Transcription:
Today's Disruptors in Health Care

Intro: The following SHSMD Podcast is a production of DoctorPodcasting.com.

Bill Klaproth (host): On this edition of the SHSMD Podcast. If our healthcare leaders were airline pilots, they'd probably be telling us to buckle up. We're in for some turbulence. That is true, but our guest, Sam Glick says there is hope for some optimism, as we look to the future. Sam is an author of a piece in the latest Future Scan 2023 to 2028. And we're going to get all of his thoughts about today's disruptors in healthcare. So let's get to Sam, right now.

This is the SHSMD Podcast, rapid insights where healthcare strategy professionals in planning, business development, marketing communications, and public relations. I'm your host Bill Klaproth. And in this episode, we talk with Sam Glick, global leader of health and life sciences at Oliver Wyman. Sam is an author for the latest future scan, 2023 to 2028 Healthcare Trends and Implications available November, 2022. You can visit SHSMD. That's S H S M D.org.

shsmd.org/futurescan to learn more. Sam, welcome to the SHSMD Podcast. As you know, we start every episode of the SHSMD Podcast with rapid insights. One quick tip someone can use to make their marketing communications better today. Sam give us your rapid insight.

Sam Glick: As a leader, you have to know yourself, but you can't make it about yourself.

Bill Klaproth (host): You want a rapid insight, you got a rapid insight. As a leader, you have to know yourself, but you can't make it about yourself. That is a short phrase, but it says a lot, Sam.

Sam Glick: That's my usual leadership lesson for new hires and stuff. So I figured it'd work out here.

Bill Klaproth (host): I Like that short phrase, but it says a lot. Well, we are looking forward to your article in the latest Future Scan 2023 to 2028 Healthcare Trends and Implications. As we talk about today's disruptors in healthcare, this article is jam packed with really good stuff. I urge you to read it when it comes out, and if you're listening to this after it has already come out, make sure you pick up a copy. Cause there's some really, really informative information in it. So, Sam, I just want a little history lesson here, if you will. Can you clue us in on how the competitive landscape for hospitals and healthcare systems have changed since that concept of the ideal patient in the eighties, how did we get to where we're at today?

Sam Glick: So, the landscape for healthcare has changed in almost every possible way. If we think about even the demographics that we're serving. We are now at a place in this country where the country is aging several times faster than it's growing. We have people who have more options than ever, video, phone, virtual convenient care around the corner, urgent care, all that kind of thing. We have a whole new regulatory environment, including things like meaningful use and the Affordable Care Acts surround.

And then particularly in the last year or so more cost pressures than we've ever seen before, with inflation overall, particularly for drugs and supplies, but, especially wage inflation, fundamentally changing the economics of delivering healthcare. And I think it's interesting when you think about even the phrase, the quote, ideal patient, that's a very system centric view. It's what do we want from the people we served, what do we want them to look like? Who do we want through our doors?

And I think we're the other way around, which is if we were kind of recoin that phrase today, it should be what's the ideal system, what's the ideal way to serve me? That we need to put the person we're serving at the center, not our business and our processes at the center.

Bill Klaproth (host): Yeah, you said a lot there. So we're aging faster than we're growing. Absolutely. Technology advances. People do have more choice and there's cost pressures, all have kinda led us to where we're at now, where we really do need to redesign for the future. So you say in Future Scan, in fact, the provision of healthcare is moving away from the monolithic department store model, right? Where it's one stop shop for kind of everything that most healthcare systems resemble today. So for the reasons you stated is that why we really need to start rethinking this department store model?

Sam Glick: We do. And I wanna be careful about that phrase. It's easy to say glibbly the world is moving away from hospitals, or we have too many hospital beds, which is often what that kind of statement is interpreted as. And, there are certainly communities in this country where we are overed, but if the pandemic proved anything, it's that there are plenty of communities in this country where we may be underbed and where as we grow and as people age, we do need more traditional inpatient capacity. But, that capacity plays a very different role in the health system of the future.

People now have the option to connect with high quality clinical care, in their pocket and in their purse, on their smartphone, they now have more options for care coming from new kinds of players. We actually just saw in the last week or so, Amazon purchased One Medical kind of creating a kind of whole foods of healthcare. They are doing more self-service. and some of that health information online is not very good at all, and we want to educate them away from it. But some of them is actually, some of it is quite good.

and they can educate themselves and be more empowered patients. And what that means is in some communities, community health systems absolutely have to be responsible for making sure that people have access to the comprehensive set of care that they need, but that doesn't necessarily mean owning it anymore. That might mean partnering with new kinds of primary care innovators or with health plans. It might mean partnering with technology companies. This kind of old sort of fortress mentality of if we don't have enough of it here, or if I'm required to coordinate it, or I feel obligated to coordinate it. I have to own it is really changing.

Bill Klaproth (host): So you say we have to be careful when using that phrase department store model, when speaking of hospitals, we're not saying that hospitals are going away, but there certainly are challenges. And it seems like forward thinking innovation, being nimble, all those terms that we use, those really have to come into play now, is that right?

Sam Glick: I think that's right. And I think in addition, realize that a lot of innovation comes from focus. And that yes, you can build almost anything yourself, but the kind of very best models have people who wake up every day thinking exactly about that model. How do I delight consumers? Whether it is a, Medicare advantage program for a particular segment to the population or a One Medical for mostly a commercial kind of worried, well population or fill in the blank, whatever it is.

And that as a system, you have to choose the spots where you can really focus your own innovation. And then think about how do you partner with others, who focus on other things to bring together something that's far more powerful than you could build or buy on your own?

Bill Klaproth (host): That's good thinking for all of us, we all should be waking up saying to ourselves, how do I delight my consumer today? So I understand what you're saying about focus and innovation. And partnering with others to bring something that's more powerful than you could bring by yourself. But even in that we should prepare or hospitals and healthcare systems should prepare to lose market share at the same time. Is that right?

Sam Glick: Yes. I think traditional not-for-profit healthcare systems in most communities are going to lose. Some form of their share. Now I say that because I'm not sure that's a bad thing. And I think because for multiple reasons, one, if you're losing share, but people are still receiving really good high quality care, perhaps even more affordable care than what you can deliver in your cost structure, that's probably a good thing. That is consistent with the mission of at least every health system that I've met.

If we start measuring share differently, still too often we measure share as something like share of discharges, as opposed to the number of people for whom I'm responsible for making sure they get high quality affordable, accessible, delightful. Well, that's probably a good thing. I probably want fewer people coming outta my hospital, if I'm able to take care of them in other ways. And so I do think it requires a reset to say, what I really wanna know is am I as relevant in my community? Am I as relevant in the lives of the people whom I serve, not necessarily, am I getting a very specific kind of fee for service, service that I count in a certain way? BEcause it's relevance that really matters. That's, what's really key when you take it from a consumer per.

Bill Klaproth (host): So like you said, it probably requires a reset and then asking the question, am I relevant? So then for our healthcare leaders today, what are the overall implications then knowing these disruptors are already here and certainly with more on the way, how do they have to adapt and change and innovate?

Sam Glick: It definitely requires first and foremost kind of partnership as a core competency. And we have not built that, in the traditional healthcare system in most places. The traditional healthcare system for better or for worse, has been built on a kind of adversarial model. We negotiate with payers, we negotiate to acquire assets. We think about how are we competing with the other system in town? And we put up billboards that say, have your baby here and get your heart surgery here or whatever it might be, but it's kind of an adversarial competitive model.

And when you look in technology, which I think is really, an insightful place and perhaps some inspiration for us, big technology companies talk about this concept of kind of cooperation, where yes, you may one day be competing with somebody and the next day cooperating. And in fact, my biggest technology company, competitor, I may also be a distributor for their product or their service. and we see this, or they may operate with my APIs or they may operate in my app store. and that's a perfectly good thing. And we need that kind of mindset in healthcare to think about this idea of co-opetition.

And how do we partner better? And that means different skill sets in contracting and finance in how we think about economics in our legal teams, in our leadership teams, right. It sort of runs the gamut. I think the other thing that I mentioned. We need to think differently about market share and stop talking so much about share in a very precise, quantitative way and think more about relevance. And how am I making the lives of the people I serve better and making more people's lives better? And there are really good measures of that and ways of thinking through that.

And then the other thing is there is gonna be pressure on affordability. We've seen a revolution in, virtual care telehealth in particular over the past few years, it may be one of the silver linings of the pandemic. The reality is that for many years, most Americans had access to telehealth. what we saw change was the convenience of the offer. The inconvenience of the alternative going in in person, and then big action by CMS around reimbursement. That's great. That's a great and important first step or maybe a second step, but if somebody out there really can deliver a visit and make a margin on a 49, a 59, a $69 reimbursement, economics tells us that should put pressure on us.

To say, how do we deliver more affordably? How do we fundamentally think? Not just about healthcare prices and resource. But about the fundamental cost structure and that's an area, I'm really passionate about, which is we are not fundamentally going to make healthcare more affordable and we have to remember affordability is still the single greatest barrier to access in this country. We are not gonna make it more affordable unless we really reengineer the work we're doing to fundamentally take cost out. Just one stat.

I'll let you go. But when we think the biggest cost in healthcare is labor. And about six outta 10 people who work in healthcare, never see a patient, never see a consumer. And some of those people are they're good. They're right. They're doing really important things. They're doing value added things like research and leadership and that kind of thing. And that's really important, but a lot of those people are doing repetitive work, that could be automated, could be replaced with simpler systems and simpler processes.

And one of the few upsides to this great resignation is if you're a health system where 15, 20% of your workforce is turning over this year. Well, that means in five to seven years, your whole workforce will have turned over. And are you stopping to say every time somebody leaves, am I gonna backfill that position in exactly the same way? Or can I do something transformative for affordability? This is such a big perishable opportunity, that we've gotta capitalize on.

Bill Klaproth (host): Wow. There's a lot there. And I do wanna ask you about reimbursement coming up at first, you were talking about partnership as a core model cooperation. I love that word. So will we not be pitting hospital against hospital across the street? You know right now, like you said, people are putting up billboard, have your, maybe at our hospital, not at their hospital. Is that gonna come to an end? What is the main threat of competition then for a hospital? If it's not gonna be the person or the healthcare system across the street?

Sam Glick: Some of it may be the healthcare system across the street, but what we even mean by a healthcare system is changing more and more health plans are getting into the care delivery business. And sure, they're probably not gonna get into the sort of full service, acute care hospital business, but we now have United Health Group through OptumCare as the single, largest physician organization in the country. That's competition. We now have Amazon in the care delivery business that's competition. We now have private equity well into the urgent care and surgery center and other, and lab businesses.

That's competition. Much of that competition is still local in its bricks and mortar form. But when I talk about things like telehealth or virtual centers of excellence or new kinds of care delivery models. Those are nationally and someday may even be globally competitive. And that's the competition. And I think fundamentally that's great for consumers. The idea that somebody from their home, can get a second opinion about their cancer or can get their question answered about their new baby at two in the morning, by somebody who might be in a very different.

That's terrific. That's really good for them, but what we deliver better be as good as what they can get from those places or we might as well say, well, what are we gonna focus on that we can be great at?

Bill Klaproth (host): So true. So with all of these competitors and disruptors, and you said, draining market share on various fronts, you also say in Future Scan that this will have an impact on reimbursement. That also is gonna be a threat. Can you explain that to us?

Sam Glick: Yeah, I think so. I mean, if we think about the kind of core reimbursement model that, we have built in healthcare, an unsustainable economic model. We've built a model in which commercially insured people, because we have under or unreimbursed people coming through government pay, but we have commercially insured people representing somewhere between 30 and 40% of the volume in your typical, full service health system. Something like two thirds of the real net revenue, and three to 500% of the profit, right.

We make all the money on the commercially insured and then we use it to serve those on Medicare, Medicaid, and the uninsured. We use it to serve our missions. And that worked for a really long time. until we got to the point where we were, as I said at the beginning, aging faster than we're growing, we're gonna be at a place in this country by now 2034. It's actually accelerated a year, where we're gonna have more people over 65 then we do under 18, for example. We are not gonna have enough working people to make up for the kind of unsustainable cost structure and the relatively low levels of re reimbursement we get from the government.

I think if you pile on top of that, the probably 10, 12, maybe in some cases, 15% annual premium increases that our employers are gonna start to see as these labor cost increases, work their way through, into contracted rates. You're gonna have employers pushing back pretty hard on, the premiums that they're getting. And what we've seen they've done historically is when premiums are at unsustainable levels, they push on the network. They move to narrower network products and they push on cost sharing. They raise deductibles and copays and co-insurance.

They now have a third option, which are newly national competitors saying that my first tier in my network is going to be a telehealth option. It's gonna be a retail clinic option that maybe comes from the payer I've contracted with. It's a new kind of model that I'm offering people. And what that means. We're gonna have reimbursement pressure. It's kind of in some ways sort of economics 101, which is, if we say competition is national competition is virtual, then we're gonna be expected to be price competitive with those players or the volume's gonna go to those players. That's a huge threat.

Bill Klaproth (host): So if our healthcare leaders today, were an airline pilot, they'd be saying buckle up, we've got some turbulence coming up. So certainly you've outlined kind of what's facing our healthcare leaders today. So from your Future Scan article, can you kind of sum up your key takeaways? And then after that, I want to ask you, what should we do then? What's next? So, first off, can you give us your key takeaways from your Future Scan article?

Sam Glick: Yeah, so I'd say four things and it's a lot of actually what we've just talked about. Bill, one is we have to acknowledge that the world around us is changing and we have to approach it from a consumer centric view, an individual centric view of the world. We need to design our businesses and our operating models for the people we serve, not expect them to change their habits to accommodate what we do. We're now competing second point, with a lot of players that do that. And they're well funded by venture capital.

They're well capitalized by publicly traded companies. And they come often from a tradition of consumer centricity and come from those skills. That's really important. We need to think of those organizations as our competition. The third is we fundamentally need to transform our organizations to compete in that world and that's, capabilities things like, being able to engage in cooperation, having real approaches to partnership, but also radically rethinking our cost structures. And then the fourth, and this is really important, this is a chance to be optimistic.

These pressures, if you're a healthcare leader, can be a real drain. This is the hardest time that I think we can identify at least, in the last several decades to be a leader of a not-for-profit health system. But at the same time, it's a huge oppotunity. As I said, turnover is a perishable opportunity to think about reengineering work, in really meaningful ways. All of these new competitors are looking for local community partners. Are we open to them or are we closed to them? We have an opportunity to think about how we do that.

There's been a new light shown on the role of public health. And frankly, some of the distrust people have in healthcare coming out of COVID. How do we think differently about how we communicate with people and can we capitalize on that to engage with them? And so, fundamentally the message of my Future Scan article is meant to be an optimistic one, which is, A ton of change happening around us. And if we kind of cross our arms and say, it's really hard and, we're just gonna do our best to maintain our rates and survive, we probably won't.

We probably, and we certainly won't lead healthcare. But if we have metaphorically kind of open body language and say, this is gonna be really tough, but tough times can sometimes be the crucible we need to do things that are really innovative. I really do believe the opportunities are out there.

Bill Klaproth (host): That's a great point. So it's not all doom in gloom.

Sam Glick: I don't think so. I think it's tough. Right. But it's good. It's good tough.

Bill Klaproth (host): Good tough. I like that. That is good. So number one, the world is changing. Make a consumer centric view. That's what we need to have. Number two, we gotta learn how to compete with these players three. Then we have to transform our organizations. To really take on this new competitive environment. As you said, number four, we have a chance to be optimistic, which is great. So if I'm a healthcare leader and I call you up Sam, and I say, this is all great stuff. Give me some advice for staying relevant and viable. What should I really concentrate on right now?

Sam Glick: First know what you're good at. And that sounds like an obvious thing, but, as I said, the most innovative organizations, one of the things we see is they focus and they focus in a, really intent kind of way. And so what's that intersection of the services your community needs, the people you serve needs and the things that you are good at, where you can really lead? And double down on those. Don't distribute investment in a kind of peanut butter spread way. Like you're making a sandwich across 30 or 40 priorities. Pick 2, 3, 4, and really, put disproportionate investment and effort behind those.

The second thing is change your focus. As I said, instead of focusing on market share, think about what does it mean to be relevant in my community? What does it mean to be relevant to the people I serve? The third thing is, really, I think we need in healthcare to go from using the phrase. Affordability is kind of a euphemism for cost cutting, to being a real consumer view of affordability. affordability and access are two sides of the same coin. And we don't often think that way. But ask yourself where across my system, is it too expensive for somebody in my community to access it?

And that may be what their health plan or their employer or the government's paying, but so often it may be what they're paying out of pocket. And do I really understand what they're paying out of pocket? Do I have an opportunity to make that something that's more affordable for them? And there are lots of ways to do that, but it is this kind of empathetic view that really links, access and affordability that I think could be quite transformative.

Bill Klaproth (host): So know what you're good at. Change your focus. What does it mean to be relevant and then focus on affordability. Where is it too expensive? Well, these are really great thoughts and all things we need to think about as we move forward in healthcare. Sam, any final thoughts from you at all? The floor is yours.

Sam Glick: This is a terrific conversation, as you can tell, I'm really passionate about it. one of the things that's easy to slip into in my job as a consultant is, a kind of arrogance. Like there is a right answer and, each organization is different. Each community is different. Each set of consumers that we serve is different. And I think that's one of the things that I push myself on and I'd encourage the CEOs and the board members and the senior executives listening to this podcast to do, which is you wanna identify what's true about your market and what's true about the people you serve.

And those things last long term, they're pretty immutable, at least for a while. What's the demographic path we're on? What are the biggest needs in this community? How do we think about making ourselves more affordable, more accessible, more delightful, higher quality, whatever it is, but the tactics that we use and are we gonna go into this neighborhood or this neighborhood, are we really gonna go more into virtual with this offering or more into home or more into bricks and mortar?

Are we gonna go with this partner or that partner? We've gotta have a certain agility. The only way you learn, whether that stuff works is to try it. And so by definition, sometimes it's gonna fail. And I think sometimes we conflate those kind of immutable truths with tactics. And when the tactics fail, we say, see, we have the wrong. We were going in the wrong way. And instead, how do you create a certain agility? Lease space, don't buy space, sign a one year partnership agreement, not a 10 year partnership agreement.

Right? Don't lay out a sort of big bang strategy that says, now we know exactly what we're gonna do for five years. You know, I often say, set a five or 10 year destination, and then just decide what you're gonna do in the first year and fill in the gaps as you go. Because it just changes the whole mindset, in a way that I think could be really powerful.

Bill Klaproth (host): And if you do have that rigid five year plan, the course might need to change after a year, but if you're stuck on that plan, you're then gonna be irrelevant when you hit that five year mark.

Sam Glick: Well, and man, I'll tell you if you know exactly what you need to do for the next five years, I'm gonna give you my stock portfolio, because you're a better predictor than I am.

Bill Klaproth (host): Right. Give me your crystal ball if it knows exactly what's gonna happen in five years. Absolutely. Well, this is great advice and great thoughts and really gets us all thinking, about what's ahead and what we need to know now, as you said, know what you're good at, understand your market. What are the needs of my community? How can I best serve them? Knowing those things can first off set you in that right direction and then be agile with all of your decisions. So I think that's just great advice, Sam, thank you so much for your time. This is really been thoughtful and insightful. And thank you for your time. This has been great.

Sam Glick: Hey, thanks Bill for having me. This is important work that all your listeners are doing, and it's a privilege to get to talk to them.

Bill Klaproth (host): And once again, that is Sam Glick. He is an author for the latest Future Scan, 2023 to 2028 Healthcare Trends and Implications available November, 2022. Visit shsmd.org/futurescan to learn more. And if you found this podcast helpful and how could you not, please share it on all of your social channels? And please hit the subscribe or follow button to get every episode. This has been a production of Dr. Podcasting. I am Bill Klaproth, see ya.