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Nate Kaufman
Welcome to the Healthcare Bridge. This is Nate Kaufman. The Healthcare Bridge is an unscripted, brutally honest discussion with healthcare leaders who have intimate knowledge about how healthcare systems work and how healthcare is delivered in our country. Today, we are excited to have Lou Shapiro, the former CEO of Hospital for Special Surgery. Welcome Lou.
Lou Shapiro
Thanks Nate, it’s good to be referred to by the person I was, as opposed to who I am. But thank you.
Nate Kaufman
Well, we’ll get to The Ranch at some point in time in this discussion. But let’s start with your origin story. Can you give a little background of your history in healthcare?
Lou Shapiro
I wanted to be a doctor until I took organic chemistry at University of Pittsburgh, and it was apparent that that wasn’t going to happen. Had no idea what I wanted to do. Like many people, they’re exposed to the industry because their parents were sick. I also had a little bit of a business interest so I sort of stumbled upon the profession. Met a guy through my parents who knew his administrative assistant. He was one of those iconic CEOs back in the day, Eric Goldberg, CEO of [UPMC] Hospital in Pittsburgh, and I was a sophomore in college. He offered me to hang out that summer doing an internship. Didn’t do anything meaningful at that time, but it seemed like it was an industry that was interesting, so I made the commitment then that that’s the direction I want to go to. Applied to graduate school, got in and in graduate school back in those days, you were going to work in the healthcare industry in either one or two segments: you would be at hospitals or you could be at insurance companies. I remember vividly, standing in the hallway by the auditorium one day, people were talking about what they wanted to be when they grew up. I said, well, I want to be a hospital CEO about halfway to 50 - very superficial comment - and that’s what I decided I was going to do, and just never looked back. When you have the good fortune of starting off at the predecessor organization of UPMC, had some great mentors then. First job was at Allegheny. I was there before, during and after the catastrophe of the AHERF bankruptcy so I got to see both what great looks like as well as what really bad looks like. Second job was at McKinsey. I was a client before they invited me to join them. Had the opportunity to really work with people who were orders of magnitude smarter than me. They didn’t have any healthcare experience on the ground, but they were pretty smart, so really, I think, sharpened up my skills at problem solving and strategy. Kaiser was a client, ended up going working there under Glenn Steele for four years. That was great experience. I knew I wasn’t going to retired with this guy sitting there and I knew I wasn’t going to be CEO with this guy sitting here because I wasn’t a physician, and only physicians are leaders there. And then I got a call one day about this job in New York, Hospital for Special Surgery. Didn’t really know anything about it. What I did know was it was a CEO job, and that’s what I wanted. And then started the interview process, one thing led to another and they were foolish enough to offer me a job, and I was fortunate enough to accept it. Spent 17 great years there, and decided back in early ‘21 that, for a variety of reasons, was enough time, and started the process of the leadership transition, which took - from beginning to end - two and a half years, A+ leadership transition and handed things off to my successor, who was made for the job, and think he’s doing pretty well.
Nate Kaufman
And then you wrote up a book called “From Seat to Soul.”
Lou Shapiro
That was an accident. The 40 years went by like that, Nate. You look back on it, it’s just a great fun run, hopefully, made a few contributions along the way, but it was really great.
Nate Kaufman
So you and I are very similar in that I tried to be a doctor. I got through organic chemistry, but when it came to the MCATs, they sent me a note back that said, your horse has a serious infection. I mean, I just couldn’t, I’m dyslexic, I can’t take the tests, and I don’t like people very much, so they weeded me out correctly, and that all worked out. But Hospitals for Special Surgery, I mean, that is one of the premier organizations in the country. Can you give a little bit of a background on that and what they do and the key to their success?
Lou Shapiro
HSS is an academic medical center that focuses on musculoskeletal related conditions, musculoskeletal health, MSK conditions. If you looked at it from a revenue standpoint, you would say it’s an orthopedic hospital of gargantuan size. It’s been around for a long time. I don’t spend much time talking about it because that’s in the rear view mirror, but for purposes of this conversation, I guess it makes sense. It’s a place that focuses on talent, recruiting. This is the way I would describe it - it might be described differently - it’s a place that focuses on recruiting the very best and brightest in the field of musculoskeletal health, orthopedic surgery, the brain related disciplines, and making sure they have all the stuff that they need to do the work that they do in a way that serves patients better than any other place can do it, and do it in a business model that also makes sense for the organization and the people who are part of it. You try not to take your eye off that ball. Historically, it hasn’t, and the results either are attributed to that or just good luck and good fortune. But it’s done pretty well, consistently, withstanding the test of time and changes in the external environment.
Nate Kaufman
And one of the things that we see with insurance companies is they start talking about reference based pricing. Well, why would you pay for a total knee replacement for $60,000 when you can get it for $30,000. I know HSS and others - I mean, it doesn’t have to be about HSS - do you view healthcare as that kind of a commodity, or do you think that where you get your care and who provides that care makes a difference?
Lou Shapiro
I think where you get your care and who provides the care makes a difference. That doesn’t always mean you have to pay more, but it definitely makes a difference. Anyone who’s making decisions on behalf of others, whether it’s an employer or the government or a payer, people who are making decisions, you can be sure they’re deciding where they want to go for their care or their family’s care. And that doesn’t mean that $60,000 is better than $30,000, it just means that there’s variability in quality, and that is an important determinant of outcomes. I would say, we may be more expensive on a unit cost basis, but we’re cheaper [inaudible]. Why wouldn’t you want to spend a little more, you do get what you pay for to certain extent.
Nate Kaufman
The Hospital for Special Surgery is located, I think, in Manhattan. What percent of your business came from outside the area because of your reputation?
Lou Shapiro
Manhattan, HSS service area back in the day, again, remember two and a half years in your rear view mirror... so as you’re driving along, things in your rear view mirror get smaller and smaller until you can’t see it. But HSS did service here is basically 75 mile radius around around the Upper East Side, which was all five boroughs, South Jersey, North Jersey, Southern Connecticut, Long Island, Westchester. 20 million people and countless organizations that delivered the same kind of services that HSS did, so competition was significant. And in all those markets, HSS either had number one or two market share position, so you can tell me that they had to leave to come into the city for some of the stuff. I think that - don’t quote me on this, whoever is listening to this - I think somewhere around 80% of patients came from the primary service area, and then 1-2% globally, and then the rest from all 50 states every year.
Nate Kaufman
So enough about HSS. Here’s something that will help me, or at least my family. My son is a young, budding hospital VP of operations. Based on your 40 years - I have 50 - of experience running hospitals, which is what he’s doing, what advice do you have? If you could talk to the young managers and executives in this industry, what advice would you give them; either what you did do or that you should have done?
Lou Shapiro
I would tell them to do a few things. Never think you’re smart enough. Always allocate time to learning. That’s number one. Number Two, don’t stay in the office. Get out to the floors or the places where care is being delivered and understand what’s driving the people who are doing the work of the organization. Number three, what wins is teamwork, not individual performance, so be a great member of the team. And then four, make sure whatever you’re doing that you are having impact on your contributions at a level where, if you left after you did whatever you were doing and you came back - and I always talk about this - X number of years later, people would remember you fondly, and the results of what you did when you were there would be visible, as opposed to having evaporated. That’s what I would tell him, and if you want, I will be happy to tell him. Have him call me, I’d be happy to talk to him.
Nate Kaufman
I probably will, as a matter of fact. When we look at healthcare today... well, first of all, how we met was you saw me posting that I thought government policymakers were a bunch of knuckleheads, and then you reached out and said, I’ve got to talk to this guy who calls government people knuckleheads - which I do, I still think they are. But I guess the environment in healthcare has gotten very challenging. I mean, we have shortages, we have all kinds of things. There are a couple of different ways to look at things, I mean, you’ve been through several cycles of environmental stress on the delivery of healthcare. Do you think it’s any different now? It’s the same? I mean, how do you feel about it?
Lou Shapiro
I feel frustrated, because the longer that you are at something, the more you see history repeating itself over and over and over and over again. Sometimes the words that are being used are different, and obviously the state of the environment is different. You go from you’re in your office writing a handwritten memo, having your assistant type it, putting in an envelope and sending it down the hallway to a person you could just walk down and see, to email, to the internet, to AI, those things have changed - technology and biotech, all those things. There are all kinds of changes, but at a certain level nothing has changed. I remember sitting in my office, which was a former bathroom with Doug Burwick when he was just starting CQI, going from different reimbursement environments. It’s just the same physician practices, consolidation, mergers. It’s the same thing over and over and over and over again. And it’s not that things haven’t improved on the fringes, obviously, science has evolved that helps people solve problems that maybe created lifelong morbidities or mortality that are fixed. But the system is the same. It’s too expensive, it’s not accessible, and the quality is both great and not so great at the same time - unchanged.
Nate Kaufman
So what thoughts do you have about affordability as an example, given your 40 years of experience. How do we make healthcare more affordable? Hospitals are getting trashed every day because of the lack of affordability and they’re right, I mean, it is too expensive,
Lou Shapiro
But everyone can’t be the bad guy, I mean, seems like everyone’s the bad guy, except that can’t be the case. The system is structured - that’s not only the healthcare system, it’s the US economy in general - in my view, to produce the results that it produces. So let’s take hospitals. Hospitals do a million things for the communities they serve. They probably shouldn’t do it. They should probably do half a million. But how do you really curtail your portfolio when you’ve grown up to be this thing and you’re providing all these different kinds of services? And then they acquire a hospital, they merge, they grow, they get bigger. Maybe that allows them to spread their overhead at the larger pace to invest in technology, but bigger. I always used to say that bigger doesn’t mean better. Better means better. And if being better doesn’t be bigger, that’s fine, but just being bigger doesn’t allow you to fix things. It’s like, you live in a house, your family grows, so you renovate a certain section house, or you put an addition on, sometimes it’s just better to move and build a new house all together. So I am not hopeful that the industry is going to accomplish anything other than incremental improvements and, to a certain extent, kicking the can down the road more - maybe that’s okay. That doesn’t mean people aren’t trying to fix things. Whether those people work for payers or employers or pharma or devices or providers, people don’t wake up every day and say, how are we just going to take advantage of this broken system, people trying from where they sit. I just don’t know that any of it is going to change. I would never position myself as being an expert on this. To answer your question, I think that there needs to be demonstration projects. When I use the word “demonstration” project, not meaning it should be a CMS thing, but that people should come together and figure out, how do we build a new healthcare system? Start from scratch, doesn’t have all the intermediaries who are trying to connect the dots as a consequence of that scratch value, a healthcare system that everyone has some responsibility, and that focuses on... we take better care of our possessions than we do of ourselves. So we need help. How do we help people to focus on health and then making sure that care is efficient and make sure all the incentives are aligned, and rebuild that healthcare system from the ground up. And as it grows, if there are parts of the existing health healthcare system that can come along with that, that’s great. If they can’t come along with that, they’re either going to be successful by being left behind, or they’re going to fail by being left behind. I’m not allocating my time to fixing the system writ large, I’m allocating my time to where I think things can make a meaningful difference on making things meaningfully better. I’m pretty excited about this thing I’m doing in the primary care space. I think the lowest common denominator is how people take care of themselves and receive care. I think the primary care physician, including their surrogates, whatever gets added to that, whether that’s AI or ATPs or whatever it is, I think that’s foundation. And I’m not sure that the primary care system isn’t broken, also. Not many people are going into it. It’s not a great job when you have to see 100 patients, or however many patients they see today. This notion of direct primary care is a model that this company that I’m working with has adopted or has formed as a result of focusing on that, and they work with large self-insured employers in the market, and it just allows them to eliminate all the friction in the system. The primary care physician and their team, which includes us - people who focus on drugs, mental health and nutrition as being all important determinants of both health and care - and they take care of patients in a way that friction has been eliminated. When they’re doing that, they also have a relationship with the health system. Like I said, health systems have a role in this. So I’m spending some of my time with that company. I think that’s the kind of example of how the healthcare industry could evolve, but all of the legacy baggage that exists, it’s hard to fix that, other than incrementally. Have people come along if they can join that and see how that turns out.
Before we dive back into today’s enlightening discussion, we have a quick message for all you healthcare bridge enthusiasts out there. Did that you can find these healthcare bridge episodes on substack as part of the common bridge series. You can also find written columns and opinions as well. Subscribe at the common bridge.substack.com for a full common bridge experience there you can comment and express your opinion on all the topics we cover on this and the past seven seasons of our podcasts. If you’d rather support the show without subscribing, you can do so with Zell at rich at Richard helppie.com or using Venmo at Richard dash c bridge. Thanks for listening. Now back to the episode.
Nate Kaufman
We’re on the same wavelength on that. University of Chicago came up with the concept of behavioral economics, and they said, do you need a nudge or do you need a shove? And what we’re seeing in the traditional healthcare, I’d say delivery systems are nudges: we’re going to change this payment, we’re going to add an ACO (Accountable Care Organization). It doesn’t really change the mess that we have, but the shoves that I’ve seen, one of them is in primary care. I just read an article about it, where, between AI and, as you said, nurse practitioners, or physician assistants, and a whole bunch of other things, you’re able to expand the reach of a primary care physician. I think we have a 29,000 shortage of primary care physicians. So you can double their panel by creating this new kind of delivery model that is primarily virtual.
Lou Shapiro
So what I was talking about is a little a bit like that, but also a little bit the opposite of that, where you cut their panel in half. So if you’re a primary care physician and you have to see 30 or 40 patients in a day, how much time you could be able to spend? How hard was it for that patient to get an appointment in lieu of that? Either that problem doesn’t get taken care of and it festers and gets worse, or they seek some other higher cost level of care. So the bottom I’m talking about, the primary care physician sees no more than 16 patients. You can get in to see them whenever you want, whether it’s virtually or physically, and they can spend time with you. It’s a little bit of back to the future, where the primary care physician and patient has a relationship, and that’s where, by bringing other resources in, you can focus on making sure they get what they need, when they need it, how they need it, which is going to be much more cost effective than otherwise. Spend time focusing on what are the things that you can do that will make you healthier. Rather than fixing your car when it’s broken, how do you advance its life so you don’t have to take it into the repair shop.
Nate Kaufman
First of all, I love direct primary care. I also love concierge primary care. My primary care doctor - concierge doctor - limits his practice to 50 families. I can get into him in a minute. I could text him right now. I send him a picture of a blemish, he’ll get right back to me. The challenge you have is, when you limit your practice to 600 families or 50 families or whatever, what’s going to happen with the rest of the people that don’t have access to that?
Lou Shapiro
Yeah, the model I’m talking about is a model for the masses, this is not for people that can do whatever they want, whenever they want because they have resources. This is the rank and file population. The bigger question is, how do you scale that? It’s a big country, right? So getting from where we are to where we need to be, that’s a long journey. I certainly do not have the magic answer for that, but I do know where I think starting makes a difference, and that’s at least my focus.
Nate Kaufman
I think we need shoves. We need different ways of doing things, which is an interesting question about orthopedics, my feeling is that orthopedics is becoming an outpatient service with the exception of complex spine and some other things. I don’t know if you see that any differently than I do.
Lou Shapiro
No, I don’t.
Nate Kaufman
Alright, so let’s move on to “From Seat to Soul.” Personally, very interested in your perspective about this, because I am 72 years old, almost 73 and I’m still doing this nonsense. Maybe, as you said in the book, I’m a day late - as opposed to a day early - retiring. Why don’t you just summarize your experience for people who haven’t read this?
Lou Shapiro
Yes, so this book was written by accident without any intentions to write it. I do view it that having the opportunity to spend 17 years as the CEO of HSS was a privilege of a lifetime so I was all in. I left everything on the field. I was all in on that for 17 years. And I loved the place, I loved the people, I loved the purpose, and I loved the job there, the role I had there. Then you go on and you don’t even think of stopping. I had a catalyst to this, which was during the pandemic, my wife went back to Pittsburgh, where my daughter was, and they hunkered down there while I was on the front line, so to speak, supporting the healthcare workers, making sure that they could do what they needed to do. I went back and forth on this. I’ve been at this for a long time, do I really want to do this as long as I had intended to do it, which was, by the way, 20 years. So if I would have stayed 20 years I would have finished up four months ago instead of two half years ago. I had a discussion with my board co-chair at the time. This was March ‘21 and we went back and forth on it a little bit then decided I was going to do it. We spent March of ‘21 through February of ‘23 - when it was announced - working on this transition. And in December of ‘22 - which was two months before the announcement - it hit me. It hit me like a ton of bricks, and I was not prepared for how I would feel about it. It was like an emotional trauma, and I was like, Oh my God, what did I do? What am I going to do? I was not the most pleasant human being to be around. And I may have been the least pleasant human being to be around - you can ask my family. It was like, I’ve got to figure this out. I went up the street, bought a notebook, went next door coffee shop, started writing things down. One thing led to another and during that process, I explored how I made the decision, how it made me feel, and how was I going to get out of this emotional mess that I was in. So I started journaling about it, and then for no reason, I started posting after the announcement, I wrote something on LinkedIn. How many people were interested in that, not about me, but about the experience of how I was feeling about it, and then it just sort of came about. Journaling, LinkedIn, pulling some of those things together, just one thing led to another. The book came out and just explored all the things that I thought about and all the things that I felt going through this and that’s all.
Nate Kaufman
Well, when I read the book, you were very honest that you had a very dark period. And as I look at my personal career, I’m a adrenaline addict, I need the dopamine going. I need everything going. I don’t play golf, I don’t shoot things... this has been my life, and it sounds like it was yours.
Lou Shapiro
Yeah...
Nate Kaufman
How’d you get through that?
Lou Shapiro
I think every individual is completely different from every other, so what’s good for one, is it good for someone else? I have a friend who had a very successful career in a totally different profession, I said so what are you going to do? He said sit on that deck. Great, if that’s what makes him happy, that’s great. What’s important is that... there are a couple things that are important. Number one is, remember we don’t have unlimited chapters. So if we make an analogy of life to golf, we’re on hole 13 or 14 - you don’t have all the time in the world left. And my view was, I would always say that family comes first, and that’s only true in words and in crisis; other than that, it comes second. So if you think about those things, I just decided that now is the time - and by the way, a good time for the organization - 17 years. Forget about the accomplishments and the success of the organization, 17 years is a long time. New blood is a good thing. It’s only a matter of time before things go bad and where that new blood is needed sooner. So it was alignment of the sun, the moon, stars. This was the right time, and I just decided that this time, family comes first, but not only in words or crisis. You, as an individual, are always last; now it’s time to flip the script. I wouldn’t say I’ve been a journaling junkie, but I have a passion to contribute to the field and a commitment that’s not going to go away. I’m not going to play golf every day. I’d like to play golf once or twice a week, but there are only limited things I could do to fill my time in my case. I developed a framework in the book. I call it, “we, me, work.” “We” is family and friends, travel, stuff like that. “Me” is focus on my health, going to the gym making sure I’m in shape, trying to get better at golf, trying to learn how to play the guitar, I’d like to read a little bit more. “We” and “me” is the priority, “work” has to fit into that. And look, I’m on seven boards and that means there are seven CEOs, seven management teams, that I’m working with to help them do what they’re trying to do, just like I have people who helped me that I would see HSS do. But now I’m just helping from a different seat, so it’s still there. But the key is, just remember, if you’re a golfer, you’re on hole 13 or 14. You don’t have unlimited chapters, so don’t put off for tomorrow, because you never know what that’s going to be, do it now. Figure out when you’ve done your job that you went to the organization to do, and if you’ve done your job that you went to the organization to do, that also means you have people in the organization that could carry on. Decide when it’s fun.
Nate Kaufman
So one of the things I just have to ask you about because I read the book, one of the things you did when you were in a difficult place, was you went to The Ranch in Malibu, and you said, while you were there, you discovered some things.
Lou Shapiro
Yeah, well, I knew a bunch of people that went to The Ranch in Melbourne, which is a sort of rigorous wellness retreat in California. It’s heavy duty hiking and nutrition based. There are other parts of it, but it’s serious stuff. You’re doing physical exertion activity, also you’re in an environment that sort of clears your mind. I knew a lot of people that I worked with that went out there so I always heard about it. But I just decided when I was in this dark place, that was November, December of ‘22. I finished in September ‘23, in July ‘23 I went. I call that my reboot. It was just sort of... everything. And then I think you never know if something was contributory to the outcome or not, unless you did an experiment and didn’t do it. I just think it was very helpful for me. Got in shape, cleared my mind, had an appropriate outlook on life, and then two years went by and I felt like I need to get back for recharge. And that’s where I would call it a little bit of a discovery, and that is when you’re in your next chapter. I was doing this, I was comparing this chapter now - what I was doing professionally - to the last chapter. You just can’t do that. It’s apples and oranges for me, like the 17 years at HSS, it could not have been a better experience. So anything is going to be not as good in comparison. The “aha” moment - I was hiking by myself in the mountains - is that I’m comparing this chapter to what I want to accomplish in this chapter, not what I accomplished in the last chapter. That is embedded in the “we, me, work” framework. And the “work” framework is still working really hard - helping these companies that are led by people that I like and are doing things to help the system - well beyond the primary care company, there are seven of them and I’m helping them. And if I help them and I derive value from helping them, then it’s great. If I’m not helping them, or I don’t derive value for helping them, then I just need to stop doing that, because now I’m in control of my time, not the organization that I’m helping.
Nate Kaufman
We’re getting close to time and we always like to end our podcast talking about any advice for patients. You’ve been in healthcare 40 years. We have patients that watch this - or civilians, shall we say - do you have any any advice for them in terms of how to navigate the healthcare system or anything?
Lou Shapiro
Number one, take care of yourself. If you’re on a plane and the oxygen things come down, you put it on yourself before you help anyone else. So take care of yourself so you can take care of others. There are things that we all can do to be healthier. Do that, number one. Number two, quality is not the same every day so make sure that you have a relationship with the primary care physician that you trust and that you have access to. That person that you trust and you have access to is going to be part of a healthcare ecosystem that has the local hospital. Then you’re in good shape and you don’t have to worry about the hospital, you’re going to trust that person. If you don’t have that, where do I go? Obviously, if it’s urgent, you go to wherever you need to go. If it’s chronic or elective, then you have choices. How do I know that this hospital... even me? How do I know which hospital in Charlotte or Pittsburgh is really better? Like, I think I know, but I don’t really know. It’s really hard, so you talk to your friends. Looking on the internet and all of the report cards that are out there, good luck trying to figure that out. That’s still way too complicated for even professionals to really figure out, let alone the people that aren’t in the industry.
Nate Kaufman
That’s in line with our belief here, that the key is to find an insider. I mean, the real question is not only the hospital, but how do you... if you need a neurologist, which neurologist you should go to, and can you get in? Those are the kinds of issues.
Lou Shapiro
That’s where, if you have a primary care physician, which is a longitudinal relationship, you trust that person, they’re going to be more informed than your friend who said, this is the way you should go.
Nate Kaufman
Exactly. I’m sure you, like I, get frequent phone calls, or used to get calls?
Lou Shapiro
They’re reducing in frequency, but they’re far from over and it’s yeah, always happy to help.
Nate Kaufman
Yeah. Same here, same here. Anything we didn’t cover that you want to mention in this little thing?
Lou Shapiro
Yeah, I think there’s - sticking to healthcare, as opposed to the world - there’s so much noise in the system. For all of your listeners who are in the industry, you don’t need to spend a half an hour on LinkedIn to see how fragmented and challenged the industry is. It would be great, and naive, to figure out a way to eliminate the noise, eliminate everyone’s instinct for survival, and figure out... we don’t have a shortage of the smartest people in the world here. How do we fix it? There’s too much noise in the system.
Nate Kaufman
Yeah, I agree.
Lou Shapiro
Maybe you and I can work that out.
Nate Kaufman
Who knows? But anyhow, well, I appreciate your time, Lou, it’s been great to catch up with you. It’s been a while, and I think we not only learned about healthcare, but we also learned about what we do as we get to the sunset of our career. Maybe you push me over the edge, we’ll see.
Lou Shapiro
Start contributing to the next chapter, Nate, whatever makes you happy is what you should do.
Nate Kaufman
What’s happy? I don’t know... [chuckle] that’s another story. Well, I think that’s a good way to end. This is Nate Kaufman, Lou Shapiro with the Healthcare Bridge, part of The Common Bridge podcast. Lou, thank you so much.
Lou Shapiro
Thanks.
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