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Episode 40: Who says that a hospital actually needs a building? Riffing on the future of the US Healthcare System with Jonathan Bush of Zus Health

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November 02, 2023

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Episode 40: Who says that a hospital actually needs a building? Riffing on the future of the US Healthcare System with Jonathan Bush of Zus Health

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Whether you place the blame on wonky demand curves or misaligned incentive structures, there’s no getting around it: the massive U.S. healthcare system just isn’t delivering on its $4.3 trillion investment. Is it time for a medical Manhattan Project? In this special episode, Justin is joined by Jonathan Bush, founder and CEO of Zus Health, and Robert Musslewhite, Definitive Healthcare CEO, to debate the future of the US healthcare system – what’s broken and who has what responsibility to fix it. Justin, Jonathan, and Robert discuss who’s really at-fault – is it the government, the payors, or the healthcare systems themselves? One thing’s for sure: it’s not the patient’s fault – or is it? They debate ideas for aligning payors, providers, employers, and patients. And they discuss the industry’s long, winding, and never-ending road to IT interoperability, and why that interoperability might not be the panacea that so many people think it could be.

Justin, Robert, and Jonathan openly wonder whether Meaningful Use and the “EMR-ification” of American healthcare was successful or not, and analyze how the emerging era of virtual care is going to change healthcare as we know it. At the end of their discussion, Jonathan lays out his vision for the hospital of the future – one that doesn’t even require a physical building to operate.

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Episode transcript

"Definitively Speaking" is a Definitive Healthcare podcast series recorded and produced in Framingham, Massachusetts. To learn more about healthcare commercial intelligence, please visit us at Hello and welcome to another episode of "Definitively Speaking," the podcast where we have data-driven conversations on the current state of healthcare. I'm Justin Steinman, chief marketing officer at Definitive Healthcare and your host for this podcast. Have we got a great episode lined up for you today. I'm joined today by not one, but two CEOs of healthcare IT companies for what should be one heck of a conversation. First, I could not be more excited to welcome Jonathan Bush to our "Definitively Speaking" podcast. If you've had anything to do with healthcare IT in the past 20 years, you know who Jonathan is. But if you're new to the healthcare IT space, let me give you a little background. Jonathan's probably best known as the founder and CEO of Athenahealth, a healthcare technology platform offering a suite of services to help hospital and ambulatory providers coordinate care, and work at the top of the licenses. Jonathan founded Athenahealth in 1997, raised venture funding, and eventually led the company to an IPO in 2007. Jonathan served as CEO of Athenahealth for 21 years until he left the company in 2018. He's been a loud and vocal voice on the role of healthcare IT to improve our nation's healthcare system, and has spoken at numerous industry events and advised many state and national politicians. In November, 2020, Jonathan got back into the healthcare IT game, starting a new company called Zus Health, the only shared health data platform designed to accelerate data interoperability by providing easy-to-use data at the point of care via API-embedded components and direct EHR integrations. So Jonathan, welcome to "Definitively Speaking."

Man, I'm thrilled to be here.

We are pumped to have you. So Jonathan and I are joined today by his friend, and my boss, Robert Musslewhite. Robert is the CEO of Definitive Healthcare, and like Jonathan, Robert has been around the US healthcare industry for longer than he'd probably care to admit. Robert has been CEO of Definitive Healthcare since August of 2022, after joining the company as president in October, 2021. Prior to joining Definitive Healthcare, Robert was the CEO of OptumInsight, a division of Optum. Robert joined Optum, following its acquisition of The Advisory Board Company, where he served as CEO from 2008 until 2017, and chairman from 2013 to 2017. Robert, welcome to "Definitively Speaking" after 45 episodes. I'm glad to have you finally on the show.

Thanks, Justin. Just took Jonathan coming on to get me an invite, so I'm appreciative of the time and look forward to it.

Awesome, well we're psyched to have both of you guys here and let's get this show on the road. Jonathan, let's start with you. What's the biggest problem in US healthcare today?

[Jonathan] The demand curve doesn't behave the way it does in other sectors. There's a lot of problems, but if you cook them all down, if Joe reduces the cost of his surgery, Joe doesn't get more patients. And if Joe raises the cost, he doesn't get less patients. And that fundamental blockage exists in many points along the food chain. The fact that employers are, you know, the only way to get full value, full tax value in buying healthcare is for the employer to buy it. It becomes 40% more expensive because of the tax differences for you to buy it yourself. So now the employer's gotta make a choice for a bunch of their employees that's very personal. How much copay do you want? How much in vitro fertilization? Can you imagine talking to anyone of your employees, Robert, about how much do you really need? I mean, how many babies? You know, that's just not a boss employee conversation, but it's in there. And so the boss can't really shop that aggressively, certainly not remotely as aggressively as if the employee could shop on their own. Like, I got 10 kids, I don't need in V, I don't wanna buy it. You know, that's not happening. So I was able to take a very concise answer and dribble it out for a while, but it's the demand curve problem.

Do you agree, Robert?

I think that's certainly one of the issues out there today. You know, behind that is the incentive structure. As much as we've made inroads into really trying to push the right incentive structure to focus on quality and cost and have people own both sides of that equation with an incentive to improve quality while reducing costs, we're still early innings of that. And if you look across the system, there are too many cross incentives. So part of what leads to what Jonathan's talking about is the fact that there's not someone with a strong incentive to change that today in the system.

I'd actually disagree with you there, Robert, because there's lots of incentives to change in the system, right? I mean, our CFO has incentive to change 'cause he wants to lower our cost. I, as an employee have incentive to change because I want better access to healthcare that's more customized to me. The insurance companies have incentive to change 'cause they're trying to all reduce their costs. And the hospitals are trying to change 'cause they need to get more business to them. So for all this incentive, why aren't people changing?

My issue is that the incentives don't fall along the demand curve. Their incentives there. And if you look at their behaviors they're doing, you know, they're doing every day along those incentives, the problem is they're doing shit you wish they wouldn't do. And it's certainly stuff they wouldn't do if the demand curve were working. I mean, the most hilarious example is the, you know, the great huge vertical monopoly campaign of all the American hospitals buying up stuff that has nothing to do with running a hospital so that they can raise prices, which they were allowed to do as part of another adverse incentive campaign, which was the government trying to get the ACO thing through say, "I'll make you a deal. You know, I'll let you out of any kickback law if you agree to do this program, that really doesn't help you."

Yeah Justin, that list, I mean, everyone has incentives to change in a certain direction. Unfortunately, they're all different. The employee's incentives are different from the employer's incentives, are different from the payer's incentives, are different from the drug company incentives, in some ways are different from the government's incentives. So while there's certainly each pocket of healthcare has their dissatisfaction and reasons they would want to drive forward, they're not aligned.

How do you align them, Robert? Can they be aligned?

Well, I think the easiest area to align on from a macro perspective is that there is a lot of waste in the system. By waste, I mean dollar spent that don't directly impact care for patients or research into care for patients. And most of that's in the administrative cost of healthcare. So if you say healthcare is what a $4 trillion industry, you know, more than a trillion is associated with what we would've called it Optum administrative waste. And a lot of it's addressable. But the reality is that there's a lot of, for example, back and forth around just the simple issue of a claim. So a doctor sees a patient, files a claim, that claim can go back and forth several times before it's ultimately paid. You could argue that with better data and better faster analytics, you could eliminate a lot of that back and forth and thereby save a ton of effort on either sides of that equation, which today is a result of, you know, creates a lot of dissatisfaction and results in a lot of extra costs. Just one example, there's pockets like that across the industry. So I would say that's, you know, that's the place where you'd have a lot of alignment in changing it. Unfortunately, that requires organizations working together to run after it. So the payers would have to agree that they would have a common set of data loaded in the system, providers would have to agree on a way of working with payers. Providers don't have a common EMR system, and so each one has a little bit different way they approach the problem. And so, at the end of the day, yet, well, we'll get to that-

Enter Zus baby, we'll get to that.

But so even on larger scale problems that everyone would say, "Yeah, we can do better. The individual players often would have to act in an aligned way, and that's not always possible.

And you do run into, you know, lots of sort of Manhattan projecting, you know, let's all buckle down and make this happen even though it's not our natural behavior pattern. That's sort of everyone we know who's been at CMMI or at, you know, going to the government to try to lean in or running, you know, Kaiser Health News, all the various entities trying to sort of make us behave unnaturally for a minute in the name of progress. But I think also what goes on, which I think is more powerful and certainly what draws me to healthcare is finding little pockets of working demand curve. Finding little places where the game layer could work, where you actually make more money doing the right thing and then really hydrating that little pocket. And it's not always a direct hit. It's not like, "Oh, if you do this, you know, healthcare gets cheaper or whatever." But it's like, "Oh, healthcare information gets more transparent or doctor encounters become online and measurable and studyable." You know, it's little vignettes in a journey that contribute to a larger journey towards a working demand curve. And I would submit that of late, there's been some breakthroughs, you know, that all these little vignettes have started to come into focus. I think the biggest one was the last CBO estimate on the next 10 years of Medicare. So the congressional budget office's latest forecast, they actually took $3.9 trillion out of the forecast. They said, "It's gonna be a lot." But it's an entire Germany less than we thought it would be. You know, because we thought when we took away the 15% premium for being in Medicare Advantage, that everyone would drain outta Medicare Advantage and instead most Americans went into it, we're now over 50%, you know, and we've found companies once Obama left, maybe no one does this, ACO gimmick anymore. Whole public companies focused on making those and others in the wings about to be public companies. You know, virtual care is vastly more efficient, but who the hell's gonna do that in a world where we want our MTV? Pandemic shows up, we're all doing virtual care. And a lot of those players are now public, reliable, safe, known brands and mainstream companies, not just little cool innovative companies, are slipstreaming in to those things. And that's just a few, I don't want to use up the, but that's the kind of thing that makes me go, "Hey, you know, one year plans never work, but 10 year plans can be fun."

So, Jonathan, you mentioned the Manhattan Project, which, you know, in the era of Oppenheimer and summer movies and everything, the government took a leadership role in driving what you called unnatural behavior.


And, you know, Robert and I are having a good conversation earlier about incentives and misalignment. Do you think the government has a role, and should be the person trying to align or the organization trying to align those misaligned incentives?

Oh, absolutely. I mean, given that the role, they've, you know, they kept, and, you know, the thing about Manhattan projects in general, great leap forward, you know, Stalin's five year plan, they are aligning, if you want power, having a giant enemy and I'll get us to kill the enemy energy, you know, works. It's a way of accumulating political power, whether you mean well or ill. And so in this country, you know, we've had the war between the states. But we've had the war on poverty, we've had the war on drugs, it's a, you know, war on terror. You know, we want power to do good, mostly, I think Americans, and we can't help but sort of slip into a, let's call it emergency and see if we can all skip a beat when the right thing for the government to do most of the time is to have a humble role of making the game layer work. And, you know, go back to great leap forward efforts that have now ripped us up with unintended consequences and gently peel those back. You know, it doesn't mean you kill regulation and we all sort of get our bows and arrows and kill our, you know, healthcare doctor services in the woods, whatever. But there's a desperate need to allow the demand curve in, ease the safety net out a little bit. And we've seen just recently real benefits from that. But that's a really hard thing to do as a politician. What, you know, "I am going to go backwards." It's a hard campaign slogan. I'm gonna pull us out gently. It has to be gentle, it can't be like, "We're gonna deregulate it all." It's a gentle, and that is a very hard role of government. And we've had a couple folks in government in the last 20 years that have done that really well, and that I've been really impressed by both sides of the aisle.

Yeah, we've had, I mean, if you look at the government. It's the single largest payer in the system. So the dollars start there, and if you wanna start with change, a lot of times follow the dollars and you'll figure out who has the most power to drive the change. In the US it's certainly the government, and you could argue about the success of various programs, but there's no question that since 2011 or 2012, there've been a series of innovations that the government has pushed or continued to support, pushed being a lot of the value-based care initiatives in their various forms. And, you know, including things around kidney care in places where they've really isolated a place where you could lower costs and improve quality. And very tangibly measured that. And in case of continuing to support a program like Medicare Advantage, which again, you can argue a little bit about the success of that program, but it's certainly been a much more popular form of Medicare that has led to, you know, a potential for better quality care at a cost that's at least fixed and potentially over time could be lowered. So, you know, the government has made big inroads over the last decade and it's slow to come to full change in the system, but I would totally agree that there's signs of progress all around.

At least 3.9 trillion that I can point to.

You know, Jonathan, when I think about good government initiatives, things that work, you know, there's the whole meaningful use that was putted to try to drive EMR adoption.


Now that we're kind of past meaningful use and it's lived its life, would you say that was successful?

You know.

It was great for Athena. It was so great for Athena.

I know, I maintain that it was bad for Athena. Now it's hard to say that with eight zillion dollars of EMR purchases, but what it did was it made everybody buy what was available and it killed the agile innovation curve for a period of about a decade. So there was no, the government literally showed up with a yellow pad and said, "This is an EMR, it involves an auto coder." And, you know, it was entirely centered around the workflow of a doctor office-based visit, you know, encounter type thing where a claim would come out the back. And that isn't at all what EMR could or should have, would have become, left to its own devices. So, but I have no idea what would've happened if everyone did nothing. So, you know, there is something about $50 billion that gets people's attention. You know, whether it was designed well or whether the money should have been used to maybe not have so much debt or what, I don't know. But for sure, everybody in America today, not the bunch of kooks like us three, know what an EMR is. We have a vague sense that our doctor has one and that our records are somewhere. And so I sort of called it healthcare keynesianism on the theory that when Roosevelt quizzed Keynes on the works project administration, he said, "Well, what if these projects, these workers don't know how to build dams?" You know, what if these projects are just not that good?" And Keynes said, "Listen, if you paid these men to dig, paid a hundred thousand men to dig a hole, and you paid another a hundred to fill it back in again, it would work almost as well." And so, in my perspective, that Keynesian aspect definitely happened. $50 billion went in there, everybody got EMRish and off we went.

What EMR have become if they hadn't done meaningful use?

The thread that we were following was, and there were companies that were doing it extremely well that just died because they were sticking to their agile knitting and not racing into the airlock before Obama or Farzad or whoever it was, sort of shut it. And then, you know, you were either legal or you weren't. But what I would've imagined happened is that the data layer would be around things that actually were consistent record to record, encounter to encounter, and then on that would become metadata about time and place and consequence and coverage. And the surface area that is the doctor for her own self, understanding the moment and deciding her plan, would not necessarily be jammed into a clicky click, you know, federal clicky click mandate, but would over time be wicked away. And so maybe even today, orthopods would still be drawing the knee and the insertion point the way they used to, but they'd be drawing it on an iPad with a lot of data and metadata wrapped around it. And then eventually, you know, the last analog piece would disappear. Instead, we have lots of sort of mandated as digital information in EMRs that are just treated as impossibly impenetrable PDF content. They literally feel like work like, function like a fax where you take critical information and you mix it with a middle school tax form and say, "Here's a bunch of totally unrelated data, and in here are five data points." So I don't, I think that mandate to make it all digital and make it all run one way, gave us a lot of opacity that now companies like Zus are cooking down, and using AI and intelligence, and filtering and enrichment to kind of tease back out again. But who cares, like, so we went that way. We went wide and dumb, and now we're gonna get narrow and smart. I'm not mad.

You know, you could argue though, had we not gone wide, we would not have gone at digitizes as fast as we come. I think there's probably an inherent value in the fact that so much is digitized today, even if it is the lowest common denominator.

Could be, I mean, look, I really believe in people. I believe in groups and individuals and families and medical groups and tribes of all sorts. But so, I just can't believe that we needed to be jammed into it with kind of money forcibly taken, et cetera. But I, but maybe we did, you know? And even if we didn't and we did, we're here, let's have a part, let's, you know, let's do it with what we've got.

Robert, I saw you shaking your head when I was asking that question, what do you think?

I mean, it's hard to argue that it didn't create a system where everyone has now data in some sort of digitized form. So there is a lowest common denominator aspect. We've also ended up in a world where we have a lot of data, and again, back to the incentive side, there hasn't been a strong incentive for that data to be easily flowing to areas that could make big differences in either cost or quality. It's funny, you know, when I was at advisory board and we started, you know, the endeavor to kind of create analytics by pulling data from health systems and pulling it together and aggregating it and trying to create some sense of it. It's funny how many people felt like they own the data. Well, the EMR owns the data, I'm putting quotation marks or air quotes around that. They own the data, so they don't wanna let it out. No, the hospital owns the data and they don't wanna let it out necessarily. No, actually the payers own part of the data because that's data on their customers. No, it's the patient's data and the patient should decide. I mean, there's a lot of data out there, but there's a lot of competing interests. Again, back to the competing interests around how that data should be used and who should get their hands on it. And some of it with good purpose. Obviously there's regulations around use of specific patient data, and there's good purpose to that, but it's created a web of tons of information, but not a lot of insight from that today. Now, Jonathan and I'll both say that's pretty good for the endeavor of collecting information and aggregating it and making it useful, but it's way harder than it should be, or has to be.

I think that's very well put. I point to the fact that we have these Accountable Care Organizations everywhere that are, you know, some of them making real money, saving money. The only, after all this EMRification, the only tool they're using is paid claims data, still today, you know? They get all this EMR Ocean of, but because the insights are so hard to cook out of the mess, people are still living on claims, just as Robert suggested.

So Jonathan, how do we get insight?

I think there's three steps. I think we need to aggregate from the islands the government created. There's all these little data islands now. So when you, and there are laws that say, "Hey, you're not allowed to block your island." Just as Robert said. You know, you gotta, people come to your island and say, "Hey, gimme Joe Smith." You gotta give it to them, and it's happening. I mean, you know, 47 million record transfers a month. I mean, that's more than there are fed wires. That's not bad. But once you have it, as we've just discussed, it's not insight, it's missing stuff, it's gappy, it's shitty. So the next thing you gotta do is enrichment. You gotta actually take it apart like an, you know, transportation safety board, you know, plane wreck. Like how do we turn this mess back into a plane? And then you gotta summarize it. So now you have, and multiple orders of magnitude, more data to look at, changing constantly as every prescription and ED admission goes by. Now you've gotta cook it way down. You've gotta summarize it down into a tweet that fits the seven minutes that's being paid for. So those are, for me, my framework is how good are we gonna get at aggregating? Are we gonna get everything that happens on a person wherever it happens? How good are we at enriching? Are we gonna get the codes and the insights and the translation layer so that it all means the same thing that all the labs into the same, you know, logical framework? And then summarize, can we cook that down? If you're an orthopod, gimme lots of detail on the last procedures and, you know, cook down the diabetes into, yes diabetes, and it's managed. Don't show me all the refills or whatever.

So it sounds like you think the provider should really be at the heart of this synthesis.

I've always believed that the movement from sort of a chaos to a working consumer market needs experts. So, in my book, "Where Does It Hurt?" You know, I said, "Look, who's gonna do this?" Are we really gonna have consumers shop and make the demand curve wake up? Probably not right away, but if doctors or their proxies started to shop, the product on the other side would become more shoppable. And once it got really simple, maybe consumers would shop, you know, with a bot or with nobody, themselves, or with a doctor, you know? I sort of imagined primary care docs becoming like the Merrill Lynch wrap account guys, you know, the brokers. And that sort of happened, I imagined it would be in the medical group format, but it wasn't, it was professionally capitalized, professionally managed companies that went back after something that looks a lot like the failed PPM model. But not failing, you know, but working. Firefly Health, for example, I mean, that's a doctor company, not a ton of doctors 'cause of all the automation and leverage and care guides, but there are professional personal shoppers for the thousands of people that agree to get their care that way.

Yeah, it's hard to see a world where the provider's not still the one at the center, at the crux of the care decisions and the caregiving. I mean, I guess you could paint models with extreme virtual care where you get away from the provider directing that. But I'd say for the near term, providers are still very much in that position. And so to me, the challenge, and it's where Jonathan's going, is how do you make their lives, how do you bring information to them in a way that makes it easier for them? You could argue we haven't done that. There's a lot of information available, but if they're to truly take advantage of it, I mean, in almost every specialty, there's more insight being published every single day than they can read, even if they spent 24/7 reading. So their specialties are moving beyond their training. How do you bring insights to the decisions they make with patients in a way that makes them have an easier time doing that versus a harder time? And that's been elusive. I mean, there's hundreds and hundreds of people and companies that have tried to get better information to the physician at the point of care. And it's like Jonathan said, it's seven minutes. So like if you, that challenge is still very real, but whoever can really solve that will turn the corner on, I think a huge change in the ability to take all the information and make the provider better. And make their job easier.

And by the way, when the summarization really takes hold, maybe seven minutes is not seven minutes. Maybe it's 30 seconds, 14 times spread across the month with better compliance on drugs. Because now we really know what to talk about 'cause we have a really intense AWACS overflight of this condition and this particular patient's social situation. That's a real, Firefly is experiencing that now. All those members are allowed to have visits whenever they want, but they actually prefer to just text at a red light, you know, and you see this trickle of guidance coming through doctors and their leveraged folks because the data is so crisp on what's needed there.

So, but you know, I do wanna come back to this 32nd thing though, because there's an old saying that doctors, in the seven minutes of a visit, it's the last 30 seconds that you really get to the real critical information. You know, how much the doctors call it? "Oh, by the way, the real reason I'm actually here is." Hit embarrassing health issue. So if we go to these things, Jonathan, we've got 30 seconds periodically. When do you get the in-depth conversation with the practitioner?

Well, I mean, that's available and obviously the first part of the in-depth conversation, which is the Marco Polo with the clipboard, you know, could be replaced by real intimacy, real understanding right away. And by the way, this gets to physician burnout and all the, you know, you're talking about people, maybe that's the next chapter here. You know, all these people are like, "I'm being treated like a DMV." You know, "Oh, you're missing a signature on row 37." Or, you know, yes, you have to put your seatbelt or you can't get a driver's license. Like these guys have had these fancy giant educations and if you look at the percentage of their life, they're not using them. You know, it's no wonder that they are depressed or quitting.

As Justin knows, I just did a panel at the health conference a couple weeks ago and talked about more than 145,000 providers left their professions over the last couple years. And the bulk of those are physicians. The numbers are staggering. If you play that forward, there's no providers left in a few years. It goes to what you were saying before, Jonathan, it's like the reasons behind this. And the panel had some kind of CMIO types on it and some tech industry leaders. And interestingly enough, the clinical leaders who kind of played in the tech world. And interestingly enough, there was a big debate about whether technology has helped or hurt. And I think the general conclusion on the panel was that, wow, technology's actually made their lives way more difficult. And part of the burnout is that right now we haven't fulfilled the promise of using all this information to make their lives better. We've made it meaningfully worse.

I completely agree. And if I were to sort of, that I could take Robert's words and say, that's my dig on the way we did meaningful use with the great leap forward or whatever we called it, the Maoist EMR campaign, you know, is that we ended up with a bloat that just makes it worse. Now, I think we can say there, Uncle Sam has gone on to something else, the programs are there and we're back into agile mode. And in that mode, you're gonna see more intelligent summarization. Instead of a screen, it's going to an API, which is going to an engine, which is going to a Twilio, which is doing the work that used to be doctor bureaucracy work.

For sure. No, they're definitely green shoots there. And innovation where, you know, you see a world where no one's stroking a keyboard at all, right? It's being ambiently listened to in the room and converted into whatever needs to be captured. And that intel is then converted into guidance in the future that helps, and future visits. And to your point, like I think we're starting to turn, hopefully starting to turn the corner on the tap, tap, tap, tap, tap with everything in the office.

This shit is working, I wouldn't wanna be a hospital. You know, we need maybe half as many as we have. If we distribute, forget the improvements. If we distribute the improvements that have already sort of been proven out evenly across the population, a lot of hospitals left.

So if you don't want be a hospital, who do you want to be in the healthcare system today?

I wanna be all of these focused factories targeting conditions and going at risk and saying, "Hey man, gimme your diabetics, gimme everyone and I'll find you the thing for your diabetics, you know, let me be your personal shopper." You know, the, I love the Firefly model and there's a bunch of them with varying degrees of physical footprint that are working. And I love that. It's a long road and it's gonna be a lot of croft, but that's a category where the tide is going in. And I think probably Firefly best of all, but I'm a little biased there.

Yeah, to translate a little bit, I think there's been the most low hanging fruit created by the system of years and years was around areas where there was a incentives towards over utilization because there wasn't coordination around the care. And if you start picking off those areas of conditions, you know, I mentioned kidney care, you know, almost every specialty along the way, you can start looking at opportunities to care for patients better by not doing as much, not spending as much. If you get the incentive system right, you've seen big movements in both improvements in quality of care and overall lower costs. And there's, I think, Jonathan, you probably mentioned there's, I don't know, a hundred different companies that are kind of playing in those pockets of different conditions.


And getting carve out risk on them 'cause they can demonstrate that they can reduce costs while improving care.

And there's above them, upstream of them, there's real independent companies that have sort of gotten in the role of the shopper buyer, you know, and they can have real money to make. I would say there's one little wave that was not so helpful between over utilization and today, which is upcoding. So there's still, we're still at the tail end of a big long upcoding vein where, you know, Medicare Advantage pays different amounts based on how sick. And it's like, "Well, we better see how sick, let's see if."

That's why I say there's some that would say Medicare Advantage hasn't been a totally unqualified success because you have to unbundle what's gone on on the risk coding side.

Right, again, people do what they're incentive to do and it's like, find evidence of sickness and we'll give you money. "Okay, I'll find you some." But I feel like there's a upper edge to that. And I feel like we're getting to it. Like we're sending thousands of people up to people's houses trying to find one more lab result that's outta control or whatever. Eventually, like even if you moved everybody into the sick category, still most of the upside is on utilization reduction.

You know, the space that interests me these days thinking about it, are the retail healthcare, right? So CVS woke up and realized one day, "Hey, we're not in the greeting card business, we're in the real estate business. And 70% of Americans live within three miles of a CVS. Hmm, what happens if I put a doctor in all those CVSs?" And as we talk about making healthcare part of everybody's day-to-day, I think the CVS, the Walgreens, who the heck knows what's happening with Amazon and all they're trying to deliver that last mile to your doorstep. I think that's potentially really transformative for healthcare.

For sure, I mean, you know, we made some snarks about the doctor's office. You would never design the doctor's office today. It doesn't make any sense. It's designed around the doctor for starters, when something like 90% of what a doctor delivers is in an information product and only 10% is, you know, a physical craft skill that his or her hands need to be holding the scope or whatever. It just makes a lot of sense to distribute it into the human movement pattern and take the information workers and use the information channels which are infinitely distributed. And that's happening. It's, you know, MinuteClinic early days. CVS did not buy MinuteClinic to get into healthcare. The pens that drove the drugs they wanted to put them into where the drugs were, not a bad idea. I don't think they ever made a dollar on MinuteClinic until they looked at the prescription, you know, and now they've gone upstream of even that and said, "Well, what about the premium dollar?" And I don't think they're wrong. I think there are even more efficient ways of doing it than putting a doctor in a, you know, strip mall, which is to put a doctor in a nerve center. And I'm seeing a lot of that too. But still, if the doctor's in the nerve center and he needs that abdomen to be palpated, how wonderful that the doctor could say, "Hey, the nearest strip mal to you has the hands that know how to palpate an abdomen, or do a strep culture, or put some stitches in, or whatever. As a sort of equity employment movement. it's interesting because now the technical work, the doctor used to hoard that, "No, I'll do the stitches." As if, you know, seven years of medical school to be able to do arts and crafts with skin. You know, nowadays, if the doctor is actually doing highly leveraged, really cool work and making a lot of money, making lots of people's care cheaper, they're not gonna hog the stitches the way they would as they sat in their little troll in the bridge, under the bridge primary care office back in the day where they needed procedures to cover the nut. So suddenly the doctor really is a buyer of all procedures. They sort of go from maybe the corrupt, you know, priest that wants to build the temple to the, who were they? The Franciscans who just, you know, they're in their digital brown shirt, you know, just with the word and no temples, no cathedrals. You know, that's a pretty cool transition. And going back to the very beginning of our conversation here, that ability to make it the selfish, greedy thing for a doctor to buy procedures rather than do them in a marked up inefficient way, super cool.

All right I could talk to you guys all day, but I got two last questions for you.

Please don't, please don't. I can't stop talking. If I would talk all day, it would be awful.

It would be awesome. We could have a multi-part podcast here. We might anyways. All right, so here you go. It seems like you can't have a conversation today without the words artificial intelligence. So let's add ourselves to the conversation. In my opinion, there's no way the reality of AI can live up to the hype, especially in healthcare. What's a realistic role for AI in healthcare? Robert, you wanna start?

I actually, while maybe short term your statement's right, I do think it has really important ramifications over the longer term. I mean, you think about healthcare, all we've talked about, there's all this data. It's hard to access, it's hard to pull together, there's competing interests around it. And you know that if you could pull the data together more easily and with higher powered analytics, you're going to get better insights. And if people like Jonathan are successful, you can then get those insights delivered in a way that's better and easier for those who control the decisions that truly impact care. I would argue that that screams for AI playing a huge role. You know, we'll have to work through some of the competing incentives around control of the data. But like Jonathan said, that's getting better and better. The data's starting to flow more freely, or the data that matters. And you have to work through obviously some protections and regulation. But if you think about the central question is can we make the caregivers more effective in a way that's easy for them? I don't see how AI doesn't play a huge role in that going forward. That's just me. So I think it's actually maybe a little bit under hyped in healthcare right now. And you know, what I always say about healthcare, when healthcare changes, healthcare is slow to change, and when it changes, it changes slowly. So like, you know, it's probably not next year or the year after, but if you look ahead five or 10 years, I think it's got potential to really help solve some of these problems that we're talking about today.

I agree with Robert. I mean, in the press, AI is, you know, described as a thing that wakes up in the night, you know, climbs into your wallet, gets your driver's license, slogs into the, you know, gets into the NSA and launches a missile or something. In the meantime, look at the percentage of healthcare that is just filling out the same fucking questionnaire 6,000 times. There's a lot that goes on in the life of healthcare and medicine that doesn't need to be subjected to mirage risk, doesn't need agency problems, you know, that can just, that these types of machine learned, you know, self-learned algorithms could just consume and just drive that bloat out of people's lives. And, you know, still, whoever submits whoever's name on the form is still accounted for what's on the form, but the filling out of forms and other sort of algorithmic or linear fact to trans, you know, you tell me, and I tell Joe, and Joe tell Caesar, you know, that stuff is just a huge percentage of healthcare, huge percentage of the life of doctors and patients. And a good AI you know, trained only on the data that's of it. You know, that's being allowed some sort of pool that's safely all, otherwise authored by someone allowed to do such things. Not off the wide world of the web and the TikTok and all that. That's just a giant, that's half of medicine right there that everyone hates.

Yeah, that's a great point. Like a lot of people say AI in healthcare, the hallucination will keep it, you know, it's gotta be a hundred percent accurate. It's like flying a plane, you wouldn't let AI fly a plane. It's gotta be a hundred percent accurate. One little mistake could be, you know, fatal. There's so much of healthcare that doesn't require that a hundred percent initially. So you're right, Jonathan, there's so many places you can apply it and still drive a lot of change without having to have the perfect answer for the perfect patient.

Everyone here has done like, "Hey, write a letter to my team telling them to go screw themselves about complaining about the retreat." Right, or whatever. And then the other guy writes, "Write a letter to my boss that doesn't get me in trouble telling him to go fuck himself." Like, that's a, and then it's like, make it shorter. You know, that's a vignette that we've had in our company that we loved a lot with ChatGPT. Well let's say you say, "Listen, show me this patient as a diabetic case." 'Cause I'm an endocrinologist. "Show me this, okay, shorter. Okay, more about the drugs. Okay, now show me this patient as an orthopedic referral." Same data, same pool, just imagining what orthopods would like to see versus it's still all there, it's still all clickable, but that's not a huge, you know, I haven't tied up ChatGPT to Zus yet, but that could be tomorrow, you know? And that's just a big deal. Just the clicky clicks that doctors have to do just to get the grok in their head. That's huge, if every doctor, most doctors today just don't look 'cause it's too much. I mean, get them drunk, I promise you they'll say, "I can't, it's impossible." Or they do and they're like angry and they want socialized medicine so that they could have two hours to look at each patient. You know, if they could just get it all cooked down for them in a way that, and they could ask for more or less or a little of this or on the side. I mean, that's a breakthrough that would take like about zero new development.

I feel like you're talking about Star Trek here. I envision like, you know, Dr. McCoy like talking to his computer saying, "Show it this way, show it that way."

Yeah, closer.


Show me their eyes. Computer, right? Absolutely doable.

All right, last question here. So, two big thought leaders here on the podcast. I want to both ask you both for your future prediction, aside from AI, fast forward five years from now, what's the single biggest change in the US healthcare system? Robert, why don't you start and then we'll give Jonathan the last word.

Oh, I already said, when healthcare is slow to change and when it changes, it changes slowly.

You can go to 10 years if you want.

Five years is tough.

You can go 10.

So I think Jonathan might have poo-pooed this a little bit, but I'll throw it out there. I do think that virtual forms of care, so the decentralization of care and pushing care more into home and home-like settings is gonna be, there'll be a big difference several years from now. We'll figure out the reimbursement that'll support it. The pandemic was a reasonably good guide, and that's just such a ticket to lower costs and improved quality in so many parts of care that I think that's a place that will, and by the way, it's more and more supported by digital health as digital health advances. So a lot of what we've been talking about, I think plays towards enabling better care, you know, home setting or in a homelike setting. So I think you'll, my sense is that's gonna be a continuing revolution in healthcare over the next decade.

If all poo-pooing I've done on that, I would like to officially de-poo poo right now. I think he is exactly right, that is it. We just had in Israel last week, the first whatever it was, JCO certified virtual hospital. It's a full on hospital and it's got no building and it was at some con, one of these conferences. So a hundred percent. And by the way, think of all the, you know, a Vietnamese only orthopedic recovery rehab. You know, if you go national, if you virtualize the amount of subspecialization and targeting and connection that you can bring to care, let alone the obvious cost saving, not obvious, but really profound cost savings. I'll go one more then just because, just to end on a horrifying or interesting note or horrifying interesting or interestingly horrifying. A sort of an '08 of hospitals, a take take us by surprise, large scale, wildfire Hospital bankruptcy. Just a rip of hospitals who can't make their newly very high interest payments and whose assets, the underlying assets of them are either buildings or worse. I mean, a lot of it's software, software that doesn't serve the digital health movement that Robert gave us as our number one movement. There's only two things that hospitals can universally make money on. It's the kickbacks of the specialty pharmacist, you know, whatever it's called, pharmacy rule something 3B or whatever. And then imaging, you know, where the imaging equipment's super cheap now and you know, you can still charge for it as if you had a room built, you know, for your sonogram. But those things are distributable, you know, there isn't anything special about the pharmacy at the hospital versus any other pharmacy. And interest rates are going up. So all these digital companies wicking that stuff out of the hospital. And then it's either a bailout, keeping progress back in the name of all those votes for all those congressmen of all those hospital workers. You know, plus it'll be like a nun executive at the mic, you know, at the panel asking for the bailout. It's gonna be very hard to say no, you know, to the Sisters of Agony and Mercy Medical System as they ask.

Well if the bank CEOs managed to get bailed out, you think the nuns.

Right, you can imagine how the hospital guys are gonna make out. But I think that if Robert's mega wave number one works at all, and I think the evidence is clear that it's working, mega wave number two will be something that is essential for reducing the cost of care, which is pulling those fixed costs outta the system. And if we were having a booming real estate market at the same time, then maybe it gets turned into office buildings and apartment complexes. I remember a hospital executive many years ago, only half jokingly say, my next move gonna go back and buy all my original hospitals out of bankruptcy, keep the helipad, keep the emergency room, bring a chef into the cafe and turn all the hospital beds into dual eligible apartments and then go at risk for them and chopper the sick ones out and maintain the other ones with a nice chef and you know, a nice clinic. So that's, anyway, that's one to watch. Whenever you do something really well, some ox gets scored.

So question on that scenario, which I think, you know, if you put A and B together, certainly is a potential endpoint. What happens to high-end specialty care, ICU emergent care? Like where where and how does that get delivered?

Remember we kept the helipad and we kept the emergency room. And of course we'll keep, you know, the, you, you know? Somewhere there'll be the you which will be able to handle the multi-modality train wreck cases. And by the way, in a world where we land this, where we stick the landing, they do make a shit ton of money for that. And we're all proud of it. You know, the way we all felt when that bombing, when those two little schmucks, you know, bombed the marathon, and Boston just woke up, boom. And every doctor got a smock on and they're in there. Not one person who didn't die instantly died. 250 people blown to pieces, none of them died. Just imagine that anywhere else in the world. We love those things for a reason, right? We go and we have freaking fundraisers for them even though they're making money on our, you know? So I think they just need to be scaled into their job, which is the multimodal shit show, and everything else needs to be moved into the virtual first focus factory that it belongs in. And we'll love them again and we won't resent them anymore.

Wow, that is quite the ending. I love that, Jonathan, thank you. I almost wanna kind of do a whole other podcast here just on that topic. So I may invite you back and we can do a deep dive into the future of hospitals.

Let's see who gets canceled after this one and then we'll go from there.

I hope we don't get canceled. Awesome, Jonathan, thanks so much for joining us today.

Alright guys, I really appreciate the time.

It was awesome, Jonathan. Thanks for letting me tag along. Great to see you again.

Robert, thank you too. And for all our listeners out there, thank you you for listening to "Definitively Speaking" a Definitive Healthcare podcast. Please join me next time for a conversation with Sam Hendler, Managing Director for Business Development for Healthcare at TH Lee. Sam's got a pretty cool job, he gets to go around and meet with all sorts of healthcare companies, big and small, software and hardware, clinical and operational, as he looks for TH Lee's next great investment. I've known Sam since we joined a fantasy football league back in 2005, a league that's still going on today, mind you. So I ask Sam to come on the show and tell us what he's seeing in the world of healthcare and what excites him about 2024. I hope you'll join us. If you like what you've heard today, and I sure hope you did, please remember to rate, review, and subscribe to the show on Apple Podcasts, Google Podcasts, Spotify, or wherever you get your podcasts. To learn more about how healthcare commercial intelligence can support your business, please follow us on Twitter or X at DefinitiveHC, or visit us at Until next time, take care, stay healthy, and remember that when it comes to healthcare, data isn't the only thing, but it might just be the everything.