June 25, 2024

Holistic Pulse

Healthcare is more important

Reviewing 11 Of The Healthcare Industry’s Boldest Moves

10 min read

It seems we never hear any good stories about healthcare. I get it. Ours is an enormous, complicated system that accounts for 17 percent of our gross domestic product. No one wants to get sick, and when we do, we face a maze of options and enter a world filled with opinions, clinicians, medications and, of course, bills.

Amid all this and our daily news cycles, it’s understandable that we lose perspective and forget about healthcare’s successes. Looking back over the last 40 years or so, I’m reminded of several big hits that genuinely improved healthcare.

I am, alas, also aware of the big, ambitious projects that failed to produce their intended results. As a leader who encourages people to learn from mistakes, I think it’s important for us to take stock of both the successes and failures and try to learn from them.

It’s Super Bowl season, so let’s take a close look at some of Healthcare’s biggest touchdowns, fumbles, and plays still in progress.

Healthcare Touchdowns: Altruism and Innovaiton

CVS Stops Selling Cigarettes. In one of the most courageous acts in modern business history, in 2014 CVS walked away from $2 billion in revenue and hundreds of millions in profit when it pulled cigarettes from its shelves. The move led to a significant drop in cigarette sales nationwide.

While we give CVS the thumbs-up for its bold move, let’s wag our other finger at competitors who have yet to follow its lead. More than 250 U.S. cities, Massachusetts and New York have banned tobacco sales at pharmacies. But the decision shouldn’t have to be up to regulators. Cigarettes make people sick. Pharmacies exist to make people healthy. Those that continue to sell deadly poisons to the public are shamefully out of sync with their missions.

Merck Provides Ivermectin for Free to End River Blindness. There’s no river blindness in Colombia, Ecuador, Guatemala or Mexico. In many other countries, the disease is close to being eradicated. Credit that success to Merck (one of my former employers), the pharmaceutical company that since 1987 has donated about five billion treatments for the parasitic disease to people in 57 countries.

When Merck began its program, chairman Dr. P. Roy Vagelos said the company decided to give Ivermectin away “because those who need it the most could not afford to pay for it.” These days, pharmaceutical companies are better known for their extraordinary profits than for making medicines that help people. Yet the FDA just approved two treatments for sickle cell disease, a debilitating blood disorder that affects at least 100,000 Americans, most of whom are Black. Donating treatments to people in developing countries was an extraordinary act of generosity. Maybe it’s time to try it closer to home.

Operation Warp Speed Ends the COVID Pandemic. Big pharma gets the credit, but the speedy development and deployment of COVID vaccines was largely due to a $10 billion public-private partnership between the federal government and six pharmaceutical companies. The idea was to fast-track vaccine development by investing heavily a variety of promising technologies. Today, COVID is more a nuisance than a killer, and for that we can thank the federal government for creating what should be a blueprint for how to react to health emergencies.

Drug Innovations Treat Previously Incurable Diseases. By 1987, 32,000 Americans had been infected with HIV. Half of them died. The term “plague” became widely used.

Meanwhile, starting in the early 1980s, researchers at the federal National Cancer Institute tested an old cancer drug from the 60s called AZT. In clinical trials carried out by the National Institutes of Health, AZT, one of a class of drugs called “Anti-Retroviral Therapies (ART), was shown to improve the immune responses of people infected with HIV. Unfortunately, the side effects were devastating and the benefits short-lived.

But that wasn’t the case with a three-drug combination introduced in 1995 by pharmaceutical companies and the National Institute of Allergy and Infectious Diseases. Anti-Retroviral Therapies averted 9.5 million deaths worldwide between 1995–2015. Today, millions of people worldwide live with HIV. Once again, the public and private sectors collaborated to end a plague.

We appear to be entering a similar period of scientific innovation. Keytruda for widely mesastatic cancers. Zolgensma for spinal muscle atrophy. Kymriah for B-cell leukemia. And the list continues. Without a doubt the modern pharmaceutical industry is developing new classes of drugs every day that are saving people’s lives. With the explosion of new therapies, it appears we may be entering a new era of biotechnology and innovation.

Healthcare Fumbles: Big Moves With Little Return

Berkshire Hathaway, JP Morgan and Amazon form Haven. Warren Buffet, Jeff Bezos, Jamie Dimon. With those names attached, how could it go wrong?

The aim was to find a way to improve healthcare services and lower costs for the three companies’ employees, make primary care easier to access, prescription drugs more affordable, and insurance benefits easier to understand.

Though Haven shut down shut down in 2021, I’m hesitant to discount the players just because their team didn’t make the playoffs. Amazon has since acquired One Medical Group, adding it to healthcare operations that include an online pharmacy. And JP Morgan’s Morgan Health is investing $250 million of its parent company’s capital in promising healthcare companies with a goal to improve employer-sponsored care. I, for one, am excited to see what happens next.

Steve Case Invests $500M to Build Revolution Health. In 2005, AOL co-founder Steve Case announced he would commit $500 million of his fortune to Revolution Health, a new venture designed to “put patients at the center of the health system, with more choices, more convenience, more control.” The heart of the enterprise was CarePages, a site designed to enable family and friends to communicate when a loved one is ill.

Revolution was a hot commodity in the day, one of several new companies designed to turn patients into consumers. But seemingly just as quickly as it started, Revolution fizzled out. In 2007, the company dismissed a quarter of its workforce and then merged with WebMD’s parent company.

Maybe the reason for the company’s demise was that, as I’ve argued previously, patients aren’t consumers. Sick people don’t want to shop for healthcare. And the experience of a person empowered to comparison shop for a new car is wholly different from that of a person diagnosed with cancer. Case was inspired to put his money and talents into healthcare after watching his brother’s struggle with cancer. He was right about the need to fix the system, even if his plan to do so wasn’t spot-on; his is an example that would-be reformers should study closely and learn from.

Big Tech Meets Healthcare. It’s hard to get through a week without seeing an article telling us about all the great things big tech is going to do in healthcare. Tech companies have brought products and services to the market that have changed so many of our lives. And yet, that have also consistently failed to meet expectations when it comes to their investments in healthcare. For all the money and talent they’ve harnessed, they haven’t really moved the needle on health outcomes. At best, they’ve invented a few novel point solutions.

Healthcare is a highly matrixed industry built fundamentally around the management of risk. If these companies are going to succeed, they’ll have to plunge deeper into the pool beyond traditional razor-and-blade product development and maybe go deeper and father. A few years ago, I proposed that they consider acquiring entire health systems (not unlike what General Catalyst has undertaken – more on that later) and remake them on a chassis of advanced, tech-driven health solutions coupled with solid risk management operations. Under this model, they could demonstrate how operations could get leaner, how whole-patient care could supplant fee-for-service care, how payers and providers can be integrated, and how administrative burdens can be lowered.

There’s precedent for what I’m calling for. Amazon dabbled in the grocery business for years. But it wasn’t until Amazon purchased Whole Foods that the tech company truly showed us how it could tie low costs, home delivery, technology and brand loyalty into a compelling business. Perhaps this kind of transformation is what they had in mind when they acquired One Medical—though primary care is only one (albeit vitally important) piece of the large healthcare puzzle.

Big Health Systems Merge. Costs Go Up. In 2023, there were $38 billion in health system mergers and acquisitions. It seems every time one of these mergers is announced, the company acquiring the other promises the public—and regulators—that costs will come down and quality will go up.

And yet, as Harvard Business School economist Leemore Dafny reports, “When rivals merge, prices increase and there’s scant evidence of improvements in the quality of care that patients receive…There is also a fair amount of evidence that quality of care decreases.”

Consolidation can improve patient care and lower costs if it’s done in order to achieve those goals. If not, it shouldn’t be allowed to happen. If there’s a silver lining to this story, it’s that the Biden administration announced in December a series of measures “to stop anticompetitive mergers and anticompetitive practices by dominant corporations in health care markets.” Let’s hope this ushers in a new era of patient-centered mergers and acquisitions that do more than pay lip service to improving care—led by a new generation of health system leaders who can demonstrate that 1+1 > 2 for patients.

Still Working Their Way Down the Field

General Catalyst Takes Summa Health For-profit as an Innovation Laboratory. Is a for-profit health system more likely to succeed in an industry that has become increasingly unstable? Akron-based Summa Health is a non-profit health system that employs 8,000 people and provides comprehensive healthcare services to more than one million patients. But it is also operating at a loss. Enter General Catalyst, one of America’s largest venture capital firms. Through its HATCo subsidiary, it intends to purchase Summa and convert it into a for-profit entity. As an owner of an entire healthcare system, General Catalyst hopes it can accelerate technology adoption and demonstrate the art of the possible.

Summa contributed more than $210 million in 2022 to community health programs. The money went toward providing care to low-income individuals, funding neighborhood health facilities and alleviating medical debt. Will Summa continue to make investments in the communities it serves once it becomes a subsidiary of one of America’s largest venture capital firms? HatCo’s CEO says he intends to turn Summa into “a forever organization for the community it serves.”

But investor-led healthcare has a mixed track record. A recent study showed that adverse events, such as falls and infections, increased 25% at hospitals acquired by private equity. While General Catalyst, a venture capital firm, has far broader ambitions than most private equity firms (not to mention some of the industry’s smartest minds around the table in Ken Frazier, Marc Harrison, Steve Klasko, and Hemant Taneja), it is an experiment worth watching closely. If the conversion pays off—Summa’s one million patients (and General Catalyst) will benefit richly.

Kaiser Permanente Grabs Geisinger, Gives Rise to Risant. Last spring, Kaiser announced its intention to acquire Pennsylvania’s Geisinger Health and fold it into Risant, a new company designed to operate nonprofit community health systems. The deal is significant because it shows Kaiser’s new willingness to work with health systems outside of its closed network. Tellingly, Geisinger will not become a Kaiser Permanente system and its physicians will not be a part of the Permanente medical groups with which it has partnered for decades.

Will it succeed and “drive greater affordability for health care in this country,” as Kaiser head Greg Adams says it will? Even if the deal is approved by regulators, we won’t be able to judge its success until Kaiser finds a second system to incorporate into the Risant model. If together they can use economies of scale to improve care while remaining focused on their communities, Kaiser will have found a way to do something that has eluded most others looking to consolidate.

Congress Empowers the Centers for Medicare and Medicaid Services (CMS) to Launch the Innovation Center (CMMI). CMMI was established in 2010 as part of the Affordable Care Act. It was created to be CMS’s engine for payment and delivery reform. And it still might be.

CMMI’s early track record is mixed (I was part of its founding team). It has created more than 50 alternative payment models and 30 of them are operational. Its Value-Based Insurance Design (VBID) Model shows promise for increasing care coordination and lowering expenditures for low-income beneficiaries, especially those nearing the end of life.

At the same time, many of its models have shown limited cost savings and quality improvement, its data quality has been called into question and it has faced an uphill battle to enroll medical practices in value-based payment models. CMMI can be an important engine of genuine change in our healthcare system—and its current leadership is taking it in the right direction—but it needs a few big wins to demonstrate that it can achieve its full potential impact on the healthcare system.

What’s Next

Besides wondering whether the Chiefs or the 49ers will win the big game, I’ve also been wondering lately what the next few decades will will hold for healthcare. Look for the above bold moves—both those that are successful and those that are not—to influence the industry as it struggles to balance the desire to improve care and save lives with the drive to make profit.


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