BIOS Podcast #3: Healthcare Delivery Innovation w/ Robert Pearl — Former CEO @ Kaiser Permanente

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Dr. Robert Pearl — Former CEO of The Permanente Medical Group, the nation’s largest medical group. Through his career with the Permanente Medical Group, Dr. Pearl led 10,000 physicians, 38,000 staff and was responsible for the nationally recognized medical care of 5 million Kaiser Permanente members. He is now a professor at the Stanford University School of Medicine and on the faculty at the Stanford Graduate School of Business.

This article is a summary of key takeaways from the BIOS Podcast episode w/ Dr. Robert Pearl— Listen Here!

Transforming the Permanente Medical Group

Prior to his leadership at the Permanente Medical Group, the company had a reputation for cheap care, which many interpreted as and associated with lower quality care. When Dr. Pearl took over as CEO, the group was in a dire situation with just 2 days of cash remaining and needing to borrow significantly to meet regulatory requirements. During his tenure, Dr. Pearl focused on raising the quality while still making the care more convenient and accessible. They largely maintained their more affordable prices but through elevating the caliber of service, they gradually rebranded as a group providing competitive care differentiating on the basis of quality.

In this process, Dr. Pearl took a strategic lens in tackling key challenges. For example, he implemented measures to retain flying nurses and created nurse trading relationships to continuously have a supply of strong nursing talent even during nurse shortage periods.

To provide more convenient and accessible care, Dr. Pearl created greater connectivity across different functions. For example, instead of a week or month long lag in between the primary care visit and specialist appointment, Dr. Pearl implemented measures for these 2 types of doctors to communicate directly and allow patients to see the specialist within the same day right after their primary care visit.

Technological Underpinnings of Healthcare Innovation

Looking ahead, Dr. Pearl is excited for a few key technological transformations of the healthcare industry enabling even more convenient, low cost, and high caliber care.

With video based communication, patients are able to connect with doctors anywhere and are thus able to be treated by the best possible doctor for their specific pain point and price point. Interestingly, patient satisfaction is actually higher with virtual care, and the majority of patients prefer it. When Dr. Pearl left Permanente, there were almost as many virtual visits as in person ones.

Similarly, secure email and electronic health records are enabling enhanced communication between doctors and patients as well as providing more constantly available data to ensure more personalized and precise care for patients. With these deeper, data driven patient understandings and the greater accessibility of care, countless deaths can be prevented globally, and the chance of death for any particular disease can be lowered substantially.

Analytics powered by AI is able to provide more accurate visual diagnostic for use cases ranging from mammograms to dermatology to diagnosing pneumonia. However, AI requires perfectly accurately labeled data to work. Even large, imperfectly labeled data sets can lead to unintentional downstream impacts on AI efficacy in crucial decision making. Consequently, visual diagnostics is a fitting first use case given the medical professionals’ ability to properly and definitively label images for binary outcomes, such as those in typical diagnoses. In contrast, pain levels, for example, are much more subjective and fall on a personalized spectrum, making it much harder to code for AI use.

Healthcare Challenges & Opportunities

At present, electronic health records (EHRs) are poorly designed from a general user experience perspective. One possible solution would be to force EHRs to open their APIs so third party developers can enter and innovate on top of their systems. However, EHRs are not structurally incentivized to provide this access because doing so would lower their switching costs and lead to greater customer churn. Government bodies may be able to force this change through imposing top down requirements on EHRs but are similarly non-incentivized.

In adopting innovation, doctors tend to defer to recommendations from their colleagues rather than insurance providers or large hospitals. Taking a long term approach in building trust with doctors is crucial for companies seeking to create products for doctors’ use.

Hospitals should use more value-add criteria to evaluate technologies for procurement rather than focusing primarily on the surface level innovation factor or the type of superficial technology forward external brand they can build. For example, while robots are exciting in theory, hospitals should ensure that they are actually accelerating patient care quality before integrating them in their workflows.

Wearables have recently become a part of mainstream fashion and a popular holiday gift. While they help wearers track how well they slept or how far they ran, they do not ultimately directly help users actually move faster or sleep better. Wearables could be used for chronic care, specifically determining the ideal and most high impact cadence of interaction between doctors and their patients with chronic conditions. However, currently, wearables tend to prefer a consultant role over solving true underlying health conditions since the former presents a strong business model and the latter model presents more risks with less profits.

Ultimately, healthcare costs are rising more than twice as fast as inflation and the ability of individuals and institutions to pay. Disruption is thereby inevitable and can come from anywhere. Dr. Pearl hypothesizes such innovation may come from for the profit efforts of Haven Healthcare (the joint partnership with Amazon, Berkshire Hathaway, and JPMorgan) or self-insured organizations led by visionary individuals with deep industry expertise and empathy.

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