Corporate Innovator: David Cannady, Chief Strategy Officer of Mercy Health

Kymberlie Mcnicholas · March 6, 2018 · Short URL:

Mercy Health is Ohio's largest non-profit healthcare system with five hospitals,180 doctor's offices

Mercy Health has a strategic plan that’s based on four strategic pillars: One is amazing patient care; second is operational excellence; fostering healthy communities is third; and the fourth is called "creating the future."

Although he’s involved in all four, David Cannady’s job as Chief Strategy Officer is primarily around the very growth-oriented pillar, “creating the future”. He is at the forefront of growing the ministry in all ways you could imagine when it comes to a healthcare system.

Since strategy and innovation resides across Mercy Health, his primary responsibility is to be a facilitator and pull the right people together across the organization.

He is the go-to guy when it comes to knowing problems all aspects of the organization are facing and who’s creating solutions within. He's also  the point person for outside innovators.

(Editor's note: Join us at SplashX Invent Health: Future of Clinics on March 15, at HP headquarters in Palo Alto. We'll take a deep dive into how local care is changing and becoming more about wellness and less about sick-care. Hear from Walgreens Health's CMO, HP's global medical director, Sutter Health's Walk-in Care, Kaiser, and CEOs of Omada, Health IQ, JustAnswer; Plus VCs from McKesson, Norwest, Mayfield, Khosla, DCVC, Comcast.) 


Interview Highlights:

  • Mercy Health innovates within, buys and leases products, as well as partners with, invests in, and acquires startups.
  • Consumerism and operational efficiency are key priorities
  • Looking to partner with companies around Artificial Intelligence
  • Just-in-time inventory is becoming more popular, and could impact how vendors set-up their business models
  • Keeping an eye on iOT to provide doctors greater insight into a patient’s home surgery recovery and chronic disease management
  • Key to future partnerships is being better coordinated internally on product testing, and ensuring acquired products solve actual problems within the organization
  • Attractive early stage companies are referred to industry experts who can better help them ready their product for adoption.


KM: To fulfill your role of ‘creating the future’ how do you decide whether to innovate within, when to partner or when to acquire, whether it's a product or even an entire company?
DC: It may sound contrary, but we've put some bureaucracy around our innovation so that we're much more intentional and deliberate. You may think sometimes innovation is freewheeling, but in order to do it effectively, you need to have some process in place to make those decisions you just outlined in a really coordinated fashion and that you intentionally ask yourself, "Is this something we feel like we can do on our own, we might need a partner, or to acquire?" So, every time we look at a potential problem or opportunity, we're going to ask those series of questions. So, we scan the horizon to determine what we have internally, what we can do internally, versus what’s already out in the marketplace. That helps make that decision a little bit easier.
KM: What are some of those problems that you're trying to solve and ultimately determine whether to innovate, partner, or acquire?
DC: Our primary focus is in consumerism, particularly the patient and family experience and consumer experience. Secondarily, operational efficiency, how do we deliver care more efficiently, and more effectively? Those are the two main filters that we're going to triage for opportunities, including potential investment, vendor relationships, internal and or external creation.

KM: Regarding consumerism, what would you hope to create within or what type of solution would you want someone bring to you?

DC: Patients are highly frustrated about how to navigate the health system. It's so fragmented. Even in a health system like a Mercy or some of the others where you see a brand on a facility and you think all those facilities are well-connected and seamless in terms of my experience, but that's not always the case. So, we have a very big focus on digital strategies to enable the patient or consumer to be smart about their healthcare choices and to navigate the system, whether that's to find a physician to schedule an appointment to getting their result, how to pay their bill, and understand their bill. So that's a big push for us is to improve the digital experience of our patients and consumers.

KM: When it comes to operational efficiency, I bet AI will play a big role in solve problems there?

DC: I think the thing that's most exciting is that Mercy Health has made a significant investment in Epic (Epic Systems Corporation: healthcare solutions provider for maintaining a patient’s health records). So, we have created a pretty amazing clinical data warehouse that has the opportunity to provide amazing clinical insights as well as operational insights about how to improve our care and the efficiency in which we deliver it. I think those will provide opportunities that we do on our own internally. I think there are also opportunities to partner with other companies, particularly if they have data that's complementary to our clinical data. For example, we may have data that's a mile deep around a particular clinical visit, but they may have broader data about that patient or consumer that we don't currently have. So, the opportunity to marry our clinical data with others who have broader sets of data, which can include payers, would provide insights that probably would benefit the patient and the organization. And a key thing there will be we may find insights, but then the question is how do you build it into the workflow of the physician or clinician that can help them make better clinical decisions? We can come in all day with insights, but if we can't work it into how they treat and manage patients, it just won't be adopted. So, we're bullish on artificial intelligence and think that there's great upside to it.

KM: What's in your product pipeline right now?
DC: What's been fascinating is that a lot of the pipeline involves third parties, and I have signed many non-disclosure agreements because they have early innovation. So, there's not a lot of those that I can talk about right now. One partner I can tell you about that we have an investment in is called ReadySet Surgical. It’s a company that helps hospitals manage and track vendor-supplied medical devices in the OR (Operating Room) with a Software-as-a-Service Platform (SaaS). For instance, to save cost, we don't necessarily buy all these devices because we never know when they might be used, so we partner with medical device companies to provide it when the physician or surgeon has scheduled a case. These are expensive items that often get lost in the OR as you can imagine, and so we one, need to be better at scheduling when the device is needed, and two, being able to track it to return it to avoid expenses with the medical device company. 
KM: That paves the way for hospitals to have access to cutting-edge capital-intensive infrastructure that they might not otherwise be able to afford to pay for upfront, allowing them to rent it on a case-by-case basis. I imagine that on-demand medical devices are becoming more desirable for hospitals today for a SaaS platform to have been developed?
DC: Absolutely. It is the idea of just-in-time inventory and not having cost sitting on a shelf. And so, working with the vendors where they're incurring the shelf cost, if you will, and that we just have it when it's necessary to have it, is huge for us. It also gives some teeth to the provider or hospital to say to a medical device vendor, "We're happy to have your product but you have to comply with this process and this technology." And while they may push back on it, they realize it's the door that they must go through.
KM: This could be a game-changer in terms of how medical device companies set-up their entire businesses, don’t you think?
DC: Yes. We've been even thinking a lot about where else this technology could apply. Not just our ORs but in our outpatient facilities, even elsewhere inside the hospital or even our physician practices.
KM: What do you find are your greatest obstacles when it comes to executing partnerships?

DC: I think a lot of it is coordination and awareness within our organization. We have a relatively large health system where many folks are pursuing the same challenge or opportunity, and just being coordinated and intentional about where we deploy or test new technology can be a big obstacle. For example, there’s a lot going on in the remote monitoring area with where a lot of companies that can provide the ability to track a patient and how they're doing at home. What we have found is that we have many vendors in which we have tested their products or have simply developed relationships. Had we known it in advance, we probably would have had a much more intentional vendor selection process and even proof of concept pilots. It would have allowed us to potentially do a better job of comparing the results.
The second part is when you're out in the marketplace, you may find a lot of great innovation, sometimes I refer to them as shiny objects, but when you bring it back to the people who really run the hospital, they say, "That's not a problem I think I have." So, we always have to keep in mind the people who run our organization, that we are in fact solving a problem that we have, and not trying to kind of force innovation, because that will lead to very poor adoption.
KM: I always say when I'm guiding startups is, "You need to reach people where they are and their pain points, and then guide them where you want them to be and where you see the future headed."
DC: That's right. And I think for us, if we're making a direct investment in a company, we do them a disservice and we do a disservice to ourselves if we make the investment before we've actually embraced it. One, that hurts their ability to go sell the product and say, "We have the X experience with Mercy Health." And it hurts our investment in them in terms of their future sales prospects. And so, we really hurt each other when we aren't deliberate about knowing whether there'll be adoption. So, now anytime someone brings a shiny bright object, whether it's an innovation or a company, I think we're going to kind of force that discipline on ourselves.
KM: How about iOT, where do you draw the line in terms of what’s in your organization’s innovation cycle versus the connected devices you believe should left to consumers to decide on their own whether to use, such as a FitBit, Bloom, or others?
DC: Underneath the value-based payment, we are more accountable for the cost and quality of care for patients, not just inside the four walls of our hospitals or our physician practices any longer. So, the ability to have greater insight into how that patient is doing in their recovery from a surgery, for example, or from how they're managing a chronic disease, we think that has a great applicability. We also like biometric tracking, tracking of weight, and tracking whether patients are taking their medications. But also have our eye on smart refrigerators. If we have insights into what the person is eating and consuming and they're a diabetic, that's amazing technology to us and can help improve the outcome. So, there's great potential. But for us it’s a matter of just separating the shiny object from what the reality is.

KM: I could see Mercy Health partnering with a company such as Innit, which is creating the next generation operating system for kitchen appliances, to reward patients who give doctors access to the data collected by Innit. It’s almost like a pledge that I'm committed to living my life better and healthier, right?
Yes. I think there's a way to get over the Big Brother element of it for people who are interested in improving their health and may opt in voluntarily if positioned correctly. I would definitely put a company like them in contact with our care coordinators.

KM: With innovation happening at the speed of light, how do you manage your priorities, and communicate them effectively to ensure the best doesn’t fall through the cracks, and you remain on the cutting edge?

DC: In recent months word has gotten out that innovation is key to our overall future strategy. So, we’ve had a lot of people approach us looking for partnerships. I think we need to do a good job of managing their expectations of, "Do they fit in our priorities?"  But if we really like their innovation, and they don’t fit into our current priorities, we can connect them to innovation partners that we have or even innovation funds who are willing to make early equity investments in a product because they have the expertise to help bring it to market. So, we would say those companies that we may not have a short-term need, but we believe in their long-term prospects that, "We are probably a future customer, but we really can't help you right now. But there might be some people who can help you move your product forward."

(The Meet the Corporate Innovator series is brought to you by Advsr, a startup advisory firm in the business of starting conversations and sparking big ideas.) 

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