Speaker 1: What went wrong with the United States healthcare system? We spend twice as much as everyone else in the industrialized world and we don't even live as long as 36 other countries in the industrialized world. What happened? What I'd like to do is share with you the problem and then hopefully the solution. So what's the problem? The first issue is perverse incentives. So have you ever thought to yourself, why do surgeons make so much and doctors that take care of your children or take care of your cognitive issues make so little? Well it turns out that the answer is in a little game I call follow the money. You see, whenever I don't understand what's going on in the United States, I play follow the money and then what seems irrational and strange to me suddenly becomes rational and clear. So it turns out that Medicare through the Medicare Payment Advisory Commission sets the rates for what doctors and hospitals get paid for everything they do. Congress oversees Medicare and of course we know PAC dollars, political action committees, pay for politicians to get elected. Now if you're a Siemens or General Electric or Hewlett Packard, what do you want in exchange for your millions of dollars that you spend getting politicians elected? Well of course you want a return on investment on the stuff that you sell. So the idea is for Medicare to reimburse doctors and hospitals at a sufficiently high rate that they'll want to do more of your stuff, whatever that stuff is. So we have a reimbursement system that's based on return on investment for stockholders and investors and has almost nothing to do with human health. Now I will tell you in other countries of the world, people get paid for keeping people healthy but that's not how fee for service works in the United States. We get paid in the United States for doing procedures and tests that are of benefit to suppliers. And by the way, end of life is a one trillion dollar business. Did you know that 40% of Americans die in hospitals every year and 20% die in intensive care units? And the sad thing is these people are going to die anyway. In every other country of the world, people die at home with the families they love in comfortable peaceful surroundings. But in the United States, we've created a huge one trillion dollar industry on taking care of people in the last six months of their life. Many of my colleagues complain that when they have a quality initiative and they're able to cut complication rate or death rate, the chief financial officer complains that you've now cut my revenue because now that people are leaving the hospital sooner, we're not getting as sick, we're not getting as many complications, we're not making as much money. You see, the problem is we get paid for sickness and not for health. We get paid for procedures and tests and not for keeping people healthy. And that's a serious problem. The next issue is non-value added variation, both clinical and administrative. My colleague Atul Gawande, a physician in Boston, wrote a wonderful article in 2004 called The Bell Curve. And he demonstrated that with children and adults with cystic fibrosis, your life expectancy will be as much as 25 to 30 years different based on where you go to get your care and which doctor takes care of you. That's a huge amount of variation. In terms of spending, doctors spend as much as a thousand percent difference taking care of the same patient with the same diagnosis based on their own particular clinical patterns. And administrators spend up to 30, 40, 50% differently managing labor and supply chain. You see, in the 20th century, we created in health care what's called a cottage industry. That basically means that every doctor treats the patient the way they want to, not necessarily according to evidence. And administrators in health care have done the same thing. They've run their hospitals the way they wanted to and didn't have to follow any scientifically sound basis or use analytics or use computers to help guide them in their management. So we have way too much variation. In fact, clinical and administrative variation is now the third greatest cause of death in the United States in our health care system behind cancer and heart disease. So what we have to do in this century is somehow eliminate the non-value added variation that has caused so much harm to so many people. And finally, the third major problem with our health care system is our government is going bankrupt from health care and social security. So how did we ever get to 65 is the eligibility age of Medicare? Well, it turns out it all started back in 1875 when Kaiser von Wilhelm and Otto von Bismarck created the first social security system in Western Europe. You see, at that time, Otto von Bismarck wanted to create an entitlement program for the elderly. And he asked his actuarials, he said, find me the age at which only 3% of Germans are still alive. And the age they came up with was 70. Well, because of politics, they had to negotiate down to 65. But 60 years later, when Franklin Roosevelt started the first social security system in the United States, he used Otto von Bismarck's data. And 30 years after that, when Lyndon Johnson and Wilbur Mills created HICFA, the precursor to our now Medicare and Medicaid, they used the same data. So as it turns out, 80% of Americans live to the age of 65. And at the age of 65, they have a 20-year life expectancy. More for women, less for men. That means we've created a Ponzi scheme. That means we've created a system whereby 20% of Americans support 80% of Americans for 25% of our lives. And that's not what entitlement programs were set up to do. They were meant to be a safety net for people with health care issues at the end of their life, not in the middle or the middle end of their life. It was never meant to be for a quarter of their entire lives. So somehow we have to fix the entitlement programs. Now a simple solution would be for healthy people who can afford it, they can be given the option of not collecting Social Security and Medicare until they're older in exchange for better benefits. I would personally defer my Medicare until I was 80 if I knew that when I got to 80, I could get my supplemental covered, get my pharmaceuticals covered, and get my long-term care covered. That would give me a sense of great security. And I would be happy to forego the Medicare for the next 15 years. But Congress and our political system is not quite ready to take that on. So what's the solution? What do we have to do to make health care workable in the United States and make it the health care system that we deserve? Well, the first thing is we have to digitize health care. How many of you remember the days when in order to make a deposit or withdrawal on a bank, you had to take a bank book during banking hours, go to a bank, and see a banker? And of course, we used to laugh about banker's hours because they were between 9 a.m. and 3.30 p.m. Monday through Friday because they had to spend the last hour and a half counting their money. And I remember taking that little bank book in and getting it stamped and being able to either withdraw money or put money in and deposit. Well, that sounds crazy today in 24-hour ATMs when any day of the week, any time of day, any country we're in, we can deposit and withdraw money on demand. Well, health care has to go there, too. See, right now to get my medical record, I have to go to a hospital. Sometimes I get into a portal, but the portal doesn't have most of my information. So I have to go to a hospital, sign a release during hospital hours when the medical records department is open, sign the forms so I can get a portal where I can get part of my medical information. And if I go to two hospitals, I have to go to two portals or go to two hospitals during hospital hours to get my medical records. Well, that's obviously a crazy way to deliver health care services. So we need to digitize health care so that we can get our information any time we want, wherever we want, whenever we want because it should belong to us and not to a hospital. So we have to digitize all of health care. Also, if we want to access information about our health, we should be able to go on to a cloud-based system that we can download our health information and get health care advice 24 hours a day, seven days a week. So digitization is one of the ways in which we can make health care better. Number two, standardization. Remember the Atul Gawande? He demonstrated there was a doctor at the University of Minnesota that if you saw that doctor and you had cystic fibrosis, your average life expectancy would be 30 years longer than almost everywhere else. So when there's an evidence-based best practice, we have to require physicians and administrators to utilize that best practice. It shouldn't be up to the individual physician any longer how to take care of each and every patient if there is evidence that there's a better way to do it. And the same thing's true for health care experts and administrators. If there's a better way to manage labor costs or supply chain costs or to manage the cost of running a hospital or health care system, and there's a better way to do it and there are better tools to do it, we should require our health care leaders to use those tools. We want to narrow variation as much as possible so the difference between the best care and the worst care is actually very small. And that's because everyone is following evidence-based practice. So in the 21st century, we have to eliminate what's called non-value-added variation that harms people or causes them to die prematurely. Number three, we have to commoditize care. Now commoditization, or the race to the bottom, means that health care is way too expensive and we have to lower its costs and quickly. You may not know this, but health care is the number one cause of personal bankruptcy among working Americans with health care insurance. In fact, if you want to render a family insolvent, bankrupt, the easiest thing to do is give them a case of cancer or hepatitis C. The out-of-pocket expenses can be as much as $50,000 to $100,000 a year. The average American family has enough savings to last for three months if you were to cut off their paycheck and throw some chemotherapy at people or radiation at people at three and four times the cost of that same treatment overseas is to literally put the security, the economic security of the average American family in jeopardy. We have to stop doing that. So what's one solution? Well, I got to use that solution not so long ago when I had a nasty dermatitis of my wrist. And it was four o'clock in the morning on a Sunday, and I had to see a client. I had to see a client the next day. And I was saying, where can I go? And what I did is I took out my phone, I took out my iPhone, and I pushed on an app. And I looked at the phone, and I looked at the doctors. And I had 36 doctors to choose from, and I chose a board-certified internist. And I had to wait a full two minutes for that doctor to come on the phone. And she took a history and did a physical. She looked at my ears, my eyes, my mouth, my heart, my lungs. And I was astonished at how good the examination was because I was a practicing clinician, and actually the view of my ears and the sounds of my heart and lungs were better than I ever had with a stethoscope or a notoscope when I used to look through people's ears. And she looked at the rash, and she says, it looks like a dermatitis. And I says, that's what I think it is. And she said, what's been helpful to you in the past? And I told her, and she said, well, I noticed on the GPS system, there's a Walgreens right across the street from the hotel. Would you like me to phone it in and have them deliver it to your hotel room? I said, that would be terrific. So 20 minutes later, a young man came with my medication. I paid for the medication, went back to bed. The entire interaction took a little over 24 minutes, and it cost $59. That's an example of a smart way to get routine care today. You shouldn't have to go to a doctor's office, sit in a waiting room, be with a nurse for 30 minutes only to have five minutes with a doctor, pay a higher fee than what I paid, and basically spend half your day getting care that is really routine. So we have to figure out ways, creative ways, to make health care much less expensive without sacrificing quality. And by the way, I believe in giving people a choice about that. If someone wants to pay extra to see their doctor, that's absolutely fine. Or pay a little bit extra to see a nurse practitioner, that's fine. And if they want to go to a retail clinic, that's fine. And if they want to use their iPhone or smartphone, that's fine too. So what we need is to give people options, different cost options, which to get health care assistance. And then finally, the last solution is globalization. You see, we don't know it, but we're actually in competition with the rest of the world. And let me explain. There's a company in Boston called Patients Beyond Borders, and it's the largest medical tourist travel agency in the United States. And what they do is they find lower cost options for Americans who cannot afford health care in the United States to go abroad and get treated. For instance, you can fly to Germany and get chemotherapy for 90% less than you can in the United States. And it can mean the difference between having cancer and getting treated and not going bankrupt, and having cancer and getting it treated and going bankrupt. So medical tourism is now the fastest growing industry in the United States. It's now 2 million Americans go overseas every year for health care. And it's a $125 million business that's set to double every two years. And now large companies are sending their employees to health care systems that are willing to guarantee quality and cost at a significant savings. For instance, Mass General in Boston does business with Rihad, Saudi Arabia. Virginia Mason in Seattle, Washington does business with Tokyo. Tokyo does business with Beijing, China. And people fly from Beijing, China to Tokyo, and from Tokyo they go to Seattle, Washington. Why? To get guaranteed care with guaranteed quality at a fraction of the cost. So we have to understand we're in competition with the world, and we have to create a health care system that is cost effective, that is standardized, that is commoditized, and is digitized. So I'd like to leave you with a final quote. General Shinseki, the former Joint Chiefs of Staff, and also former head of the VA hospital system once famously said, if you don't like change, you're going to like irrelevance even less. So it's critically important for our health care system to understand that we're not a cottage industry anymore. We have tools like analytics and data that can help us to practice evidence-based medicine. We can eliminate variation, we can make health care less expensive, we can compete on the global stage, and we can digitize health care so everybody can get the health care they need any time, any place, anywhere they want. And then we can have the health care system that we all deserve. Thank you.