Our health care system may be failing, but it isn’t broken [PODCAST]

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“The problem with health care isn’t ‘fixing’ the system. The problem is continuing to ensure that profits can be made and millions can be employed while better health care outcomes and experiences are achieved.

We won’t find the solution to that problem by embracing the solutions offered by either the right or the left. We need to leave the past behind and start again, building a new health care system that better meets our needs. We have to build from the ground up, starting with a new foundation. I can’t wish away the political realities that stand in the way of such fundamental reform. But given all that’s at stake, I’m unwilling to accept anything less than this goal. Hopefully, you agree.”

Jeb Dunkelberger is a health care executive and author of Rich & Dying: An Insider Calls Bullsh*t on America’s Healthcare Economy.

He shares his story and discusses his KevinMD article, “Our health care system may be failing, but it isn’t broken.”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show, we have Jeb Dunkelberger. He is CEO of Sutter Health Aetna, and he wrote the book Rich and Dying: An Insider Calls BS on America’s Healthcare Economy. There’s an excerpt from that book on KevinMD titled “Our health care system may be failing, but it isn’t broken.” Jeb, welcome to the show.

Jeb Dunkelberger: Hey, thank you so much for having me.

Kevin Pho: So we’ll get into your book and excerpt in a little bit, but first off, can you share your story and journey to where you are today?

Jeb Dunkelberger: Yeah. Currently, I am the CEO of a regional health plan called Sutter Health Aetna, which is the combination of both Sutter Health, obviously, and Aetna, which is a CVS company. Prior to that, I did a few startups in Silicon Valley, in renal care as well as a robotics company. Before that, I worked in the payer space. I was in the Blues family at Highmark, and then I also worked at McKesson on the provider side. I actually started my career in advisory at Ernst & Young as a health economist.

Kevin Pho: So as a CEO of a health plan, tell me some of the challenges that you’re facing today.

Jeb Dunkelberger: Well, obviously everyone’s going to kind of work towards COVID. I think one of the most interesting statistics right now is that if I were to break down COVID cost, hospitalizations are about $6 PMPM for us right now, but testing is about $7 PMPM for us right now. So it’s a very unique situation that we’re in.

If I were to step away from COVID and look at some of the other areas that we’re focused on, there is this kind of blossoming, loose constellation of point solutions that have been coming out, and we’re trying to make sense of all that and ensure that we’re not just ushering in and trading our problems by bringing in a bunch of point solutions that further disintermediate care. So those are probably two of the biggest things that we’re facing right now within our day-to-day work.

Kevin Pho: And in the next six to 12 months, from your perspective, what would you say are some of the future trends of the health care industry?

Jeb Dunkelberger: In the next six to 12 months, well, I think that provider networks from a payer perspective are going to look a bit different. Obviously, virtual care has been ushered in during this pandemic, but we’re actually seeing now that the network is going to include both virtual providers as well as more like digital therapeutics. I think that’s a very interesting space that you’re going to see a big push in over the next six to 12 months.

Another area is hospital price transparency and transparency in coverage. Obviously, those things were, hospital price transparency was launched this year in January, and transparency in coverage is coming out January of next year. When I look at both of those, again, it’s kind of in the theme of consumerism. As many people state, consumerism today only exists within about 5 to 10 percent of health care. Most of health care is not shoppable.

But I would predict that over the next six to 12 months, we’re going to see the federal government take a pretty strong stance, and that’s really going to be our beacon, or our line of sight, into where things are heading over the next year or two years. That can open up a whole number of new issues in terms of transparency if employers and insurance brokers get their hands on that data and know how to use it. So again, I’m looking forward to that, because that’s actually where I believe the market needs to begin to have.

Kevin Pho: For those who aren’t familiar with the status of price transparency, tell me what the situation is right now, and tell me what you anticipate the situation to be 12 months from now from a consumer standpoint.

Jeb Dunkelberger: Yeah. So right now, the current situation is that there is a federal mandate for all hospitals to post 300 shoppable services on their website. It’s supposed to be machine-readable as well as consumer-friendly. The current state of the state is that really less than probably 15 percent of hospitals are fully compliant at this point. The current penalty right now is about $300 a day, if I remember correctly. Obviously, that’s a de minimis amount in terms of total revenue, and so the Biden administration has come out and said, “Actually, we’re going to increase that penalty to a pretty high number,” to actually make this felt at the most senior levels of the organizations that they’re trying to go after.

From my perspective, what we’re going to see is, although there’s a lot of contention around this topic, hospitals should not be scared of putting out the prices that they have negotiated with insurance carriers. The issue, though, that I think is happening is the way that that is done today is a very complicated process. If you go to most hospital executives, they may not even know their cost structure. When you say, “How much is it going to cost for a colonoscopy?” it’s not always easy to say exactly what that price is, based upon the myriad of factors that go into figuring out a patient’s co-pay or coinsurance.

So where I think things are going is that it is going to become much easier and user-friendly. I think that you’re going to see the government continue to take a stance on this, and insurance carriers are going to have to reinvent themselves a bit in terms of defending their relevancy in this equation, right? Because they should be the steward of the dollar. They should be the watchdog of this. They should be working on behalf of the consumers and the employers that they represent.

So again, I believe that over the next 12 months or so, through the federal government taking a stance, you’re going to see a lot of industry incumbents decide which path they’re going to go down, and some may even blaze a new trail. There are going to be some pretty big incumbents that do that.

Kevin Pho: All right, let’s talk more about our health care system. You wrote a book on it titled Rich and Dying: An Insider Calls BS on America’s Healthcare Economy. There’s an excerpt from your book on KevinMD titled “Our health care system may be failing, but it isn’t broken.” Now, for those who didn’t get a chance to read your excerpt or your book, can you just walk my audience through it and share the story of why you decided to write it?

Jeb Dunkelberger: Yeah. At the highest level, the book is broken into three pieces. It kind of walks through where the industry is today and really demystifies the two ends of the spectrum that I find most people falling into, which is Medicare for All or a free market. I break down in the book basically why neither of those things are really the panacea or the answer, and why some of those things can’t even exist today. The second part really talks about insurance companies and all the different programs that have been implemented in terms of self-reform, right, getting this health care system back on track. And then the final piece really talks about the future and what I believe is needed in order to correct the current state of affairs.

I think at the highest level, it’s just important to remember, and the reason why I took such a stance with Rich and Dying: An Insider Calls BS on America’s Healthcare Economy, is that one in seven people is employed by health care. Health care tends to be the largest employer in any state. It’s either an insurance company, a health system, or Walmart. So if you think that reform is going to come at the local level through politicians, I think that you’d be gravely mistaken.

So from my perspective, writing this book allowed me to really explain why I believe pieces, although they look like they are fixing the broader problem, we’ve maybe made a strip of reinventing health care: health care 2.0, OK, 3.0. And we’re not really taking the actual steps needed to truly transform the system. So after being in this for over a decade, working in provider, payer, technology, and advisory, I felt like I had enough perspective to share at least my point of view in terms of where things need to go. And again, I’ve got, God willing, 20 years left in this space, so hopefully I can see some of these ideas through.

Kevin Pho: So in your excerpt in particular, you take the viewpoint that our health care system actually is quite positive. You said that you want to start with our health care system as perfect, so from a position of strength. That perspective I’m interested in exploring more, because whenever I talk about health care policy on this show, it’s always what’s wrong with our health care system. So you start with what’s right with our health care system and kind of work from there. So let’s start there. What’s right with our health care system?

Jeb Dunkelberger: Well, I think at the highest level, what’s right with our health care system is that we have an ample supply of access, right? We are lucky compared to many other countries. We have more providers per capita than just about anywhere else. On top of that, I think from an acute care perspective, we also are very fortunate.

If you were to take it even one step further, the fact that our health care sector employs one in seven people, that to me is a success. It is a driver of our overall economy, and that is just a real point that everyone just has to kind of swallow. We can’t change that, right? The master’s programs, the doctorate programs, all the different specialties within health care, they employ a lot of people. So it’s always funny when I hear people say, “Oh, well, health care spend, 30 to 50 percent of it is fraud, waste, and abuse.” Well, then you also have to say that 30 to 50 percent of the spend is employing one in seven Americans. There are 20 million of them that you would have to think about: Where would you put them if you got rid of that fraud, waste, and abuse? So at least in my mind, that is where the system has its strengths.

And then I also think that the system responds very well to the current incentives that are put in it. So in terms of the economic drivers of that model, the program is working. I mean, if you have a fee-for-service model where you only make money when you see a patient and you treat them, then that’s what you’re going to get. So if we really want to see this change to more of a population health, preventative type of model, you have to change the incentives that lie within that. Furthermore, you have to change the compensation structures that sit within the provider world. And we also have to look at all the other industry incumbents, including the payer, including diagnostics, including pharmaceuticals and bio-life sciences, and say, “What is your relevancy to adding value to this program? If we can’t prove it out, we can’t pay you big dollars.”

Kevin Pho: Now, in your view, what would you say are the top two or three areas that need the most reform in our health care system?

Jeb Dunkelberger: Well, I think if I were to go after the top two or three in terms of reform, first and foremost, I think that we need to get the incentives correct. We have seen in a lot of microcosms how sharing risk and sharing accountability with providers has an overall net positive impact, not just on quality of care but also on the total cost of care. So I think that’s number one, because we’ve got to start with the incentives. We’ve got to get people paid for doing the right thing.

I also think that it’s really important that we start creating a shoppable experience for consumers, right? Right now, there’s just too much murkiness. As I said to you when we were first getting on the phone here and online, my fiancée is a trauma surgeon at USC LA County, and I look at that and I say there’s a very, very small percentage of care that is not shoppable. That’s that acute, traumatic incident. But we have to do a better job making it so people can actually navigate the system.

That probably takes me into my third area, which is actually being able to move around the system. There’s no price transparency, there’s inelastic demand, and there’s no easy entry into or exit from the market. So we need to make this more consumer-friendly. So those are probably the three areas I’d focus on without getting too deep into the political side of the house.

Kevin Pho: Now, I think one of the criticisms, of course, of our health care system, you mentioned, is the increasing costs. And there are studies, according to, for instance, the Commonwealth Fund, saying that the quality that we get for the money we pay isn’t comparable to, say, some European countries, or countries that use a more socialized or nationalized system. So what’s a response to people who bring those statistics up?

Jeb Dunkelberger: Well, look, I look at those studies as well, and I trained and worked in England for a few years. What I would tell you is this: We spend $115,000 on health care every second. So by the time I finish the sentence, we’ve probably racked up a million bucks. The size of our system is, what, the size of two Russias in terms of the GDP. So when you think about how much money is being spent here, and you think about the outcomes that we’re getting, there’s definitely a disconnect.

I think there are some wonderful studies that have shown that other European countries spend twice as much on social services but half as much on health care compared to the United States. I completely agree with them. When you see somebody walking down the street and you say that person is healthy, is it because of the provider they go to, or is it because you look at all the other social determinants of health that you can kind of configure from walking, talking, and listening to somebody?

I think, again, the stats project that 90 percent of health care is determined by things that are outside of the clinical setting, and so we need to move into that space. But again, that ties back to aligning the incentives. If you go more towards the capitated payment model, where the provider is going to make money by doing preventative medicine and keeping those avoidable or impactable utilization trends down, we will see more providers move into the social determinants of health space.

That is such a buzz term right now, but I do believe that getting into housing and nutrition is really important. I find myself constantly going back to my undergraduate degree in human nutrition, foods, and exercise, and I was always praying that this would somehow become relevant in the future, and I think that it surely is. So right now, in 2021, I see us taking a shift away from clinical interventions and moving much more upstream into the social factors.

Kevin Pho: Now, currently, the Biden administration is strengthening the Affordable Care Act, so there is a possibility of a public option. Is this the right path for our health care system?

Jeb Dunkelberger: Here’s what I’d say. You can look at the American Rescue Plan, and we increased access and eligibility for the ACA products to 400 percent of the FPL, the federal poverty level. You also look at the fact that we may drop the eligibility for Medicare to 60 years old. Do I think that’s the right thing philosophically? Yes, I do think that we should have universal care and access to care.

What I am worried about, though, is that right now, most hospital systems are running on 1 to 2, maybe 3 percent margins. They’re coming out of a pandemic, or they’re still in the pandemic, and they’re fighting for their life right now. Where they make their money and their margin is on commercial insurance, and so that is the employers. I’m not sitting here saying today that employers need to continue to foot the bill for the rest of the country, paying both a Medicare tax as well as paying two, three, four times the reimbursement rates for commercial insurance versus government-funded. But as you expand the government-funded lines of business and more people go on to that, you’re going to flirt with a math problem. So this is not political. It’s just a math problem: You’re going to tip the scale the wrong way, and hospitals will go upside down.

So we have to do two things simultaneously. One, optimize the cost structures of all of our care clinics, which can’t mean firing people. Again, this is a jobs program in some respects, and we have to think about that. And then two, we have to think about, as we increase access to care, if it’s government-funded, is that reimbursement enough to protect those businesses so that they can actually survive? Because right now, I think there’s enough analysis done that if you were to increase eligibility by the 400 percent and drop Medicare eligibility to 60, a lot of hospitals are going to go upside down.

So they’ll philosophically agree with it. I think mathematically, there’s still some work to do before we just go about making emotional decisions on who has access to care. We have to think about just the hard and true fact, which is there is a math problem, and we need to figure out how these hospitals survive.

Kevin Pho: We’re talking to Jeb Dunkelberger. He is the CEO of Sutter Health Aetna, and he’s the author of the book Rich and Dying: An Insider Calls BS on America’s Healthcare Economy. There’s an excerpt from that book on KevinMD, “Our health care system may be failing, but it isn’t broken.”

Jeb, I want you to speak to the Medicare for All proponents. You did mention a couple of obstacles to implementing a system like that in the United States, for instance, the number of people who already work with health care, who are going to be essentially looking for new jobs, and you talk about the disruption on hospitals, especially rural hospitals, that such a system would impact. What’s the scope of the change if something like a Medicare for All system were implemented in the United States?

Jeb Dunkelberger: I mean, the loose analysis that I did, actually probably two years ago, where we thought that there’d be well over a million jobs lost, up to three million jobs lost. Medicare for All, I don’t believe, is the answer. Do I think that the federal government should provide a safety net? Absolutely. I’m more in favor of something, if we’re going to go down that track and I had to kind of take the lesser of two evils, probably a Medicare Advantage for All, because I do believe that that still allows the private sector to play a role in innovation.

As I look at my local DMV, as I stand in a TSA line, or maybe even just look at how we responded to the pandemic from the federal perspective, I do not want the federal government playing that larger role in care delivery. So a Medicare Advantage line of business, I think, actually plays well. It allows the private side to really drive innovation forward and continue to monitor quality and cost, and then the federal government is left to really sit back and regulate that. I think that is probably an even path that gets enough of the innovation and private sector involved, but at the same time provides the access that we’re discussing.

Kevin Pho: Now, I’m a primary care internal medicine physician, and you did mention some trends that we may be looking for. So to go more specifically, for doctors like myself, what do we have to look forward to in the next three to five years?

Jeb Dunkelberger: I think that if there’s ever been a great time to be a primary care family doc, now is the time. But you’ve got to step up to the plate, because I also realize that 70 percent of providers today are employed, and so typically they are just following what the larger system is doing, or the employer is doing. But now is the time.

The average primary care provider controls about five cents out of every dollar that’s spent in health care, but they have the ability to influence well over 50 to 60 cents out of every dollar. They are really the conduit to us seeing utilization change and referral patterns change. So as more transparency comes out about who is high quality and low cost, it is really on that primary care doctor to go to the payer and say, “Hey, I want to take responsibility for that dollar. I want to take responsibility for more than just five cents.”

I think that now is the time to speak up. There are wonderful companies out there that have already kind of shown a path here, Iora, One Medical, Aledade, Oak Street, right? There’s a litany of them that you can look at, but the business models are not rocket science. And so as I’m looking out to even my friends that are family doctors, I’m constantly telling them that now is the time. Do not sit back and wait for someone to come and tell you how to do it, because by then, you’re just talking about another employment model. Take a step forward. Talk to your largest payers that are in the market. The commercial side is a wonderful area to continue to break into.

And as I see it, more and more of the money is being spent on a delegation of risk. So more providers are coming in saying, “We want to take a capitated payment, or a bundled payment, or some upside-downside shared savings,” is maybe what you hear. You can only cut the pie so many times. So if the risk gets all delegated, it may be too late for a primary care doctor to step up and say, “I’d like to take risk,” because it may already be assumed by another entity. And so you really do have to start moving sooner rather than later.

Kevin Pho: And my final question: What’s your take-home message that you want to leave with the KevinMD audience?

Jeb Dunkelberger: Take-home message: Keep fighting the good fight. I know that it’s tough right now. If you look at COVID, if you look at the federal government, there really are just a few reasons to stay in health care right now, and there’s a ton of reasons to just stay home. But what I would say is keep fighting the good fight. We need you, and I’m grateful that I’ve had the opportunity to talk to you all today. So again, thank you for what you’re doing out there, and I look forward to seeing this into the next chapter, because that’s where the country needs to go.

Kevin Pho: Thank you so much for sharing your time and insight. Thanks again for being on the show.

Jeb Dunkelberger: Thank you.

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