October 19, 2022 • 27 mins
Dan Liljenquist, Senior Vice President and Chief Strategy Officer for Intermountain Healthcare, discusses physician shortages, the economics of drug development and distribution, and his career path with and before Intermountain Healthcare. Value-based care isn't a destination; it's an evolution. Learn where Dan sees that evolution going next and how it has led to the creation of the nonprofit generic drug manufacturing company Civica Rx.
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S1 (00:07):
Hello, welcome to Profits Health Care Transformers podcast, where we'll
be talking to leaders in health care who are focused
on transforming their organizations to drive the next level of
growth for their business and for health care. Hosted by
Priya Aneja, Lindsay Moseby, Paul Schrimpf and Jeff Gourdji. Transformation
is one of those terms that has a lot of
(00:28):
layers to it. Sometimes it's about innovation, sometimes it's about
shifting the way you do business. Sometimes it's to your
overall operating model and other times it's to a specific
department or function. It's also about people helping them navigate
the discomfort that comes with change, but also motivating them
to engage in the journey of transformation from the CEO
(00:51):
to the newest employee. It's a journey, and that's why
we created this podcast to break down this multidimensional, dynamic
topic of transformation one story at a time. Are you
ready to dive in?
S2 (01:07):
Welcome to the podcast. This is Jeff Gourdji. I'm going
to host this edition. Happy to have with me Daniel Inquest,
who is the chief strategy officer for Inner Mountain Health
and also the board chair of Civica Rx . And we'll
talk about both those topics. Dan, it's great to have
you with us and good to be with you. Thanks
for the invitation. So, Dan, give us a little bit
(01:28):
and give those listening a brief introduction to who you are,
how you came to the role, and maybe tell us
one fun personal fact that is not either well-known or
on your LinkedIn profile or something else like that. Yeah.
So I've been with Intermountain Health for coming up on
ten years. My background is pretty varied. I'm an attorney
(01:48):
by training, but I launched my career with Bain Consulting
and spent time in the Fortune 500 world, had my
own company and built it and sold it, served in
the Utah State Senate, ran for the US Senate, got
absolutely destroyed by Senator Orrin Hatch, and found Intermountain Health
Care about ten years ago. And I've loved being here.
I currently serve as the chief strategy officer, been in
(02:11):
this role about four and a half years and it's
a great place to be. So fun facts for me. Gosh,
I do Spartan races with my boys. These are obstacle
course races that you see out there and they kind
of beat you up. I've done 16 of them. I've
got a couple more this year and it's more just
about getting through it than competing. Really. I'm not very fast,
(02:33):
but I love doing them. That is a fun fact.
The fact that you served in the in the that
worked in politics and served as a state senator is
also kind of a fun fact. And sometime in a
different conversation, you know, we'll talk about our either shared
love or shared hatred of politics, but that's not today's topic.
So but again, thank you for being here and good
to have you. So, Daniel, I had the privilege of
having a few conversations over the years at various stages
(02:56):
of the kind of work that we've done and writing
the book I wrote several years ago that you were
a part of just very recently the organization that changed
its name or announced its intention to change its name
from Intermountain Health Care to Intermountain Health. I would love
just to hear about the state of Intermountain Health Transformation
and whether the name is, in fact, the signal to
the marketplace that you're ready to be a new type
(03:19):
of health care player and engage people in their health
in a different way than you ever have. But Jeff
Intermountain has been focused on has been focused on value
based care for decades. And in fact, our mission statement
is helping people live the healthiest lives possible. And to us,
the best expression of that mission is when we take
full clinical and financial accountability for the health of the
(03:42):
people we serve. The company was launched in 1975 when
the Church of Jesus Christ of Latter Day Saints donated
15 hospitals to the community, and Intermountain Healthcare started at
that point. But we've really been focused on health for
quite some time, and this recent name change just turn
into Intermountain Health is natural to us and really speaks
(04:03):
to our aspirations, something that we've been working to do
for a long time, and that is keep people well
and when they need our care, you give them the safest,
highest quality, most cost effective care possible so they can
get back to their regular lives. And and that's the
role we think, and that's that's the role that health
systems should play with our patients, with our communities. So
(04:26):
a first for so many health systems, the barrier to
providing health and treating health rather than health care is the,
you know, the reimbursement model and has been the way
they're paid. And that not only doesn't rewards you for
keeping people healthy, it actually in some ways punishes you
with less services. Tell us about and tell kind of
those listening about the why that's not a barrier for
(04:47):
Intermountain or how you overcome the barrier toward being actually
a health provider, not just a health care provider, but
just health care financing in this country is really exacerbating
the problems we're seeing access problems, quality problems. We're paid
transactional as an organization. Most of our health care organizations
are paid transactional. It's it's you do a service, you
(05:09):
bill for the service, you get paid for the service.
In that model, the incentives are really lined up to
to treat patients transactional. You can't actually afford to move
upstream to help somebody avoid developing type two diabetes, to
help them avoid developing the complications of other types of
disease or, you know, to actually manage that disease. It's really,
(05:34):
really difficult to do. And in fact, it's it's totally
unaffordable for most health systems when they're paid just on
a per widget basis. And that's just not not effective.
One of the reasons, the advantages that Intermountain has is
that we have our own health plan. We like we
launched in the eighties called Select Health and working very
closely with our integrated delivery system and with Sawtelle, we
(05:57):
were able to change and rewire those incentives so that
we're focused on keeping people well. We actually work with
multiple payers health insurance. Companies aren't fully capitated arrangements where
we receive essentially an upfront payment and then we work
to keep people well underneath that payment. So we are
of our $14 billion or so in revenue as an organization,
(06:18):
roughly 5 billion is for capitated. We we have love
to get to the point where where it's 100% capitated
and we're working towards that now. But we believe that
that the payment model and mechanism where you get what
you pay for right now we're paying for transactional medicine
in this country and we get transactional care and that
(06:38):
does not help people live their healthiest lives. And so
we're focused on changing that model and want to lead.
And frankly, I also think that that's one of the
reasons why health care are so unaffordable, is that the
big problems that cause the big expenses for health care
are problems that develop over many years and then health systems,
(06:59):
and they're stepping in at the very last to when
when the problems are most acute and when the interventions
are the most expensive. And we just think that's the
wrong model and are working towards something new. So once
you shift the payment model right as you have as
you've started to do, then that enables you to do
all kinds of different things. What are some of the
(07:20):
kind of newest innovative things you're doing perhaps since we
last spoke to and put it, putting aside, you know,
specifically as a kind of delivery of care that you're doing,
whether it's addressing social determinants of health, whether it's kind
of wrapping your arms around patients in ways that are nontraditional. Well, Jeff,
we're working to build a system patient relationship. And traditionally
(07:41):
we've asked our customers, our patients, when they get sick
to dig through their to their wallet and find their
insurance card and start making phone calls. And frankly, the
market is so confusing to people that they don't know
what to do. And so it's usually they're calling a
doctor friend. They know and that doctor to know exactly
what to do. And so they get shunted around and
kind of grope their way through the system. And what
(08:04):
we're working on is with the new payment model, by
being prepaid, we can start rewiring how health care delivery
is done. And we want people as much as possible
to self triage self self-treat they have a curated experience
where they're guided in that process and when they need
to talk to a provider, making sure that they have
(08:26):
immediate access to that provider, that a doctor or clinician
to get the care that they need. And several things.
We're doing this in a model where you're prepaid, where
we rewiring how clinicians do their work and they manage
their practices. So give me an example. Right now, most
doctors show up and go to work every day and think, okay,
who's on my schedule today? And they look and they've
(08:48):
got 30 patients on their schedule, and those patients may
or may not need to be seen that day. What
we're now working to do is have our clinicians practice
in panels and instead of looking at their schedule and saying,
Who's on my schedules today, we want them asking who
should be on my schedule today, who didn't pick up
their medications, who pinged the emergency department last night? What's
(09:11):
going on with my panel of patients? 10% of the
patients in this country generate 83% of our costs. And
so if you're really trying to manage costs, you better
know what those 10% are doing. I'll just give you
an example of some of the things we're working on there.
So chronic obstructive pulmonary disorder or COPD affects a lot
(09:31):
of our patients, particularly our elderly patients. And when you're
having an episode and you can't breathe, oftentimes you're rushing
to the emergency room. And what we found is for most,
most of our patients, they can actually effectively manage at
a clinic with their doctor. And so in these environments
where where we've kind of reimagined how primary care will
(09:54):
work when a patient shows up in emergency department with COPD,
we're immediately notified, the clinics are immediately notified. What happens
is they're able to call the emergency department and have
that patient, instead of admitted to the hospital, be discharged
to the care of the primary care provider, which is
much more efficient, much less expensive way to go. And
(10:16):
that allows that patients be really effectively coordinated care. We
found that we're able to intervene before really high costs
interventions occur in a hospital just because of awareness and
how we're organizing our our clinical models. And that's just
one example. You know, we're also working on personalized medicine,
sequencing the genomes of our patients so that we can
(10:38):
tailor customized, you know, really care process models, care plans
for those patients. So if we want to know, for example,
if people are carrying the BRCA1 gene, which gives you
a markedly higher risk of breast cancer so we can
actually tailor your lifetime care plan to you, and that
requires awareness, investment, longitudinal care models and a longitudinal relationship
(11:03):
with the patient. And so. Those are the things we're
working on, believing that, hey, let's if we get better
and better at this, instead of having a large, opaque,
difficult to use health care environment, we can give a
very tailored, direct, easy to use customizable experience for our patients.
And we have those experience in every other industry. We
(11:26):
just don't have them in health care. And so that's
what we're working on. So, Dana, I'm struck by your
your two examples are around, you know, the doctor asking
who should be on my schedule. And it was one
thing I picked up in your first example and the
other in this second example was the idea, the need
for longitudinal relationships. What does it all mean for the
doctor patient relationship, if anything? Does it mean that for
(11:47):
a doctor to say, rather than here's the 30 patients
I have, who should I be seeing? Does it mean
they need to have less patients on their schedule and
create more flexibility? Or does it mean Dr. need to
work in teams so they can kind of triage and
pass people around? Who needs to see who. Which could
obviously have implications for the doctor patient relationship. Does the
longitudinal relationship remain with the patient or is it transferred
(12:07):
to the system? Listen, we want to create deep personal
relationships with our patients. And health care is so complex now. Oftentimes,
patients have multiple clinician relationships and none of that is
tied together. And so if you're managing a chronic disease,
you have a relationship with your specialist, often your primary
(12:29):
care doctor, your pharmacist. There are whole teams of people
already involved in your care. They're just not particularly well coordinated.
But I don't think people wake up every day and say,
The first person I'm excited to see is my doctor.
I do think they want to have a trusted relationship.
And the simple fact is. JF Over the next decade,
and we've been really worried about this. If transactional medicine
(12:52):
is the model we're going to carry into the future.
Meaning a single doctor, single patient come in and see
the doctor generate a bill. There is no way that
we can train enough doctors to handle the demand is coming.
We are going to be short 55,000 doctors in 2030
and you're already seeing those challenges. Today. We have 10,000
(13:12):
people a day aging into Medicare. You have 25,000 primary
care doctors have the age of 65 who are going
to be retiring. There's not enough backfill to continue to
service the demand. So what we're very concerned, concerned about now,
about economists at heart, you know, if you have a
shift to the right in the demand curve and the
amount of demand, and that's what you're seeing, a significant
(13:34):
increase in demand for services. At the same time, the
supply curve is shifting to the left. Jeff, you know
what happens if you have a much higher equilibrium price?
And what that means is that people have means will
be able to afford doctors and those without want. And
you're already seeing those disparities arise. Intermountain Health is a
non-profit organization. We're here to service our communities, and we've
(13:57):
always been dedicated to taking care of people regardless of
their ability to pay. And so we think about creating
new types of access. We've got to find a way
for clinicians to increase their panel size from 1500 to
3000 patients without absolutely destroying their lives. And when you
tell a clinician that today, there's no way that they
(14:21):
can see how they could possibly do that, they would
never have a moment of rest. And so what we're
trying to do is to say, what are the support
structures that we can build around clinicians so that they're
focused on the people who really need to be seen
that day and all the routine stuff. Let's offload that
to a system. Let's offload that to other team members
(14:41):
who can help them do that more effectively. And in
so doing, hopefully create a quality of life for our
clinicians where they can actually live their best lives while
at the same time providing appropriate access for them for
the patients we serve. One of our clients put it
in a way that was just very striking, she said.
There's not enough humans being born to take care of
(15:02):
all the humans that need to be taking care of
or something along those lines, right? Speaking to the upcoming
demographic challenge, I like how you characterize it because you
essentially get rid of unnecessary appointments, if you will, offload
the routine that doesn't need to be done, allow doctors
to increase their panel size and as part of the solve,
there's a nice pivot there. So I want to talk
(15:23):
about the intermountain people and the culture. And my observation
would be that a lot of my clients, a lot
of people look to Intermountain Health Care and say, how
can we be that? How can we be the mountain
of the Northeast or the Southwest or whatever the region
is they're talking about? And in some ways they all
have the same access to the capital markets. They all
have access to talent, right? Sometimes people move around and stuff,
(15:46):
but there's probably answers to what makes Intermountain or Mountain
to go beyond your access to talent capital. Right? Knowledge.
I've just love to hear you reflect on the Intermountain culture,
perhaps the good and bad of it. And what about
it allows you to lead this transformation going forward? I
would say no. Culture is perfect and a culture is
(16:07):
always adjusting. I love this place though, for a bunch
of different reasons, not least of which I don't think
there are more committed people to the mission of helping
people about the as long as possible. And what we
you see that every day. And in fact, when we
survey our people, that is the motivation. People come because
they want to be part of that. And so we've
(16:29):
got almost 60,000 caregivers. We call everybody caregivers. We're all caregivers,
even though I don't directly touch patients, but we care.
That's really hard to build and to replicate in. And
I think the generosity of the leaders over the years,
the servant leadership approach, the let's do the right thing
for the right reason for our community has been at
(16:51):
the heart of what it amounts done for a long time.
That said, also, we've had substantial advantages a healthy population,
a significant market share. From the day we started the organization,
we were able to launch our health plan because we
had scale. We were able to invest in population health
because we had a health plan and we had scale.
(17:13):
So some of the innovations we made around clinical delivery
and around payment model reform is because we in many
ways were born on third base. And sometimes I think
we said we think we hit a triple. I think
we've done really, really well with what we've got. But
there's more to do. And what I'm concerned about is
payers just don't want to give risks to health care systems.
(17:35):
They feel like that's their job. We collect premium, we
manage the risk and then health care systems there. What
they do is they provide transactional care and we think
that that model will not work. It does not work.
It is not the right model for patients that the
(17:55):
health system's just too complex for transactional payments to ever
actually change the incentive models and really help us figure
out something new. And so Intermountain has advantages there, but
we hope to help other health systems build those advantages. Well,
I love your third your third base quip, but I
want to give you credit for something, something else, which
(18:17):
is just a willingness to take risk and not financial risk,
strategic risk and the innovativeness. Right. That has led to
all the things you've talked about. And one thing I
want to pivot to, which is civic risks, right? So
when you and I spoke, you know, last I am
free at exactly that time, I think you had just
announced it or was a relatively new venture. Love for
(18:39):
you just to reflect on how that came to be
and where it's going and how it fits into the
Intermountain kind of view of helping people in their healthiest lives. Yeah,
if I look, I could talk all day about Civic.
I will talk. I do want to say one thing.
Intermountain has a lot of values and be more an
on third base doesn't score year run. There's still a
(18:59):
lot to do. And what we're trying to do is
make sure that that we're not stranded on third base,
but that we bring it home and actually deliver really
at our full potential. And we feel really fortunate and
blessed to be in the situation we were in. But
we also know that there's so much more we should
be doing and can be doing or determined to do
it right. You know, so Civic are just, you know
(19:21):
this because you've written about it. This initiative really is
an idea. I had it back in 2016. I had
been really I'm an economist, as I said at heart.
That's what I love. I love economics. And when I
watched Heather Bresch and the folks at Mylan decry the
awful situation in health care, that right that forced them
to raise the price of EpiPen by 60 500%. I
(19:44):
just found it disgusting and felt like, wait a second,
markets don't typically work that way. What's going on in
this market that allows a drug that's been on the
market for 100 years to be cornered by a company
and then they raise the price. And and that really
bothered me. And I thought, how can Congress fix that?
(20:04):
I didn't really feel that optimistic that Congress that Congress
had a desire to regulate the market. And even if
they could, Congress just has a poor history of actually
getting things right when they unleashed a new regulatory regime.
So I started thinking like, how can the market police
the market, how do we use market forces to kind
(20:24):
of police the market? So we have this idea of
essentially organizing the demand side of the equation, organize the
people who buy the drugs. And let's start a non-profit
generic drug manufacturing company. And the idea would be that
we would create essentially a nonprofit public utility model to
make drugs. And, you know, fast forward to today. We
(20:46):
launched the company four years ago last month, and we've
now treated almost 40 million patients and are making over
60 drugs. And we've organized almost 60 health systems now
involved in Civica around the country. We've also launched a
company called Civica Script, which is. A partnership with 23
large payers that cover 140 million people with a goal
(21:09):
to address drugs that are in the outpatient market or
the retail space drugs like insulin. And it's just been
a fun collaboration. We've organized large chunks of the industry.
We just announced that we are making three molecules of
insulin and that will bring those insulin molecules to the
market in 2024 and and hopefully dramatically reduce the cost
(21:30):
burden of diabetes. And so we're excited what's going on there. And,
you know, happy to dive deeper as you'd like to. Yeah,
on the diabetes one in particular, because that's, I think
the newest news, or at least the newest is that
I've been aware of. You know, it's one to your point,
Congress has been wrestling with and addressing even over the
summer and there are some back and forth. And in
the end, you couldn't get to any resolution on solving
(21:51):
the problem. So to your point, you're taking action where
driving action, where the government so far has has failed
to do so. So that's more of a supply side issue. Right.
I'm just curious, the role of Civica in terms of,
you know, its role in the market. You are you
are both University of Chicago guys. So we both kind
of think the same way. And demand and supply curves
(22:12):
is the ultimate kind of goal to change the behavior
of market participant other market participants, or do you long
term want to be in the business of manufacturing medicines?
We looked to early on and said, if we don't
make the medicines, you can't move the market. You've got
to have the credibility to move them, the medicines to
move the market. And so, yeah, we said we think
you have to do that. Know, it's interesting, economists will
(22:35):
tell you the reason why these markets consolidate with drugs
is there are three reasons. One, there's inelastic demand for
the drug mean if you need insulin and you don't
have it, you die or epinephrine. If your kid brushes
up against a peanut and they're in anaphylaxis, you don't
have epinephrine, your kid dies in front of you. And
so people will pay whatever it takes to live. So
(22:59):
you have almost a perfectly vertical demand curve, right? Then
there are huge economies of scale. Manufacturing takes you millions
and millions of dollars to develop insulin to get the
formula to set up the production. But your first dose costs,
you know, maybe a couple of dollars to make. And
so you've got to spread your millions of dollars of
investment over volume. But one thing I think people don't
(23:21):
realize with drugs, there's not room for four or five
or six manufacturers in a market. In a competitive market,
you've got to have multiple competitors from IS with drugs.
If you had five competitors, in some case you have
five times the production capacity you need in a market
because one production line can meet the entire market demand.
And so what happens is people leave the market, the
(23:42):
price becomes unstable, and then they leave, and then they
leave one or two manufacturers in place. And those people
those people essentially on a perfect market, you know, you
can charge what you want and you can essentially tax
anybody who has the disease you're trying to treat. And
so what we thought was we can try to stimulate
a lot more competition by bringing multiple players in the market.
(24:05):
That would make sense because they would probably never get
to the right price because, again, you're trying to spread
five times the capacity or a set amount of volume
instead of like so like you double the production of insulin,
people are going to use twice as much. They're not.
So what we thought was you can either have five
manufacturers or you could have one honest one. And that's
(24:26):
why it was so important to come into the nonprofit
to say, look, there's no way to make money here.
The whole goal is to make just enough money for
us to stay in the market, but there's no dividends
to anybody. But if we can bring one additional honest competitor,
we can start moving the market price. And that's what
we've done with Civica. And so that's why it's so
(24:46):
important to be a nonprofit. That's why it's so important
to actually be focused on a mission of making sure
that essential drugs are available and affordable to everyone. And
what's important about Civica Jef, is that we do not
focus on market share. We focus on market impact, what's
happening to the price and availability of drugs. And if
the market's performing well, we won't make the product. But
(25:09):
we're the market is broken and it's a drug that's
critical and where we feel like people are getting ripped off,
that's where Civic will enter to regulate through a private
market mechanism, the abuses of that market. And so I
watch it. It is hard enough to have diabetes. But
to add on top of that, exploitive pricing made me mad.
(25:29):
And so when I came up with this idea and
it kind of came to me and I just thought
one day we're going to make insulin. And I found
guys like Clay Christianson. You know, my first conversation with Clay,
as you said, Dan, he pulled out his vial of
insulin and said, let's make insulin one day. And so,
you know, for me, that's the return. That's the return.
That's enough for me just feeling like that. Maybe we
(25:51):
can change some lives. And and I think sometimes people
think that markets are only about making money, but you
can have market mechanisms to do good and to generate
different types of returns. And that's frankly, the return that I.
Who are interested. How can I help a bunch of
people that mean something to me personally? And I'm motivated
by it. So, yeah, it's fun. We're on our way
(26:12):
and we hope to bring the price of insulin down
by more by around 90%. Very powerful, I think. I
think I'm going to leave it there. You just said
it beautifully. So thank you for that. Dan, it was
great having you. I always enjoy our conversations. Thanks for
covering it. But what I hope in telling these stories
is that maybe somebody also have a good idea that
they're inspired by and they go run with. And that's
(26:33):
that's worth spending the time talking about this stuff. It's
not often you get to have an idea and then
see it come about and actually, you know, watch it
come true. It's been it's been a dream come true
for me that if if this helps inspire maybe other
people to solve other problems, I mean, that's that's how
the industry is going to have to change. Well, and
you and I both had a good day, if we
(26:53):
can do that. Yeah. Thanks, man. Good to see you.
S1 (27:01):
And. Thanks for listening to Prophets Health Care Transformers Podcast.
This podcast is produced by Jared Johnson and his wonderful
team at Shift Forward Health, and a big thank you
to our hosts, Priya Aneja, Lindsay Mosby, Paul Shrimpf and
Jeff Gourdji. If you like today's episode, you can find
more great content like this Prophet dot com slash thinking.
(27:23):
I'm Anna Kuno, the senior editor of this podcast. Thank you
for listening.
Hello, welcome to Profits Health Care Transformers podcast, where we'll
be talking to leaders in health care who are focused
on transforming their organizations to drive the next level of
growth for their business and for health care. Hosted by
Priya Aneja, Lindsay Moseby, Paul Schrimpf and Jeff Gourdji. Transformation
is one of those terms that has a lot of
(00:28):
layers to it. Sometimes it's about innovation, sometimes it's about
shifting the way you do business. Sometimes it's to your
overall operating model and other times it's to a specific
department or function. It's also about people helping them navigate
the discomfort that comes with change, but also motivating them
to engage in the journey of transformation from the CEO
(00:51):
to the newest employee. It's a journey, and that's why
we created this podcast to break down this multidimensional, dynamic
topic of transformation one story at a time. Are you
ready to dive in?
S2 (01:07):
Welcome to the podcast. This is Jeff Gourdji. I'm going
to host this edition. Happy to have with me Daniel Inquest,
who is the chief strategy officer for Inner Mountain Health
and also the board chair of Civica Rx . And we'll
talk about both those topics. Dan, it's great to have
you with us and good to be with you. Thanks
for the invitation. So, Dan, give us a little bit
(01:28):
and give those listening a brief introduction to who you are,
how you came to the role, and maybe tell us
one fun personal fact that is not either well-known or
on your LinkedIn profile or something else like that. Yeah.
So I've been with Intermountain Health for coming up on
ten years. My background is pretty varied. I'm an attorney
(01:48):
by training, but I launched my career with Bain Consulting
and spent time in the Fortune 500 world, had my
own company and built it and sold it, served in
the Utah State Senate, ran for the US Senate, got
absolutely destroyed by Senator Orrin Hatch, and found Intermountain Health
Care about ten years ago. And I've loved being here.
I currently serve as the chief strategy officer, been in
(02:11):
this role about four and a half years and it's
a great place to be. So fun facts for me. Gosh,
I do Spartan races with my boys. These are obstacle
course races that you see out there and they kind
of beat you up. I've done 16 of them. I've
got a couple more this year and it's more just
about getting through it than competing. Really. I'm not very fast,
(02:33):
but I love doing them. That is a fun fact.
The fact that you served in the in the that
worked in politics and served as a state senator is
also kind of a fun fact. And sometime in a
different conversation, you know, we'll talk about our either shared
love or shared hatred of politics, but that's not today's topic.
So but again, thank you for being here and good
to have you. So, Daniel, I had the privilege of
having a few conversations over the years at various stages
(02:56):
of the kind of work that we've done and writing
the book I wrote several years ago that you were
a part of just very recently the organization that changed
its name or announced its intention to change its name
from Intermountain Health Care to Intermountain Health. I would love
just to hear about the state of Intermountain Health Transformation
and whether the name is, in fact, the signal to
the marketplace that you're ready to be a new type
(03:19):
of health care player and engage people in their health
in a different way than you ever have. But Jeff
Intermountain has been focused on has been focused on value
based care for decades. And in fact, our mission statement
is helping people live the healthiest lives possible. And to us,
the best expression of that mission is when we take
full clinical and financial accountability for the health of the
(03:42):
people we serve. The company was launched in 1975 when
the Church of Jesus Christ of Latter Day Saints donated
15 hospitals to the community, and Intermountain Healthcare started at
that point. But we've really been focused on health for
quite some time, and this recent name change just turn
into Intermountain Health is natural to us and really speaks
(04:03):
to our aspirations, something that we've been working to do
for a long time, and that is keep people well
and when they need our care, you give them the safest,
highest quality, most cost effective care possible so they can
get back to their regular lives. And and that's the
role we think, and that's that's the role that health
systems should play with our patients, with our communities. So
(04:26):
a first for so many health systems, the barrier to
providing health and treating health rather than health care is the,
you know, the reimbursement model and has been the way
they're paid. And that not only doesn't rewards you for
keeping people healthy, it actually in some ways punishes you
with less services. Tell us about and tell kind of
those listening about the why that's not a barrier for
(04:47):
Intermountain or how you overcome the barrier toward being actually
a health provider, not just a health care provider, but
just health care financing in this country is really exacerbating
the problems we're seeing access problems, quality problems. We're paid
transactional as an organization. Most of our health care organizations
are paid transactional. It's it's you do a service, you
(05:09):
bill for the service, you get paid for the service.
In that model, the incentives are really lined up to
to treat patients transactional. You can't actually afford to move
upstream to help somebody avoid developing type two diabetes, to
help them avoid developing the complications of other types of
disease or, you know, to actually manage that disease. It's really,
(05:34):
really difficult to do. And in fact, it's it's totally
unaffordable for most health systems when they're paid just on
a per widget basis. And that's just not not effective.
One of the reasons, the advantages that Intermountain has is
that we have our own health plan. We like we
launched in the eighties called Select Health and working very
closely with our integrated delivery system and with Sawtelle, we
(05:57):
were able to change and rewire those incentives so that
we're focused on keeping people well. We actually work with
multiple payers health insurance. Companies aren't fully capitated arrangements where
we receive essentially an upfront payment and then we work
to keep people well underneath that payment. So we are
of our $14 billion or so in revenue as an organization,
(06:18):
roughly 5 billion is for capitated. We we have love
to get to the point where where it's 100% capitated
and we're working towards that now. But we believe that
that the payment model and mechanism where you get what
you pay for right now we're paying for transactional medicine
in this country and we get transactional care and that
(06:38):
does not help people live their healthiest lives. And so
we're focused on changing that model and want to lead.
And frankly, I also think that that's one of the
reasons why health care are so unaffordable, is that the
big problems that cause the big expenses for health care
are problems that develop over many years and then health systems,
(06:59):
and they're stepping in at the very last to when
when the problems are most acute and when the interventions
are the most expensive. And we just think that's the
wrong model and are working towards something new. So once
you shift the payment model right as you have as
you've started to do, then that enables you to do
all kinds of different things. What are some of the
(07:20):
kind of newest innovative things you're doing perhaps since we
last spoke to and put it, putting aside, you know,
specifically as a kind of delivery of care that you're doing,
whether it's addressing social determinants of health, whether it's kind
of wrapping your arms around patients in ways that are nontraditional. Well, Jeff,
we're working to build a system patient relationship. And traditionally
(07:41):
we've asked our customers, our patients, when they get sick
to dig through their to their wallet and find their
insurance card and start making phone calls. And frankly, the
market is so confusing to people that they don't know
what to do. And so it's usually they're calling a
doctor friend. They know and that doctor to know exactly
what to do. And so they get shunted around and
kind of grope their way through the system. And what
(08:04):
we're working on is with the new payment model, by
being prepaid, we can start rewiring how health care delivery
is done. And we want people as much as possible
to self triage self self-treat they have a curated experience
where they're guided in that process and when they need
to talk to a provider, making sure that they have
(08:26):
immediate access to that provider, that a doctor or clinician
to get the care that they need. And several things.
We're doing this in a model where you're prepaid, where
we rewiring how clinicians do their work and they manage
their practices. So give me an example. Right now, most
doctors show up and go to work every day and think, okay,
who's on my schedule today? And they look and they've
(08:48):
got 30 patients on their schedule, and those patients may
or may not need to be seen that day. What
we're now working to do is have our clinicians practice
in panels and instead of looking at their schedule and saying,
Who's on my schedules today, we want them asking who
should be on my schedule today, who didn't pick up
their medications, who pinged the emergency department last night? What's
(09:11):
going on with my panel of patients? 10% of the
patients in this country generate 83% of our costs. And
so if you're really trying to manage costs, you better
know what those 10% are doing. I'll just give you
an example of some of the things we're working on there.
So chronic obstructive pulmonary disorder or COPD affects a lot
(09:31):
of our patients, particularly our elderly patients. And when you're
having an episode and you can't breathe, oftentimes you're rushing
to the emergency room. And what we found is for most,
most of our patients, they can actually effectively manage at
a clinic with their doctor. And so in these environments
where where we've kind of reimagined how primary care will
(09:54):
work when a patient shows up in emergency department with COPD,
we're immediately notified, the clinics are immediately notified. What happens
is they're able to call the emergency department and have
that patient, instead of admitted to the hospital, be discharged
to the care of the primary care provider, which is
much more efficient, much less expensive way to go. And
(10:16):
that allows that patients be really effectively coordinated care. We
found that we're able to intervene before really high costs
interventions occur in a hospital just because of awareness and
how we're organizing our our clinical models. And that's just
one example. You know, we're also working on personalized medicine,
sequencing the genomes of our patients so that we can
(10:38):
tailor customized, you know, really care process models, care plans
for those patients. So if we want to know, for example,
if people are carrying the BRCA1 gene, which gives you
a markedly higher risk of breast cancer so we can
actually tailor your lifetime care plan to you, and that
requires awareness, investment, longitudinal care models and a longitudinal relationship
(11:03):
with the patient. And so. Those are the things we're
working on, believing that, hey, let's if we get better
and better at this, instead of having a large, opaque,
difficult to use health care environment, we can give a
very tailored, direct, easy to use customizable experience for our patients.
And we have those experience in every other industry. We
(11:26):
just don't have them in health care. And so that's
what we're working on. So, Dana, I'm struck by your
your two examples are around, you know, the doctor asking
who should be on my schedule. And it was one
thing I picked up in your first example and the
other in this second example was the idea, the need
for longitudinal relationships. What does it all mean for the
doctor patient relationship, if anything? Does it mean that for
(11:47):
a doctor to say, rather than here's the 30 patients
I have, who should I be seeing? Does it mean
they need to have less patients on their schedule and
create more flexibility? Or does it mean Dr. need to
work in teams so they can kind of triage and
pass people around? Who needs to see who. Which could
obviously have implications for the doctor patient relationship. Does the
longitudinal relationship remain with the patient or is it transferred
(12:07):
to the system? Listen, we want to create deep personal
relationships with our patients. And health care is so complex now. Oftentimes,
patients have multiple clinician relationships and none of that is
tied together. And so if you're managing a chronic disease,
you have a relationship with your specialist, often your primary
(12:29):
care doctor, your pharmacist. There are whole teams of people
already involved in your care. They're just not particularly well coordinated.
But I don't think people wake up every day and say,
The first person I'm excited to see is my doctor.
I do think they want to have a trusted relationship.
And the simple fact is. JF Over the next decade,
and we've been really worried about this. If transactional medicine
(12:52):
is the model we're going to carry into the future.
Meaning a single doctor, single patient come in and see
the doctor generate a bill. There is no way that
we can train enough doctors to handle the demand is coming.
We are going to be short 55,000 doctors in 2030
and you're already seeing those challenges. Today. We have 10,000
(13:12):
people a day aging into Medicare. You have 25,000 primary
care doctors have the age of 65 who are going
to be retiring. There's not enough backfill to continue to
service the demand. So what we're very concerned, concerned about now,
about economists at heart, you know, if you have a
shift to the right in the demand curve and the
amount of demand, and that's what you're seeing, a significant
(13:34):
increase in demand for services. At the same time, the
supply curve is shifting to the left. Jeff, you know
what happens if you have a much higher equilibrium price?
And what that means is that people have means will
be able to afford doctors and those without want. And
you're already seeing those disparities arise. Intermountain Health is a
non-profit organization. We're here to service our communities, and we've
(13:57):
always been dedicated to taking care of people regardless of
their ability to pay. And so we think about creating
new types of access. We've got to find a way
for clinicians to increase their panel size from 1500 to
3000 patients without absolutely destroying their lives. And when you
tell a clinician that today, there's no way that they
(14:21):
can see how they could possibly do that, they would
never have a moment of rest. And so what we're
trying to do is to say, what are the support
structures that we can build around clinicians so that they're
focused on the people who really need to be seen
that day and all the routine stuff. Let's offload that
to a system. Let's offload that to other team members
(14:41):
who can help them do that more effectively. And in
so doing, hopefully create a quality of life for our
clinicians where they can actually live their best lives while
at the same time providing appropriate access for them for
the patients we serve. One of our clients put it
in a way that was just very striking, she said.
There's not enough humans being born to take care of
(15:02):
all the humans that need to be taking care of
or something along those lines, right? Speaking to the upcoming
demographic challenge, I like how you characterize it because you
essentially get rid of unnecessary appointments, if you will, offload
the routine that doesn't need to be done, allow doctors
to increase their panel size and as part of the solve,
there's a nice pivot there. So I want to talk
(15:23):
about the intermountain people and the culture. And my observation
would be that a lot of my clients, a lot
of people look to Intermountain Health Care and say, how
can we be that? How can we be the mountain
of the Northeast or the Southwest or whatever the region
is they're talking about? And in some ways they all
have the same access to the capital markets. They all
have access to talent, right? Sometimes people move around and stuff,
(15:46):
but there's probably answers to what makes Intermountain or Mountain
to go beyond your access to talent capital. Right? Knowledge.
I've just love to hear you reflect on the Intermountain culture,
perhaps the good and bad of it. And what about
it allows you to lead this transformation going forward? I
would say no. Culture is perfect and a culture is
(16:07):
always adjusting. I love this place though, for a bunch
of different reasons, not least of which I don't think
there are more committed people to the mission of helping
people about the as long as possible. And what we
you see that every day. And in fact, when we
survey our people, that is the motivation. People come because
they want to be part of that. And so we've
(16:29):
got almost 60,000 caregivers. We call everybody caregivers. We're all caregivers,
even though I don't directly touch patients, but we care.
That's really hard to build and to replicate in. And
I think the generosity of the leaders over the years,
the servant leadership approach, the let's do the right thing
for the right reason for our community has been at
(16:51):
the heart of what it amounts done for a long time.
That said, also, we've had substantial advantages a healthy population,
a significant market share. From the day we started the organization,
we were able to launch our health plan because we
had scale. We were able to invest in population health
because we had a health plan and we had scale.
(17:13):
So some of the innovations we made around clinical delivery
and around payment model reform is because we in many
ways were born on third base. And sometimes I think
we said we think we hit a triple. I think
we've done really, really well with what we've got. But
there's more to do. And what I'm concerned about is
payers just don't want to give risks to health care systems.
(17:35):
They feel like that's their job. We collect premium, we
manage the risk and then health care systems there. What
they do is they provide transactional care and we think
that that model will not work. It does not work.
It is not the right model for patients that the
(17:55):
health system's just too complex for transactional payments to ever
actually change the incentive models and really help us figure
out something new. And so Intermountain has advantages there, but
we hope to help other health systems build those advantages. Well,
I love your third your third base quip, but I
want to give you credit for something, something else, which
(18:17):
is just a willingness to take risk and not financial risk,
strategic risk and the innovativeness. Right. That has led to
all the things you've talked about. And one thing I
want to pivot to, which is civic risks, right? So
when you and I spoke, you know, last I am
free at exactly that time, I think you had just
announced it or was a relatively new venture. Love for
(18:39):
you just to reflect on how that came to be
and where it's going and how it fits into the
Intermountain kind of view of helping people in their healthiest lives. Yeah,
if I look, I could talk all day about Civic.
I will talk. I do want to say one thing.
Intermountain has a lot of values and be more an
on third base doesn't score year run. There's still a
(18:59):
lot to do. And what we're trying to do is
make sure that that we're not stranded on third base,
but that we bring it home and actually deliver really
at our full potential. And we feel really fortunate and
blessed to be in the situation we were in. But
we also know that there's so much more we should
be doing and can be doing or determined to do
it right. You know, so Civic are just, you know
(19:21):
this because you've written about it. This initiative really is
an idea. I had it back in 2016. I had
been really I'm an economist, as I said at heart.
That's what I love. I love economics. And when I
watched Heather Bresch and the folks at Mylan decry the
awful situation in health care, that right that forced them
to raise the price of EpiPen by 60 500%. I
(19:44):
just found it disgusting and felt like, wait a second,
markets don't typically work that way. What's going on in
this market that allows a drug that's been on the
market for 100 years to be cornered by a company
and then they raise the price. And and that really
bothered me. And I thought, how can Congress fix that?
(20:04):
I didn't really feel that optimistic that Congress that Congress
had a desire to regulate the market. And even if
they could, Congress just has a poor history of actually
getting things right when they unleashed a new regulatory regime.
So I started thinking like, how can the market police
the market, how do we use market forces to kind
(20:24):
of police the market? So we have this idea of
essentially organizing the demand side of the equation, organize the
people who buy the drugs. And let's start a non-profit
generic drug manufacturing company. And the idea would be that
we would create essentially a nonprofit public utility model to
make drugs. And, you know, fast forward to today. We
(20:46):
launched the company four years ago last month, and we've
now treated almost 40 million patients and are making over
60 drugs. And we've organized almost 60 health systems now
involved in Civica around the country. We've also launched a
company called Civica Script, which is. A partnership with 23
large payers that cover 140 million people with a goal
(21:09):
to address drugs that are in the outpatient market or
the retail space drugs like insulin. And it's just been
a fun collaboration. We've organized large chunks of the industry.
We just announced that we are making three molecules of
insulin and that will bring those insulin molecules to the
market in 2024 and and hopefully dramatically reduce the cost
(21:30):
burden of diabetes. And so we're excited what's going on there. And,
you know, happy to dive deeper as you'd like to. Yeah,
on the diabetes one in particular, because that's, I think
the newest news, or at least the newest is that
I've been aware of. You know, it's one to your point,
Congress has been wrestling with and addressing even over the
summer and there are some back and forth. And in
the end, you couldn't get to any resolution on solving
(21:51):
the problem. So to your point, you're taking action where
driving action, where the government so far has has failed
to do so. So that's more of a supply side issue. Right.
I'm just curious, the role of Civica in terms of,
you know, its role in the market. You are you
are both University of Chicago guys. So we both kind
of think the same way. And demand and supply curves
(22:12):
is the ultimate kind of goal to change the behavior
of market participant other market participants, or do you long
term want to be in the business of manufacturing medicines?
We looked to early on and said, if we don't
make the medicines, you can't move the market. You've got
to have the credibility to move them, the medicines to
move the market. And so, yeah, we said we think
you have to do that. Know, it's interesting, economists will
(22:35):
tell you the reason why these markets consolidate with drugs
is there are three reasons. One, there's inelastic demand for
the drug mean if you need insulin and you don't
have it, you die or epinephrine. If your kid brushes
up against a peanut and they're in anaphylaxis, you don't
have epinephrine, your kid dies in front of you. And
so people will pay whatever it takes to live. So
(22:59):
you have almost a perfectly vertical demand curve, right? Then
there are huge economies of scale. Manufacturing takes you millions
and millions of dollars to develop insulin to get the
formula to set up the production. But your first dose costs,
you know, maybe a couple of dollars to make. And
so you've got to spread your millions of dollars of
investment over volume. But one thing I think people don't
(23:21):
realize with drugs, there's not room for four or five
or six manufacturers in a market. In a competitive market,
you've got to have multiple competitors from IS with drugs.
If you had five competitors, in some case you have
five times the production capacity you need in a market
because one production line can meet the entire market demand.
And so what happens is people leave the market, the
(23:42):
price becomes unstable, and then they leave, and then they
leave one or two manufacturers in place. And those people
those people essentially on a perfect market, you know, you
can charge what you want and you can essentially tax
anybody who has the disease you're trying to treat. And
so what we thought was we can try to stimulate
a lot more competition by bringing multiple players in the market.
(24:05):
That would make sense because they would probably never get
to the right price because, again, you're trying to spread
five times the capacity or a set amount of volume
instead of like so like you double the production of insulin,
people are going to use twice as much. They're not.
So what we thought was you can either have five
manufacturers or you could have one honest one. And that's
(24:26):
why it was so important to come into the nonprofit
to say, look, there's no way to make money here.
The whole goal is to make just enough money for
us to stay in the market, but there's no dividends
to anybody. But if we can bring one additional honest competitor,
we can start moving the market price. And that's what
we've done with Civica. And so that's why it's so
(24:46):
important to be a nonprofit. That's why it's so important
to actually be focused on a mission of making sure
that essential drugs are available and affordable to everyone. And
what's important about Civica Jef, is that we do not
focus on market share. We focus on market impact, what's
happening to the price and availability of drugs. And if
the market's performing well, we won't make the product. But
(25:09):
we're the market is broken and it's a drug that's
critical and where we feel like people are getting ripped off,
that's where Civic will enter to regulate through a private
market mechanism, the abuses of that market. And so I
watch it. It is hard enough to have diabetes. But
to add on top of that, exploitive pricing made me mad.
(25:29):
And so when I came up with this idea and
it kind of came to me and I just thought
one day we're going to make insulin. And I found
guys like Clay Christianson. You know, my first conversation with Clay,
as you said, Dan, he pulled out his vial of
insulin and said, let's make insulin one day. And so,
you know, for me, that's the return. That's the return.
That's enough for me just feeling like that. Maybe we
(25:51):
can change some lives. And and I think sometimes people
think that markets are only about making money, but you
can have market mechanisms to do good and to generate
different types of returns. And that's frankly, the return that I.
Who are interested. How can I help a bunch of
people that mean something to me personally? And I'm motivated
by it. So, yeah, it's fun. We're on our way
(26:12):
and we hope to bring the price of insulin down
by more by around 90%. Very powerful, I think. I
think I'm going to leave it there. You just said
it beautifully. So thank you for that. Dan, it was
great having you. I always enjoy our conversations. Thanks for
covering it. But what I hope in telling these stories
is that maybe somebody also have a good idea that
they're inspired by and they go run with. And that's
(26:33):
that's worth spending the time talking about this stuff. It's
not often you get to have an idea and then
see it come about and actually, you know, watch it
come true. It's been it's been a dream come true
for me that if if this helps inspire maybe other
people to solve other problems, I mean, that's that's how
the industry is going to have to change. Well, and
you and I both had a good day, if we
(26:53):
can do that. Yeah. Thanks, man. Good to see you.
S1 (27:01):
And. Thanks for listening to Prophets Health Care Transformers Podcast.
This podcast is produced by Jared Johnson and his wonderful
team at Shift Forward Health, and a big thank you
to our hosts, Priya Aneja, Lindsay Mosby, Paul Shrimpf and
Jeff Gourdji. If you like today's episode, you can find
more great content like this Prophet dot com slash thinking.
(27:23):
I'm Anna Kuno, the senior editor of this podcast. Thank you
for listening.
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