there first and so with Comcast health and the quill partnership that they have with a payer what they’re doing is trying to figure out what are the services that they actually launched and they’ve done that in a quick way they the first ones Aging in Place so they’ve come up with some in-home services using the Google a iCloud to bring those to life and they’re thinking about other services like hospital at home etc that can really extend that so comcast is an incumbent that’s really thinking about healthcare in a unique way and leveraging the demand side of their their network these 85 million households to make that deal and then finally Kaiser I really like Kaiser Permanente I like the people there the the leadership the their their vision and and if you look at Kaiser what I think is unique with them is that they’re coming up with an engagement ecosystem and they have the advantage of being a payer and provider a digital engagement ecosystem that’s more than just digital it converges physical and digital into a you know what we call a service experience and so they combine tech and touch and everything from the base application that has alerts your appointments your medical record to some of the additional apps they have they have a video doc app that that lets you actually have a video call with your doctor they have a health wealth app they let you lets you monitor your spending what they’re doing is they’re building a set of services digital services that transforms that experience for all of us and makes it more human so I think Kaiser is doing some cool things that are kind of a step above that are that are differentiated and you can easily see an extension of that I mean there’s no reason why they couldn’t replicate forward right there’s no reason why they couldn’t get into preventive care through the you know through devices like the one I have on my arm but they can start getting there and they can start building the alerts and using AI to actually curate the experience you want to have with your healthcare provider so Kaiser is another a great example and so all these incumbents are using assets they have that could be undervalued to create new services new products launch new businesses that let them defend and win against the disruption they face so how do we think about digital transformation and how do we frame digital transformation in the way that’s consumable to the you know the C Suites the CEOs and other senior leaders we serve and the boards they serve and investors they serve and it’s really

really hard o give you an example if you look at the pivot that Microsoft made to Azure and LinkedIn and and some of the other new services that pivot really caused them to disrupt their existing value pool windows which is incredibly high margin and without a founder lurking around it would be really hard to make that pivot as a hired CEO it’s just really hard to do because the investors want you to focus on the next quarter because you and I as the investors in those funds want the same thing we want to return immediately and so founder supported companies like Walmart with the Walton family gates and and Microsoft Amazon and Bezos have a disadvantage that they can focus on a longer term horizon and so the companies the other companies that have hired CEOs you have to give them a framework for how they think about digital disruption transformation and we think of that in terms of three kind of horizons of transformation first horizon of transformation is the core and we call them brilliant basics are their basic fundamental things low risk low reward but quick wins that an organization can put in place to unleash trap value in the core business and make a step change in how they deliver a great experience to you and I and and so those are core things like horizon one so an example of a horizon one may be just a more pleasant experience on a website with a company like Kaiser Permanente that enables us to just have a better experience with them a horizon one activity can also be focused on what we call digitization so making a step change step change improvement in using digital technology to make a step change improvement in how we reduce costs or improve revenue so that’s horizon one horizon 2 is about extensions to the core adjacencies to the core we’re not launching a new business using assets from our core but we’re doing is we’re extending the s-curve of our core business through new capabilities and services and an example of that I think that it’s probably most relevant Berkshire Hathaway launched three insurance this could easily be an inhale thin surance attacker as well but three insurance in essence is an SMB insurance provider if they bundle insurance for you as an SMB there’s no broker so there’s a disruption with the broker and Berkshire is the reinsurance engine for that so they’ve launched three insurance you go to the website it’s three page policy there’s no broker and you sign up it’s 100% digital what does that do and it extends the s-curve of their business because they release a massive amount of trap value that sits with those brokers they simplify and bundle the products in a different way and they rethink what they’re offering now and that’s an adjacency so we’re creating an adjacency to our core market product or service and and that’s kind of a horizon to activity and then finally a horizon 3 activity is actually creating a disruptive business model and and this one’s a lot harder for incumbent organizations but can we take for example data and create a new business that complements our core so Loblaws done this with la blaw media so they’ve taken all the data and attribution shopper attribution about you and I they’ve applied a set of algorithms on top of that and they’ve created a framework a platform that allows you to target audiences execute campaigns on the inventory they own as well as on Facebook and Instagram and then measure those campaigns through one interface and so la blaw media competes against Amazon media and Google marketing or double-click and Walmart’s media exchange but they were able to make that pivot and create a complementary business and so it is possible but those things in horizon 3 are higher risk higher reward and a lot of times the bets you’re making there

will most likely not succeed Pacific Life launched swell insurance so I was out there giving a keynote to the their leadership team swallow insurance they decided to close down so while insurance was a digital attacker and in the insurance space they closed that down but they took the assets from that and applied it to their entire business and then pivoted their business and so horizon three things are higher risk they may be higher award but your board and the investors that you rely on may see that as something they don’t want you to do similar to AT&T or Pacific Life or others and so generally what we say is you you’ve map the opportunities in something like this so we can actually say hey here’s what we’re gonna be focused on and you know people on our team here’s what we’re going to be focused on board here’s what we’re going to be focused on the other c-suite leaders suppliers partners customers and the notional value of these elements can be quantified and we can measure our pivot to becoming a digital business so so that’s the the last element of what I wanted to share so so basically I wanted to talk to you broadly about disruption some of the the disruptors we’re seeing in healthcare some of the things assets are incumbents can leverage and then and then examples of how you’d frame that so with that I’ll I’ll open it up to questions if there are any questions a couple quick questions please so when you are making investments whether it be in your venture fund or elsewhere what do you look for to see whether somebody you think can be successful in going through this disruptive model that you’re describing well one I look for the team like at the end of the day it boils down to whether the team can pivot and the DNA of the the startup team whether it’s inside of a big company or in a start-up I think that’s essential to I look for the the potential trap value that’s being released how big is that and then three I look for what are what’s the likelihood that that trap value can be released and it’s incredibly complex in healthcare as a lot of the folks in the panel described so the the easiest area of trap value to release in healthcare is self-funded corporate insurance programs like Accenture so we spent about a half a billion dollars I think on our are self-funded program and we use a third-party payer to administer that program those are the biggest you know kind of rocks because the companies like Accenture are always looking for more efficiency reduce their costs so if you if you’re you know in the car ‘get it as at those corporate dollars Amazon just launched their Amazon care I think it’s called I don’t if you guys have seen that so it’s a it’s a care based service for Amazon employees in the Seattle area which creates a set of AI capabilities mobile apps tella doc etc in you know clinician type services and it’s aimed at that dot the amount that Amazon spending on healthcare they’ve also jumped in with JP MC JP JP MC Amazon and Burke Sheriff’s jumped in to kind of do something similar so that the spend that the 300 largest companies have to have these self-funded programs that spend going up I don’t know 15% a year some amount that is a trap value that’s easy to get at other elements of the trap value are incredibly hard a hospital doesn’t want to reduce its revenue right and so the like go after the trap value that can release quickly is the the third element I’m Way over but yeah one last question hi Bob my name is Emily marker and thank you so much for being here today do you think that innovation has changed at all as we’re entering into the market of disruption and do you think that incumbents have the skills to innovate to be disruptors yeah good question so I think I think all of us have the skills to be disruptors or create some new service Sarah I mean I created bloom inside of a 40 billion dollar company so I think that exists you may have to complement that talent with external

talent and and kind of make sure there’s a mix you don’t want to you know HSBC launched a b2b commerce platform in India and China for you know kind of secure commerce that’s an issue there and you go to the office and and you have it’s a replication of the the the HSBC parent like there’s assistants sitting out front there’s closed offices everyone has their you know tribes within the the startup the startup has to operate think differently it has to be able to pivot quickly but I think the DNA of an entrepreneur is in all of us okay well thank you so much [Applause]