JULY 9, 2018
Dr. Atul
Gawande will step out of health care’s limelight on Monday to put himself under
its microscope.
Taking the helm of the new health venture
funded by Amazon, JPMorgan Chase, and Berkshire Hathaway is the riskiest move
of his career — one that will subject his acclaimed New Yorker narratives to a
real-world stress test whose outcome is far from certain.
In the
balance will hang not just his reputation as a physician and writer, but
perhaps the highest-profile effort to date to leverage the private sector to
fix America’s fragmented and dysfunctional health care system. Gawande has made
a name for himself by proposing novel solutions to the system’s
many shortcomings — from surgical checklists to rooting out unnecessary care —
and testing them in specific hospitals or markets around the world.
“All the eyes of American health care will be
on this new initiative,” said Andrew Dreyfus, chief executive of Blue Cross
Blue Shield of Massachusetts and an acquaintance of Gawande’s. “Atul
understands this is high stakes, and I think that’s why he took the job.”
After
interviews with leaders across the world of health care, STAT has identified
five challenges Gawande will take on in his new role. Each one carries
substantial risks and complications that range from the political, to the
personal, to the professional and ethical:
Gawande’s
biggest test will be to make changes that will simultaneously lower costs while
improving the quality of care for 1.2 million employees who range from
investment bankers, to short-order cooks, to Amazon pickers in fulfillment
centers across the U.S.
The
combined workforce is a microcosm of America, which is why it can serve as a
powerful example for the rest of the country and why it will be so difficult to
develop effective solutions.
To
succeed, Gawande will need to make clear who his real boss is — the employees
or the business leaders who have an inherent interest in reducing their runaway
health care expenses. Gawande has emphasized that the new venture will be a
nonprofit, and therefore somewhat insulated from corporate financial pressures.
But health care business specialists said he will need to set the tone early
among patients who will be skeptical of the new venture’s motives.
“It’s a
sensitive political area: Are we here to just cut costs? Will we lose the trust
of those under our care if that’s a stated mandate?” asked Zen Chu, faculty
director of Health Care Ventures at the Massachusetts Institute of Technology’s
Sloan School of Management. “Setting it up as a nonprofit helps, but there will
still be trust issues.”
Gawande
will need to muster his considerable talents as a communicator to explain the
rationale behind his changes — whether it’s sending employees to a particular
provider to get care, or more carefully scrutinizing when they get certain
tests and procedures.
It is
impossible to save money without getting lower prices for medical services.
Americans pay the highest health care prices in the world, which is a primary
driver of the nation’s sky-high health care tab, according to a recent study by
researchers at Harvard University and the London School of Economics.
But
several industry specialists said that Amazon and its partners, though large
and influential, lack the concentration of employees in specific geographic
regions to force hospitals to cut their prices.
“The
quickest way to get a bang for your buck in cost control in health care is for
purchasers of care to negotiate better prices, and that’s what limits them in local
markets — they don’t have enough purchasing power,” said Dr. David Blumenthal,
president of the Commonwealth Fund, a private foundation that conducts health
care research. “If you can’t negotiate better prices, the alternative is to
send your consumers to places that charge lower prices.”
In some
cases, that might mean directing employees to steer clear of large academic
medical centers that dominate local health care markets and charge the most for
their care. Gawande himself is a surgeon at Brigham and Women’s Hospital, a
prominent Harvard-affiliated hospital in Boston, so his effort in this new
venture may run counter to the business interests of his own hospital.
Another
way to counter hospitals’ pricing power is to convince other large employers to
join the new venture, which may be a relatively easy to do given the prominence
and promise of the effort.
“It
wouldn’t surprise me if lots of other self-insured employers piled into
whatever Atul is running,” said Chu. “It’s structurally a nonprofit and it
improves with scale, so very quickly you could have 50 million covered lives,
way beyond the 1 million employees the founding companies charged him with.”
Amazon
has built its business on simplifying supply chains and cutting out industry
gatekeepers who either add unnecessary costs or undermine the customer
experience. Think books. Think home goods. Think groceries.
Gawande
must accomplish the same feat in health care, where it is much harder and more
complicated to do so. The market is filled with entrenched incumbents who
control access to prescription drugs, medical services, and even the customers
themselves.
But
Amazon’s recent acquisition of the mail-order
pharmacy PillPack points to a way forward — and not just in pharmacy sector.
PillPack successfully battled with pharmacy benefit managers, which operate
their own mail-order pharmacies, to get access to networks that include
hundreds of millions of U.S. customers.
Chu, who
was the first investor in the company, said it accomplished that by using
technology to create a better service. PillPack uses software and robots to deliver
medicines in presorted packets to patients across the country that take
multiple medicines. It provides them with instructions on taking the
medications and avoiding adverse interactions.
When
Express Scripts, one of the nation’s largest pharmacy benefit managers, sought
to block PillPack from its network, the company got its customers to protest the move,
putting pressure on Express Scripts to reverse course. It did so in 2016.
“From the
beginning they knew they were competing on customer satisfaction,” Chu said of
PillPack’s founders, who added that Amazon’s acquisition of the company will
spur a transformation of the industry. “My prediction is this is the beginning
of a sea change, as Amazon will be able to serve on the front lines of consumer
health care.”
Amazon
will also likely become the pharmacy supplier to the 1.2 million employees
covered by Gawande’s venture, which could help improve care and lead other
employers to sign up.
A crucial
part of Gawande’s efforts will be addressing the crushing burden of chronic
disease. These preventable illnesses, such as diabetes and heart disease, dramatically
magnify costs: Studies have established that 5 percent of U.S. patients account
for nearly 50 percent of spending in
the U.S.
“Most of
those 5 percent have multiple chronic illnesses that tend to not be
well-managed within our fragmented health care system,” said Dreyfus, the Blue
Cross chief executive. He added that one of Gawande’s first efforts will likely
be trying to understand the extent of the disease burden among the 1.2 million
employees.
The new
venture could help improve their care and cut costs by standardizing treatment
regimens and directing employees to providers with proven track records. Given
the expertise of Amazon, JPMorgan and Berkshire Hathaway in analyzing data and
assessing risks, Gawande will be able to use machine learning software and
other technologies to better predict the onset of disease and take preventive
measures.
That’s
where Blumenthal sees the greatest potential for Gawande and the new health
venture — using the power of technology to help inform patients and deliver
care at the time when it can make the most difference.
“The one
major advantage that this combination has is Amazon and its IT capabilities and
the network of consumers that Alexa touches,” he said, adding that the PillPack
acqusition further enhances its ability to leverage technology.
“I would
extend that well beyond the pharmaceutical market to begin to try to influence
the decisions that consumers make with their clinicians about health care in a
very personal way,” Blumenthal said. “That doesn’t mean changing the way
providers behave so much as it means changing the way consumers behave, making
them smarter purchasers.”
Gawande
holds many jobs — surgeon, writer, teacher, entrepreneur — and intends to
retain them while leading the new venture. But it may be difficult to keep the
roles separate, particularly as it relates to his most public job as a staff
writer for the New Yorker.
The power
of his writing is what put him on the radar of the executives
who formed the new health venture. In 2010, Warren Buffett publicly praised “The Cost Conundrum,”
Gawande’s New Yorker piece, which examined why health care was so much more
expensive in some parts of the U.S. than others, despite little difference in
the quality of care or the sickness of people getting it.
But
writing on matters related to his work for the health care nonprofit could pose
conflicts, potentially by disclosing information or strategies the new venture
would want to keep quiet — something Amazon in particular insists upon in its
business dealings. He might also have to tiptoe around certain topics to avoid
infusing bias.
“I see a
lot that intersects pretty directly with the work he’ll be doing as part of his
new venture,” said Dan Kennedy, an associate professor of journalism at
Northeastern University. In addition to health care costs, Kennedy noted that
Gawande has written about President Trump’s attempts to do away with the ACA,
unnecessary medical procedures, and other controversial subjects.
“Given
his journalistic focus on policy matters, it strikes me that it’s going to be
difficult for him to avoid writing about issues that he’s not involved in,” he
said.
More
broadly, Gawande will have to learn to manage the new venture, and his other
interests, in a fish bowl, as his every move and misstep will be the subject of
intense media coverage and scrutiny. But keeping one foot in his existing
endeavors also provides a cushion if the new venture doesn’t produce the
results many are hoping for.
“I do
think this is brave,” Blumenthal said of Gawande’s new job. “On the other hand,
he starts from a foundation of enormous prestige and influence and he’s not
giving up the career that has brought him to prominence. So if it doesn’t work,
he can return to being the extraordinary thinker and writer and innovator he’s
always been.”
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