How to Disrupt the American Healthcare System with Dr. Robert Pearl

Exclusive Interview with: Robert Pearl

Healthcare speaker, Dr. Robert Pearl provides a sound look at the shortcomings of the American healthcare system and what can be done to turn it around. As a practicing physician, medical professor, former CEO of Kaiser Permanente, and the son of a patient who died from an easily avoidable medical error, Dr. Pearl views one of the U.S.’s most pressing issues from multiple angles. His best-selling book Mistreated: Why We Think We’re Getting Good Healthcare—And Why Were Usually Wrong presents an accessible roadmap for fixing the broken American healthcare system by embracing a prepaid model of care in which physician-led multispecialty groups are connected and enabled with advanced information technology.

In practically every global study and measure of healthcare performance, the United States ranks worst among its wealthier peers: worst in life expectancy, worst in infant mortality, worst in access to care, worst in avoiding preventable deaths. The only category in which the United States ranks highest is the cost of healthcare.

SPEAKING.COM: What are some of the misconceptions Americans have about the healthcare system?

PEARL: The biggest misconceptions Americans have about their healthcare is that it’s the best in the world. In fact, 77% of patients describe the quality of care they receive as good or excellent (Gallup).

There’s just one problem. These positive perceptions are in conflict with the objective data. In practically every global study and measure of healthcare performance, the United States ranks worst among its wealthier peers: worst in life expectancy, worst in infant mortality, worst in access to care, worst in avoiding preventable deaths (2017 Commonwealth Fund Report). The only category in which the United States ranks highest is the cost of healthcare. The United States spends nearly twice as much as any other nation to treat patients and yet our outcomes aren’t nearly as good as other industrialized nations.

These facts leave us with two important questions:
• Why does American healthcare perform so poorly on a global scale?
• Why do American patients tolerate the healthcare system we have?

The answer to the first question is that our system’s structure, reimbursement model and technology are outdated and underperforming. Yet few people inside or outside of medicine realize how ripe American healthcare is for disruption. Look closely and you’ll find a system that resembles a 19th-century cottage industry. Doctors work alone in small offices, disconnected from one another, using outdated technology and being paid piecemeal (fee-for-service) for every service they render. Together, they make it impossible for practitioners to deliver the best care. So, because neither doctors nor patients know any better, we all simply accept the status quo.

As I note in my 2017 bestselling book Mistreated, “Our healthcare system functions in an environment unlike any other in American culture, society, or industry. The rules are different, the stakes are elevated, and the perceptions of everyone in it—from doctors to patients to U.S. presidents—get radically distorted because human life is at stake. But rather than producing improved performance, the consequences prove hazardous to our health.”

Today’s patients are willing to wait weeks, sometimes months, for a doctor’s appointment that lasts, on average, 15 minutes. They are willing to miss work and battle traffic, rather than benefiting from the use of email or text. Less than 2% of Americans are able to participate in video-visits with their doctors that would make care more convenient and cost-effective. American patients put up with so much unnecessary inconvenience because we are afraid to ask more from our doctors and hospitals. Until people are able to see the problems and demand improvement, change will be slow if not impossible to achieve.

SPEAKING.COM: Why does the U.S. pay 50% more as a nation for healthcare than other developed countries?

PEARL: Our higher costs reflect several problems with the current system. Here are three:

• We pay too much for drugs compared to the rest of the world. Americans pay three times more for the top 20 highest-selling prescription drugs than patients in Britain. Elsewhere, U.S. prices are six times higher than in Brazil and 16 times higher than the average in India. That’s because nearly all other governments negotiate prices on behalf of their citizens. This practice is prohibited in the U.S. and, as such, we contribute excessively to drug company profits.

• Prices for medical services are dramatically higher in the United States with very little accountability or price transparency. Hospitals and doctors use semi-monopolistic pricing controls to get away with charging outrageous prices that America’s private insurance system continues to reimburse. Even today, the cost for a hip replacement can vary by $100,000 or more despite almost no variation in the quality of surgical outcomes.

• The U.S. has an over-abundance of high-priced specialists who perform radical interventions. At the same time, we have too few primary care providers – the people who can actually keep patients off the operating table in the first place. This imbalance not only drives up costs but reduces clinical quality, as well. Because we have too many surgeons, for example, nearly half of them fail to perform enough procedures to acquire clinical expertise. As a result, patients suffer unnecessary complications and prolonged hospital stays.

The challenge is less about knowing what to do, than motivating the legacy players, including hospitals, specialists, drug companies and insurance executives, to support the effort. Today they benefit financially from the inefficiencies of the current system and they are all prone for disruption.

SPEAKING.COM: What are some of the common medical errors costing us money and lives, and what are some ways they could be prevented?

PEARL: Every year, hundreds of thousands of people die prematurely from (a) preventable medical error, (b) failure to provide preventive medical care and (c) avoidable complications from chronic disease.

One of those lives was my father’s. My father was an amazing man: The son of poor immigrants, he put himself through dental school, volunteered to be a paratrooper in World War II and worked hard to raise a family with my mother. But like too many people in this country, he died prematurely from a medical error—one that would not have happened had his doctors shared a comprehensive electronic health record and successfully coordinated his care. Failure to communicate and exchange the medical details of his care resulted in his doctors missing an important step in his treatment, an error of omission that led to his premature death.

Whenever I talk about my father at medical conferences, people line up to tell me about friends and loved ones who have suffered similar tragedies. It shouldn’t be like this. It doesn’t have to be like this. Here are some examples of what needs to change and how:

• Hospital acquired infections are the third-leading cause of death for inpatients. One of the more commonly transmitted is Clostridium Difficile (C. diff.), which causes an estimated 400,000 infections each year and 14,000 deaths in the United States alone. Nearly all cases could be avoided with consistent hand-washing and yet studies continually show that doctors fail to do so for 1 out of every 3 patient visits.

• Colon cancer kills 200,000 people in the U.S. each year. Half of those deaths could be avoided through proper screening. Although individuals with a family history or colonic polyps require a colonoscopy, the majority of people could do a simple Fecal Immunochemical Test (FIT) done once a year in the privacy of their own homes. The test takes 5 minutes to complete with no need to visit a doctor or miss work. There’s simply no good reason why 1 in 3 people who should be tested never are.

• Elevated blood pressure (hypertension) is the No. 1 cause of strokes in America but many of them are preventable. What we know is that hypertension in the United States is controlled only 55% of the time. But there are organizations like Kaiser Permanente that control it 90% of the time. That’s a huge difference. What accounts for it?

If we want to improve in each of these areas, the changes to our system can’t be small or incremental. They need to be radical and transformative. Focusing on individuals rarely works. That’s why nearly all pay-for-performance systems fail. The American healthcare system is broken. In Mistreated, I offer four pillars upon which the future of American healthcare could be constructed and explain how we can accomplish systemic change.

The challenge is less about knowing what to do, than motivating the legacy players, including hospitals, specialists, drug companies and insurance executives, to support the effort. Today they benefit financially from the inefficiencies of the current system and they are all prone for disruption. Look at Borders, Kodak or, most recently, Yellow Cab. In each case, the incumbents resisted major improvements until it was too late. The American healthcare system is approaching that point.

SPEAKING.COM: When it comes to healthcare coverage, what is the cost of continuing the status quo?

PEARL: Healthcare’s status quo is untenable for most Americans, including those who are insured and wrongly perceive their healthcare to be free. Because of the rapid rise in healthcare costs over the past two decades, hourly wages for U.S. workers have remained relatively flat. Despite labor productivity increasing 259% since the 1970s, a staggering 40% of all Americans now make less than the 1968 minimum wage when adjusted for inflation.

When it comes to affordability, two statistics jump out: Half of all wage earners in this country (a) make less than $30,000 and (b) have a high-deductible health plan (that makes them personally responsible for a major portion of annual healthcare costs), anywhere from $1,350 to $6,650 per person. As a result, half of U.S. adults say that one large medical bill would put them in debt. Currently, 62% of bankruptcy filings are due to medical bills. If nothing changes, these financial problems will continue to harm American families.

SPEAKING.COM: What are the most effective changes we could feasibly make to the American healthcare system?

PEARL: There’s only one solution for this level of increased spending and out-of-control costs: Major, sweeping and systemic change. The transformation of American health care into a more ideal system will be dependent on four major shifts that, together, can create a more efficient and effective model of care delivery in the future:

Health care will need to be integrated, both horizontally within specialties and vertically across primary, specialty, and diagnostic care.

Health care will need to be prepaid, moving away from pay-for-volume toward paying for value and superior outcomes.

Health care will need to be technologically enabled, with comprehensive electronic health record systems, patient access to medical information, and the ability to obtain care using mobile and video technologies.

Health care will need to be physician led, which will require greater leadership training and development.

Each day, mundane financial tasks distance doctors from the reasons they chose medicine as a career in the first place. That’s the duality of being a doctor. There’s the fulfilling personal side and the frustrating impersonal side.

SPEAKING.COM: Could you explain to an industry outsider what it’s like to be a healthcare provider in the U.S. and some of the challenges they face?

PEARL: About four years ago, bestselling author and renowned thinker Malcolm Gladwell asked me to tell Forbes readers what it’s really like to be a physician. I was surprised at how many people found this question intriguing and forwarded the article to colleagues and friends. Ultimately what I wrote was read by 640,000+ individuals.

In the article, I pointed out the duality of practicing medicine.

Most physicians go into medicine with a mission-driven spirit, committed to helping people. They are grateful for the opportunity to care for others, proud of their ability to diagnosis and treat, and inspired by the trust their patients put in them. But those experiences contrast vividly with the economic side of being a physician. Each day, mundane financial tasks distance doctors from the reasons they chose medicine as a career in the first place. That’s the duality of being a doctor. There’s the fulfilling personal side and the frustrating impersonal side. The personal side reminds doctors why they love practicing medicine. The impersonal side poses a significant threat to the future of medicine.

When I meet with new physicians, I ask them why they wanted to become doctors. Most of them describe moments in time when life and medicine intersected in powerful ways. For some, it was the death of a parent or sibling. For others, it was a positive memory, a particular physician who saved their life or the life of someone very close to them. Regardless of the reason they enter medicine, almost all American doctors are smart, highly motivated, ethical and passionate about helping people.

However, this fulfillment from helping others, once intrinsic to the medical profession, is crumbling. One-third of all doctors are now dissatisfied with their professional lives and over one-half would discourage their children from following in their footsteps. Many are counting down the days to retirement. Physicians across the nation are frustrated by the challenges of running their offices and tired of fighting with insurance companies to get paid for the work they do. American medicine was once a fulfilling profession. More and more today, it’s not. Something is deeply wrong.

As fulfilling as patient care is, most doctors (particularly those in individual and small practices) lament the other side of the job: the business of healthcare. As much as half of each day can be consumed with clerical and administrative tasks: completing insurance claims forms, navigating complex coding requirements, and negotiating with insurance companies over prior approvals and payment rates. And this affects not only physicians, but also their patients – further complicating medical practice and increasing the level of frustration on both sides of the stethoscope.

SPEAKING.COM: As a physician and former CEO of a major medical group, what can healthcare providers and administrators do within their power to improve our healthcare system?

PEARL: When I began speaking to groups and TV/radio audiences about my book Mistreated, I expected widespread rebuke of the solutions I offered. I braced for strong disagreement from doctors and hospital administrators. After all, I point to them as part of the problem while acknowledging the enormous hurdles they’ll need to clear to become part of the solution.

Instead, time and again, these professionals have approached the microphones at major conferences and called into talk shows to express their appreciation and agreement with (a) my assessment of the problem and (b) the “Four Pillars of Transformation.” Consistently, they pointed out how implementing all four would not only improve patient care, but improve their professional satisfaction, as well.

Although there are dozens of immediate steps physician leaders and hospital administrators can take to improve patient care and lower costs, here are three powerful examples.

• Eliminate fee-for-service payments to doctors and the huge amount of time spent coding, billing and collecting payments. And invest the added efficiency in more time with each patient.

• Reduce the volume of quality/service measurements down to a manageable few, so physicians can feel like more caregivers and patient advocates, and less like car mechanics.

• Invest in the technology needed for the future and make IT experts available to provide the education and support doctors need to improve patient care. For doctors in their mid-to-late career, many of the approaches needed for data entry and retrieval are not intuitive. But with hands-on support, they can and will be ready to embrace the opportunities that exist, particularly when the technology makes their jobs and the lives of their patients better.

SPEAKING.COM: How can prescription drug costs come down?

PEARL: I recently wrote a Forbes column about the 4 actions necessary to drive down drug costs and help patients gain greater access to live-saving medications. I noted that the pharmaceutical industry today enjoys generous patent protections and, thereby, monopolistic control over pricing. The consequence is that Americans are paying exorbitant prices for medications. The simplest solution is to strike a legislative balance that allows (a) drug companies to invent (and invest in) the next generation of breakthrough medication while (b) allowing the American people to afford the medications they need to stay healthy.

For most of the 20th century, the pharmaceutical world stayed within those guardrails. But over the past decade, profits have been way out of line with R&D and investment. The time has come to restore balance and reasonableness, regardless of what the national drug lobby wants. I have openly asked some of our nation’s most powerful individuals to use their authority to make drugs more affordable. I believe the health of the American people depends on it.

Ultimately in return for the monopolistic patent protection they enjoy, the pharmaceutical industry will need to make prices correlate either with the R&D dollars invested or the efficacy of the drugs offered. Today neither is the case, and drug companies can purchase existing drugs and raise the prices 500% or 1000% for reason other than greed.

We now need policy makers to step up and protect patients against America’s growing opioid addiction. By enacting legislation that prevents healthcare entities from making money off of addiction, healthcare CEOs would think twice before putting such profits ahead of patients.

SPEAKING.COM: What are some actions you feel can be taken to address the opioid crisis?

PEARL: The first step is to understand how this horrific situation happened, so as to prevent other life-threatening crises in the future. The manufacturers of these narcotic medications encouraged broad prescribing by paying doctors to tell others the medications would not be addictive or life-threatening when used by patients with pain, even chronic musculoskeletal conditions. We now know that to be false.

We can never fully reverse opioid addiction in our country, nor can we bring back those who have died from it. However, there are 3 things we can do to (a) prevent future over-dependence, (b) avoid another 42,000 unnecessary deaths in years to come, (c) help those currently struggling with addiction, and (d) hold powerful individuals and companies responsible for America’s recent decline in life expectancy:

Punish the drug makers and distributors responsible. We should not expect powerful/profitable manufacturers and distributors to be part of the solution. Therefore, elected officials should pass legislation holding leaders in the drug industry personally responsible when they knowingly harm patients and negatively impact American health. In 2002, Congress passed the Sarbanes-Oxley Act (SOX) to protect investors and the general public from the fraudulent activities perpetrated by companies like Enron and WorldCom. We now need policy makers to step up and protect patients against America’s growing opioid addiction. By enacting legislation that prevents healthcare entities from making money off of addiction, healthcare CEOs would think twice before putting such profits ahead of patients.

Curb physician prescribing habits. Physicians should limit the supply of new opioid prescriptions to a five- to seven-day window. Emergency departments should dispense pills to patients for no more than 72 hours after discharge. All refills should be issued by the patient’s primary physician to prevent so-called “doctor shopping.” Pain management expertise and assistance should be provided before refills are written for any patient whose pain continues for more than two to three weeks without a specific cause. High-dose narcotics for patients with musculoskeletal problems should be avoided per widely accepted best practices. Finally, physicians should make a concerted effort to safely taper the total dose of narcotics over time for patients currently on opiods and help them explore the use of alternative pain relief treatment.

Pass meaningful legislation and offer public services. Serious consideration should be given to repealing the Marino Act, thus restoring the DEA’s ability to enforce the laws and protect communities from self-serving individuals. Further, the expansion of social services is essential for addicted individuals, their families and their children. Many communities and schools provide education and support, but we need a more comprehensive effort to curb addiction. Some states already require drug testing as part of an initial driver’s license application. This enables officials to identify high school students with problems, allow treatment and provide services in a non-punitive fashion for those already addicted.

Healthcare accounts for 18% of the U.S. GDP. It’s an industry ripe for disruption and the trio of Bezos-Buffett-Dimon have set their sights on bringing radical change to a $3.4 trillion industry.

SPEAKING.COM: What do you think we can expect from corporate heavyweights, Jeff Bezos, Warren Buffett, and Jamie Dimon’s collective healthcare venture?

PEARL: Healthcare accounts for 18% of the U.S. GDP. It’s an industry ripe for disruption and the trio of Bezos-Buffett-Dimon have set their sights on bringing radical change to a $3.4 trillion industry.

They understand how much they still need to learn about U.S. healthcare, but they’re already well on their way. In a popular article on my website, I explain the three tools these companies bring to the table:

Clout. Combined, the three companies begin their healthcare aspirations with an established member base of 1 million employees. By contrast, the well-funded Oscar Health is hoping for 250,000 members, now five years after being founded. What each company lacks in expertise, they make up for in reputation, power and influence.

Connections. Through their holdings, acquisitions and other interests, the leaders of Amazon, J.P. Morgan and Berkshire have close connections with hundreds of Fortune 500 companies. Once they establish their footing and know-how, they can rapidly scale their success.

Cash. Unlike in the startup world, the newly joined trio can invest heavily in this venture without running out of cash or having to solicit outside capital. And because all three companies are self-funded, they aren’t required to pay the Affordable Care Act tax on the cost of medical care or adhere to the legislation’s very rigid requirements around coverage.

Furthermore, each company brings a unique set of skills and benefits to the table: Amazon is the leader in providing value at reduced prices, and its acquisition of Pillpack will allow it to sell medications in all 50 states. Berkshire Hathaway already owns Geico, so it has a knowledge of insurance, although it must understand the ways healthcare differs in rules and regulations. And J.P. Morgan-Chase manages immense databases and will use that knowledge to enhance electronic health record security.

I predict the three will take several years to understand and improve the operational aspects of healthcare coverage and delivery, but I also believe that three future outcomes are certain:

• This new healthcare venture will not want to contract with current insurance companies. It seeks to displace them.

• The healthcare trio will look to consolidate the number of physicians and hospitals currently providing care to their employees.

• Bezos-Buffett-Dimon, along with their chosen healthcare CEO Atul Gawande, will consolidate all patient medical information into a single database to maximize the quality provided to each patient. Further, they’ll double down on tech, applying Artificial Intelligence and data analytics to establish the best approach for each medical problem. And having done that, will require providers to adhere to best practices, or be prohibited from caring for their patients.

And once everything is in place, they will flip their not-for-profit venture into a business and sell to the other large self-funded companies, followed by those now purchasing commercial insurance products. The current American healthcare system is inefficient and ineffective. Every industry that underperforms this way gets disrupted. Healthcare is not immune. Either the current health plans, hospitals and doctors will lead the improvements needed, or they will find themselves on the outside looking in.

SPEAKING.COM: You say you wrote your book, Mistreated, for “the patient in all of us.” An overhaul of the American healthcare system seems like a massive process. How can everyday Americans have an impact in an area that appears to be a big challenge even for powerful entrepreneurs like Jeff Bezos?

PEARL: It is difficult for everyday people to avail themselves of the future when its benefits aren’t yet obvious or widely available. That’s life prior to disruption. Before Uber and Lyft, the only choices for getting around a big city were the (often terrifying) public transit systems and (equally unpleasant) taxi cabs. There were no alternative drivers, no apps to use and no system for cashless payment. Healthcare is beyond that null state. Innovation often presents itself before the entire industry tips. In that way, healthcare most closely resembles ride sharing in its earliest days.

Here are four suggestions for patients:

• Depending on your geography, you may be able to take advantage of large multispecialty medical groups that use comprehensive electronic records and have high scores from the NCQA and Medicare. You should pick them over small community doctors and hospitals that lack the technology, volume and expertise to deliver 21st-century care.

• When you need to have a procedure done, always ask your doctor how many he or she did last year. If it is relatively low (<25 for hysterectomy or <50 for total joint) find a physician with more experience. Similarly, pick a hospital that does a large number of procedures (at least 800 heart surgeries a year or 3,000 baby deliveries a year) and check the Leapfrog Group’s ratings for the facility.• Whenever your doctor wants to prescribe you a brand-name drug, ask if there is a generic alternative. And if there is, ask whether there’s any scientific evidence that the brand name is better. In almost all cases, it’s not.• While you’re at it, check the “Dollars for Doc” database from ProPublic to see how much your doctor received last year from drug and device manufacturers. You may be surprised. And remember, if they were recipients of drug-company cash, it wasn’t their “expertise” that earned them big payments. It was their willingness to prescribe a certain medication or use a certain device when an equally effective, less expensive alternative would have been better.

We all need to be savvier consumers of healthcare in the future. You wouldn’t buy a car without checking Carfax or Consumer Reports, right? Then why would we trust our healthcare to word-of-mouth anecdotes and advice from our friends and family? It just doesn’t compute.

To bring healthcare speaker, Dr. Robert Pearl to your organization, please contact Michael Frick at:

©, published on February 21, 2019

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