The reality of innovation in healthcare is that “everyone agrees” its necessary “but no one changes,” Ohio Lieutenant Governor Jon Husted said in kicking off a session at the Healthcare CEO Summit at Cleveland Clinic in October.
Husted’s expression of frustration got a lot of heads nodding agreement during a roundtable discussion between healthcare CEOs sponsored by the state of Ohio.
“Government is good at providing access but not efficient services, and we need better outcomes,” he said. “And now we’re having conversations about ‘Medicare for all.’ That’s the context in which we live today. Innovation provides that opportunity where everyone can win, but it has to drive better healthcare outcomes and drive down costs.”
A big part of the problem is that healthcare’s “economic model is so different from any other sort of transaction,” said Howard Edelman, chief revenue officer of Product Realization Group, a product-development consultancy. “Every day I see an article where someone goes in for a procedure and gets a [humongous] bill. But the people paying the bill aren’t the ones getting the service. And there’s no negotiation. How come this system is like that at its core?”
Douglas Boothe agreed that America is “way out of balance with every other society because there are no price controls” for healthcare. The CEO of Akorn Pharmaceuticals said, “We need more consumerization of healthcare. So many consumers believe in a doctor as God… There’s no visibility or transparency to costs.”
For example, while federal Medicare and state Medicaid programs “may be negotiating with healthcare providers, the person getting the services has zero responsibility,” said Danilo Coité, CEO of Independence Plus, a home-health-services provider. “If a person doesn’t have charge of his own health, what incentive do they have to do anything different?”
If more negotiation of healthcare expenses were empowered, “and people could negotiate and get awarded some percentage of the savings, you would see costs driven down,” Edelman said.
Alfan Jetha observed that making primary care more universally available could help. “Everyone has access to even basic care, and if you need something urgent and decide to go to the Cleveland Clinic, the system allows for that too, but you have got to pay,” said the president and CEO of RxSource, a pharma-procurement specialist. “I would be curious to see the outrage if you were to socialize the doctor system in the U.S., and some doctors got paid to go to less-desirable areas.”
Husted argued that “we already kind of do that, but you can’t say that—or no one wants to say that. We have freedom of association. Different areas get different economic incentives, but the bottom line is that hospitals now are closing in poor areas and opening in wealthier areas so they have more private-pay customers. They’ll open great facilities right across the street from each other to have that access.”
Another big reason innovation gets logjammed on the way to lowering costs is the huge regulatory burdens that new medical devices and drugs must overcome, Edelman noted. At the same time, it’s much more difficult to find capital to fund early development beyond the seed stage of innovative healthcare startups than, say, it is for a fintech firm, said Balaji Rajan, CEO of Ceannate, which has launched a “teletherapy” smartphone app for college students.
And then, when it comes to commercialization, such difficult paths “can stop a lot of these innovations from ever getting into the hands and benefits of patients,” said Vincent Ho, CEO of VGH Solutions, an online provider of pain-relief devices. “We were lucky” that a professor at the University of Waterloo in Ontario was intrigued enough by VGH’s technology that the school supported its development.
The CEOs agreed that a bigger emphasis on innovating for prevention would get tremendous results compared with the current focus on diagnosis and cure of conditions and diseases after they’re manifested. “Japan and France have gotten big into prevention, with results,” said Kevin Hrusovsky, chief of Quanterix. But in the United States, he complained, there are still government subsidies for food ingredients such as sugar that end up playing key roles in healthcare scourges such as the obesity and diabetes epidemics, treatment of which comprises a huge portion of the nation’s medical bill.
“We should at least stop subsidizing sugar or corn syrup,” Husted agreed. “We have to look at some of the root causes, and diet and exercise are tougher conversations to have than talking about [cancer-research] moonshots because it requires everyday people and systems in our country to change… And if you can’t force people to change their behavior, it doesn’t matter.”
Also, in Europe as well as Singapore, noted Michael Crupain, chief medical officer of the Sharecare online health platform, life expectancies are longer in part because of their emphasis on “public health. Singapore has the longest life expectancy but spends the least” per capita on healthcare. “They’re super-efficient. But they spend a lot of money on social goods like housing. There’s a lot of order in that society, and they’re good at planning.” Husted noted also that “there’s not so much illegal drug use in Singapore” because of its tough approach to crime.
The Ohio lieutenant governor also blamed some CEOs for not caring about social goods—“just the subsidy” that their companies might get from a government for expanding or locating a facility somewhere. “They’ll just go to the other place,” he said.
Kimberley Lewis brought up another lifestyle behavior that ultimately stems from the decisions of CEOs in one industry and that increasingly is viewed as a medical threat: sleep deprivation from kids’ addiction to content on mobile phones. “The computer industry is absolutely making apps today that prevent kids from sleeping and is causing mental-health issues,” said the corporate manager of appeals for AmeriHealth Caritas, a managed-care provider based in Philadelphia.
Roundtable participants also agreed that America’s opioid epidemic is another major weight carried by the healthcare industry as well as society in general. “Life expectancy of kids being born here today is shorter than their parents’,” Lewis said. “Opioids have brought it down.”
Meanwhile, the bulk of medical expenses in the U.S. are racked up at the end of life. “And I don’t think we’re willing to impose certain conditions on that,” Edelman said, “because of our freedoms.”
More education of consumers could modify behavior, extend mortality and reduce costs, Lewis argued. Consumers even in the current system would become savvier. “We need to educate consumers more about how much services will cost them when they may not really need it,” she said. “We need to take the time to educate the consumer so they’ll be informed not just about resources but about their recourses…” For example, many healthcare providers don’t engage their patients on ways to manage chronic health issues, such as providing “daily tips for eating if they’re in disease management,” she says.
But Crupain maintained otherwise. “Media is how we change our culture; education doesn’t,” said Crupain, who also remains medical chief of staff of Dr. Oz. “That’s what we do at the show. No one talked about Greek yogurt or kale before [Oz] did. When it comes to our health, we don’t care about the future but about now. How do we better incentivize people to care now?”
Douglas Boothe CEO, Akorn Pharmaceuticals; Danilo Coité, CEO, Independence Plus; Michael Crupain, Chief Medical Officer, Sharecare; Howard Edelman, Chief Revenue Officer, Product Realization Group; David Harrington, President & COO, Centre for Neuro Skills; Vincent Ho, CEO VGH Solutions; Kevin Hrusovsky, Chairman & CEO, Quanterix; Jon Husted, Lt. Governor, Ohio; Alfan Jetha, CEO, RxSource; Kimberley Lewis, Corporate Manager, Appeals, Amerihealth Caritas; Susan Rahe, Senior Director, Celanese; Balaji “Raj” Rajan, CEO, Ceannate.