Health system performance has split into three groups, according to Kevin Holloran, senior director at Fitch Ratings. He said so during a Tuesday fireside chat at the HFMA Annual Conference in Denver.
These groups are the leaders, the strugglers and the middle. The first group consists of large, deep-pocketed health systems that can not only afford to recruit and retain top talent, but also invest heavily in emerging technologies.
The middle, the biggest group, refers to organizations that are stuck — working mightily but barely maintaining their position due to strong external pressures like declining payer reimbursement rates and increasing drug and supply expenses.
“I don’t want to leave anyone with the idea that they’re not busy or working hard or doing anything — but this is the country. I mean, it’s like a duck on a river, right? Their legs are moving incredibly fast. They’re just not going anywhere because the current is so strong against them,” Holloran stated.
As for the strugglers, Holloran noted that they primarily exist in rural areas and small towns with declining populations and limited abilities to attract talent.
The labor challenges hospitals have been experiencing over the past few years have intensified these divides, he pointed out. Going forward, he expects these categories to remain evident.
“As technology and innovation becomes a bigger deal, I think that trifurcation is going to stick and hold. Those organizations that, essentially, can invest, can innovate, particularly in things like AI new technologies. They’re going to leapfrog ahead of others that don’t have the means for that,” Holloran declared.
Hollaran’s counterpart for the fireside chat — Dennis Dahlen, CFO of Mayo Clinic — acknowledged that his organization is one of the leaders.
Because of this, the Rochester, Minnesota-based health system has been able to build out its technology and innovation strategy, he noted.
“As it relates to AI and technology and innovations, we take it off the top. It’s a must-have — it’s not a ‘nice-to-have.’ It’s not optional. We have to invest in that because of the position we hold as one of the leading healthcare providers on the planet and the fact that we are blessed with the financial resources to do so,” Dahlen remarked.
Similarly to his conversation partner, Dahlen laid out some categorizations. When it comes to the technologies companies Mayo is investing in and the tools it is deploying at in its hospitals, he said there are four main categories.
The first is business process automation. This refers to tools — oftentimes powered by generative or agentic AI — that automate administrative tasks like billing and scheduling. The aim here is to reduce human labor so staff members have more time to focus on situations that truly require their expertise.
Mayo is also applying similar automation strategies in the clinical space — but the health system is doing so more cautiously due to higher risks.
“We’re doing the same thing in the clinical realm — that takes a little longer because the price of failure is high, so you’ve got to make sure you build in that reliability and resilience,” Dahlen stated.
He added that Mayo is using generative Ai to mine clinical data for insights that are not easily visible to humans. The goal behind these efforts are to accelerate discovery — transforming insights that might take years to uncover into ones found in days or weeks, he explained.
The final category that Dahlen mentioned is technology designed to address the primary care workforce crisis. Mayo is exploring how agentic AI tools, like AI avatars or bots, can deliver aspects of primary care.
“We’ve got people exiting that segment of the healthcare business, and nobody’s replacing them. So if there’s another alternative through technology, nobody has pointed at it yet. So we’ve got to get there,” Dahlen said.
In the future, he envisions embedding the expertise of Mayo and other health systems into these AI tools. He recognizes there will be an adoption curve, but he believes this is a necessary direction to explore.
