During his Engage track keynote at HLTH, Robert Pearl painted a dysfunctional healthcare system that is ripe for disruption. A physician, author, former CEO at Permanente Medical Group and now a professor at Stanford University, Pearl noted that many Americans believe we have a great healthcare system. Unfortunately, the reality may fall short.
“We spend more on healthcare than the entire nation of India spends taking care of 1.2 billion people – their education, their clothing, their food, their transportation and their healthcare,” Pearl said. “Among the 11 industrialized nations, we are last. Last in life expectancy, last in child mortality, last in maternal mortality.”
Pearl suggested a few prescriptions for the ailing system, including getting rid of fee-for-service in favor of capitation, in which providers receive a fixed sum to provide care.
“It’s the only way to align incentives for the patient,” Pearl said. “When you’re capitated, all of a sudden, your perception of prevention goes up, your perception of the importance of avoiding a medical error goes up significantly. If someone is being paid as a percentage of time and cost of materials, they are going to do more. Fee for service simply adds volume without adding value. If you make a mistake, you get paid twice. The incentives are misaligned.”
He noted this misalignment has far-reaching consequences. For example, he described how 10 hospitals in the San Francisco Bay Area provide cardiovascular surgery, but three perform fewer than 300 cases a year. In his view, this approach is inefficient and may reduce quality, yet those hospitals continue to provide heart surgery.
“What business could run with an average of one patient a day?” he asks.
Pearl also believes the system is technologically backward. When he tells medical students the most common way to communicate patient information between physicians is via fax machine, they ask: What’s a fax machine?
While he believes in technology, he thinks leaders need to be strategically smart. Too often, vendors offer technologies that make them money but don’t really solve anything. He feels entrepreneurs should always start with the problems and then develop technologies specifically designed to solve them.
There are also technologies, he believes, that do provide solutions, but perhaps not for the problems they’re designed to solve. He cited Fitbits, wondering aloud whether they do anything to support better sleep and fitness. Still, Pearl admitted the technology does fix one serious problem.
“The December dilemma,” he said. “Christmas and Hanukkah are coming, and there’s someone you love a lot. You want them to know how cool you are.”
On the other hand, he feels commonplace technologies, like video and electronic health records (EHRs) can really make a difference. He noted that a stroke-trained neurologist can monitor video feeds of patients entering multiple emergency departments, flagging possible stroke patients for increased scrutiny and potentially accelerating the decision to give them thrombolytics to dissolve clots and preserve brain tissue.
In addition, EHR data can be analyzed to decrease mortality after hospital discharge. Data analytics could identify patients who, after being discharged, may quickly return to the ICU.
Pearl finished by describing ways the system may be disrupted. Major business partnerships, such as Haven Healthcare, a collaboration between Amazon, Berkshire Hathaway and JPMorgan Chase, might be a catalyst. Offshore care may also drive positive change.
“I can’t find a single industry that was as ineffective, inefficient and high-priced as the American health system today that did not get disrupted,” said Pearl. “If you have any doubts, ask Kodak, ask Borders, ask Yellow Cab.”
Photo: AlexLMX, Getty Images
