Amazon, JPMorgan and Berkshire crown Gawande: Does he have the business chops?
The top executives of some of the most successful businesses in America have handed the reins of their healthcare joint venture to one of the most respected thought leaders in the industry—Dr. Atul Gawande.
With a trifecta of medical expertise, policy prowess and communication skills, Gawande is seen by many experts as an ideal pick to lead the Amazon, JPMorgan Chase, Berkshire Hathaway healthcare company, even though little is known about its plans. However, his full plate of other responsibilities and limited business background could stymie his impact.
Gawande will lead the independent, Boston-based venture that set its sights on corralling the rising cost of healthcare, and will likely use the companies' nearly 1.2 million employees to test out potentially scalable models.
Gawande will bring decades of experience as a surgeon, academic, policy adviser and professional communicator when he officially takes over as CEO on July 9. In those roles, he has persistently advocated for more practical, compassionate care and taking profit-incentives out of the system.
Gawande will continue to practice general and endocrine surgery at Brigham and Women's Hospital and teach at the Harvard T.H. Chan School of Public Health and Harvard Medical School. He is also the executive director of Ariadne Labs, a staff writer for The New Yorker and a best-selling author who is widely recognized for his contributions to the healthcare industry. Gawande also advised Presidents Bill Clinton and Barack Obama on healthcare policy.
"I have devoted my public health career to building scalable solutions for better healthcare delivery that are saving lives, reducing suffering and eliminating wasteful spending both in the U.S. and across the world," Gawande said in a statement. "Now I have the backing of these remarkable organizations to pursue this mission with even greater impact for more than a million people, and in doing so incubate better models of care for all. This work will take time but must be done. The system is broken, and better is possible."
Gawande will be able to present difficult and controversial concepts in a clear and relatable manner, said Lyndean Brick, CEO of the Advis Group, a healthcare consulting firm.
"This is exactly the kind of messenger needed to deliver these tough messages and changes brought about if you are going to reduce the cost of healthcare," she said. "If he succeeds, he will be reshaping all of healthcare. If at the end of the day he can provide care that is effective at lesser cost, we are going to replicate what he does."
But with the lofty goal of trying to fundamentally change the financial scope and delivery of healthcare, which effectively is an economy the size of Germany, it would be helpful to have a CEO with more experience managing healthcare businesses and more time to dedicate to the job, said Craig Garthwaite, a health economist at Northwestern University.
"I am disheartened to see that he will maintain all these other jobs while running the firm. It is a full-time endeavor," he said. "I don't see how you can have yourself involved in all these other ventures at the same time and be effective."
It's unclear whether juggling multiple responsibilities stems from underestimating the job or if it will be more of a thought-leadership role rather than a typical CEO position, Garthwaite said.
Picking his leadership team will be an indicative and important step, Brick said.
"He has to surround himself with a team of hard-nose professionals," she said. "He may be the grand educator and front guy but he is going to have to have a hard team of people to deal with Big Pharma, supply chain and IT companies. He has to be prepared for this to be politicized."
Amazon, JPMorgan and Berkshire said they would initially focus on technology that would provide employees and their families "simplified, high-quality and transparent healthcare at a reasonable cost." The joint venture will operate as an independent entity that is free from profit-making incentives and constraints, executives said. Still, it's unknown if they will use the joint venture internally to self-fund employee benefits together, if they will build out their own insurance operation or partner with other healthcare organizations to develop new care delivery models on a bigger scale.
The endeavor has been hailed as the next disruptive force that will drive widespread change throughout the industry and simultaneously downplayed as a glorified group purchasing organization.
"(Gawande's) thoughtful approach to identifying meaningful and practical improvements, when applied consistently and at scale, have led to demonstrable impact both domestically and abroad," said Dr. Saranya Loehrer, head of the North America region at the Institute for Healthcare Improvement. "Creating better health, ensuring a better care experience for patients and providers, and doing so at costs that we as a society can afford will take courage, creativity and collaboration amongst a wide variety of committed stakeholders and industries."
Gawande's 2009 New Yorker article analyzing healthcare's cost conundrum may provide some insight on how he would curb costs.
He studied why McAllen, Texas, had some of the highest costs in the country. Part of the problem was that doctors and healthcare executives he talked to didn't know the Medicare cost data of their organizations until Gawande showed them. Doctors in McAllen also recommended more potentially unnecessary tests to protect themselves from the state's strong malpractice laws.
Nationally, doctors performed at least 60 million surgical procedures in 2006, 1 for every 5 Americans, he wrote.
"No other country does anything like as many operations on its citizens," the New Yorker article reads. "Are we better off for it? No one knows for sure, but it seems highly unlikely."
He highlighted a health system in Grand Junction, Colo., that "adopted measures to blunt harmful financial incentives, and they took collective responsibility for improving the sum total of patient care," Gawande wrote.
His work on end-of-life care explores the struggle between balancing quality of life with potentially life-saving procedures. Every impulse is to fight, try toxic drugs of unknown efficacy—do something, Gawande wrote in a 2010 New Yorker piece.
He wrote about Aetna's "concurrent care" program that allowed patients to receive hospice services without forgoing other treatments, resulting in less utilization of emergency room, hospital and ICU services that cut total costs by almost a quarter.
He spoke to executives at Gundersen Lutheran Medical Center in La Crosse, Wis., which had unusually low end-of-life hospital costs partially because most La Crosse residents had written advanced directives that doctors followed.
"If I were in his position, I would suggest to his employees that they would have to have an end-of-life care plan to obtain insurance through their three companies," Brick said. "That would be revolutionary."
Bunny Ellerin, Columbia Business School's director of healthcare and pharmaceutical management program, said Gawande embodies exactly what's needed in healthcare—a practicing physician with compassion, empathy and a patient-centered philosophy.
"He is someone who believes that we can do better and deliver improved healthcare if we focus on what's important to the individual patient and to society more broadly," she said in a statement.
Gawande is not the typical hire for this position, said Brenda Doherty, partner at Buffkin/Baker, an executive search agency that specializes in placing C-suite executives. But that may be exactly what that role requires, especially since those who are steeped in institutional bureaucracy prolong the status quo, she said.
Judging by his work, Gawande is not just about curing disease at any cost. He carefully measures quality of life, and that is refreshing, Doherty said. He may implement new delivery models that speed the industry's transition from hospital-based care to outpatient, telemedicine and home-based care, she said.
"He will have the financial backing to create scalable solutions that have never been attempted before," Doherty said.
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