A Conversation with Dr. Pandey on Healthcare Transformation

Dr. "Ravi" Pandey is president of BIPRO Inc., a consulting company, which focuses helping organizations across the globe to achieve sustainable growth in performance and consumer satisfaction. He is an expert in performance improvement and strategy, and has strong ideas about healthcare reform, which he expresses on his Healthcare Transformation blog.

I've known Ravi for over a year and respect his intelligence, knowledge, experience, and dedication. We engage in weekly discussions about key issues focused on transforming our healthcare system. Following I reconstruct a conversation we've been having about healthcare policy and strategy.

Policy

Dr. Beller: What are your thoughts about the healthcare reform debate these days in our country?

Dr. Pandey: Oh, don't get me started on it. I was very optimistic earlier. Now I see lots of talk but no substance. If we can pull off something meaningful, it would be a miracle. I mean, think about it, we don't even have a clearly defined goal? What would an ideal healthcare system be? And yet we are already arguing about cost.

Dr. Beller: Some people believe that you should know the cost first, so that you can decide what the goal should be. What's your take on it?

Dr. Pandey: It is all tricks to confuse and distract us from the real issues. How can you talk about cost unless you have a clear vision of the goals and the effort needed to achieve them? When I say goal, I don't mean it in terms of universal healthcare, or single payer, co-ops, or anything like that. Instead, let's say our goal is to achieve world-class healthcare; then what does it mean? We need to clearly articulate that. Then, we can debate about how to achieve it.

All this discussion about cost is premature...It's a silly discussion to have at this time. Let me ask you this: We all agree that our healthcare system is too expensive, correct? If that is the case, then wouldn't spending more money make it more expensive? We already have the money, we need to utilize it better.

Our healthcare system costs 30-40 percent more than it should. By the way, this I also heard on CNBC program. Sen. Frist was saying the same thing that we have about 1/3 of money is wasted. That's more than 700 billion dollars of waste. This is not a cost issue. It is an efficiency, policy, and management issue.

Dr. Beller: We'll come back to this cost issue later. Let's focus for the time being on the policy and politics. Lots of people are saying that the government can't do anything right. If they run healthcare they will screw it up, too.

Dr. Pandey: Again, that is just a scare tactic. We should ask those people if they are living in the best country in the world or not! WE are the government. If government is not good, we have made it that way. I mean the federal government is one of the biggest employers. Many of us Americans are working there. Now if we say it is unproductive system, then we are basically saying that many of us are no good and are wasteful.

I also think we beat up the government for everything. Let me ask you this, which of the following has given demonstrated spectacular performance Enron, AIG, WorldCom, the Big 3 auto makers, private health insurers? I have seen the private sector up close and personal. I am not sure if their performance is anything to boast about..

Dr. Beller: So, are you saying we should have a government controlled healthcare?

Dr. Pandey: No, that's not what I'm saying! I have expressed my own ideas in bits and pieces on my blog, the Healthcare Transformation.

When it comes to healthcare reform, what I see now is more of a patchwork being done. It is not a reform bill and it is not a healthcare for all bill. Instead, it's a "healthcare for more bill"... more people and more money. Secondly, there is too much finger pointing and distortion. That's because our system is built upon adversarial forms of competition. Unless you create a law where no one can provide misleading information, insurance companies, the AMA, hospitals, big pharma, and medical device manufacturers have the power to derail the whole thing through blame shifting and misinformation. Remember the ads in 90s against healthcare.

For any healthcare reform to work—which I would rather call "healthcare transformation"—we need to create a system that takes into account the needs of everyone, including patients, doctors, insurers, etc. This can be done by creating a competitive collaboration.

Dr. Beller: What do you mean by "competitive collaboration?"

Dr. Pandey: In a traditional sense, when we compete, we not only try to do better, but also we try to hurt the competition. Creating a public option to compete with private sector insurers could do that. There's another way to slice the market. Let government be more focused on wellness care. The PCPs [primary care physicians] would serve as health managers, that is, they would focus on managing their patients' health…keeping them well and making sure they get the right care when sick. There should use evidence based guidelines and use performance metrics, such as a wellness index, that measures care quality and cost. And the insurance industries could provide the supplemental insurance.

In that way we are not competing, but complementing the market needs. This is what I call competitive collaboration. You work together to succeed by leveraging each others strengths. Not by undercutting each other.

Strategy

Dr. Beller: Back to the money issue. If we do what you said earlier and define the goal of healthcare transformation, will there be enough money to pay for it? Where will that money come from?

Dr. Pandey: Of course there is. Let's start with administrative cost for insurance management, the cost of treating over a million avoidable injuries, malpractice premiums, over-testing and excessive treatments, under-utilized capital, and so on. In addition, insurance administration and profits add up to 30% of the premium payments, compared to 3% that Medicaid and Medicare spend. There's plenty of fault and inefficiency to go around and hospitals have too many managers and bureaucracy, which means there is huge opportunity for productivity improvement.

Additionally, I heard this guy on CNBC panel discussion say that if you can create a wellness program and reduce people's weight to pre-1991; it will save about a trillion dollar. I am not sure where he is getting his numbers from; but there is at least conceptual validity to his argument. He was also quoting about some study that a Japanese ethnic group is twice more likely to get cancer in US than in Japan. It's due to our eco-system and life style.

So, I think money should be the least concern. What we need is to define clear strategies. I bet you could achieve all the objectives and still save some money.

Dr. Beller: How do you suggest this be changed in order to create an efficient healthcare system that works?

Dr. Pandey: The people working in healthcare system cannot change it. It is not about their competence, it's about a system that has become incredibly complex. We have to redesign the system.

I mean healthcare is a relationship between doctors and patients. You improve their productivity by using nurses and technicians. Then you might add some diagnostics equipment. Would you not think everything else is a waste? It is a simplistic view to make a point. However, what I mean here is that these are the logics you can use to see what should be the cost of an ideal system. There's your benchmark then.

Dr. Beller: But wouldn't productivity be more greatly improved if those doctors knew how to deliver the most cost-effective care and were rewarded for doing so?

Dr. Pandey: Yes. That is the reason I was talking about creating a new system that incentivizes the right behavior. And we need to spend resources on research. You know that we do not have enough information to individualize medicine. We launch a product and often times we find months later that it needs to be taken off the shelf. Why are we failing? Where are we failing?

A major burden is not on doctors, but on the pharmas. They should be doing their research properly. Doctors prescribe based on what they have been told. So a better correlation between medicine and an individual will improve the care delivery effectiveness. I think though it is long way away.

Dr. Beller: What about health IT and informatics?

Dr. Pandey: They have a big role. However, these are only platforms. Unless we changed the process and behavior, the IT will only accelerate the bad things. I have been a big critique of most of the products being sold today. I was glad to see recently an article where Dr. Blumenthal's office was quoted as saying that the current EMRs are not up to the standard since they do not take into account of the needs of the stakeholders.

In my view, these products are piece-mealed together. In a sense, they were developed and then people tried to fit them to meet the healthcare industry's needs rather than understanding the needs and then developing the software. There are lots of horror stories about implementing informatics products. To be fair, we also need to improve the quality of processes and project management. We will succeed if we first focus on building the process frame work for healthcare delivery and management. And then create IT products to automate it. Right now we just keep on adding functionalities in existing products and it keeps on getting worse and worse.

Take the example of EHRs and PHRs. Why do we need two systems? It creates unnecessary confusion and duplications. Personal health, as you know, is a combination of genetics, medicine, habits, environments, etc. So if the solution to wellness is a holistic approach, then why not create systems that support the holistic needs.

I think a great system that can be implemented with relative ease and can be developed in about $1 billion or a bit more. Over $20 billion being allocated by the white house will end up in the same hands that have spent years to develop a non-workable system. They are smart, but they do not know how to get out of the maze that has been created. IT culture of product development isn't suited for product design for healthcare industry due to its critical nature. They need to bring some outside experts to help develop their products. When MS Window crashes, it is not a big deal…but you do not want those kinds of issues. Our IT system has to transform its own attitude towards product quality.

Dr. Beller: How would you summarize what should happen?

Dr. Pandey:

• Create a clear definition of ideal healthcare system. And create strategies around that.
  
• Create a culture for healthy living.
  
• Improve the quality and efficiency of medical research.
  
• Demand a cost reduction of over 30% across the sector.
  
• Create a tiered system of coverage...basic provided by government and advanced through private insurance.
  
• Implement a new system for handing malpractice claims.
  
• Scrap the entire health IT system and recreate...it will save tons of money.
  

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This concludes the first part of our discussion. Check back for more.