Technology vendors need to share the risk

Every hospital I visit has, on some server, a system that someone bought with conviction and that nobody opens today. The license is still charged every month. The contract renews on its own, without drama, and the problem that prompted the purchase is still exactly where it was.

This has stopped being an anecdote and become a statistic. Anahp’s Hospital Digital Maturity Map shows that 64.1% of institutions have already reached maturity in technology infrastructure. In the same survey, artificial intelligence adoption stands at 23%. The plumbing is installed, and almost nothing flows through it.

I came to healthcare from the outside. I studied in the United States, started in product and spent the following years in fintech, working with other people’s money. But the experience that serves me best today came before that, when I spent seven months in Ambev’s corporate innovation team helping the CTO for Latin America build the company’s digital strategy.

Part of my job was organizing technology bootcamps for the board. They were good bootcamps, with good people in the room. I left with a suspicion I only understood later: almost none of it reached operations. It was a serious company, with cash and genuine intent, buying tool after tool and expecting change to come bundled in the package. I found the same pattern inside hospitals four years later.

Then I moved to the other side of the counter. At isaac, I worked on the platform that reorganized the money of Brazilian private schools, and the problem there is a cousin of the one here: payments that take too long, bills that come back wrong, and an entire team in the middle just to make the money arrive. Anyone who has faced this in another industry recognizes the pattern inside a hospital within two weeks.

The birth defect of subscription software

The model that has sold technology to the world for the past twenty years works like this: the vendor delivers a tool and charges for its availability. The invoice is due on the first of the month, and it is due just the same whether denials fell by half or doubled, whether billing sped up or claims are still taking seventy-seven days to turn into cash. The hospital takes on the risk of making it work, alone.

This design worked well where the tool alone solves the problem. An email system delivers email, and that is that. The trouble starts when the result depends on continuous operation, on rules that change every week and on exceptions that need human judgment. Then the tool becomes necessary but insufficient, and the hospital finds out too late that it bought the easy half of the problem.

The highest degree is the vendor absorbing the loss

There are degrees of risk sharing. The mildest is the vendor taking a fraction of the gain it helped produce, which already fixes half the problem. The next degree is the one I advocate, and it is far more uncomfortable for the seller: the vendor guarantees the result by contract and, if a validated item is denied at the end of the process, the vendor covers the difference.

Putting this on paper hurts, and it hurts on purpose. The loss leaves the hospital’s balance sheet and lands on the books of whoever sold the promise. From then on, the vendor has a selfish and permanent reason for the claim to go out right the first time. At Rivio, we sign contracts like this, and I can tell you the internal conversation changes subject the day a client’s denial becomes our expense.

This changes the seller’s behavior, and it changes it in the very first week. A vendor paid by license closes the contract and moves on to the next one, which is perfectly rational under its rules. When the cost of the denial is the vendor’s, it has to stay: get into the claim, understand each payer’s rules, fight for the appeal and show up at the meeting in the month the number did not come through. The dispute becomes expensive for both sides, and that is when someone finally has an interest in reducing it.

Advertising has already made this crossing

There was a time when people bought space. So many centimeters of newspaper, so many seconds of television, and whatever happened afterward was the advertiser’s problem. Today no marketing director signs off on a media plan without discussing what happened after the ad. The whole market reorganized around this, with metrics, with attribution and with a fairly honest fight over attribution.

Healthcare today is where advertising was fifteen years ago, with an advantage nobody exploits: in a hospital, results are measured in cash, the most auditable thing there is inside an institution.

Why this is still hard

I know the objections because I have heard them all, and three of them are legitimate.

The first is the baseline. Guaranteeing the result requires agreeing up front on the starting point, and the starting point is contested territory. If the hospital was coming off a bad quarter, the bar is low and the vendor wins easily. If it was coming off an excellent quarter, the vendor takes on a step it may not be able to climb. This is solved with a long historical series and with both sides looking at the same data.

The second is the boundary, and it is the one that generates the most justified distrust. No guarantee covers everything. When prior authorization was not requested, when the patient had no coverage, when the material used was outside the contract, that denial was born of a decision that did not go through the vendor. Drawing this boundary clearly, and writing it into the contract in the same font size as the rest, is what separates a real guarantee from a piece of marketing. Every hospital should ask for this list before signing anything, including with us.

The third is the one almost nobody on my side admits in public. This model pushes vendors toward the easy hospitals. An organized institution, with clean data and a good team, delivers results quickly, and that is where everyone rushes. But the ones that need it most are usually the most disorganized, and that is precisely where taking on someone else’s losses scares the seller. Anyone who wants to take this model seriously also has to sign with the difficult hospital.

The question that changes the conversation

The next time a technology vendor sits down at your table, there is a question that reorganizes the entire negotiation: what happens to their invoice if the result does not come?

If the answer is nothing, you are buying a tool and taking on the risk of making it work alone. Sometimes that is the right decision, and it can be made consciously. What is no longer acceptable is making it without knowing there is another option on the table.

An efficient hospital saves more lives. Those who sell technology to hospitals should have their own money at stake in that.

Bruno Brasil is Head of Product at Rivio. A Babson College graduate, he worked in corporate innovation at Anheuser-Busch InBev and at fintechs such as isaac before working on the hospital revenue cycle.