What value-based care really needs: change management


The transition is one careers will be built on, if health executives align their delivery systems properly, deploy analytics, and maintain focus.

Hospital executives have a tough balancing act regarding the transition to value-based payment models. While the industry is steadily moving toward this new framework, many providers and services still operate on the old fee-for-service model, which is becoming more and more obsolete. That means C-suite leadership has to make the switch to value a high priority for their organizations.

They’re under tremendous pressure these days. There’s been a significant market shift. Providers and their associated patient panels — a list of patients assigned to each care team in the practice — are shifting toward government business, and government business has a more pronounced focus on value-based care.

According to Jeff Smith, senior vice president of U.S. markets at Lumeris, the move to value has been accelerated by a shift in payer mix away from commercial and more toward Medicare, which yields lower margins. And the commercial rates providers have been receiving are on the downswing.

“Underlying their business model today, health systems have to profitably manage their fee-for-service business while making this transition to value,” Smith said. “It’s like having one foot on the dock and one in the canoe. They often don’t have the understanding or expertise to make that strategic shift and successfully move toward value. It’s a new frontier for many of these providers.”

What providers need, said Smith, is more robust alignment with their delivery system around the new model. It’s about having an engaged, aligned network that focuses not just on the patient in front of them, but on an entire population.

“It really is an enterprise-wide change management initiative. This the kind of transition that careers are built on,” Smith said. “Some of the things they need to avoid are embarking on this journey with a lack of, I would say, panel density, and aligned incentives with their physician network. It’s problematic if this is nothing more than a nuisance. It really has to be a strategic focus.”

An organization also has to have the right governance and leadership in place, he said. Even though something worked under the old model, it’s a mistake to assume that it will naturally evolve and adapt to the new. A successful transition requires significant practice transformation.

All that, and an organization still has to maintain a high standard of care. That’s where advanced analytics come in.

“It really requires an understanding of where the opportunities are,” Smith said, “and that’s driven by advanced analytics and practical insights, and where to apply their investments to get the maximum return. They also need to have a really strong plan in governance, and this really requires support from the C-suite. It has to start with the CEO.”

Because every hospital, health system and physician practice is different, a good place to begin is with a market assessment of provider and business opportunity, which can show how to align strategies around a blueprint for successful profitability. Alignment truly is a key component of success, as everyone needs to be on the same page, from the CEO down to the physicians delivering care.

And time is of the essence. Smith expects the journey to value to be near-complete within about three years.

“The transition has been remarkable to me,” he said. “The amount of change we’re seeing year over year is remarkable. It was primarily led by these government programs, but the private payers have really adopted a lot of these changes. There are significant changes in the payer community in general, and more to come.”


Machine learning is a big idea, but hospitals need business plans first


machine learning and AI in healthcare

Elizabeth Clements, business architect at Geisinger Health, will be hosting a session at HIMSS18 on March 7.

Don’t get lost in the complexity of large-scale use cases.

Machine learning has the potential to transform healthcare through new knowledge discovery and improved productivity, but many health systems do not have a business plan in place to support advanced analytics beyond research and development.

As health systems consider how best to leverage machine learning and artificial intelligence, it will require a shift in IT strategy to focus on not just data, but managing the model itself. This means, among other things, defining the value of machine learning and providing a framework for evaluation and application.

Health systems need to keep things simple when moving into machine learning, said Elizabeth Clements, business architect at Geisinger Health.

“When working with new technology and developing a service from scratch, it can be easy to get lost and slow progress down with the complexity of a large use-case,” Clements said. “If you keep your scope narrow and define near-term goals, you will find you are able to make more meaningful progress in a short amount of time.”

And healthcare professionals dealing with machine learning must themselves learn how to partner with the business.

“Understanding the current and future state use of the machine learning solution is critical,” Clements said. “If you don’t consciously determine how much you want or need human intervention with the model, it will make your solution much more difficult to implement and gain buy-in.”

Clements said a simple framework for thinking about machine learning in the context of the business is needed. That includes understanding its value and use-cases before embarking on this type of analytics advancement, as well as knowing the basic challenges and how to design a program that takes those into account.

“Machine learning is the next wave of advanced processing technology offering us new avenues for information discovery and productivity enhancement,” she said. “It has the potential to transform how we conduct business; however, it will require a shift in our IT strategy.”

It is not just about the data or the application, it is also about the model itself. IT leaders should consider how to complement their existing IT and data scientist teams with new skill sets and consider how machine learning can advance existing task execution, she added.

Clements will be speaking in the HIMSS18 session, “Managing Machine Learning: Insights and Strategy,” at 11:30 a.m. March 7 in the Venetian, Palazzo D.

The Medicaid Agency of the Future: What capabilities and leadership will it need?


Image result for The Medicaid Agency of the Future: What capabilities and leadership will it need?

Medicaid’s scale and complexity are unprecedented. State Medicaid leaders will need to innovate if they are to develop the capabilities that will enable them to steer their agencies into the future.

Since its inception in 1965, Medicaid has grown to have an expanded role in state governance—it is usually the first- or second-largest state program. Nationwide, Medicaid agencies manage about $574 billion in annual spending.1In an average-sized state, Medicaid directors are the single largest purchaser in the health sector, overseeing about $10 billion each year in payments to providers (roughly 17% of the state’s economy).2The agencies typically serve nearly one-quarter of their state’s population3and, in our experience, procure the largest IT infrastructure projects in state government.

Recently, demands on state Medicaid agencies have grown. Increasingly, Medicaid agencies are playing a multi-part role, fulfilling their traditional responsibilities (i.e., payer-purchaser, operator) and taking on new ones (i.e., market shaper and innovator). And while they are doing this, the agencies must address an array of competing priorities, as well as uncertainty about future funding levels. To perform well in these new roles, the agencies must develop new, next-generation capabilities so they can address the needs of their state’s citizens—even those not enrolled in Medicaid.

We believe the roles played by state Medicaid agencies will continue to evolve, but the agencies—in conjunction with the state government leaders they work with—can choose their strategic path forward (primarily, the extent to which they want to be market shapers). Those that pursue this path aggressively will be the first of their peers to evolve into a Medicaid Agency of the Future.

As we discuss below, all state Medicaid agencies will need to strengthen their capabilities if they are to meet the demands of the future—an issue that has important implications not only for the agencies themselves but also for state government leaders, managed care organizations (MCOs), local providers, and others. However, agencies focused on becoming market shapers will need to double down on capability building if they want to succeed on their chosen path.4

Trends shaping Medicaid

A number of trends are shaping what Medicaid agencies need to do to prioritize the direction of their efforts.

Spending growth is putting pressure on state budgets. Medicaid is putting continued cost pressure on state budgets. Program spending (including federal and state funding) increased from 20.5% of state budgets in 2008 to 29.0% in 2016.5The continued increase in Medicaid spending could have funding implications for other state programs, such as elementary and higher education, public assistance, and transportation. The cost pressures resulting from Medicaid spending are expected to continue regardless of what, if any, changes are made at the federal level.

Medicaid programs can lead to payment inno­vation. As program costs have risen, Medicaid directors have increasingly tried to slow the medical cost trend. One lever available to them is transitioning from fee-for-service reimbursement to payment innovations that include meaningful levels of provider risk-sharing. New payment models that reward providers for delivering high-quality care at lower cost have been shown to improve care quality and reduce costs by 5% to 10% when rolled out across the full spending base.6In several states, Medicaid programs have led multi-payer efforts to achieve payment inno­vation across the state.7

Medicaid plays an important role as both a payer and a convener. In the aggregate, Medicaid is the country’s largest payer in terms of covered lives and, in many states, is the largest purchaser of healthcare ser­vices.8Thus, Medicaid agencies are uniquely positioned to facilitate change. In addition, the agencies can often bring together multiple stakeholders to help align on improvements that would affect not only Medicaid but also the entire healthcare market.

Recognition of Medicaid members as consumers is increasing. Some Medicaid agencies are beginning to approach Medicaid members as consumers. For example, they are offering members technological tools, such as apps and patient portals, that empower greater decision making (e.g., about choice of provider, care setting, or treatment). If well utilized, these tools can improve member experience and encourage higher-value care.

Awareness of social determinants is rising. Increasingly, states are turning their attention to non-health factors, such as housing, education, and transportation, that influence Medicaid members’ ability to maintain their health and adhere to treatment. Some programs are beginning to address these determinants head on (e.g., by providing housing or transportation vouchers). Experimentation in special needs care is underway. Integrated models typically deliver better quality and cost outcomes. For example, integrated behavioral and physical healthcare approaches for high-needs patients have been shown to reduce emergency department and inpatient visit spending by 10% to 25%.9The successes to date are paving the way for further innovation in other special needs areas.

Analytics is playing an increasing role. Advanced analytics and big data can help Medicaid and other public health officials better understand state needs, design programs, and target interventions to maximize the impact of limited funds. The emergence of new national data-sets, such as the Transformed Medicaid Statistical Information System (T-MSIS, which includes states’ comprehensive claims and enrollment data) and CMS’ online database of state waivers and state plan amendments, may enable states to draw on experiences elsewhere when designing new programs.10

In short, state Medicaid agencies are facing an increasingly complex and difficult set of challenges at a time when the expectations of multiple stakeholders—members, families, and advocates; providers and MCOs; the federal government, state leaders, and other state agencies—are rising. If Medicaid agencies are to address these challenges successfully, the role they play must evolve.

Introducing the Medicaid Agency of the Future

In the future, some state Medicaid agencies may opt to follow the path set by previous state leaders. In other cases, they may want to respond to the trends just discussed by taking the lead in transforming healthcare delivery in their programs and their states. These Agencies of the Future will have to be able to chart a strong strategic direction and execute the activities that follow both efficiently and effectively. To accomplish those goals, they will need to use a data-driven approach to program management, build new capabilities, and improve their organizational health (Exhibit 1).

Agencies that opt to follow a more traditional path would also benefit from strengthening their operational performance and organi­zational health, but the level of improvement needed is lower for them than for the Agencies of the Future. Both sets of agencies, however, will want to prioritize their strategic investments once they have chosen their path forward.


Lehigh Valley Health Network’s ‘Moneyball’ marketing strategy attracts insured patients


Credit: Lehigh Valley Health Network

Health system’s marketing team uses data to target higher-paying commercially insured consumers to balance growing Medicare demographic.

As providers use analytics to drive population health, so are marketing departments taking advantage of data and social media to target new consumers.

Lehigh Valley Health Network in Pennsylvania, for instance, is netting an increase in appointments from consumers who have commercial insurance.

An estimated 10,000 clicks on targeted Facebook and other social media ads have converted to 4,500 new consumers; 60 percent of these are commercially insured, according to Dan Lavelle, the administrator of Marketing at Lehigh Valley Health Network.

“To me, that’s the moneyball number,” said John Marzano, Vice President Marketing and Public Affairs. “We kind of coined this ‘healthcare marketing moneyball’ after what Billy Beane did in baseball.”

“‘Moneyball’ is the book and movie centered on Billy Beane’s chase for a win using baseball statistics. Beane, then general manager of the Oakland Athletics, is now executive vice president of baseball operations and minority owner in the team.

Healthcare marketing has changed dramatically in the last five years, and those hired to do the job need to keep up, according to  Marzano, who with Lavelle, is speaking at HIMSS18 in Las Vegas.

“Five years ago, we’d talk about which doctor to put on a billboard,” Marzano said. “Historically we were probably 75 to 80 percent traditional marketing. And now we’re probably almost 50/50 digital vs. traditional. We’re using the same dollars for the same fiscal years.”

Lehigh Valley works closely with clinical leaders to target message campaigns for such services as prostate exams. Banner ads appeared on Facebook. When someone in nearby Hazleton did an online search for prostate cancer, the program in Allentown popped up.

“We invest ad dollars to win that top page search,” Marzano said.

The health system has recently run an estimated 22 campaigns for  mammography, orthopedics and hernia screenings, among others.

“Digital is such an immediate thing,” Lavelle said. “We can track all of these things to understand not only how many people click on an ad, but how many made appointments.”

One reason to drive commercial business is demographics. An aging baby boomer population will grow the Medicare business in the area to 50 percent of the market. At a lower reimbursement rate, Lehigh Valley needs the commercial dollars to balance that out.

Gone are the days when hospitals could tout their benefits through advertising alone. The competition, and in Pennsylvania UPMC is creeping ever eastward, demands that the chief marketing officer  become friendly with chief information officer to leverage data to grow the hospital’s population.

“It’s not about us anymore, it’s about the consumer,” Marzano said. “We need to be there with the information. They have to select us rather than competition.”

12 takeaways from the 2018 JP Morgan Healthcare Conference


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The recent breathtaking flurry of mega-mergers coupled with increasingly challenging market forces and an ever shifting political landscape has cast a cloud of confusion regarding where the U.S. healthcare delivery system is heading.

So, where do you go to find the map?

Every year, the JP Morgan Healthcare Conference provides an incredibly efficient snapshot of the strategies for large healthcare delivery systems, the hub for healthcare in the U.S. Most of these organizations are also the largest employers in their respective states. The conference took place this week in San Francisco with over 20 healthcare systems presenting, including Advocate Health Care, Aurora Health Care, Baylor Scott & White Health, Catholic Health Initiatives, Cleveland Clinic, Geisinger Health System, Hospital for Special Surgery, Intermountain Healthcare, Mercy Health in Ohio, Northwell Health, Northwestern Medicine, Partners HealthCare System, WakeMed Health & Hospitals and many of the other big name brands in the market. Each provided their strategic roadmap in a series of 25-minute presentations from their “C” suite. If you’re looking for the GPS on strategy and a gauge on the health of healthcare, this is it.

How do their strategies differ? What direction are they heading in? There is a great line from Alice in Wonderland that goes, “If you don’t know where you’re going, any road will take you there.” You would think that line applies perfectly to the U.S healthcare system, but the good news is it actually doesn’t.

While the exact destination for everyone is TBD, the direction they are heading in is actually pretty clear and consistent. It turns out that they are all using a very similar compass, which is sending them down a similar path.

So, what are the roadside stops health systems consider absolutely necessary to be part of their journey to creating a more viable and sustainable value-based business model?

Based on the travel plans for over 20 of the largest and most prestigious healthcare delivery systems in the country, here’s your GPS and list of 12 things you “must do” on your journey.

1. You Must Scale

Clearly the headline at #JPM18 was the flurry of major announcements regarding major mergers. With that said, two of the mergers were front and center: teams were there to present from Downers Grove, Ill.-based Advocate and Milwaukee-based Aurora, which will be a $10 billion organization with 70,000 employees, as well as San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, which will be a $28 billion organization with 160,000 employees. The size and scale of these mergers is pretty stunning. While the announcement of these and the other recent mega-mergers has forced many into their board room to determine what the deals mean to them, the consensus at the conference was this: There are a number of different paths forward to achieve scale. Some, like Baylor Scott & White in Texas, have aggressive regional expansion plans. Others are betting on partnerships to provide the same or even more value. Taking a pulse of the room, two things were clear. The first is there is no definition of scale any more in this market. The second is that, despite this flurry of mergers, “getting really big” is not the only destination.

2. You Must Pursue “Smart Growth” and Find New Revenue Streams

Running counter to the merger narrative in the market, Salt Lake City-based Intermountain provided a good overview of the movement to what is called an “asset light” strategy of “smart growth.” This is a radically contrarian approach to the industry norm, which is the capital intensive bricks and mortar playbook of buying and building. As part of their strategy, Intermountain will open a “virtual hospital” delivering provider consultations and remote patient monitoring via telehealth. The system will also launch a number of healthcare companies every year, leveraging their considerable resources in a manner they believe will produce a higher yield. Other health systems outlined a similar stream of initiatives they have in motion to diversify their revenue streams and expand their business model into higher margin, higher growth businesses. One example is Cincinnati-based Mercy Health, which achieved strong growth and leverage via their investment in a revenue cycle management company. Advocate in Illinois formed a partnership with Walgreens. Together, they now operating 56 retail clinics and Advocate has made a significant impact on driving new patients and downstream revenue to their system. The bottom line is all now recognize that they must think and act differently to be able to continue to fund their clinical mission and serve their community.

3. You Must Measure and Manage Cost and Margins

While some are moving aggressively to get scale, everyone is looking to more effectively use the resources they have and get more operating leverage. Margin compression was a consistent theme, with many systems now moving into consistent, stable operating models around managing margins versus launching reactionary initiatives when they find a budget gap. What is emerging is a new discipline and continuous process around managing cost and margins that is starting to look similar to the level of sophistication we have seen in the past for revenue cycle management. To that end, there has been major movement in the market to implement advanced cost accounting systems, often referred to as financial decision support, which provide accurate and actionable information on cost and help organizations understand their true margins as they take on risk-based, capitated contracts. Some during the conference referred to it as the “killer app” for the financial side of driving value. Regardless of what you call it, all are moving aggressively to understand the denominator of their value equation.

4. You Must Become a Brand

Investing in and better leveraging their brand has become a strategic must for health systems. The level of sophistication is growing here as providers shift their mental model to viewing patients as “consumers.” Aurorain Wisconsin cited their dedicated Consumer Insights Group and outlined their “best people, best brand, best value” approach that has been incredibly effective both internally and externally. At the same time, the bigger investments for many health systems relative to brand are more on brand experience than brand image, with a focus on understanding and radically rethinking the consumer experience. As an example, at Danville, Pa.-based Geisinger, close to 50 percent of ambulatory appointments are scheduled and seen on the same day. And every health system is making meaningful investments in their “digital handshake” with consumer, creating and leveraging it via telehealth as well as mobile applications to enhance the customer experience.

5. You Must Operate as a System, Not Just Call Yourself One

One clear theme at #JPM18 is different organizations were at different points along the continuum of truly operating as a system vs. merely sharing a name and a logo. There are a number of reasons for this, but you are increasingly seeing tough decisions actually being made vs. just kicking the can down the road. There has been a great deal of acquisitions over the last few years coupled with a new wave of thinking relative to integration that is more aggressive and more forward-looking. This mental shift is actually a very big deal and perhaps the most important new trend. Many health systems are heavily investing in leadership development deep into their organization to drive changes much faster.

6. You Must Act Small

The word “agile” is quickly becoming part of everyone’s narrative with health systems looking to adopt the principles and processes leveraged in high tech. Chicago-based Northwestern Medicine is an example of an organization that has grown dramatically in the last five years, now approaching $5 billion in revenue. At the same time, they have still found a way to operate small, leveraging daily huddles across the organization to drive their results. The team at Raleigh, N.C.-based WakeMed has achieved a dramatic financial turnaround over the last few years, applying a similar level of rigor yielding major operational improvements in surgical, pharmacy and emergency services that have translated into better bottom line results.

7. You Must Engage Your Physicians

Employee engagement was a major theme in many of the presentations. With the level of change required both now and in the future, a true focus on culture is now clearly top of mind and a strategic must for high-performing health systems. That said, only a handful articulated a focus on monitoring and measuring physician engagement. This appears to be a major miss, given that physicians make roughly 80 percent of the decisions on care that take place and, therefore, control 80 percent of the spend. One data point that stood out was a 117 percent improvement in physician engagement at Northwestern. Major improvements will require clinical leadership and a true partnership with physicians.

8. You Must Leverage Analytics

Many have reached their initial destination of deploying a single clinical record, only to find that their journey isn’t over. While health systems have made major investments big data, machine learning and artificial intelligence, there was a consistent theme regarding the need to bring clinical and financial data together to truly understand value. Part of this path is the consolidation of systems that is now needed on the financial side of the house with a focus on deploying a single platform for financial planning, analytics and performance. The primary focus is to translate analytics not just into insights, but action.

9. You Must Protect Yourself

As organizations move deeper into data, there is increased recognition that cybersecurity is a major risk. Over 40 percent of all data breaches that occur happen in healthcare. During the keynote, JP Morgan Chase CEO Jamie Dimon shared that his organization will spend $700 million protecting itself and their customers this year. Investments in cybersecurity will continue to ramp up due to both the operational and reputational risk involved. Cybersecurity has become a board room issue and a top-of-mind initiative for executive teams at every health delivery system.

10. You Must Manage Social Determinants of Health in the Communities You Serve

Perhaps the most encouraging theme for healthcare provider organizations was the need to engage the community they serve and focus on social determinants of health. As Intermountain shared: “Zip code is more important than genetic code.” To that end, Geisinger refers to their focus on “ZNA.” They have deployed community health assistants, non-licensed workers who work on social determinants of health and have implemented a “Fresh Food Farmacy,” yielding a 20 percent decrease in hemoglobin A1c levels along with a 78 percent decrease in cost. Organizations like ProMedica Health System in Ohio have seen similar results with their focus on hunger in Toledo. WakeMed has an initiative focused on vulnerable populations in underserved communities that has resulted in a significant decrease in ER visits and admissions and over $6 million in savings.

11. You Must Help Solve the Opioid Epidemic

The opioid issue is one that healthcare professionals take very personally and feel responsible for solving. It came up in virtually in every presentation, and it’s an emotional issue for the leaders of each organization. This is good news, but the better news is that they are taking action. As an example, Geisinger invested in a CleanState Medicaid member pilot that resulted in a 23 percent decrease in ER visits and 35 percent decrease in medical spending, breaking even on their investment in less than 10 months. While many would rightly argue that the economic rationalization isn’t needed for something this important, the fact that it’s there should eliminate any excuse for anyone not taking action.

12. You Must Deliver Value

The Hospital for Special Surgery in New York is the largest orthopedics shop in the U.S. and a great example of how value-based care delivery is taking shape. Perhaps the most revealing stat they shared is that 36 percent of the time, patients receive a non-surgical recommendation when they are referred to one of their providers for a second opinion. This is exactly the type of value-based counseling and decision-making that will help flip the model of healthcare. Some systems are farther along than others. Northwestern currently has 25 percent of its patients in value-based agreements, but other systems have less. As the team from Intermountain re-stated to this audience this year, “You can’t time the market on value, you should always do the right thing, right now.” Well said.

It’s time to get started or get moving even faster.

As the saying goes, “It’s the journey, not the destination.”

Happy trails.

What will become of MACRA, Obamacare, health IT? HIMSS boss weighs in (podcast)


HIMSS Chicago 2015

The annual Healthcare Information and Management Systems Society (HIMSS) conference gets under way Monday in Orlando, Florida, with numerous preconference activities starting Sunday.

As more than 40,000 people descend on Central Florida for the grueling event, MedCity News talked to HIMSS CEO and President H. Stephen Lieber for what has become an annual ritual, at least for this reporter. As usual, it’s on tape.

HIMSS17 is the last HIMSS conference with Lieber in charge; he announced in December that he would retire at the end of 2017.

Lieber is preparing to depart at a time when health IT is at a crossroads.

Healthcare organizations in the U.S. have spent the better part of the last 10 years installing and now optimizing electronic health records, though they continue to lag when it comes to sharing data across systems. And they continue to gripe about EHR usability and Meaningful Use requirements.

Providers in recent years also have grappled with updates to HIPAA regulations and the conversion to ICD-10 coding. Now, they face some new regulations affecting health IT.

Notably, the 2016 Medicare Access and CHIP Reauthorization Act (MACRA) is coming into force for ambulatory care. The rise of accountable care is “certainly having an impact already in terms of how care is not only delivered,” as well as how payers calculate reimbursements, Lieber noted.

They also face the uncertainty that comes with a change in administration in Washington.

Still, some things do remain relatively constant in health IT.

“The ongoing challenge in dealing with security, there is going to be an even greater focus this year as we try to bring more attention, more focus on what it takes to make sure that we’re handling data in a secure way,” Lieber said.

Clinical analytics has become a normal course of business in the field as well, though it has changed from merely clinical decision support and retrospective analytics to predictive analytics and machine learning. “As the field evolves, we’re evolving the programming with it.” Lieber noted.

Policy seems to be where a lot of intrigue is right now. It’s easy to make assumptions about what the new Trump administration might do, but assumptions are just that.

What does analytics mean to Intuitive Surgical?

What does analytics mean to Intuitive Surgical?


I think analytics has multiple components in it. As you may know, the majority of our systems are real-time connected to the Internet today. I think over 90% of systems are online. They report back information to us mostly around the system performance itself, what it is itself is doing, rather than, say, patient information. That data can be turned into insights for the company and for our customers and we have been doing that for some time now. So there’s that type of analytics.

Going forward, I think that as our computational structures get more powerful, we can bring some of that intelligence more real-time. So rather than offline insights, you can start generating real-time insights. That’s a multi-year pathway. I think it’s interesting and challenging. I think there’s long-term potential in it. But we’re moving down that pathway, making sure that we have good access and fast access and low latency access to our devices in the field, and then bringing to bear information that can help surgeons as they’re performing the procedure. And you’ll see from us in future years a series of products that come out using that set of kind of digital pipeline.