By Alexis Kayser

Copyright newsweek

In the early days of Facebook, Mark Zuckberg coined the phrase, “move fast and break things.” It oozes a little Silicon Valley cheese, but the mantra has defined a generation of tech companies and start-up businesses. It proposes that innovation can yield healthy enough returns to cover any mistakes made in the experimentation process. And in some industries, it holds up.That’s not necessarily the case in health care. If Amazon launches an AI agent that gives false advice about how to make a return, a disgruntled customer can be placated with a refund. If a health system launches an AI agent that gives false advice about when to seek immediate medical attention, there is little that customer service can do to reverse any harmful effects on the patient’s health.That’s why, historically, health care has been a risk-averse industry. But in recent years, increased demand for health care services and a challenging financial environment have encouraged leaders to change the status quo. Hospitals that invest in new technologies like AI and predictive analytics could have an edge as they vie for patient preference and work toward balanced budgets.But all new technology brings risk—financial, operational, legal and even reputational. Newsweek spoke with chief leaders at some of the nation’s top health systems to understand how they’re making the business case for innovation while grappling with (potentially unfavorable) unknowns.These health system leaders told us that they can’t afford to miss out on the new wave of technological advances. However, they’re proceeding with caution and intention.Editor’s Note: All of the executives mentioned in this article will be speaking at Newsweek’s Digital Health Care Forum on September 16 in New York City. Click here to view the agenda and purchase tickets. How do health systems define ROI?Health care calculates its return on investment (ROI) differently than many other businesses. Something does not have to yield a “hard dollar” profit in order to be a success, according to Brad Reimer, system vice president and chief information officer at Sanford Health.Reimer and his executive team at the Sioux Falls, South Dakota-based system also evaluate technology based on its ability to improve access. As the largest rural health system in the nation, Sanford Health can innovate its way into the most remote corners of the country, bringing specialty and even emergency care closer to patients.Sanford’s status as a not-for-profit organization allows it to lean into its mission and make forward-looking investments because they’re the right decision for the patient population, Reimer said. There is always a level of risk involved with new tech, but they’re prepared to navigate that carefully to improve patients’ experience and outcomes.”A lot of times we are kind of hedging our bets that this latest technology does have a promise of efficiency, does have a promise of bridging access and providing better care to our patients as a whole,” he said.James Hereford, president and CEO of Fairview Health Services in Minneapolis, has a similar outlook.”Typically our thought process is not simply about technology,” Hereford said. “It’s the impact technology can have on people and process. And those three have to go together.”Health care executives often use the term “value” when discussing their investments. That term has layers, according to Dr. David Callender, president and CEO of Memorial Hermann Health System, based in Houston. A simple value calculation—outcome divided by cause—is an insufficient measure of a technology’s impact in health care. He multiplies that quotient by patient engagement and experience, employee satisfaction and community care access.Improvements to those soft measures often benefit the hard ones in the long run. Only 15 to 20 percent of a person’s health status is attributable to the health care services that they consume, according to Callendar. The rest of their health is dependent on other factors, like where they live, access to resources and transportation. These are commonly called social determinants of health or non-medical drivers of health, and it is imperative for health systems to pay attention to them if they want to improve the health of their population, he said.”As a health system focused on improving the health of our community, it can’t just be about health care and the bottom line associated with health care,” Callendar said. “It has to be about making more resources available, making [as] efficient use of resources as possible, and then thinking about how we prioritize our efforts to drive that value, improve those outcomes, reduce the cost and give a great experience.”Health care leaders have recently “shifted” stance on technology deploymentWhile patient care has always been a pillar of health system strategy, executives have started looking at technology differently in recent years. Digitalization was once a means to that end of top-notch service. Now, it’s starting to look like the only means.”Something that has shifted in our mindset over the last three or four years is we used to look at technology and say, okay, we either need to be all in or not do it at all,” Reimer said. “We’ve started, especially with some more of these innovative technologies, to do a lot more proof-of-concept and pilots, and then grow them after [we’ve] proven the return.”That test method has worked well for Sanford in areas like ambient listening and documentation, virtual nursing and patient monitoring, according to Reimer. They can tweak products and processes as they go, then deploy something more polished.However, AI models are developing at a rapid clip—and so are the companies that sell them. The speed of the tech industry is not always aligned with the inertia of health care. Despite pressures to move fast, many health systems would rather be behind the curve than be the first to make headlines for an AI-related lawsuit.”We want to avoid some of the mistakes we’ve made across health care in the past, where we’re dazzled by how really cool the technology is, but it doesn’t offer something that truly helps us address a pain point,” Callendar said.Health systems also must be careful not to disrupt the flow of patient care while deploying new tools. It’s a delicate balance to strike for a large, busy organization like Fairview Health Services, according to Hereford.”We can’t sacrifice direct patient care because we’re too busy making changes,” he said. “But the same time, if we aren’t busy making changes, we won’t be able to deliver the kind of care that we need to as we move into the future.”Which investments are worth the cost?Despite these challenges, Fairview’s financial reports indicate that they’ve been doing something right. The system saw a $65 million improvement in net operating income in Q1 2025, compared to the same quarter in 2024.In order to architect that sort of financial turnaround, Fairview leaders spent time thinking through all of the indirect impacts of their economic decisions, including effects on patient loyalty and the size of their referral base, according to Hereford.Valuable initiatives include a “teleICU” that allows the system to project care into rural communities, and enhancements to Epic, its electronic health record (EHR). Epic offers a vast array of tools for its health system users, but it isn’t always easy to find the right needles in that haystack.”[Epic] is expensive, and so we want to make sure that we’re creating maximum value from that investment, and being able to optimize it,” Hereford said.Fairview also runs a “getting rid of stupid stuff” program, a term their CEO says he “shamelessly stole” from the University of Hawaii. Using AI to improve documentation and coding processes has helped reduce computer clicks for the system’s clinicians, freeing up more time for patient care.While Sanford Health is known for its robust virtual care capabilities, its technology investments run deeper, Reimer said. The system has been pouring into “proactive” tools like predictive models that can anticipate the risk of chronic kidney disease. This allows them to intervene sooner for high-risk patients.”That’s obviously much better for the patient,” Reimer said, “but also provides some efficiencies and improvements on the back end for being able to deal with somebody in a healthy state rather than a very sick state.”Technology also serves as a recruitment tool for Sanford. Recent graduates from nursing and medical school expect to have the latest, greatest innovations, and are seeking out employers that align with the times.For Callendar at Memorial Hermann, culture change has been paramount to digital strategy. The system has an innovation hub that supports idea generations across all levels of the organization, and offers monetary rewards to incentivize those ideas.It also leverages partnerships, such as collaborations with Uber and Lyft. The ride-sharing companies offer Memorial Hermann discounted prices to shuttle patients with unreliable transportation to and from their appointments. At first glance it looks like an additional line on the budget, but it ultimately pays off: reducing the number of canceled visits and ensuring access to preventative care.Health systems’ fight to be the provider of choiceUltimately, innovation is an imperative to remain competitive. The digital health market is growing, with U.S.-based startups raising $10.1 billion across 497 deals in 2024. Legacy health systems must win patients over from these virtual providers, which promise the convenience that customers crave.”The disadvantage for us is, obviously, we’re not the only game in town,” Hereford said, “but the advantage is, it pushes us to get better. And the real value and the real promise of integrated medicine and integrated systems is that we can manage the totality of the experience, the entire continuum of care, more effectively.”Many integrated systems haven’t realized that potential yet, health system leaders told Newsweek—but they hope that technology can help them get there.”Health care as an industry has been fairly passive, kind of like utility in many ways,” Hereford said. “You turn on the tap, the water comes out.””A more competitive environment doesn’t necessarily ensure that the water is going to come out,” he continued. “We have to earn our right to serve our patients.”