Under the title, “Health Care Tech Trends: Addressing the Value Equation,” John Doerr, chairman of Kleiner Perkins Caufield Byers, a venture capital firm based in Menlo Park, Calif., a Silicon Valley suburb of San Francisco, and Tom Owens, M.D., president of Duke University Hospital, and senior vice president of the Duke University Health System (both Durham, N.C.), discussed the dramatic changes taking place in the U.S. healthcare industry right now, and the important role that technology, including information technology, will be playing in the transformation of the healthcare industry in the coming months and years.
Doerr, the author of Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, speaks regularly about the goal-setting system of objectives and key results (OKRs), and broad business strategy.
After initial introductions, Doerr asked Dr. Owens about the pace of change, and the challenges that Owens and his colleagues at Duke Health are facing right now, as they look into the near future in U.S. healthcare.
“People in healthcare work hard,” Owens said, “and their readiness for change depends on how well they’re feeling, how resilient. A lot of providers are feeling burned out right now, and that’s a challenge every day. In addition, we have challenges we’re facing with regard to reimbursement change.” Asked about the pace of healthcare system transformation in North Carolina, he said, “Our state has been slow to change to value. We’re now moving towards managed Medicaid. I think the big change will come from commercial payers, who will drive providers into risk-based contracts into risk faster than expected.”
“And managed Medicaid will be good?” Doerr asked.
“We feel responsible for the care of our community, and that’s what Medicaid represents for us,” Owens said. “I think that managed Medicaid, done well, could be very good for us; done poorly, it would be [challenging]. We’ve launched an ACO [accountable care organization], and have about a quarter-million lives under some form of management. How we can leverage some of the technology, manage the massive amounts of data involved,” will be an important element in success, Owens said. “And the [historically] siloed approach of community, providers, and payers, isn’t going to work.”
Turning the conversation back to Doerr, Owens said, “You’ve such a big part of changing a number of industries. I’m wondering what advice you have for us in healthcare? How we might think about technology, and disruption, in a healthy way?”
“I would say that I’ve had the privilege of working with some of the country’s most amazing entrepreneurs and disruptors, from Jeff Bezos at Amazon, to the folks at Google, or the folks at Uber, to even Twitter, who wanted to change the way we did texting and exchanging information,” Doerr said. “And what I’d say is true about all those innovators is that they possessed vision for a world that no one else imagined.” For example, he said, “Google was the eighteenth search engine to arrive on the scene; but all their predecessors had produced searches that were kind of crummy. Before Google came along, the ads were banner ads, sold by advertising executives on Madison Avenue, over three-cocktail lunches. And Google said, screw that, we’re going to auction ads, in a way that you could create a sustainable, not an overpriced, marketplace. And the challenge for healthcare, writ large, is that we don’t have a functional market. And consumers have a hard time discerning quality.”
Doerr went on to say, “Duke’s a high-quality organization; I’m sure you have a hard time getting that message out there. There’s little price competition. Many of the elements that make capitalism and the economy go, are not present yet in healthcare. But risk adjustment, flexibility in payments, and providers being responsible for care end-to-end—all elements present in Medicare Advantage—those things allow for innovation. And where is Duke in the journey from fee for service to fee for value?” he asked.
“I’d say we’re in the middle of the pack at best,” Owens said, noting that “The larger transformation” of the healthcare system from fee for service to fee for value “may be even more challenging in academic medical centers. We have great talent and depth, and great success in the current academic model. And we have three missions—clinical care, education and research, and in the U.S., clinical care helps subsidize the other two, so when we think about change, we think about the risk to those missions. We realize we need partners. We can’t get there fast enough developing algorithms for risk adjustment and disease prevention. And so we’re thinking about all kinds of relationships” in terms of moving into the world of risk-based contracting. In that regard, he added, “We laid out a five-year plan three years ago, to think about the way we manage risk and manage patients.”
Owens went on to detail some of the challenges facing physicians in the current practice environment, noting that “Most physicians went into healthcare for the right reasons: they want to take care of patients. And they want to invest in the healthcare of the future. And when we engage them, and we create a path to risk, a path to change, that they can buy into, that’s worked really well for us. And when we’ve been able to shine a light on unnecessary care and variation, it’s been really helpful.”
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