I Live in the Future…

If it is now asked, “Do we presently live in an enlightened age?” the answer is, “No, but we do live in an age of enlightenment.”

– Immanuel Kant

The other day I had an odd experience.  As I was doing my normal checkout at Whole Foods (stocking up ahead of the madness from the upcoming price slashes), I double-tapped my Apple Watch, held it to the NFC card reader, and felt the “tap-tap” of a complete transaction.  It’s a Series 1, so I’ve done this dance hundreds of times, and to me now it feels routine.  But the cashier shot me a look and said, “Woah! I’ve never seen that one done”.  His surprise caught me by surprise.

Two things came to mind.  First, it is truly amazing how much we can do these days in a matter of seconds.  Apple Pay replaces something that takes 30 seconds to a minute, sure (fumbling with cash, writing a check, swiping a card), but there is so much more I can do from my devices in general that happen 10-100x faster and I have become completely inured to.  Get a late night email from the boss? No problem.  Open the OneDrive app on my phone, hit the share button, and instantly reply back with the document he needs (and permissions correctly configured).  When I told my grandfather that I do quite a bit of heavy-duty work from my phone, he was extremely surprised.  To have gone from radio broadcasts to connected-anywhere supercomputers in our pockets during his lifetimes blew his mind.

Secondly, I realized that I live in the future.  My guess is that, if you are reading this blog, you do too!  So many people are anywhere from a few years behind bleeding-edge technology (the cashier) to many many years (my grandpa).  Without carefully checking in with other people, it’s easy to become wrapped up in your routine and think your baseline is everyone else’s too.

Me Adopting New Technology

Rather than lament the fact that this new technology is causing a Loneliness Epidemic across the pond or draw out the litany of examples of how major tech companies don’t handle diverse customer bases well at all, I’d like to zero in on our current struggles in the Healthcare IT field.

This week, an influential piece called “Death by a Thousand Clicks” was published on the Kaiser Health Network, highlighting some of the very serious and very shocking struggles major Electronic Health Record (EHR) vendors have had since meaningful use’s launch.  It was an eye-opening article, forwarded to me several times by family members and clinician friends.

I applaud my employer’s timely response at HIMSS19, launching Virtual Scribe and Chart Assist to improve clinical documentation, lessen providers’ cognitive burden, and help solve the problem of physician burnout. It’s an important step in using the latest technologies to solve a real and pressing problem that is causing major unneeded pain in healthcare.

But I think there is a more basic solution that is needed for Healthcare IT companies to be successful: retrain on the clinician workflow.  In “Death by a Thousand Clicks”, the author likens the Meaningful Use legislation that came from the HITECH Act to “asking nine women to have a baby in a single month”.  In the rush to meet legislation and do the right thing, certain tradeoffs were made by HIT vendors so that healthcare could continue to function, providers could get paid, and patient safety would not be compromised.

Now is the time for all of us in Healthcare IT to regroup.  Let’s breathe a sigh of collective relief: the fight to digitize healthcare is over and we won. Today, more than 90% of hospitals across every category use an EHR and 85% of all office-based physicians use an EHR.  Now that the hard tasks of installation, configuration, deployment, change, and ultimately digitization have been done, we need to reflect and heed Kant’s words.  We are not yet fully enlightened, not fully realizing the promise of digital medicine, but we can see the path forward.  I am excited for the industry to make its long-awaited pivot and tackle the basic building blocks (user experience, stability, performance) that will restore joy to the patient-provider experience.  It is a many-sided problem with multiple required solutions, but the blocking and tackling is going to be just as (if not more) important than a lot of the futuristic AI buzzwords we see today.  Put another way, I will continue to use my Apple Watch for contactless payment, but we all have to make sure that “Cash and Credit” is a seamless, joyful option for everyone interacting at the Health IT checkout line.

Corporate Strategy, Entrepreneurship

Greed is (Not?) Good

Capitalism is a great technology and a mediocre philosophy.

– Reid Hoffman

This week I passed by an article in the Wall Street Journal about how pay regulations are back on the table for big banks.  Although the rule was mandated by Dodd-Frank, a decade later the pay restrictions and clawbacks are not in place (seriously?).   At the same time, I started reading Duff McDonald’s epic takedown of MBAs, The Golden Passport.

I haven’t read the full thing yet so don’t want to give a review, but it’s definitely getting my attention. Mainly I’m drawn in by McDonald’s provocative writing and crux-finding.  In the earliest chapters, he lays out the root of all MBA evil: profits.  Telling the story of Frederick Taylor, the founder of Taylorism and an early management science pioneer, McDonald throws down and calls out Taylor as a traitor to workers and glorified bean-counter.  When discussing the “original case study”[1], McDonald criticizes Taylor’s self-aggrandizement and attempts to science-ize management:

Frederick Taylor generalized a step too far.  In arguing that his methods revealed a universal science of management, Taylor engaged in metonymy–confusing just one part of management (that is, quantitative analysis) for the whole.  Efficiency–and its close relative, profitability–is just one possible goal of management.  Others include customer satisfaction, community relations, and quality.  In Taylorism, one could argue, lie the seeds of American industry’s eventual comeuppance at the hands of the Germans and the Japanese…[H]e was implicitly sanctioning the idea that a company can be judged by a single metric.  Today’s even more pernicious version of such: shareholder value.  Writes Stewart: “The modern-day CEOs who sacrifice the long-term viability of their corporations for the sake of short-term boosts in their quarterly earnings reports are direct descendants of the pig-iron managers who undermined their work team’s morale in order to achieve temporary productivity targets.”

McDonald is not subtle, to say the least.  But, ignoring European dissatisfaction with their more socialist system and Japan’s anemic growth over the last decade, McDonald also gets one crucial thing wrong in my opinion: that profits, shareholder value, efficiency, or whatever you want to call it, are the wrong metric.  In my opinion they are the right metric, but the markets that are developing in America are no longer fully free and fair.

Profits represent a very simple metric: revenues minus costs[2].  Revenues are also a very simple metric: the value to the person buying the good or service.  And cost, you guessed it, is a simple metric: the value that was expended in producing the good or service.  So, at its core profits represent the purest definition of value creation, the difference between what value was expended to produce a good or service and what the consumer values that good or service at.

My argument is that Friedman was right and there is no better way for a society to operate than to have corporations attempt to maximize profits.  By only taking into account value created (revenue) and value destroyed (cost), all of the hardest questions are boiled down into “value”.  It’s a nebulous term, but with a free and fair market, it forms the motive that self-interested humans need to participate without relying on political connections, committing fraud, or more.  In a free and fair market, you have to create value, or you go out of business.

But surely, there are problems.  In America today, there is income inequality, monopolization, fraud, Wall Street short-termism, and more.  These are real problems that are infecting our society and becoming more visible with each passing year.  So do they exist because MBAs have tricked the world into sacrificing the common good on the altar of profit-driven capitalism? No.  Increasingly, consumers lack the ability to take their dollars elsewhere.  In repeat transactions, consumers have no choice because America’s markets are getting less free and less fair. Some examples:

  • Transactional in Nature.  When corporations have a one-and-done interaction with you, why bother having good customer relationships, support, or quality?  Examples: car salesmen (who are not linked to service), realtors.
  • Private Equity Leveraged Buyouts.  If you’re definitely going to exit an investment in 7-10 years, does it make sense to plan for longer? Certainly a private equity firm that does will have a lower IRR, and therefore not look as good to future investors. Examples: RJR Nabisco, Toys R’ Us.
  • Monopoly.  When every repeat transaction is guaranteed to go to your platform, why bother doing anything right? Customers can’t switch, so they won’t. Examples: Cable companies, landline phones, employer health insurance.

    Meet customers where their tastes are

Compare that with some of the best examples of customer satisfaction, quality, and community relations.

  • Amazon.  Online retail is cut-throat, single-digit margin business with insanely low switching costs.  Bezos knew from the outset that good customer service could be a huge competitive advantage.  People value convenience and purchase consumer-packaged goods every few days, so by having the best customer service Amazon keeps its customers wanting more.
  • Rolex. When your good is a commodity, how can you stand out from the crowd? Make your watch impeccable quality, ornately adorned, and a status symbol.  The business model here makes sense from a profit perspective: don’t compromise on quality, and your customers will more than make up in the difference of your costs.
  • Mom-and-Pop Shops.  When your reputation is on display daily because all of your clients are neighbors, you often behave with community relations in mind.  According to a recent study[3], small businesses donate 250% more than larger businesses to non-profits and community causes.

So how to address the problems of our day if not by throwing out the concept of shareholder value?

  • Executive Compensation Periods.  Deferring the compensation for longer than the current 5-year standard and enabling clawbacks is absolutely crucial to ensuring that, say, 10 years into a toxic mortgage the executives are not retired and fully vested while the rest of the economy melts. The WSJ article is a salient reminder of the urgency of this.
  • Expansion of Small Business Loans and Incentives.  If Amazon can get billions of dollars in incentives for building HQ2, why can’t other businesses? To New York’s credit, the majority of what Amazon was leveraging were programs that already existed for other businesses.  For some municipalities though this is not the case.  We should be encouraging small upstarts to take on incumbents and build in the communities they serve.
  • Incorporation of Full Cost into the Production of Goods.  Coal-powered energy brought almost 1 billion people out of poverty in China at the turn of the 21st Century.  There is real evidence that the climate is changing, but at what benefit? Let’s assign a dollar value to carbon, modify it frequently, and levy it on large industrial companies.  This will help address externalities within the framework of the profit-seeking motive.
  • Aggressive Monopoly-Busting. I am firmly on the side of more vigorous antitrust enforcement.  Modern business has gotten basically a free pass to vertically integrate thanks to Bork’s precedents and a focus on an actually bad single metric (HHI).  Makan Delrahim took a step in the right direction, but the courts need to break precedent and change with the times.

Culture is important.  Greed is not always good.  But show me a better technology than profit-based incentives for capitalism before you say we should throw the baby out with the bathwater.

[1] The original case study was, not surprisingly, about steel and railroads.  In 1899, the Bethlehem steel company found themselves in possession of a surplus of two million pounds of pig-iron bars.  They needed to figure out the most efficient way to load them into railcars for transport, and Taylor stepped in.  Whether counting, efficiency, or science, McDonald considers this the original sin of HBS.

[2] What type of profits? Economic profits.  There are adjustments, tax considerations, etc. etc. in the real world I understand, but I am simply using the most basic definition of profit available.  This might even be part of McDonald’s argument: that such an analysis is too simplistic.  But I would argue there’s nothing wrong with establishing that gravity is 9.8 m/s^2 of acceleration, even if there’s always air resistance on Earth. As is often said, “the difference between theory and practice is, in theory small, but in practice much larger.”

[3] Seattle Good Business Network

Corporate Strategy, Healthcare

No Customization Without Differentiation

No one wants to hear Odysseus go to the corner store.

– Alex Blumberg

Recently, I was sent an interesting article about how “Cowboy(/girl)” doctors are driving up healthcare costs in medicine.  The authors cite a study that argues that, when it comes to dying, certain doctors “reject ‘evidence-based professional guidelines for appropriate care’ and… order invasive and costly procedures despite little chance their efforts would delay the inevitable”.  These “Cowboy” doctors, as they are labeled, contribute up to 35% of end-of-life fee-for-service Medicare expenditures, and up to 12% of overall Medicare expenditures.  To give you an eye-popping dollar figure, that would amount to $84.5 billion[1].

Beyond questions of morality and what constitutes “little chance” in the study, this raises another interesting question for patients and providers: should we drive toward standardization of care plans?

On the one hand, the word standardization itself implies, at the very least, a reduction in inequality for all.  But furthermore, recent studies of standardization of care across patient populations shows it cuts costs and raises quality, two front and center goals of the IHI’s Triple Aim.  In business school, we had a saying in strategy: “No customization without differentiation”.  Basically, I took this to mean that unless you could prove beyond a doubt that your special snowflake was far superior to the rest, you should not customize the product/company/service you were offering.  Bundled payments programs like CMS’s Comprehensive Care for Joint Replacement (CJR) aim to use standardization to drive improved outcomes and cost, perhaps implying that they believe current customizations between providers are not differentiated.

However, standardization of care (often through the specter of “socialized medicine”) is a common boogeyman evoking images of “death panels”, rationing, and the removal of physician judgment from the medical process[2].  Obviously, depending on how the problem is framed public opinion shifts, and there are different care delivery models that can make these problems better or worst.

As we enter HIMSS19 this week, and we start to see more intelligent offerings that aim to bring standardized, evidence-based practices to global healthcare delivery, I can’t help but hearken back to when the human genome was first sequenced.  The attitude back then, growing up in a family of physicians, was that from that day on every single treatment would be individualized and targeted.  No longer would your Advil bottle say “Adults over 12 take two pills per day”, and gone were the days of treating every infection with Amoxicillin.  But now, we have done a complete U-turn.  HIMSS vendors and attendees are focused on treating populations of thousands or millions of patients with reduced variation, reduced cost, and greater predictability.  Not greater customization.

In fact, I was in a conversation at Cerner last week where we began to touch on some of our advanced genomics offerings.  One business leader remarked that there were well-set standards in pharmacogenomics, but fewer in oncological genomic medicine.  This focus on standards led me to think that there may be a new two-tiered approach emerging in medicine.  First, advanced medical practices are studied and honed at leading specialty centers (for example, MD Anderson for cancer).  Then, they are formulated into practices that are proven to scale to thousands or millions of patients in a repeatable manner.

Dr. Bluth Adopting New Methodologies

It’s a far cry from the precision offered by gene sequencing and individualized treatment, and more akin to the University -> Industry pipeline that has existed in the tech industry for years (think Stanford PageRank -> Google Search).  I don’t know what to make of this yet, but I think there are implications that we need to think through:

  • Will the drive toward standardization compound the problem of ignoring rare illnesses, which the U.S. had to combat with special Orphan Drug regulations?
  • Will the rise in standardization cause a loss of provider autonomy and worsen the problems of burnout and disengagement U.S. clinicians face?
  • Is the human body and its millions of variations even “standardize-able” in such a way that allows this approach to work?

Either way, technology has a role to play.  But I always worry about pendulum swings, and my take is that competing approaches should be balanced to find an optimal path.

[1] See the HHS 2018 budget in brief for more details.

[2] I’m looking for a comprehensive article or journal paper discussing the systemic effects of rationing in single-payer, integrated delivery systems, and different competitive models but I can’t find anything good.  Let me know of any good links.

Corporate Strategy, Healthcare

Price Transparency – Healthcare’s Silver Bullet?

Trust is the coin of the realm.

– George Shultz

This week, most people are talking about all the news coming out of JP Morgan’s Annual Healthcare extravaganza, and rightfully so.  However, I don’t think there’s much I can add to the discussion, so I want to talk about another big event that happened in the past couple of weeks: CMS’s implementation of the much-anticipated Price Transparency rule for hospitals.

Unfortunately, over the break I was in a hospital for a family-related medical event for which I would be financially responsible.  Once I knew the issue would be resolved without any major harm or loss of life, my next question turned to: would I be able to afford this? Cerner starts its new plan year along with the calendar year, so being in the hospital in early January means incurring medical expenses without the added benefit of having time to fill your HRA/HSA.

Having knowledge of the new price transparency rule, I turned to Google and looked for the hospital’s chargemaster.  The first hiccup: it wasn’t there.  Being a determined consumer, I politely called the billing department to note that they had not released their prices and therefore were non-compliant with CMS’s new regulation.  To this organization’s great credit, they told me they were working on it and within a week got back to me with the link.

Next, once I downloaded the chargemaster as an Excel spreadsheet, I started to comb through it on my phone.  This was the second hiccup: although the pricing information was machine-readable, it was not human-readable.  Searching through abbrevations like INF, HOSP, etc. was time-consuming and not straightforward, especially as a non-medical professional.

So, lastly I decided to buzz my friend (who happens to be an RN at the hospital, convenient!) and asked her to explain to me what a typical set of codes/services might be for the stay that occurred.  Her response: no clue man.  And that is fair, because she is a healthcare provider and knows nothing about billing.

My Excitement Looking at a Chargemaster

Looking at Administrator Verma’s take on the new rule, I think she is absolutely right: this is a first step.  It is a great first step and I applaud it, but the major issue I take with the data is not inaccuracy for those with insurance.  Healthcare stakeholders need to understand that data is only as good as the tools that use them.  So, I would propose several next steps for those implementing and administrating price transparency rules:

  1. Campaign for Awareness – I was only aware of this new data source because I happen to work in Digital Health.  99.9% of Americans don’t even know this data exists.  Well-placed TV or radio dollars could help get the word out, increasing patient utilization.
  2. Encourage Sophisticated Tooling – By the time I got to the chargemaster it was in Excel format and highly complex medical jargon.  There are some great Price Transparency experiments that CMS is running to help modernize federally-run insurance programs, but private enterprise should be encouraged to build direct-to-consumer tools on top of the new information.
  3. Integrate Pricing with Workflows – The fact that my friend, who is an RN at the health system, could not tell me how specific clinical procedures mapped back to billing is troublesome.   Better integration between the EHR and revenue cycle solutions will help clinicians guide consumers as healthcare becomes more and more consumer-driven.
  4. Create Consumer-Friendly Price Hotlines –  Many major health systems are moving toward employing in-house billing and coding specialists to maximize revenues and improve cost efficiencies across their facilities and networks.  As this happens, health systems should also create “consumer helplines” that answer simple questions about pricing and services ahead of time.  Lots of startups like ZenDesk, LiveChat, and Intercom provide a front-door chat interface that integrates natively with websites and could solve this issue elegantly.

All-in-all, I was not able to get a sense of what the cost for my visit would be and had to wait for the bill to arrive.  This begs a question though: if I had been able to find out what the visit cost, would it have changed my behavior? The answer is almost certainly no.  My main concern was making sure that my family was healthy.  What amount of price savings would I trade off for that? That thinking alone is probably more likely to continue driving healthcare costs upward faster than any downward pressure this Price Transparency effort could provide.

New Year's, Personal

2018 Book List

Back at it again, with 5 books I read that totally changed my perspective on life, business, and coffee.  I would love to hear of any good books you’ve been reading, so DM me if you have them!

First, to commemorate the centennial of Armistice Day (the end of World War I), I picked up All Quiet on the Western Front, which (although I think I was supposed to read it in high school) I only saw the film for.  The book is far more gripping. In addition, I was recommended 1944 to discover more about the pivotal year in the second World War (the 75th anniversary of the end of that conflict is right around the corner too).

Second, I took a deep dive into business books as I started my next chapter in corporate strategy.  I’m making my way through Influence and The Basics of Hoshin Kanri to understand how decisions are made in large companies (or rather, how someone can make decisions “happen”).  This sort of plays on my theme last year of psychology books with true-to-life lessons (like Kahneman and Haidt), but from a more industrial/organizational lens.

Finally, I took the time to dive deep into what I say is a passion with some actual reading.  While a grad student, I found a wonderful local book entitled Craft Coffee that dives into the art and science behind coffee picking, brewing, and paraphernalia.  For any coffee-lovers, this is a great way to get quickly versed with what temperature to brew at, how to grind, and much more.

As with last year: rather than editorialize about each book individually, I’ve copied in the Amazon descriptions below (and included a link to Amazon Smile – go pick a charity of your choice!)  If you get some time this holiday season, these are definitely worth the read.


All Quiet on the Western Front, Erich Maria Remarque.  Paul Baumer enlisted with his classmates in the German army of World War I. Youthful, enthusiastic, they become soldiers. But despite what they have learned, they break into pieces under the first bombardment in the trenches. And as horrible war plods on year after year, Paul holds fast to a single vow: to fight against the principles of hate that meaninglessly pits young men of the same generation but different uniforms against each other–if only he can come out of the war alive.



1944: FDR and the Year that Changed HistoryJay Winik.  1944 witnessed a series of titanic events… But millions of lives were at stake as President Roosevelt learned about Hitler’s Final Solution. Just as the Allies were landing in Normandy, the Nazis were accelerating the killing of millions of European Jews. Winik shows how escalating pressures fell on an infirm Roosevelt, who faced a momentous decision. Was winning the war the best way to rescue the Jews? Or would it get in the way of defeating Hitler? In [1944] one challenge—saving Europe’s Jews—seemed to remain beyond Roosevelt’s grasp.


Influence: Science and PracticeRobert Cialdini. Written in a narrative style combined with scholarly research, Cialdini combines evidence from experimental work with the techniques and strategies he gathered while working as a salesperson, fundraiser, advertiser, and in other positions inside organizations that commonly use compliance tactics to get us to say “yes.”…  Cialdini organizes compliance techniques into six categories based on psychological principles that direct human behavior: reciprocation, consistency, social proof, liking, authority, and scarcity.

51h-tqyvVzL._SX331_BO1204203200_The Health Care Handbook: A Clear and Concise Guide to the United States Health Care SystemElizabeth Askin, Nathan Moore, Vikram Shankar, William Peck. The Handbook is the one-stop guide to the people, organizations and industries that make up the U.S. health care system and major issues the system faces today. It is rigorously researched and scrupulously unbiased yet written in a conversational and humorous tone that’s a pleasure to read and illuminates the convoluted health care system and its many components.


Craft Coffee: A ManualJessica Easto and Andreas Willhoff.  Written by a coffee enthusiast for coffee enthusiasts, [this] is a comprehensive guide to improving your brew at home. The book provides all the information readers need to discover what they like in a cup of specialty coffee—and how to replicate the perfect cup day after day. From the science of extraction and brewing techniques to choosing equipment and deciphering coffee bags, Craft Coffee focuses on the issues—cost, time, taste, and accessibility—that home coffee brewers negotiate.

Corporate Strategy, Personal

Why Every Business School Should Have Improv Classes

Happiness is a choice.

– Tito Beveridge

This week I came across an awesome article in the Wall Street Journal talking about how improv classes can help you run a more effective business meeting (paywall).

Business #Winning

It threw me back to that time at Booth when, the first week of school, we went on a Leadership Orientation Retreat (LOR) and were thrown into an improv class.  I’m not going to lie.  It was certainly awkward.  Thankfully for all of the class’s participants I don’t actually remember what we improv’ed.  But the experience left me with the one critical lesson that improv teaches:

Yes, and…

I find myself often in meetings where we are discussing a new proposal for some solution, service, etc. and we come to the meat of it.  The conversation goes like this:

Participant 1: I was thinking that we might lay out A on top of B and embed that in C.  Doing so would probably be the best solution.

Me: Well, the probably with embedding A on B in C is…

And I start to go on and on about some little nit that is kind of an issue, but if I’m being honest with myself not really a major issue at all.  And frankly, although I will admit to my mistakes, I am not the only one.  How often have you found yourself in a situation like this where coworkers are shooting down a perfectly good idea for reasons that are esoteric and seemingly unimportant?

For the longest time, I thought that this was probably because it was easy.  How hard is it to find just one thing wrong with any proposal? We get in our two cents, are “right”, and are able to have massive influence (a supposed “veto”) without having done much effort.

Some other people have proposed to me that it’s really a form of insurance.  People are incredibly resistant to change, and perhaps our natural state is a “Default No”.  It protected us in predator times against all of the things that were typically “change = bad”.

However, I heard a great explanation from one of my co-workers the other day: negativity as a bonding mechanism.   He’s not the first one to propose this.  Over a decade ago, researchers from University of Oklahoma and UT Austin proposed that negativity serves as a better mechanism for bonding than positivity.  Specifically, the authors posited that

…sharing negative attitudes is alluring because it establishes in-group/out-group boundaries, boosts self-esteem, and conveys highly diagnostic information about attitude holders.

Which brings me to the improv wisdom:

Yes, and…

It’s so simple, and yet so effective.  By not allowing yourself to begin with a “Default No”, the entire tenor of your suggestion becomes positive and constructive.  This has the benefit of allowing the entire team to feel supported.  I’m not the best at this.  But I am actively trying.  The article in the journal reminded me of just how effective this technique can be, and highly recommend it for anyone looking for team wins.

Entrepreneurship, Personal


Vision without action is merely a dream.

Action without vision just passes the time.

Vision with action can change the world.

– Nelson Mandela (sometimes attributed to Joel Barker)

I’m getting excited for this week.  The stage is getting lit.  The Solutions Gallery is being set up.  It’s all coming together folks.


I don’t have too much to say for this blog post given all the prep we’ve been engaged in at Cerner for this year’s Cerner Health Conference (CHC).  For those who aren’t familiar, every year Cerner hosts the Cerner Health Conference in the beautiful City of Fountains and brings together the best and brightest in the Digital Healthcare industry.  From providers to health system leaders to excited Cerner associates (that’s me!), everyone gets together for 4 awesome days to discuss the latest and greatest our organizations are delivering.

But the star of the conference every year is someone who is not always explicitly in the room: the patient.  Every single person at a session, keynote, or workshop is there to do one thing and one thing alone: improve healthcare for patients across the globe.

Which is why I was so moved this weekend by a short film from the Cleveland Clinic that I watched.  Every new Cleveland Clinic employee watches this video and is given a “Patients First” pin when they join.  If you have the time, I highly encourage you to watch it.  Tip: have tissues on hand.  By watching the video, wearing the pins, and always keeping the patient at the center of everything they do, employees at the Cleveland Clinic, from custodial staff to CMIO, have transformed it from an average institution to one of the nation’s best hospitals across every conceivable metric.

Lots of research shows that psychological distance has a big impact on organizational function.  The further removed companies are from the humans that they serve, the worse they perform.  This has often been cited as the reason for business scandals such as the Ford Pinto’s deadly fuel tanks and Impax delegating drug pricing to Martin Shkreli. It also is used as a potential explanation for Amazon’s incredible success in an competitive retail landscape: when you are earth’s most customer-obsessed company, it’s pretty easy to deliver value and beat the competition.  As a former Amazonian, I can tell you that the “Customer Obsession” value made it pretty easy to make decisions because there was always a right answer: whatever the customer needed.

So going into CHC18 I am most excited to bring this client focus to bear.  As a healthcare vendor, it is incredibly easy for Cerner associates like me to have psychological distance from the providers and patients we impact every day.  Events like CHC18 are an incredibly important reminder that at the end of the day there are real people counting on us to deliver in a big way.

Also, just please watch the video.  It is truly one of my favorite things I have watched this past year.  And that includes the much-buzzed-about A Star is Born remake.


Provider Incentives – Are They the Key?

Last night, I spent the night looking at my wife sitting on the living room floor in front of a whiteboard that lists out dozens of genes and their mutations.  She has a med school exam on Friday, and to me, this feels a little bit like that movie A Beautiful Mind.  I’m scared.


What Medical School Does to People

But it makes me ask a deeper question: why in the hell would anyone go through this? The sheer volume of materials they give you in medical school, not to mention the bi-weekly tests and massive student debt, seem completely overwhelming.  It’s no wonder that nearly 80% of medical students say they are burned out.

Last time, I wrote about how healthcare revolves around a “proxy paying service”, which can make it really hard to understand why providers, insurers, or health vendors do the things they do.  The money flows in such a convoluted path that the players in the market often cannot even agree on how much money was actually spent.  This market structure (read: chaos) causes odd behaviors and perverse incentives.

Doctors by and large do not want to think about these organizational structures.  Doctors want to sit at a whiteboard studying oncogenes so that they can go save people’s lives.  For them, it is truly a calling.  Which is why I find it so intriguing that The Keckley Report this week focused on tracking outcomes and spending based on hospital ownership.  If the hospital is a for-profit entity that is maximizing its own self-interest and profits, are outcomes and expenditures better or worse than not-for-profit systems? As with everything in healthcare, the answer was: it depends.  Keckley notes that “analyses of publicly reported quality measures have not shown causal relationship between a hospital’s ownership and its outcomes”.  In addition, he cites a Health Affairs survey that found that 7 of the 10 most profitable health systems in the U.S. are not-for-profits.  The data tells an unclear story.

So why do the for-profit health systems focus doctor compensation so heavily on incentives? Keckley’s report notes that providers at for-profit health systems more often have some financial metric included in their annual performance reviews that at not-for-profit health systems.  Given that I went to the University of Chicago, I am generally a big fan of using these kind of free-market monetary incentives to drive desired outcomes.  But I am also wary of shoehorning aspiring doctors like my wife into forced measures, especially when doing so does not change outcomes or costs!

It is admirable in many ways that for-profit healthcare systems are trying to make structural changes to push the needle in American healthcare.  But if our country’s health system leans heavily on monetary incentives, it seems to me like we are all presupposing that providers are too lazy or, at the very least, apathetic enough to not want to get the best quality outcomes for their patients and continue learning the latest procedures.  Believe me, spend one day with a young group of budding medical school students or newly matched residents and you will see just how much these folks care about their chosen line of work.

So how can we undo the need for massive medical paydays and get back to adding quality to the system?  Some quick thoughts include:

  1. Make Medical School Tuition-Free.  A lot has been written about NYU Langone’s recent decision to cover tuition for all current and incoming medical students.  The focus has been on the fact that this will increase the diversity of individuals able to go into the medical system and encourage primary care.  However, more broadly the point is that free tuition will reduce the need for doctors to focus on compensation when choosing a health system to work at[1].  Instead, perhaps these doctors will focus on the “best” workplaces, which in my opinion will skew towards “best” meaning “best outcomes”.
  2. Stop Incentivizing Doctors on Volume or Profits. While these have long been touted as ways to improve the efficiency of hospital operations or cut costs[2], they crowd out the moral thinking and care focus that made doctors want to be doctors in the first place[3].  Beyond that, the Keckley Report dispels any notion that these are silver bullets.  By and large, I think these should be jettisoned.
  3. Encourage Standardization and Teamwork.  Currently, I am reading “Unaccountable” by Martin Makary and have been recommended Atul Gawande’s “Checklist Manifesto”.  Both of these offer incredible statistical insight into how standardization and teamwork can drastically improve patient health outcomes, regardless of incentive structure or a doctor’s natural genius.  As we move toward a more consumer-driven healthcare system based on greater transparency, health systems that implement these proven processes will see better outcomes and much better public relations/unearned media exposure.

[1] For those who support nationalized medicine like the NHS in the UK, this has also been proposed as a way of keeping provider cost down.  Stephen Bergman (author of “House of God”), spoke at my cousin’s graduation from UConn medical school about 10 years ago where he brought up this very topic.

[2] Value-based care is, incidentally, just a way to incentivize on profits with fixed revenue.  Although it seems better than fee-for-service, it only “bends the cost curve” so long as the capitation rate increase is strictly managed every year.  This is difficult to see happening in a highly captured regulatory environment like healthcare.

[3] There is a lot of psychological research into moral crowding and mixed motivations.  A study we learned about at Booth highlighted that charity call center workers actually made more phone calls when they were volunteers than when they were paid a small amount.  There is a lot of debate about the magnitudes of this effect, but the directional results are highly replicable.

Corporate Strategy, Healthcare

The Willie Sutton Rule

“Why do you rob banks?”

“Because that’s where the money is.”

– Conversation with Willie Sutton

Last month I posted about joining Cerner in their executive development program.  Since then, I have spent six weeks immersing myself in all things healthcare.  I think it’s fair to say that I’m now an expert.

Me Talking Healthcare

Actually, as you might expect, after spending six weeks reading every possible news source or book I could find, the only thing I know now is how much I really do not know.  It will come as no shock to anyone that healthcare is highly regulated, very complex, blah blah blah.

But one potential cause of this chaos that I wanted to write about today is what I am starting to call the client/user dichotomy.  The reason healthcare is different is because the clients doing the paying are not the people using the products.

Let’s take, by comparison, a simple retail transaction.  In a simple retail transaction I walk into a store to buy some candy.  The cashier (who represents the owners of the company) takes my money and hands me the candy.  I both buy and eat the candy.  The cashier collects my money and provides me the goods.

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A Typical Retail Transaction

Healthcare is different.  When you or I go to the doctor to get healthcare services (like vaccines or antibiotics), we are not paying them for their service.  Analogous to most insurance companies, we are submitting a “claim” against the service we got.  So if we got an antibiotic, we are saying to our insurance company, “Hey my body was broken so I had to go fix it, can you pay for this?”

The major thing that’s different here is that usually in an insurance setting, the claimant is responsible for collecting the reimbursement.  When you get into an accident in a car wreck, you pay for the repair before submitting a claim.

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What Normal Insurance Looks Like

In healthcare, you receive the service and the provider (doctor, nurse, etc.) has to go through your insurance to get paid[1].  In this sense healthcare insurance is a bit of a misnomer.  It’s more like a proxy paying service.

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Health Insurance is Really Proxy Paying

But this odd situation is compounded by another complication: the healthcare providers are not tied to the payment from their hospital services and systems[2].  In the retail example we gave above, the cashier is paid by the owner of the store to handle transactions.  But there are preset prices for all goods, the cashier does not make this up on the fly.  With healthcare, the amount that the provider and health system is actually able to collect from a patient will depend on their health insurance, which is not known ahead of time.  In addition, payee models are changing from a fee-for-service modality (similar to paying for the candy you buy) to value-based care.  Each of these specific topics deserves its own post to dive into, but for the sake of explaining the dichotomy, this simply means that the provider is essentially no longer an agent acting on behalf of the person collecting the money, but an independent operator whose work is leveraged by the health system to collect revenue at a later date.

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The Users and Providers of Healthcare Are Not Where the Money Is

So we get the resultant flow above.  Which means that there are six potential interactions between the key players in the space[3].  For those building businesses in and around the healthcare industry this leads to interesting questions:

  1. Who is really your client: the agent that is paying (insurance), the agent that is being paid (health systems), the provider and/or the patient?
  2. How can you improve the provider/patient relationship with the presence of these middlemen?
  3. Are there ways to completely disrupt the middle layers to bring efficiency?
  4. How can this landscape be navigated in a highly regulated environment?
  5. How does the fact that 37% of all dollars in this system are controlled by the government shape innovation and delivery?

If you have an analogous industry that would provide color on business models or potential improvements I would love to hear them.  I still have found this model unparalleled, for better and worse.

[1] This does not even cover co-pays and deductibles which are their own strange things.  This is just about the rates that providers get directly from insurance companies as reimbursements for their goods and services.

[2] This is a little different in private practice because the doctor owns the practice and therefore has “skin in the game”.  But recent trends show a major decline in private practice from 62% in 2008 to 35% in 2014 and a massive consolidation of major healthcare systems.  Both of these trends exacerbate the payee/provider dichotomy.

[3] Patient to Insurance, Patient to Health System, Patient to Provider, Insurance to Health System, Insurance to Provider, and Health System to Provider

Credit to John Gallemore for introducing me to the “Willie Sutton Rule” in cost accounting.

Corporate Strategy, Personal

My Next Chapter at Cerner

If you are more fortunate than others, it is better to build a longer table than a higher fence.

– Unknown

Due to graduation and my recent move, I haven’t had much time to think about the topics I usually like to post about.  Entrepreneurship is hard to do when you’re trying to move all of your family’s stuff, then realize that your new place looks totally empty.  I guess that’s the joy of going from 700 square feet to a human-family-sized home.

Me In a Normal-Sized Living Space

For those who follow me (thanks for reading!) you know that I have written about how proud I am of my wife for getting into medical school.  That medical school is specifically the University of Kansas (Rock Chalk) and we were on our way to relocating in Kansas City.  After Booth, I was intent on pursuing my startup… until I made the painful decision to learn hard lessons instead of waste other people’s money.  So, looking to my next thing I tried to ask myself: how can I do that but be supportive of my family?

So, to avoid burying the lead: I took a job at Cerner.  Cerner has this incredible program (modeled after the famed GE “Green Beret” training) that allows recent MBA graduates to flex their skills (or improve their lack thereof) across multiple business areas.  I felt that this was the perfect mix of “intrapreneurship” and stability.  In these types of experiences, at the same time that you get to be around amazing, creative people, you get to grow your family and continue learning day-to-day.

Cerner offered me an interesting opportunity at a crazy fast-growing company in an industry totally different than I had ever done before.  Healthcare IT would seem like software, but given the intricacies of healthcare, the payer model, physician satisfaction, and much much more, there is a ton to ramp up on.

So I’ll keep this short and sweet: I’m obviously super excited! If you are in healthcare, IT, Kansas City, or just want to reconnect you know how to find me.  I am doing my best to learn fast, but always can use a helping hand.

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