Podcast interview with Bob Stone, co-founder of Healthways. Part I (transcript)

This is the transcript of part I of my podcast interview with Bob Stone, co-founder of disease management company Healthways.

David Williams: This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Bob Stone. He’s the executive vice president of Healthways, which is a leading disease management company that he co-founded in 1981.

Bob, thank you for speaking with me today.

Bob Stone: It’s my pleasure, David. Thank you for giving us the opportunity.

David: Bob, there’s been a lot of tinkering around the edges but no real fundamental health care reform in this country, despite lots of talk and attention. Why is that?

Bob: I think there are probably a couple of reasons and the first one that occurs to me is that our health care system really wasn’t developed in response to some real well thought-out master plan. I don’t know any time or place where anyone has sat down and laid out a purpose, objectives, initiatives, milestones or anything else you would expect to see in a coherent effort to construct something of such fundamental importance like how we’re going to deliver health and health care services in this country.

In fact, arguably, even our country has a better plan called the Constitution. We’ve only had to amend that 24-odd times in the last couple hundred years and two of those don’t count because it was Prohibition and the repeal of Prohibition. And so, I think what we’ve seen is a system that grew in response to perceived needs. And each of those needs was addressed in turn and did not receive or appear to receive significant thought about the impact that the solutions would have on other element of the system that had been addressed in response to the last set of perceived need.

So absent a North Star, an agreed upon purpose and a general consensus about what we want the system to do, I think that we’re in a continuous cycle of: here is a problem with a component or a function of the system, let’s fix it. And in doing that we tend, at least historically, to overcompensate in one degree or another depending on what it is we’re trying to do.

In 1945 following World War II, the perception was, I think accurately, that there weren’t enough community hospitals in the country and we saw the the federal government provided funding for the development of hospitals across the country. 15 years later, in response to the perception that it was overbuilt hospital infrastructure that was driving health care costs, we saw Certificate of Need legislation designed to retard the growth of those very facilities that we had, 15 years earlier, fostered. We’ve seen the same kind of thing with manpower policy. Now we’ve got too many doctors, too few doctors. We’ve got too many of the wrong kind of doctors. And so as the situation changes over time, we respond to, as I’ve suggested, the immediate needs without any real thought that I can detect about what the end game is that we want to accomplish.

David: So we now have a Constitutional scholar in high office. Do you think things might be different this time around?

Bob: I think we may be a step closer. One of the things that I like about President Obama is the approach that we saw, actually during the campaign, around the financial crisis, of enumerating principles. But I think, again, in the absence of an overriding single objective to which everything else must submit, that the principles that I’ve seen enumerated are really still about treating symptoms.

So we have a principle on coverage policy. We have a principle, although it’s not fully worked out yet, on payment policy. We haven’t yet quite seen a principle on pricing policy, other than discussions about using the power of the federal government to purchase, particularly in the pharmaceutical industry, to get the kinds of discounts that volume purchasing of that kind can drive. I have not yet heard a discussion that answers the question: What is it that we want the system to accomplish? How will we know that we are making progress towards that goal? What is the one thing at the end of the day that we’re going to measure to determine whether we’re heading where we want to go?

David: Bob, you mentioned a couple of times talking about objectives and I wonder if maybe the health care system is just too complicated to have a single objective. Would you be able to state one particular objective that you think should be the objective of health reform?

Bob: Well, I think that it may sound somewhat silly but I think it has the virtue of being clear and simple and easy to understand. If you look at any of the various rankings that are out there that compare the performance of our health care system with other countries –either in total or just the developed nation– if you look at the metrics that are used to compare the relative health of our citizens against those of other countries, the kindest conclusion that you come to is that our performance is poor, particularly given the level of gross domestic product that we invest in here in this country, which is the largest percentage in the world and is growing at an astronomical and apparently unstoppable pace, at least historically.

So my simple answer is that we ought to have an objective that at some defined point in the future, probably 10 years, that when the new rankings come out, we’re number one. Now, I considered saying, “We should be number 8 or number 22” but I don’t know how to justify that. We’re committed as a nation to be number 1 in sports, why wouldn’t we be committed to being number 1 in health and health care on an international basis? As I see it, it’s pretty black and white. It’s sort of like President Kennedy’s moon shot: within the decade we will be number 1 on whatever rankings there are out there on the health of our population and the effectiveness and efficiency of our health care system.

I think the advantage of having the objective is that you can then look at how you assemble the components of the system, how you pay for it, how everything interacts – through the lens of: do those decisions advance us toward that goal or do they not? And absent that kind of objective, you really don’t have the kind of clarity you need to deal with a system that’s, as you suggest, very highly complex, very poorly understood even by those who are in it, in terms of unintended consequences of particular decisions, maybe as they impact the overall goal.

David: I was going to say that initially it was a little bit audacious to say that we should be number 1. Because I think, according to the WHO, we’re about number 37. But on the other hand, it seems that perhaps it is reasonable to say in 10 years we should be number one. And then in another 10 years, maybe rather than spending twice as much per capita as the number 2 player, we should be on par. So maybe it is realistic.

Bob: You raise an interesting point about what it costs us. I think that being number one requires that we recognize that the historical reform efforts and fixes that we have put into place over the last 50 years anyway, have principally been driven on the supply side of the health equation.

We’ve made payment coverage, manpower, facility decisions, we’ve made access decisions but we’ve really not focused a whole lot of attention on the demand side of the equation except in areas like disease management over the last 10 years. Even there, frankly, I think we’d be forced to conclude that while effective in having some impact, it’s clearly not sufficient to cover the inexorable cost increases that we’ve seen in the system. We know that we are creating demand through the significant increase in the number of people with avoidable chronic disease and we are doing very little in an organized way to deprive that chronic disease engine of fuel.

And so as we look out as a company and as we look out in terms of if we had a blank sheet of paper, what would we do? We think that the system has to evolve towards a consensus goal such as the one we discussed, focused on three things and three things only. The first of those is keeping healthy people healthy. The longer we can keep people healthy, the less demand they are going to make on the system over time and the cost benefit of that ought to be significant. The second, which is a little bit more difficult, is recognizing that there is a portion of the population who is at risk for health compromise because of the personal lifestyle behavior choices that they make, and that we ought to be providing support for that population and helping them make better choices and sustaining those better behaviors. This too, over time, will significantly reduce demand on the system associated with that unavoidable demand. And then third and finally, we need to assure evidence-based care is available to those who require it.

It’s the third part of the system that everybody has been focussed on principally over the last 50 years. Very few people get up in the morning and say, “I’m going to go interact with the health care system because it’s fun.” People go to the system when they’re sick and they can’t effectively self-manage the recovery process or the disease process that they’re dealing with. But we basically ignore the healthy and the at-risk, until, of course, they turn 65 and then Medicare is the catcher’s mitt for everything that’s been avoided or denied over the previous 65 years.

David: This concludes part one of my interview with Bob Stone, co-founder and executive vice president at Healthways. In part two we’ll talk more specifically about disease management.

Transcript continues here.

April 22, 2009

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