Fixing Healthcare… From The Trenches (Episode 9)

Dr.Badia (00:02):

Good morning. This is Dr. Alejandro Badia with another weekly session of the podcast “Fixing Healthcare From The Trenches” ironically, I have a guest today that is really luminary in healthcare, A disruptor who has a podcast with similar name, which I apologize deeply. My book, as people know is, is called, Healthcare From the Trenches” And what I’m hoping to do with this is educate the Public about how to fix healthcare .Dr. Pearl as does not surprise me, is a step ahead and has had a podcast for some time entitled “Fixing Healthcare” and I encourage you to listen to it. I’ve listened to some episodes recently. So to introduce Dr. Robert Pearl, he is a physician. I try to often interview physicians who are also disruptors. So let’s, let’s start with the core is that he has his medical degree from Yale, d plastic and reconstructive surgery at Stanford. We are in Miami. So, I want to point out that plastic surgery does not just simply mean, breast augmentation. Okay? It is, reconstructive surgery, very complex. And he was, for a number of years the CEO of the largest medical group in the country called the Permanente Group, affiliated with Kaiser Permanente that, he headed 10,000 physicians that took care of about 5 million patients. So he knows something about healthcare. He therefore was named one of the 50 most influential, physicians by Modern Healthcare and influential leaders in healthcare. He’s got two books out of, the one I particularly enjoyed called “Uncaring” and the subtitles, how the Culture of Medicine kills Doctors and Patients. So it’s, it’s right in your face and I think we share a lot of the same ideas in terms of how to fix it. We might differ a little bit, and that’s what we’re going to talk about. So let me introduce Dr. Robert Pearl.

Dr.Pearl (02:03):

It’s a pleasure to be here this morning, and I look forward to our conversation.

Dr.Badia (02:07):

Thank you, Robert. So, tell me a little bit about how did you transition? I mean, and I have to tell you, we know some people in common and one of them gave you the highest compliment,. That you were one of the hardest working physicians they know. I don’t know if that’s good or bad, but you are, you are a plastic reconstructive surgeon. But how did you transition into that role as heading up 10,000,cats, as I call ’em, herding cats?

Dr.Pearl (02:34):

So you’re, you’re absolutely right. My focus actually was on cleft lip and cleft Powell, although I also did a lot of hand surgery like yourself and I went to Kaiser Permanente after my residency at Stanford, loved it there. Progressively they asked me to take on responsibility. I remember my second year there, they asked me whether I would head the, OR because the OR was having a lot of problems. There’s a nursing shortage at the time, and cases were having to get delayed, you know, I assumed they asked me because of my great credentials. It turned out everyone else had said no to the terrible job. I was just too naive and foolish to realize what I was getting on myself for. But I did a pretty good job brought in some traveling nurses, started a training program and got the or back running and once you’re seen as someone who can solve problems, they ask you to solve more problems. And that’s how I took on the job became the head of the facility in Santa Clara, which takes care of 400,000 Americans. Then went on to become the C E O in Kaiser Permanente, where as you said, I was responsible for millions of patients and led actually about 12,000 physicians both on the east and west coast.

Dr.Badia (03:49):

Wow. So, obviously you have a lot of experience in dealing with the challenges of US doctors. You speak about it in your book “Uncaring” about how during the training or even the education process physicians we deviated somewhat to being able to run a business and to be able to work together because of the medical process. In my book I say that the competition starts sophomore year in organic chemistry, right? And then never ends. And this is one of the problems, that’s why everyone is eating our lunch, right? So what what’s your perspective on that?

Dr.Pearl (04:27):

I absolutely agree. You know, medicine is often in leftover in the last century and uncaring, I talk a lot about the culture of medicine, right? The culture of medicine is what you learn in medical school and residency. You don’t learn it in textbooks or lecture halls. You learn it by observing your chief residents and your attending physicians. You, you see how they act. You listen to the words they say, and unfortunately, the culture of medicine is always decades behind what’s going on, particularly as technology is accelerated in the modern time period. We’re still in the 20th century, as you well know, the most common way that doctors exchange information is the fax machine, an 1834 invention. That’s how modern doctors exchange information in the 21st century. So yeah, that’s my observation is that one of the things that we value is the individual doctor and the autonomy.

Dr.Pearl (05:24):

And that was great in the 20th century when patients had straightforward problems, they might have had a trauma, they needed to be repaired, they might have had pneumonia. But today it’s far more complex and I just don’t believe that we can succeed as well as individuals, as we can as teams and as you point out, that runs very contrary to the culture of medicine, to how we were trained and getting physicians to collaborate, cooperate, to accept the leadership structure, to put in place a set of expectations. Those are the types of things that as doctors we rebel against. We call cookbook medicine, we say it can’t possibly work except the data says the opposite, that it does extremely well.

Dr.Badia (06:06):

Interesting. so yeah, I’m kind of the antithesis of everything you said and agree that there’s pros and cons. I mean, I’m a solo. I had co-founded a group of five hand surgeons and as often happens all it takes is one or two physicians to disrupt that and now I’m solo and I’m very happy in that way. I realize it isn’t necessarily the best way to practice. Perhaps I’m in a very niche specialty but in many other sectors of medicine, you need that big group to be able to leverage the knowledge. Yet when you talk about this in one of your podcasts, is that the monopolization right, of medicine and that you would think that costs and quality would improve with consolidation but quite the opposite is happening. So, hat, how do you think we can, I mean, obviously Kaiser did that quite well, how do you think we can counter the current trend?

Dr.Pearl (07:08):

What you’re describing when I talk about the monopolies, you’re looking at hospitals that merge together that as you point out, could easily close low volume centers put all the work together at a single location. We’d have teams dedicated to taking care of a particular problem. You know, very well, as a hand surgeon, without the physical therapist, without the occupational therapist, you couldn’t get the excellent results that you do achieve. It does require a team of people. It is unique, unlike some other areas where you do need to have physicians across different specialties. But rather than having three centers all doing a little bit of this and a little bit of that, having a center of excellence, doing a high volume we know is going to lead to higher outcomes. But that’s not the way the hospital consolidation is going.

Dr.Pearl (07:57):

They’re doing it simply to get market control, to raise the prices. We see the drug industry, we’re seeing $200,000 drugs that should cost a fraction of that don’t add very much,value sitting there and as you well know, we’re seeing private equity come into physician practices, bringing groups of doctors together in order to get market control. What we know, and I teach at the Stanford Graduate School of Business, and if people want more information on this, they can go to my website, robertpearlmd.Com. But at the Stanford School of Business, we talk about the fact that monopolies not only raise prices without adding significantly more value, but they inhibit innovation. And that’s what we need if we’re gonna solve the problems of today, right? How do we find ways to get higher performance? You know, to me a really great example of that is total joints, which traditionally involve their procedure three days in the hospital.

Dr.Pearl (08:57):

And we undertook it in Kaiser Permanente, and we said, okay, what would happen if rather than training patients that had to do crutch walking after the surgery, we train ’em before and what would happen if we make sure they have all the right ramps and the pieces at home? And what would happen if the surgeons use longer acting anesthetics? We start PT in the recovery room, and we are able to do 70% of patients as outpatients with better range of motion, better ambulation, and far lower cost. That’s the kind of innovation that we need to have and as you know, one of my areas right now that’s great interest is Chatgpt, where I think it will revolutionize the practice of medicine, not the version that’s out today. That’s just the first generation. But if it continues to progress at the rate it’s going, we’re going to have an application that’s 32 times more powerful in a decade, a thousand times more powerful in 20 years. I think it’s going to totally change medicine, but I’m fearful that it will not be physicians who lead the way and clinicians who lead the way that actually it’s going to be done by others and have less confidence in their ability to make the right decisions for patients.

Dr.Badia (10:07):

Well, that’s absolutely true. I just gave two talks at a big data and AI and healthcare conference. And I can tell you, I was in the room, the only other physician there was, I believe is an endocrinologist from Mexico City who’s doing some really interesting things of creating a genome for the Latin population, which actually is not out there because you know, different ethnicities have tendencies different diseases. And yet, right, there are, there were very few doctors attending this. So we have to, we just have to get engaged. Part of the thing is you mentioned innovation and in my book, I summarize a bit, an article you probably know by Herzlinger from the Harvard Business Review on why innovation is so hard in healthcare. And there’s just so many barriers, but upon is we have to get rid of these hurdles to allow people like us who want to be innovative to do that, because we ultimately do have the knowledge of patient care. And yes, we need administrators, we need these executives, but ultimately we have to take control of healthcare as the prime as the quarterback for healthcare.

Dr.Pearl (11:21):

Absolutely. And I think that right now we’re not leading the way, but you know, who is, I think the retail clinics? Yes. Amazon, cvs, Walmart. Now what we’re watching is they’re acquiring all the pieces that they need not to augment healthcare, but to replace it to totally disrupt healthcare. You have Amazon that had previously acquired pill pack for pharmacy services, now acquired one medical for 3.9 billion cvs that already had Aetna, that has its own retail clinics, has its own pharmacies.

Dr.Badia (11:59):

How do you feel about Amazon or Walmart, which is a budget kind of, you know department store, basically, how do you feel about them managing our healthcare?

Dr.Pearl (12:12):

I don’t think it’s a question of how I feel about it. There’s a question about what, whether it’s going to happen. And I think my answer is that unless healthcare professionals don’t step forward and provide a better service, that it will happen. That’s the problem.

Dr.Badia (12:28):

The question is, will they listen to those of us who are in the trenches? I mean, I’ve spoken to every one of those entities you mentioned about my, my innovation, right? Which has, you know, probably spurred me to write the book, which is orthoNOW it’s a walk-in orthopedic center, very much like the general urgent cares that are everywhere, but with the appropriate expertise, right? And yet you know, I spoke even to Gowane, but there is very little engagement. The big companies want to, like one medical, they’re interested in just buying and acquiring other big companies. They’re not really looking at the actual innovation and then taking their capital and they’re expanding it. Those are two very different things. Correct. I mean, to take an actual innovation and expand is different than just buying something that’s already out there.

Dr.Pearl (13:20):

So I’d like to provide a perspective because it applies equally to chatGPT it applies equally to retail, it applies to a lot of different areas, which is that in a time of disruptive change, what you see is an exponential curve and you really underestimate where it’s going because you think that today is the endpoint and not recognize that it’s the start. If you look at these primary care first programs, well it’s one medical or Oak Street that CVS has acquired. You’re absolutely correct that it doesn’t go very much into the depth, into the more complex areas, into the opportunities that exist. But that’s not why I don’t think, I don’t, I don’t believe in the, I don’t have any insight information. That’s not why I don’t think the retail clinics are acquiring them. I think it’s going to go where you’re saying that they actually will look at the process of care delivery and they will come up with better ways to be able to provide specialty care.

Dr.Pearl (14:19):

But don’t make the mistake. They’re not going to do what exists today, which is have every doctor out there, they’re going to have their own physicians working in a particularly narrow area and providing that care. And if it turns out that the best way to do an orthopedic, set of procedures is in a center of excellence, they will create that because it will allow them to raise quality, improve access, and lower costs and I think that that is what is missing in the mindset of healthcare professionals today. It’s that conglomerate of monopolies. They’d rather raise the price, but they’re not going to make the big changes needed. Innovate. I asked you to create an orthopedic center of excellence doing hand surgery or plastic surgical center of excellence doing hand surgery, and you can handpick a few individuals who support them with a big team and put behind the technology.

Dr.Pearl (15:12):

I guarantee you can raise quality, you can make access more convenient for patients, and you could drive cost down 30, 40, 50%, but there’s no one doing it today because it’s better and easier for the providers of that service to simply raise the price to accomplish it. And that’s why I think it’s gonna be displaced. It’s like Amazon, you know, is Amazon a low cost service? Yeah. Most of the products are pretty well priced. Is it a convenience service? Yeah. They tell me it’ll come tomorrow and there it is in my doorstep at exactly the time they promised it to be. And is the quality good? Is it what they promised it to be? Yes, it is. That is the kind of customer focused service that I think they’re going to drive. Now, will it be good for the workers? I don’t think so. That’s not what they’re known for. Yeah. They actually make it really good for the customers. And you’re right, Walmart focuses on socioeconomics that’s lower. And you have Amazon, let’s say, focuses on a broad socioeconomics, but most of the people I know are pretty well off using the service. And it’s going to be a customer driven, a patient driven focus, raising quality, improving access, lower cost

Dr.Badia (16:24):

Essentially the, the consumerization of healthcare. Right? That’s what we’re seeing. And, and you know, you, you’ve mentioned several times about hospitals you know, one of my big pushes is really going to the outpatient sector. I really believe that hospitals should be for very, very sick people, very major procedures. On Monday , our spine surgeon, I mean, he’s done front and back surgeries, you know what that’s like, right? For the lay public, that’s where we open the abdomen. Usually a general surgeon comes in, does the exposure and the spine, it’s instrumented then usually from the back, from the backside. So we’re talking about a big surgery and these patients are going home. So I think one of the big pushes has to be to be able to push a lot of things to the outpatient realm, which is more cost effective and as you mentioned, centers of excellence because when you’re doing the same procedures, not just the surgeon, but the tech, the nurses everyone working together, that saves money. So yeah that is definitely a disruption that’s needed. You’re right, these, these big companies, now if they engage with us, that would be, you know, that’s the thing. Are they really engaging with those of us in the trenches? That I have not seen so far and that remains to be seen.

Dr.Pearl (17:39):

So, we’ll have to see it. I don’t think they’re going to engage with everyone. They’re going to pick the few people they want and ask them to lead the process.

Dr.Badia (17:48):

Yeah, absolutely. So, we get to the point where I’m going to ask you very succinctly for three, your three say top initiatives that would really change healthcare for the better. What would you say? 1, 2, 3.

Dr.Pearl (18:02):

The first one is moving from Fee for service to capitation. Capitation aligns incentives. Capitation favors prevention, avoidance of complication of chronic disease, it in a sense the centers of excellence that are able to provide higher quality at lower cost. It aligns what patients want and what doctors want and until we go there, I don’t think the changes will come from inside healthcare. Actually, I think these retail giants are looking at capitation as their model of performance. The second I think, and you mentioned earlier, is forming groups. I think the idea of the individual doctor working alone is a outdated 20th century idea. Yes, there’s a lot of hand surgery. Cause I do hand surgery. You can do without having a physician set of teams, you need to have the PT, the OT, the operative people that are sitting there.

Dr.Pearl (18:51):

But I think the idea of the individual doctor being the sole person who can provide the best quality. I think right now most patients have complex problems that go across areas and working together as a group is going to lead to far better outcomes. Then I think the final is really introducing the effective 21st century, I’ll call it information technology. I’m not talking about operative robots. They’ve never been shown to make any improvement. They’ve slowed doctors down. But the opportunity through something like chatGPT the opportunity through something like data analytic to figure out how do we get the best results to be able to empower patients, I think that could make healthcare move from 1834, the fax machine to the 21st century.

Dr.Badia (19:38):

Absolutely and that ties into the first of my three initiatives, which I repeat each week. The first one is public education. So chatGPT and other technologies have allowed the public to access and learn and if you have an educated patient as you know, Dr. Pearl you can get better outcomes when a patient understands the process and also seeks a right provider. Which leads to my second one besides public education is right clinician, right time. I am a strong believer if you start with the right practitioner, even if it’s a mid-level provider, but somebody who’s an expert in that area, you save a lot of money and it’s good for the patient. Right now we have this system which forces people oftentimes to see their overworked primary care doctors, where those doctors should really be keeping us healthy and following us along, but not episodic care where they’re forced to then get the authorization.

Dr.Badia (20:28):

Which brings me to my third point, which is oversight, not authorization. I believe doctor’s hands are tied when we have to get approval from insurance companies for every step of the way. Once that physician is approved there should be oversight because we are not perfect and certainly there are some bad apples out there. I talk about Dr.Death in my book, right, the spine surgeon. So we need oversight, but we need to get these middle people out of the way. It delays care, it hampers it, and it raises costs. So those would be my three. So any parting words Dr. Pearl?

Dr.Pearl (21:09):

My parting words are that both providers of care and receivers of care shouldn’t underestimate what’s possible. That we need to be looking to the future to be able to change, transform medicine from where it is right now in 19th century cottage industry with doctors fragmented, unconnected, uncoordinated, paid on a piecemeal basis, fee for service using this outdated technology like the fax machine to provide the care and move forward more rapidly. I think there’s a lot of people out there who talk about what should be, I don’t anyone talk about what should be. I talk about what will be because what I know from my time teaching in the business school is that when a system is dysfunctional, it will get disrupted. And I think that that’s where American healthcare is today. So I think as patients, we should be demanding more as providers, you should be giving more.

Dr.Pearl (22:11):

It’s not that doctors don’t work incredibly hard. They do. We work way too much, way too much, way too hard because the systems and the culture and the technology isn’t what it needs to be. So it’s not a criticism of the doctors, but we do need to lead the way or someone else will. And I guarantee you that if we don’t lead the way, we will be unhappy that we chose to let someone else do it because once that occurs, we’ll never again catch up. And I think the medical profession and the patients who rely on us will be harmed as a consequence.

Dr.Badia (22:46):

Well, as we know, that’s happening already. So for the listeners out there, please engage you know, share this podcast and these thoughts. I’ll leave up some parting words. Kevin O’Learyy you know, Mr. Wonderful commented that we all have this in our pocket nowadays, and we could use it to get better healthcare. And we’re not you know, there are protocols out there using our smartphone that can really disrupt it. So with all of the comments you made we can integrate it and, and finally really adopt technology. So I hope we see that and I hope, can have further conversations. Dr. Pearl thank you.

Dr.Pearl (23:28):

My pleasure. Thank you so much.

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