 On behalf of the McLean Center for Clinical Medical Ethics and the Center for Health and Social Sciences, Dr. David Meltzer, David, right there, and I welcome you to the fifth lecture in our 2018-19 series on improving value in the U.S. healthcare system. It is now a real pleasure to introduce an old friend and squash buddy, today's speaker, Ralph Muller. Ralph is Chief Executive Officer at the University of Pennsylvania Health System, a world-renowned academic medical center and system with hospitals that not only are consistently ranked among the top in the U.S., but also are ranked as one of the top employees, top 10 employees in the U.S., and listen to this, the second-best employer of women among all American companies, all American large companies. The University of Pennsylvania Health System provides comprehensive patient services across six acute care hospitals, multi-specialty care facilities, and home care. Prior to joining the system in 2003, Ralph was, from 1985 to 2001, the President of the University of Chicago Hospital and Health System. Previously, Ralph had been the Budget Director at the University, and before joining the University in the early 1980s, Ralph Muller held senior positions with the Commonwealth of Massachusetts, serving as Deputy Commissioner of the Department of Public Welfare. Here in Illinois, before joining the University, Ralph was the Chief Operating Officer responsible for Illinois' state welfare programs, including the Medicaid program. Mr. Muller is Director of the National Committee for Quality Assurance, has served as Commissioner on the Medicare Payment Advisory Commission, as the Commissioner of the Joint Commission, as the Chair of the Association of American Medical Colleges, Chair of the Council of Teaching Hospitals and Health Systems, I could go on and on, and here at the University serve for many years as Chair of the National Opinion Research Center, NORC. Ralph is also an elected member of the National Academy of Medicine and a Fellow of the American Association for the Advancement of Science. Ralph's talk today is entitled, as you see up above, Another Cycle, or this time it's different. I'm glad you joined me in giving a warm welcome throughout the time. Thank you, Mark. Thank you, Mark. It's a pleasure to be back. I was in this room many times over 16, 17 years that I had the pleasure to be here and seeing people like Dr. Plonsky and Dr. Meltzer, Dr. Meadow others here. We had many, many meetings here and it was a great pleasure to kind of grow up in the sense that the University of Chicago, I'm still involved at NORC as Mark mentioned so I get a chance to come back here very often. And what I'm going to speak about today as the title indicates is, you know, we go through cycles in American health care and many people have pointed out every 20 years people keep making the same mistakes that they should have remembered from 20 years ago. So I'll tease you before I give you my answer whether I think it is another cycle or whether it's different this time. What I'm going to do is kind of look at the national health care scene, talk a little bit about Penn. Hopefully some of what I talk about at Penn is relevant to the University of Chicago because obviously a lot of my affection is for this place and there's a lot of similarities. One of the things I realized when I went from Chicago to Penn is about 10, 15 places in the country whether they're in Boston or Baltimore or Chicago or San Francisco. We're pretty much the same. I'm going to talk a little bit about the pressure on payments, talk a little bit about affordability and disruption. So this is an important thing to always remember and I was talking to Dr. Palonsky before in how we pay for health care in America is much different than we do in the countries of the European Union or Canada or other parts of the world. And systems where there's governments paid for health care is much different than else. And by that gray bar, roughly half of American health care is provided by employers. And that makes a big difference in how the system operates. As you can see, Medicare and Medicaid add another trillion dollars of spending. But the fact that unlike, let's say, Canada or the U.K., we have this major private health insurance system have enormous consequences for how the system runs. And when people do cross national comparisons, if you forget about the fact how American health care is financed, you make big mistakes in terms of, I've always said that you cannot take examples from small homogeneous countries like Denmark or Holland or the state of Vermont and extrapolate them to 50 states in the United States. It's just impossible to do so. And then where the cost, who actually provides the care, you can roughly see that half the costs in the American health care system go to hospitals and physicians. But prescription drugs are at 10% of that and have been a big issue the last six, seven years because of all the sectors inside this chart, the other ones have been growing the most, which is why you had some issues in the recent election as to what you might do about prescription drug coverage. Now hospitals are doing less well than they did a few years ago. You can see these operating margins are the jargon by which people like me and Dr. Plansky and President O'Keefe talk about these kind of things. They're going down. This is a national study from a company that's based in Chicago called Navigant. The operating margins are going down around the country. In some ways, this was a deal when we got the Affordable Care Act, also known as Obamacare. The basic deal that doctors and hospitals made is if we got more coverage under the Affordable Care Act, we would take price reductions as a way of compensating for the payment to cover more patients. Now the bad news is that these health care costs, rising health care costs are unsustainable. Our dog is, many people have, a big part of the election of 2016 is essentially the fact that the average person's society hasn't really not gotten a compensation increase the last 20 years. Insofar as that person who makes $50,000 has gotten a compensation increase in the last 20 years, it's come in the form of increased health benefits, but they really haven't until maybe the last few months or so, really gotten what economists call real increases in compensation. Health care costs are going on this kind of steep curve. As Mark pointed out, I'm still involved in NRC, but you don't have to go to NRC to figure out the curve like this is much steeper than the curve like that. So if costs are going up 200-some percent and the compensation is going up 50 percent, there's a big gap in terms of affordability. And this part of the chart is very important. Average American income, roughly $50,000. The cost of health care on average is $15,000. Now $15,000 against $52,000 may seem okay, but at the poverty level, you're making $24,000. If you're working at McDonald's, you're making $15,000. Obviously, if it costs $15,000 to provide health care coverage, you're making $15,000. Your employer is not very interested in providing you with health care coverage. So a central dilemma in American health care, if it costs $15,000, who's going to pay for it? Part of what the Affordable Care Act of Obamacare did is to say, we'll give you subsidies to cover that $15,000. But that has been a big part of the policy debate for the last seven, eight years. How do we pay for health care for the average person in the American population? Now there's been a quite, this is the Northeast where I'm obviously I'm based right now. As you can see, the operating margins are getting pretty low for most of the systems inside the Northeast. Fortunately, we're still up here on the left-hand side doing quite well. And we've been able to sustain the overall enterprise. But by and large, most hospitals in the Northeast, and these charts would be the same around the other geographic regions of the country, are having declining margins and in more difficult shape than they were before. Now I've gone over what's happened in the economy the last 20 years and how health care costs have gone up. So we also have a new administration that came into Washington two years ago that ran against Obamacare. The Obama crowd, like the Clinton crowd, as Mark indicated, I've been around a long time. You know, they were governmental interventionists. The Clinton people they brought on Hillary care, though that never got to pass. Obviously President Obama brought on what even President Obama calls Obamacare. The current crowd doesn't want government intervention and health care in many ways what President Trump has done, almost anything that has President Obama's name on it he's against. So he's been trying to undo Obamacare since he came in. The private sector has figured this out. They're not going to get a lot of intervention from government except for trying to tear things apart in these two or maybe two more years. So the private sector is kind of coming into health care. With the 18% of the U.S. economy being devoted to health care they're kind of coming in. So here are some examples. I'm sorry. You know the United Health Care has now employed 20,000 doctors. Again to go through my tile slide is this another cycle? Is this different? Yes. Mr. Goldbott here was the chairman of the board when I was here. We know that in the 90s a lot of big physician aggregations were around the country and they came and went and had big crashing exits from health care. For those who have been around like Bill Meadow, Mark and I, things like a fire core and that part is all kind of crashed and burned. Is United Health Care hiring 20,000 doctors going to know any different in 2018 than those places who failed that in 1994, 1995? But by hiring 20,000 doctors they're obviously making a big bet that they know how to manage physician practices. Amazon and the big Berkshire Hathaway and JPMorgan they just announced a new company a few months ago and they took Dr. Gawande from Harvard and the New Yorker to be the new CEO. I notice he's keeping all his day jobs so I'm interested to see how much he's actually going to do at this. You know one of the big healthcare insurers of the country is buying a pharmacy benefit manager and CVS which has 10,000 drug stores around the country. I think they put out in the press release that essentially they are within 10 miles of 90% of American population and they're buying Edna which is one of the biggest insurance companies and they're basically going to try to figure out how to put insurance company into your walking strip mall and so that's an interesting business proposition as well. Now so the question is with all these entrants from the private sector coming to healthcare what are they actually going to do? So a professor at Harvard who's written about disruptive innovation has taken this example looking at what happened in steel production but basically the competitors coming in 20, 30 years ago into steel came in at the low end of the business in terms of rebar and bars and boots and then in two time got into the high end business. Our analogy is are people coming into the walking clinics, the Walgreens, the Walmart, the CVS's and try to dominate in that kind of walking clinic area and they can they get into what University of Chicago and Penduel into the ICUs and the transplants and the cancer trials. So the question is it's just a way to kind of penetrate healthcare. Start with kind of walking clinic and primary care and see whether you can move up the so-called advanced medicine ladder just like it happened and the question is, is the example in what happened in steel and those industries relevant to what goes on in healthcare? So it's one of the key questions I'm asking of you today. Now one thing that people have done has been a lot of consolidation. I've written about this with some of my colleagues at Penn who were fortunate for me trained at here at the University of Chicago is getting bigger the answer still 20 years later the biggest not-for-profit bankruptcy in the U.S. was just Allegheny Health System in Western Pennsylvania 20 years ago and they got bigger and they by 1998 they fell very big and so just getting bigger may not be the right answer either in terms of how you deal with this disruption. So what do you do? McKenzie which is a national consulting firm that does a lot of work in healthcare recently put out a paper and the important thing here is basically the proportions it says in the next five six years to really bring more value into the American healthcare system you have to look at efforts of clinical productivity I'll talk about that in a moment you have to look at the sites of care for example this transition to outpatient retail this is kind of walking clinics where the fact that you know a lot of you now know if you go to Walmart you can buy generic drugs at Walmart Walmart doesn't make money by the walk-in clinics it makes the money by selling your generic drugs CVS makes money by walking in and selling you the brand name drugs so basically they don't make money in the walk-in clinics they make money off selling drugs to you and the question is is this transition going to be what's going to happen are there new for example one of things we're proud of at Penn we've developed this new immunotherapy which that's been shown especially in leukemia and lymphoma to hopefully give life on cures and what might cost hundreds of thousands of dollars if you go through three four rounds of fail chemo therapy it may cost more so question is are the lifetime cures coming along in terms of new medications new treatments and so forth that will save money can you bring down the waste and variability in health care whether or not so dirty little secrets about merican health care this is true in Chicago and Philadelphia everywhere every place else there's enormous variation of what we do so even inside our system you know what a surgeon does in one hospital versus another hospital and doing hip or knee replacements there can be two to three time variation in costs in terms of what they do and then the question is can you know big data and AI and so forth and the important thing here is you know as Yogi Berra says it's hard to make predictions especially about the future it's hard to make predictions in health care but the proportions here that at least McKenzie thinks is that the big opportunities are in clinical productivity and effective care delivery and in these efficiencies so let me talk now about a very important thing this is work that comes out of Gallup and similar kind of work has been done by my colleagues over at NRC and let me this is consumer trust the top of the trust curve in the US is nurses pharmacist and doctors I've discussed this with Dr. Segaler doctors used to be the top of the heap and the last 20 years I think that physicians have been seen by the American public is getting a little bit too commercial so they kind of dip below nurses in terms of trust at the bottom of the heap is your members of Congress lobbyists telemarketers and car salesmen and the American public and business the American public trust the people inside this room does not trust Congress and does not trust you know insurance companies as well business executives so to me I've been a doctors and nurses in the pharmacists as the people that patients will trust in the future so some of my skepticism about how much how disruptive the retailers and the internet and the insurers will be can they in fact get the doctors and nurses of the future to work in those settings and be the trusted agents on behalf of patients remember when I first took my position here as Mark said I was president hospital here I first took the position here and we were going through one of these ways of disruption in 1986 87 I said to myself when the big insurers you know that time in Chicago Blue Cross the microease health plan united and so forth when they have the doctors and nurses working for them rather than the University of Chicago they'll get worried it doesn't mean that we can be capital or small but the doctors and nurses still working for the University of Chicago hospitals or Penn medicine and so forth this conference that will still win the trust the American patient if they move over as united is trying to do by hiring 20,000 doctors around the country and start becoming the agents or CVS and then I'll start worrying a bit more about what's going on so my bet is still as disruptive as these forces will be the fact that the trust and obviously you know Dr. Sieger has for 25 30 years now been running in the claims center here in clinical ethics so me really being on top of that patient relationship is what really makes a difference in terms of where the American people will ultimately vote about how they organize the health care system so what should we do and so I'm going to move to the part of my talk as to what and having been trained as a social scientist I pay a lot of attention to ultimately institutions like us depend on public trust and what's and you have to meet the needs of society and when I've pointed out in different settings hospitals in some ways have been around forever hospitals go back 600 years the church goes back a couple thousand years the church and hospitals in the military are there the people in the S&P 500 turnover every 20 years hospitals are forever so what you have to do is you have to do with public needs and to use a little jargon here now I'm gonna focus on four major categories advanced medicine as you notice the with the Duchess Ross Center for advanced medicine which I was proud to be part of when I was when I was here as the president hospital in fact renamed it de cam here as you know and I have another version of it a pen different donor with last name starting with peace we call it pecan at 10 versus a de cam how to do advanced medicine how to think about the coordination of care how to worry about affordability to go back to my slides the American population is very worried about how much health care costs and then increasingly we have to mimic some of what the walk-in clinics know the people do in terms of convenience so let me now go through that so how to organize around patient populations how to be patient-facing how to leverage technology now this this is probably in many ways the most powerful technology in health care right now right here this has changed more than anything else how we deliver deliver health care speak a little bit more about that in a moment and how to innovate really in patient care we can't be smug if the same time I say you want to be with the people who have doctors and nurses on their side you can't be indifferent you have to get modernizing as to what you offer to the public so first of all we use the phrase at pen your life is worth pen medicine and I'm very proud of these are the top honor all hospitals in the US news and of all those these are all 20 hospitals our main hospital which is comparable to your Center for Care and Discovery which is called the hospital University of Pennsylvania this is a ratio of expected to expected deaths so basically this says if you come to a hospital obviously if you come in with metastatic cancer or liver transplant your outcome is going to be a little different than if you're coming for knee replacement so they do a measure what's called how many people die compared to what would have happened so the joggers get observed or expected if the ratio is normalized to one then you want to be below one so basically where we're at point five six at our main hospital and point six three at our hospital eight blocks away and even some of the great hospitals in the country Mass General Brigham they're over one so we're proud of the fact we've really figured out how to bring mortality down our hospitals through a lot of interventions at the bedside we have done this through having the classic this is our main hospital the we have a new hospital so I use the old one here just like you have the center compared to Billings and Mitchell we have six community hospitals as Mark indicated in his opening introduction one thing that Dr. Plotskin I learned when we work together here is you really have to distribute outpatient care but you have to do it not in walking clinics but through multi-specialty centers so those you get into medicine develop multi-specialty centers it's a good so every place we are showing a moment we cover about a 200 mile region and we have multi-specialty centers everywhere I can't and I cannot develop one in Orton Park 20 some years ago and the first week I got to Penn I said we're the multi-specialty centers we've been developing ever since our business is 57% outpatient so the same time you have a mental notion of you know Chicago and Penn Madison Mass General Hopkins is big hospitals we're 57% outpatient in terms of dollars so that the care has moved to the outpatient settings we have a big primary care operation as well because obviously and one of the things we've done we've distributed that that 200 mile geography we've put one of these multi-specialty centers basically at the intersection of every big highway near within 20 30 40 miles of downtown Penn and we've gone big time into home care with the biggest home care company in the region there's increasingly caring is being provided inside the home and our home care is infusion therapy and not just coming in to do blood pressure checks so we've really focused on that end of the business and good news for us again I learned from from NRC you want this curve to go up so our activity is going up on the inpatient side and the outpatient side over these years and also the good news is since you have to be patient facing this is the last five six years outpatient satisfaction again you want the slope to go up and we're among the national leaders now and this is a measure as Dr. Ponsky knows it's very highly correlated outcome just like comparable to recommending airlines or restaurants are you likely to recommend this to your your friend and neighbor and people recommend us to their friends and neighbors so we have no 90% patient satisfaction in terms of like good to recommend as Mark mentioned we're very proud of the fact that employees who are very happy at work are very good to patients so we were named the top healthcare employer in the country the last two years and second among all companies this is universities healthcare corporations googles apples and Trader Joe's and Wegmans we're the second best employer women in the country top healthcare employer so we've really focused and one of things that we developed here at at Chicago that took a pen is a whole Academy I'm sure I familiar with that where we basically develop our staff and train them how to do the right thing my my phrase has always been you teach people on Saturday how to do it on Monday so we teach people how to how to run the ICU and obviously it's not literally on a Saturday but it's a phrase but you know I learned you know football teams practice 40 hours a week and play three and generally healthcare you practice two and play 60 so you had to reverse our ratio a little bit and practice a lot more and I think the way you get great employees and rate get great patient satisfaction is train people endlessly on everything you want to do and both the Academy here and what we've done at Penn is that endless training and among best employers in women our country now this is I'm a sports fan as Mark and Stan other people know this is a a map of where this Philly fans and why do I look at that that's where we're located because my thesis is that fandom reflects in medicine medical referrals reflect the cultural values of the region now having grown up in New York and Boston I knew that the people south of Hartford were Yankee fans and north of Hartford where Red Sox fans so I came to healthcare and that reflected you know whether you read the Boston Globe in New York Times and what department store you went to or you know what TV station in those days when I grew up you had over the OTB and single only went 50 miles so you basically medicine reflects that as well so in fact when we I tell this story inside my board we took over the Lancaster Hospital here and one of the in the due diligence one of the things I made sure before we took it over is that they were Philly's fans rather Oreo's fans because they were even closer to Baltimore Stadium in Johns Hopkins so we go where there's Philly's fans and therefore what we have done is we've taken the 80 miles west of Philadelphia and the 50 miles north those you know eastern geography like Dr. Shigo went to Princeton north of Princeton they go to New York so I said to myself I'm not gonna fight against those historical patterns so we're gonna go to Princeton and so we go to the Jersey Shore we go 200 miles this is 200 miles this way 50 north and south and so essentially we have hospitals and all these dots are outpatient multi-special centers and so forth where we have put our practices to really orient ourselves as Chicago has here's a little bit suggestion for you and these are the kind of clusters where we do things and these are especially in primary care sites hold on this is the heat map of Chicago now the trouble is you have all these Cubs fans everywhere which helps Northwestern a little bit so so as I talked about the plants you got to focus on where these white socks fans are and even a stand go by now we're sharing there's too many Cubs fans out here where we have summer homes so this helps your demography here to go back to what we've tried to do here's we have clustered our hospitals our outpatient centers now primary care sites in these areas and having hospital anchors with multi-special anchors and primary care and these three ovals is what's helped us to really have that kind of regional geography and what we've learned is people will travel for cancer therapy they didn't come in for surgery but not going to come in 20 times for chemotherapy they're not going to come in 20 times of radiotherapy and they're not going to come out often for images and so forth so you basically have to get close to the population where we differ from the ride aids and the CVS's and so forth there's we put imaging and and chemotherapy and radiation therapy out there as well because we know that people who not want to travel 20 30 40 times 50 miles to do that so that that kind of regional presence and it's more difficult Chicago but your demography is more difficult here than it is inside of Philadelphia it's basically what's allowed us to get very close to the patients in all these regions now the payers as I mentioned in one of my early slides the insurance companies essentially from the time you leave school it's the time to get on Medicare so roughly from age 20 to age 65 you're gonna be covering health care by your employer Obama care has changed that a little bit and the payers the big insurance companies the Blue Crosses the Atenus United that you have in your backyard here basically become the agents of patients as I noted they increasingly do not want to pay as much for health care as they paid in the past so one of the big experiments in Obamacare was to quote-unquote to go to more value-based payments and one of the things I've noted at both the Chicago and Penn if it's your cargo you've been telling people for a hundred years come to me if you're sick or Penn and fraternity years come to if you're sick guess what you're gonna get when you put together an insurance plan you get a lot of sick people you can't run an insurance plan if you don't it was called a normal distribution of patients so if you're a place that gets sick people you don't you do not want to run insurance plan that's what you're gonna get and since a sick person and cost a hundred times as much as a healthy person if you got a lot of sick people your insurance plan you're gonna go broke pretty fast so just inside baseball you know a lot of the big systems the country right now you know like Matt's general partners and the system in New York just doing three four hundred million dollar white offs because they got an insurance plans and I said to them what you're thinking about if you're a mass general in Hopkins or those kind of places people gonna come to if you're sick you don't want to run insurance plan but you want to run as a spectrum of care that and the way to do that is to what what I would say is is take risk on what are called bundles so we've been doing this the last couple years and as ads has Chicago in orthopedic care and cardiac care we're basically we take the accountability after hip replacement e-replacement valve replacement will take responsibility for 90 days care so we have to do not just inpatient setting the outpatient setting the home care but we do 90 days a time but by knowing it's gonna be a valve replacement or hip replacement we basically know what the care process is going to be which is different than just saying bring me all the people you have and then a co and therefore you may get populations that just need hip replacement e-replacements and they pay you seven thousand a year you can't get seven thousand year across a whole population it's all gonna be hip replacement e-replacement so you have to do it in bundles so you're protected against that so we've been taking assuming I'm sorry going the wrong way here so we've been taking the risk on these various bundles over the last four or five years in Medicare in Blue Cross and and we think that's a way and in those bundles we get paid for the hospital care the doctor's care the radiology and a seizure of the surgeon and I would throw into that no labs and other things as well so if you take to me I think a way an academic medical center should take risk and insurance is to do in bundles to protect against reselection and that's part of what I think I've done very well for us it's a business model rather than getting directly into insurance and in fact we signed a contract our big Blue Cross like it is our biggest insurer and so we did last year is as we get paid reasonably well with Blue Cross it said they were worried about our cost of care I said we will take the risk that any patient that gets readmitted to the hospital we won't charge you for that any and they're kind of readmission rate in a commercial population about 11-12% so an 11-12% of the patients and what we did is as we know enough from my Chicago days and our Penn days to know the reasons that people get readmitted to the hospital is they don't do the follow-up visit with their primary care physician they don't take their medications they may not have paid attention to what you told them at discharge a lot of these so we said we'll take the risk and we will put community health workers to follow those patients we will make sure they get back to see the doctors we make sure they're on their medications so we've learned to do things like text people after your whole generation that does texting right so we text all our patients when they leave have you done this have you done that and since we have everybody in the same common electronic record we can follow everybody constantly as they leave the hospital and we know that if we send a nurse out to see him or home care worker out to see him we know exactly what's going on so that that capability which insurance companies not have to stay and help the patients to read buys them to monitor their blood pressure to read to advise them to go see the primary care physician to advise them if they need help in paying for their medication so we send people out either directly or we do it electronically to remind them what to do by doing that we have brought down we admissions by 30% which is the biggest rate in the country and we've done that and the part of the jargon the last four or five years is looking at the social economics determinants of health and obviously a place like the University of Chicago which has a broad history in the social science branches of the university as has penned we focus a lot on what what really causes patients to come back in the hospital and by and large has less to do with their follow-up medical care and more to do with the social economic conditions in many ways here's a trick question what what's the best predictor of whether somebody be admitted to hospital it's their credit score the credit score is a good measure other economic status and they're reliably and so you can almost predict whether somebody can read admit it to hospital if they have a low credit score which is a bizarre finding in the world of big data so not that we just look at that but we look at other things as well so looking at the social economic conditions is a big indicator so what we've done we have over 60 community health workers that go out and basically hover over at the patients that have been admitted it's obviously the ones are admitted and once again remitted so by doing that we've brought down the remission risk by 30% and in all patients outside of this program it's 8% another important thing as to why we've had the geographic distribution that we've we've had that I described earlier maps is if you can keep the care inside of system this is an important point for those you're going to medicine if you keep the care inside of the system you can save half the cost patient this is national data from the there's a hundred hospitals like us around the country from Stanford to Harvard to Emory to Seattle if you keep the care inside of a system it's half the cost of when people bounce around and some obvious things are duplicate MRIs and CTs and so forth and misdiagnosis but if you have integrated care inside a system you this is one of the major findings we've had in our research it's a natural search over the last five six years keep the care integrated inside a system you'll save half the money and that is how you bend the American cost curve by keeping care inside a system so another point point there's two or three slides to pay attention remember this one it's my five and fifty slide five percent of the population this is true in Chicago in Philadelphia and San Francisco in Denmark and Vermont it's true in each in Europe and the United States and Medicare and Medicaid five percent of the population causes fifty percent of the cost and one of my criticisms of a lot of the efforts in population health the last few years they focus too much on healthy 28 year olds you now if all you healthy 28 year olds do the right thing listen to your mom and didn't smoke and exercise a bit and slept enough and ate the right diet and so forth happy you would never have to come see us but since you don't do that at age 52 and 72 you can see us and therefore you cause when you get to be 62 and 72 and 82 you cause 50% of the health care costs and if you don't take a dent at figuring out what to do with that five percent that costs 50% of the cost you're not going to bend the American cost curve in many ways one of my critiques the Obama care they didn't focus enough on the five percent you have to whether these are preterm births in you know in the NICU that Dr. Meadow used to run or cancer patients or heart failure patients of strokes if you don't pay attention to what you can do in that five percent you're not going to bend the American cost curve and fortunately we know that the news and bad news is expensive cases you know cancer strokes transplants cost 50 to 150 thousand dollars most people inside this room you don't cost anything saving 100 cent of zero still zero so if you don't cost anything 28 and 30 basically a 32 age 20 and 32 may have babies and you may have an accident but basically you don't cost any money saving money I use and it's not going to bend the American cost curve it's good 30 years down the road but if you want to save a minute in American healthcare excuse me you have to focus on these cases and the good news from my slide a few few slides ago there's enormous variation in chronic disease of this congestive heart failure CPD cancer stroke and we've shown from national evidence there's 20 to 40 percent savings opportunity so if you save 20 to 40 percent on a 50 to 100,000 dollar case you can really bend the American cost curve and part of what we've done for example now remit when a patient gets remitted to a hospital they likely get remitted for about 10 11 days and it's but roughly in a place like Chicago or Penn it's about 5,000 a day get remitted 10 days 5,000 50,000 do the math and 50,000 dollar case when they get remitted so you want to make sure you keep those remissions there down so to me we're American medicine where whether it's pan or mass general Hopkins Duke Chicago should focus is what can they do to bring down the cost of these curves and I think we're uniquely a place to do that because we have doctors nurses social workers pharmacists and calm electronic records all into one roof and our strategy is a little hard to see so at the base of this pyramid you have your healthy patients again importance of moral cause but not where the money is all the money's up here this is where American health care costs are so we you know for the healthy patients we have our primary care network and as you move up there you know into your chronic conditions that way as both you know dr. Segar and all those doctors inside the room know in due time in fact Mark once taught me you know the average patient at Chicago a pen that we really work as someone who's like 74 years old has gotten their diabetes and hypertension and BMI of 40 those are patients across all the money so you have to figure out how to manage those populations and one of the things we've really done that's enormous importance it's hard to see we have a common electronic record every place we are our hospitals our old patients studying our home care common electronic no matter where you come into the tune amounts of pen you can be in a common record you know it's epic like you have you know we have it everywhere so we can manage your care from the moment you walk in the door and know what meds are on what images your doctors notice all right there and so we and we've also organized ourselves into service lines and disease teams the average patient doesn't know he needs and he or she needs a neurologist or neurosurgeon they know they had a stroke or they know they have lower back pain or they know they had their breast cancer so we organize ourselves by cancer heart disease neurosciences so our teams now we take the classic academic departments of medicine surgery orthopedics ophthalmology we organize them all by disease teams as a way of organizing around patient populations so the theme of this as I've tried to develop is this is a multifaceted approach where you have both regional distribution to take care of patients where they are you focus a lot on quality as we have throughout academy brought the both the mortality rates to a national low and patient satisfaction you develop bundles for payers to kind of share the expertise and give them some payment relief you work on readmissions you work on variation and these things you have to work on all those things to really make a distinctive difference and causes sorry to keep saying but we want what Chicago and Penn can offer you and for example these are copy cases without complications cost about one-third one-fourth a case of complications to so you have to focus on quality bring down hospital quiet conditions bring down those clap season uti's and all those things you know about as medical students and nurses and you bring those down you'll bring your costs down enormously and this is say it's 40,000 for cases of complications and that this this difference in in in cost curves is again one of the things that academic medical centers can really focus on we focus a lot on the coordination of care we for example we signed people up there's a feature in epic called you know my chart we call a pen chart and we have five over 500,000 people who now can sign up and just look at their you know look at their lab tests their images their doctor's notes every day their labs are really managed your care and then we communicate with your care team manage your appointments renew prescriptions make it easy make it easy for the patient to manage their care we invested enormously in telemedicine whether it's you know monitoring patients inside the IU I'm trying to rush up a little bit so we have few moments for questions so we have the electronic monitoring of the intensive care unit to remote monitoring of Parkinson's and we even do telegenetics around the world and same thing with dermatology and refile of transplants so having telemedicine make it easy you know your hospital like our hospital is full every day so if you have your patient come from 80 miles away who has Parkinson's and you know somebody some adult child has to you know take the mom or dad in to bring them down 80 miles to see us we now do the but through telemedicine as a way of making it easier for patients to come see us this Dutch word is obviously tribute to the University of Chicago based on that the book that came out from Cass Sunstein and Richard Valor we developed the first nudge unit in in medicine I know there's 200 I think David Nelson I think by 200 these are around the world right now we were the first one to develop it a good University of Chicago product main and merchant heads our Center for Digital Health and we've basically taken the lessons from Silicon Valley and learned how to try things out fast you learn this you learn this Silicon Valley jargon of try fast and fail fast you just try things out and one of the things you do in academic medicine is kind of wedded to process rightfully so but in patient care delivery you have to try things out a lot faster so one of these we've done we've created about a 60 person Innovation Center that's made up of doctors nurses but also bio statistician design experts social workers engineers and they basically a kind of innovative lab so we whether it's things like quick recovery after after surgery to prescribing of generics we have them try out experiments like that then we try to bring the operating unit quite fast so we basically mimic this office Silicon Valley ethos and the nudge unit for example about three years ago we realized that we had generic prescribing about 65% of the time now an electronic record when a doctor prescribed the first thing that comes up in the drop-down menu is a generic we've gotten tonight overnight we went from 65% to 99% generic prescribing inside the hospital where this biosomer so 99% generic prescribing overnight by making that nudge and we've done the same thing on opioid you know for the opioid crisis around the country we like a lot of people routinely three four years ago we're handing out 30-day you know prescriptions for opioids and now we limit it to five or less so when you when anybody prescribes opioids now the first nudge just say maybe one day maybe three days maybe five years and it's enormous difference in prescribing just those simple nudges the doctor can solve a ride but it's a simple nudge like that makes an enormous difference in terms of patient care so to sum up where I've taken you today it's both a strategy business and execution because it's part of why I'm proud of this that we focus a lot whether through training on what you actually do a lot of people around academic medicine think once you announce a strategy self-execute I learned a long time ago strategies never self-execute you have to figure out where you're in a sports team or medical center really focus on on implementation train people to do the right thing the burden of proof on value to go back to those cost curves I showed you that the American population has not had a on average a compensation increase except for health benefits the last 20 years that can't continue and whether they vote for Mr. Trump in 2016 or 2020 they're rebelling in terms of cost of health care costs so we have to keep figuring out how we provide value the consolidation disruption I didn't speak a lot about hospital consolidation today so I think you have that covered in other talks that disruption from private sectors going to continue when you have 18% of the American economy inside health care the Amazon's and Google's apples are going to keep coming to health care and we have to then figure out how much they're going to disrupt health care versus being once more a passing cycle we figure it out we haven't opened up walk-in clinics but we basically figure out you had to put a care where the patients live so you have your main academic hospitals you have here but then a primary care and multi-special care everywhere so people can get to you within 10 15 miles and where we think we've really shown the difference and the bundles are part of our economic model is we think the total cost it may be more expensive go to Chicago and Penn for the first day but by the fact that we diagnose you right that we do genetic testing to make sure you're not put into chemotherapy if it's not going to work for you know if you have a block of mutation so but we've been able to show our insurers in heart failure and cancer diagnosis and so forth we'll save you 30% by doing the right diagnosis the first time so they come back to say if you're so sure about that take the risk was it will take the risk that we can prove it the remissions program was part of us taking the risk that we could bring down this cost by 20 30 percent so we think now managing care 60 days 90 days 180 days maybe your time is a right way for us to go because we have the great academic medical center with the ICUs we have the distributed primary care we have special care we have home care and we have a calm electronic record everywhere we think that's the way to go in terms of American population I showed the slides I'm reducing variation of care where a case of complications will cost three four times with a case without complications let's really focus on that and that requires trust among doctors and nurses that we're using the data to improve patient care rather than just to monitor them too much and the investments in technology innovation have to continue I mean we're a generation which are young doctors you know Canada I know you know we have like a pen out 10 15 percent about graduating doctors from the medical school they don't go to practice they're going to app development they're gonna work for Google and the developing hundred apps a year so increasingly medical expertise is being going into that kind of software world I'm worried that we'll once more have a cacophony of apps and to go over the cacophony of paper records that we dealt with 23 years ago but we have to deal with technology but at our core I think every decade that I've been academic medicine going back 85 now it's always been predicted that academic hospitals will have a difficult time the community hospitals will surpass them and every decade the academic hospitals are stronger than they were before I think it's perfect because we keep attracting the doctors to nurses to pharmacists to social workers as long as you have the care team being organized around the hospital and community worker the fact that we've done this for 500 years will continue to put us in good stead for the next decades as well so it's a pleasure to be back with you I spend many fun times as room as if you have any questions I'd be glad to comment so I had a question about the five percent of patients that cost the 50 percent of her cause 50 percent of costs when they're shopping around for a procedure assuming they are shopping yeah they're not yeah if they're asking for a procedure that's like way way above their deductible how do you make them actually care the procedure for things the L a little less cost wife has breast and prostate cancer your children are 24 weeks you know a maturity at birth and frankly the nose and in the middle of breast cancer you're gonna start negotiating on your you know iPhone for the cost of an MRI that being said we have to be attentive to the to those those costs what we try to do is we try to show their insurance company who's their agent there were better value over so what we try to do with our blue cross and this is basically say let's be a center of excellence in stroke let us be a center of excellence for high risk first let us be a center of excellence in proton therapy so we've tried to give them packages so the patient doesn't have to make that decision as she or he is coming to the hospital on the other hand under Obamacare you know the as important as as important as out out of pocket costs are the limited $6500 per patient and 13,000 and that's not you know most many parts of American population can't afford that but there's Obamacare subsidies for that that Trump is trying to undo so my politics are coming through but by and large on those cases you know for example you know we don't send anybody to bankruptcy and so forth so you basically you can negotiate those expensive cases my point is only the insurance companies do not know how to manage those complications we do the people inside this room not a manager's complications we know how to do the right diagnosis insurance companies don't so I think in many ways I think the insurance companies are going to go on to be like visa and they'll get the 3% off the top but the care process to have to be managed by the people inside this room well to go back to example the doc Seeger gave me you know 20 years ago the patient who's 74 s these really does ace and now it's between what you know it's one thing to be 28 from tennis and I don't be too flippant about that it's not a thing to be 70 and have four or five things going on and so I feel it's both our professional obligation then our obligations medical centers to figure out on behalf of those patients so even though I'm a big fan of the internet and so but when the time comes there's too much you know garbage on the internet as well as reliable things so ultimately I think the when some of these are seriously ill they're gonna rely on the doctor in the nearest to help and sort out all the stuff that's going on there and knowing the right thing to do is know if exactly more than these it's a behavioral issue going on as well whether it's whether it's depression or whether it's you know substance to be yourself got no self-diagnosed it's very difficult in Trump's computer and I try this computer apps out where you get it goes on somebody says of your seriously I'll go see a doctor then tax minutes okay you if you like if you allow if you allow this generation to text a doctor every minute the doctor are crazy even Kaiser now limits these text eight a month because they were getting too many people asking their caregivers every month so if you bring the price of health care down to zero you're gonna demand even more of it so one of the things that people forget about when we brought in the walking clinics they did not bring down primary care in the country when we brought in urgent care did not bring down ED visits every big innovation health care last four years has been an add-on not a substitute that's a big challenge for all of us inside that we keep adding on which is what I said so written about this automated hovering health last four or five years all of us have not with the opioid crisis and there's a lot of interventions one could be here as well to help those patients of sure David well so it was I loved all the about the real efficiencies that pen has produced but I want to go back to the slide you had about the margin yeah because the margin of course is the difference between the revenue and the cost and I'm wondering what part of pens profitability is related to the rates it's able to negotiate and and in thinking about those rates you're able to negotiate how important is pens market share which I know has grown tremendously over the years and just to sort of push one more level to what extent do you think pens efficiencies have been a major driver of its ability to get that sort of market share and and with that sort of some of the less competitive potential competitors drifting out of the market David asked a multiple series of questions let me try to take them on this academic evidence and I've written about this as well that by and large the big systems command better prices than glasses and that's true and we're one of those systems against better prices now some of this is baked into legislation because I'll get a little jargony on Medicare hospital teaching hospitals such as Chicago and Penn get an extra allowance from the federal government on inpatient cases that now case is worth about 25% the case 25% is it's called the IME adjustment I've spent the last 30 years of my life going to Congress to make sure they don't take that away as Mr. Trump tried to do so part of that is the Medicare we all get that extra add on on inpatient cases secondly on the blues and so forth you try to have regional market share one the reasons we did regional distribution and I've talked to Dr. Ponsky about this you know and I knew this when I got here 30 years ago just sitting in the South Side of Chicago 37% 37% Medicaid when I was here Blue Cross paid us five times as much for the same procedure as Medicaid did you don't have to do advanced math to figure out if you're getting paid five times as much by Blue Cross as Medicaid you better figure out how to get some Blue Cross patients in Europe so you have to have regional programs like cancer when I was here cancer GI etc. that caused patients to kind of come in and you know a lot of as you know even better than I a lot of American healthcare is based more on your zip code than anything else so tomorrow you know the way we pay for American healthcare which I showed my first slide or two is important powerful and you have to figure out how to deal with that and no we're not as in a city based as as Chicago is we have to figure out some way to get to the populations which is why we distribute ourselves to multi-special centers now in terms of what I'm proud of is I knew that just having higher prices is not sustainable in the long term I've hung around an economist like you to know that so one of the reasons we focus as much on quality and safety and so forth it's we knew in the long term we had to prove that they got value so that's why I was willing to take the real mission risk which is the only place in the country that's been willing to do that because I knew that we have enough communities and go be social workers and so forth we put them out there and so we knew that that's a little inside baseball but basically if you basically do the community interventions you can save money so I think we've been able to show them that in hard failure and breast and long and so forth and we can save in 30% by the better diagnosis you have to have better care in the long term I think coming to hospitals Rob Burns I've written about this is the times again today just get by with higher prices that's not sustainable in the long term those higher prices are going away Ralph Merrick Edison what would you do one thing that you would impose on all of us well I'll give you a simple answer because we still live in a 50 state system and R and these and blue and red and so forth and I've been pushing this I've moved Medicare to 55 because we know there's evidence that people who are not insured when they get to Medicare at 65 they have a lot of you know pent up in a sense disease they cost four or five times as much as somebody who's been continually insured so big repeat that if you get to 65 on Medicare you're gonna cost four or five times as much those first couple years if somebody has continued to be insured and therefore having access to health care so if we can make that age of having an elevator of Medicare down to 55 to get my example earlier all of us were over 55 with the ones who cost money I don't think the country is going to go for Medicare for all despite what sent to war and other people account not going to go there there's not enough trust in government for the reasons I mentioned your trust in government 7% trust in doctors 85 and so my sense is it's not a big kind of sexy solution do Medicare 55 Clinton proposed that they got washed out in the whole 97 98 crisis I wish we had done it then one of my friends on the board at 10 has been doing a lot of polling around the country with Governor Randall and this is the most saying issue among working class and Democratic voters my guess is I'll predict you today if the if we have the Democratic president in 2000 you're gonna get Medicare 55 this one really resonates so I mean there's other big things you could do but I think with 50 states 320 metropolitan areas important based health insurance arts and deeds and blue seats and all that kind of stuff you can't do one big solution isn't I mean Obamacare came as close as you could do you see the kind of rebellion against that no Florida and Texas still don't have Medicaid expansion to show you how ridiculous things are inside this country so to me Medicare 55 is a thing of the push as a solution what's nice about that I give them the Republicans will go for that because you especially again will inside base to do through Medicare Advantage rather which has private sector involvement as well as public sector funding to do through Medicare Advantage the Rs were likeers and the deeds were like the 55 and the Rs were like Medicare Advantage again using a little jog and yeah I've been around washing long enough to know you have to have solutions that get both the Rs and and the D's on it so Medicare 55 is my solution to that yes yeah yeah in terms of moral theory and Obamacare keeping people obviously once you have your diagnosis or cancer you want to make sure you have access to health care but for example I mentioned earlier do what your mom told you don't smoke so for example one of our behavioral economists doctors like Albert David Meltzer he had a study of GE about ten years ago where they gave the GE general electric gave GE employees incentives not smoke that's very hard to stop smoking but basically but then also in GE said these these people are 28 and 29 and 31 not gonna be working for me when they're 55 and 57 when they get lung cancer so GE stops saying I'm not gonna pay for somebody who's 28 a kind of annual payment to not smoke there's a savings from that person it's gonna be when he or she is 55 and when they're 55 you know in the gigagon they're gonna be working for me so one of the real challenges in poor based health care I'll get a more narrative is companies do not want to pay for somebody who's gonna be on somebody else's tab five years from now and one of the great challenges in wellness preventive health is basically the cost of they're not doing the right thing exercising eating smoking so forth comes ten years down the road so to go to pre-existing conditions now obviously when it's more advanced such as early being diagnosed with cancer or being hypertensive and so forth you obamacare fortunately still protects us on that in terms of the cost curve obviously though some of those things may be 10 15 years out in a government-paid system like the UK and Canada you're more likely to be willing to pay for those kind of things than you on any US kind of system so I think one of the failures that's why we have to make sure despite what Mr. Trump says they keep a pre-existing condition as part of the policy but I think whether general challenges to do the right thing with 20 and 30 year olds is that essentially at age 50 they can be working for somebody else and the company says well I'm not gonna pay for that well first by fail fast this is a kind of jogging from Sturgeon first of we're doing this 10 15 patients at a time so I mean it's not like we're doing a thousand patients at a time you try it out so for example whether it's getting people to you know check their blood pressure or take their medications you try out different ways and we found a texting there's a good way of getting saying in touch with people so it's better patient care as well so it's not just the problem maximizing because in a world of bundles and so forth you want some ways of says economic benefit but also keeping people at hospitals keeping people in medications keeping people you know healthy it's a good thing worldly it's not just an economic thing so by and large you know hospitals for 50 years have been the most expensive part of health system I showed you the 30% slide that's a little reduced where it was 34 years ago keeping people at hospitals is what most people have figured out is how you bring money take money out of health care so whether it's producing re-admissions making sure you reduce the hospital quiet infection so you don't have complications those are things you want to experiment on those are good for patients as well as economically so by and large a lot of our efforts at economic improvement are also efforts of inequality up so I think I think that there's a moral kind of overlap there listen thank you to be great to be back here