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Nate Kaufman
This is Nate Kaufman for the Healthcare Bridge, a component of The Common Bridge. Our goal is to provide an insider's perspective on our crazy healthcare system. Today, we have a true insider and a good friend of mine, Dr Jeff Goldsmith. Jeff, greetings, why don't we start with your origin story? Give us a little background on your education, your experience, and we'll go from there.
Dr. Jeff Goldsmith
Well, I'm a native of Portland, Oregon, a graduate of Reed College and of the doctoral program in social science at the University of Chicago. I've worked in in healthcare.... it will be 50 years in November. I went to work as the regulatory and strategy person at the University of Chicago Medical Center in the middle of a turnaround. I've worked in academic medicine, I've worked in start-up companies, I've done strategy consulting for the better part of 40 years, pretty much across the health system, not just in hospitals. So, broad-based, continue to be really interested in what's going on in this field. I'm particularly interested, believe it or not, in the science, so I read a lot of of journal articles and "Science and Nature," that kind of thing. That's a short version.
Nate Kaufman
I guess I'll just start with a HIPAA violation; you were also a patient fairly recently, I understand, as well.
Dr. Jeff Goldsmith
Well, not recently, I mean, from 2015 to 2017 I had five major surgeries in 29 months, starting with cancer surgery, which was successful. It was fascinating to be a big expert on the health system and use it. It fundamentally changed my view of how healthcare works, to actually be a patient. One of the most thrilling things - this is a weird word to use for five complex surgeries - was only three of the people that touched me during those five surgeries were over the age of 40 and they did the most phenomenal job. They were so together and focused on me and on the scary stuff that was happening to me, and they did a great job. I came away really optimistic about the future of our healthcare system because of all the amazing young people that are working in it on the front lines.
Nate Kaufman
Yeah, doctors and nurses are just amazing. You've got to give them a lot of credit. You said you learned something. Here you've been in healthcare 40 or 50 years and you were a patient with five major surgeries. What was it that you learned?
Dr. Jeff Goldsmith
I underestimated the degree to which patients are motivated by abject fear in using the health system. And it isn't just the horrible things that could conceivably go wrong if the medical intervention doesn't work, but also, frankly, afraid of the bill. I think there are two levels of fear. There's, am I going to be ruined by this financially? And then, am I going to survive this? Am I going to be able to continue in my own life? So I think, the cancer diagnosis was like looking down the barrel of a shotgun; it was open ended, could have ended really badly. It didn't. I didn't believe at age 67 - which is what I was when I had the surgery - that my it was my time to go. But could have been, if things had turned out differently. That could have been it.
Nate Kaufman
And knowing you as a resident in Virginia, you actually went to some other state for surgery; you were the ultimate shopper.
Dr. Jeff Goldsmith
Well, I've got a lot of friends in this field. I went to the University of Chicago for my cancer surgery. They had a spectacular head and neck program, one of the best in the country. They saved Grant Achatz life, the chef. I flew all the way out to Virginia Mason in Seattle, where I'd been working as a strategy consultant, to have my cervical spine fused. I had my my both of my hips done here, not at the University of Virginia, but at our community hospital - Martha Jefferson - by a brilliant 37 year old female hip replacement specialist. And then Washington University in St Louis to have my nerves rewired in my right hand.
Nate Kaufman
So had you not been an insider and knew how to navigate through this insane healthcare system that we have, would you have ended up in the same places? What would have happened?
Dr. Jeff Goldsmith
Well, a lot of where I went had to do with what I learned during my career. So yeah, I think I would have ended up in a different place. I probably would have ended up with all my care here in the community. But a lot of people travel out of the community for a lot of different reasons, and understanding those reasons is really important. One of the things that really pisses me off about the current strategy dialog about all this is that I would have been considered "leakage" by the strategy folks here in town for going out of town. I find the use of sewage metaphors in describing patient decisions incredibly demeaning. We don't leak. Discharge planning is another one of my favorites. That's what you do with toxic waste or sewage; you discharge it. So I think that language that we use to describe the experience is really important.
Nate Kaufman
Enough about you. [Laughter.] Being in healthcare - by the way, for everyone who's listening to this, we're combined 99 years in healthcare - when I started in healthcare and had my first real job, I wanted to educate people on healthcare strategy and marketing in the 1980s so I called you. We've been working together for decades and know each other well. What is keeping you up at night about our healthcare system today?
Dr. Jeff Goldsmith
I think that a lot of folks are in this fugue state, not entirely believing what's happened to them. In the last three months, Congress basically abolished Obamacare without going through all of the psychodrama. They're in the process of creating - by the end of the year if they don't extend the covid era exchange subsidy bump - 15 million new uninsured people at a minimum. But more importantly, they re-welfarized the Medicaid program. A lot of Medicaid people enrolled in Medicaid don't even know they're in Medicaid, like they're in the Oregon Health Plan, well, the Oregon Health Plan is the Medicaid program. A lot of folks re-branded Medicaid because they didn't want people to feel like that they were losers or something by enrolling in it. So I think the estimates of ten million people, or whatever, losing coverage are way low, because I think a lot of states are going to go out of their way to humiliate people that are otherwise eligible, and they won't enroll. My problem with the field right now is that there is a level of aggression that is going to be required, both politically and from an organizational leadership standpoint, to get to a defensible place and to not have a catastrophic effect on the community by implementing this law. I think a lot of folks that I see are just frozen. They're waiting for something to happen, or they're assuming that Congress is going to turn over in 2026 and abolish all of it, and that's far from clear. I'm not a believer in scenario planning - you and I know this - I'd rather try to make my best guess about what is going to happen. But in this particular case, I think scenario planning is really important. I think people are going to need to have a worst case assumption that every single piece of that law gets implemented as the President signed it, and they're going to have to begin figuring out how to make choices for their own institutions, their workforce, and their communities, that they can live with and that they can explain in English to the people that are going to be affected by it. I'm very frustrated by, frankly, the lack of aggression that I see, both politically and organizationally, in people confronting what is, in my 50 years, the most significant threat that I've seen the industry.
Nate Kaufman
I would agree with you. I guess from my perspective, working with health systems on a daily basis, what I see is a lack of urgency.
Dr. Jeff Goldsmith
That's what I mean by a lack of aggression, that this is something that isn't going to solve itself. It's going to require leadership on the part of boards, clinical communities and CEOs. It is really the ultimate leadership challenge. This law is implemented as it is written. People are not going to be able to afford to do all the stuff they're doing now, and they're going to need to make intelligent choices about what not to do that result in the least harm.
Nate Kaufman
Okay, so my question is, what will this do to the average person who has employee health insurance and/or Medicare who are theoretically not affected by being cut out of Medicaid or not being able to afford an ACA plan?
Dr. Jeff Goldsmith
Well, I certainly don't assume that Medicare has a free pass here, because there's a lot of discussion about whether the huge deficits that were contained in that bill don't end up triggering a 4% Medicare sequester. Now that's still on the table. And whether the amount of money that's being brought in by tariffs alleviates that problem and there isn't a sequester, I don't think the Medicare folks - and you and I are among them - are out of the woods here at all. I also think you saw what happened to United Healthcare. I've followed that company closely for 20 years. They're going to be getting out of a lot of markets. A lot of people are going to be getting out of Medicare Advantage because they aren't adding any value, and the number of choices that people have that want to remain in the program is going to narrow. So I think the assumption that 60 some odd million of us folks that are in Medicare are going to be untouched by this is wrong. Employer based insurance really worries me, because if the amount of cost shifting that's going to happen with 15 or 20 million more uninsured people rolls all the way through, there are going to be huge increases in insurance premiums that are going to end up being blamed on - not on this Congress - providers. I don't think it's too early for care systems to begin the conversation about finding alternative revenue sources so that cost shifting dynamic isn't permitted to continue because I don't think it's viable long term. You cut Medicaid payments, you cut state directed payments to Medicaid managed care providers; the people that are losing coverage aren't going to go away. We're not going to deport them. They're going to continue using the health system when they need it. Who's going to pay for them? Well, under the present system, employers are going to pay for it, and I don't think that's viable long term.
Nate Kaufman
Yeah, we’ve seen health insurance increase by about $1,000 a year for a family of four. I mean, it’s just not sustainable. So you mentioned alternative sources of income. What are health systems actually good at that they should be getting into?
Dr. Jeff Goldsmith
That's not what I'm talking about. I'm talking about things like temporary local tax levies so that the cost of all that uncompensated care is spread over a broader base. Remember, hospitals are going to be paying a portion of that because they insure their workers. So I think it's to begin thinking about... is it possible in a lot of communities to create tax revenue to support some of these places? I don't think you need to be a public institution to do that, but you do need to have a conversation with your local political leadership about it.
Nate Kaufman
But we do have academics out there, some - let's say in Maryland as an example - that say that these not for profit hospitals, they're not even fulfilling their charitable mission and providing sufficient charity care. Now Jeff Goldsmith is saying they need to tax the public.
Dr. Jeff Goldsmith
Well, I'm sort of with them. I think there are a lot of people that are coasting free on that tax exemption and are not putting back a comparable amount of benefits to what they're being sheltered from in tax. I think it's a real issue, and part of the conversation is what claim do I have if I'm not putting out more in benefits to the community than I'm getting in tax exemption now. You don't have much of a claim. I don't think that conversation goes very far if the balance of benefits isn't already tilted in the direction the community. I think that non-profit thing is a real point of vulnerability. Repeated studies have shown that investor-owned hospitals actually provide more charity care than non-profits, and that really comes back to bite you in circumstances like this.
Nate Kaufman
Well, that's if you consider charity care, not the subsidies for underpaying Medicaid and underpaying Medicare. Another issue; you mentioned cost shifting, but let me get to another issue. You wrote a book on radiology a while back. You and I know all about physician transactions and what it costs now to staff a hospital. There's a cost shift going on where if you want to have anesthesia - which means you want to keep your operating rooms open - your anesthesiologists are not making enough money from Medicare, Medicaid, and even commercial, to keep them viable and recruit and retain physicians. So they are now charging the hospital, essentially cost shifting to the hospital. We also see it in primary care. How do you feel about that stuff?
Dr. Jeff Goldsmith
It makes me really angry. I think you can blame our health policy community for a lot, but basically starving the Part B fee schedule, and then turning around and blaming hospitals for employing them - I mean that takes a lot of brass, as far as I'm concerned. And of course, hospitals are using clinic fees, outpatient charges, to offset some of those losses. Those are in the gun sight. So my argument has been, if they do cut site-of-service, every penny that they take ought to go back into the Medicare fee schedule so that private practitioners have an opportunity to not be employed by hospitals. Our Medicare and Medicaid programs, Nate, are just... they're a civic disgrace, and it isn't the people that they're helping that's disgraceful, but the absolute absurd complexity and just flat out wrong-headedness of the payment structure. It just it's mind boggling. I mean, if you were Martian and you landed on Earth in 2026 and looked at Medicare and Medicaid, you would go, what the heck are they doing? Why did they do it this way? These programs need to be rebuilt from the bottom up, and they need to be fundamentally rethought, restructured and and framed in a way that doesn't waste the taxpayers money.
Nate Kaufman
What would you do if you were able to; they come to you and say, Jeff, you're a policy expert, been in the business 50 years, we want to change how we do Medicaid, but we don't want to pay more money or put more money into it. What would you suggest they do?
Dr. Jeff Goldsmith
I think there are two separate programs here that overlap Medicare and Medicaid. There's a program for the chronically ill, including the mentally ill, and then there's a program for acute medicine. I think those programs need to be separated, and they need to finance how they're paid for in different ways. I'm not going to get into the financing part, where the money comes from, but I think I've been an advocate for years for the chronic care part and for primary care, paying on a subscription basis; not just for the wealthy that can afford concierge care, but basically, for everybody. I subscribe to primary care physician services. I subscribe to mental health services. That subscription, I pay a portion of myself, but the rest of it comes from tax dollars. I think that's what needs to happen. And acute care, I think you pay for in bundles; enhanced bundles and include physician care. I don't think it's really all that complicated to create a sensible structure and allocation of risk that doesn't waste huge amounts of time in the revenue cycle and in diverting clinician time into documenting every single decision that they make. We could save a tremendous amount of money by eliminating a lot of that waste, and we're going to need to do it, because we're not going to have anywhere near enough doctors to take care of us when we're in our 80s.
Nate Kaufman
Everyone says the answer is primary care. There ain't enough primary care physicians.
Dr. Jeff Goldsmith
Well, right. But we created the shortage need by diverting half of clinician time into typing to defend every single decision, every single prescription - that is absolute idiocy. The idea that we pay for a video visit by the minute, like we pay for lawyers, I mean, come on, that ought to be included in the bundle. I think the secret is sensible bundling.
Nate Kaufman
Is bundling capitation? How is that different?
Dr. Jeff Goldsmith
No, because you're not pushing the entire risk of health spending off onto the primary dock in the subscription amount. I think that was a mistake. It was clearly a mistake that we experimented with in 1980s, we decided we didn't want to do this global cap where the primary care physician bears all the risk, it makes very little sense to me. But on the bundle side, the acute side, it's episode driven, it's an episode driven bundle, like an enhanced DRG (Editor's note: Diagnosis-Related Group). I really think this is a conversation we're going to have in the wreckage of what was done back here in the spring.
Nate Kaufman
When you mentioned wreckage, my biggest concern right now is not the cost of care, it's access. It can take six months for a patient to see a specialist. I had a situation just the other day where somebody thought the doctor, the cardiologist, said you have an aortic aneurysm - not me, but a friend of a friend - and you need a CT scan to find out if you need surgery. He called the hospital and the hospital said, Well, we can get you in for 28 days.
Dr. Jeff Goldsmith
Right. Something very similar happened to my sister with an adverse radiology finding. I won't go into details, but it's the very same thing. It's like, we can get to it in 30 days.
Nate Kaufman
And so this guy was panicked, and I was able to - because I'm in the secret society and an insider - call the right person, who got the right person in, and this guy got it on that Friday. Luckily, he still doesn't need surgery. But all these people are talking about is cost, cost, cost, and cheaper is better. I have problems with cheaper from the standpoint of - and you're a shopper, so you know this - that not all the doctors are the same, not all hospitals are the same and can treat the same stuff. What we should be more concerned about is outcome. Nothing is more expensive than a misdiagnosis and a wrong treatment plan.
Dr. Jeff Goldsmith
Nate, I'm with you, and I guess I think so much of this we've done to ourselves by the idiotic way in which we pay for care and this absurd Obamacare. I was one of the people that actually read the entire bill twice, and it was shameful how complicated it was and how much work it was going to be to implement it and to use it. I just thought it was a fundamental failure. They obviously did a huge good deed by providing health insurance to 30 million people but a lot of the rest of that bill actually made things worse and created the illusion that there was a scientific way to pay for healthcare and we're going to find it.
Nate Kaufman
I know you mentioned earlier that you spent a lot of time looking at policy and research and academics - far more than I do, although I do quite a bit - what is your opinion of the current state of the policy community and academic research community for healthcare?
Dr. Jeff Goldsmith
I think it's really polarized. There's a small poll of incredibly angry, market oriented folks that really believe we just ought to let things rip. And then there’s a large group of people who really want to go back to the 1970s with rate review—like Maryland has—as the solution to hospital costs. I think health policy right now is in a really sad state. I think the quality of the research findings and the dialog about what to do has really degenerated. It's really a disappointing conversation.
Nate Kaufman
I don't recall any time in my decades in healthcare when venture capital funds were as influential on academic research as they are today.
Dr. Jeff Goldsmith
You're probably talking about Arnold Ventures. Arnold Ventures is really simply a for-profit foundation. I can't remember exactly why they made it for-profit. But the guy is spending tens of millions of dollars trying to influence a health policy agenda, I think mostly for the Democrats when the Democrats inevitably get back in. He's basically purchased the names and reputations of a huge chunk of the health services research community, including a lot of friends of mine. When I asked one of them, why are you taking money from this guy? He said, if you want to bring down the medical industrial complex, he's your guy. That's the attitude. I don't want to bring down the medical industrial complex. I just want it to work for me. In fact, I'm working on a book. I've been working on a book all summer called "A User's Guide to the Medical Industrial Complex" that talks about how do we get it to work for us, as patients, as healthcare workers, as members of a community. How do we get these huge organizations that were created largely by policy makers, policy makers that wanted to have the entire health system look like Kaiser. Policy makers were responsible for creating these things in the first place. It wasn't market forces at work at all. It was dreamers that wanted to fundamentally reshape - under Clinton and under Obama - our healthcare system so that everything looked exactly like Kaiser. Well, it didn't work, but the legacy of it are these multi-billion - ten, one hundred billion - dollar entities that are frankly lost. They were in managed care backlash 2.0. These companies are being torn apart in the markets right now. A lot of people are just flat out angry at the way they've been treated by these organizations. I think they're really lost. They're looking for a rationale, a reason for being, and I want to work on what that reason is.
Nate Kaufman
What about what I call the insurance cartels, given that they control 80% of drug distribution in our country. Any thoughts about that as we get closer to the end of our collective rants?
Dr. Jeff Goldsmith
I think gravity is setting in here. They're anti-trust. Folks have made runs at these people that have been completely unsuccessful. Anti-trust is a blunt instrument for dealing with a lot of these critters. A lot of them have pursued this academic idea of vertical integration. I can tell you, because I've been working on a paper on this; vertical integration doesn't work in this field. It's too damn complicated. And the value chains in healthcare just don't work in the same way as they do in manufacturing or retailing. I think these organizations are going to have to do the same thing that healthcare delivery entities are going to do. They're going to have to figure out what businesses they're good at, what businesses they want to stay in, and how they can create value for their subscribers. To me, the thing that foretold the collapse of United Healthcare was its –12 Net Promoter Score. I mean, you’ve got a –12 Net Promoter Score. People eating the dog food, throwing it up, and leaving the rest on the porch.
Nate Kaufman
They don't eat it, for those of us who don't know what a Promoter Score is.
Dr. Jeff Goldsmith
Yeah, a Net Promoter Score is simply the percentage of people who would recommend that you use a service, minus the percentage of people that would not recommend using the service. So -12 means you've got, essentially, your customers telling you're doing a crappy job.
Nate Kaufman
Well, it's tough when your customers are telling you doing a crappy job, and the providers are telling you you're doing a crappy job. One last question I have. You are a Medicare Advantage patient if I recall, how many times have nurses wanted to come in and examine your vascular system to see if you have any peripheral vascular disease?
Dr. Jeff Goldsmith
I'm not going to name my carrier, but I've received 16 calls from my provider wanting to send a nurse to my house to up-code me. But the last three or four were from Signify, the company that I think was purchased by CVS. I kept telling them, take my name off your call list, I really don't want to have anything to do with you, I know why you're coming and it's not a wellness visit. So Medicare Advantage has been a huge disappointment. I get dental coverage. When I go to find out if my dentist or even any dentists I know are in their network, the answer is no, so I can't use that. My health club isn't covered because they're out of network. A lot of the alleged benefits that I was going to receive in Medicare Advantage I can't get access to. Pretty much, as an MA beneficiary, I have felt like a sheep that's just being periodically sheared and the wool taken off and sold to somebody else.
Nate Kaufman
Jeffrey, anything else that we didn't cover in our little discussion here today that you'd like to bring up?
Dr. Jeff Goldsmith
I don't know. I wrote a book about the baby boom generation 15 years ago. It came out three weeks before the 2008 market crash. But in that crash, I talked about the fact that we really don't know - us Boomers - how to not work. I mean, I'm still working at almost 77, you're still working and you know how old you are. I think if we encourage people to work and be healthy, a lot of the problems that people are worrying about - about how to finance and pay for healthcare - we'll pay for it with the tax revenues that we generate. So for working in the field as long as I have, to remain optimistic may be a sign of some type of onset mental disorder, but I'm actually pretty optimistic about where we're headed. I think within the next ten years, we're going to have vaccines for a lot of the neuro-degenerative and psychiatric conditions. I think we're right on the edge of unraveling a major knot of medical problems that right now we don't have a lot of solutions for. I look around and I see all this cool stuff happening that nobody talks about. There's all this "ain't it awful" stuff - isn't this awful, isn't that awful? And it just isn't getting us anywhere. We need to focus on the stuff we can change and change it.
Nate Kaufman
That's the old grant me the wisdom to know what I can change, right?
Dr. Jeff Goldsmith
Exactly, the Serenity Prayer. We're pretty serene.
Nate Kaufman
[Laughter.] You might be, at times I am. Thank you, Dr Goldsmith, for this spirited discussion.
Dr. Jeff Goldsmith
Nate, it's been great talking to you.
Nate Kaufman
Healthcare is extremely complex and a lot of it doesn't make sense. There are a lot of opinions out there from academicians and policymakers who have no idea what is going on in the trenches, where I spend every day and you spend much of your time. If you have a healthcare issue, seek the guidance of an insider who truly understands how our crazy healthcare systems work. Your life may depend on it. This is Nate Kaufman signing off for the Healthcare Bridge.
