Walgreen Boots Alliance, the colossus that recently unseated GE to join the Dow Jones Industrial Average, reports third-quarter earnings today. Analysts expect higher profits and prescription volumes. But they will want insights about how WBA will deal with a rapidly consolidating sector. Biting at its heels is Amazon, which has poached non-pharmaceutical sales, as shoppers look online for items like mops and toothpaste. So WBA and CVS, its archrival, are under pressure to revamp the shopping experience. Their answer is in-store clinics. This month WBA announced a partnership with Humana, an insurer, to open two primary-care clinics in Kansas City. It already has a similar arrangement with UnitedHealth Group, another insurer, to provide urgent care in 15 stores. CVS will follow suit, following a merger with Aetna. For consumers, such partnerships offer a one-stop shop for doctor’s visits and prescription pickups. For drugstores, it means new customers. Welcome to the “retailisation” of health care.
Is It Getting Harder to Care for Poor Patients?
by Dhruv Kuhllar, M.D. - NYT - June 26, 2018
In my more exasperated moments of residency, I must admit I was envious not only of what my supervising doctors knew, but also who they treated.
Residents in our clinic, doctors in training just out of medical school, generally picked up patients they cared for in the hospital — with lots of medical problems, little medical care and often without a place to stay. The attending physicians who supervised us, it seemed, built their patient panels handing out business cards in luxury suites at Patriots games. Over time, as we transferred patients from one graduating resident to the next, our panels came to embody the city’s deepest and most recalcitrant social challenges.
This was, of course, good training, if only in the art of seeing patients with six conditions on 12 medications in 15 minutes. But what strained our abilities was not our patients’ medical complexity, but their social problems: They were poorer, less educated, more isolated, from rougher neighborhoods. We quickly learned that while it’s hard to dose insulin, it’s harder still for a patient who speaks no English, has no refrigerator and regularly has his medications stolen.
This dynamic is not unique to my clinic, nor to residents versus attendings. Across the country, some doctors, hospitals and clinics care for a disproportionate share of disadvantaged patients. But we’ve been largely unable — or unwilling — to consider social disparities among patients in how we support and pay doctors.
A growing recognition that social factors influence health outcomes has coincided with a policy push to hold medical providers more accountable for the care they deliver. These “value-based” payment models try to measure quality, outcomes and costs — and reward or penalize providers based on their performance. They generally adjust for patients’ medical problems, but not social ones.
While most experts agree that value-based purchasing is a better way to pay doctors, it also has the potential to worsen health disparities by discouraging providers to care for vulnerable populations. If I’m paid for how many stents I put in or how many patients I see, it doesn’t really matter if my patients live on the street or can’t read the instructions on a pill bottle. But if I’m paid based on how well their blood pressure is controlled and how frequently they’re admitted to the hospital, those things start to matter quite a bit.
“This is something that feels intuitive to clinicians but not always to policymakers,” said Dr. Karen Joynt Maddox, assistant professor at the Washington University School of Medicine in St. Louis. “In general, policymakers have accepted that you need to take medical risk into account. Social risk has been much more controversial, but it contributes just as much, if not more, to health outcomes.”
Many providers are rightly concerned that caring for disadvantaged patients may penalize them for factors outside their control — and unfairly affect their bottom line. Under all of Medicare’s value-based purchasing programs, for example, providers who treat more socially complex patients suffer higher penalties. And patients with more social risk factors have worse outcomes regardless of who they see.
“Many of these payment models are predicated on making fair comparisons across providers,” Dr. Joynt Maddox told me. “Some are literally a zero-sum game. They rank everyone, then separate winners and losers. Failure to take social risk into account can have real negative consequences for clinicians and for patients.”
Doctors who care for disadvantaged populations need more resources to produce comparable health outcomes, but they’re less likely to have them. Their patients are often uninsured or on Medicaid, which pays considerably less than Medicare or private insurance. They may also have a harder time getting their patients access to needed services, like subspecialty care, diagnostic imaging and nonemergency hospital admission.
There’s some indication that payers are starting to consider adjusting for social risk. For example, in 2016 the Massachusetts Medicaid program started incorporatingsocial factors like disability, poverty and homelessness into how it pays clinicians. Last year, the Centers for Medicare and Medicaid Services began adjusting Medicare Advantage plan ratings for differences in the proportion of their beneficiaries who are dually eligible for Medicare and Medicaid — a proxy for low-income. And the National Academy of Sciences, Engineering, and Medicine recently released a reporton how social risk factors could be incorporated into provider payment more broadly. We might, for example, stratify public report cards for doctors and hospitals based on the socioeconomic characteristics of patients they serve, or adjust bonus payments for those who take on more disadvantaged patients.
But whatever model we might end up adopting, selecting the right types of measures will be important. It probably doesn’t make sense to adjust for social risk when assessing whether a patient got aspirin for a heart attack or the right antibiotics for an infection, but it does when measuring how well a patient’s diabetes or blood pressure is controlled over time. Clinicians could also be rewarded for improvements in care — compared to similar providers or compared to their own prior performance — instead of for meeting absolute thresholds.
Paying doctors to do better — instead of to do more — is essential for a higher-value health system. But if not done carefully, we risk leaving some patients behind. Better care for those who’ve been dealt a bad hand will mean making sure doctors aren’t playing against a stacked deck.
https://mobile.nytimes.com/2018/06/26/well/is-it-getting-harder-to-care-for-poor-patients.html?
Judge Strikes Down Kentucky’s Medicaid Work Rules
by Abbie Goodnough - NYT - June 29, 2018
WASHINGTON — A federal judge on Friday blocked Kentucky’s closely watched plan to require many Medicaid recipients to work, volunteer or train for a job as a condition of coverage.
The state had been poised to start carrying out the new rules next week and to phase them in fully by the end of this year.
Judge James E. Boasberg of Federal District Court for the District of Columbia, an Obama appointee, ruled that the Trump administration’s approval of the plan had been “arbitrary and capricious” because it had not adequately considered whether the plan would “help the state furnish medical assistance to its citizens, a central objective of Medicaid.”
The ruling in the Kentucky case is the first on this issue, but it will almost certainly not be the last; the question may wind up before a more conservative Supreme Court with two Trump appointees. Three other states have already gotten permission from the Trump administration to impose work requirements, and seven more have asked for clearance to do so.
Gov. Matt Bevin of Kentucky, a Republican, has said that if he ultimately loses in court, he will end the Medicaid expansion in Kentucky. But instead of announcing plans to appeal the ruling Friday, the state’s top health official said he would work with the Trump administration to “quickly resolve the single issue raised by the court so that we can move forward.” The official, Adam Meier, added that if the new rules could not be quickly implemented, “we will have no choice but to make significant benefit reductions.”
Seema Verma, chosen by President Trump to run the Centers for Medicare and Medicaid Services, called the decision “disappointing” and said she would confer with the Justice Department “to chart a path forward.”
The debate over requiring poor people to work to keep their health insurance encapsulates fundamentally different visions of the role of Medicaid, a program jointly funded by federal and state governments that now covers one in five Americans. Many Republicans see it as a welfare program that should be conditioned on participants working if they are able, while Democrats consider it a crucial element of the government safety net for the poor.
Requiring Medicaid recipients to work — and to pay monthly premiums, which was also part of Kentucky’s plan — would have significantly reduced the number of people with coverage, many experts predicted. People could lose their health benefits if they were deemed able to work or volunteer but did not, or were unable to keep up with premium payments or provide the documentation every month to prove they had worked the required 80 hours.
Mr. Bevin, a vocal opponent of the Affordable Care Act, took office after his Democratic predecessor enthusiastically expanded Medicaid under the law. He has argued that the program was created for only the most vulnerable citizens — those who aren’t merely poor, but also disabled, elderly, pregnant or younger than 21. Mr. Bevin and a growing number of mostly Republican governors believe that adults with no disabilities, millions of whom became eligible for Medicaid under the health law, should work or otherwise engage in their community to keep their coverage.
More than 400,000 Kentuckians have joined Medicaid since 2014 as a result of the expansion, and the state estimated that some 350,000 of them — about a quarter of its overall Medicaid population — would be subject to the new work rule. But many recipients already have jobs or otherwise would meet the requirement. The state had planned to grant exemptions to people it deemed medically frail or who were pregnant, in school, or the primary caregiver of a dependent child or disabled family member.
Advocates for the poor say that even many working Medicaid recipients would have lost coverage because of the new documentation requirements. Kentucky itself has estimated that 95,000 fewer residents would have been enrolled in Medicaid within five years, although its lawyers said many of those people would have found jobs that offered insurance. Regardless, the plaintiffs used Kentucky’s estimate to argue that work requirements would have thwarted the purpose of Medicaid.
The Trump administration approved Kentucky’s plan in January, shortly after Ms. Verma announced a major policy shift letting states require many adults to work or participate in other “community engagement activities” as a condition of eligibility for Medicaid.
Weeks later, the National Health Law Program, the Kentucky Equal Justice Center and the Southern Poverty Law Center filed the suit on behalf of 16 Medicaid beneficiaries in the state.
The work requirement has drawn the most interest. Arkansas, Indiana and New Hampshire have won permission to follow in Kentucky’s footsteps, and seven other states are waiting for the Trump administration to decide whether they can, too. Those states are Arizona and Ohio, which have expanded Medicaid, and Kansas, Maine, Mississippi, North Carolina, Utah and Wisconsin, which have not and would direct their work requirement at the small number of adults who were not disabled, mostly mothers of dependent children.
Michigan, Virginia and several other states were also planning to pursue work requirements but had not yet submitted applications.
“The Trump administration’s attempt to transform the Medicaid program through executive action has been restrained,” said Jane Perkins, the legal director for the National Health Law Program, which provides legal services for the poor. “The purpose of the Medicaid Act is to furnish medical assistance, and this approval could not stand because it was doing just the opposite — restricting coverage.”
Although Judge Boasberg’s ruling affects only Kentucky, advocacy groups will likely challenge other states’ requirements and his decision could influence those cases. Mr. Bevin said last week that the legality of work requirements “will be decided in the Supreme Court, almost without question.”
The Trump administration and the state of Kentucky, which intervened in the case, had asked Judge Boasberg to throw out the case on grounds that Congress gave the health and human services secretary broad discretion to approve Medicaid demonstration projects. Lawyers for the administration also argued that the secretary, Alex M. Azar II, provided plenty of evidence that working improves health.
Judge Boasberg disagreed. “While the ultimate decision whether to grant approval rests with the secretary, his discretion is not boundless,” he wrote. He also said the important thing to consider was not whether work requirements would improve health, but whether they would “furnish medical assistance” to the poor, as the Medicaid statute states as its goal.
“At bottom,” the judge concluded, “the record shows that 95,000 people would lose Medicaid coverage, and yet the secretary paid no attention to that deprivation.”
The work requirement was to take effect next week in Campbell County, just south of Cincinnati, Ohio. Two other counties in northern Kentucky were tophase the program in by Labor Day, and most by the end of the year.
Kentucky’s uninsured rate fell to 5.1 percent in 2016, according to the most recent census data, from 16.3 percent in 2013, the year before Medicaid expanded there. It was among the steepest drops in the nation.
The state had been moving forward with its plan despite the lawsuit, investing millions of dollars in a new online system where residents could log their work or “community engagement” hours, take online health or financial literacy courses as a way to prevent losing their coverage if they skipped premium payments, and list “healthy behaviors,” such as preventive screenings, that would help them earn “rewards dollars” they could use for teeth cleanings or vision checks.
The Strategic Lies of Oncologists
by Susan Gubar - NYT - June 21, 2018
“We’ll have to invent symptoms,” the doctor said. Since this physician was a paragon of integrity, the patient gasped. With what words could she thank the doctor for such a breach of insurance rules?
Many have fulminated against oncologists who lie to patients about their prognoses, but sometimes cancer doctors lie for or with patients to improve our chances of survival.
Here’s the back story in this case. The patient, a woman in her early 50s, was given a diagnosis of endometrial cancer. After three infusions of chemo, she was supposed to start radiation, but imaging for it detected tumor growth. In other words, her disease was so malevolent that malignancy progressed during treatment. Yet physicians successfully altered the regimen, which she weathered. While some women with gynecologic cancer can use the CA125 blood test as a marker for recurrence, for others it does not work at all; they need scans. This patient is in that category, so she and her oncologist agreed to rely on a CT scan every nine months.
However, the insurance company refused to pre-certify the patient’s scan on the grounds that she had no symptoms of recurrence. Both she and her oncologist were baffled. Three specialists had warned that her cancer would probably return. Umpteen forms, filled out and submitted, failed to change the verdict; the oncologist fumed at insurance representatives on the phone, but to no avail. The doctor then coached my friend to fabricate cramping or bloating — symptoms that the insurance company might see as justification for the scan.
“A shell game,” she tells me, suspecting that her doctor must hate the lie as much as she does: “How humiliating for this consummate professional.”
My friend’s account reminds me of a youthful colleague with a family history of lethal colon cancer. His doctor made up blood in his stool to obtain insurance coverage for a colonoscopy. Precancerous polyps, found and removed, justified future surveillance.
What does the scant literature on the phenomenon of falsification tell us? A 1999 study, “Lying for Patients: Physician Deception of Third-Party Payers,” argues that it has characterized medicine, inside and outside cancer care, for some time. The authors document doctors’ willingness to dissemble in areas ranging from coronary bypass surgery to mammography screening.
“Many physicians sanction the use of deception to secure third-party payers’ approval of medically indicated care,” they wrote.
Physician subterfuge, the article concludes, reflects friction between “the traditional ethics of patient advocacy and the new ethic of cost control that restricts patient and physician choice in the use of limited resources.”
Is it ethical to break cost-controlling rules for a patient’s benefit? At a fork in the road, the doctor must make a decision worthy of the Greek heroine Antigone. Should the patient’s best interest be paramount or the requirements of the system? Distress over the conflict between lawbreaking patient advocacy and law-abiding cost control intensifies with a life-threatening disease.
Dr. Rick Boulay, a gynecologic oncologist, describes the “peer-to-peer” phone consultation that constitutes the final step in the process of trying to get services covered for patients with metastatic disease. He recounts prescribing and defending a (more expensive) PET scan because an earlier CT had produced a false negative. Denial of coverage leads Dr. Boulay to conclude that his patient “may pay with her life for the insurance doc’s inability to look beyond policy.”
Not wanting patients to pay with their lives, how many physicians break or bend health care regulations in order to gain access to reimbursement and therefore to care? For without coverage of pricey drugs or procedures, most patients cannot afford them.
“You will never find it publicly discussed, but it happens; in unique situations, the rules need to be tweaked,” one oncologist-acquaintance confided on the condition of anonymity (because of the fines and sentences associated with insurance fraud). While contending with the mounting burden of electronic medical billing, physicians may encounter problems with the financial gatekeepers of insurance companies. Denials of coverage are made by insurance doctors who may not be specialists or, in some circumstances, vigilant adjudicators.
Earlier this year the former medical director of Aetna for Southern California admitted under oath that he did not review patients’ medical records before approving or denying appeals for insurance coverage. Renata Louwers, the widow of a bladder cancer patient, was especially outraged at this revelation because of the hours she spent on hold as insurers refused to pay for an off-label drug that shrank her husband’s cancer; the couple paid for it themselves until they won an appeal.
Insurers use the periodically updated National Comprehensive Cancer Network Guidelines to determine coverage for a specific regimen for a specific type of cancer. “If the prescribing doctor chooses to go outside” the list, my oncologist-informant explained, “the plan is often delayed or denied.” The network has not yet established detailed guidelines for some of the newest and most expensive targeted therapies. Delays in cancer treatment can be as deadly as denials.
Skyrocketing health care expenses certainly require regulations, most of us realize. And unfortunately oncologists have been known to put money in their own pockets by over-testing and over-treating in practices that do not help patients but could bankrupt our society.
The solution? The oncologist I spoke with suggested that partnerships between clinical care providers and insurance providers could prioritize patients’ well-being while keeping costs as low as possible. The authors of “Lying for Patients” argue that “Alternatives to deception include broadening existing appeal processes on behalf of individuals and political advocacy for health care reform.”
That professionals in the arduous field of oncology feel tempted to lie — in order to care for their patients — must take a psychological toll. Lying may finesse the system for the good of one, but it does not change it for the good of all.
The pressure on the system will only increase as detection tools generate predictions of cancer and genetic analyses produce personalized treatment plans. To facilitate prevention and to obtain proper care, insurance protocols must be made more flexible. Oncologists need to be free — without worrying that they will harm their patients — to speak truth to power.
Amazon to Buy Online Pharmacy PillPack, Jumping Into the Drug Business
by Claire Ballentine and Katie Thomas - NYT - June 27, 2018
In the world of health care, PillPack, an online pharmacy, is a pretty small player. Its work force of 1,000 or so people pales in comparison with the 235,000 who work for Walgreens.
But when Amazon announced on Thursday that it was buying PillPack, the deal immediately shook the industry. Shares of Walgreens and Rite Aid tumbled more than 9 percent, while CVS Health dropped 6.6 percent.
That’s because with one move, Amazon answered the question about when — and how — it would grab a piece of the $560 billion prescription drug industry.
It was precisely the sort of deal that the health care industry had feared.
Amazon has been hinting at its interest in selling drugs, but it faced the problem of securing pharmacy licenses in each state. PillPack will help overcome that hurdle, since the start-up is licensed to ship drugs in 50 states — clearing the way for the e-commerce giant to quickly become a major player in the business.
And it will be doing so without much financial stress. Amazon, which has a market value of over $840 billion, is paying about $1 billion for the start-up, according to one person briefed on the deal, who was not authorized to speak about it publicly. Amazon beat out Walmart for the company, the person said.
“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, Amazon’s chief executive of its consumer business, said in a statement. “We’re excited to see what we can do together on behalf of customers over time.”
Anxiety over what Amazon might do in health care has unsettled the industry. The company’s interest in drugs has been considered a factor in a wave of recently proposed mergers, including CVS’s acquisition of Aetna and a union between the health insurer Cigna and Express Scripts, the pharmacy benefit manager. Amazon’s entry could make it easier for some of those deals to get approval from regulators, by adding a new competitor.
Last fall, perhaps in a move to get ahead of Amazon, CVS announced it would offer next-day delivery of prescription drugs and same-day service in some big cities. The next-day delivery began this month, for a fee of $4.99.
PillPack, which started in 2013, distributes pills in easy-to-use packages designed for consumers with chronic conditions and multiple prescriptions. The company sorts prescriptions by the dose and includes a label with a picture of each pill and directions on how it should be taken.
TJ Parker, a pharmacist, and Elliot Cohen, an engineer, founded the start-up after meeting through a health care innovation program at the Massachusetts Institute of Technology. The company’s primary pharmacy is in Manchester, N.H., but it also has numerous other pharmacies, including in Miami, Brooklyn and Austin, Tex. While it has licenses to deliver drugs in all 50 states, it does not now ship to Hawaii.
It has raised $118 million in funding, with investors including Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures and Techstars.
It is not necessarily a major player in the pharmacy world, bringing in about $100 million in revenue in 2017, according to the company. But PillPack has long been seen as a potential target for larger businesses looking at online drug sales.
Its national reach made it an attractive prospect for Amazon, said Adam J. Fein, chief executive of the Drug Channels Institute, who studies the industry.
After early tussles with pharmacy-benefit managers like Express Scripts, PillPack also managed to work with major benefit managers and insurers, not an easy feat for an online pharmacy that directly competes with many of those companies’ mail-order businesses.
“It’s a turnkey mail pharmacy operation,” Mr. Fein said.
Even as Americans have shifted their buying habits online, prescription drugs have remained a stubbornly brick-and-mortar purchase. About 90 percent of all prescriptions are filled at a pharmacy counter, according to Iqvia, a research firm.
If Amazon can break that habit, it could upend the industry. “It helps people to eliminate that trip and buy everything they need from Amazon,” said Stephen Buck, a pharmaceutical supply-chain expert who co-founded the drug-price website GoodRx.
In a call with investors on Thursday, Stefano Pessina, chief executive officer of Walgreens Boots Alliance, said he was not concerned about Amazon’s acquisition. He said the physical pharmacy would remain important to customers in the future.
“We are not complacent, we know we have to change the level of our services to the customers, and we are working in that direction, but we are not worried,” he said.
Carolyn Castel, a spokeswoman at CVS Health, said her company had the same abilities as PillPack, with many more existing customers.
“Keep in mind that we have not seen a large shift of patients that are looking for their medications to be delivered versus coming to a retail pharmacy,” she wrote in an email. “And for those patients that do desire to transition, we offer the option.”
Independent online pharmacies have had a tough time because consumers who do buy their prescriptions through mail order are often required to do so by their insurance plans. Pharmacy benefit managers have traditionally offered employers and insurers incentives requiring that long-term prescriptions be filled through the managers’ own mail-order pharmacies.
And for short-term prescriptions, like antibiotics, many consumers prefer their corner drugstore, since they often need to fill those drugs right away. About 85 percent of prescriptions in the United States are for refills, according to Iqvia.
But Mr. Buck and others said Amazon might have a new opportunity. A growing number of Americans are without health insurance or have such high deductibles that they may be better off bargain shopping on their own. He estimated that 25 million Americans fell into that category.
Until now, he said, PillPack has not aggressively competed on price. With Amazon in charge, “how about they start posting prices that are really, really aggressive?” Mr. Buck said.
The deal for PillPack could be just one piece in Amazon’s broader health ambitions.
In January, Amazon, Berkshire Hathaway and JPMorgan Chase announced plans to form an independent health care company for their employees in the United States, in what could become an incubator for new ideas. Last week, the companies said Dr. Atul Gawande, a Harvard surgeon and staff writer for The New Yorker, would become chief executive of the business.
Amazon has also pushed to expand its medical supplies business, seeking to become a major supplier for hospitals and outpatient clinics. It received wholesale pharmacy licenses from several states this year that permit it to start selling medical equipment to businesses. Its products could be used to supply operating and emergency rooms, along with outpatient locations.
The company previously tried to enter the pharmaceutical world in 1999 by purchasing 40 percent of Drugstore.com. However, it ran into logistical and regulatory challenges that ultimately derailed the effort.
John Sculley, a former chief executive of Apple and the chief marketing officer of RxAdvance, a pharmacy benefit manager, said PillPack was a natural choice for Amazon.
“This one plays right into everything they know how to do,” he said. “It’s in their wheelhouse.”
Michael J. de la Merced contributed reporting.
How Atul Gawande landed perhaps the most extraordinary (or impossible) job in health care
by Rick Berke - STAT - June 25, 2018
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SPEN, Colo. — It’s hard to imagine having to endure a more exacting executive search committee than the triad of corporate chieftains atop Amazon, JPMorgan Chase, and Berkshire Hathaway.
But Dr. Atul Gawande’s selection last week by Jeff Bezos, Jamie Dimon, and Warren Buffett to run a venture with the extraordinary yet seemingly futile goal of disrupting the health care industry didn’t stem from any longstanding relationship he had with any of them. Its genesis was an article he wrote for the New Yorker nine years ago.
“That opened the door,” Gawande told STAT, providing the first explanation of how his selection came about.
Gawande, 52, the celebrated surgeon, author, and journalist, said the closest he had come to knowing Amazon’s Bezos was a fleeting hello at a TED Talk. “But I had really never met Jeff Bezos. And I didn’t know Jamie Dimon in the least.” He did catch the eye of Berkshire Hathaway’s Buffett years ago, or, rather, Buffett’s longtime right-hand man, Charlie Munger, also a businessman and entrepreneur.
In a brief interview at the Aspen Ideas Festival Spotlight Health program — in which he also said the new job would have to be his top priority — Gawande said he had known Munger ever since he wrote a much acclaimed article in 2009 for the New Yorker, “The Cost Conundrum.”
The piece examined why health care was vastly more expensive in some parts of the U.S. than others, despite little difference in the quality of health care and the sickness of people getting it. The piece was reported from McAllen, Texas, then the most expensive health care market in the country.
“Charlie Munger I’ve known since he told me he loved, he liked, the article I wrote,” Gawande said. He then recalled the story, well-publicized at the time, of how Munger thought the article was so socially important that he blindly mailed Gawande a $20,000 check.
Gawande, a surgeon at Brigham and Women’s Hospital in Boston, said at first he sent the money back: “He sent it back to me again and said, ‘Do with it what you want.’ And so I put it into our research fund.”
Though Gawande said the Munger relationship had paved the way for his selection as CEO of the new health care company, he went on to say of Buffett, Dimon, and Bezos, “I think each of them heard about me in different ways.”
Buffett spoke publicly about Gawande long before they met. In a CNBC interview in 2010, Buffett praised the “The Cost Conundrum,” saying, “That fellow whose written on health care recently in the New Yorker — Gawande — he had an article last summer that was absolutely magnificent.”
In some ways, the McAllen article could be seen as laying out some of the challenges the new enterprise will face as it seeks to reduce health care costs. In announcing the venture in January, Dimon said, “Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”
Gawande told STAT that he was first approached for his advice in January. He said he did not know when the dialogue evolved from his offering his thoughts to being a prospect for the job.
“I started talking with them,” he said, “but they ended up talking to over 100 people for advice, so I don’t think I exactly know.”
Gawande has offered scant details about the yet-to-be-named organization (he jokingly referred to it as AJB after its corporate owners), though he said it is meant to come up with ways to reduce health care costs for the companies’ employees, as well solutions that could be applied across the entire country.
He said the intermediary who first contacted him was Todd Combs, an investment manager at Berkshire Hathaway in Omaha who was the emissary who quietly put the three billionaires together in the first place. Combs was said to have so impressed Dimon that he was named to the board of JPMorgan Chase.
No matter how efficient Gawande is with his time, his CEO role will test even his ability to multitask. Asked how much time he would devote to it when he officially begins July 9, Gawande said, “It’ll have to be 100 percent.”
But he is not giving up his positions at Harvard or Brigham and Women’s or his work as a surgeon, and plans to continue writing. He said he will transition from being executive director to chairman of Ariadne Labs in Boston, which works on solving problems in health systems around the world.
“I still have my patients and surgery booked through the summer and have my work,” he said.
Asked if most of his time will be spent in the new role, he said, “This is going to become the number one priority.”
If it were possible for Gawande to be even more of a celebrity in the worlds of health and medicine, the announcement last week has inevitably made him more in demand. He was crowded by well-wishers at appearances here Saturday and Sunday, with some thrusting his books at him for autographs.
Several leaders in health and medicine said in interviews here that while Gawande’s mission is daunting, they thought he was a prudent choice.
“He’s excited. He’s nervous. And he’s also incredibly humble,” said Seth Berkley, CEO of Gavi, the Vaccine Alliance, who met privately with Gawande in Aspen this weekend. “He’s incredibly smart and he has a great shot at being able to do this.”
Berkley said Gawande will, of course, be under great pressure from Dimon, Bezos, and Buffett. “Some of these leaders he’s working with don’t have a reputation for patience, and he knows that. He understands the risks given the oversized personalities.”
Rip Ballou, vice president and head of GSK Global Vaccines, said he was impressed after hearing Gawande speak here, saying, “He left me feeling that there are actual people thinking how do we get out of this quagmire.”
Ballou said that the billionaires who will be Gawande’s new bosses reminded him of when he worked for Bill Gates. “People who have achieved the kind of success these people have achieved — it’s not by accident,” he said. “I would expect them not to leave him to his own devices. I wouldn’t be surprised if those three bosses become very well-educated” in health care and put forward their own ideas.
“I was very encouraged to hear that all three of his bosses said, ‘You have time — you don’t have to figure it out by next year,'” Ballou added.
Indeed, during a panel here Saturday, when he was questioned by PBS journalist Judy Woodruff, Gawande took care not to overpromise — and repeatedly noted that he hadn’t started yet. He said he understood the daunting challenge of taking on health care intermediaries such as insurers and pharmacy benefit managers.
“It is amazing to me that I would get to partner with people like Jeff Bezos, Warren Buffett, and Jamie Dimon — amazing people who have committed themselves to the long term,” he told the crowd. “But the largest concept here is that I get to have a million patients that I as a doctor get to add to my responsibility, and my job for them is to figure out ways that we’re going to drive better outcomes, better satisfaction with care, and better cost efficiency with new models that can be incubated for all. That is a tall fricking order. But what they’re saying to me is that resources won’t be the problem. Human behavior will be. And achieving scale will be.”
Gawande emphasized the nonprofit nature of the organization and made clear that he does not see himself under the thumb of Amazon, JPMorgan Chase, or Berkshire Hathaway bureaucracies — something people who know him said was important to establish before he accepted the job.
“Number 1: It is an independent entity; it is not part of those companies. Number 2: It is nonprofit; there are no dollars that go back to those companies. That’s really important.”
Asked about the range of employees at the companies, Gawande said, “This is ordinary America. They are across the entire country. So I get to have and have to worry about and learn about the life and needs of — what’s the largest employment group at Amazon? Fulfillment center workers, most of them people who probably are only there a year or so.
“So these are people who have very unstable health care … and how do you solve problems for that range of people?”
Berkshire Hathaway includes many old-line companies, he noted, “often union, Midwestern, Southern — it’s Burlington Northern Railways, with union railway workers, it is Acme Brick, it is Dairy Queen. They make stuff. And then you get to JPMorgan Chase, where their largest employment group are bank tellers.”
Sounding much like a politician, Gawande told people here that he intends to embark on a “listening tour.” His first decision: coming up with a name that’s less of a mouthful than the Amazon-Berkshire-JPMorgan health venture.
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