Why health care delivery is an exceptionally different industry [PODCAST]

Listen and followApple PodcastsSpotifyYouTubeMore apps · Browse all episodes

“The business of health care delivery differs markedly from other consumer and service industries in many ways. First and foremost, the economics differ. Specifically, the payers of medical care are often different from the customers, the government and third-party insurers are the primary payers, demand is inelastic, quality metrics are typically unavailable, and the industry consists largely of nonprofits that avoid taxes. And that’s just the start of the economic differences. These profound economic differences vis-a-vis other industries lead to fundamental deficiencies in health care governance, leadership, organizational design, infrastructure, and operations. We believe economic exceptionalism is the root cause.”

Joe Mandato is a venture capitalist. Ryan Van Wert is a pulmonary physician and health care executive.

They share their stories and discuss their KevinMD article, “Why health care delivery is an exceptionally different industry.”

Did you enjoy today’s episode?

Rate and review the show so more audiences can find The Podcast by KevinMD.

Subscribe on your favorite podcast app to get notified when a new episode comes out.

Reflect and earn 1.0 AMA PRA Category 1 CME for this episode.

Also available in Category 1 CME bundles.

Powered by CMEfy – a seamless way for busy clinician learners to discover Internet Point-of-Care Learning opportunities that reward AMA PRA Category 1 Credit(s)™. Learn more at about.cmefy.com/cme-info

Do you know someone who might enjoy this episode? Share this episode with anyone who wants to hear health care stories filled with information, insight, and inspiration.

Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show, we have Joe Mandato and Ryan Van Wert. Joe is a venture capitalist. Ryan is a pulmonologist and health care executive. Together, they wrote a series of articles on KevinMD, “Why health care delivery is an exceptionally different industry.” Joe and Ryan, welcome to the show.

Ryan Van Wert: Thank you.

Joe Mandato: Thank you.

Kevin Pho: So, Ryan, I’m going to start with you. I’m going to ask each of you the same first question, which is really just sharing your story and journey to where you are today. So, Ryan, what do we say first?

Ryan Van Wert: Thank you for having us on the podcast today. I started out as a chemical engineer, worked briefly in biotech, and moved very quickly into a career in medicine. I did my training in Toronto, originally from Canada, and moved to Stanford to do my pulmonary and critical care training. I’d also wanted to bring the engineering and medicine into a career, and I got involved in the program in Biodesign at Stanford, which is a health technology program focused on value- and need-driven innovation.

I did that postdoc and was involved in three projects that became companies and technologies. Two of them were more traditional medical devices in the critical care and women’s health space, and one of them was a business that I’m still actively involved in as a CEO, focused on improving serious illness and end-of-life care. So my life today is partially in this company, which is called Vynca, and partially practicing medicine one day a week, still in a role at Stanford.

Kevin Pho: Well, it’s good to hear from a fellow Canadian. I’m from Toronto, Canada, as well. So I always like to ask CEO physicians this question. Ryan, has being a physician helped or hurt you as a CEO?

Ryan Van Wert: I think it’s overwhelmingly helped, I would say, particularly having a small toe in the water of clinical medicine. There’s not a clinic that goes by where I don’t bring some insight about something that’s relevant to our business back, and that’s helpful. That might be learning from a patient interaction. It might be something that’s changed in terms of how we’re delivering care, a new compliance issue that’s come up, or a new opportunity to see change on the horizon. So for me, it’s been really helpful.

But I will say that I think there is a need to kind of separate those roles and functions. What I mean by that is that I think there is a requisite humility that has to come with that. You’re not by any means the smartest person in the room as a physician, and I think if you approach it from a humble point of view, you can bring those learnings back into your role on the executive side.

Joe Mandato: Imagine, if you will, an interventional cardiologist being humble, right? All the traits that a great CEO has, sometimes. As long as the physician understands his or her limitations, they can be very value-added.

Kevin Pho: And, Joe, I’m going to ask you that same question. You are a venture capitalist, so tell me your story and journey to where you are today.

Joe Mandato: My first exposure to health care was as a medic in the United States Army, and then as an officer, where I was the aide-de-camp to a major general who was the commanding general of Walter Reed Army Medical Center, which at the time was an 1,100-bed hospital. He was an extraordinary human being. I learned a great deal about him, and I learned a great deal about how he effectively managed this large institution.

Following that, I knew I wanted to stay in health care. I was not able to go to medical school, so I was able to get other experiences as an executive in various health care companies. So I have led six health care companies, and I have invested in and been on the boards of 20-some-odd health care companies. Subsequent to that, I thought I’d make it, and I got involved in teaching. I’m a lecturer at Stanford in Biodesign.

And my writing, which is a hobby, and I love it, I focused on two big issues: number one, the effectiveness and the roles of boards of directors, and the patient experience, having been through recent patient experiences myself and seeing how my mom, who was 99 at the time, confronted the challenges of the health care system.

Kevin Pho: And, Joe, I have a lot of physicians on the show who are interested in the health tech space, and I’m sure you hear many, many pitches. So what’s your number one piece of advice to physicians who want to pitch to venture capitalists like yourself? What’s your number one piece of advice to these doctors who have a great idea?

Joe Mandato: For them to surround themselves with domain expertise, right? Both on the technical side as well as the leadership side. Sometimes that’s difficult for them to do, but I think it’s really essential. You have to bring as much credibility to the table as you can, and the practical side of developing a technology or product is full of challenges that many of them have never encountered.

Kevin Pho: Now, both of you wrote a series of articles on KevinMD, very insightful, “Why health care delivery is an exceptionally different industry.” Now, Ryan, I’m going to have you summarize these articles for those of you who get a chance to read it. Maybe you could also share the impetus and reason why you and Joe decided to write this series.

Ryan Van Wert: Yeah, absolutely. Well, the impetus was really some of the conversations that Joe and I have had about our shared experiences as patients, or seeing loved ones who are patients, navigating the health care system. Joe and I, in our day jobs, are on the other side of that, right? It really isn’t until you’re in that seat, or you see someone around you in that seat navigating that experience, that it really highlights how terrible a job we often do of providing the basics of an exceptional, person-centered experience in health care. The whole system is designed for the providers of care or the other stakeholders, and the patient is often lost in that. I think the word “patient” itself is a problem, right? They’re people or individuals that we’re caring for.

Our conversations then led to, well, there are a bunch of other industries that are just as complicated as health care. There are a bunch of other industries with very complex stakeholder landscapes, and those industries still manage to provide an exceptional experience to their end users, call them customers or whatever that end user is. They’ve figured out how to create an exceptional experience for that end user. Joe and I have done a lot of self-reflection on why this is. Why is it? Why do we have these dingy waiting rooms? Why are we made to wait for 30 minutes?

We keyed in on this concept of exceptionalism, I think just from some of the stories that Joe just alluded to, around what are those attitudes of the health care system, in the health care ecosystem, that perhaps drive biases in our behaviors that fundamentally have led to these issues, these structural issues in health care. So we keyed in on a few different aspects, examples of this exceptionalism that we see.

One of them, given Joe’s expertise in board governance, is around how boards of health systems are typically structured. In businesses, whether for-profit or nonprofit, outside of health systems, the boards are true stewards and partners in that operation, in guiding and holding the executive team accountable to operational goals, and so on. In health systems, the board of directors is basically an extension of the foundation, typically, right? It’s a fundraising function, where the individuals around the board are able to bring capital to the table through their positions or networks or otherwise, but don’t bring that expertise and that function that a board ought to have, that Joe knows so well.

The second aspect was around health care leadership in general and how we look at health system CEOs, things like: Why do health system CEOs turn over far more rapidly than CEOs in other industries, and what does that lead to, as a consequence, for the leadership and longitudinal success of these health care operations?

And then the third is around infrastructure and operations, and how we enter a hospital and find these dingy waiting rooms, these dingy, awful buildings, when somebody’s already sick and not feeling well. That’s the last place you want to be. You don’t want to go down a long hallway and get lost five times. You want to have an experience where you feel comforted and supported. Also along those lines, we’re seeing a lack of true investment in health care technology, innovation, and infrastructure in that regard.

So we talk a lot about some of the examples of the consequences of exceptionalism, and our real point with this series of articles is to encourage self-reflection amongst our community, to check ourselves about these attitudes, and to ask ourselves how we can do better. Because what we are seeing, and this is some of the other writing that Joe and I have done, is that there are people doing this in the industry today. There are people providing innovative primary care solutions and innovative solutions for other populations, and that is the seed of fundamental disruption in the industry, which is great to see. Those disruptors have taken that individual, that patient, as we call them today, and they’ve put them at the center. They understand their needs, they address those needs, and they provide a delightful experience for those individuals.

Joe Mandato: You know, it starts at the top. The leader sets a culture. If you’ve got a culture of accountability and patient satisfaction, it permeates the entire system, and it forces change in the entire system. If you’ve got it, the culture is the way you do things. If the leader doesn’t impose his or her will to create a positive culture, the organization is just not going to work.

We cite the infrastructure, the layout, and all of a sudden, imagine, as a 75-year-old, my dad was looking for the MRI at the Brigham and Women’s on Longwood Avenue. Imagine as an individual trying to navigate that kind of a system, or when you try to check in with the unit clerk and they treat you like dog meat. I mean, you’re already in a bad state of mind. You’re depressed. You’re scared. Why is that? I mean, it’s the cheapest, the most effective way to manage, by setting a positive culture and having people treat each other with the respect that they deserve. It’s really challenging, and until you have a leader willing to acknowledge the problem, but then make a disruptive change, force disruptive change throughout the organization, it’s going to stay the same.

The other challenge you’ve got is that accountability does not permeate the organization. OK, they can have the worst financial results year after year, so the CEO gets fired. So what? They bring in a new one, and they may fix certain things in a very reactive way, but it doesn’t solve the underlying problem.

And the other challenge, I think, is that so many organizations have MDs as the CEOs. Why is that? Does that mean that non-MDs don’t have a clue on how to manage a thousand-bed institution? I think not. Why is it that at Mass General everybody’s got to be an MD? I don’t understand that.

Ryan Van Wert: I’m just going to say, I think the physician executive is totally fine and can do a great job, but that physician executive has to have the requisite background and training for the executive role, and to bring that operational rigor, that accountability, and the establishment of goals and KPIs. That skill set is critical. The MD certainly can add value as an executive, but if you’re lacking and not including all of those other things that are so much more important to actually being a great health system CEO, that’s a real problem.

Kevin Pho: We’ve had this question come up in a podcast before: Why should executives and CEOs have or not have an MD? I think that there’s something that someone has called, Pat Faye, she calls it the business school mindset, and sometimes the business school mindset lies in direct tension with what constitutes great patient care. So there’s an inherent tension there. So ideally, if you have that physician executive, you would have someone with the skills of both the business school mindset but also the patient care mindset, because if you have one or the other, sometimes that’s not going to work.

Ryan Van Wert: Although what I will say to that, Kevin, is that I think those things actually work together. If you have this sort of business school mindset and establish goals and accountability around things like exceptional patient experience, around things like exceptional quality of care, that’s great, and that’s a great way to institute those changes at a health care delivery system. The executive, the board, and the whole organization have to be aligned that those are priorities, though, and if they’re not priorities, then they will suffer.

But I would differentiate between the skill set of a business background and the sort of patient experience and quality of care implication. I think they’re absolutely aligned, and in fact, a great way to ensure high-quality and consistent care is by applying those business practices to health care organizations.

Kevin Pho: So, Joe, I’m going to draw on your expertise on governance. If you were to make changes in terms of how the majority of health care systems are governed, from the board of directors to the CEO, what kind of improvements and changes would you make from that perspective?

Joe Mandato: We talked about, in the piece, NewYork-Presbyterian. With all due respect to Presbyterian, I mean, they have a hundred-member board. What the hell can they do? I mean, it’s got to be like herding cats to try to manage all these really extraordinary, outstanding human beings and executives. But that’s not what the institution needs, right? The institution is measured on delivering superior patient care and a superior patient experience. They’ve got patient experience officers with little or no responsibility or accountability.

But anyway, the board has got to have those personalities and those skill sets that fill gaps in the institution’s skill sets, in this management team, right? I think that’s really number one. It’s such a huge advantage to be able to get the outstanding human beings willing to serve, who will give their time and expertise besides their capital, to deliver a better and more efficient organization. I think that’s the biggest one. The expertise that the institution does not have in its leadership team can really be supplemented by outstanding human beings from the outside.

Kevin Pho: We’re talking to Joe Mandato and Ryan Van Wert. Joe is a venture capitalist. Ryan is a pulmonary care physician and health care executive. Together, they wrote a series of articles on KevinMD, “Why health care delivery is an exceptionally different industry.” So, Joe and Ryan, I know that we could spend many hours talking about this, but we have five minutes left, so I’m going to just ask each of you for your take-home messages and what you would like to see in an ideal world in terms of how we can improve our health care delivery system. So, Joe, I’m going to start with you. What are some of your take-home messages?

Joe Mandato: Given that we spend the most per capita on health care, and yet our outcomes are not even close to being at the top of the list, we’ve got to figure out a way to do it differently. I think the leader has to drive and be receptive to change. He or she has to be receptive to disruptive new ideas. Specific Health Care has a committee, and they formed the committee, and they call it the Getting Rid of Stupid Stuff program, right? Empower your team members to come up with different, more productive ways of doing things.

Another one, the University of Melbourne, came up with three recommendations: Prioritize patient and staff safety, right? Number one. Create a culture of accountability, number two. And provide proof that new practices can be effective. So again, empowering your organization, getting them involved, getting them engaged, and holding people accountable. Those are my recommendations.

Kevin Pho: And, Ryan, what are some of your recommendations to improve our health care delivery system, and your take-home messages?

Ryan Van Wert: Yeah, I totally agree with Joe’s thoughts. I would reflect on some of the comments at the beginning: Let’s self-reflect on why we’re all here. We’re all here in health care because there’s a mission-driven purpose, and to make sure that we’re doing the best we can to achieve that mission. I think with exceptionalism can come complacency.

My call to action would be to look at those opportunities, self-reflect, and think about those other industries where you as an individual, if you haven’t, you know, some of us are fortunate not to have been a patient, or not to be a patient often, and if you’re in that category, I would say think about other industries where you leave as the customer with just an exceptional experience. Ask yourself why that happened and why that made you feel delighted as a customer, and think about how we can take some of those learnings and put them into health care.

Kevin Pho: Joe and Ryan, thank you so much for sharing your time and insight, and thanks again for being on the show.

Joe Mandato: Thank you.

Listen and followApple PodcastsSpotifyYouTubeMore apps · Browse all episodes