Reveleer welcomes you to Episode 8 of  The Value-Based Healthcare Podcast. Our guest on this episode is Dr. Robert Pearl. Dr. Pearl is a practicing physician, Stanford professor, Forbes.com contributor, co-host of the Fixing Healthcare Podcast and former medical group CEO.

This series aims to assist health plans become more successful through shared experience and best practices used by their peers in the industry. We interview executives at all levels within Risk Adjustment and Quality Improvement groups to share various perspectives. 

The Value-Based Healthcare Podcast is about sharing inspiring and real-world solutions from the people who are questioning the way business has always been done. We aim to educate across the spectrum of healthcare so that managed care organizations, providers and members alike are more successful in navigating and operating in this complex and ever-changing landscape. Subscribe today to ensure you receive the latest episodes!

Podcast transcription: 

Jay Ackerman:
Hello and good day. I'm Jay Ackerman, CEO of Reveleer, a software and services company committed to providing health plans with innovative technologies to maximize their return from quality, risk adjustment and compliance initiatives. It's a must in the value-based care world we operate in. I'm back again with yet another installment of The Value-Based Healthcare Podcast. This is absolutely one of my job highlights is, I have a regular opportunity to engage with thought-leaders and visionaries in the healthcare arena. Through our podcast, we aim to widen the visibility and voice of people working to change how healthcare is provided, and the impact it has to all those who participate in the care delivery chain.

I'm thrilled today, to be joined by Dr. Robert Pearl. Dr. Pearl is a former CEO of the Permanente Medical group, the nation's largest medical group, and former President of the Mid-Atlantic Permanente Medical Group. In these roles, he led over 10,000 physicians, 35,000 staff and was responsible for the nationally recognized medical care of 4 million Kaiser Permanente members on the West and East Coast. He's been named one of Modern Healthcare’s 50 most influential physician leaders. Dr. Pearl is an advocate for the power of integrated, prepaid, technologically-advanced and physician-led healthcare delivery.

He serves as a professor at the Stanford University School of Medicine and the Stanford Graduate School of Business. In 2017, he authored Mistreated: Why We Think We're Getting Good Healthcare When We're Usually Wrong. It was a Washington Post bestseller that offers a roadmap for transforming American healthcare. All proceeds from his book benefit Doctors Without Borders. He has a monthly column for Forbes, and he hosts a new podcast called Fixing Healthcare. Welcome, Dr. Pearl.

Dr. Robert Pearl:
Good afternoon, Jay.

Jay Ackerman:
Delighted to have you today. Why don't we just jump in and let's talk about your career journey. I'd love to hear first... when I have people like you on our podcast who've had such a fantastic career. How did you find your way into healthcare? What brought you to it, to begin with?

Dr. Pearl:
So much of my career has been serendipity. You make the decisions. When the window's open, you jump through them, but you're not quite sure what's on the other side. It began. I was in college. I had no interest really, in medicine. Although I took a lot of science because I liked the science part. I was going to become a university professor. One of my heroes didn't get tenure for a very obvious, political set of reasons. People laugh when I say this, but I went into medicine, to avoid politics. I went to Yale Medical School and I decided there, that I would become a heart surgeon, because it seemed to me that either you lived or died, following surgery.

It never bothered me. I'd like to be good, but if I wasn't good, it never bothered me to not have recognition, but it would bother me if somehow, that didn't happen. Heart surgery seemed to be the obvious solution. Came out to Stanford for my residency. Worked with a gentleman named Dr. Norman Shumway, one of the pioneers and one of the first heart transplants in the United States. What was interesting to me is that the people I saw again, in the cardiovascular room were not necessarily, the best people getting the referrals. It was the people who played the politics, belonged to the right country clubs, invited the people along. It was somewhat a, I'll say, disillusioning experience.

Actually I, at that point, transferred my residency across to plastic and reconstructive surgery. I did that because I became very interested in children with clef lip and cleft palate. Did quite a number of programs in South America, and that actually became the area that I pursued. Then I was ready, actually to spend a year, traveling around South America, doing surgery on children with birth defects. Went to plastic surgery at Kaiser Permanente, which at that time I had never heard of Kaiser Permanente. Actually died in a tragic plane crash. They called me and said, "Would you take a job for six months, working here?" I thought, "Well, what can you lose for six months?" As they say, that's the really circuitous kind of path that I went through. I think a lot of people going through medicine aren't quite sure where they're going to be, and end up in a really good place.

Jay Ackerman:
Then I guess, at some point you must have gotten a little comfortable with the politics, to find yourself at the helm of such a large organization.

Dr. Pearl:
Again, it was a serendipitous kind of way. I'd been there about a year. I got a phone call from one of the individuals who had a big title, a position with a big title, who asked me whether I'd become the Chairman of the Operating Room Committee. I was certain, this was because he recognized my absolute brilliance and skill. Of course, the reality was that everyone else had said no. I was the last guy who joined on, and so I was foolish enough to say yes. I actually enjoyed problem-solving. I'm a very creative kind of person, in my surgery, in my leadership. The idea of coming up with a short-term plan, a mid-term plan and a long-term plan. "How can we bring in, so-called flying nurses? How could we make sure that we kept the ones we had, by offering retraining and expansion? How could we develop a school to train operating room nurses?" I was able to solve that problem. That was a very satisfying set of steps for me, and of course it brought a lot of attention from the so-called higher-ups.

Over the course of, I'll say, my first career... I've thought of myself as having, Jay, three careers. This first career was as a surgeon. I did a huge amount of surgery. I actually ran the residency at Stanford, while I was at Kaiser Permanente. I perfected quite a number of techniques. Really enjoyed that process. Enjoyed the teaching. At the same time, this administrative part was starting to go, but the first, I'll say, third of my career was focused on my clinical work. Learning to do administration. Then as you said, the opportunity came, to become the CEO. People thought I'd be good at that job. It's quite a complex, as you say, political process that I was able to go through. Fortunately, was selected and had the opportunity to do that as my second career. Do that for three, so-called six year terms, 18 years.

Then when the book came out, I thought I wanted a third career. I wanted to be able to change the American healthcare system. As a surgeon, you take care of 10,000, 20,000 people. As the CEO, I was responsible for 5 million people on the East and the West Coast. The American healthcare system with 300 million people is what really fascinates me. The opportunity now, to be on podcasts like yours and reach out to a broader audience. To be able to write my Forbes blog twice a month. To have the podcast. To publish the book Mistreated: Why We Think We're Getting Good Healthcare - We're Usually Wrong. To be able to change the American view of not only what's missing, but what's possible. That's been the work that I've done now, in my third career, that I'm about two years into.

Jay Ackerman:
Thank you for sharing the career journey. It's bucking into those three separate careers is fantastic. As you think about that third one, and trying to touch and impact 300 million. Can you share what you see as your top two or three objectives, as you look out over the next 12 to 18 months, as you try to influence and impact an audience that large?

Dr. Pearl:
When I wrote Mistreated, the book begins with a story of my father. My father, Jack Pearl was an amazing man, the son of two immigrant parents. He worked his way through college and through dental school. When World War II breaks out, and he could have stayed safe and behind American lines. Instead he volunteers for 101st Airborne parachutes on D-Day. He and his troop are captured by the Germans, who leads a daring escape through the forests at night and brings everyone back safely. You know, Tom Brokaw would call, the greatest generation.

He was a tireless man and one day he developed fatigue. Saw the physician. They diagnosed the Hemolytic anemia, took out his spleen. My dad lived half of the year in Florida and half of the year in New York. My brother happens to be Chairman of Anesthesia at Stanford, so he and I picked my dad's doctors. They were all excellent. The ones in New York were sure, the ones in Florida had given him the vaccine that one needs, after your spleen's taken out, against Pneumococcus because you're particularly susceptible. Of course, Florida thought that New York had given it to him. The specialist thought, primary care and primary care thought, specialty care. In the end, he never got it.

The consequence of that is that, one day he came out to visit my brother and me. Stayed at my brother's house in Palo Alto. My brother woke up for ICU rounds. There's my dad on the floor, unresponsive. Four days in the ICU, not waking up. Two weeks in the hospital. He doesn't die during that admission, although he ultimately died from complications, a couple of years later. Of course, the diagnosis, Pneumococcal septicemia. One of 200,000 medical errors, that year and every year.

My view and my question is, how come people are, I'll say, being mistreated? Dying unnecessarily, because it's not just a medical error, it's also couple hundred thousand people from omissions in prevention or complications from chronic disease that could have been avoided. How does that happen? In the book, I talk about a lot of psychological research and brain scanning studies looking at this phenomenon that, context shapes perception and changes behavior. We as physicians, we think it's going to be data, information, numbers. But, when you look at what actually drives that change, what you see is that it's the context that people are in.

When I look at the American Healthcare system, that context is totally broken. You have fragmentation, doctors scattered across the communities. Hospitals across the communities. People unconnected with each other. People actually seeing colleagues as competitors, not being on the same team. We pay people, in a way that is piecemeal. We call it fee-for-service. The more you do, the more you get paid. If things turn out badly, somebody gets paid twice.

I give a lot of speeches at keynotes, at conferences. I say, "How many of you would bring a contractor into your kitchen and say, 'You do whatever you want. I'll pay you time and materials?'" Not a single hand goes up. Do we think that doctors are just so much more ethical and moral than contractors? No. It's how context shapes their perception and changes the behavior. The technology we have is 50 years old. In the class I teach at Stanford Graduate School of Business, I ask the following question. "What's the number one way that physicians communicate information with each other?" When I tell them that the answer is, by the fax machine, they look at me and they say, "What's a fax machine?" That's American technology today. All the pieces are broken. It's a 19th century cottage industry. Almost half a million people dying prematurely.

What I see as the biggest opportunity is, how do we shift that? How do we move from fragmentation to integration? How do we bring primary care and specialty care together, working as one? How do we shift to, not just pay for value, but capitation? Because that aligns the incentives. How do we implement true modern technology? It's really criminal that, we don't have all the information on every patient at every point of contact. You can go with an ATM in South America, high up in the Andes mountains, and you'll be able to get money out of a machine for your bank account in the Unites States. Yet, you go across the street to a different doctor or a hospital, and you don't have that information.

How do we make sure we use data analytics? How do we use, I like to call it, video people like Telemedicine, to be able to make care more convenient? To bring in expertise, higher specialization? How do we do these things in the American healthcare system? That's what drives me, because I can see what's possible. I saw it in Kaiser Permanente. Across the United States today Jay, 55% of the patients with hypertension are well-controlled. We were at 92%. The difference is 40% higher incidence of stroke, or cardiovascular, blood lipids, blood pressure, or being able to manage all those parts that we know, lead to Coronary artery disease. We can save tens and hundreds of thousands of lives. Colon cancer. Half of the cases that happen, half the people who die, didn't have to die. Yet in the American healthcare system, they do.

The American people, at least till recently, have believed that our care is the best in the world. You look at the Commonwealth Fund, what do you see? The only thing we lead the world in, is cost. Everything else, we trail. We're last in life expectancy, last in childhood mortality, last in, almost in every measure in the industrialized country. That's what drives me, Jay. I know, I have people understand how broken it is. Recognize that there are opportunities, what I call, the four pillars; to integrate, decapitate, to use technology and to achieve leadership, and then help the nation move forward.

Jay Ackerman:
Wow, that's certainly an ambitious agenda, and one that... if you're successful, there will be 300 million people whose lives will be a lot better off. That's a perfect lead-in for the next question I was going to ask which is, as you look at the industry, what trends do you see, that are most beneficial to better connecting providers back to the health plans?

Dr. Pearl:
The first thing that I see is, a move away from fee-for-service, towards pay-for-value. I think we're seeing it more at the Medicare level, at the insurance level, and particularly in the Medicare Advantage. I'm hoping that the commercial health plans, with whom you do a lot of advising and work, will jump on the bandwagon. It's simply, from my perspective, not possible to give the best care in a fee-for-service-type environment.

I think the second part is the value of technology. What we have is opportunities, to provide care in ways that patients don't have to miss work. That they can get care from experts, even though the experts may be at a distance, with things like telemedicine. You know, one of the things that we were able to do, is to be able to link primary care physicians with specialists using a combination of telephone, video, digital. As an example, if you walked into a primary care physician's office with a particular rash, that the primary care physician felt that he or she needed a dermatologic assistance for, they would take a picture. Send it to a Dermatologist. Within six minutes on average, you would have your diagnosis and treatment plan. In the surrounding community, that could be six weeks or six months. That opportunity to use modern technology.

Again, I'm hopeful that the health plans with whom you work, will recognize that and find the way to make it happen. I believe the reason it hasn't, by the way, is not the technology. It's the fear that the payers would have, that'll be misused and abused excessively by the providers of care.

I think the final trend that I'm seeing, is an awareness of how, not just the patients are mistreated by the current system, but the providers of care. As you know, one out of every three physicians today, reports being depressed. What we know is that there's over 400 suicides a year. Half of physicians would not tell their children to go into medicine. I think that, that awareness of that issue is the first step. What we now have to do of course, is take second and third steps, to be able to identify all the problems that are there, and invest because what we know is that physicians who are "burned out, depressed," are going to make more mistakes and not deliver the same excellence in quality medical care.

Jay Ackerman:
What do you see as some of the biggest barriers or challenges to better embracing technology? To use your analogy about the ATM at the top of the mountain, to making sure that the data can flow from provider to provider, so that, that complete picture is understood in the member?

Dr. Pearl:
I would see this in three different buckets, if you want to think about it that way. The first one is the electronic health record. An electronic health record that is not comprehensive, it doesn't have all the information, isn't particularly valuable. Why is that? Because you're not able to figure out who has not had the care that they require. You don't have the up to date information. You don't even know the medications they're on. To accomplish that, I believe we're going to need to force the manufacturers to open what's called, the APIs, the Application Processing Interfaces.

If you think about something like your iPhone. There's half a million applications sitting on it, that third party developers have done, but they couldn't do it when Apple was refusing to open their APIs, many, many years ago. I'm convinced that if they open the APIs and developers can get in there, we'd have the tools that would both help doctors and patients. It could be put on to, not just a computer, but on to a tablet. It could become clinically-oriented, not simply as a billing tool that sits in place.

The second one to me is the fact that we have technology that we know, works. Video to me, is the greatest example. It's inexpensive, it's easy to use, it connects doctors and patients and nurses, wherever they are, any time of day. Obviously, you need the delivery system back behind it. You're not going to have a physician available 24/7, but you can have a healthcare system available. If it's in the middle of the night, and a mother is concerned about her child, you can connect that person with a video, as we did in the Mid-Atlantic. 70% of the time, we can solve the problem there and then, without having a complete disruption of their life. I think the insurers are going to have to find the ways to support those processes.

Artificial intelligence to me, is a major opportunity, particularly in the visual diagnostic areas. They're going to have to figure out how to incorporate that into the schemes that exist already. Some data out of Stanford has shown that it's 10-15% better than the best radiologists, at reading very difficult X-rays. We've seen the same thing in terms of eye scans and patients with diabetes.

The final area, and one of the areas of the greatest frustration to me. As I say, I'm going around, trying to change the American healthcare system, not for any kind of personal gain. It's what I'm passionate about and care about, but many manufacturers distribute information that, from my viewpoint or technology, that is a solution in search of a problem. A really great example to me, is the monitor that gives you continuous heart readings. Who wants continuous heart readings? Once you know someone's EKG is good on a couple of occasions, there's no need to have more information. The idea, that's going to be sent to the doctor's office and clog up their information technology system, is a solution in search of a purpose. I don't think that, that's what should happen.

Often when I talk about technology, I ask the audience, "How many of you have a Fitbit or its equivalent, sitting on their wrist?" Of course, maybe a quarter or a third, do. I tell them, "I'm a big runner, but I don't have a Fitbit. I carry my iPhone to know how far enough I went. Tell me if I'm wrong, it does two things. Number one, it tells you how well you slept last night." Then I ask the rest of the audience, "Do you not know how well you slept last night?" Then ask the first part, "If you didn't sleep well, what are you going to do?" It's again, it's a solution in search of a problem. Number two, it tells you how far you went. As I say, you can do that on your iPhone or carry a $5 pedometer. Why is it selling, not only the best of all devices to consumers in healthcare, but 10 times better than the next? The answer is that, it solves a problem.

The problem of course, is nothing medical. It's called, the December Dilemma. You have Christmas or Hanukkah coming. You want to give a present. It's got to be cool. They got to wear it all the time. It's got to cost between $150 and $200. That device solves that problem. For your listeners who may be a bit older, they might remember Inline skates. Inline skates are never coming out of the box again, after December 25th, but it fulfilled that purpose. That's what we need.

What's the technology we need? We need monitors that people can wear, that now will analyze the data and tell the individual that they're fine or not. With chronic diseases, you don't get it once in a while. You have it all the time. The management should require seeing a physician or a nurse or someone else who can change, or a pharmacist, change your management when your problem's out of line. You don't need to see someone just for a "checkup." We do that out of history. We do that because we don't know how else to manage it. That could happen. The manufacturers are afraid. They're afraid because if something goes wrong, they're going to get sued, and they have big, deep pockets. We need to change that. Patients are dying as a consequence of our failure to use modern technology. It could happen. It's not that hard to do. Just going to require someone to have the courage to do it.

Jay Ackerman:
You know Dr. Pearl, you had a lot to say there. I'd like to try to unpack a little bit of that. First, going back to the comment you made about fax machines. Yeah, I think if I asked my nine year old to go upstairs and grab something off the fax machine, he wouldn't know where to walk to, in the house. How long you think, until every fax machine has disappeared from a provider's office?

Dr. Pearl:
I fear that it's going to be longer than makes any sense, because it's not going to disappear until we have a better way to transfer that information. Today, we don't have that interconnectivity of our devices. As I say, it's going to be very hard to do because the manufacturers understand that, as soon as data can flow easily amongst providers of care, they've lost the monopolist, the control over the people who've purchased it. These are multi-billion dollar companies. The way they are able to maintain their pricing is the fact that, once they have you, you can't get out of it because you'd have to reload 3 years of data, 5 years of data, 10 years of data. The amount of work that it would take, is just not worth it for the added price. I think it's going to take an action at the Congressional level, to force it to happen. It's been talked about, but I'm not optimistic that it's going to happen very soon.

Jay Ackerman:
Any thoughts on how you can be a voice of change and driving Congress to act at that level?

Dr. Pearl:
There are so many things that I would like to get Congress to do. I'd have to say that I'm very pessimistic. They do listen, by the way. Quite a number of them subscribe to my monthly musings, which listeners can get by going to my website, robertpearlmd.com. They read it. I know that because I can tell that some of the subscribers, they're new subscribers. I can see that they're there, but I fear that the imperative to act in ways that are going to force people to provide better care to patients. Not to simply fund care, because that the government does moderately well through Medicare as an example, but to actually drive that change. To force companies to open up their APIs. Even more significantly, to get the drug companies to stop overcharging patients.

What's happening right now with insulin, in patients with diabetes is just criminal. We have people limiting the amount of insulin, the lifesaving medication because they simply can't afford it. It's not they can't afford it because it costs so much to produce. It's being sold in other countries for a fraction of the cost. It's just that once again, once you control the market, you can raise the price. The only people who can effectively stop that, from my viewpoint is, Congress. The problem, of course is, you have political contributions. You have people who have constituencies. Again, I'm concerned that change is not going to derive out of our elected officials.

Jay Ackerman:
Continuing on. What technology do you think, will have the biggest impact on the payer-provider relationship over the next three to five years? Any thoughts on that?

Dr. Pearl:
One piece that will have a big impact is going to be telemedicine, because it really offers this potential to raise quality at a far lower cost. Have great convenience. It is a cheap technology. I think the idea of how to make it available without having it being abused by... by abused I mean, it is going to be utilized, when it's not going to have much value. I think that, that's what they're struggling with, but I think they will solve it. I think in that way, we will end up with a much better patient experience and a better insurer experience. In the shortest of runs to me, still, that's the technology that will be the biggest... I think this is the second-level, which is going to be the convenience for the patient. The ability to make an appointment online. The ability to retrieve your data. That's readily available now, but we still tolerate it at the insurance-level. Providers who are not able to do that.

One of the things that I sometimes say is that, if the major purchasers of care said, "Today is April 10th, 2019. April 10th, 2024, we're not going to purchase insurance from anyone who does not have an integrated system with a comprehensive electronic health record and modern technology." I'll guarantee you, the providers, the hospital, the doctors would figure out how to make that happen. I think the will to make that occur is not in place.

If I had a message for the insurers who might be listening in. Be very careful because when I look at the Apple, Berkshire-Hathaway, JPMorgan Chase process, they're not going to be looking for the best insurance company. They're going to believe that they're going to do better with no insurance company. They're going to believe that they can do that because they're going to put in place, these changes. They're not going to contract with every doctor and every hospital. They are going to put in place the technology. I think they have about five years of learning, before they start to move it forward. Anyone who wants to believe that Jeff Bezos and Atul Gawande are doing this only for the 1 million people employed by those organizations, and are doing it as a not-for-profit, probably believes that all Amazon does is sell books.

Jay Ackerman:
Yeah. Yeah, I'm sure their ambition goes well beyond their own members and driving down their own cost curve. You know, your comment on advice for insurers. Why don't we take that a little bit deeper? What advice might you have for healthcare executives in navigating our industry at this point in time, with the rapid change that's unfolding?

Dr. Pearl:
My advice is, to find an excellent physician partner. I think many of the people that I teach in the business school and in the medical school at Stanford, so I see people on both sides of Palm Drive. I think they do best when they work together, because the skills are often very complimentary. Now, there's some physicians who are in those leadership roles. I understand that. Overall, I think that, what the administrators of the health plans do well, is to understand the marketing, the sales. To understand how you evaluate value, to do the kind of data analytics. There's a lot of tremendous skills that they bring, but I don't believe you can get... and I’ll keep saying physicians, although, nurses and pharmacists and others are very, very important. You can't get the physicians to change, if you're not a physician, at least not easily. The reason is fear.

Your doctors are very dedicated. The idea of making a mistake, harming a patient, is so ingrained as a taboo in their training and upbringing, that to get them to do things differently, to take care of a patient using video, rather than in person, to trust the monitor, to tell them when the patient should come in. It could be tomorrow, it could be six months from now. To make these changes in practice, to use a different medication, to use a generic, rather than some other medication they learned to use, many years in the past. That is difficult to accomplish. To overcome the psychology or that fear. That's where I think, physicians are able to do it well, and to redesign the systems.

My personal belief, Jay, is that we know what to do. We just have trouble figuring out how to make it happen. We know the advantages of bringing physicians together, and physicians and hospitals together. We know the advantage of capitating people in a way, that they have an incentive, to avoid disease in the first place, to avoid medical error. We know what technology is capable of doing. Yet, across the United States today, fewer than 5% of physicians offer video visits as an example. We know what to do, we just haven't done it. My advice to them is, find yourself a great partner and together, make these changes happen sooner rather than later.

Jay Ackerman:
To build on that one, a little bit. How do you think CMS could enter that equation and help those two parties move along at a faster pace?

Dr. Pearl:
As you know, CMS is not going to be very directly involved, certainly in the 155 million people insured in the commercial system. What CMS is able to do is, obviously work with those people who are going to be providing care in the Medicare space, particularly the health plans, the Medicare Advantage arena. I think even more importantly, to be able to create some models. What I mean by that is the following; number one, the model of capitation, particularly capitation that pays based upon outcomes, and their willingness to take risk. Not based upon volume. That's called Medicare Advantage.

I think it can figure out a better pricing or reference pricing. I think we could, actually the commercial insurers could demand, through the government, with the government, that every hospital provide the cost of care: now, this was recently passed, but do it in a way that it's bundled up, so people can understand. If I come to your hospital and I need a hip replacement, what's the charge going to be? If I come to your hospital to deliver a baby, what's the charge going to be? Rather than giving all the pieces and all the codes, to actually make it understandable to the patient.

One of the challenges that we've seen lately, relative to the drug industry is that they figured out, how they can basically, harm insurers by bringing the patient along by forgiving the copayments or giving coupons, or all the various other approaches that sit in place. So, now that patient becomes forced to demand medication, rather than trying to analyze, "Does it do any good? Is it any better?" What we see is a lot of, I'll use the word, waste. People don't like waste, because waste implies laziness. No, it's just that we don't have the transparency, we don't have the information, we don't have the economic system to support it. I think that CMS, the Federal Government, can drive some of those changes.

What I was going to say before, because I thought about the question you're posing. In the context of some of the work that I'm doing is, people assume that disruption's not going to happen. Change isn't going to happen. It'll stay this way. We don't have to make adjustments. I think the history of disruption is that, it happens slowly and then rapidly. Kodak knew about filmless cameras for a long time, and then within a few years they were out of business. Borders understood about Amazon for a long time, and then very quickly they went out of business. That's what we're going to see in healthcare.

The last guest on my podcast was a gentleman named Dr. Devi Shetty. I don't know if you know Devi, but he's a heart surgeon in India. He does surgery for $1,800 a case, with results that are better than 90% of hospitals in the United States because his volumes are so good and his physicians are so specialized. When I asked Devi on my show. I said "Devi, what do you really do?" He told me something fascinating, Jay. He said, "I set the price for a human life." I said, "Devi, what do you mean, you set the price for a human life?" He said, and by the way, he was Mother Teresa's physician, so he's a pretty famous gentleman. He said, "I come in, in the morning. There's 30 mothers and 30 babies. They all need surgery. I do a lot of free surgery. I just can't do it all because 90% of people in India don't have any insurance. When I tell the family it's going to cost $1,800, the ones who can borrow the money, the child lives. The other ones go home, to die." He said, "If I get the cost down to $1,500 or $1,200, now I will have elevated the price of a human life because people will have lived."

I tell this story to health plans and to hospitals and to doctors because, not a whole lot of Americans are going to go to India for surgery. If they have family there, they might. Devi just opened a hospital in the Grand Cayman Islands. A one-hour plane flight from Miami, seven-mile white sand beach. Tourist culture, English speaking, totally safe. He's building a 2,000-bed hospital, on an island of 50,000 people. He needs about 20 of those beds for the people living there. The rest are for the people in surrounding countries that are particularly, sitting in the United States. Disruption is coming. The insurance executives need to know that. The hospital executives need to know that. The physicians need to know that. If we don't change now, Jay, trouble is ahead.

Jay Ackerman:
That's a perfect story that I think, leads into my next and final question. What recommendation would you have for the public? For the individuals out there, regarding their empowerment and ownership of their own medical care?

Dr. Pearl:
I think the biggest thing is, you have to take charge. It starts with figuring out who you're going to purchase insurance from. You need to understand what it is that you're going to get. Right now, we focus so much simply on the courage. Is the care going to be integrated? Do the physicians share the common electronic health record? What technology beyond that, is going to be offered to you? How are they paid? We do a very, I'll say, poor job. We have broad networks without a whole lot of information. We're not able to guide people. I'm going to predict that for the most part, people know more about the individuals who tune their car, than they know necessarily about the people who provide a lot of the healthcare to them.

One of the things I often start my class at Stanford, is asking people, "Do you get great healthcare?" I remember, everyone at the Stanford Graduate School of Business, they've been in finance or banking for five years. They can look at information on companies. Evaluate them in great detail. They pride themselves on their ability to judge value, and they all raised their hand. Of course, they do. My next question was a very simple one, "How do you know? How many procedures did the doctor do last year? What kind of outcomes do they get? What kind of error rate do they have?" Of course, none of that information is available.

That opportunity for us, from my viewpoint, to advance healthcare to the 21st century, is sitting right there. My advice to the consumer is, you've got to start demanding it. Don't tolerate what you have today. You'd never bank some place, if you couldn't have an ATM. So why are you willing to use a delivery system that you can't obtain information from? You'd never fly in an airline, if you had to miss work and drive there to pick up a printed ticket? Why do we tolerate that kind of technology left over from 50 years ago?

I think the consumer is going to have to drive a lot of this process. I understand very well, the need to look at bills and figure things out and make things happen. It's so complex and difficult. I just don't think they're going to be able to do it. The time has come for the consumer to demand for the delivery system. The kind of bundled, clear information that they want every place else in their life. Healthcare is just one of the institutions left at the end.

Jay Ackerman:
Yeah, so I think that's great advice to the members. Hey, so we're going to bring it to a close for my rapid-fire round. Before we do that, I just want to first say, thanks again Dr. Pearl, for participating. You've been an amazing guest. For those of you who are listening, just a reminder that you can connect with Dr. Pearl on Twitter, @RobertPearlMD. You can find Dr. Pearl on LinkedIn, and through his website at robertpearlmd.com. Please keep that in mind. Dr. Pearl, rapid-fire round, five quick questions, top of mind for you. What keeps you up at night?

Dr. Pearl:
I think the first thing is, I sleep very well at night. I understand the metaphor. I think if anything keeps me up at night, it's the fact that a half million people are going to die this year and next year and the year after, unless something is done, to be able to shift and change our American healthcare system. We're going to have another 200,000 medical errors this year. We're going to have people die unnecessarily for lack of prevention. Lack of treatment for a chronic disease and suffering complications as a result. Again, I'd encourage your listeners to actually read Mistreated: Why We Think We're Getting Good Healthcare When We're Usually Wrong, with all the profits to Doctors Without Borders, that really want to understand a lot of the things we've talked about today.

What keeps me up at night is, how do I get that information out to all 300 million Americans, as quickly as possible?

Jay Ackerman:
I imagine when you're restless, you've got a number of books that you might pull from. What book is at the top of your list right now, beyond Mistreated, and why are you reading it?

Dr. Pearl:
I'd say, I have a stack of books. That's the better way to do it, depending upon my particular mood at that evening. If I want to read something just for fun, I tend to read something like a Grisham novel. I like those kinds, or a Connelly novel. I like those kinds of interesting, legal twists and turns. When I want to be inspired or learn something, I'll often read a piece or a book by Atul Gawande. I just re-read his book; Complications, or his first, that I think was excellent. Then when I want to really learn and go to sleep at the same time, I read Thinking, Fast and Slow, by Nobel Prize winner Daniel Kahneman, because I think that behavioral economics is a very unpursued opportunity for us, to change how patients receive care and how doctors provide it.

Jay Ackerman:
Thank you. All good suggestions. If you could move into question three. If you could redo one decision in your life, what would it be and what are your thoughts around it?

Dr. Pearl:
My life is a bigger equation, but in healthcare or in my role when I was CEO. I think the one thing that I regret was that, around the middle of the time, we had a particular program that we provided at one of our hospitals that was attacked by someone in the media. With a real vengeance, they twisted the information. They got it all wrong. Patients were actually doing really well, but they twisted it to make it look like they weren't. There was a lot of outside forces around it. The media folks and the legal folks convinced me to give in and to close it down, in order to stop the external pressure. I think it was a mistake. I think it's important that everyone have the courage to stand up to the bullies that are out there. I didn't think I did as good a job. In retrospect, I wish I had done it better.

Jay Ackerman:
Thanks for sharing that personal story. We are going to go to something a little lighter. What's your favorite app on your mobile device?

Dr. Pearl:
I have a lot of apps on my mobile device, around information. That's where I get most of it, each day. I like the New York Times app. I like ESPN, for the sports information. I have probably, five or six different news feeds into my phone that I start each day, looking at, and figuring out what's going on in the world.

Jay Ackerman:
Last one. How do you invest in yourself?

Dr. Pearl:
I invest in two ways. I would really encourage your listeners to think about how they invest as well, in the same parallel kinds of ways. The first one is, how do I exercise? I'm a big believer that exercise is crucial. We introduced exercise as a vital sign, when I was CEO. I do that by running. I ran six miles today. I run 30 to 40 miles every week. In the winter, I like to ski. Whatever it is, get up and get moving. I actually, often put my AirPods on and listen to podcasts, so you can get information at the same time. That's how I do it, physically.

Then as I said, I'm a very creative person. I enjoy problem-solving. Right now, what I really enjoy doing is, the process of writing and learning and teaching, and finding new ways to stimulate, both my mind and help others. I've begun writing my next book. A book that's really going to be, not just on the structure of medicine and how it's broken, but the culture of medicine, and the impact that it's having on the people, both the physicians and the patients.

Jay Ackerman:
That's great, Dr. Pearl. Look, you've been a wonderful guest. I've enjoyed learning about your career journey, your thoughts on healthcare, and what you think can happen between payers, providers and how we can move healthcare truly, into the next century. Thanks for your openness. This will bring our Value-Based Healthcare Podcast to a close. Thanks, Dr. Pearl.

Dr. Pearl:
Thank you, Jay. It's been a pleasure. Good luck on all of your efforts, to be able to improve the American healthcare system.

Jay Ackerman:
I appreciate it. You know, one of the things that we hold near and dear is, a value in our company is, when we're looking to bring on new people is, do they have a passion for change in the American healthcare system? We hope we'll do our small part, to continue to improve it. For those listening, please follow Reveleer on LinkedIn. You may also follow me on Twitter, @AckermanJay. Over and out.

Reveleer welcomes you to Episode 8 of  The Value-Based Healthcare Podcast. Our guest on this episode is Dr. Robert Pearl. Dr. Pearl is a practicing physician, Stanford professor, Forbes.com contributor, co-host of the Fixing Healthcare Podcast and former medical group CEO.

This series aims to assist health plans become more successful through shared experience and best practices used by their peers in the industry. We interview executives at all levels within Risk Adjustment and Quality Improvement groups to share various perspectives. 

The Value-Based Healthcare Podcast is about sharing inspiring and real-world solutions from the people who are questioning the way business has always been done. We aim to educate across the spectrum of healthcare so that managed care organizations, providers and members alike are more successful in navigating and operating in this complex and ever-changing landscape. Subscribe today to ensure you receive the latest episodes!

Podcast transcription: 

Jay Ackerman:
Hello and good day. I'm Jay Ackerman, CEO of Reveleer, a software and services company committed to providing health plans with innovative technologies to maximize their return from quality, risk adjustment and compliance initiatives. It's a must in the value-based care world we operate in. I'm back again with yet another installment of The Value-Based Healthcare Podcast. This is absolutely one of my job highlights is, I have a regular opportunity to engage with thought-leaders and visionaries in the healthcare arena. Through our podcast, we aim to widen the visibility and voice of people working to change how healthcare is provided, and the impact it has to all those who participate in the care delivery chain.

I'm thrilled today, to be joined by Dr. Robert Pearl. Dr. Pearl is a former CEO of the Permanente Medical group, the nation's largest medical group, and former President of the Mid-Atlantic Permanente Medical Group. In these roles, he led over 10,000 physicians, 35,000 staff and was responsible for the nationally recognized medical care of 4 million Kaiser Permanente members on the West and East Coast. He's been named one of Modern Healthcare’s 50 most influential physician leaders. Dr. Pearl is an advocate for the power of integrated, prepaid, technologically-advanced and physician-led healthcare delivery.

He serves as a professor at the Stanford University School of Medicine and the Stanford Graduate School of Business. In 2017, he authored Mistreated: Why We Think We're Getting Good Healthcare When We're Usually Wrong. It was a Washington Post bestseller that offers a roadmap for transforming American healthcare. All proceeds from his book benefit Doctors Without Borders. He has a monthly column for Forbes, and he hosts a new podcast called Fixing Healthcare. Welcome, Dr. Pearl.

Dr. Robert Pearl:
Good afternoon, Jay.

Jay Ackerman:
Delighted to have you today. Why don't we just jump in and let's talk about your career journey. I'd love to hear first... when I have people like you on our podcast who've had such a fantastic career. How did you find your way into healthcare? What brought you to it, to begin with?

Dr. Pearl:
So much of my career has been serendipity. You make the decisions. When the window's open, you jump through them, but you're not quite sure what's on the other side. It began. I was in college. I had no interest really, in medicine. Although I took a lot of science because I liked the science part. I was going to become a university professor. One of my heroes didn't get tenure for a very obvious, political set of reasons. People laugh when I say this, but I went into medicine, to avoid politics. I went to Yale Medical School and I decided there, that I would become a heart surgeon, because it seemed to me that either you lived or died, following surgery.

It never bothered me. I'd like to be good, but if I wasn't good, it never bothered me to not have recognition, but it would bother me if somehow, that didn't happen. Heart surgery seemed to be the obvious solution. Came out to Stanford for my residency. Worked with a gentleman named Dr. Norman Shumway, one of the pioneers and one of the first heart transplants in the United States. What was interesting to me is that the people I saw again, in the cardiovascular room were not necessarily, the best people getting the referrals. It was the people who played the politics, belonged to the right country clubs, invited the people along. It was somewhat a, I'll say, disillusioning experience.

Actually I, at that point, transferred my residency across to plastic and reconstructive surgery. I did that because I became very interested in children with clef lip and cleft palate. Did quite a number of programs in South America, and that actually became the area that I pursued. Then I was ready, actually to spend a year, traveling around South America, doing surgery on children with birth defects. Went to plastic surgery at Kaiser Permanente, which at that time I had never heard of Kaiser Permanente. Actually died in a tragic plane crash. They called me and said, "Would you take a job for six months, working here?" I thought, "Well, what can you lose for six months?" As they say, that's the really circuitous kind of path that I went through. I think a lot of people going through medicine aren't quite sure where they're going to be, and end up in a really good place.

Jay Ackerman:
Then I guess, at some point you must have gotten a little comfortable with the politics, to find yourself at the helm of such a large organization.

Dr. Pearl:
Again, it was a serendipitous kind of way. I'd been there about a year. I got a phone call from one of the individuals who had a big title, a position with a big title, who asked me whether I'd become the Chairman of the Operating Room Committee. I was certain, this was because he recognized my absolute brilliance and skill. Of course, the reality was that everyone else had said no. I was the last guy who joined on, and so I was foolish enough to say yes. I actually enjoyed problem-solving. I'm a very creative kind of person, in my surgery, in my leadership. The idea of coming up with a short-term plan, a mid-term plan and a long-term plan. "How can we bring in, so-called flying nurses? How could we make sure that we kept the ones we had, by offering retraining and expansion? How could we develop a school to train operating room nurses?" I was able to solve that problem. That was a very satisfying set of steps for me, and of course it brought a lot of attention from the so-called higher-ups.

Over the course of, I'll say, my first career... I've thought of myself as having, Jay, three careers. This first career was as a surgeon. I did a huge amount of surgery. I actually ran the residency at Stanford, while I was at Kaiser Permanente. I perfected quite a number of techniques. Really enjoyed that process. Enjoyed the teaching. At the same time, this administrative part was starting to go, but the first, I'll say, third of my career was focused on my clinical work. Learning to do administration. Then as you said, the opportunity came, to become the CEO. People thought I'd be good at that job. It's quite a complex, as you say, political process that I was able to go through. Fortunately, was selected and had the opportunity to do that as my second career. Do that for three, so-called six year terms, 18 years.

Then when the book came out, I thought I wanted a third career. I wanted to be able to change the American healthcare system. As a surgeon, you take care of 10,000, 20,000 people. As the CEO, I was responsible for 5 million people on the East and the West Coast. The American healthcare system with 300 million people is what really fascinates me. The opportunity now, to be on podcasts like yours and reach out to a broader audience. To be able to write my Forbes blog twice a month. To have the podcast. To publish the book Mistreated: Why We Think We're Getting Good Healthcare - We're Usually Wrong. To be able to change the American view of not only what's missing, but what's possible. That's been the work that I've done now, in my third career, that I'm about two years into.

Jay Ackerman:
Thank you for sharing the career journey. It's bucking into those three separate careers is fantastic. As you think about that third one, and trying to touch and impact 300 million. Can you share what you see as your top two or three objectives, as you look out over the next 12 to 18 months, as you try to influence and impact an audience that large?

Dr. Pearl:
When I wrote Mistreated, the book begins with a story of my father. My father, Jack Pearl was an amazing man, the son of two immigrant parents. He worked his way through college and through dental school. When World War II breaks out, and he could have stayed safe and behind American lines. Instead he volunteers for 101st Airborne parachutes on D-Day. He and his troop are captured by the Germans, who leads a daring escape through the forests at night and brings everyone back safely. You know, Tom Brokaw would call, the greatest generation.

He was a tireless man and one day he developed fatigue. Saw the physician. They diagnosed the Hemolytic anemia, took out his spleen. My dad lived half of the year in Florida and half of the year in New York. My brother happens to be Chairman of Anesthesia at Stanford, so he and I picked my dad's doctors. They were all excellent. The ones in New York were sure, the ones in Florida had given him the vaccine that one needs, after your spleen's taken out, against Pneumococcus because you're particularly susceptible. Of course, Florida thought that New York had given it to him. The specialist thought, primary care and primary care thought, specialty care. In the end, he never got it.

The consequence of that is that, one day he came out to visit my brother and me. Stayed at my brother's house in Palo Alto. My brother woke up for ICU rounds. There's my dad on the floor, unresponsive. Four days in the ICU, not waking up. Two weeks in the hospital. He doesn't die during that admission, although he ultimately died from complications, a couple of years later. Of course, the diagnosis, Pneumococcal septicemia. One of 200,000 medical errors, that year and every year.

My view and my question is, how come people are, I'll say, being mistreated? Dying unnecessarily, because it's not just a medical error, it's also couple hundred thousand people from omissions in prevention or complications from chronic disease that could have been avoided. How does that happen? In the book, I talk about a lot of psychological research and brain scanning studies looking at this phenomenon that, context shapes perception and changes behavior. We as physicians, we think it's going to be data, information, numbers. But, when you look at what actually drives that change, what you see is that it's the context that people are in.

When I look at the American Healthcare system, that context is totally broken. You have fragmentation, doctors scattered across the communities. Hospitals across the communities. People unconnected with each other. People actually seeing colleagues as competitors, not being on the same team. We pay people, in a way that is piecemeal. We call it fee-for-service. The more you do, the more you get paid. If things turn out badly, somebody gets paid twice.

I give a lot of speeches at keynotes, at conferences. I say, "How many of you would bring a contractor into your kitchen and say, 'You do whatever you want. I'll pay you time and materials?'" Not a single hand goes up. Do we think that doctors are just so much more ethical and moral than contractors? No. It's how context shapes their perception and changes the behavior. The technology we have is 50 years old. In the class I teach at Stanford Graduate School of Business, I ask the following question. "What's the number one way that physicians communicate information with each other?" When I tell them that the answer is, by the fax machine, they look at me and they say, "What's a fax machine?" That's American technology today. All the pieces are broken. It's a 19th century cottage industry. Almost half a million people dying prematurely.

What I see as the biggest opportunity is, how do we shift that? How do we move from fragmentation to integration? How do we bring primary care and specialty care together, working as one? How do we shift to, not just pay for value, but capitation? Because that aligns the incentives. How do we implement true modern technology? It's really criminal that, we don't have all the information on every patient at every point of contact. You can go with an ATM in South America, high up in the Andes mountains, and you'll be able to get money out of a machine for your bank account in the Unites States. Yet, you go across the street to a different doctor or a hospital, and you don't have that information.

How do we make sure we use data analytics? How do we use, I like to call it, video people like Telemedicine, to be able to make care more convenient? To bring in expertise, higher specialization? How do we do these things in the American healthcare system? That's what drives me, because I can see what's possible. I saw it in Kaiser Permanente. Across the United States today Jay, 55% of the patients with hypertension are well-controlled. We were at 92%. The difference is 40% higher incidence of stroke, or cardiovascular, blood lipids, blood pressure, or being able to manage all those parts that we know, lead to Coronary artery disease. We can save tens and hundreds of thousands of lives. Colon cancer. Half of the cases that happen, half the people who die, didn't have to die. Yet in the American healthcare system, they do.

The American people, at least till recently, have believed that our care is the best in the world. You look at the Commonwealth Fund, what do you see? The only thing we lead the world in, is cost. Everything else, we trail. We're last in life expectancy, last in childhood mortality, last in, almost in every measure in the industrialized country. That's what drives me, Jay. I know, I have people understand how broken it is. Recognize that there are opportunities, what I call, the four pillars; to integrate, decapitate, to use technology and to achieve leadership, and then help the nation move forward.

Jay Ackerman:
Wow, that's certainly an ambitious agenda, and one that... if you're successful, there will be 300 million people whose lives will be a lot better off. That's a perfect lead-in for the next question I was going to ask which is, as you look at the industry, what trends do you see, that are most beneficial to better connecting providers back to the health plans?

Dr. Pearl:
The first thing that I see is, a move away from fee-for-service, towards pay-for-value. I think we're seeing it more at the Medicare level, at the insurance level, and particularly in the Medicare Advantage. I'm hoping that the commercial health plans, with whom you do a lot of advising and work, will jump on the bandwagon. It's simply, from my perspective, not possible to give the best care in a fee-for-service-type environment.

I think the second part is the value of technology. What we have is opportunities, to provide care in ways that patients don't have to miss work. That they can get care from experts, even though the experts may be at a distance, with things like telemedicine. You know, one of the things that we were able to do, is to be able to link primary care physicians with specialists using a combination of telephone, video, digital. As an example, if you walked into a primary care physician's office with a particular rash, that the primary care physician felt that he or she needed a dermatologic assistance for, they would take a picture. Send it to a Dermatologist. Within six minutes on average, you would have your diagnosis and treatment plan. In the surrounding community, that could be six weeks or six months. That opportunity to use modern technology.

Again, I'm hopeful that the health plans with whom you work, will recognize that and find the way to make it happen. I believe the reason it hasn't, by the way, is not the technology. It's the fear that the payers would have, that'll be misused and abused excessively by the providers of care.

I think the final trend that I'm seeing, is an awareness of how, not just the patients are mistreated by the current system, but the providers of care. As you know, one out of every three physicians today, reports being depressed. What we know is that there's over 400 suicides a year. Half of physicians would not tell their children to go into medicine. I think that, that awareness of that issue is the first step. What we now have to do of course, is take second and third steps, to be able to identify all the problems that are there, and invest because what we know is that physicians who are "burned out, depressed," are going to make more mistakes and not deliver the same excellence in quality medical care.

Jay Ackerman:
What do you see as some of the biggest barriers or challenges to better embracing technology? To use your analogy about the ATM at the top of the mountain, to making sure that the data can flow from provider to provider, so that, that complete picture is understood in the member?

Dr. Pearl:
I would see this in three different buckets, if you want to think about it that way. The first one is the electronic health record. An electronic health record that is not comprehensive, it doesn't have all the information, isn't particularly valuable. Why is that? Because you're not able to figure out who has not had the care that they require. You don't have the up to date information. You don't even know the medications they're on. To accomplish that, I believe we're going to need to force the manufacturers to open what's called, the APIs, the Application Processing Interfaces.

If you think about something like your iPhone. There's half a million applications sitting on it, that third party developers have done, but they couldn't do it when Apple was refusing to open their APIs, many, many years ago. I'm convinced that if they open the APIs and developers can get in there, we'd have the tools that would both help doctors and patients. It could be put on to, not just a computer, but on to a tablet. It could become clinically-oriented, not simply as a billing tool that sits in place.

The second one to me is the fact that we have technology that we know, works. Video to me, is the greatest example. It's inexpensive, it's easy to use, it connects doctors and patients and nurses, wherever they are, any time of day. Obviously, you need the delivery system back behind it. You're not going to have a physician available 24/7, but you can have a healthcare system available. If it's in the middle of the night, and a mother is concerned about her child, you can connect that person with a video, as we did in the Mid-Atlantic. 70% of the time, we can solve the problem there and then, without having a complete disruption of their life. I think the insurers are going to have to find the ways to support those processes.

Artificial intelligence to me, is a major opportunity, particularly in the visual diagnostic areas. They're going to have to figure out how to incorporate that into the schemes that exist already. Some data out of Stanford has shown that it's 10-15% better than the best radiologists, at reading very difficult X-rays. We've seen the same thing in terms of eye scans and patients with diabetes.

The final area, and one of the areas of the greatest frustration to me. As I say, I'm going around, trying to change the American healthcare system, not for any kind of personal gain. It's what I'm passionate about and care about, but many manufacturers distribute information that, from my viewpoint or technology, that is a solution in search of a problem. A really great example to me, is the monitor that gives you continuous heart readings. Who wants continuous heart readings? Once you know someone's EKG is good on a couple of occasions, there's no need to have more information. The idea, that's going to be sent to the doctor's office and clog up their information technology system, is a solution in search of a purpose. I don't think that, that's what should happen.

Often when I talk about technology, I ask the audience, "How many of you have a Fitbit or its equivalent, sitting on their wrist?" Of course, maybe a quarter or a third, do. I tell them, "I'm a big runner, but I don't have a Fitbit. I carry my iPhone to know how far enough I went. Tell me if I'm wrong, it does two things. Number one, it tells you how well you slept last night." Then I ask the rest of the audience, "Do you not know how well you slept last night?" Then ask the first part, "If you didn't sleep well, what are you going to do?" It's again, it's a solution in search of a problem. Number two, it tells you how far you went. As I say, you can do that on your iPhone or carry a $5 pedometer. Why is it selling, not only the best of all devices to consumers in healthcare, but 10 times better than the next? The answer is that, it solves a problem.

The problem of course, is nothing medical. It's called, the December Dilemma. You have Christmas or Hanukkah coming. You want to give a present. It's got to be cool. They got to wear it all the time. It's got to cost between $150 and $200. That device solves that problem. For your listeners who may be a bit older, they might remember Inline skates. Inline skates are never coming out of the box again, after December 25th, but it fulfilled that purpose. That's what we need.

What's the technology we need? We need monitors that people can wear, that now will analyze the data and tell the individual that they're fine or not. With chronic diseases, you don't get it once in a while. You have it all the time. The management should require seeing a physician or a nurse or someone else who can change, or a pharmacist, change your management when your problem's out of line. You don't need to see someone just for a "checkup." We do that out of history. We do that because we don't know how else to manage it. That could happen. The manufacturers are afraid. They're afraid because if something goes wrong, they're going to get sued, and they have big, deep pockets. We need to change that. Patients are dying as a consequence of our failure to use modern technology. It could happen. It's not that hard to do. Just going to require someone to have the courage to do it.

Jay Ackerman:
You know Dr. Pearl, you had a lot to say there. I'd like to try to unpack a little bit of that. First, going back to the comment you made about fax machines. Yeah, I think if I asked my nine year old to go upstairs and grab something off the fax machine, he wouldn't know where to walk to, in the house. How long you think, until every fax machine has disappeared from a provider's office?

Dr. Pearl:
I fear that it's going to be longer than makes any sense, because it's not going to disappear until we have a better way to transfer that information. Today, we don't have that interconnectivity of our devices. As I say, it's going to be very hard to do because the manufacturers understand that, as soon as data can flow easily amongst providers of care, they've lost the monopolist, the control over the people who've purchased it. These are multi-billion dollar companies. The way they are able to maintain their pricing is the fact that, once they have you, you can't get out of it because you'd have to reload 3 years of data, 5 years of data, 10 years of data. The amount of work that it would take, is just not worth it for the added price. I think it's going to take an action at the Congressional level, to force it to happen. It's been talked about, but I'm not optimistic that it's going to happen very soon.

Jay Ackerman:
Any thoughts on how you can be a voice of change and driving Congress to act at that level?

Dr. Pearl:
There are so many things that I would like to get Congress to do. I'd have to say that I'm very pessimistic. They do listen, by the way. Quite a number of them subscribe to my monthly musings, which listeners can get by going to my website, robertpearlmd.com. They read it. I know that because I can tell that some of the subscribers, they're new subscribers. I can see that they're there, but I fear that the imperative to act in ways that are going to force people to provide better care to patients. Not to simply fund care, because that the government does moderately well through Medicare as an example, but to actually drive that change. To force companies to open up their APIs. Even more significantly, to get the drug companies to stop overcharging patients.

What's happening right now with insulin, in patients with diabetes is just criminal. We have people limiting the amount of insulin, the lifesaving medication because they simply can't afford it. It's not they can't afford it because it costs so much to produce. It's being sold in other countries for a fraction of the cost. It's just that once again, once you control the market, you can raise the price. The only people who can effectively stop that, from my viewpoint is, Congress. The problem, of course is, you have political contributions. You have people who have constituencies. Again, I'm concerned that change is not going to derive out of our elected officials.

Jay Ackerman:
Continuing on. What technology do you think, will have the biggest impact on the payer-provider relationship over the next three to five years? Any thoughts on that?

Dr. Pearl:
One piece that will have a big impact is going to be telemedicine, because it really offers this potential to raise quality at a far lower cost. Have great convenience. It is a cheap technology. I think the idea of how to make it available without having it being abused by... by abused I mean, it is going to be utilized, when it's not going to have much value. I think that, that's what they're struggling with, but I think they will solve it. I think in that way, we will end up with a much better patient experience and a better insurer experience. In the shortest of runs to me, still, that's the technology that will be the biggest... I think this is the second-level, which is going to be the convenience for the patient. The ability to make an appointment online. The ability to retrieve your data. That's readily available now, but we still tolerate it at the insurance-level. Providers who are not able to do that.

One of the things that I sometimes say is that, if the major purchasers of care said, "Today is April 10th, 2019. April 10th, 2024, we're not going to purchase insurance from anyone who does not have an integrated system with a comprehensive electronic health record and modern technology." I'll guarantee you, the providers, the hospital, the doctors would figure out how to make that happen. I think the will to make that occur is not in place.

If I had a message for the insurers who might be listening in. Be very careful because when I look at the Apple, Berkshire-Hathaway, JPMorgan Chase process, they're not going to be looking for the best insurance company. They're going to believe that they're going to do better with no insurance company. They're going to believe that they can do that because they're going to put in place, these changes. They're not going to contract with every doctor and every hospital. They are going to put in place the technology. I think they have about five years of learning, before they start to move it forward. Anyone who wants to believe that Jeff Bezos and Atul Gawande are doing this only for the 1 million people employed by those organizations, and are doing it as a not-for-profit, probably believes that all Amazon does is sell books.

Jay Ackerman:
Yeah. Yeah, I'm sure their ambition goes well beyond their own members and driving down their own cost curve. You know, your comment on advice for insurers. Why don't we take that a little bit deeper? What advice might you have for healthcare executives in navigating our industry at this point in time, with the rapid change that's unfolding?

Dr. Pearl:
My advice is, to find an excellent physician partner. I think many of the people that I teach in the business school and in the medical school at Stanford, so I see people on both sides of Palm Drive. I think they do best when they work together, because the skills are often very complimentary. Now, there's some physicians who are in those leadership roles. I understand that. Overall, I think that, what the administrators of the health plans do well, is to understand the marketing, the sales. To understand how you evaluate value, to do the kind of data analytics. There's a lot of tremendous skills that they bring, but I don't believe you can get... and I’ll keep saying physicians, although, nurses and pharmacists and others are very, very important. You can't get the physicians to change, if you're not a physician, at least not easily. The reason is fear.

Your doctors are very dedicated. The idea of making a mistake, harming a patient, is so ingrained as a taboo in their training and upbringing, that to get them to do things differently, to take care of a patient using video, rather than in person, to trust the monitor, to tell them when the patient should come in. It could be tomorrow, it could be six months from now. To make these changes in practice, to use a different medication, to use a generic, rather than some other medication they learned to use, many years in the past. That is difficult to accomplish. To overcome the psychology or that fear. That's where I think, physicians are able to do it well, and to redesign the systems.

My personal belief, Jay, is that we know what to do. We just have trouble figuring out how to make it happen. We know the advantages of bringing physicians together, and physicians and hospitals together. We know the advantage of capitating people in a way, that they have an incentive, to avoid disease in the first place, to avoid medical error. We know what technology is capable of doing. Yet, across the United States today, fewer than 5% of physicians offer video visits as an example. We know what to do, we just haven't done it. My advice to them is, find yourself a great partner and together, make these changes happen sooner rather than later.

Jay Ackerman:
To build on that one, a little bit. How do you think CMS could enter that equation and help those two parties move along at a faster pace?

Dr. Pearl:
As you know, CMS is not going to be very directly involved, certainly in the 155 million people insured in the commercial system. What CMS is able to do is, obviously work with those people who are going to be providing care in the Medicare space, particularly the health plans, the Medicare Advantage arena. I think even more importantly, to be able to create some models. What I mean by that is the following; number one, the model of capitation, particularly capitation that pays based upon outcomes, and their willingness to take risk. Not based upon volume. That's called Medicare Advantage.

I think it can figure out a better pricing or reference pricing. I think we could, actually the commercial insurers could demand, through the government, with the government, that every hospital provide the cost of care: now, this was recently passed, but do it in a way that it's bundled up, so people can understand. If I come to your hospital and I need a hip replacement, what's the charge going to be? If I come to your hospital to deliver a baby, what's the charge going to be? Rather than giving all the pieces and all the codes, to actually make it understandable to the patient.

One of the challenges that we've seen lately, relative to the drug industry is that they figured out, how they can basically, harm insurers by bringing the patient along by forgiving the copayments or giving coupons, or all the various other approaches that sit in place. So, now that patient becomes forced to demand medication, rather than trying to analyze, "Does it do any good? Is it any better?" What we see is a lot of, I'll use the word, waste. People don't like waste, because waste implies laziness. No, it's just that we don't have the transparency, we don't have the information, we don't have the economic system to support it. I think that CMS, the Federal Government, can drive some of those changes.

What I was going to say before, because I thought about the question you're posing. In the context of some of the work that I'm doing is, people assume that disruption's not going to happen. Change isn't going to happen. It'll stay this way. We don't have to make adjustments. I think the history of disruption is that, it happens slowly and then rapidly. Kodak knew about filmless cameras for a long time, and then within a few years they were out of business. Borders understood about Amazon for a long time, and then very quickly they went out of business. That's what we're going to see in healthcare.

The last guest on my podcast was a gentleman named Dr. Devi Shetty. I don't know if you know Devi, but he's a heart surgeon in India. He does surgery for $1,800 a case, with results that are better than 90% of hospitals in the United States because his volumes are so good and his physicians are so specialized. When I asked Devi on my show. I said "Devi, what do you really do?" He told me something fascinating, Jay. He said, "I set the price for a human life." I said, "Devi, what do you mean, you set the price for a human life?" He said, and by the way, he was Mother Teresa's physician, so he's a pretty famous gentleman. He said, "I come in, in the morning. There's 30 mothers and 30 babies. They all need surgery. I do a lot of free surgery. I just can't do it all because 90% of people in India don't have any insurance. When I tell the family it's going to cost $1,800, the ones who can borrow the money, the child lives. The other ones go home, to die." He said, "If I get the cost down to $1,500 or $1,200, now I will have elevated the price of a human life because people will have lived."

I tell this story to health plans and to hospitals and to doctors because, not a whole lot of Americans are going to go to India for surgery. If they have family there, they might. Devi just opened a hospital in the Grand Cayman Islands. A one-hour plane flight from Miami, seven-mile white sand beach. Tourist culture, English speaking, totally safe. He's building a 2,000-bed hospital, on an island of 50,000 people. He needs about 20 of those beds for the people living there. The rest are for the people in surrounding countries that are particularly, sitting in the United States. Disruption is coming. The insurance executives need to know that. The hospital executives need to know that. The physicians need to know that. If we don't change now, Jay, trouble is ahead.

Jay Ackerman:
That's a perfect story that I think, leads into my next and final question. What recommendation would you have for the public? For the individuals out there, regarding their empowerment and ownership of their own medical care?

Dr. Pearl:
I think the biggest thing is, you have to take charge. It starts with figuring out who you're going to purchase insurance from. You need to understand what it is that you're going to get. Right now, we focus so much simply on the courage. Is the care going to be integrated? Do the physicians share the common electronic health record? What technology beyond that, is going to be offered to you? How are they paid? We do a very, I'll say, poor job. We have broad networks without a whole lot of information. We're not able to guide people. I'm going to predict that for the most part, people know more about the individuals who tune their car, than they know necessarily about the people who provide a lot of the healthcare to them.

One of the things I often start my class at Stanford, is asking people, "Do you get great healthcare?" I remember, everyone at the Stanford Graduate School of Business, they've been in finance or banking for five years. They can look at information on companies. Evaluate them in great detail. They pride themselves on their ability to judge value, and they all raised their hand. Of course, they do. My next question was a very simple one, "How do you know? How many procedures did the doctor do last year? What kind of outcomes do they get? What kind of error rate do they have?" Of course, none of that information is available.

That opportunity for us, from my viewpoint, to advance healthcare to the 21st century, is sitting right there. My advice to the consumer is, you've got to start demanding it. Don't tolerate what you have today. You'd never bank some place, if you couldn't have an ATM. So why are you willing to use a delivery system that you can't obtain information from? You'd never fly in an airline, if you had to miss work and drive there to pick up a printed ticket? Why do we tolerate that kind of technology left over from 50 years ago?

I think the consumer is going to have to drive a lot of this process. I understand very well, the need to look at bills and figure things out and make things happen. It's so complex and difficult. I just don't think they're going to be able to do it. The time has come for the consumer to demand for the delivery system. The kind of bundled, clear information that they want every place else in their life. Healthcare is just one of the institutions left at the end.

Jay Ackerman:
Yeah, so I think that's great advice to the members. Hey, so we're going to bring it to a close for my rapid-fire round. Before we do that, I just want to first say, thanks again Dr. Pearl, for participating. You've been an amazing guest. For those of you who are listening, just a reminder that you can connect with Dr. Pearl on Twitter, @RobertPearlMD. You can find Dr. Pearl on LinkedIn, and through his website at robertpearlmd.com. Please keep that in mind. Dr. Pearl, rapid-fire round, five quick questions, top of mind for you. What keeps you up at night?

Dr. Pearl:
I think the first thing is, I sleep very well at night. I understand the metaphor. I think if anything keeps me up at night, it's the fact that a half million people are going to die this year and next year and the year after, unless something is done, to be able to shift and change our American healthcare system. We're going to have another 200,000 medical errors this year. We're going to have people die unnecessarily for lack of prevention. Lack of treatment for a chronic disease and suffering complications as a result. Again, I'd encourage your listeners to actually read Mistreated: Why We Think We're Getting Good Healthcare When We're Usually Wrong, with all the profits to Doctors Without Borders, that really want to understand a lot of the things we've talked about today.

What keeps me up at night is, how do I get that information out to all 300 million Americans, as quickly as possible?

Jay Ackerman:
I imagine when you're restless, you've got a number of books that you might pull from. What book is at the top of your list right now, beyond Mistreated, and why are you reading it?

Dr. Pearl:
I'd say, I have a stack of books. That's the better way to do it, depending upon my particular mood at that evening. If I want to read something just for fun, I tend to read something like a Grisham novel. I like those kinds, or a Connelly novel. I like those kinds of interesting, legal twists and turns. When I want to be inspired or learn something, I'll often read a piece or a book by Atul Gawande. I just re-read his book; Complications, or his first, that I think was excellent. Then when I want to really learn and go to sleep at the same time, I read Thinking, Fast and Slow, by Nobel Prize winner Daniel Kahneman, because I think that behavioral economics is a very unpursued opportunity for us, to change how patients receive care and how doctors provide it.

Jay Ackerman:
Thank you. All good suggestions. If you could move into question three. If you could redo one decision in your life, what would it be and what are your thoughts around it?

Dr. Pearl:
My life is a bigger equation, but in healthcare or in my role when I was CEO. I think the one thing that I regret was that, around the middle of the time, we had a particular program that we provided at one of our hospitals that was attacked by someone in the media. With a real vengeance, they twisted the information. They got it all wrong. Patients were actually doing really well, but they twisted it to make it look like they weren't. There was a lot of outside forces around it. The media folks and the legal folks convinced me to give in and to close it down, in order to stop the external pressure. I think it was a mistake. I think it's important that everyone have the courage to stand up to the bullies that are out there. I didn't think I did as good a job. In retrospect, I wish I had done it better.

Jay Ackerman:
Thanks for sharing that personal story. We are going to go to something a little lighter. What's your favorite app on your mobile device?

Dr. Pearl:
I have a lot of apps on my mobile device, around information. That's where I get most of it, each day. I like the New York Times app. I like ESPN, for the sports information. I have probably, five or six different news feeds into my phone that I start each day, looking at, and figuring out what's going on in the world.

Jay Ackerman:
Last one. How do you invest in yourself?

Dr. Pearl:
I invest in two ways. I would really encourage your listeners to think about how they invest as well, in the same parallel kinds of ways. The first one is, how do I exercise? I'm a big believer that exercise is crucial. We introduced exercise as a vital sign, when I was CEO. I do that by running. I ran six miles today. I run 30 to 40 miles every week. In the winter, I like to ski. Whatever it is, get up and get moving. I actually, often put my AirPods on and listen to podcasts, so you can get information at the same time. That's how I do it, physically.

Then as I said, I'm a very creative person. I enjoy problem-solving. Right now, what I really enjoy doing is, the process of writing and learning and teaching, and finding new ways to stimulate, both my mind and help others. I've begun writing my next book. A book that's really going to be, not just on the structure of medicine and how it's broken, but the culture of medicine, and the impact that it's having on the people, both the physicians and the patients.

Jay Ackerman:
That's great, Dr. Pearl. Look, you've been a wonderful guest. I've enjoyed learning about your career journey, your thoughts on healthcare, and what you think can happen between payers, providers and how we can move healthcare truly, into the next century. Thanks for your openness. This will bring our Value-Based Healthcare Podcast to a close. Thanks, Dr. Pearl.

Dr. Pearl:
Thank you, Jay. It's been a pleasure. Good luck on all of your efforts, to be able to improve the American healthcare system.

Jay Ackerman:
I appreciate it. You know, one of the things that we hold near and dear is, a value in our company is, when we're looking to bring on new people is, do they have a passion for change in the American healthcare system? We hope we'll do our small part, to continue to improve it. For those listening, please follow Reveleer on LinkedIn. You may also follow me on Twitter, @AckermanJay. Over and out.