ServiceNow, Inc. (NOW) Earnings Call Transcript & Summary

Hi, everyone. Thank you for joining, and thank you for having me on here to talk about the Now Platform with ServiceNow and the Washington, D.C. release. My name is Vishakha Sant, and I will be presenting on what we're doing in the release as well as providing an overview as to the platform. I have more than 20 years of experience in the health IT landscape and really always at the conjuncture of making sure that physicians are enabled, that patients have seamless access to health care. And I've dedicated my life to this concept of easy, accessible, affordable through the use of IT without it being a barrier in terms of care delivery. And so with that, let's go and get started. The first thing I just want to call out is this notion of health care is very complex. It's an overcomplicated health care operations system that really impacts patients and employee experiences that prohibits them from focusing on their important aspects of the job. For example, nearly 42 of nurses -- 42% of nurses spend time on tasks that could be supported or reduced by technology enablement. And so what that means is they're not operating at the highest level of their skill set. And there's a lot of resources that could be doing some of these more administrative tasks and taking the workload off of these clinicians. And so through that research, about 20% of that time could be freed up, saving a total of 1 hour in a 12-hour shift for these nurses. And if you think about still the labor shortages that we're facing, you're still seeing a decrease of health care professionals getting into the workforce, and so how can we really alleviate some of that nuance and that burden? And not only are their experiences negatively impacted and overly complicated but so is the technology. And so research really shows that roughly $300 billion could be yielded by reducing administrative complexity through workflow automation. And so that's what I'm here to really talk to you about. It is what does ServiceNow do and what does ServiceNow do in health care? ServiceNow is an intelligent workflow automation system. And at the simplest form, you have a requester that needs something done and you have a fulfiller. And you have all of the tasks in between and the data and the systems that are siloed right now that need to come together to efficiently close out that outcome. And that outcome could be finding advice. It could be yielding patient transport to help you get to the next stage of patient care delivery. So what I'll be speaking to you about is really looking at where is all of this different overhead. And solving care delivery problems still requires a lot of human intervention in health care. The reality is that care teams no longer have sufficient time to dedicate to one-on-one interactions with patients. And if you think about your most recent visit to a health care organization and your recent appointment, they're charting, they're coding, they're really looking at making sure all of the different questions that they're measured on and their KPIs, and what it limits is that true interaction that we seek as patients that really help us from an emotional standpoint in our time of need when we're looking at care delivery. But what's happening is they're burdened by these administrative tasks, whether it's documentation or it's charting or it's various paperwork. There's a stat out there that says for every $1 spent, about $0.30 to $0.40 of that dollar is spent on administrative overhead. So digitizing patient data, it was really supposed to solve for the burnout. But now it's actually a leading contributor, jumping between these disparate platforms, swivel chairing between their electronic medical record and then the other systems. And when we visit these clinical floors, there's a lot of noise pollution with the beeps and the various aspects of attention that's needed that they need to actually pay attention to in order to actually deliver that care. Managing these disconnected processes and technologies is why ServiceNow created a fundamentally different platform architecture 18 years ago. We built very industry-specific native extensions to our platform to apply to all common business environments across various industries like manufacturing, like health care, life sciences and payer. And because you have multiple systems, there isn't a great way to coordinate with all these different teams and the technologies that are associated with it. In our conversations with health care leaders, they really focus on digital transformation efforts on the left-hand side here, which is really looking at the engagement from the patients and the care teams. But workflows really break down behind the scenes towards the right-hand side, which is all -- connecting between all the ancillary departments. And while the front-end patient engagement is important, it's really not enough. Disconnected care teams and data silos add to the unnecessary delays in care delivery, which then negatively impact the patient experience. And then we've all witnessed it further, the derivative of that is a lot of burned out clinicians and care teams. So in short, fragmented architecture really fuels poor experiences, and that's what health care organizations are looking to solve for. So with our platform, we basically are able to intelligently orchestrate and automate workflows across existing processes and technologies. Health care and life sciences service management can help solve for these different problems. Our purpose-built workflow is really designed to link all of the various workflows associated with it, and it's based on the FHIR HL7 data model. It also has prebuilt workflows associated with it, which essentially can be broken down and apply to various aspects of the strategic objectives that your health care organizations are here to meet. And so through end-to-end automation, we can provide the full solution from the customer engagement to the self-service and access through all of the front office, the messy middle, and then the back office, and then ongoing to really meet some of those security and regulatory regulations that you have to deal with within the health care system. So we connect everything, the patients, the employees, the devices, the processes. And we help providers create and extend processes with a fast yet governed low-code configuration. Using process automation and AI and low code, you can actually create new ways of doing work that didn't exist before. And you can actually aggregate different data and insight so that you can create new value and really look at what's happening across your enterprise, not only at a location level. But then you can look at it at various entity levels as well. And what we've heard from health care organizations is they need a way to automate this. They need a way to track these requests as they meet with their leadership. There needs to be a cohesive way to be able to analyze what's going on within the organization, so that they can really optimize the care teams and the care delivery aspect of it as well. So let's just note a few things here when we talk about health care and the products in any of our industry products. They're really built on our customer and industry workflow architecture. So starting here at the bottom, we have a number of innovations that our platform with ServiceNow introduces. We have those built as a feed for our Service Foundation, which then has all the core horizontal capabilities that are required to service our customers. And that is the unique value proposition of ServiceNow is that it is one data model, one architecture across the whole platform. So even as we acquire companies or we partner with companies, we recode them into our platform base so that you only have one single source and one reference architecture to actually navigate all these various workflows. Then on top of that, we have our self-service capabilities, our customer engagement capabilities, and that's where all of the different channel and assisted service offer. Our industry products are really building on this foundation. And the benefit is that you have all of the capabilities that are tried and tested across not only the health care industry, but the likes of Starbucks, of Home Depot consumerism. They might not be your industry, but then you are able to get the benefit of those types of specific capabilities that we're focused on. So then let's talk a little bit about what are we doing in health care. You can see here, we really look at the health care delivery and provider life cycle in these various views. The first is clinical operations. I spoke a little bit about that messy middle. It's really about how are you able to connect those various processes so that there is more clinician effectiveness. And when we talk about clinician effectiveness, there is this concept of on-boarding, cross-boarding, off-boarding and ever-boarding employees. And so ServiceNow has the capability that actually looks at how do you streamline that? How do you reduce the 3 months to onboard and get them to day 1 being in front of patients, so that they're able to add value right off the bat? And then the other aspect of it is modernizing the tech stack. So we oftentimes know, especially coming from a health care organization myself, there's not a rip-and-replace concept. Lots of investments have been made with your existing infrastructure. It's really about how do you now bring that into a platform that allows you to do more with that data and actually get those new insights and start to connect those workflows that take you from the front end, to the middle, all the way to the back end. Then we have this concept of care continuity. So when you actually receive care within a health care setting, what happens when you get discharged? Oftentimes, there seems to be a little bit of a disconnect. Or the caregivers that are at home with you, how are they informed with the information that they need to make sure that you as a patient are successful in your care journey? The ability to navigate that notion of going from hospital into the home or into any remote setting is ideally and eventually the vision for health care at ServiceNow. And then the other aspect of it is the patient navigation. How are we giving patients the choice to have more self-service? And then what does that do on the back end? It helps you deflect calls within your call centers, your patient appointment centers, your billing, et cetera. But how are you able to bring that information to the forefront for the patient? And so this is where we're going to spend our time is within the clinical operations. That's predominantly the focus of this webinar is how are we able to do those things like give time back and actually connect the entire health care ecosystem in a way that's meaningful that allows you to add more to your bottom line as well as have better experiences for your clinicians as well. So I'll just stop here, and I'd love to just get a sense of understanding from you all. So if you take a minute to just fill out this poll, what tools does your organization currently use for reporting and managing service requests made by care teams and clinicians? So think about clinicians at the bed side. If you just take a minute as I'm talking to just fill out your answers, do they have a dedicated service request software that's embedded within their EMR? Do they have some that's outside of their EMR? Are you still using things like spreadsheets or smart sheets? Or are you doing other things like just the manual good ole' walk over and figure out what's happening to get the information as well? I see about a few responses. I'll wait on a little bit to see if there's more responses that come in here. And if there are others, please specify that in the chat, if you don't mind. I'll give it about 30 more seconds. [Voting]

Okay. Let's see what the responses are. So we see that there's 23% that look at service requests through an integrated software within the EMR. At 70%, a very large number of you have ticketing or some sort of software that's outside of the EMR. And it's actually quite interesting that only about 6% are looking at things like spreadsheets or smart sheets. I really do want to dig into the second one because that's really where the true value is. And it further goes to show, when we speak with our health care clients and customers, they've told us, if it's not happening within the EMR, it's really a additional time and effort for care teams to be able to navigate through understanding where these service requests go. And what we're trying to do is really prevent that and make it more seamless and within the workflow and not take clinicians out of their workflow. So what we're doing is really introducing this concept and we have been, as some of you are all aware, that we've had this innovation related to EMR Help. I spoke about the health care data model, which is basically the foundation of understanding practitioners and patients. How are they associated with the locations? How are they associated with the actual devices? So we're able to get that information in from APIs, and then we're able to do things like Patient 360, a full view of that patient, whether it's their health insurance information or it's the number of times that they might have actually seen the organization or what were their top priority requests when they called. So that really sets you up for an agent experience. Patient support services, pre-visit management, those are all various playbooks that allow for you to onboard patients into whether it's looking at making sure they have all their prior authorization before they go into a surgery or they're enrolled into very specific programs like diabetes management and do they meet the different criteria associated with those programs. Within ServiceNow here, we have this concept of a playbook. And if you recall previously, I spoke about the requester and fulfiller, and everything in between that is the playbook that's needed to construct and get to an eventual outcome. Our vaccine administration management solution, that's been used by various organizations across the world to vaccinate their citizens. And now it's looking as though we're extending that into different types of vaccinations through some of those customers. And then we get to EMR Help. And what EMR Help is essentially is a capability that allows you from your EMR to put in service requests related to the EMR itself, and now we're extending that into any type of health care case. So we're trying to automate any clinician service requested from within the EMR, so that it actually makes it easier to report on issues because what ends up happening is they're either not reported or they're reported and it takes too long to close or you have no visibility in actually closing out those issues. And so what we're doing is passing information along from the EMR session because a lot of times, when you report those issues, then it's a phone call to somebody or it's an e-mail saying, here's all the different information and there's a lot of back and forth that happens. What we've done is actually made it very simple by actually extracting that session information and within the parameters and context of the issue that's being reported. And then we're able to actually streamline and fix those issues through the intelligent routing that's sitting behind the scenes so that, for example, you would be able to report on a medical device issue, take that into your biomed teams, see that they have a work order that's generated associated with that device, and then come back to fixing that device. And then the clinician can get a notification as to, hey, this device issue has been resolved, and they get the notification. So it's a full closed-loop continuum of how we can really manage this concept of enterprise service delivery for health care. And we have had a lot of successful customers using it. We have one organization where 50% of their tickets were triggered within the EMR, and they were able to see a 12-point increase in their first call resolution from the various issues that they were facing within their EMR. They were able to leverage EMR Help and collect that information and get the information right at the beginning, so that you're saving those few minutes that added to the 1 hour in a 12-hour shift, so that you can actually focus on other things, whether it's the patient care itself or taking time out for a mental break for those clinicians that we are trying to also rescue them from all of the administrative burden that's placed on them. The other aspect of this is looking at things like automating care delivery throughout the patient life cycle. So here, we have an organization out in Australia, which is really looking at patient engagement. They had a preadmission process that was -- could use more automation, that could use a lot more checks and balances. And so they were able to increase their conversion rates before they went from social medicine into private care. They were able to increase that type of transfer as well as they were able to anticipate about a 32% increase in the preadmission process because it was a lot more streamlined and they were able to look at value. Actual dollars saved based on 200,000 hours that were freed up from the actual ability to look at patient care annually, but saving those minutes across the various patient base. The other aspect of this is looking at how do you take care into the home. So I spoke a little bit about how you can leverage our data model, you can look at the foundation and then extend that care. So we have a health care organization that's very much focused in the States on extending care into the home through field service management and health care service management. And what they were trying to do is imagine Uber meets nursing and patient care in the home. How are you able to look at the patient preferences? If I wanted a Chinese-speaking nurse that was okay with dogs, where does that go typically? How does that then get referenced back into the clinicians who are Chinese speaking that are okay with pets? And how do you match those together so that there's this concept of actually consumerizing health care? Being able to know your patient, being able to show them that you know them, and that you're able to treat them in a way that's beyond just the care provided but all of the context around the care provided. So here, we were able to see a 20% reduction on the on-boarding of these nurses because in this frame, there's a high turnover and there's a lot of contractors as well. So being able to effectively manage how you onboard contractors and potentially look at optimizing the amount of care delivered per month. So with that, I just want to have another poll question related to when we think about extending care into the home and we think about providing care within the health care organization, the concept of devices comes up a lot. And in our Washington, D.C. release, we've really made it much more effective in terms of clinical device management and the whole life cycle of that. So I just want to pause here for another poll question and get a sense of how would you rate your organization's current processes from the end-to-end life cycle management, maintenance and reporting of clinical devices? I'll just stop here and see for a minute, if you could go ahead and fill in this poll question. Don't be shy. I'll wait about another 30 seconds. [Voting]

Okay. Let's see what the responses here were. So very efficient, only about 3%; somewhat efficient, about 50%; neutral, again, I think those 2 would be relatively average and somewhat inefficient. So this is actually quite surprising because a lot of the health care organizations we speak with when we talk about clinical device management, they either don't have a good inventory of all of their devices that are either on the network or not on the network, or they don't have a good understanding of all of the maintenance plans associated with it, or even when it comes down to the auditing and traceability for Joint Commission, the ability to provide the reporting associated with, yes, I'm compliant with my maintenance schedules for this device and here's all of the record associated with it. We know that, that can be very cumbersome for health care organizations, and we've actually introduced into it clinical device management, which is essentially the ability to automate everything across the whole life cycle management of your device. So think about from the management of that device to the maintenance to the reporting of it, looking at how you actually dispatch your technicians for the various preventative maintenance schedules or the alternative equipment maintenance schedules and the tracking of those devices as well, and then providing an audit log and a trail for any of the equipment maintenance that has to happen on a comprehensive basis so that you have much more transparent reporting. So let me tell you a little bit about what the clinical device management includes. So we start with the planning and acquisition of these devices. So think about devices that need to be procured. Who has the approval rights? Has it gone through the right approval process? Has your procurement team been able to do the due diligence associated with it? To when you actually receive those devices into your inventory and stock rooms, do you have the capabilities to do the audits and asset tagging? And are you able to make sure that you have your stock renewals and the understanding of where all of these devices sit to the point of actually looking at installation and deployment of those devices? Is your CMDB in sync with these new devices that are being on-boarded? If there's loaners or swaps and oftentimes, there's -- health care organizations have many warehouses that actually keep some of the extra inventory. Are you aware of what's in those warehouses? Are you able to quickly locate that and call upon that so that if there's a need for additional hospital beds because you have to expand because there's a crisis, are you able to do that in a manner that's quick enough to adjust to the real-time needs of your organization? Then the ability to coordinate and dispatch. So this is where a lot of the pain points we see. Oftentimes, it's beyond just your biomed departments. It falls into facilities as well. And you have to be able to look at the equipment. You have to be able to make sure you're resource planning. You have to be able to make decisions around you repair a device or do you replace the device? And do you have the reporting available to understand utilization information so that you can either replace a part or the whole device itself? And then the ability to look at things like break/fix or planned maintenance schedules. It's oftentimes that a lot of these devices want alternative equipment maintenance schedules because they might have missed or prolonged the upkeep of that device per the manufacturer's agreements. And so now it's on a different maintenance schedule. Are you actually able to keep up with those? Then we have the whole concept of decommissioning and disposing of that device. So it needs to be wiped clean. It's a health care device. Are you doing the right thing by perhaps refurbishing that device to a lower socioeconomic region that doesn't necessarily have the capacity to buy new MRI machines? So hence, you have these feeder programs. So it kind of falls in suit with ESG rules and strategies as well. So I want to bring some of this to life by actually showing you what we're doing with clinical device management. [Presentation]

Great. So I hope you were able to see kind of how we're able to look at the end-to-end workflow of device management and applying that to even service requests and the ability to get issues from permissions into something that might be device-related or any issues for that matter, and the ability to do that plus now adding into it the concept of gen AI, which is what I'll speak about next, and answer some of the questions that I'm seeing in chat. So we have a very robust investment in what we're doing with our AI platform. And the whole notion here is to resolve cases faster with AI. So things like document intelligence. How are you able to extract information from documents to actually look at integrate them into workflow automation? Think about FMLA or think about release of medical information. I oftentimes have seen organizations still have a PDF out there that a consumer goes through to fill out or they have to pick up the phone and call. And then there's SLAs from a compliance standpoint in terms of being able to fulfill those, being able to read that information then trigger workflows to your release of medical information department, so that they are quickly able to resolve those requests and put that information back into the patient's hands. Or sentiment analysis, prioritizing issues based on the user sentiment. At this high level, the feature is really looking at in context of the user or e-mail to case categorization. The ability to minimize delays by routing issues to the right care teams to provide the faster service. Again, that's what's going to help in the upstream of care teams and clinicians having to navigate their own ways to figure out how to resolve those issues. Language detection with AI. Being able to route cases faster to skilled agents so that they can look at different sentiments and language preferences associated with it. And then looking at our admin console to really create and train AI models so that you have more of a guided experience. And then on top of that, we are also looking at things like having gen AI within HCLS. So David, to the question that you had out in chat, we have the capabilities to look at case and chat summarization. So similar to how you're working with a live desk agent as a patient, all that documentation is happening, perhaps that documentation has happened several different times because it's a frequent flyer or if the patient continues to call or have -- continues to have issues. How are you able to summarize that so that whomever is on the agent side can look at what the history is at a very quick view and then be able to summarize, here's the challenge that the patient had, here's how we closed it out, oh, and by the way, if it's a new issue, how do you then add that into your knowledge base so that the next service agent can actually work that if that issue does arise rather than leave the onus on the service agent to figure out, okay, this was a new issue. It's not a part of our inventory of how we resolve issues. Now we need to go back and do something. The ability to actually automate some of that is very helpful. Now Assist in AI Search allows enhancement of self-service capabilities so that within Virtual Agent, you can do a self search. You can look for various things that are associated at a very basic locations, doctors, how many of them are within a 5-mile radius of me. Again, that doesn't need to be a phone call into your call centers. It can actually be just driven through Now Assist in AI Search because you already have that information in your provider data management or looking at Now Assist in Virtual Agent. So now how do you sensibly actually use the Virtual Agent to enable closure of some of these requests that might be coming up? Or through our contact center as a service, how do you now have a warm handoff with the trail of information and history that, that patient might have gone through prior to having a warm handoff? So the ability to connect that on one platform is really what ServiceNow offers. We also have the Now Assist panel, which basically allows you to request summaries and other actions through a conversational structure. A lot of time, when we speak with these health care organizations, they'd come back to us like, well, typing is okay, but we rather would want to speak to it. We have the capabilities to look at voice and take it into our workflow. And we have lots of partners here as well that have been working with us on this. And then we have the admin console. So the ability to deploy things like Now Assist solutions with more easy and intuitive admin experiences. And so some of the use cases that we've seen here are, for example, we have one health care organization, which has basically leveraged our HCLS service management. And they've looked at how can we actually improve the efficiency of how we get lower failure to keep appointment rates. So they had a high level of failure to keep appointment percentages. We wanted to make sure that they were able to leverage the platform and look at, in this case, how do you make sure that patients are showing up for their surgeries. And what they did was they looked at what are all the operating rooms, what are the devices that are within those operating rooms, marry that against the roster of people that are there to work, and then marry that against the highest level of utilization. So this is where AI comes into play. It actually then provided about options for schedules to say peak utilization is option one. If you want to have less peak utilization or if you want to maximize how you're using your resources more effectively, here's the different schedules for how you can operate these theaters. And so then a human makes the decision to say, okay, this is the best schedule. It then further goes on to engage with the patient 10 days prior to appointment. Are you confirmed for the appointment? Yes. Great. So now you have more immersive-ness and engagement with that patient. Five days out, are you sure you made -- you did the labs? Yes. Okay. Great. Here's a checklist for the next thing. Three days out, are we still confirmed? Yes. And they've actually shown and they've been successful with minimizing their failure to keep appointment rates as well as optimizing the amount of time they're spending in their surgical theaters without having canceled appointments because we all know that that's probably the highest cost, when you aren't able to leverage the resources or even anticipate that you're going to have a gap and be able to leverage those resources. So with that, those are some of the use cases that are associated with health care and life sciences service management as well as clinical device management. We're really excited to offer the opportunity to come to Knowledge, which is our industry and our company, here's what's happening within ServiceNow now. It's exciting. You can see that you have the ability to register. It's in Vegas this year as well as we have various health care customers that are looking at aspects of and explaining the success that they've had on the platform. A couple of the areas I just want to highlight are the ones related to the road map here in green. We also have some of our key customers that are talking about the transformational changes that they've seen in health care as well. So I encourage and invite all of you to attend Knowledge this year and join us. And if you have use cases or stories where you've been successful, please reach out and we can look at further opportunities for us to get you all on stage and share your experiences. And so with that, I'll just stop here and see if there's any questions within the chat. And we'll just stop for some Q&A in the next 15 minutes.

Okay. I see a question here related to how you address the challenge of integrating new technologies into existing workflows without disrupting care team efficiency. I think that there's a technology viewpoint of this, but then there's also a governance viewpoint. So first and foremost, your digital transformation has to be sponsored and guided and made a priority across your organization. And it has to be focused. We all know that there is lots of choices out there in terms of how you bring digital investments together. But really, a platform approach is the way forward because you're not going to rip and replace. You're going to want to have certain aspects of information from various systems. You're going to want to trigger other workflows from those. And so I think making sure your organization supports this concept of digital transformation and the change management associated with it, that you have your clinician leaders on board as well because if they're not on board, it's -- you're never going to win that battle. And so making sure you have a partnership between your IT, your clinicians and your administrative leaders, so that it's a trifecta of success that you're setting up for. And the third is make sure you're picking your partners very selectively. Make sure that they have the knowledge and the bandwidth to be able to scale on the platform as well as be a partner in looking at your strategic objectives. These are not point solutions. It is a point and a platform that takes you to a myriad of value that you can derive within the organization. Let's see. Referrals across the care continuum is a big issue. Any work being done on this? Yes. We actually have one of the largest cancer centers in the U.S. looking at -- using us for referral management because we all know driving patients out of network is a very high cost. And if you don't keep the stickiness, you're going to lose them as well. So the ability to actually do more referral management so that as a primary care provider that's referring a patient to, let's say a cancer center, what does that handoff look like? The cancer centers don't necessarily have the same EMRs. Is the right information being sent to them? Do they have all the eligibility criteria? Do they have the prior authorization? There's playbooks that can be constructed that allow you to leverage the Service Model Foundation and look at what your external entities are that you might be referring to. So yes, we do have the capabilities to construct referral management on the platform as well. Other questions? Okay. Well, I don't see any other questions out there in chat. I do want to thank you for your time. And if there's any information that you need, please feel free to reach out. At the end of the day, I want to not only thank you for joining, but thank you for being leaders in your organizations that are helping drive this concept of seamless care delivery forward. We are in this together. ServiceNow is here to help you be successful in your endeavors. And let's have a partnership. Let's work together to really understand how we move the needle forward and not just in this point in time but over years, so that it turns into strategic partnerships as well. Any more integrations with Epic beyond the Help button? It is a great question. So ServiceNow is a part of Epic's vendor service agreement. We are actively having conversations with them for a myriad of things to really understand how can we make it more seamless. We have some health care organizations that leverage ServiceNow for their Epic implementations. And it's -- they've been able to implement Epic, and we all know those implementations are not easy. Updates are not easy. They require a lot of resources. So ServiceNow has been successful in terms of helping organizations with their Epic implementations or their transition from EMRs to other EMRs. And as far as other integrations that we're doing with Epic, more to come in the future, but I can say that we actually are having active discussions with Epic currently. And so stay tuned. As we crystallize what that looks like and kind of hone in on what that focus is, we will have webinars specific to what we're doing with the various EMRs and the integrations. Not only with Epic but the others that are out there as well. Other questions? Okay. Well, thank you so much for your time, everyone. I appreciate your participation, and I hope that you found value from this session. We encourage you to go on to our website. We encourage you to attend Knowledge, and thank you so much for the opportunity to be here on this platform today. Thanks, everyone.