I just returned from J.P. Morgan’s Healthcare Conference. With investors, healthcare systems, and companies all descending on San Francisco for a week to talk and to make deals, it is the largest conference of its kind. Since its inception in 1983, this conference has massively grown. The total value of the companies presenting has skyrocketed from $3 billion the first year to $4.7 trillion this year, and the registered attendees have increased from fewer than 100 to over 9,000. The actual number of folks who flock to the host city is easily 3 to 5 times that, with all of the side meetings and networking opportunities.
I met with representatives from Siemens, Philips, Amazon, large healthcare systems, venture capitalists, and private equity firms. There was a lot of excitement in both biopharma and in digital health. One company, Click Diagnostics, offers DNA analysis for infection using a device smaller than a deck of cards that costs less than $20. One day, I’d like to be an investor. Investors choose the innovations we’ll have available in the future.
Often when I go to meetings I take Lyft Pool from the airport to my hotel. I do this partly because I’m cheap and partly because it seems good for the environment, but also because I always seem to meet interesting people on these rides. This year was no exception. A young woman joined me on my journey from the Oakland airport. She had a full ride to a university in New York when her brother was diagnosed with leukemia, so she returned to Arizona and completed her degree at Arizona State University’s Barrett Honors College.
She felt fortunate. Her brother’s physician was able to get him transferred to Mayo Clinic in Scottsdale for care, and he’s now disease-free. But the care didn’t come cheap. When she mentioned Mayo, I commented that he was lucky to have had good insurance. Mayo is out of network for many people—including me. Not so fast, she said. As a student, her brother had minimal insurance. At the end of his treatment, his medical bills totaled over half a million dollars; he had to declare bankruptcy. Even after that, Mayo came after him, looking to take his car and other assets, trying to wring blood from a stone.
Mayo is not alone here. Many (if not most) hospital systems are unforgiving when it comes to bad debt. The problem is, this leaves many Americans down and out—lose your health and lose your wealth, with limited chance to recover and become a productive, taxpaying member of society. Lest you think this is a rare event, some data suggest that more than 60% of bankruptcies in the U.S. are health-related
Like I said, this is the tale of 2 J.P. Morgans—the highest highs, the lowest lows. We’re the richest country in the world, but we allow our fellow citizens to run into financial ruin simply because they had the bad luck to get sick and sought good treatment. Why do we allow this?
It’s all about the business model.
Healthcare is like a snowball rolling down a hill. With no architect, no real accountable visionary, the snowball accelerates and packs on new snow: Stakeholders such as hospitals, payers, doctors, and pharma companies. But without an overarching owner, each of these stakeholders is stronger than the whole, resisting any change in course for the snowball. But don’t blame the stakeholders. They’re capitalists, responding to Adam Smith’s invisible hand, the business of healthcare.
Some would argue that this is the prime reason for a single-payer system, a central authority making decisions about healthcare spending. And generally, I’m supportive. I believe basic healthcare is a right, that people shouldn’t have their lives ruined when disaster strikes. But I’m also sensitive to those who say that a single-payer system is un-American; that it removes the incentives that get the most productivity from workers. I generally believe in capitalism. I’ve worked at VA hospitals. It’s not exactly the system most people hold up as the best in care.
Sadly, our legislative representatives seem to be at an impasse, for all major issues including healthcare. I’ve lost faith in their ability to lead. What is needed is a new business model, one that provides care for all Americans while aligning with our basic market incentives. The money is there. Healthcare is almost 20% of our economy. It’s how we spend the money that matters. We need to stop that snowball from rolling over Americans.
My dream is that the J.P. Morgan community, the business owners of healthcare, take an active part in fixing the real American healthcare crisis.