Carol Carden, Managing Principal, PYA, speaks to Tim Adelman, Luminis Health, Chair, 2030 Task Force, about AHLA’s 2030 Task Force, which was created to research anticipated changes in the health care and health law industries over the next ten years. The podcast discusses the White Paper that is based on and expands the Task Force’s analyses and findings and what are the most important trends for health law professionals to keep in mind. Sponsored by PYA.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Carol Carden, Managing Principal, PYA, speaks to Tim Adelman, Luminis Health, Chair, 2030 Task Force, about AHLA’s 2030 Task Force, which was created to research anticipated changes in the health care and health law industries over the next ten years. The podcast discusses the White Paper that is based on and expands the Task Force’s analyses and findings and what are the most important trends for health law professionals to keep in mind. Sponsored by PYA.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Support for A H L A comes from p y a For nearly 40 years, p y a has helped clients find value in the complex challenges related to mergers and acquisitions, clinical integrations, regulatory compliance, business valuations, and fair market value assessments and tax and assurance. P y A is recognized by Modern Healthcare as one of the nation's top 20 healthcare consulting firms, and by inside public accounting as a top 100 accounting firm. Learn more@ppypc.com.
Speaker 2:Hi, I'm Carol, card Principal with p y a. Thanks for joining me today on this podcast to discuss the recently released white paper entitled Health Law Destruction, destruction 2030 and Beyond, anticipated Trends for the Healthcare and Health Law Industries. P's proud to sponsor this informative and innovative piece of thought leadership. I'm joined today on the podcast by Tim Edelman, general counsel and Chief Legal Officer of Luminous Health, and also the chair of the task force responsible for the publication of the White paper. Hey, Tim, thanks for joining me today. I'm really looking forward to this, um, discussion and hearing your thoughts on the white paper.
Speaker 3:Yeah, I appreciate you inviting me to this podcast. It's, uh, it was a great project and always excited to talk about, uh, the project itself and what we see happening over the next 10 years.
Speaker 2:I think to get us started, maybe it would be good to give us the, everyone listening to the podcast, some context about what was the, the genesis for this white paper and what kind of process you and the task force went through to get us to this end result, which is so impressive.
Speaker 3:Yeah. So, uh, back in June of 2019, uh, rod Ney, then the president of H l a, uh, wanted to have a task force that would look at the next 10 years, uh, the changes in the healthcare industry and how that would impact the health law industry. And when you think about A H L A itself, it has, uh, typically done a three year strategic plan at the governance level. Um, and so what we wanted to do is really take a, a more macro view of what we see changing over the next 10 years to help drive, uh, not only the organization, but really to, to serve the members, uh, of a H L A and give them insight as to where we think the industry is going. Uh, and you can't really focus on the health law industry without understanding the underlying healthcare industry. So the task force had four members on it. We, uh, we did a lot of deep dive into data. We had surveys and literature research. We did interviews, uh, and spent, uh, the, literally the entire year, uh, combing through information analysts talking to our partners. You know, p y a was a contributor as well as, uh, a lot of other, uh, uh, partners of HLA industry experts. And in the end, we, uh, we presented our findings in January, uh, of 20, uh, 19 to the, uh, uh, or January, 2020 to the board. And then we finalize that paper in our findings in June of 2020. And now you're seeing the product of that through the, uh, white paper that was published, the associated videos and this podcast and other resources.
Speaker 2:Yeah, so obviously, uh, COVID 19 through a bit of a curve ball in 2020. So having participated in white papers like this before, I'll just say as a consumer of this white paper, I was very appreciative of the fact that you guys had managed to weave in a lot of the stuff that's changed most recently because of the pandemic into your thoughts about the next 10 years. Cause that, I found that to be really helpful personally.
Speaker 3:Yeah, I think our experience, we, we did a lot of research, uh, from June until really March was a heavy dose of research and digesting as we started to draft our final analysis. And then as you, as you noted, COVID hit. Um, and as I went back in, in late May, early June to review our work, one of the things I noticed was Covid didn't really change a lot of the predictions. It just probably accelerated some of them. For example, you know, we, we saw telehealth as becoming a really big issue, uh, as a, as a provider in the healthcare industry. Um, and we knew that would have an associated impact on the health law industry, right? How, how do you manage telehealth? And, and as we saw with Covid, uh, and the implementation of telehealth, there were a fair amount of exceptions and waivers to certain state laws and federal laws to be able to really implement telehealth in a, in a practical manner to treat patients. Um, and so we, we foresaw some of that change just at accelerated in a matter of a month versus over a 10 year period. So, uh, that was at least somewhat reassuring to, for us as a group, to see that what we were predicting was going to happen, uh, and, and in some cases, uh, that that happening just was through, uh, the acceleration of, uh, of an immediate need.
Speaker 2:Yeah, I think a lot of people would agree that telehealth wider acceptance was long overdue, but yet unfortunate it took us a pandemic to get us to where we probably should have been<laugh> several years ago. But, so one of the things I thought, um, would be good to talk about now, the, the way the white papers organized it, kind of bifurcates trends impacting the healthcare industry versus those impacting the health law industry. So just in terms of the healthcare industry at kind of a high level macro level, uh, I'd be interested in your thoughts on the kind of the key takeaways that we have addressed in the white paper.
Speaker 3:Yeah, I think if you were to summarize what we think is gonna happen is obviously the industry is ripe for innovation. And, and let me explain that. So the healthcare industry, uh, in 2007 was 16.4% of our gdp. And by 2022, so in another year and a half, it's gonna be almost 20% of the gdp. So it's obviously the healthcare industry is a huge component of our economy, but you put on top of that an increasing, uh, age of our population. So those age 65 to 70 will grow from 21 million in 2010 to almost 39 million. So almost double the to size of that aging population, which places a huge demand on the healthcare industry. And then we have financial pressures that many of us know, and we have shortage of providers in, you know, one area that we cite is there's over almost 240,000 mental health professionals shortage by 2025. Um, so tremendous shortage in certain key areas. And then you take all of that, and we have in the private equity, and we can talk about that in more detail later, but 1 trillion in dry powder ready to invest in the private equity sectors across the entire, uh, global economy. But 250 billion of that is really thought to be targeting the healthcare industry. So you have an industry in which there's high demand, uh, we are concerned about the supply, the number of providers and the cost pressures. I think all of that, uh, is just makes it ripe for innovation, uh, both in terms of technology and data, as well as just our care delivery models. And I think that's what we're gonna see over the next 10 years.
Speaker 2:That's interesting. So you referenced technology, and one of the things that I found really interesting when I was reading the white paper was the discussion of the role of artificial intelligence. So I've heard people over the last few years speculate on how artificial intelligence might disrupt the healthcare industry. I've, I've heard it primarily in regards to will it eliminate certain types of jobs in the healthcare industry. Where do you think we will see the biggest impact, and where are we likely to see it come in first? And those might be two different answers, or it might be the same answer, biggest impact, and it's gonna come first. What are your thoughts on that?
Speaker 3:You know, as we were going through this, this process, it reminded me that the task force process, it reminded me of one of the keynote speakers at the in-house, uh, program in tw uh, 2019. And they talked about the impact of technology on the workforce. And one of the examples they gave was in the baking industry when the ATM came out, uh, many thoughts that that was going to significantly eliminate the bank teller jobs across the country. And we're gonna see these big massive bank buildings, you know, shrink. Um, and what a actually ended up happening is you had ex explosion of little banking units across cities, uh, you know, your Bank of Americas, your, uh, you know, Wells Fargo, they were opening up these small shops that could really service and start servicing loans and mortgages and other types of things. Healthcare industries, the same way, what ends up happening in technology is technology typically doesn't eliminate jobs, but it changes those jobs. So take radiology, for example, radiology has been one of the top three that is identified to be prone to, uh, uh, artificial intelligence taking, making a major change. And so what they've talked about, the analysis is that radiologists will become less, uh, reading images and more integrated in the care process of the patient. So they will be interpreting the film and really helping the patient understand, uh, what this means, the disease or the condition and how it should be treated. So I think we'll just see, uh, individuals jobs change. The other thing is, I referenced earlier is there's a shortage of providers, a number of provider, uh, uh, classifications. There's a shortage. And AI can be used to help extend making one provider, uh, as efficient as two providers. And I think that's where we'll see a lot of change. So I don't think we'll see an elimination of jobs. I think we'll see, uh, some jobs change and I think we'll see other jobs become more efficient to help meet the demand. But without a doubt, the demand will always be there.
Speaker 2:So first of all, I love the at t m example. I think that's something that all of us can easily wrap our mind around. So I had not heard it, uh, laid out quite like that before, but very interesting. Also wonder, kind of back to your telehealth, um, I think the combination of, you know, the shortage area can help, can be partly I think, um, solved through increased use of telehealth, and then, as you said, partly solved through maybe some ai. So what would be interesting to see kinda longer term is for all the people who might be concerned about job security with artificial intelligence, I wonder if in the long run that their job satisfaction actually increases because they're getting to focus on the parts of their job that are maybe a little more patient-centric or they're dealing with more complex problems, which give them a higher level of job satisfaction. So it could be that, uh, this thing that people might be a little concerned about or uncomfortable with in the long run turns out to be a bit of a silver lining in terms of their jobs satisfaction.
Speaker 3:Yeah, when I started, uh, when I was asked to, uh, chair the task force, and I, I think one of the reasons was I had already shown an interest in what was gonna happen in the future. And then that was actually for my own self-preservation. I mean, I'm gonna be practicing law for the next<laugh> 20 to 30 years, and I was getting worried that AI was gonna start to take away some job opportunities for me. And, uh, I think the healthcare industry, you know, now that I've transitioned to in-house and working closely with, uh, with a variety of, uh, providers every day, um, they certainly feel that same pressure, which is, what is my job gonna look like in, uh, in five years, 10 years? What is technology gonna do that job? And, uh, you know, I think as you said, some of that may help them have, uh, increased satisfaction through more efficiencies. Um, the one thing you noticed with telehealth that, you know, we just mentioned is it it does allow us to, to spread our wings a little bit more, but there's some other, uh, challenges associated with it in terms of, uh, a telehealth visit may not and typically does not reimburse at the same level, because if you have a patient come into your hospital, uh, or to your clinic, it may be a level three, but you may be able to deal with some of these things easier on telehealth, and it's a build at a level two. But on top of that, you also have ancillaries that aren't being built if they're all telehealth. And so you have some revenue decreases on that side, but that's where we talk about innovation, right? So maybe we may bring in less revenue, but we also have less expenses. We don't need to have these large office buildings with multiple staff there. And so we may be able to trim and become more efficient. Uh, and then, you know, I obviously, the concern I hear is, so you're saying we may have our staff be reduced, so maybe doctors still here, but you know, the staff isn't, and I can tell you personally right now in our own system, we have a hard time hiring enough staff, right? There's always a shortage of good workers. Um, I think that's across every healthcare providers, always looking for, you know, good techs and, uh, MAs and nurses and receptionists, et cetera. And that those are, that's always gonna be there.
Speaker 2:So speaking of ways to be more efficient and potentially cut costs, you made reference a little bit earlier to there being 250 billion available in, um, private equity money, and I targeted for the healthcare industry and that that is likely to be, um, driving some consolidation. So we, we all know that kind of the end game for a PE firm is return on investment and an exit strategy. So how do you think, um, an increased presence of, uh, private equity will impact the industry over the next 10 years?
Speaker 3:You know, it, it, there, there are pluses and minuses, obviously with, with the influx of, of private equity, as you said. Uh, at a very basic level, most reports say that the private equity life cycle is three to seven years on a rate of return. Um, and in, when we look at private equity, taking a step back of that 250 billion, you know, one of the things that private equity is rightfully acknowledged early on is that to change the current cost structure, the bend the curve, you need to have data. And the payers have historically been viewed as those that have the most access to data. So, uh, in an analysis of deals in the past couple of years, 5% of the deals have been focused on payers. But that's accounted for almost 50% of the investment. So small amount of deals, but a lot of money pouring into payer related private equity ventures. And that's because they have the data and they feel like that's where you can make the most, uh, uh, leverage and return on investment. But we're seeing this across, I think there was up to 300, uh, private equity deals done last year that was up for the low 200 s in the year before, uh, in the physician, uh, area. Um, you know, it, the nice thing about private equity is it gives capital infusion. It can bring together, uh, you know, in the physician area, physician practices, they can get capital investment and equipment. And in areas where there's not a lot of, uh, infrastructure already that can really boost that healthcare delivery platform in other areas where it comes in and competes with an established, uh, facility, that becomes, uh, very challenging. And so private equity can be a real boost to the healthcare ecosystem in a region. It can also be a challenging competitor. It just depends on that market.
Speaker 2:Yeah, that's interesting that you bring that up. So I don't know if you guys are seeing this at luminous in your market, but we certainly have had a number of clients in all across the country really dealing with a situation where either a practice that has, you know, long used their facilities is now being courted by a private equity firm, and they feel compelled to make a competing offer. But you know, they don't have to follow the same rules. And what I wonder if long term, what we won't see is the physicians who go into those deals with private equity, maybe not fully appreciating the cultural change that will come about. And so I wonder if we'll see this private equity, all this stuff roll up and then a few years later start unwinding just because of the culture differences. What do you, do you think that's, um, likely to happen?
Speaker 3:You know, I think it's a, it, it certainly is a cycle and not one that we haven't seen before. I mean, and, you know, we had MSOs and various versions of HMOs, et cetera, and, and there's always an opportunity to try to look the way to do things better, faster<laugh>, you know, more efficient. And I think private equity, we definitely have it in our market. Um, you know, there's some great reports about there showing which, uh, specialties are particularly vulnerable to private equity. Uh, and we've had that experience here. Uh, and it's hard to compete, as you say, they, they don't, they're not necessarily constrained by the kickback statute or the, uh, stark calls depending on the nature of the, the relationship. And, uh, they're very creative on how to deal with the unauthorized practice of medicine. And, you know, it's a lot of money being thrown in one direction, but as you indicated, it's, uh, it's also very challenging, uh, work environment. So if it, you're looking for a rate of return in three to seven years, that means you gotta get your volume up. And while you can talk about the, the ability to use private equity transition to, uh, pay for performance and, uh, value-based contracting, I think that that doesn't happen in three years. And that's really the rate of return on a lot of these deals. So you have to keep your fee for service, and that's, that's a challenging environment for, for physicians and, uh, other providers.
Speaker 2:Yeah. So let's turn our attention now for a minute. We've talked about a lot of things going on in the healthcare industry. Obviously those will all have to some degree, an impact on the health law industry. So again, starting at kind of a macro level, what do you anticipating is kinda the biggest changes over the next decade for the health law industry?
Speaker 3:You know, certainly artificial intelligence is going to change the way, uh, we deliver health law services, but I, I think the biggest change is we're gonna see a significant expansion of the health law provider. So traditionally health law was a health lawyer industry. Uh, we saw the rise of the compliance officer over the last 10 years. We know that, uh, accountants and even the big four accounting firms have gotten into the legal aspects. A lot of those big accounting firms have actually set up subsidiary, uh, entities that have lawyers on it. Uh, we know the consulting industry has very much, uh, uh, become experts in areas of the health law. And so I, I think in an industry that was historically viewed as a lawyer dominant industry, we're seeing other health law professionals come in. And now this is being, uh, uh, continued supported by the educational background, which is, you know, we have this a master of health law, a degree in which it's a, uh, health law degree for non-lawyers. And so, uh, what we're seeing is a lot of more, uh, we have a huge demand for healthcare. We have a huge demand for health law services, and now we're seeing those voids be filled by a, a variety of providers. I think that's gonna be overall the biggest change in the next 10 years. And then you layer in something like artificial intelligence being able to do, uh, certain tasks that we're traditionally done by the lawyer, and now we have another problem, which is how do we get these trained health law professionals or health lawyers, given that some of the tasks we used to do are gone and we have a lot more competition.
Speaker 2:That's a good point. And, you know, um, I'm on the consulting side, but, um, we've seen the same, a similar trend in that a lot of law firms have now set up subsidiaries that do consulting. So there's a lot of, seems like a lot of crossover going, uh, between the, the per professional services industries. Um, I haven't heard as much on the consulting side about the use of AI as you might have heard on the legal side, but I think your question about getting training for the, the new attorneys right outta school is a great one and a, and a challenge that's likely to be facing the industry.
Speaker 3:Yeah. One of the things that, uh, you know, the, the old model of health law was if there was a transaction, you, you, you had a couple partners doing the, the transaction deal, and then you had a bunch of associates doing the due diligence of that transaction, and those associates would learn the, the mechanics of a transaction by being paid to do due diligence. Now there's artificial intelligence that can do the due diligence, that can sift through the documents and identifying flag ones that are important. So we don't have that training ground now. We can't afford to ha, we won't afford be able to afford to have their associate put in a bunch of hours on a due diligence, which helps'em learn the nature mechanics of a transaction. Now they have to come in and actually help on the transaction side, and that becomes a lot more, uh, uh, challenging. We know that a lot of firms that are already using ai, and I think that the white paper reference is a few example, but there's some basic AI that just helps with contract prepare, uh, preparing contracts. There's AI that helps due diligence. It's not farfetched that will have AI in the near future that could, you could insert a bunch of variables related to a compliance concern and they could, you know, immediately pop out the, you know, a proposed result of that compliance analysis. Now what ends up happening is the lawyer then becomes the advisor, right? And becomes the trusted strategic partner. Um, and I think that's where we've seen the law firms get into consulting, because consulting from the lawyer's perspective has always been that person advising on the business and being a strategic partner. And the lawyers have been kind of doing the mechanics of a deal, and now we're seeing the lawyers, uh, transition into more of the advisor strategic role along with the mechanics.
Speaker 2:So do you think these changes and how attorneys get trained and the use of artificial intelligence will impact how you help at least out outside council, how they are able to charge for their services? Or do you think it'll remain kind of the billable hour that it is now? It's just maybe you have some less hours because you're more efficient?
Speaker 3:You know, it's, it, it, it's an interesting question. I, for me personally, I, I don't see how we continue down an our billable hour process. It's not a good economic model. I think most lawyers would tell you they, they hate the, they hate the model. And for clients it's not always a great model. Uh, but we also know how hard it is to get away. We mean, we know how hard it is to get away for fee for service in the healthcare industry, right? But I think everyone would say that value-based payments are, are make a lot more sense. Uh, I think it's hard for law firms, uh, in particular to go to an alternative fee model because of the unknown and the risk. They don't wanna, you know, quote a project that a fixed fee of$10,000 and now they got$20,000 put into it in terms of man, uh, uh, of, uh, uh, worked hours. And so there's just a lot of competing and, uh, interest in trying to do that. I am one that believes in the next 10 years, we will see a substantial evolution to fixed fee, alternative fee models, uh, more, uh, uh, arrangements where you pay for the product, which could be a policy, a contractor or a transaction and less paying hourly mm-hmm.<affirmative>. And when you do that, you can then leverage your talent and then use that as a training ground. Uh, because you're not, as long as you do the work with an efficient margin, the client's not caring how many hours it took an associate versus a partner.
Speaker 2:Right? And in the consulting world, we've done some of that transition already. So we have a lots of different types of projects within consulting that we typically do, quote as a, a fixed fee, and then other types of work. And it is, many times it is a risk based decision. How much risk is there, how, you know, what's your ability to estimate what it's really gonna take to get a project done?
Speaker 3:You win some, you lose some, right?
Speaker 2:That's right. You do. No kidding. So I guess one of the things we talked about, uh, when we were talking about the healthcare industry and, and the use of artificial intelligence changing people's position was that it, it wouldn't necessarily reduce the number of, um, employees that you might need in a given area. It just might change what they do, uh, or in some cases maybe even make what they do more enjoyable. Is that what you would anticipate on the health law side? So we need as many attorneys, we just need'em doing something different, or do you think, um, there might be some reduction at least in that external council world?
Speaker 3:I, you know, I, I'm a believer, if you look at the A H L A want ads that classified, there's always advertisements for good healthcare lawyers. And I think, uh, that that market will remain hot. When I was in the, in, in a law firm, I remember it was always hard to find good healthcare lawyers and you always needed them. Um, there's just that much more work. So I think technology will help make us more efficient and may help deal with that shortage of, of health law professionals. Um, so I definitely think it's gonna be similar to the healthcare industry. I do also think that our job as a health law professional is gonna be involved, and that's, that's gonna take some time. So the health law professional really needs to have a strong grasp of the business of healthcare to become a strategic partner. And lawyers, uh, certainly understand a particular deal, can understand if you're gonna acquire a practice or implement a new service or acquire a new technology, uh, most lawyers will deep dive into that, understand that to help prepare the documents, but now they have to have a much bigger picture as well as how does that deal fit into the overall health system, and how do I counsel the client on whether this fits in with their mission, vision, values, et cetera. Um, and that's a change, that's an evolution. So I think we will see the lawyers and the health law professionals job change, um, but I don't see us having a reduction in demand, uh, just becoming more efficient to meet the demand. Mm-hmm.
Speaker 2:<affirmative>, so we've talked about some pretty significant changes that we're anticipating, um, over the next 10 years. And a H L A as an organization obviously thought it was important to explore this since they had formed this task force that you chaired and asked you to try to, you, you and the task force to try to predict the next 10 years. So as an organization, um, devoted to the health law profession, how, how do you see a H L A best being able to help those in the industry and in the law profession respond to these changes and position themselves to be successful in these changes?
Speaker 3:Uh, yeah, it's a, it's a great question. So, you know, I, we all know that H L A is, is now the, the, the preeminent health law association organization. It's, it's the leader in health law education. Um, and I think we'll see H L a continue to be that, uh, excellent source of education. But as we talked about, uh, we're losing some of our training grounds for our health law professionals as AI and other deal dynamics change. We don't have the ability to have someone, you know, do the grunt work to be able to become a, uh, a trusted advisor at a partner level. So HLA is gonna have to step up and, and provide some of that training and be some of the resources. And I think we'll see, uh, HLA products evolve over time to meet that demand. I think we'll see HLA continue to be a thought leader in the healthcare industry. So HLA does these convener sessions, which are outstanding, where they bring health, uh, you know, really participants and experts from across a variety of fields together. And I think we'll see them continue to be active in the industry as a thought leader. I think we'll see them be active in education and they even have the opportunity to get active in products. For example, we talked about data. Data is one of those things that is extremely important now that we understand how we can use data. Um, and HLA can certainly be a clearinghouse for certain data that other organizations cannot be. So, uh, I, I think we're gonna chla evolve to become a really valuable resource for the health law professional in the coming years, uh, even though it even more so than it has been for all of us in the past.
Speaker 2:Yeah, those are some great thoughts. Well, Tim, I have enjoyed this time with you so much. I appreciate you, um, for joining me on this podcast and sharing your thoughts about what, what's coming down the road in the next 10 years. And for anyone listening to this podcast, if you haven't checked out this white paper, you definitely need to do it. I know it's widely available, um, on the website and other social media platforms, but I've, I've appreciated your time today, Tim.
Speaker 3:Thanks very much. It's always great to talk about this. You know, who knows, maybe in 10 years we'll be sitting around the bar at an in-house, uh, program in the future talking about what or what really did change and what didn't. But, uh, looking forward to, uh, to being part of that, that discussion over the next 10 years.
Speaker 2:Well, I, for one, will say, I sure hope that we're sitting there in person at conferences sooner than 10 years.<laugh>, I've missed that. Rest of your
Speaker 3:Thank you. You too. Take care.