 All right. Good afternoon, ladies and gentlemen. And welcome to another edition of the Stanford Health Policy Forum. My name is Keith Humphries. I'm a professor of psychiatry here at the medical school. And I chair the advisory group for the forum, which brings top health policy makers and thought leaders to Stanford so they can engage with the university community and the broader community about health, health promotion, and health care. This is our first forum for this academic year. Our next forum will be November 27th. And we'll be on the topic, why do we get fat? And is there any way to stay thin other than living on a diet of yogurt and wicker furniture? The guests will be Gary Taubes, who is a Stanford-educated science writer, a writer of multiple bestsellers about calories and obesity, and our own Christopher Gardner, professor of nutrition. That's going to be a very interesting event, November 27th. The precise details of the room and the time will be available where you can find everything else about the forum, which is our website. That's healthpolicyforum, all one word, healthpolicyforum.stanford.edu. If you go to the website, you will also notice an archive. Every event we've had is available for you to watch. And that is my cue to say we are filming this today. And therefore, if you've got a beeper, pager, cell phone, MRI machine, and the like, please turn it off if you can. Or if you have to have it on, please turn it to a silent setting. We'll get a much better sound quality if you do that. Thank you. Just to thank the people who put this together, Paul Costello is the head of communications and media at our med school and our regular and outstanding interviewer, as he's doing again today. The government relations staff do yeoman's work for all the details. And there are a lot of details. And thank you so much, Lucy Wicks and Ryan Adesnik. And thank you to the other members of the advisory committee, Mr. Bob Burke, associate dean Ann Arvin, and Professor Dan Kessler. You make it happen. We really do appreciate it. The other person deserves to be thanked is the man whose office funds the forum. And I wouldn't flatter him, just because he's my boss. Although I got to say, you look younger every year, fellow. It's incredible. I don't know how you do it. So he's one of the world's leading pediatricians. And he is the dean of our med school. And he will introduce our distinguished guests. So please welcome Dr. Phil Pisa. Well, thank you so much, Keith. And thank you for all you do. Clearly, we're going to need a larger room for the November forum on obesity. It is after Thanksgiving. So that makes me even a little bit more alarmed. But today, without doubt, is one of the most important topics facing all of us, indeed, our nation and the world. And that's the future of what health care is going to look like. And I couldn't think of a more exciting and important and interesting speaker than our guest today, Zeke Emanuel. Zeke has been a friend for a long time. And I've had the pleasure of knowing him in various different settings and capacities. But today, he is the vice provost for Global Initiatives at the University of Pennsylvania, where he's also the chair of the Department of Bioethics and Health Policy. And of course, he was a special advisor to the director of OMB as part of the big debate and run-up to the Affordable Care Act. And we're so pleased, Zeke, that you've made the trip to visit with us today. And I am sure we're going to hear a point of view today. So I'll ask Zeke to come forward, and also Paul Costello, as you've heard, our esteemed director of communications who's going to lead the discussion. Thank you, Zeke. Thank you. Thanks, Phil. Well, thank you, everyone, for joining us today. We really appreciate your being here. Well, let's start out right away. And I want to start out with some recent news. In his Meet the Press appearance on Sunday, Governor Mitt Romney stated a change in his position on the Affordable Care Act. And prior to Sunday, he said he would gut the act on his first day in office. And now he says he would keep one of the most popular pieces of the reform plan, which is allowing people with pre-existing conditions to obtain health insurance. Can you parse this for us? I mean, is it possible, on the one hand, to eliminate the act and yet keep one of the most expensive provisions? And if you do that, how do you do that? First of all, I'm not sure I know what his position is. And I don't think that's a partisan statement. If you look at Mitt Romney's career as a whole, I mean, he championed health care reform in Massachusetts. And let's face it, it wouldn't have passed without him. And I think the exigencies of politics have made him move against the act. I sort of doubt that his heart's in it, in being against the act. I think he understands that it's really necessary to move the country forward in the health care sphere. And I think you got out of him on Sunday something about what he really wants, which is you have to get people who have pre-existing conditions coverage. It turns out that the only way you can actually get them coverage is a mandate. The mandate didn't come out of nowhere. We know both from health policy and health economics theory as well as practice of low these many years that if you don't have everyone in the system and you just have the sick buying in the system, the rates go up and people can't afford it. I mean, if you look at states, and there are a few states that have guaranteed issue, which means that anyone who applies has to get coverage. What you end up seeing without a mandate is that insurance rates are through the roof because only the sick end up buying insurance because people who are healthy can't afford the insurance and wouldn't pay that amount. And people who get insurance are generally poor risk. They are going to use health care. They're going to use a lot of health care. If you want to have an affordable system and you want to get coverage for people who have preexisting conditions, you have to have everyone in. And if you're going to have everyone in, either you have to give it to everyone so it's free so they don't have to pay for it or you have to have a mandate. I mean, as President Clinton said, this is just simple arithmetic and that's all it is. And he understood it when he was governor of Massachusetts and every single health policy person, no matter whether you're of the left or the right and this isn't a partisan thing, understands it. It's just that we're in a sort of crazy political moment where you can say things that on the face don't make sense which is we'll cover preexisting conditions but we won't have a mandate. That's just not possible. Earlier today, you said that you're an optimist and you believed that by 2020 we will have a very robust perhaps health care system and the getting there is going to be the bumps in the road. So let's talk about the bumps in the road. What are the significant bumps in the hurdles that you think that a president, no matter who that president is, they're gonna have to take the American people with them over that next period of time, eight years. So I can see from this audience, many of you have had adolescent children. Some of you look like you were recently adolescent children and everyone who's gone through that knows that it's a very bumpy road but by the time you get into the 20s things tend to smooth out. That is exactly where we are in health care which is we're about to go through the teens in, we'll get to the 20s and then things will smooth out. The health care system in America is a $2.8 trillion system. To give you some context, that makes it the fifth largest economy of the world. Our health care system is equivalent to the entire French economy. Now just take into your mind, we're gonna change the French economy pretty substantially. You're not gonna do that overnight. It's gonna take time. It's going to be dislocating. That's what we're facing. So we have to take our current system which has peaks of greatness like Stanford but a lot of valleys and a lot of uneven quality. We have problems with access where 50 million people don't have access to health insurance and we have healthcare costs that are growing too large. We have to move all of those things. You're not gonna improve quality overnight. That's gonna take some time. To get access, even that's gonna take time to get people into the insurance system to make sure you have enough coverage of them. And then certainly to get costs under control is gonna take time because that's gonna take a re-engineering of how we deliver care. We're gonna have to move from single doctors or small doctors and small group practices to teams who are working. We're gonna have to change how we pay doctors instead of paying them only to take care of people who are acutely ill. We're gonna have to pay them to keep people healthy. All of those changes are gonna take time. That's the dislocations. That's the bumps in the road. And that's gonna take up roughly a decade of implementation. When you hear people say, and you hear it from, I just recently heard it on the Bill Maher show a Republican congressman, we have the best healthcare system in the world. What's your response to that? How many of you in this room think we have the best healthcare system in the world? Look, I think, again, I think it's, we have peaks of greatness and we should be clear. We have some of the greatest in the world, but the system as a whole is quite uneven. Almost by any metric that we could use to measure it, we are uneven and we're certainly not performing as well as we should. Every other healthcare system has defects, but they also have lower costs than we do. And I think, in general, many systems have less uneven quality. So I think it's very hard to defend the proposition that we have the best healthcare system in the world. I think the other thing is, it turns out, and most of us are very well off in this audience by the looks of it, even for the well off in this country, it always surprised me, you're not guaranteed great quality either. You can go to a hospital and the rate of hospital acquired infections is high and you don't know whether it's gonna be you or your neighbor, even if you know the doctor, even if you know the president of the hospital, they can't guarantee it to you. The rate of mistaken drug interactions, also high. So I think none of us should be satisfied, no matter how good our personal healthcare is by the system, because it's unpredictable what we're gonna get or unpredictable if we have an emergency that we're gonna get the right care. So we should all want the system to dramatically improve its quality. And we also all should want the system to be able to control its costs, because after all those costs, it's not that the insurance companies are paying it, it's not that the government's paying it, it's not that business is paying it. Ultimately, we're paying it. Whether we're paying it through taxes or through lower wages, we're paying it. And so we should want our healthcare costs to be moderated. Why do you think that the Affordable Care Act is so, at best, misunderstood and at worst, despised? So I think there are two parts to that answer. The first part is if you take it apart, tease it apart, people actually like various provisions. I'll just be blunt. I have a 26-year-old daughter, she's 25, she'll be 26 in November, and then she won't have coverage, but she has for the last year, as she's gone in and out of the United States, when she comes back into the United States, she has coverage through her parents' policies. So that's been a big boon to us. So I've been in a beneficiary, I've had millions of other families, and a lot of upper middle-class families in America, because their kids have had coverage. And you can go down various provisions. Many people, seniors, have gotten rebates through the closing of the donut hole. Many people have gotten rebates because of the provision that insurance companies can't make excessive profits. Whether you're for them or against them, many people have benefited. I think the problem is that there hasn't been a good communication strategy to explain to the public the bill and the rationale behind various provisions of the bill. I do think the White House has not done its job in this as well as it should have. And I think that really does center around why do we have the mandate? Why do people have to be required to buy coverage? And the real, I mean, again, going back, you have to explain to people why the mandate is absolutely essential if you want to have a situation where insurance companies can't discriminate against people on the basis of preexisting conditions. Those two things go together. You can't have one without the other. And I think we haven't, the public hasn't been told and that hasn't been clearly explained to them. I don't think the American public is unreasonable. Healthcare policy is complicated. I was once told by Vic Fuchs, who's on the faculty here at Stanford when he and I began collaborating almost a decade ago. He says, you know, there are only two people in America who understand health policy and one of them just died. And it's a complicated business. It takes a lot of explanation. And as, you know, all of us know, you can't just explain it once. Richard Nixon says, you know, you say something once, you say something twice, you say it seven, eight times, you're getting sick of it. The public's just beginning to hear it. And so you have to say and explain this relationship between preexisting conditions and the mandate over and over again for the public to understand it. And I think that just hasn't been done as clearly as it could be. When you step back and look at the efforts of the Clintons, the Clinton White House versus the Obama White House and why President Obama was able to achieve the success, what was the dynamic? Why this moment versus the failure before? I was involved in the 93 effort too. So I think, I think there are a number of components to it one is the 93 failure did set up the ability. We learned something from the 93 failure that fed into the being able to succeed in 2009. So it, while it was a horrible situation and wasted, you know, 15 years, people actually did learn lessons and became smarter because of it. And some of the lessons we learned is, you know, you will have a lot of interest groups against you. You need to attend to those interest groups like the pharmaceutical industry, like the insurance industry. And I think that was done this time. It was also quite clear that the Clintons, you know, did it famously behind closed doors, kept the press out. That was a very bad mistake. The Obama administration, I think, learned from that. I think you had people like my brother who had been through the first episode and took lessons along. Also, I think the debate among health policy experts had matured enough so that the range of options had already been pretty well vetted and a lot of the framework people had been clear about. I would say also you had a set of congressional leaders on Nancy Pelosi. She understood that you couldn't have three committees working on healthcare simultaneous. You had to have all of them come together. We had five different congressional committees working on healthcare reform, unless there was some coherence and uniformity to that. So she had them all working on the same bill instead of reporting out three different bills. So it's a lot of those elements that were necessary to get this passed. And by the way, I think we're still in the sort of heat of battle. It's just been a little over two years. In five years from now, we're gonna look back and look at this as a real world historical event. We have been trying to get healthcare reform in this country for a hundred years since the early 19 teens when FDR began campaigning on it. Finally to get it, that's pretty remarkable. And I think while we're still debating the mandate and the constitutionality in this and that, the fact is that this is a real world historical event. Why did the Chief Justice support it? What was, you've now had a... I've never met the Chief Justice. I don't know. What's your conjecture? I know you've written about it. So I would say that the Chief Justice did not want it to look like a political decision. Of course, it was the most political decision that could have ever been made. You know, it's a very strange decision. On the one hand, he goes through this long argument as to why the Commerce Clause couldn't justify it. Typically, you don't do that in the decision. I mean, that's very unusual to explain why that argument won't work. You don't do that. And I think that's very dubious, by the way. I think most, I would bet, almost all the constitutional lawyers here at Stanford Law School would say, that just doesn't work. There's a long list of pedigree of very conservative legal scholars, whether you're thinking about Charles Freed, the Solicitor General under Reagan and Harvard Law School professor, or Justice Silverberg, the head of the DC Circuit. Clearly, this falls within the Commerce Clause. I mean, it's open and shut. And that the Chief Justice said it didn't. It's a little weird. I mean, the distinction between activity and inactivity just doesn't hold here. But I think he also wanted to insulate the court from the charge of being politicized, because it is on the verge of being, it's approval rating the sense of the public that it's actually deciding things as a matter of laws as opposed to a matter of politics, as it's lowest level. And so I think he wants to protect the institution. And I think this was a protect the institution justification. So that's one. And the second is, look, I mean, the coming term is gonna be another extremely political term with affirmative action at the top of the list. And I think this somewhat, I think, they think will insulate them. We'll see. I heard that you had a bet with Scalia that it wouldn't pass the Congress. And you won that bet? Yes. And that was a deal. So I like to bet dinners. I know it doesn't look like it, but I actually like food a lot. And I eat a lot of food and I like to go to good restaurants. And three days after the Scott Brown election, we happened to be at a dinner together sitting across each other. And we got into a conversation about many things, social security, the pay of Supreme Court justices. And he said, well, you know, the Affordable Care Act's not gonna pass. And if it did pass, it'd be good for us. And well, I said, no, I do think it's gonna pass. And, you know, that was a pretty lunatic thing to say after we, Scott Brown had just been elected. And he said, and I said, you know, I'll bet you. And he said, well, you know, I'll bet you $5. I said, you know, I don't bet $5. I bet dinners. And he said, well, no, I can't afford it. And then we got, we got around to the discussion. And he said, well, he doesn't take social security because he doesn't need it. And I said, wait, wait, wait, wait, I detect a contradiction here. On the one hand, you can't afford a bet on dinner, but on the other hand, you don't need social security. So he said, I guess you got me there. And I said, all right, so we'll have a dinner, we'll bet a dinner. And obviously it looked pretty bad for me. I mean, it didn't even take odds. Maybe not the smartest thing to do. And so, yes, and he was, I will say, he was a gentleman about it. We went out to a very, very nice dinner. And he's a wonderful dinner companion. You can argue with him about anything. He has no whole bars. He's very funny. He's a very warm individual. And that doesn't mean you agree with his politics or agree with the way he judges things. We've had long arguments about Citizen United. Subsequently, I invited him out to dinner and subsequently I've had him over to my house for dinner. And so we do socialize, but we do not agree. And, you know. I see the price of coming here today was learning that about Justice Scalia. So, you know, one of the questions that I think is fundamental to this whole debate on health care is what level of health care should be entitled every American? So, the bill has this provision that you have to provide essential benefits. It doesn't define essential benefits. It defines a process for trying to articulate essential benefits. The Institute of Medicine came out with a report about that. It also did not articulate the essential benefits that should go in. It does pose this sort of, I think, lays down clearly a trade-off between comprehensiveness, covering every possible benefit, and affordability. The more you cover, the less affordable it's going to be. The more you try to get affordability, you are going to have to trim and be more prudent in what you cover. And I think that's a trade-off all of us are going to, I think all of us should face. It's irresponsible for us to say, we're not going to ignore how much it costs. And it's irresponsible to say, we can have just a very, very thin package, only catastrophic coverage. And I think that's always going to be a dynamic situation. But I do think too much, and I'll say this as an ethicist, too much we have said additional services without thinking about the affordability and the consequences if we have a very comprehensive package and it's very expensive. Because there are serious consequences of a very expensive healthcare package. So let me just give you a few of them. The more expensive our healthcare is, the harder it is to cover everyone. We know that. And even in this new system under the Affordable Care Act, there are going to be some people who are going to feel like they can't afford healthcare, even with the subsidies, even with the exchange bringing insurance costs down. And so I think that, you know, even by the projections of the Congressional Budget Office, we're going to get the 94, 95, 96% coverage. That's not 100%. And part of that reason is going to be affordability. Second problem is high healthcare costs are impacting the states. You know, all of you in California probably know it better than anyone else. When you have high healthcare costs, you have high Medicaid costs. And that puts the states in a bind. You can pay for Medicaid under those conditions. And it's not just Medicaid, by the way, it's also high state employee health insurance costs. And you can pay for those costs by raising taxes. Well, in California, that's an anathema. You can't raise taxes, as is true in most of the country, right? And then, you know, the government officials are stuck with a dilemma of what do you cut to pay for healthcare? And we've all seen the consequence. Maybe we hasn't hit us straight in the eye, but the cuts to primary and secondary schools, the cuts to higher education, and there's a consequence to the dramatic increase in tuitions at the great universities of the University of California, those are all very closely tied to increases in healthcare costs. Now, we may not want to see it that way. It may look like a fudge, but that's the way it is. You know, we should see that the increase at the UKL system in the tuition is a direct result of healthcare costs increase. And the third one, which I think is very important for all of us is, you know, wages have been flat. And one reason wages have been flat for the last 30 years is because healthcare costs have gone up and up and up and taken more of that increase in wages. But why wasn't that economic message that you've just talked about a central part of the sales of the Affordable Care Act? Well, I think the president did go around and talk about the importance of cost control. And he did say that that was an essential issue and essential motivation for him in advocating healthcare. And let me add the fourth item, which is that the growth of healthcare spending is the major threat to the deficit, the major cause of the deficit, and therefore the major threat to the fiscal stability of the country. And that the president did say over and over again. And I know that it's out there a decade or so from now. And so it doesn't seem so pressing. But remember, the international monetary markets, they don't give you a lot of warning before they suddenly say, man, we don't trust your currency and we're gonna drive it down to the ground. I think that was a, I think all of those were major motivations. Whether the communication strategy was the best around these is, I wasn't the communications guru. I'm not the communications guru. I'm a policy wonk and so. You've talked about some interventions that I wanna talk about. And you've spoken about these very high-cost interventions that are low-value treatments. And you spoke about too, a vast- Are you really gonna get me in trouble? Yeah, I'm gonna try. You talked about a vast in which costs 880, no, it's 88,000 per year per patient for metastatic breast cancer. And the other one is proton B therapy targeted for prostate cancer in men. And these two, I think that you've really stated that these two are microcosms of the difficulty of changing the system. If we can't throw out treatments that aren't working, that aren't cost beneficial, how can we change the system? So let me dissect at least one of those, the proton beam one. And I say that working at an institution that has a proton beam facility. Proton beam is, you have to generate it by having a accelerator. It's basically a hydrogen atom with the electron stripped off. You need a football field size building to contain the accelerator. They're very expensive to build, around about $100 million. Actually, Mayo's building two of them at $180 million each, because they've got, they're really souped up. Now, the proton beam therapy is proven to be beneficial for kids with brain tumors and spinal cord tumors, because you can focus them very precisely and you spare the healthy tissue around the tumor and you really focus in on the tumor. And for kids whose brains are developing, it's been shown that you can have less cognitive decline, less impede effect on their brain power and less hearing loss when the tumor is near their ear pieces. And it's beneficial. I guess the good news is, we don't have that many kids who get brain tumors, only 3,000 a year. You can't run very many machines on 3,000 kids a year. And so one of the consequences is, we have roughly 20 of those machines, 20, I forget the exact number at the moment. I think, well, whatever. We have way too many, 12, 14 of those machines now up and running. And you don't need as many as we have for the kids, the just 3,000 kids. And so people who have the machines are looking around for other diseases where that might be effective. So they've tried it on breast cancer and esophageal cancer and gastric cancer and pancreatic cancer. And they've landed on treating men with early-stage prostate cancer with it. The only problem is, there's not a shred of evidence that it makes any difference compared to regular radiation treatment. As a matter of fact, there are some shreds of evidence that is actually worse and it's more than twice as expensive. Now that just doesn't seem to me a deal that we should want our insurance companies. Certainly we don't want Medicare paying for it because if it's no better and twice as expensive, all of us are paying that bill because we pay taxes. And we also shouldn't want our insurance companies paying for it because it's the exact same situation. We pay premiums and if they're spending money on things that aren't effective, raises my premium too. And I think that is, it's very indefensible in my opinion. And I do not see why an insurance company should cover it. You want it? You want to pay the money for it? More power to you. But I don't think that as a system, this goes back to your question about essential benefits. In my opinion, it's quite clear that should not be part of the essential benefits. We should not be paying for that. That raises the cost without improving the quality. I don't want to impede your willingness to pay for it. And if you've got that kind of money and that's your choice, I'm all for it. That's the American way. But it's not, you should not ask me and the rest of the American public to pay for you, which is essentially what you do when insurance pays for it and Medicare pays for it. Isn't that rationing? No, that is definitely not rationing. I, so I'm just gonna, first of all, I'm gonna plug, can I plug my course? Okay. At the moment at the University of Pennsylvania, I'm teaching a course called Rationing in the Allocation of Resources. Actually, this last Wednesday, we had 45 minutes on the definitions of rationing. That course will be publicly available for free on the Great Stanford Coursera Program, coming in the spring in, probably be available in March or April. But it's not rationing. So rationing is when you have an absolutely scarce resource. You can't cover everyone who needs it and you have to pick people. So the classic examples are, we don't have enough livers in this country for everyone who needs a liver transplant. We do about 6,000 a year and there are about 16,000 people on the waiting list. And even if we got every liver from everyone who was a suitable donor, we wouldn't have enough. That's rationing. Similarly, if we, God forbid, have a great flu pandemic, we won't have enough vaccine for everyone to go around, picking who gets it, creating a list. That would be rationing. This is not rationing. Proton Beam does not work and has not proven to work for men with early stage prostate cancer. Not covering it is not rationing. How do we get around the word and grapple with that word rationing, which is oftentimes the elephant in the room? How do you think as a country, as a nation, we come to some understanding of what is rationing versus what is not rationing? I tried to just define it for everyone. I'm giving a course to try to help people understand it. I mean, what else do you want me to do? I mean, I do think, trying to explain it, try to put the category where it is, work, it's necessary, and then talk about other stuff where it's really not a case of rationing and I think saying it over and over again. And I do think calling people out who are simply using it to raise people's blood pressure and get people riled up where it's inappropriate is very, very important. We cannot let, in my opinion, that kind of irresponsible discussion rule the day and govern our debates. As the great Senator Pat Moynihan said, you're entitled to your opinion, you are not entitled to the facts. You cannot just make up definitions for words to promote your opinion. There are reasons we have words they have meanings, we need to stick to those meanings, and we need to enforce that as a public and say, you know, we're not gonna put up with that kind of statement that really deviates from the case of using the words properly. And you know, the same thing happened with the death panels. We'll talk about that in a minute. I just wanted to, wow. Really, you're making my day here. Trying to, you know, you've long preached about the inefficiencies in the healthcare system and just last week, as many of you know in this room, the Institutes of Medicine said America's healthcare system has become too complex, we know that, and costly continued business as usual, we know that also. The committee calculated about 30% of healthcare spending in 2009, roughly $750 billion was wasted on unnecessary services, excessive administrative costs, fraud, and other problems. So where do we, we now know that information, we've known that information. Where do we go with the low hanging fruit to get at the efficiencies? So let me just re-emphasize, it is important that the Institute of Medicine came to that conclusion. That's the, I think, fourth report that has highlighted round about that same number. So you can come to that by saying, all right, let's look at each place that we're running the system and how much could we save by best guesses and by studies. That's what the Institute of Medicine did. You could go and compare the United States to Europe and say, well, if we were running in the same way that Europe was running, how much could we save? That's what the McKinsey Institute did. You can do this by saying, well, let's look at our best performing states and compare them to our worst performing states. And if we brought our worst performing states up to our best performing states, how much could we, they all turn out to coalesce and overlap round about $6, $750 billion. And again, just to put that in context, we, $2.8 trillion, even if we don't get all of that money, even if we got only a quarter of that or, you know, that's $175 billion. That's a lot of money, a lot of money. That's almost two years of healthcare inflation there. It's more money than it's gonna cost to get all the people onto the healthcare system. So we have to be very clear about that. So what are the kinds of things we need to do? And there's, I think, a pretty good list of approaches that are gonna help us get some of that out. One is, we do know that a large, we have a large administrative inefficiencies. Some of that's built into the fact that we're a federalist country and we have 50 states and insurance companies have to go through 50 regulations and we have lots of different regulations. We also have a lot of different billing systems, but there's almost everyone who's looked at it, there are low-hanging fruit. Consolidate the, have the same billing system, have the same way of credentialing doctors one central way. Require everyone to bill in the same way. So, you know, you have a swipe card, it pulls up the information. You have electronic claims processing rather than having someone in the doctor's office put it in by hand and make a mistake. Lots of technologies there. One of the things that I'm very proud of myself and actually sitting here, Bob Kocher, who worked with me, we worked together, he worked at NEC, we pushed and championed and took a lot of slings and arrows for pushing in the Affordable Care Act, steps along the way to create administrative efficiencies and administrative simplification. And some of those rules have gone into place and over the next few years, more are gonna go into place. It won't get us the $30 billion in savings that everyone thinks we can get, but it'll get us pretty far down the line. There's more we can do in that regard. Second, I think indispensable to getting rid of some of this inefficiency is changing how we pay doctors in hospitals. If you ask me what's the core that we need to do over the next decade to really fix the system, we have to change how we pay. Right now, 80 plus percent of payment is on what's called fee for service. That is a doctor sees you or you get admitted to the hospital, they get a fee, ka-ching. You go in for surgery, the surgeon charges, the anesthesiologist charges, the radiologist charges, the pathologist will charge, there's a hospital operating room fee, and on and on and on, right? That encourages more volume, right? You get paid more if the more you do. It also doesn't encourage coordination and it certainly doesn't encourage keeping you healthy because if I keep you healthy, you never make it to the operating room, I lose all that dough. That is not a very good business practice. And so one of the things we have to do, if we really want the system, quote unquote, which keeps people healthy and has the healthcare system focusing on keeping people healthy, we have to change how we pay doctors in hospitals. That change, I believe, going to initially bundling, that he is putting all of that together. So instead of paying the surgeon and the radiologist and the anesthesiologist and the hospital all separately and the rehabilitation doc, you put it all together in one price. Well, that encourages them to collaborate, become efficient, get the unnecessary stuff out. We have to go a step beyond the bundling. We have to say, all right, you're gonna take care of this patient. We're giving you one price for this patient for the whole year. It's called global payment. And that really says, oh, look, even if we're efficient once they get in and we give them surgery, we can actually do better if we prevent them from getting in. They don't even need the surgery. So if they're a diabetic and we can work really hard to make sure that they don't get a cut. And if they get a cut, we clean it out and they don't get gangrene. And if they get gangrene, it doesn't progress so that we need to amputate. That is the secret sauce that is going to, I think, transform the system because then you're gonna get the whole healthcare system focusing on how do we keep these people healthy? And then I think that leads to several avenues. First, it leads to working in teams, not just an individual doctor. It's doctors with nurses, with dieticians, with pharmacists, with rehabilitation people. Second, it gets the healthcare system thinking outside the four walls of the healthcare system. Instead of just focusing on what goes on in the doctor's office or the hospital, most patients don't spend their lives in the doctor's office or the hospital, they spend it at home. We gotta think about what are they doing at home? How do we increase their compliance with their medications? How do we increase their compliance with the diet? How do we make sure that they're actually getting physical activity? And again, unless we incentivize the system to begin focusing there, they're not gonna focus there. And so I think the payment is the key catalytic change. What is some of the most, you traveled around the country quite a bit, what are some of the most exciting things you're seeing taking place in the clinic around the country that goes to the heart of what you've just talked about, incentivizing? I get paid nothing for this, okay? So I'm gonna plug the one, which I, at least at the moment, I think is a real leader in this area, but there are lots of experiments going on in various different places. But one that I'm most impressed with is Caremore, which is centered in Southern California, now has some clinics in Arizona, Nevada, and it's expanding. And they get a global payment to take care of elderly people. And they do a huge, I mean, again, they focus on the team, a new elderly person gets enrolled, they have a two-hour visit, go through everything. Their history, their drugs, they get a screen for dementia, they get a screen for depression. Mental health turns out that about 17% of their elderly patients newly arrived have signs of depression. They have a team taking care of, they put in a lot of infrastructure to monitor them at home. Weights that get communicated in regularly. Hemoglobin A1C for diabetics that gets communicated in. Breathing for patients with emphysema. They have specialized clinics. Again, I mentioned the diabetic and the wound. They have specialized clinics for diabetic wound care where the doc doesn't do it, once every few weeks in his office. They have one nurse who's superb at it and the patients go there and get the treatment. They do things that are usually not covered by insurance. Things like exercise and balance classes so that elderly people don't trip or fall over. They sometimes replace carpeting in people's houses. They have a transportation service so that they can bring people with chronic illness in to the office so that they don't miss appointments where the next stop is, well, the emergency room, then the hospital admission, and on. They have remarkable results. Their amputation rate among diabetics about 60% lower than the competition. Their hospital admission is about 38% lower than the competition. Their readmission rate for their patients is 10%, whereas the national average for these patients is 20%. They are 15% to 30% cheaper than the competition. So what I like to call this is they just spend a huge amount of attention on people with chronic illness in an effort to keep them healthy and out of the clutches of the healthcare system. And that turns out, it's not by saying no, not by denying care. It's actually by keeping people healthy that they're able to really both improve the quality of life of these people and keep the cost of the healthcare system down. And that's just one example. There are many other places that have tried similar things, but that's the transformation that you're gonna see, I think, over the next decade. And another transformation we're seeing right now is big medicine. Do you have concerns about this consolidation of the industry? Is it inevitable when you have these pressures on dollars that you can't have singular physicians anymore, you can't have small practices, you have to have big medicine? And do you see dangers in that? The answer is yes to both. Which is having single or groups of two physicians has certain appeal, but you have to have an infrastructure behind them. To provide high quality medicine today, it can't just be an isolated doctor or two, you need the infrastructure because it's gotta have electronic records. It has to have other healthcare providers beyond the doctors, as I mentioned, nurses, dietitians, physical therapists. You also need to have a computer system that has support services. You need to have access 24-7, if you're gonna be, I think, high quality. So I think somehow it doesn't have to be big medicine, but it has to be a network in some way that connects doctors. And I think there are gonna be various different forms of this. We don't know the best form, and I'm not sure there is a single best form. There's probably gonna be multiple ways of doing the same delivery. I do think small practices, given the right infrastructure and right affiliations, can probably survive. We'll see whether they do. Nonetheless, I do think that there's always a worry of big medicine. Worry of impersonal to the experience. Worry about the fact that it's unresponsive to individual patients. Worry that consolidation will also raise prices. So I think there are very legitimate worries about big medicine. I also think in terms of delivering continuity of care and focusing on keeping people healthy, it's also probably inevitable. You tried to have a conversation during the healthcare debate about end-of-life issues and end-of-life conversations usually typically take place 33 days before a patient dies. And 80% of people say they wanna die at home, but only 10% do. Well, I don't know that that last number is correct, but anyway. Well, I'll give you the last numbers. How do we, if we're not able to get into a sane debate in a period of time when we're talking about this issue, how do we move the country forward in having this adult conversation about end-of-life issues? All right, so now it's my turn to talk about the glass being half full. When I started in the end-of-life care era, 25 years ago, actually more than 25, almost 30 years ago, God, am I getting old? You know, I left Harvard Medical School as a student and told the dean that I was gonna go and work on a PhD and part of my focus was gonna be end-of-life care and he basically said to me, well, that'll be a career render. We don't talk about end-of-life care and medicine. And, you know, being a sort of pigheaded and not very good at listening to what people were telling me, I still did it. And then, you know, lo and behold, at the end of the 80s, it really did come on the agenda. But when I left, more than 70% of cancer patients in America were dying in a hospital. Today, it's under, certainly under 30% and probably under 25%. That's a huge change. Hospice was pretty much nowhere to be found. I mean, there were a few isolated hospices. Among cancer patients now, hospice is just one of the treatments. Now, we might give it too late, but we certainly, every oncologist has used it, uses it regularly. And again, we might not use it optimally, just like we don't use our chemotherapy necessarily optimally, but we're very comfortable with it. It's not necessarily true of every cardiologist, but I think it's expanding. It was a forbidden topic. You know, as my Dean said, you know, it's a career render. It's not that, you know, we have a whole cadre of people who are doing research on how to improve it now, whereas, you know, there were probably four of factors in the 80s who were, you know, focused on this at all. So I think we've actually made huge progress as a society. We haven't made as much progress as we should or as we like, and there's plenty of stuff we can do to make it better. What can we do to make it better? Well, let me just say why I think the trend, I actually think the death panels thing backfired. Most of the public does want to have a discussion of this and wants to have, as you point out, their views and preferences on this respected better. What they don't understand is how does the system have to change to make that work for them? And that's, I think, where the death panel scare can get some perch. But for most people, they would like the system to respond better to them and their loved ones. So what do I think is necessary? Let's be honest, we don't know yet. We don't know the optimal strategy, but here are some things that, here's what we were trying to do in the Affordable Care Act and again, my colleague Bob Cocher and I worked on this together. So one thing which I think is essential is communication, training doctors and nurses about communication around end-of-life care. Look, I'm an oncologist. Is that a interaction I like to have with my patient? We've tried every chemotherapy, they're not working, I'm sorry, but sometime in the next few months you are gonna die? No, I would put it off as long as possible. Who wants to have that conversation, right? Plus, they didn't teach me how to have that conversation in a medical school. Well, one of the things we have today is we actually have people who've worked out trainings on that conversation that can make doctors and nurses feel more comfortable about having that conversation. That's really critical it seems to me and one of the things, why don't we require training on communication around end-of-life care? I don't mean general training about communication with patients on end-of-life care. And I think that would be a big, big step in the right direction, whereas we wouldn't be as afraid of it. I mean again, it's never gonna be a pleasant conversation but we wouldn't be as afraid of it. Second, we do need to have a better infrastructure for taking care of patients who are dying at home and giving them palliative therapies. Yes, great academic institutions have good palliative care services. You go to the other 4,500 hospitals in America, not true. We do need to have a way that every hospital has good palliative care, access to good palliative care services that people can address the symptoms of patients and make it work. I think those two things go a long way towards making it better. And then one of the things I think we're gonna find out over the next decade is, what else works in this space? And I think that is, again, one of the more interesting and exciting things we're gonna learn over the next 10 years. But I think if I had to play around with it, I would focus on communication by the healthcare team and on guaranteeing that every patient, no matter what, can have access to good palliative care. What about time? I mean, Phil Pizzo has pointed out in Anna Devere Smith's play, Let Me Down Easy, that their time is the essence of why people, why physicians don't talk about these issues. They don't have the time to sit down. And time is a real significant barrier also to the discussion. So it is a significant barrier. I think training people will help. They'll figure out how to get the conversation right. I do think the third thing I actually left out and thank you for correcting me is, we do need to pay doctors for this conversation. It's not like the conversation doesn't take time and we should pay and compensate them for a conversation about advanced care preferences with patients and for conversations when you have to make a critical decision. It's not like that doesn't happen. So let's recognize that it takes time and therefore doctors should be compensated for that. And I think, so thanks for correcting me. That's the third leg of the stool. We do need communication training. We need access to palliative care so you have an infrastructure to give it and we need to compensate doctors for doing it. Again, that's not gonna make me rush into the room and do it. It means though that you're gonna reduce the barriers and the inhibitions. You proposed the creation of a children's opportunity bequest fund. Can you flesh that out for us? Why? What's the thinking behind that? What's the idea? So one of the things, and I guess this is because I'm the son of a pediatrician, but I think over the last, I don't know, 30, 40 years, we have under-invested in our children. One of the common tropes in American political life is our children are our most valuable asset. Well, we actually don't believe that if you look at our actions. If you look at the federal government, the ratio in the federal budget of how much we spend on seniors versus how much we spend on children is seven to one. Seven dollars goes to seniors for every one dollar that goes to kids. And it seems to me most of us would find that disturbing. Kids are our most valuable asset. They're our future. They're the future of the American populace. Most of us think we're not doing enough in their education. There's probably a lot more we can do about obesity, about their exercise, about getting, keeping them in school. So on the other hand, no one wants to give up their slice of the federal budget. For one thing, if I give it up, there's no guarantee it's gonna go to kids, right? Who knows where it goes in the federal budget. It's like a big black hole. So my sitting back and saying, well, how do you motivate people to say, all right, I'm willing to give up something for kids? Well, one of the things I think that motivates, would motivate people is, I'm willing to give it up for my grandchildren. And so you would say, well, I would go either without Social Security for a couple of extra years, or without Medicare for a couple of extra years. And I would assume the cost if I could redirect that money to this Social Security number, which happens to be my grandson. Now, if you're wealthy, I think, you should have to, if you wanna give it to your grandchildren, that would be great, but you'd also have to match that by giving it to a pot that would go to kids who either don't have grandparents who are so wealthy and can afford to do it, or really aren't related to grandparents because of however they've been born. And that would go to someone within your zip code so that it would build up your community, a poor kid who raised beneath the poverty line. It is an idea that I think of, how do you motivate people who I think really genuinely would like to give to their kids and to children to motivate them to give it? As someone who wrote me after I published that said, you know, most old people don't wanna be well off while kids are in poverty. That just doesn't make sense to them. On the other hand, the mechanism, the way to solve that problem is not obvious. We haven't created it. Let me just give you another statistic about how bad I think we are in this society around kids and elderly people. So in the 1960s, around a third of people over 65 were under the poverty line. We've brought that down to under 9% now in America. It's a great success, right? Over 90% of elderly people are above the, living above the poverty line. We've done just the opposite with our children. You know, we have I think a quarter of kids are now born below the poverty line. 40% of kids are on Medicaid. You know, it's a horrible statistic. We should not be proud of that. We have to figure out how to rebalance that and it seems to be this sort of bequest idea or creating a fund that can be directed to children is my attempt to think through how do you create an infrastructure that will allow people and encourage people to give to their children. We're going to take questions from the audience in one minute, but I want to close with two things. One is that you're an optimist. You really believe that we can turn this healthcare system around with all of its significant issues, with all of the funding problems, with all of the problems and efficiency. You do see a sun at the end of whatever may be the darkness en route. Yes, so I have a slide when I give my usual stand-up presentation, my stump speech I call it. And at the top says, I am an optimist. I say, and I think guaranteed by 2020, guaranteed by 2020 the healthcare system will be better than it is today. How can I say that? How can I be sure about that? First, on the access side, we will have an infrastructure, exchanges, Medicaid coverage that'll get everyone in the country access to health insurance. That's a big improvement. Two, on the quality side, every one of you is gonna have an electronic health record which is gonna be interchangeable, interoperable. It'll be accessible. Hospital acquired infections, hospital mistakes will be down. They are going to decrease. We're providing incentives. Hospitals are working diligently across the country to do that. Re-admission rates gonna come down. We're spending a lot of money in developing new quality metrics so that we'll really be able to assess doctors and hospitals and we'll finally be able to know whether the Mayo Clinic is the Mayo Clinic. We'll have data that'll allow us to know. And on the cost side, all of those things are gonna save some money and I think together we'll save more money and I think we are gonna probably try a lot more in terms of payment reform and it's gonna have an effect. We are gonna have these experiments, like care more, like group health experiment and Puget Sound, like the Mass Generals experiment with Medicare patients, like Intermountain Healthcare's provision. We're gonna find out different models at work and they are gonna spread around the country. So again, I'm not predicting it by 2014. I'm not predicting it by 2015. By the end of the decade, we will definitely see a measurable improvement and more importantly, I think actually the trajectory's gonna be in the right direction. Will you come back in 2020 and talk about that? If you get me food, I'll come back. Well, I just want to final question is that you have a new book coming out in November and the name of the book is... No, no, February. February and the name of the book is Brothers Emanuel about Ari, Ram and Singh. Tell us just a little bit about the book. It's about our growing up. You have to see the rest, you know? I can't give you the stories now before the book comes out, but they're good. You'll enjoy it. Some of it's funny, some of it is, I can't believe I did that kind of stuff and you'll understand why we are the way we are. So pushy. See you can manual. See you can manual. Thank you for joining. Thank you. We're gonna take questions from the audience. I think we're gonna... We have a microphone right there. Thank you. Therial Thimms with Mendel's Pod. We're a media site for the life sciences and biotech. So going back to the discussion on costs. Yeah. We look at it as, oh, costs are so bad. But in a way, we've really been the victim of our own success. I mean, there's been so many new technologies developed, med device, new therapeutics, a lot here at Stanford, which are good. And so the population's getting older, we're treating people more. Is there a new way we can look at healthcare? So that it's not, oh, costs are bad. But I don't know, just a new model. So first of all, I think it's really, really important. I am all for innovation. And innovation in the healthcare space. But we have to distinguish between true innovation and false innovation. True innovation are advances, whether drugs or devices or new surgical techniques, that either save lives, reduce side effects, reduce costs, easier to administer. Those are worth paying for. There's no doubt about it. When we take a pill that lowers our bad cholesterol and has shown to reduce heart attacks and prolonged life, that's a really good innovation, really good innovation. On the other hand, when we build proton beam machines at $180 million and they're not proven to do anything, except in this very small category of kids, that's not a true innovation. That's a lot of money for what exactly? And so I think one of the problems in the current system is we have a lot of incentives to create very high and expensive innovations. That aren't true innovations. They're false innovations. Yes, they're glitzy, they're shiny. You can advertise for them, but they haven't been proven to improve health. And I can give you a long list of those. Now, what I'm hoping over the next decade, and I think it's already begun to be borne out, is we're gonna incentivize innovations that do exactly what we want them to do. Improve quality, improve longevity, decrease side effects, and do it at a low cost. And that's what we want to encourage. And I'm worried, we should not just talk about all new technologies or somehow it's undifferentiatedly good. New technology that doesn't improve health and costs a lot of money, that's not a good thing. You will see, however, if you've got new technology that improves longevity, improves the quality of life, decreases side effects, is more convenient, people are gonna pay for that. And that's been our problem. We've incentivized the wrong thing. And I do think we're gonna fix those incentives. And I can give you a long list. Recently, a device maker wanted a new device to hold the patella during a knee replacement. Went to the Royal College of Art. If you wanted a new device, why wouldn't you go to a college of art to get it? They actually have a division in London that does medical devices. They redesigned it, instead of heavy stainless steel, it was injection mold plastic. Instead of reusable and sterilizable, it was disposable, so no infection problems. And it turned out to be more accurate than the heavy stainless steel one. And one-tenth the price, right? Now that's a true innovation. Better quality, lower price. There's another one, a new bottle top for medication, those prescription pills, to encourage people to take it. So there's a light on it, an LED that is green when you're supposed to take it and turns to red when you take it. And if by 11 o'clock in the morning you haven't taken it, it sends a message to your doctor. It also sends a message to your relatives. And by the way, when you get down to 10 pills left it sends a message to the pharmacist. Hasn't been fully tested, but a small, relatively small trial at Mass General showed that compliance with that one is opposed to the usual when from 70% compliance to 98% compliance. That's a true innovation. These are the kind of things that need to be incentivized, not 10 million dollar machines that aren't proven to be advantageous at all. And that I think is where we need to head. Right over here. Hi, Karen Duncan, Independent Health Policy Researcher. You've talked a great deal about cost and to a certain extent about access but I wanna ask you a quality question. Would you comment on the adequacy of medical education given the intellectual and professional demands that accountable care, for example, makes on physicians? I'm not sure that's a quality question so much as a medical education question. And I actually, and I appreciate the question because I have written a little bit but I will begin writing a lot more about the fact that we have to change the medical education system for the next century, I believe. We're clearly not educating our medical students, I think, for the coming way they're gonna practice. We need to do a lot better training in terms of teams. The practice is going to evolve to, as I mentioned, not just single doctors but you're gonna work on a team. That's a different dynamic than the way we've been trained. And probably we need to do something different in medical school. I don't know whether it's coeducate with nurses and pharmacists and others. I think that probably wouldn't be a bad idea. Second, one of the things we're gonna have to have is a lot more management training of doctors. Now I know that's an enigma. That business school over there and the medical school, they don't get together. And I know that certainly through my training we look down upon them. But let's be serious. How we build teams. Really, it's not just, you didn't learn that in the womb. You have to learn certain things about it. Negotiation, we're constantly negotiating with patients, with nurses, with fellow doctors, with hospitals. We need training in that. How to use data to improve care. How to run lots of small experiments in improvement. Get the information on whether it works or not and change. Rapid cycle improvement. We need training on that. Finances. We need some training on that. Leadership. Again, most doctors aren't born with it. I think there's a whole series of those things that we need to incorporate in medical school. And I have long suggestions about lots of things we should get out of medical school. And I think I'm not a bash to say that most of the first two years of my medical school I found, if not completely worthless, pretty close, right? It's not clear to me that I ever used the Krebs cycle in medical school or the Starling Law. So I think if you don't want to reduce the first two years to nothing, you can certainly reduce it to a year. Duke has shown that. That saves you a lot of time to do other things. And I think easily within the four years, and I would actually say even within three years we could get what we need to. But I do think that's gonna have to change and it's gonna have to change a lot more rapidly than it has changed in the last 100 years. We'll go to the back. Here the schools do talk to each other. Well, you're on one campus and you're one of four major, one of four leading universities where that's true. I happen to be on the other one and I do think it makes a huge amount of difference. In the back. Hi, my name is Kimberly Levitt. I'm a family physician. I'm also a student at Stanford Law School right now. Thank you very much for coming. What an inspirational talk you gave. I do want to ask a question. You were talking about global payments and you were talking about a model of care that did show that they reduced their cost of healthcare spending. They also increased the quality. One concern that I've heard about something like global payments or bundled payments is that potentially physicians start to make less money and of course every other country where they do show better healthcare quality, lower cost, physicians are paid a lot less on average than our physicians in this country. And I'm wondering how you rectify that and that sort of necessary thing to happen when we do pay so much more for our education here. I mean, I already have $250,000 of debt and of course law school is not gonna be helping that. But you got to wonder how do we pay our physicians and justify that decrease. So first thing to say is I don't think the approach I've recommended, either whether it's through bundled payments or through global payment, necessarily means doctors are gonna be paid less. As a matter of fact, there are many scenarios where doctors are actually paid more. And it depends upon how doctors adjust to the system. That's the first thing. The second thing is it is true in most European countries, Japan, et cetera, that doctors there make less than doctors here. Simultaneously, however, our healthcare costs are 50% more than all those other countries. We have plenty of money in the system for doctors to continue to be well paid and no one is talking about, we're gonna take our system from $2.8 trillion down to $2 trillion. All of this talk about controlling costs, it's controlling costs. It's controlling how fast we go up, not about going from 2.8 down to two. That needs to be very clear. How can doctors do better actually in a new model system? Well, one of the ways is doctors could actually get paid for all of the things that they do and if patients don't go into the hospital as frequently, if you don't have complications as much, if you don't have readmissions, there's savings there, some of which can go to the doctors and some of which can go back into the system or go back into people who are paying premiums. And if you look at the ratios, hospitals are about a third of the healthcare spend and doctors, their salaries are about 10 or 12% of the total healthcare spend. You don't have to, if you change payments to hospitals by about 10%, turns out that that's a very big increase in what doctors can earn. It's about a 30% increase in what doctors can earn. So there are many ways by which actually we can control costs, change how we pay without forcing doctors to have lower salaries. Over here. I'm Stan Schreyer, a Stanford hematologist. I think you wrote a piece in the New York Times where you identified a major cost in medical care as being the care for chronic illness. I wonder if you have some thoughts about how we can take care of patients with type II diabetes or chronic digestive heart failure and so forth, improving the quality by controlling the costs. Thank you. I didn't make this point and I probably should have. So one of the most, when I teach my students at the University of Pennsylvania, I say that the second most important slide in health policy is a slide that shows the fact that costs in the American healthcare system are not evenly distributed. They're lumpy bumpy. 50% of the population are basically out of the healthcare system. They use 3% of the costs. They're irrelevant. Who are they? You know, they're the young adults sitting in this audience. Right? They're kids. They might get a broken arm in which case, you know, they've got to be sadder. They might get stitches or they might have an ear infection but they're peanuts. 10% of the population uses nearly 2 thirds of the dollars. That's where the money is. That's where the quality problems are too. Those are the people who are heavy users and they are exactly, as you point out, people who have chronic conditions and multiple chronic conditions, whether it's diabetes, heart disease, emphysema, asthma, cancer, high blood pressure. And if we really want to improve quality and control costs, we have to focus on those patients. And as I mentioned, some of the ways to focus on them. You really need to put all of those resources and keeping them healthy. Keeping them on diets. Making sure that they actually measure their weight regularly, take their medications regularly, get exercise classes. When they have a problem, intervene early before it requires a hospitalization. All of those things, that's the places that have succeeded in improving the quality, like Caramor, like Group Health, like other places. They focus on those patients with chronic illness. They focus on keeping them healthy and they are able to have better quality and lower costs. And you're absolutely right. It's only by focusing on the chronically ill that we can get these two things, high quality and low cost, going together. How about we'll go here and then there and then in the back, right here. Following up on that point about costs versus outcomes, you've given two examples which were easy, it seems to me. The proton B was not a better outcome but high cost, so you don't want that. They replaced the plastic knee as better outcome and lower cost, you do want that. What about the middle ground where something is substantially higher cost and a better outcome? Is there a way of calculating a cost per benefit, a cost per life, or cost per life per year? How do you make those tough choices? And aren't there a big percentage of the total dollars spent in that middle ground with high cost and better outcomes? Well, I'm not sure that there's a big percentage of cost in that middle ground. I don't know that anyone's differentiated it. But there's no doubt that there are a number of interventions, like the new interventions for cystic fibrosis, which have a big improvement for patients. And I think it costs a quarter of a million dollars a year. And that's obviously a serious challenge to the system. I think I don't want to go around measuring cost effectiveness ratio and using that as a strict way. I don't think that's appropriate. On the other hand, I do think if we get our payment system right and we get the practice right, we are going to find out that the incentives for developing things which have high cost but minimal benefits is probably going to disappear. High cost, high benefits like the cystic fibrosis intervention, I think we're going to pay for that. We already do pay for those kind of things. Liver transplantation, quarter of a million dollars. Well, it turns out it's 85% success rate at five years for kids and young adults. Well, no one has any problem paying for that, right? Not even the most hard-nosed, green-eye-shea guy. This is going to say, I'm not sure we should do that. No, it turns out if you're really saving life and you're really improving the quality of life of people and it's going to cost money, we're going to do that. The problem is, when we're paying $100,000 and we're extending life on average two months, but if you've got a system that is actually paying for high quality and efficiency, it's not clear to me people are going to continue to develop those kind of interventions. The woman raising her hand in the back and then we'll go over here. Right? Yeah. Elizabeth Oliva from the Palo Alto VA. I really appreciated your analogy to adolescence and the growing pains. So I was actually. Let me guess how old your kids are. I had a question as to what sort of growing pains do you anticipate in the upcoming, because you're talking about a huge cultural shift. And so I'm just wondering what growing pains you guys are anticipating, how you're preparing for that. I mean, because a lot of the arguments as to other places that have this sort of similar sort of system, they're lower or smaller SES disparity, smaller, more homogenous, those sorts of things. So I'm just wondering what you're anticipating and how you guys are preparing for that. Look, there's going to be a big, require a big shift and transformation on the health care delivery side. Doctors are going to have to shift how they care for patients. That's a big shift. Doctors and hospitals are going to have to have different kinds of relationships than we've had hitherto. That's going to be a big shift. I think patients themselves are going to have to realize that their interaction with the health care system is going to be very different. Let me just give you an example. In Sweden, if you're a healthy kid and 90-plus percent of kids are healthy kids, you see the doctor once before your 18th birthday. The rest of the time, you see nurse practitioners. All right, do my kids need to see the doctor for an otitis media for an ear infection or a strep throat swab or the latest vaccine or to tell me they're really on the growth curve? You don't really need the doctor for most of that. So part of our, we need to change our expectations too. Does that mean that if I take my kids and they see the nurse practitioner most of the time, that somehow I'm getting lower quality? No. So I think that there's going to be an important shift on all of our parts, mainly the health care system, doctors, nurses, other health professionals and hospitals. But the public has to recognize too that some of these changes, which they might not have anticipated, are also probably going to be good and maybe they'll even be cost savings. Another one is telemedicine. A large part of 20% of America lives in rural areas. Telemedicine is probably the answer to getting them really good quality care. Well, it's a lot different than talking to your doctor or a nurse practitioner on the television. It's probably not your first idea of high quality care, but it probably is going to be the way to get the best quality care. So I think there's going to be a lot of these unanticipated things. And you know, look, we're all amateur psychologists, right? We know that when you have uncertainty and change and you're asked to do things different than what you're used to, you get nervous. That's why I think many people are nervous about the health care reform. They're unsure how it's going to play out. So I understand why we're all nervous, whether you're a doctor or a member of the public looking over the next 10 years. But I think, you know, being uncertain, we should not correlate with it's gonna be necessarily bad. It could also be that we actually finally see that it's going to be better. And I think, again, I am the optimist. I do think it's almost assuredly and I am willing to bet good dinners that it's gonna be better by 2020. No one's taken me up on that, by the way. You know, I noticed that. I'll take you. Right here, row three. You, sir. John Lilly, Stanford volunteer. When I hear you talk about the next eight years being bumpy, those are the ones that concern me. I think I go along with you on dinner in 2020. But when I think of other industries that have gone through major transformation, it's been worse than bumpy. Let's think about airline industry. De-regulation is an example. Poor service, bankruptcies, people out of jobs, et cetera, et cetera. And if anything, just payment reform in the health industry is a bigger transition than airline deregulation, I think. And might threaten some of our most important health institutions. Could you comment on how you see maybe some smoothing that would occur? Well, first of all, again, one of the reasons I try to pick 2020 or say that we should keep our eye on 2020 is because I actually do think the transitions are gonna be more gradual. I mean, it's not like anyone has said 2015 we're getting off fee for service, except in Arkansas. So I do think actually one of the reasons it is gonna be bumpy, but I don't think it's gonna be as bad as you said is because a lot of the changes are likely to be phased in. I mean, look, no one has said when are we getting off fee for service and give us a date certain. But they're not gonna, I can guarantee you, they're not giving us a date in this decade. If anything, it'll be early in the next decade. And so I think that does allow for a smooth transition. But what we do need is some certainty. I mean, what does business hate most? Run certainty. Give it some certainty so they can plan out how they're gonna spend their money, how they're gonna lead the transformation. What are the milestones along that process? We've made a proposal alluded to, but I'll just spell it out. What do I think? How do I think we could do this best? I think if we had the federal government, say in Medicare by 2022, we're gonna have 75% of our payments off fee for service. Everyone then understands, the head of Stanford Hospital, the head of the Palo Alto Health Clinic, all of them understand, all right? 2022, my business miles are gonna be completely different. So now I know I've got a decade to plan. Second, I think we should say, all right, so here's some milestones along that path for you. First, we should shift all cardiac, whether it's bypass surgery, stents, catheterizations, pacemaker placements, and orthopedics, hip and knee replacements. We should shift those to bundled payments. And we can do that quickly because Medicare has a bundled payment model, it's tested out, it's been shown to save money, it's been shown to improve quality. We've already worked it out. Just say, we're gonna roll that out by 2014. It leads to lots of advantages because it gets the doctors and hospitals communicating, it gets them working in the same direction. That tells everyone, A, we're really serious, and B, here's the first step. But it's not that radical a shift. Then we can say, 2017, we're gonna have two chronic conditions, my proposals are for a bunch of cancers, adjuvant treatment for breast cancer, colon cancer, lung cancer, where, again, the professionals, the oncologists, my colleagues have defined, here's the right way of treating people for a year. We're gonna bundle that payment. Then we're gonna take something like congestive heart failure or coronary artery disease. We're gonna bundle that. So we're gonna get not just these procedures, but we're also gonna begin getting chronic diseases by 2017. That gives people a glide path. And once Medicare does that, you've got private insurers that are gonna do the same, and then we can expand beyond the bundle payments to global payment or other financial system. I think that smooths out the transition. It alerts everyone to what is gonna happen. That is my hope for the system. I've been blabbing about it for a lot of time in Washington now. And I think that would be a much better way than, next year we're deregulating, which is basically the way the airline industry did it. Last question, right here, this woman. Thank you. Hi, I'm an undergraduate economic student writing about cost controls of health care plans. And you want me to read your paper? No. No, I actually read your book, Health Care Guaranteed, and I know you stress the use of electronic medical records, but you also mentioned that these have very high startup costs. My question is, how do you incentivize providers to actually implement systems? Well, we've already done it. So the Recovery Act, not actually the Affordable Care Act, but the Recovery Act, in that act had an incentive structure for doctors and hospitals to adopt electronic health records, recognizing that their startup costs, initially they decrease productivity. There's a network effect. You can have it, but if the specialist you're referring the patient to or the laboratory aren't using it, it turns out to be a big investment for not a whole lot of payout. And the uptake has been tremendous in terms of doctors and hospitals implementing electronic health records. And I think by 2015, you've got to implement them, otherwise you begin to get dinged. You get payment reduction from Medicare. And I think the fact is, we've also seen a big profusion of companies working in the electronic health record area. Most doctors who you talk to or nurses who you talk to about electronic health records, moan about it doesn't do this and I can't do that. Yeah, for sure. But again, by the end of the decade, we're gonna have a lot more technology in this space. How many of you remember when you couldn't send an email between an Apple computer and a PC? We solved that problem, right? But it once was a problem. We are gonna solve a lot of these hiccups and paint in the necks about the electronic records and we're gonna figure out how it's better and I'm sure once the voice to translation, once we get past that crappy Siri and get into something that's realistic, probably you'll speak it and I think these will be a whole lot better in that sphere. And by the way, the advantage of electronic health records is not just that it's interoperable. We're then gonna have the ability to actually track people better. We're gonna have the ability to make predictions better. We're gonna have the ability to figure out which patients are at high risk and intervene before they get sick. It opens up a huge swath of interventions early and it also reduces fraud. Allows you to have better predictive modeling about who's overbilling you or who's playing games or who's not treating patients despite the fact that you're giving them payment. Who's actually not treating them up to snuff. So I think it's one of those very important foundation zones. A loan is probably not that beneficial. You just put an electronic record in the doctor's office. But as part of a growing network of records, data mining, ability to use it to make predictions, use it to figure out which treatments work and don't work, hugely important foundation stone. Seek a manual. Thank you and thank you for joining us. Thank you. The preceding program is copyrighted by the Board of Trustees of the Leland-Stanford Junior University. Please visit us at med.stanford.edu.