Virtual Care ROI with Dan D’Orazio of Sage Growth Partners
Digital Health Frontiers – Podcast Ep. 5
In this episode of the Digital Health Frontiers podcast, host and Caregility President and COO Mike Brandofino is joined by Dan D’Orazio, CEO of Sage Growth Partners, and Caregility CFO Tod Nestor for a candid conversation about virtual care ROI. Mike, Dan, and Tod dig into market research findings and executive feedback on what’s driving health systems to go all in on telehealth, from the hospital bedside to the patient’s home.
Dan contrasts healthcare spending from 2000 to 2024, emphasizing the dramatic growth in hospital costs and the rising demand for more efficient care models. He attributes the push for virtual care to a “perfect storm” of factors, including an aging population, sicker patients, labor shortages, and rising healthcare expenses. Tod offers insights into how CFOs evaluate the ROI of virtual care investments, noting their growing demand for evidence-based, measurable savings. The conversation highlights real-world examples of successful virtual care implementations by healthcare organizations that embraced virtual care to modernize workflows and improve care delivery despite limited funding.
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Read the Transcript
Welcome to Digital Health Frontiers, where we explore the cutting edge of healthcare technology, policy, and innovation, hosted by Mike Brandofino, President and COO of Caregility. In this episode, Mike is joined by Dan D’Orazio, CEO of Sage Growth Partners, and Caregility CFO Tod Nestor for a candid conversation about virtual care ROI. Mike, Dan, and Tod dig into market research findings and executive feedback on what’s driving health systems to go all in on telehealth, from the hospital bedside to the patient’s home.
Mike Brandofino
Hey everybody. Welcome to Caregility’s podcast. I’m Mike Brandofino, President and COO of Caregility, and I’d like to introduce Dan D’Orazio from Sage, a company that we’ve been working with to do an economic value calculator, and Tod Nestor, our CFO here at Caregility. Dan, you know, what we’ve been working on has really been trying to identify the key drivers that really help customers figure out that economic value in virtual care systems. We’re seeing customers expand or looking to expand virtual care to every room and we really are trying to nail down for them some of those key drivers. Can you talk about that?
Dan D’Orazio
Yeah. Thank you for having me, Tod and Mike. Great to work with the Caregility team. I think it’s interesting if we look back 24 years to look forward 24 years. And here’s what I mean. In 2000, we spent $1.4 trillion on the entire U.S. healthcare economy. In 2024, we spent 1.4 trillion just on the hospital, part A alone.
And so, Mike, you’re asking about, you know, why are people looking to expand to virtual care? The growth of our hospital-centric model is enormous. We have more and more people aging in, and they’re becoming sicker and sicker, and we have eventually fewer and less experienced staff. So, you put those factors together and you say, well, how am I going to deliver care effectively and efficiently across space and time? And I even mean inside the walls of an organization, not even outside the walls of an organization. We’re considering both of those in these conversations. And so you look at the shortage of supply capacity expertise, you put on top of that labor expense, the challenges that exist generally in healthcare with sharing information easily, you know, across many different domains in many different settings – I think you have an unfortunate perfect storm that brings us to this conversation of how do we solve this problem, which has given rise to the virtual care discussion.
Mike Brandofino
Yeah, I definitely think that from a staffing perspective, you know, that’s a clear issue. I think everybody understands that. I think the challenges as we get into talking with customers are, you know, where is the CFO’s head on all this? And, you know, how do we get them to understand current and future economic value benefits?
Dan D’Orazio
Yes. Yeah, I agree. And Sage and the work we’ve done with you, we build what we call economic impact models because we’re trying to understand a couple of things. What is the use case of the problem we’re solving? What is the workflow? And where do we generate revenue, reduce cost, or save time, generally speaking? And when we are talking about time, it’s not necessarily getting rid of people. We already have a shortage. It’s how do we spend more time doing more of what we could, should, and need to across the different skill sets? And, Tod, you being the CFO – we often sort of tongue-in-cheek call the CFO the CF-“No” because they have a lot of people knocking on their door telling them that there’s going to be great ROI, which is important but often elusive to chase and maybe even arbitrate – but how have you been unpacking this model and what have those conversations been like with your colleagues on the system side?
Tod Nestor
Dan, thanks for asking. I think one of the things that we’re seeing is the CFOs are re-entering some of the decision-making on the resource allocations. Maybe during COVID they were less so because the focus was on just providing care. As the CFOs re-enter some of the decision-making on the allocation of resources, I think the bar is going up on what they want to see. What’s required? I think when you talk about the savings opportunities, you know, CFOs by nature are going to want to be fact-based. Maybe that’s why that friendly term of CF-”No” occurs – they want to see some more support for the decision-making and the resource allocation.
And so what we’ve been seeing is, you know, their skepticism around that. There’s the challenge of change management within an organization. And what’s required with virtual care and telehealth? But ultimately what we’re seeing is a desire for more substance in making the decisions, not a lack of a desire to do it, but more support for making that decision to allocate the resources to an effort like this. That’s all they’re looking for and the calculator and some of the what I’ll call hard savings that we can identify through the drivers of cost savings as well. Some of the cost savings are going a long way to conquering some of those challenges of the skepticism that we’re seeing from the CFO ranks. We also are seeing it’s not only about that though. There is a strong desire for all executives and hospital systems for improving healthcare just as much as there is about the savings. So, they’re wanting to see both of those results.
Dan D’Orazio
Yeah, very helpful. Mike, I was curious – in your conversations, are these light-switch-moments for people wanting to see, you know, like we talked about, ROI, but is this like ‘Hey Mike, you said you’re going to offer me the solution tomorrow. What do I see?’
Mike Brandofino
Yeah, in some cases it is. But I think, you know, Tod getting involved and talking to CFOs is a really good step for some of our customers. I think that the challenge is we focus heavily on the clinical side, which is clearly right when helping them develop workflows and improve care, or modernize care, but they’re not always well-versed in making the pitch. One of the things that we’re trying to do is help educate the clinical side and then, on the CFO side, is the idea of these building blocks. You can’t get to the Holy Grail of ROI in health systems – which is most likely improved ratios, you know, improved caregiver-to-patient ratios – until you buy back some of the time. Until you buy back enough time for nurses to practice at the top of their license, you can’t get to those.
So really what we’re trying to educate customers on is the building blocks of getting to the bigger hard-dollar ROI. And that could be in the form of, you know, improving discharges by 40 minutes or 30 minutes and improving patient satisfaction scores, which, by the way, enables caregivers to use virtual care nurses a little bit more than floor nurses potentially, too. It maybe takes some of the workload off of mundane tasks that nurses have to do every day that you might be able to push to lower-skill people. Then keep, like I said, buying that time back to the point where, before you know it, you don’t have to tell nurses that you’re increasing your ratios. They will by the sheer fact that they have the extra time. So I think those building blocks are really important to talk to our customers about and also educate and help our clinical-side partners and stakeholders build the pitch, if you will, based on those building blocks.
Dan D’Orazio
Yeah, that’s a great point.
Mike Brandofino
So, you know, when you’re out there, Dan, you know there are obviously key areas of value that consistently pop up. What are the top two or three that pop up all the time?
Dan D’Orazio
Yeah, so, I think resources and time, and of course, they’re connected. And let me unpack those a little further. Nurses do an average of 72 tasks an hour, an average of 55 seconds per task, and I’ve seen this through the research. I also have a wife who’s a clinical care and trauma nurse who’s also a nurse manager and you just see what they wrestle with, you know, inside the walls of the hospital when you’re looking at that volume of tasks that they have to perform. You talk about how the ratios will come when we give them the time to do what they’re good at and trained to do, and think, and be the glue that keeps the operations running literally and figuratively. In an organization that’s providing care, resources are not just about nurses, but also all the other ancillary support providers. And that time is so valuable. But it’s hard to exactly put your finger on until you give it back to someone, right? So if you go from 55 tasks an hour to 40 – and you talked about patient satisfaction, Mike – the studies are clear: Happy nurse, happy patient. And that relationship is causal and direct. And that’s where we have to get connected.
And then sort of, this deferring of clinical cost because if we’re getting to stuff sooner, if we’re doing the proper interventions, if we’re thinking, we can also get people out, to your point, from a discharge perspective sooner. Now we know the last day of that discharge is the cheapest, but the person coming into that bed, that first day is not the cheapest for them, right? And so, that’s where all these resources go, you know. It’s one flip from out-the-door to in-the-door and so that’s where time and resources in that clinical movement or deferring of cost really becomes important. And this is what people are looking for in these conversations.
And I would proffer that of all the years we’ve built these models, no one expects a vendor to have all the data. The clients don’t even have it. It’s ‘how do we partner on this to really figure out what’s going to work for our unique system of care, in our unique problems?’ And that’s the partnership that they’re looking for. And so Mike, this is exciting. But let’s talk about a little bit of what you’re seeing with your clients, right? How do we bring this into reality and bring this to life a little bit? Could you give a couple examples of where this is happening in the partnerships that you have and what are or what kind of results are people seeing, albeit different, I’m sure?
Mike Brandofino
Sure, yeah. We have a couple of great examples. And it’s interesting, you know, as we talk about economic value, you, I think, immediately start thinking this must be reserved for health systems that have a ton of money and ability to invest and actually we’re seeing adoption across the board.
So I’ll give you an example. One of our customers, Baptist Health Little Rock, they’re in a state that has the least funding of all 50 states from the federal government. Yet the leadership of Baptist understood that in order for them to be able to deliver the care, modernize care, and work the resources they had, they had to commit to putting virtual care in every room. So, they found a way. And in their model, they’ve committed to putting virtual care in every room. I think there, over 50-60% of the rooms are ready and the feedback that they’re getting from the staff has been incredible. In fact, you know, health systems or hospitals that they haven’t gotten to yet and floors they haven’t gotten to yet are like, ‘When are we getting our technology?’ They’re really seeing the benefit of it. And from their perspective, they, you know, kind of put the cart before the horse. They said we understand we need to do this. We know we’ll get the benefit, the economic benefits. But we can’t wait until proving all of that. And so, they went ahead and they did it, you know, on basically the idea that they need to modernize care.
Another one down South, Lee Health, is another customer who in fact went through it. They just recently went from public to private, so they also were losing a bunch of federal funding. But the leadership didn’t bat an eyelash. They’re on the path of this commitment to putting virtual care in every room. They’re building that and they believe in that building block approach, by the way. You know Doctor Carracino, the CMIO over there, and I have had many conversations about, you know, just getting the little wins, adding workflows, adding more capability. And before you know it, you start seeing those building blocks lead to, you know, significant real dollar value.
Here are two great examples of health systems that aren’t the biggest, you know, in the country. They’re pretty big in their region, but they made those decisions in advance of a full hard dollar ROI because they just saw the value. And I think that’s really something that we need to figure out how to help more of our customers do, you know? Tod, as you talk to CEOs and you hear the skepticism from them, do you think these types of stories can help and move them along? I think you either mentioned it or I definitely know you have talked about it before – we’re seeing customers talk about this as an investment in the future. What have those conversations been like? What are your thoughts?
Tod Nestor
Great question. I want to build a little bit on what you and Dan both have said. At the end of the day, what I’m hearing from CFOs and CEOs, as well, is their challenge is they have limited people resources and monetary resources. So, they need to figure out where to put it to its best use, and it is those investment opportunities you’re talking about. So, as we develop approaches to help them identify where they can either have that hard-cost savings or even soft-cost savings, which allows them to reallocate it to other applications or a nurse’s time. As Dan said, they can improve the quality of care, they can see better outcomes, they can have other intangible benefits that occur that are eventually tangible, and you can quantify. So having that ability to talk to them in terms of resource allocation – where they invest those freed-up resources as a result of the virtual care in every room – is something that’s happening and it’s resonating. You see their heads nod when we talk about it.
I think one of the things that you know we’re doing to help with some of that skepticism is we’re developing approaches to allow them to actually measure and monitor that after they put it in place as well. So they can measure those savings and those resources as a way of doing business going forward. That helps them with that resource allocation because at the end of the day, the CFO’s role is not so much about saying no, it’s about saying, you know, where can we get our best return on our investment? And that is maybe in the quality of care or in some kind of cost savings. It doesn’t always flow to the bottom line in a hospital system. Sometimes it’s about putting those resources to better usage and improving the quality of care just as well.
Mike Brandofino
Thanks, Tod. So Dan, you know, as we wrap up here – one of the things that we’re also seeing and believe strongly in is that virtual care and the modernization of care is going to apply outside of the four walls of a hospital. And you mentioned it a little bit before – the ageing population. So, long term care, home health, and aging-at-home are definitely going to benefit from virtual care. I guess the question is looking ahead. How do we create the economic value there and where do you see it heading in the next, you know, three to five years?
Dan D’Orazio
A report last week highlighted the funding boom and investment in ambulatory property and sites of care in the US. I think that’s for a couple of reasons but is primarily driven by the fact that people want to be there more. Also, we know, again, that 1.4 trillion is everything we spend just on hospital now. And it used to be everything 20 years ago, 24 years ago. So, the price and resource consumption are not viable. So, both from a consumer patient perspective and Medicare, who is, you know, for over 65, the largest payer – they have a need to, I don’t want to say rationalize, but be rational about the cost of care. And we know if anything, healthcare is difficult operationally, right, because there are so many different crevices and cracks and maneuvers that people have to make. And when you can bring your team together virtually, it’s hard to do that within a hospital, right? And so, when someone leaves, the last thing you want is someone going from a hospital to a skilled nursing facility to come back to the hospital. There are virtual hospitalists, you’re seeing all kinds of virtual psychiatry, and virtual specialists that can go, you know, to the 30 or 40 million people in rural America who actually can’t get to any kind of care that’s close.
But this is not just about folks that are far away. I see a need for this inside the walls and then outside the walls right to that person’s home. That might be five miles away in that catchment area. We have to smooth out the experience and this is the most important thing for the provider and the patient. We cannot have a disjointed experience, for one, and a good experience for the other because it will fail. And during COVID, what we saw was everyone stopped. All the challenges went away. Providers and patients felt the benefit. We have to continue to move and, you know, I think that’s where you guys are focusing. How do both ends of this equation work? Because, if not, it won’t work.
Mike Brandofino
Yeah, I agree. You know, I think the consumerization of care is something that we should all be thinking about and I think that speaks to what you said about the experience. Think about 15, 20 years ago how we used to plan travel through a travel agent. Now we all do it on our phone. I think people want the same thing with their healthcare, and I think we’ve made strides. COVID forced us to, but I think we need to continue to drive down that path. And I think this whole modernization of care, having the ability to have virtual everywhere, will really enable that and make it easier to provide. But there’s a lot of challenges in there in between.
Well, guys, thank you very much for the conversation. Hopefully people who are listening. If you’re interested in hearing more about the economic value calculator, please reach out to us at caregility.com. And, again, thank you for joining, Dan, and thanks for joining, Tod.
Dan D’Orazio
Yeah, my pleasure. Thanks for having us.
Tod Nestor
Thank you.
Dan D’Orazio
Take care.
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