As a country, we're pretty good at putting Humpty Dumpty back together, yet we fail to explore why or even help prevent him from climbing the wall in the first place. On this first of a two part podcast, we're exploring the hiccups within the US healthcare system and how it affects our most valuable asset, our own health.
As organizational leaders, we are responsible for a wide variety of assets that include company profits, team members, physical office spaces, or the company as a whole – yet we forget about our most valuable asset, our health. We know that a lot of weight rests on our shoulders and we do not have the luxury, most of the time, to take off work due to poor health. On this first of a two-part podcast, we’re taking a look at our U-S health system to uncover its flaws and understand what changes are being made that will affect both doctors and patients. Especially with the Baby Boomers about to reach retirement.
Nir Menachemi:We cannot afford as a nation to continue spending as much as we do, and worse, we have an aging population that's going to go onto Medicare, the Baby Boomers. Mathematically, we just don't have enough money in the system to not focus on prevention anymore.
Let’s get to the podcast…
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Welcome to another episode of the ROI Podcast presented by the Indiana University Kelley School of Business, I’m your host Matt Martella alongside Associate Dean Phil Powell. On this two-part series, we’re taking a look into the current healthcare system in America and what changes are on the way that could affect both doctors and patients – ultimately allowing us to protect our most valuable asset as leaders, our health. Before we dive into the content, I just want to say thank you to everyone who has been sharing our podcast on social media. It’s an honor that you find our content valuable for not just yourselves, but for your friends and family too. If you could do us a huge favor, we would love it if you could go to your favorite podcasting app and leave us a review because that helps our show grow. And for those of you tuning in for the first time, we just want to say welcome to the Kelley family. We work hard to help organizations make better business decisions through our weekly podcasts because we know the organization is only as good as its leadership. So, if you would like for us to explore a topic, have any questions we could answer, or would like to recommend a guest for our show, shoot us an email to ROI-pod, that’s email@example.com.
On today’s episode, we sat down with one of Kelley’s Business of Medicine professors, Nir Menachemi, who helps us unpack the confusing healthcare system we have here in America and unveils some shocking truths about where we rank among the world’s healthcare systems. And on next week’s episode, Nir will help us understand what changes are being made and how they will affect us and our families in the future. In a recent entry in the Journal of American Medical Association, published in early 2018, the United States spends almost twice as much in medical care than any other country around the globe. That makes sense, we’re a leading economic nation, we have a large population, and the price of healthcare in this country is expensive. But here’s what’s shocking – though we spend way more than any other country, according to this study, the U-S has the lowest life expectancy and the highest infant mortality rates out of every country. Why?
Before we have Nir answer that, let’s put some dollars and cents to show how much we’re actually spending. According to that same journal entry, in 2016, the U-S spent 17.8 percent of its entire gross domestic product, or GDP which translates to $3.31 trillion. That’s 3 with 12 zeros after it, for those trying to picture the scale. The closest country, on the highest end of that spectrum, spent 12.4 percent of their GDP. Yet, that does not translate into twice the quality of care. So where’s the breakdown?
Nir Menachemi:We know that for any population, the drivers of what makes them sick or healthy are a function of, first and foremost, the behaviors that they engage in. That includes their nutrition, exercise, and also include the level of education they have. These are all behaviors that someone can engage in, and in some cases, people do not have the option, given their life circumstance, to engage in some of those behaviors. Our best research and science underpinning health suggests that as much as 50% of someone's health is a function of these behaviors that they are engaging in on a day-in and day-out kind of fashion. Another 20% of their health is a function of the environment that they live in. By environment, we're talking about the quality of the existential requirements of life. First and foremost, you need air - we're talking about the quality of the air. If you're in a high pollution area, for example, you'd be chronically exposed to poor air quality. After air, we need water - you can look to Flint, Michigan to see what happened for example, when the quality of water goes south, it has huge repercussions in terms of health conditions that are then manifesting themselves in the population there. The next important thing is the quality of the food that we eat, and the last thing in our environment is the quality of our shelter. You can think about exposure to lead in children in lower quality shelters, or asbestos within buildings or homes where exposure to that in our shelter could have serious implications to our health. Between behaviors and environment, we just covered 70% of things that explains people's health and their outcomes after they're diagnosed with a disease. Another 20%, which brings us to a total of 90, are genetic factors. By in large, I describe genetic factors as the "lottery of life" - this is what you get when you are born, that is the hand you are dealt, and that's going to potentially pre-dispose you to different conditions, ailments, or situations that affect your health. By in large, as much as the whole field of genomics and genetic manipulation and intervention is exciting - there's almost the Star Trek kind of feel to it - there's very little that we can do for the vast majority of people given what their genetics are. The amount that we are able to do, and are proud of, in science represents a fraction of 1% of all the things that might be possible one day. So here we have 90% of health is a function of things that has nothing to do with accessing the healthcare system, or even going to the doctor in the first place. The last 10%, based on well-cited and well-supported research, is access to care. And yet, access to care in the minds of almost everyone is the make-or-break for what's going to decide your health. That's just plain and simply not true. I don't what to say that access to say isn't important, it absolutely is, especially once you are sick, but in terms of what's going to prevent you from being sick in the first place, or delay the amount of time before you develop your illness, it's all those other things.The US spends more per person on healthcare than any other country in the world. In fact, I'll make it more dramatic, more than any other country in the history of the world. The most recent estimates suggest that we spend on average $10,000 per person in the United States per year on healthcare… These are high-income, mostly European countries, who spend significantly less than us. When you look at our report card in terms of how we do versus them, they beat us on almost every metric. In fact, there are almost no metrics that the United States does better on, despite our higher spending. One of the reasons that might be is that when you take our $10,000 per person that we spend - and remember, those breakouts on what the size our health helps to determine who's going to be healthy and who's outcomes are going to be best - we spend 88% of our dollars on that 10% access to care piece. We spend relatively little or nothing, something like 4%, on health behaviors, which as we discussed, explain 50% of the outcomes of people and populations in terms of their health. We have this lopsided focus on putting our money towards sick care, as opposed to preventative care. I always joke that it's like our healthcare system is focused on Humpty Dumpty - as everyone is well aware, he fell off the wall, and got to be put back together again. All of our resources are focused on figuring out how to put Humpty Dumpty back together again. If you have a heart attack - and by the way, the United States does relatively well on heart attack mortality - that's very akin to putting Humpty Dumpty back together again: you're sick, we know how to fix you. But we do relatively poorly on the world's stage in preventing heart attacks in the first place, even though we know what causes them.
I love Nir’s example of Humpty Dumpty as a reflection of our current healthcare system. You know the old nursery rhyme – humpty dumpty sat on a wall, humpty dumpty had a great fall, all the king’s horses and all the king’s men, couldn’t put humpty back together again – except as a country, we are able to put humpty back together again. The only problem is, we never address why humpty was on the wall in the first place. If we could prevent him from climbing the wall from the beginning, we would not need to put him back together.
And if we follow the money trail, like Nir said, it’s evident we pride ourselves to be able to put sick people back together. I want to reiterate what Nir shared, 10% of our healthcare needs come from access to care – though it’s important, it’s a small sliver compared to the rest of what keeps us healthy. Yet, how we spend our money is completely backwards. We put 88% of total health spending into a 10% slice, while we only spend 5% into the majority of what keeps us healthy in the first place. That completely contradicts what healthcare is – prevention. So number one, in order for us to protect our most valuable resource, our health, we need to recognize we have a serious problem in the United States. If any business in this country spent two times more than all of its competition, yet was still at the bottom of the list in performance, as business leaders we know that organization would crumble, investors would step in and restructure processes, or every decision maker would be let go. So how did we let this happen?
Nir Menachemi:Not surprisingly, your listeners will be very familiar with the old adage of "it's always about the money". When you think about the traditional way that we have been paying for health services, it's always been fee-for-service - that means someone is sick, they go to the doctor, the doctor fixes them, collects a fee from the insurance company. The incentives there are not about prevention, there are actually perverse. The sicker the patients are, and the more problems they have, the more money that can be generated for the physician or the provider under a fee-for-service mentality. That has also contributed to a lot of the practices and the unnecessary spending and utilization that occurs.
What the journal entry also brought to light is compared to the rest of the world, Americans use close to the same amount of health services as other major world powers. So where’s the breakdown? When we take a step back, what’s clear is weak business leadership and decisions made within health organizations. Remember, doctors and physicians go to school to help people, they don’t focus much on the business side of healthcare. So, what can be done?
The second way we can protect our most valuable asset, which remember, is our health, is to improve business practices and leadership inside our health industries. Because there are sweeping changes coming through our lawmaking process that will completely change how we approach healthcare as a nation – we will get more into that on next week’s episode.
Nir Menachemi:It's been so delightful to work with the physicians in the Business of Medicine MBA program - you can take almost any one of them that has graduated in the last X number of years, and get the anecdotes of how they have been able to transform their practices and organizations. Even if they're still on the quest of doing so, talk to them about their confidence in being able to navigate these "treacherous waters" that no one else understands. When you go to medical school, you learn, intensely, how to focus on the individual patient in front of you - you don't figure out or you're never trained how to think about the larger picture, like the community or population you're responsible for, or all of the customers of the organization. Where do you learn that? You really learn that in either business school or public health school on how to think about the organization or the population. I think it's a transformative experience to be re-trained to think at a unit larger than the individual. We know that focusing on the population, or focusing on the organization, is where a lot of the low-hanging fruits to improve health outcomes are. At the end of the day, without physicians, I don't think this could be done, period.
At the end of the day, the health industry is a business – there’s a cash flow and budget to keep hospital rooms stocked and the lights on, there’s marketing strategies to incentives new clients to walk through doctors’ doors, and tough business decisions that need to be made from owners or executives of health institutes. As Nir said, many of these disciplines are not taught in medical school. So for those physicians looking for help to sharpen their skills as organizational leaders, I highly recommend you check into an MBA program that’s geared toward healthcare professionals – which the Kelley School of Business offers. Because not only will you be able to gain valuable organizational development skills, you can walk into meetings armed with the knowledge to make tough business decisions that will help cut unnecessary spending while offering great care to patients. Not to mention, when these changes, which we’ll dive into next week, take effect. You’ll be able to stay ahead of the curve and lead your team to success.
Nir Menachemi:Because what's absolutely critical and something that my own research and observations has found time and time again, that the leadership of that conglomerate has to have strong physician presence. It cannot be by administrators, suits, or by insurance companies, it's got to be strong physician leadership in that decision-making, or at least, strongly influencing the decision-making that occurs at that level. We know that because unlike administrators or insurance companies, physicians are in the trenches, seeing exactly what's going on in and are interacting with patients on a day-in, day-out basis, and more importantly, patients trust physicians. When I am sick, I want to see a doctor, and I want to know what she has to say. I don't really want to hear what the CEO of her hospital currently has to say about my condition. I'm just trusting that in the background, the organization is going to be doing all the things that I want and that are important for me. Sadly, and I'll bring my dad back into this, as a primary care physician who's now retired, he never had an interest, and frankly, never had an opportunity, and was self-selected to not care about the business and leadership side of organizations. He wanted to see patients in the clinic, and that's what he did, for forty years. I don't think physicians have that luxury anymore because the demands on them are to be experts in the exam room or the surgical suite, also engaged in organizational decision-making, and then in leadership by walking around with their colleagues, helping them understand why this decision is critical for everyone's best interest. Without physicians in that role, and physicians need training and to beef up their business in leadership skills to be able to do that effectively, we're not going to move as quickly towards the panacea that I think everyone needs us to be at.
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So let’s recap... on this first of a two part podcast, Nir helps us understand why our health system needs work so we can ultimately know how to protect our most valuable asset, our health. He said that 90% of our healthy well-being happens outside of the doctors’ office. Yet 88% of our entire health spending goes to 10% of our well-being – that is fixing a person AFTER they’re broken. Our current, “fee-for-service” healthcare model is fairly good at putting Humpty Dumpty back together, but we fail to understand why he climbed the wall in the first place. It incentivizes doctors to only treat people after they have an issue instead of working toward preventing people from having to see the doctor from the beginning. The first way we can work to protect our most valuable asset, our health is to recognize that we have a serious problem with our current system. As a country, we spend almost twice the amount in healthcare, yet we fall to the bottom in the quality of care, compared to other countries around the world. The second way we can start protecting our health is to improve the business practices and leadership within our healthcare organizations. Remember, doctors are focused and trained on how to care for a patient, which leaves room for growth on how to create the best organizational practices. There are incredible educational programs out there, like the Kelley Business of Medicine MBA, to help doctors bridge that gap. And as we’ll get into next week, this is not an easy fix because it involves changing the entire culture behind our current healthcare model that’s been around for decades.
Be sure to come back next week, where we continue our conversation on how to protect our most valuable asset, our health. Nir will help us explore what changes are underway and how they will affect not only the doctors providing the care, but also us as patients. This has been another episode of the ROI Podcast presented by the Indiana University Kelley School of Business. I’m your host Matt Martella alongside Associate Dean Phil Powell where we work hard to help organizations make better business decisions. We’ll see you next week.