The interview took place at the World Health Care Congress and both a podcast and a transcript lay out the conversation below.

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• DOWNLOAD INTERVIEW WITH GENE DRABINSKI–TRIZETTO (WMA) (9 MB)

Gene Drabinski
Trizetto

Vijay Goel: Hi, this is Vijay Goel at the World Healthcare Conference, and I’m sitting with Gene Drabinski, currently of Trizetto. Now Gene, you just walked me through a very interesting background that you’ve had so far, and if you could share with the users kind of what types of experiences have you had across the healthcare system?

Gene Drabinski: Okay, I think I mentioned it earlier. When I was a young boy, just out of the army and finished college, I was a community organizer, and I worked in underserved–I guess it would be called now, essentially poor communities—working with public housing tenants and welfare mothers and little community groups to facilitate their gaining power and influence, so just very small things—get a stop sign in their neighborhood—and it was very powerful for me to see how folks could go from feeling they had no power, there was nothing they could do, very defeatist, and very small things like this, to, literally, getting a stop sign in the neighborhood and feeling like they were pretty powerful folks—they knew how to do this, they could do it again.

VG: Power can be kind of scary, isn’t it? Once people get a little bit, then they want more.

GD: Actually, I don’t know that the feelings of efficacy are scary at all. I think there may be some scary aspects of them, but frankly, I think that’s the least of our problems. And in healthcare, I got into healthcare late, I went to nursing school in my early 30s, and while I was in nursing school, I was working nights, going to school days, I had three kids, and I quit smoking. I quit smoking and I started exercising, and that was on January 17^th, 1977.

VG: You remember that day? Is there a reason?

GD: I changed my life that day. And as I’m learning about physiology, I’m experiencing changes in my body—my resting pulse is coming down, my weight is coming down, my sleep is getting better—all these kinds of things changed in my body, and I thought, ‘this is cool, if everybody knew this, this would be really wonderful.’ In 1980, I had an opportunity to start the first cardiac rehab program in the state of Idaho, where I lived, and I had people who had just suffered a heart attack or bypass surgery. They had 3 weeks post-bypass and maybe ten days post-discharged for AMI, and they were in the toilet. These folks, their life was over—they couldn’t work or make love or be productive anymore. Their life was just terrible. I had them two hours a day, three days a week for three months, and they left that program in the best condition—and it made them feel good, and it made me feel ten times as good. I said, “Man, this is what I want to do. I want to facilitate the process of people in the health space of moving from ‘I have no efficacy, no locus of control internal, everything is happening to me’ to the stage of ‘I can do this, look what I’ve done. Look at the changes that I’ve made.’” And essentially, I built a career on that premise.

VG: So your goal then is to empower people and give them the taste of control and being able to achieve their goals, not somebody else’s?

GD: That’s very well said. People are always more effective at saying reaching goals they set for themselves, than they are of goals that I or you or someone else sets. That’s exactly correct.

VG: And just, definitionally, it sounds like when you’re talking about healthcare, you’re talking about the status of somebody’s health inside and outside the “medico industrial health complex,” which seems like it’s different than some of the other conversations we’ve had out in this health setting.

GD: Absolutely. An interesting statistic is that about 75% of people will have a symptom of a health problem or a health problem within a 30-day period. And it’s also true that about 8 out of 10 of those people don’t ever enter the health care system. They figure out that they’ve got a cold and they’re just going to drink a lot of fluids and get better. Or that their child does not really have an ear infection—they make these decisions—this cut does not need stitches, and all those kinds of things. And so people already do a bunch of this stuff, and from a health plan side, there’s no claim, there’s no nothing, so people already manage their health and make health decisions everyday that are totally invisible to the health care delivery system. We don’t see them.

VG: Which is interesting, because now, when you put the context of, your health decision is anywhere from ‘do I get a stitch or let it just heal?’ versus, ‘I’m now in a hospital setting, and I want some choices, too.’ We’ve got a pretty paternalistic system thus far that thinks that you aren’t able to make a lot of those decisions in that setting.

GD: Are you sure you want to get me started on this? Absolutely. I want to pick up on two things. First of all, when is the healthcare delivery system now interested in people becoming engaged in treatment? Well, I’ll tell ya, you’re pretty doggone sick. You’ve got a lump. Okay, here’s what we’ve done, we’ve biopsied it. Now you need to make a choice. Do you want a lumpectomy with the appropriate aftercare treatment or a mastectomy? Well [laughs], I’ve been participating in the healthcare system for 45 years—you never asked me to be involved in any other decision, and all of a sudden you want me to be involved in this one that’s scaring the heck out of me? No, I’m not going to do that. I mean, I think that this needs to be turned upside down, because I ask you, or anybody who happens to be listening to this, to think about the last time they went to the doctor or took their child to the doctor, and I’ll ask you, ‘who weighed you?’ ‘Who w
eighed your baby?’ You don’t have it down, you’re not thoroughly capable of writing down that number on the digital printout? You’re not capable of measuring your baby in inches and centimeters, which I think you’ve measured tons of other stuff. The entire system is built around disempowerment from the moment you walk in until the moment you walk out. So changing that is not going to happen on the margins. I think changing that is fundamentally, probably the largest change in healthcare in the rest of my life.

VG: Interesting. So right now, you’re focusing on value and quality. Can you define what value and quality means from the perspective of two of your organizations that you served, one on the consumer side and the other on the provider side.

GD: Okay, I should be completely honest, my title as President of Trizetto, COST and quality. And cost is a factor of value, so just to modify that a little bit. So my accountability is to help health plans improve the quality and manage the cost of care. So now my product tries to do all of those things. For example, the personal health record that is a part of my product line, has a self-triage screen right on the front when you open it up—you couldn’t possibly miss it. It’s a body map. Where does it hurt? And as you drill down for information on what do you think this is, or what should you do now? And if you’re seeing a doctor, you’re still going to do something—you’re going to ice it, you’re going to elevate it, you’re going to take aspirin, you’re not going to take aspirin—and then when you need to see a provider for it? So we start fundamentally with what people do all the time. Our database is a very member-centric database, so we have information about Vijay. Not just information that we have from the health plan, and that Vijay has been nice enough to contribute on his enrollment plan and form, which is still all the wrong things about him—I’m glad to know your zip code and everything, but what we really want to know is what are your interests? What are your preferences? How do you like to be served? We really don’t ask those as part of the enrollment process, but we do as part of my product, so we have a bunch of metadata, if you will, about Vijay, that allows rules for a payer to be written against that metadata to show every good-looking 33-year-old guy, entrepreneur, the new opportunities that there are for really cool bicycles at a great price in his neighborhood.

VG: That’s interesting. It sounds like you’re starting to personalize, and some of your rules are not “one size fits all” as I’ve heard in some of the other presentations, but you’re really trying to bring something that’s of personal value to me.

GD: Exactly. I quit smoking, January 17^th, 1977, and start exercising. I’ve been exercising ever since. A couple years ago, I have a problem with my knee. What I could get was information about knees, but what I wanted was information about MY knee, because I’m 63-years-old, but my knee is not just a 63-year-old male’s knee. It’s this knee that I ride bikes, that I run, that I snowboard, that I do these things on, and when all I could find is someone who could personalize the information for me and say, “I wouldn’t tell anybody else, Gene, but the only way to fix this knee is for the rest of your life, three days a week, you have to do these four things.” Okay. As my physician told me, 1 out of 10 people will do those things, but he wouldn’t even bother telling the others because they’d be looking for an office with surgical treatment, but I am really, really good about consistent efforts over time, and I actually pulled my kneecap back. And so, I want information about ME. And in the absense of that information, it’s hard for me to engage in it.

VG: It’s also interesting there because there is some data showing that if you’re an athlete, and you go to a doctor that’s an athlete, you’re going to get a different set of recommendations than if you go to a doctor that’s overweight and sedentary.

GD: You’re absolutely right. But the response typically has been, “if it hurts, don’t do it.” Thank you, but I really don’t want to pay for that advice. I want to talk to someone live or virtually who asks enough questions to know about me, and then can empathize with me. That’s what I need. I don’t need—and that’s not very costly.

VG: Sounds like it’s kind of hard to do in a 6 minute visit.

GD: It is, indeed, hard to do in a 6 minute visit. I think if you look to have it done in a 6 minute visit, you’ll be highly unsatisfactory, and I think that’s one of the powers of the web. In fact, one of the interventions, if you blow hard on the product line that I’m accountable for, it’s very, very good at attaching metadata to individuals and writing rules against it and then, what its very good at, is serving up for Vijay, a piece of content that enables the customization for Vijay. So, electronic content, multimedia over the web, certainly IVR kinds of things, so working to take down the price point of that personalized intervention, so that lots and lots and lots of people can take advantage of it.

VG: So that’s actually a good point for some of the physicians that are listeners, is that the doctor doesn’t actually need to physically do all these things, but your recommendation might seem like it requires you to. There are other tools that are available.

GD: The doctor knows that she/he can’t do all of those things. And frankly, the coaching competency, there is a lot of variation in the physician community for competencies and coaching, just as there are in nursing—some are good, most are not any better at that than they’d be in checkers or chess or something. So I think it’s being able to use technology enables a provider to extend the reach of the things that he or she does really, really well.

VG: So that’s interesting, the technology allows us to both reduce the cost and increase the quality of that service. As we’re wrestling with some of the other aspects of cost and quality in the system, what is your take on where the next few years might take us?

GD: Well, I’m intrigued—and obviously, this is my personal opinion—I’m intrigued by certain aspects of what I would call a “retailization” of healthcare. I used to teach and ask people to, I was trying to explain the economics of healthcare, to imagine that their car is terminally ill, and they had to buy another car. So to write down on a piece of paper the cars they’d look for. And once they were done, I asked them to turn that paper over and I say, “Now, imagine that you only have to pay the first $1000 out of pocket, a
nd then you pay 20% of that up to amaximum out of pocket of $10,000. Now write down the cars you will look at.” Needless to say, the cars on the second side of the paper did not appear on the first side of the paper—they were entirely different.

VG: Sure.

GD: Because the cost has been removed.

VG: I want my employer sponsored Lexus insurance!

GD: Yes, I do! I want the Lexus! And I’d like to trade it in next year for a Beemer. Yeah, you bet! And so, we sucked the market dynamics out of the healthcare delivery system and put in an incredibly weird kind of thing, but if you think about retail—and there was a period in my life where I did organizational development for a 350-store retail pharmacy outlet, and stores in the West—Payless Drug Stores, actually, is the name of them, they’re no longer alive—but, I learned a ton in that business. And actually, I learned only two things that I’ve maintained forever. One, is the relationship between margin and turn. The toaster is way in the back, it doesn’t turn but once every two weeks, big margin on it, 50-60-70%. That spearmint gum, hardly any margin, turns like crazy, it’s at the checkout line—Ah! I get it! And if you think about business, a lot of it boils down to margin and turn has been really helpful. But the second thing was, how do you compete in the retail world? Do you compete on access and service? And I now live in the East. If you could throw a rock and not hit a CVS or a Walgreens from any urban area in the East, I would be flabbergasted. And the reason there are so many of them is, because the one you can get to the quickest is the one you’re going to buy from. And then service within that. So access and service is how you compete in the retail market. So imagine healthcare where you competed for the patient’s dollar by access and service. Woah. That’s pretty exciting to think about.

VG: Well we’re seeing massive growth in the retail clinic space, and that seems to be the basis, at least some of the basis, in how they’re competing.

GD: Isn’t it cool? Because look where the clinics are? They’re in Wal-Mart! They’re in the absolute center of the retail universe, right? Sam Walton, God bless his soul, knew a ton about retail, and so having them available in retail places makes perfectly good sense, and don’t forget, this will be a transitionary period, so it’s going to start where the seed most easily takes root, and that would be in a retail environment. It’s going to move from that so that—just imagine! What does the web do best? It puts buyers and sellers together—from a commercial aspect. Okay, so who’s the buyer? The patient. Who’s the seller? The doctor. Okay. Imagine that you can go out, just like you use Expedia, and you can find an opportunity for a doctor within this distance to see you at this period of time. And maybe that visit doesn’t even need to be physical. That could be virtual, there’s technology in place right now, in fact, a presenter here at this conference is capable of building that work on the fly, and put the buyer and the seller together. So I think that we start in retail outlets because you start where it’s most comfortable to do the same things that you’ve always been doing, but watch this stuff grow. I think there are so many upsides to the retailization of healthcare—this could be a powerful thing to watch.

VG: That’s interesting, because that would imply the network now changes, and we move from the commoditized discount that currently dominates, to something around different models of practice and different models of delivery, which would be a whole ‘nother topic.

GD: I have a very close relative who is a woman in her 30s who lives in New York City who is serially monogamous and lesbian. She asks me, “Why can I not find a doctor who I would love to see given the neatness or perceived specialness of my lifestyle? Why can I not find a person? It’s so difficult for me to do.” Okay, this is just a small segment of the population, but we all are looking for a relationship with a provider, adviser, and caregiver, that we trust, that likes us—by gosh, they got to like us, right? Because we’re vulnerable in there, we’re on the paper and laying on that funky little bed thing they’ve got, so I think that we’re going to see some really, really wonderful innovations in healthcare delivery that tie most of the stuff you do with much of the pressures that are in the marketplace for retailization.

VG: It will be an interesting time for primary care. Thank you so much, Gene!

GD: You bet, my pleasure, Vijay.

VG: Bye!

His premise, which I’ve been arguing for a while, and which Dr Rich has written about eloquently as Covert Rationing, is that insurance, rather than solving the problems of cost, creates much of the problems we see today.

Insurance is all about betting against negative consequences and the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. Sometimes even the canniest MIT grads can’t help: Property and casualty insurers have collapsed in the wake of natural disasters.

Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict. There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.

While I approve of his overall premise that physicians, especially those practicing minor surgery or primary care, should move away from the insurance model for reimbursement, I think his rationale doesn’t address some of the core misassumptions out in the marketplace today.

But a hefty proportion of health-care services – office visits, minor surgeries – would be affordable to most Americans if the slice of the health-care dollar that currently ends up in the coffers of insurance companies was eliminated.

Its not that insurance companies, as the middleman, are making health services unaffordable by inserting themselves in the transaction and charging fees (although for small dollar services, the processing overhead can be truly phenomenal–over 50%). Its really that the type of transaction being incented by payment is suboptimal– the focus on technology instead of communication, personalized advice, and support has led to a severe underutilization of primary care services. Even more so, by removing the price discussion between consumers and providers, incentives to provide incremental services that financially benefit the provider have raised costs tremendously over time. In fact, cash prices and “usual and customary” fee schedules are largely unrelated, as Kellerman highlights

Several years ago, I suffered a sports injury that necessitated an MRI. The “fee” for a 20-minute procedure was over $3,000. My insurance company refused to pay, so I informed the radiologist that I’d be footing the bill myself. Immediately, the “fee” was cut by two thirds. And the doctor was tickled to get it.

In fact one of the biggest issues with the 3rd party reimbursement model is that innovators creating lower cost, disruptive models lose their customer base, as customers are not forced to make choices between higher cost and good enough. In essence, we’ve installed a model that systematically starves out the low cost innovators, who instead have been conditioned to always make something better and more expensive. Clay Christensen’s explanation of low-end disruption:

“Low-end disruption” occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.

In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.

Indeed, less insurance, especially for low-dollar items will create consumer demand for “good enough” services, especially where they add convenience or personalization as we’re seeing with the retail clinics. Unlocking the system to a market based pricing approach will create more effective primary care approaches that can better address the issues of non-adherence to therapy and significant frictional cost incurred with each doctor’s visit.

In talking about High Value Health care, he put forth an interesting equation I hadn’t heard to date.

His take on the Value Equation for health was that is was:

Value = (Outcomes + Safety + Service)/(Cost + Time)

This is interesting to me as it is a mechanistic equation that seems to be based in a belief that there is some optimal value we can all agree on. One would imagine that would allow society to set some absolute value on each service, which fits in the overall approach taken by Medicare, Medicaid, health insurance, etc.

If we believe in a retail marketplace, value suddenly looks very different than the equation mentioned above. Per Karl Menger, in his Principles of Economics in 1873:

Value is…nothing inherent in goods, no property of them. Value is judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men…The value of goods…is subjective in nature.

The determining factor in the value of a good, then, is neither the quantity of labor or other goods necessary for its production nor the quantity necessary for its reproduction, but rather the magnitude of importance of those satisfactions with respect to which we are conscious of being dependent on command of the good. This principle of value determination is universally valid, and no exception to it can be found in human economy.

The conclusions coming off of this make for a very different approach to pricing, per Michelle Golden. The biggest questions are around absolute vs. relative approaches to pricing– and if we believe in relative, then how does that get integrated with the current purchasing systems in health today.

Value is…nothing inherent in goods, no property of them. Value is judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men…The value of goods…is subjective in nature.

The determining factor in the value of a good, then, is neither the quantity of labor or other goods necessary for its production nor the quantity necessary for its reproduction, but rather the magnitude of importance of those satisfactions with respect to which we are conscious of being dependent on command of the good. This principle of value determination is universally valid, and no exception to it can be found in human economy.

When a patient is in need of blood that isn’t available, it becomes a life and death situation. Historically the Red Cross will make efforts to alert the public during a shortage. But there may be a better way – leverage the social networks to get the word out. If shortages of a certain type of blood occur in a certain zip code, having a database of willing donors in that zip code to contact may be the most efficient way to solve the problem quickly.

That’s where Takes All Types (TAT), a non-profit organization, comes in. Users install their just-released Facebook application, tell it their location and blood type, and say how often they are willing to be contacted to donate blood (maximum is every 57 days). If a shortage occurs, they’ll contact you via the methods that you authorize (Facebook, email, text message, etc.)

This is a perfect example of innovation helping to move healthcare information and services (in this case, a call on social responsibility) to where consumers already are. This furthers the trend toward placing clinics in convenient retail locations or bringing doctors where people want to be, whether at home, in the office or even to the streets of the local neighborhood.

The trends, as health becomes more of a consumer-focused culture, will be to bring care back outside the massive institutions such as the hospital and back into our own homes, with all the savings in overhead and unnecessary technology that come with a occupying a hospital bed.
Instead, lightweight technologies enabled by the internet and via telemedicine and an increasingly sophisticated doctor’s bag will bring healthcare services back into the community, specified to the level of services required by and personalized to the consumer.