Balancing Mission and Margin in Healthcare: A Candid Conversation with Dr. Ben Schwartz
In this episode, host Stacey Richter engages in a deep dive with Dr. Ben Schwartz to explore the phrase 'No Margin, No Mission' and its practical implications in the healthcare industry.
They discuss the complex relationship between profitability and mission-driven care, the challenges of value-based care, and the role of dyad leadership. The episode emphasizes the importance of transparency, regulatory measures, and trust in fostering a balance between mission and margin. Along the way, Dr. Schwartz shares insights from his new role at Commons Clinic and addresses broader systemic issues like regulatory capture and the subjective nature of defining value in healthcare.
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08:50 Sister Irene Kraus and the origin of no margin, no mission.
10:01 Margin and mission versus profit and profiteering.
12:45 Stacey’s manifesto (EP400).
13:01 What is the broad mission within healthcare?
14:12 What is mission drift within healthcare?
15:54 EP474 with Yashaswini Singh, PhD.
17:26 Why do we struggle with balancing margin and mission?
20:47 EP455 with Beau Raymond, MD.
20:52 How does value vary?
23:18 EP326 with Rishi Wadhera, MD, MPP.
23:53 What needs to happen to balance margin with mission?
28:29 Why does everything come down to trust?
28:33 EP391 with Scott Conard, MD.
30:30 EP419 with Andreas Mang.
32:21 What are the “vectors of change” to create balance between mission and margin?
32:43 EP475 with Peter Hayes.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Episode 481.
"Seriously, IRL, What Does No Margin,No Mission Even Mean?" That is the
question I ask Dr. Ben Schwartz.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:26):
Relentlessly Seeking Value.
Last week I announced I wason a tear to really get to the
bottom of no margin, no mission.
How do we in real life operationalizethese very sort of inspirational,
but kind of vague words.
This conversation is largely megrilling Dr. Ben Schwartz on what no
(00:46):
margin, no mission means to him, andhow do you systematically pull it off?
So, yeah, real softball kind of question.
I'm joking, which is why I couldnot have been more appreciative
of Dr. Ben Schwartz for taking onthis challenge and coming back on
Relentless Health Value to discuss.
Because here's the thing.
If you wanna do a startup or you wannado something in healthcare involving
(01:10):
mission and margin, it is often conceivedthat the more mission, the less margin.
This trade off is more likelygoing to be true when there are
perverse incentives such as stufflike the sicker the population is,
the more money everybody makes.
From provider organizations to carriersto PBMs and yeah, pharma to even
(01:31):
brokers, consultants who are often paida percentage of, in air quotes, shared
savings or get a little kicker for everyprescription written, like how common
apparently it is for some big PBMs topay employee benefit consultants for
every single script that gets written.
Something like, what, $7, hypothetically.
(01:52):
But back to shared savings.
You know, never forget sharedsavings go up when trend goes up.
Rebates go up when list prices go up.
This is always true.
Of course there is theHippocratic Oath for sure.
But as far as laws go, the onlymaybe structural or legal framework
around mission that I could findanyway is fiduciary responsibility.
(02:12):
And you know, the only entity withfiduciary responsibility, to patients or
members, plan sponsors, ? No, the boardsof nonprofit health systems don't have
fiduciary responsibility to patients.
Not TPAs or ASO leaders as far as mostcourts seems to have determined so far.
Not PBMs.
None of these entities has any legalobligation to patients, members,
(02:37):
or the communities they serve.
Dave Karlander was talkingabout this recently.
Any health system or any of themtalking about fiduciary responsibility,
legally, what that means is aresponsibility to margin it up for
better or for worse, even as a nonprofit.
And so mission and margin only traveltogether if someone is creative,
(02:58):
innovative, knowledgeable, dedicated,and has enough energy to force these
two terms to align amidst a whole lot ofcountervailing industry norms, policies,
shareholder fiduciary interests, andjust some deeply ingrained culture.
I really liked how Anthony Stanowskiput it in a recent Modern Healthcare
(03:19):
article he wrote, "We often hearthe phrase, "No margin, no mission".
And it's true, a system without financialviability cannot sustain itself.
But the reverse is also true withoutmission margin devolves into a utilitarian
calculation of which procedures yieldthe highest returns, or which population
segment is most important to attract."
(03:40):
Link in the show notes.
So with all that said, here'swhat I'm up to, listeners.
This is going to be a series wherewe talk about achieving mission
success and if and or how mission canfit into any given business model.
Especially business models thatwe talk so often about on this
podcast, which could be labeled as.
(04:03):
Not so good.
Not so good for keeping patientsor people who really don't want
to become patients, healthy.
So what I'm gonna do periodically isinvite guests to come on Relentless Health
Value to have this conversation with me.
This started with the showlast week with Dr. John Lee.
I really wanna pick a few of yourbig brains about what it takes to get
(04:25):
ourselves so situated as a businessor as an industry or an ecosystem so
that those who are able to balancemission and margin come out as winners?
That is my goal.
Okay.
I wanna talk about a complication now.
A complication that is evenmore deep rooted than the whole
perverse incentives thing.
What's even below that?
Because why is it, you know, that CharlieMunger quote, Warren Buffett's partner,
(04:49):
who've famously said, "Show me anincentive and I'll show you an outcome".
Why is that even true in the first place?
It's not like, if there's anincentive, then I must act in
accordance to that incentive.
Where does this come from, that ifthere's a perverse incentive that
the outcomes then are also perverse.
And this might be TMI philosophical,but yeah, here we are.
(05:11):
So let's just go there for 45 seconds.
Why don't we.
So it's important I think, to recognizethat monetary success is the bedrock
of a lot of people's self-esteem.
I just listened to Scott Galloway,who's an interesting cat.
He has a podcast, he's got severalpodcasts, but, in one of them, and
I will link to it in the show notes.
He went on at some length abouthow we so often measure, again, our
(05:36):
self-worth by our literal worth.
Like every dollar we put in ourpocket is like a quantitative increase
in our value as a human being.
And Scott Galloway continues.
Few people, even billionaires,feel they have enough money.
This thought really stuck with me andI've been thinking about it for a week.
(05:56):
Just in terms of what this meansfor healthcare in this country.
You know, if our basic value system istied to increasing our net worth, and we
often think that's okay, even if it comesat the expense of personal relationships
or our own health, but also if thebusiness is a healthcare business, me
self enriching in profiteering ways willnegatively impact other people's health.
(06:19):
But margin has become a cultural norm.
. Hi, I am Keith Passwater, CEO of Havarti Risk.
Relentless Health Value hasconsistently challenged the way I
think about the business of healthcare.
The conversations are smart,relevant, and grounded in the
realities we face every day.
If you're as passionate about drivingmeaningful change in healthcare
as I am, I really encourage you tofollow Relentless Health Value on
(06:41):
LinkedIn and join the conversation.
Thanks for listening.
Alright, massive spoiler alert.
So if you don't wanna hear this, skipahead, but I just need to give you a heads
up of my big, holy smokes, blew my brainmoment of reckoning that cropped up in
this conversation with Dr. Ben Schwartz.
(07:02):
And it became so clear towards the end.
Where this conversation windsup is we circle the whole
way back from wence we came.
"Trust".
That if you want to trust that no mission,no margin is gonna wind up in a place
that you can trust, then you have totrust the person who is making that call.
(07:22):
Do listen to this episode, eventhough I just ruined the suspense,
but hey, that's what I do.
And with that, here's myconversation with Dr. Ben Schwartz.
Read his bio on the website.
He just got a brand new job at CommonsClinic, his new job is not being
an orthopedic surgeon full-time.
He will be SVP Care Services andStrategy over there at Commons Clinic.
My name is Stacey Richter.
(07:43):
This podcast is sponsoredby Aventria Health Group.
Ben Schwartz, MD, welcome backto Relentless Health Value.
Thanks for having me.
It's an honor to make a return appearance.
I wanna talk to you about no margin,no mission, which is a catchphrase.
As a physician, what do you thinkabout when you think about this?
This phrase, no margin, no mission.
(08:05):
No margin, no mission.
People may not realize is itactually originated in healthcare.
It's attributed to SisterIrene Kraus, who was a nun.
She was head of a health system.
And I think the phrase has gottensometimes taken out of context and a lot
of people think about it from Jeff Bezos'scontext of your margin is my mission.
(08:25):
The spirit of the quote is really, if youdon't make money, then you can't fulfill
your mission of taking care of patients.
So if I'm an orthopedic surgeon andI don't make money doing surgeries,
I can't support a practice.
I can't do surgeries andtake care of patients.
If I'm manufacturing a drug, if I'm ahospital, you know, admitting patients.
Anybody that has a viable businesshas to make some margin in
(08:47):
healthcare is no different there.
This statement in any other contextbesides like one that assumes affording
the mission is the North Star.
Yeah.
Opens, misinterpretation.
It doesn't necessarily mean that ithas to be a negative thing or a bad
thing, but the spirit of it is, inorder to fulfill healthcare mission,
(09:07):
you have to be able to have a viablebusiness to take care of patients.
Yeah.
I believe over the years, your marginhas become my mission, which is how
Jeff Bezos adopted that to his ownuses, but maybe enough individuals in
healthcare have kind of tapped intothat same ethos and sort of transformed
(09:28):
that statement into, I don't know,is it a rhetorical tool to legitimize
profit extraction at some level?
Yeah, I think I think about itmore in terms of not so much
no margin, no mission, butprofit and profiteering, right?
I don't think we would blame anybody fromrunning a business wanting to make money
for delivering a product to service,whether it's healthcare or something else.
(09:52):
The question becomes, where do you tipover from getting paid money to deliver a
service and getting paid fairly and doingsomething ethical versus profiteering
when it goes beyond your missionbecomes the margin and nothing else.
And it becomes profiteering whereyou're just looking to extract
as much money or value out of thesystem instead of creating value.
(10:14):
So to me, it's more helpful to thinkabout it less as no margin, no mission,
and more as, profit versus profiteering.
There's a lot of gray areas there as well.
You know, when does it stop beingprofit and start being profiteering?
But I think that's an easier way tothink about it as far as I'm concerned,
more so than margin versus mission.
(10:34):
I would say fair compensationfor doing the right thing.
We'll talk about this a little bitmore like how do you know when you've
tipped into the, we have an issue here.
I never really thought about thatbefore, but you probably know when
you've tipped into profiteering whenyou start doing the wrong thing.
Yeah.
Maybe you do, maybe you don't.
I mean, maybe that's part of theproblem is that it's a slippery slope
and a little bit more, and a littlebit more, and a little bit more, and
(10:56):
all of a sudden it goes from, youknow, making a fair amount of money
for delivering a service to trying toextract as much money from the system.
And it's hard to know exactlywhen that inflection point takes
place, and it can be very gradual.
We've seen that with hospital healthsystem consolidation, where over time
you consolidate more and more and more,you get more and more market power, and
all of a sudden you're able to leveragethat market power to drive up prices.
(11:20):
Where, you know, when you firststarted your mission was we're gonna
consolidate because this will allowus to deliver better care, more
integrated care, more cost effectivecare, because we are integrated.
And all of a sudden you turn around andfive, 10 years later, all you've done
is continue to increase your pricesbecause your market power has gotten
more and more to the point that youhave greater leverage to negotiate.
(11:42):
So that's, that's where that slipperyslope that you can gradually fall into.
The whole construct is very slippery,which is one reason, a big reason why I
was compelled to write my own manifestoor personal charter, which is episode 400.
But yeah, why don't we take it from thetop and start out defining terms here.
I think that would be a good wayto go, because saying words with
(12:04):
fuzzy definitions is often thevery first place that many great
ideas go flying off the tracks.
So, okay.
What do you think mission even means?
Because it might not be as self-evidentas I think we would like to believe.
I think broadly in healthcare, we canall sort of agree that the mission is
to do the right thing for the patient,take good care of patients, do it in
(12:26):
a cost-effective and high quality way.
I think that hopefully issomething we can all agree on.
Obviously that's very broad.
And when you start to dig intoit, there's a lot of different
ways to come about that.
A lot of people come into healthcare,particularly if they're outsiders.
They've had some sort of negativeexperience with the healthcare system.
They see a problem and they comein with a very idealistic way of
(12:47):
thinking about fixing that problem.
And their mission is very altruistic,and it's based on something very
tangible that they've experienced.
They might quickly realize thathealthcare as a business maybe is a
little less like other businesses.
How you make money in healthcaredoesn't always make sense.
Who's paying for healthcareversus who's the one receiving
it isn't always the same thing.
There's a lot of principal agent problems.
(13:09):
There's a lot of moral hazard, and soyou can come into healthcare with a very
altruistic mission to solve a problem.
But then you quickly realize thatit may be hard to make margin
doing that because healthcareeconomics are, are so complicated.
I think mission, I'm gonna call it missiondrift, can certainly also take place.
I loved how you put itthe last time we spoke.
(13:29):
It's a very different view, 10 feetfrom the bedside than 10,000 feet.
As you move further and further away frompatients, it becomes harder and harder to
see quickly the impact of both the missionmakes you feel good, but then also what
happens when you start to drift away fromit or maybe do things which diminish it?
Yeah, it's difficult if you haveinvestors, if you have stakeholders,
(13:53):
shareholders that expect thisbusiness to make money, and if you're
investing in that business, you expectyour investment to eventually pay
off, then you have to make margin.
And if staying on your original missiondoesn't allow you to see the margin.
The way that others expect or to haveyour business be successful or to have
the extra outcome that your investorsexpect, then that's when you start to
(14:16):
kind of drift away from the missiontowards things that maybe are better
to make money on and make margin on,but aren't aligned with that mission.
You know, we've seen that maybe with someof these virtual, mental and behavioral
health companies whose mission was,let's make something that's difficult and
expensive to access now more accessible,more cost effective for people, and that's
(14:37):
a great altruistic goal, good mission.
But all of a sudden you realize that,hey, if we prescribe medications, we've
become more of, of, you know, a pill mill.
Our margin is better.
And now we've drifted away from themission of delivering good high quality
mental behavioral healthcare towardslet's prescribe medications because
(14:57):
that's how we make money and that'show we're gonna get an exit, and that's
how we're going to sort of satisfythe margin part of the equation.
I did talk with Yashaswini Singhabout this in the show about
private equity several weeks ago.
Just how some idea that a foundercomes up with at the very beginning,
(15:18):
could be very mission focused andreally have good patient impact.
And then as time goes on, if you dohave private equity or professional
money getting in the mix, however thatlooks, it could also be, you know,
getting owned by a hospital, right?
Like there's any number of different waysthat professional money can get involved.
The fiduciary responsibility,there is to shareholders or to
(15:43):
limited partners or investors.
It's a really tricky thingwith fiduciary responsibility.
I got actually an email the otherday from Dave Karlander that the,
if we're talking about fiduciaryresponsibility, plan sponsors have
fiduciary responsibility to members.
Almost nobody else in the, ofalmost any of the other stakeholders
involved in patient care, includingthe boards of nonprofit hospitals.
(16:05):
Right?
Like they do not havefiduciary responsibility to
patients or to the community.
So as we talk about mission andas we talk about what is any sort
of legal accountability to deliverthat mission, there's very little.
Yeah, it, it's the tug of warbetween margin and mission.
How do you thread thatneedle in healthcare?
The ideal situation would be to try toalign those things as much as possible.
(16:28):
I think that's why there's been alot of interest in value-based care
as a way to sort of bring missionand margin into greater alignment.
The problem is, what people havefound is that maintaining margin and
value-based care is more difficult,and if you have this sort of bailout
back to the traditional fee for servicesystem where your margin is more
predictable, it's more achievable thana fuzzier value-based care situation,
(16:51):
then people are going to take that out.
And so I think we've struggled,I don't know anybody's hit on
perfectly how to balance margin andmission and healthcare and not get
too far on one side or the other.
If I'm really trying to figure outhow I am going to balance margin and
mission, or evaluate a company on itsmargin mission ratio, do you know of any
(17:18):
methodology by which one can do this inany sort of standardly acceptable way?
I think when you look at healthcare, it'snow pretty much a $5 trillion industry.
We know that there's billions ofdollars in fraud, waste, and abuse.
Again, how you define that is notalways black and white, but to me,
(17:39):
when you put those two things together,there has to be an opportunity.
There has to be an opportunity tostay on mission, do things well
appropriately, evidence-based, highquality, and still save the system money.
Make good margin, honest margin, butsave the system money by not doing things
that are fraudulent wasteful or abusive.
(18:02):
The idea of value-based carestill at its core gets at that.
If we can figure out sustainableways to do that, and I think the
sustainable way to do that is to deliverhigh quality care, make good margin
on it, but not profiteer doing it.
And so I think it is possible to do that.
A lot of this just feels very subjective,like it's very much up to the individuals
(18:25):
in the mix to choose what all of thesevery subjective terms mean individually.
Like as a system at the systemiclevel, it doesn't feel like there's
very many that there's controls here.
Yeah.
It gets back to the same criticismthat people have of value-based care.
Like how do you define value?
It's very difficult to define value.
Value means different things to differentpeople within the system, whether
(18:47):
it's value to a patient, value to aphysician, value to a hospital health
system, value to insurance company.
It's hard to line those things up.
And maybe we don't need specificobjective black and white definitions
of these things, but we have to havesome way of measuring what we're doing.
(19:08):
Some way of proving that what we're doingworks well, is appropriate and still at
the same time saves money to the system.
And I think that's really beenone of the struggles of reforming
healthcare in the way we deliver care.
However we achieve that,that's the end goal.
We just have to figure out that, provethat that's what we're accomplishing.
As you're talking about, a keysuccess factor in trying to figure
(19:31):
out what's the difference betweenprofit and profiteering is to be
able to measure the outcomes, right?
And then you can compare that againsthow much money someone is taking in and
then, then at least there's a transparentenough assessment of, is it worth it?
Two things there.
You know, first of all, thatwas kind of, as you just said,
the goal of value-based care.
(19:52):
Like Dr. John Lee just wrotea post on this the other day.
Nobody still can define value.
Was talking to Dr. BeauRaymond from Ochsner.
He's saying that what valueis could actually vary.
Even within their servicearea, local communities need
very, very different things.
So if you start measuring things on areally consistent basis, you'll just
(20:13):
have one area doing really well becausethey kind of didn't need that to begin
with and it didn't require any work.
And then you've got some otherarea that's gonna be failing all
over the place because, right?
It's just, it's just like a, everycommunity healthcare is so local
and you sort of figure that outwhen you start trying to do stuff.
And then secondly.
I gotta say we're scrappyin this country, right?
(20:36):
Like you throw out an opportunity,you're gonna get somebody who takes
you up on it, and therefore we'vegot, I just heard someone call it the
measurement industrial complex wherethere's a lot of money that's now
being made measuring stuff, consideringthat this is a $5 trillion industry,
I feel like there's more questionsnow than answers in this whole thing.
(20:57):
If it was easy, it would'vebeen solved by now.
We have too many smart peoplethat have been working on it.
To me, there's alwayselegance in simplicity.
You can't improve, which youcan't measure, but at the same
time, we have to make sure we'remeasuring the right things.
We have to make sure it's not depth by athousand metrics, which unfortunately I
think some of these BBC programs, some ofthe government programs have tipped into.
Then you kind of teach to the testand you make the metric look better,
(21:19):
but is that really making care better?
Yeah, I think there'selegance in simplicity.
I think there's elegance in transparencyto say, look, this is what this
particular treatment or treatingthis condition usually costs us.
If you can come in underneath thatcost and you can still achieve
great outcomes, however you wannadefine that, I think we have to
(21:39):
get more, you know, straightforwardin how we define quality outcomes.
Then you're delivering value.
So how do we do that simply, elegantlywithout creating this administrative
burden that people don't wannaparticipate in these programs or
the cost of administering theseprograms, you know, offsets any
kind of savings you get from it.
And again, that's something I hopeto work on, but really, how do we
(21:59):
nail that discussion of what arewe trying to achieve and how do we
achieve that measurably, but simply,and how do we prove that we're
improving costs or reducing costs?
And it may be the 80/20 principleof, you know, 20% of the patients
responsible for 80% of the cost, or maybe20% of the providers are responsible
(22:20):
for percent of the inefficiency.
And, and start there.
But I think we haven't really hit onexactly how best to measure these things.
I'm thinking a couple ofthings as you're talking.
One of them is Goodhart's law, ofcourse, where I think the second
that a measure becomes a metric,it ceases to be a good measure.
I did a show with Dr. Rishi Wadheraabout that, where what winds up happening
(22:41):
is that those who are best equipped tofigure out how to measure things in a
certain way are the ones that do beston the metric, which basically means
rich healthcare organizations get richerand those who can't afford coders and
analysts and all kinds of expensive thingswind up not doing as well, meaning the
essential safety net hospitals typically.
(23:03):
But it certainly sounds like one very bigaspect of what you think needs to happen
here is really to figure out exactly howwe are going to for real, define outcomes
and then align that with what amountsto a fair price, which I think we've
spent 10, 15 minutes here talking aboutjust how unbelievably difficult that is.
(23:24):
Another thing that you have mentionedin the past is dyad leadership, and that
has come up quite a bit also on this pod.
Do you wanna talk about that a little bit?
Sure.
You know the, the healthcare context,it's a clinical leader and a business
leader, and those two people sortof working in harmony to make sure
(23:44):
that the business, the clinicalside of things are in balance.
I think of the classic yinand yang symbol, right?
It's not a pure white swirland a pure black swirl.
It's a white swirl with a black dot,and it's a black swirl with a white dot.
And to me that means that bothsides of the equation have to
have some comfort and level ofunderstanding with the other side.
So if you're a clinician, it's veryhelpful to have some business strategy
(24:08):
sort of acumen or ability to understandthe business strategy part of it.
And if you are on the business sideof thing, it's very helpful to have
at least some understanding andknowledge of the clinical side of it.
Because that's really how you'rein true harmony and balance.
If you don't, then you're just sort oftwo separate circles trying to do your
own thing, and that's not a true diad.
(24:29):
And it can't be a clinical figureheadwhere you're just doctor, they trot
out to wave at everybody to say,Hey, we have clinical leadership.
It has to really be a seat at the table.
And if you're, uh, on the business sideof things, it can't just be, I sit in
an office, I look at spreadsheets andthat's all I really understand, and
you have to have some understandingof what goes on and appreciation
for what goes on on the front lines.
(24:49):
Yeah, so another way to say yinand yang might be mission margin.
Yes, the clinician is the missionpart of it, and the business
person is the margin part of it.
But those two things can't beseparate as we were talking about.
You know, both of those thingshave to be able to work together
to thread that needle and makesure there's not a, a cause of tug
of war between those two things,
I'll tell you where I am right now.
(25:12):
I might be focusing less onwhat is a good business model
or what is a bad business model.
I also might be focusing less ontrying to police what someone is doing.
And I might be thinking morebecause I'm thinking more about
the kind of individuals who are indecision making or leadership roles.
(25:33):
I'm thinking that that mightactually matter the most.
For example, I heard someone saythe other day, you can't make a good
deal with a bad partner, and if youdon't trust somebody and speaking
entirely of my, from my own experience.
But if you don't trust someone, you cannotcontract your way or measure your way into
(25:55):
forcing somebody who's not so inclined todo the right thing, to do the right thing.
Actually, I was having a conversationwith Doug Geinzer about this recently, and
he gives all of his partners a contract.
I don't know that it's literallya contract, but it's a document
and he asked them to sign it, andit's sort of a more professional
(26:17):
version of a no A-holes policy.
Like I loved it, could not haveloved it more, and maybe that's
really the way to do this.
And I'm actually almost thinking at thehuman level, like human to human, not
even the organizational level, right?
Like everybody let in the room, you make'em look through this, something like
this because it really specifies like, areyou in healthcare for the right reasons?
(26:40):
And who can we trustat a very human level?
And I'm thinking here, if we're tryingto find the sweet spot and the mission
margin ratio, it could really justboil down to who's doing the math.
I mean, maybe the best idea is justbring back the nuns, bring back people
who think like Sister Irene Kraus.
(27:03):
And you know, circling up to what you weretalking about before, maybe that's really
hammering on the dyad leadership model.
It also could be hammering on fiduciaryresponsibility to patients such that
there is a legal commitment to mission.
It really just, the more that we'retalking, the more I'm putting my finger
(27:23):
on, it is trust between individuals.
It's about trusting who is making thedecisions, which might work out better
than trying to, I don't know, get amagnifying glass and study every single
decision that winds up flying by.
It comes down to trust.
Yeah, like, like most things inhealthcare, it comes down to trust.
(27:44):
Scott Conard gets at that.
That's kind of the approach that he took.
He didn't do value-based care, but whathe did is he said, I'm gonna deliver
really great kind of fee for service.
I'm gonna prove that we'retaking great care of patients.
Our outcomes are great.
We're saving money at the same time.
And I think if you do things the rightway and you do them well empirically or
(28:04):
intrinsically, you're delivering value.
And so value becomes a byproductof doing things the right way.
Not something you're trying to forcevia a payment model, but something
that just kind of arises inherentlyand naturally from doing things well.
I think it's Pollyanna tothink that everybody is gonna
take a similar approach.
The question is, are enough peoplegonna take that approach that we
(28:25):
can crowd out the ones that don't?
Are we cynical enough tothink that there's not that
left to their own devices?
People are gonna engage inprofiteering, and we need
stricter rules and regulations.
I don't think that that's the case.
I think you do need to have someguardrails, but I have enough faith
that there are enough people out therethat are willing to do it the right way.
(28:45):
That if we allow them to be rewardedfairly for that, if they're willing
to embrace transparency withtheir cost, their outcomes, we can
start to move the needle there.
I think right now we struggle to dothat because the way the system is set
up through regulatory capture, it's,it's harder to support those people
trying to do things the right way
And you're talking about Dr. ScottConard from the first episode with him.
(29:10):
We will link to it in the show notes.
You also mentioned regulatory capture,which is a brutally real thing.
It means some hugely powerful player inany given market who is now so powerful
they actually have started to controlthe regulatory body in government
that's supposed to be regulating themand kind of bringing this all together.
(29:33):
Then you also talked about enoughpeople who are willing to embrace
transparency of costs and also outcomes.
And I'm gonna say right out of thegate, something that Andreas Mang
said in the first show with him.
Again, we will link to all ofthese shows in the show notes.
But in that first episode with AndreasMang, he said that, and he was talking
(29:53):
about employee benefit consultants here,but it's probably true across the board.
He said, you can easily tell who iseager to be transparent and forthcoming
about their costs and their outcomes,and you can usually just as easily
see who is hiding behind prettywords like trade secrets or IP or
throwing around the disruption word.
(30:15):
Like if you ask for something and atevery turn somebody is telling you why
you cannot have it, that is somebodywho does not practice in the halls what
is written on their walls, you know?
Or has beautiful marketing materials,and then some kind of half-assed approach
to actually fulfilling them and, yeah,not, not trustworthy, not transparent.
(30:36):
Yeah.
I think the take home is transparency.
You know, being willing to sharetransparency of your outcomes,
transparency in your costs is going togo a long way to solving these issues
and allowing people to make importantdecisions and find good high quality care.
And I think at some point we have tomake it easier whether through changing
(31:00):
laws and regulations for people whoare independent and trying to do the
things the right way to be able tosurvive on their own and not be squeezed
out by larger entities that maybe areusing consolidation to drive up costs.
Value is intrinsic.
You know, I think you can't force value.
(31:22):
I think there are people, entities outthere delivering value intrinsically.
How do we identify them and elevate themand, and make sure that they succeed?
So it sounds like your vectors ofchange, if you will are transparency,
regulation to curb some of the moreegregious profiteering, uh, so that
those trying to do the right thing cankind of come out from underneath the
(31:45):
shadow of the market distortions thatare created by these entities who have
captured the regulatory and capturedmarkets and just have so much power.
It's interesting, Dr. Ben Schwartz,that you are saying two of the same
exact things that Peter Hayes wastalking about a couple of weeks ago
on the pod as he was contemplating howclose we are to an inflection point.
(32:06):
And the two things that he said whichoverlap with exactly what you said are
we need transparency and there is enoughtransparency in the marketplace right now,
uh, a greater amount than we've reallyalmost ever had, as well as regulatory.
There's a number of different regulations.
The Consolidated Appropriations Act.
There's a bunch of different stuffthat's going on at the state level,
(32:28):
which is creating a situationwhere, you know, in his case he
was talking about inflection point.
In our case, we're talking aboutwhat's necessary in order to create a
mission and margin, balance, a balanceof the two, which is sustainable.
Yes.
I think public awareness of theseissues is definitely important to
(32:49):
have these discussions, and it's animportant part of driving change.
And the more public awareness thereis and more public discourse about
these things, the better off we are.
And I think we are seeing more publicawareness and more public discourse
that is going to eventually getpeople to listen and drive change.
We ride at dawn!.
Exactly.
Dr. Ben Schwartz, we've talked abouta number of different things today as
(33:12):
we try to parse the mission margin.
How do we figure out the sweet spot there.
How do we find the line betweenprofit and profiteering.
Is there anything else that youwanna add that we haven't covered?
Yeah, obviously these are not easy topics.
Even if you don't come to aconclusion, I think it's important
to talk about them and think throughthem and continue to work on them.
(33:34):
because it's gonna be piecemeal.
Maybe we'll come to anaha moment at some point.
But just having thediscussion is important.
I agree.
Dr. Ben Schwartz, thank you so much forbeing on Relentless Health Value today.
Thanks for having me.
Hey, this is Matt McQuidewith Synergy Healthcare.
I listen to Stacey and RelentlessHealth Value every single week.
There's valuable information everysingle week to take from it, and I
(33:54):
just so appreciate this is around.
Episode 481.
"Seriously, IRL, What Does No Margin,No Mission Even Mean?" That is the
question I ask Dr. Ben Schwartz.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:26):
Relentlessly Seeking Value.
Last week I announced I wason a tear to really get to the
bottom of no margin, no mission.
How do we in real life operationalizethese very sort of inspirational,
but kind of vague words.
This conversation is largely megrilling Dr. Ben Schwartz on what no
(00:46):
margin, no mission means to him, andhow do you systematically pull it off?
So, yeah, real softball kind of question.
I'm joking, which is why I couldnot have been more appreciative
of Dr. Ben Schwartz for taking onthis challenge and coming back on
Relentless Health Value to discuss.
Because here's the thing.
If you wanna do a startup or you wannado something in healthcare involving
(01:10):
mission and margin, it is often conceivedthat the more mission, the less margin.
This trade off is more likelygoing to be true when there are
perverse incentives such as stufflike the sicker the population is,
the more money everybody makes.
From provider organizations to carriersto PBMs and yeah, pharma to even
(01:31):
brokers, consultants who are often paida percentage of, in air quotes, shared
savings or get a little kicker for everyprescription written, like how common
apparently it is for some big PBMs topay employee benefit consultants for
every single script that gets written.
Something like, what, $7, hypothetically.
(01:52):
But back to shared savings.
You know, never forget sharedsavings go up when trend goes up.
Rebates go up when list prices go up.
This is always true.
Of course there is theHippocratic Oath for sure.
But as far as laws go, the onlymaybe structural or legal framework
around mission that I could findanyway is fiduciary responsibility.
(02:12):
And you know, the only entity withfiduciary responsibility, to patients or
members, plan sponsors, ? No, the boardsof nonprofit health systems don't have
fiduciary responsibility to patients.
Not TPAs or ASO leaders as far as mostcourts seems to have determined so far.
Not PBMs.
None of these entities has any legalobligation to patients, members,
(02:37):
or the communities they serve.
Dave Karlander was talkingabout this recently.
Any health system or any of themtalking about fiduciary responsibility,
legally, what that means is aresponsibility to margin it up for
better or for worse, even as a nonprofit.
And so mission and margin only traveltogether if someone is creative,
(02:58):
innovative, knowledgeable, dedicated,and has enough energy to force these
two terms to align amidst a whole lot ofcountervailing industry norms, policies,
shareholder fiduciary interests, andjust some deeply ingrained culture.
I really liked how Anthony Stanowskiput it in a recent Modern Healthcare
(03:19):
article he wrote, "We often hearthe phrase, "No margin, no mission".
And it's true, a system without financialviability cannot sustain itself.
But the reverse is also true withoutmission margin devolves into a utilitarian
calculation of which procedures yieldthe highest returns, or which population
segment is most important to attract."
(03:40):
Link in the show notes.
So with all that said, here'swhat I'm up to, listeners.
This is going to be a series wherewe talk about achieving mission
success and if and or how mission canfit into any given business model.
Especially business models thatwe talk so often about on this
podcast, which could be labeled as.
(04:03):
Not so good.
Not so good for keeping patientsor people who really don't want
to become patients, healthy.
So what I'm gonna do periodically isinvite guests to come on Relentless Health
Value to have this conversation with me.
This started with the showlast week with Dr. John Lee.
I really wanna pick a few of yourbig brains about what it takes to get
(04:25):
ourselves so situated as a businessor as an industry or an ecosystem so
that those who are able to balancemission and margin come out as winners?
That is my goal.
Okay.
I wanna talk about a complication now.
A complication that is evenmore deep rooted than the whole
perverse incentives thing.
What's even below that?
Because why is it, you know, that CharlieMunger quote, Warren Buffett's partner,
(04:49):
who've famously said, "Show me anincentive and I'll show you an outcome".
Why is that even true in the first place?
It's not like, if there's anincentive, then I must act in
accordance to that incentive.
Where does this come from, that ifthere's a perverse incentive that
the outcomes then are also perverse.
And this might be TMI philosophical,but yeah, here we are.
(05:11):
So let's just go there for 45 seconds.
Why don't we.
So it's important I think, to recognizethat monetary success is the bedrock
of a lot of people's self-esteem.
I just listened to Scott Galloway,who's an interesting cat.
He has a podcast, he's got severalpodcasts, but, in one of them, and
I will link to it in the show notes.
He went on at some length abouthow we so often measure, again, our
(05:36):
self-worth by our literal worth.
Like every dollar we put in ourpocket is like a quantitative increase
in our value as a human being.
And Scott Galloway continues.
Few people, even billionaires,feel they have enough money.
This thought really stuck with me andI've been thinking about it for a week.
(05:56):
Just in terms of what this meansfor healthcare in this country.
You know, if our basic value system istied to increasing our net worth, and we
often think that's okay, even if it comesat the expense of personal relationships
or our own health, but also if thebusiness is a healthcare business, me
self enriching in profiteering ways willnegatively impact other people's health.
(06:19):
But margin has become a cultural norm.
. Hi, I am Keith Passwater, CEO of Havarti Risk.
Relentless Health Value hasconsistently challenged the way I
think about the business of healthcare.
The conversations are smart,relevant, and grounded in the
realities we face every day.
If you're as passionate about drivingmeaningful change in healthcare
as I am, I really encourage you tofollow Relentless Health Value on
(06:41):
LinkedIn and join the conversation.
Thanks for listening.
Alright, massive spoiler alert.
So if you don't wanna hear this, skipahead, but I just need to give you a heads
up of my big, holy smokes, blew my brainmoment of reckoning that cropped up in
this conversation with Dr. Ben Schwartz.
(07:02):
And it became so clear towards the end.
Where this conversation windsup is we circle the whole
way back from wence we came.
"Trust".
That if you want to trust that no mission,no margin is gonna wind up in a place
that you can trust, then you have totrust the person who is making that call.
(07:22):
Do listen to this episode, eventhough I just ruined the suspense,
but hey, that's what I do.
And with that, here's myconversation with Dr. Ben Schwartz.
Read his bio on the website.
He just got a brand new job at CommonsClinic, his new job is not being
an orthopedic surgeon full-time.
He will be SVP Care Services andStrategy over there at Commons Clinic.
My name is Stacey Richter.
(07:43):
This podcast is sponsoredby Aventria Health Group.
Ben Schwartz, MD, welcome backto Relentless Health Value.
Thanks for having me.
It's an honor to make a return appearance.
I wanna talk to you about no margin,no mission, which is a catchphrase.
As a physician, what do you thinkabout when you think about this?
This phrase, no margin, no mission.
(08:05):
No margin, no mission.
People may not realize is itactually originated in healthcare.
It's attributed to SisterIrene Kraus, who was a nun.
She was head of a health system.
And I think the phrase has gottensometimes taken out of context and a lot
of people think about it from Jeff Bezos'scontext of your margin is my mission.
(08:25):
The spirit of the quote is really, if youdon't make money, then you can't fulfill
your mission of taking care of patients.
So if I'm an orthopedic surgeon andI don't make money doing surgeries,
I can't support a practice.
I can't do surgeries andtake care of patients.
If I'm manufacturing a drug, if I'm ahospital, you know, admitting patients.
Anybody that has a viable businesshas to make some margin in
(08:47):
healthcare is no different there.
This statement in any other contextbesides like one that assumes affording
the mission is the North Star.
Yeah.
Opens, misinterpretation.
It doesn't necessarily mean that ithas to be a negative thing or a bad
thing, but the spirit of it is, inorder to fulfill healthcare mission,
(09:07):
you have to be able to have a viablebusiness to take care of patients.
Yeah.
I believe over the years, your marginhas become my mission, which is how
Jeff Bezos adopted that to his ownuses, but maybe enough individuals in
healthcare have kind of tapped intothat same ethos and sort of transformed
(09:28):
that statement into, I don't know,is it a rhetorical tool to legitimize
profit extraction at some level?
Yeah, I think I think about itmore in terms of not so much
no margin, no mission, butprofit and profiteering, right?
I don't think we would blame anybody fromrunning a business wanting to make money
for delivering a product to service,whether it's healthcare or something else.
(09:52):
The question becomes, where do you tipover from getting paid money to deliver a
service and getting paid fairly and doingsomething ethical versus profiteering
when it goes beyond your missionbecomes the margin and nothing else.
And it becomes profiteering whereyou're just looking to extract
as much money or value out of thesystem instead of creating value.
(10:14):
So to me, it's more helpful to thinkabout it less as no margin, no mission,
and more as, profit versus profiteering.
There's a lot of gray areas there as well.
You know, when does it stop beingprofit and start being profiteering?
But I think that's an easier way tothink about it as far as I'm concerned,
more so than margin versus mission.
(10:34):
I would say fair compensationfor doing the right thing.
We'll talk about this a little bitmore like how do you know when you've
tipped into the, we have an issue here.
I never really thought about thatbefore, but you probably know when
you've tipped into profiteering whenyou start doing the wrong thing.
Yeah.
Maybe you do, maybe you don't.
I mean, maybe that's part of theproblem is that it's a slippery slope
and a little bit more, and a littlebit more, and a little bit more, and
(10:56):
all of a sudden it goes from, youknow, making a fair amount of money
for delivering a service to trying toextract as much money from the system.
And it's hard to know exactlywhen that inflection point takes
place, and it can be very gradual.
We've seen that with hospital healthsystem consolidation, where over time
you consolidate more and more and more,you get more and more market power, and
all of a sudden you're able to leveragethat market power to drive up prices.
(11:20):
Where, you know, when you firststarted your mission was we're gonna
consolidate because this will allowus to deliver better care, more
integrated care, more cost effectivecare, because we are integrated.
And all of a sudden you turn around andfive, 10 years later, all you've done
is continue to increase your pricesbecause your market power has gotten
more and more to the point that youhave greater leverage to negotiate.
(11:42):
So that's, that's where that slipperyslope that you can gradually fall into.
The whole construct is very slippery,which is one reason, a big reason why I
was compelled to write my own manifestoor personal charter, which is episode 400.
But yeah, why don't we take it from thetop and start out defining terms here.
I think that would be a good wayto go, because saying words with
(12:04):
fuzzy definitions is often thevery first place that many great
ideas go flying off the tracks.
So, okay.
What do you think mission even means?
Because it might not be as self-evidentas I think we would like to believe.
I think broadly in healthcare, we canall sort of agree that the mission is
to do the right thing for the patient,take good care of patients, do it in
(12:26):
a cost-effective and high quality way.
I think that hopefully issomething we can all agree on.
Obviously that's very broad.
And when you start to dig intoit, there's a lot of different
ways to come about that.
A lot of people come into healthcare,particularly if they're outsiders.
They've had some sort of negativeexperience with the healthcare system.
They see a problem and they comein with a very idealistic way of
(12:47):
thinking about fixing that problem.
And their mission is very altruistic,and it's based on something very
tangible that they've experienced.
They might quickly realize thathealthcare as a business maybe is a
little less like other businesses.
How you make money in healthcaredoesn't always make sense.
Who's paying for healthcareversus who's the one receiving
it isn't always the same thing.
There's a lot of principal agent problems.
(13:09):
There's a lot of moral hazard, and soyou can come into healthcare with a very
altruistic mission to solve a problem.
But then you quickly realize thatit may be hard to make margin
doing that because healthcareeconomics are, are so complicated.
I think mission, I'm gonna call it missiondrift, can certainly also take place.
I loved how you put itthe last time we spoke.
(13:29):
It's a very different view, 10 feetfrom the bedside than 10,000 feet.
As you move further and further away frompatients, it becomes harder and harder to
see quickly the impact of both the missionmakes you feel good, but then also what
happens when you start to drift away fromit or maybe do things which diminish it?
Yeah, it's difficult if you haveinvestors, if you have stakeholders,
(13:53):
shareholders that expect thisbusiness to make money, and if you're
investing in that business, you expectyour investment to eventually pay
off, then you have to make margin.
And if staying on your original missiondoesn't allow you to see the margin.
The way that others expect or to haveyour business be successful or to have
the extra outcome that your investorsexpect, then that's when you start to
(14:16):
kind of drift away from the missiontowards things that maybe are better
to make money on and make margin on,but aren't aligned with that mission.
You know, we've seen that maybe with someof these virtual, mental and behavioral
health companies whose mission was,let's make something that's difficult and
expensive to access now more accessible,more cost effective for people, and that's
(14:37):
a great altruistic goal, good mission.
But all of a sudden you realize that,hey, if we prescribe medications, we've
become more of, of, you know, a pill mill.
Our margin is better.
And now we've drifted away from themission of delivering good high quality
mental behavioral healthcare towardslet's prescribe medications because
(14:57):
that's how we make money and that'show we're gonna get an exit, and that's
how we're going to sort of satisfythe margin part of the equation.
I did talk with Yashaswini Singhabout this in the show about
private equity several weeks ago.
Just how some idea that a foundercomes up with at the very beginning,
(15:18):
could be very mission focused andreally have good patient impact.
And then as time goes on, if you dohave private equity or professional
money getting in the mix, however thatlooks, it could also be, you know,
getting owned by a hospital, right?
Like there's any number of different waysthat professional money can get involved.
The fiduciary responsibility,there is to shareholders or to
(15:43):
limited partners or investors.
It's a really tricky thingwith fiduciary responsibility.
I got actually an email the otherday from Dave Karlander that the,
if we're talking about fiduciaryresponsibility, plan sponsors have
fiduciary responsibility to members.
Almost nobody else in the, ofalmost any of the other stakeholders
involved in patient care, includingthe boards of nonprofit hospitals.
(16:05):
Right?
Like they do not havefiduciary responsibility to
patients or to the community.
So as we talk about mission andas we talk about what is any sort
of legal accountability to deliverthat mission, there's very little.
Yeah, it, it's the tug of warbetween margin and mission.
How do you thread thatneedle in healthcare?
The ideal situation would be to try toalign those things as much as possible.
(16:28):
I think that's why there's been alot of interest in value-based care
as a way to sort of bring missionand margin into greater alignment.
The problem is, what people havefound is that maintaining margin and
value-based care is more difficult,and if you have this sort of bailout
back to the traditional fee for servicesystem where your margin is more
predictable, it's more achievable thana fuzzier value-based care situation,
(16:51):
then people are going to take that out.
And so I think we've struggled,I don't know anybody's hit on
perfectly how to balance margin andmission and healthcare and not get
too far on one side or the other.
If I'm really trying to figure outhow I am going to balance margin and
mission, or evaluate a company on itsmargin mission ratio, do you know of any
(17:18):
methodology by which one can do this inany sort of standardly acceptable way?
I think when you look at healthcare, it'snow pretty much a $5 trillion industry.
We know that there's billions ofdollars in fraud, waste, and abuse.
Again, how you define that is notalways black and white, but to me,
(17:39):
when you put those two things together,there has to be an opportunity.
There has to be an opportunity tostay on mission, do things well
appropriately, evidence-based, highquality, and still save the system money.
Make good margin, honest margin, butsave the system money by not doing things
that are fraudulent wasteful or abusive.
(18:02):
The idea of value-based carestill at its core gets at that.
If we can figure out sustainableways to do that, and I think the
sustainable way to do that is to deliverhigh quality care, make good margin
on it, but not profiteer doing it.
And so I think it is possible to do that.
A lot of this just feels very subjective,like it's very much up to the individuals
(18:25):
in the mix to choose what all of thesevery subjective terms mean individually.
Like as a system at the systemiclevel, it doesn't feel like there's
very many that there's controls here.
Yeah.
It gets back to the same criticismthat people have of value-based care.
Like how do you define value?
It's very difficult to define value.
Value means different things to differentpeople within the system, whether
(18:47):
it's value to a patient, value to aphysician, value to a hospital health
system, value to insurance company.
It's hard to line those things up.
And maybe we don't need specificobjective black and white definitions
of these things, but we have to havesome way of measuring what we're doing.
(19:08):
Some way of proving that what we're doingworks well, is appropriate and still at
the same time saves money to the system.
And I think that's really beenone of the struggles of reforming
healthcare in the way we deliver care.
However we achieve that,that's the end goal.
We just have to figure out that, provethat that's what we're accomplishing.
As you're talking about, a keysuccess factor in trying to figure
(19:31):
out what's the difference betweenprofit and profiteering is to be
able to measure the outcomes, right?
And then you can compare that againsthow much money someone is taking in and
then, then at least there's a transparentenough assessment of, is it worth it?
Two things there.
You know, first of all, thatwas kind of, as you just said,
the goal of value-based care.
(19:52):
Like Dr. John Lee just wrotea post on this the other day.
Nobody still can define value.
Was talking to Dr. BeauRaymond from Ochsner.
He's saying that what valueis could actually vary.
Even within their servicearea, local communities need
very, very different things.
So if you start measuring things on areally consistent basis, you'll just
(20:13):
have one area doing really well becausethey kind of didn't need that to begin
with and it didn't require any work.
And then you've got some otherarea that's gonna be failing all
over the place because, right?
It's just, it's just like a, everycommunity healthcare is so local
and you sort of figure that outwhen you start trying to do stuff.
And then secondly.
I gotta say we're scrappyin this country, right?
(20:36):
Like you throw out an opportunity,you're gonna get somebody who takes
you up on it, and therefore we'vegot, I just heard someone call it the
measurement industrial complex wherethere's a lot of money that's now
being made measuring stuff, consideringthat this is a $5 trillion industry,
I feel like there's more questionsnow than answers in this whole thing.
(20:57):
If it was easy, it would'vebeen solved by now.
We have too many smart peoplethat have been working on it.
To me, there's alwayselegance in simplicity.
You can't improve, which youcan't measure, but at the same
time, we have to make sure we'remeasuring the right things.
We have to make sure it's not depth by athousand metrics, which unfortunately I
think some of these BBC programs, some ofthe government programs have tipped into.
Then you kind of teach to the testand you make the metric look better,
(21:19):
but is that really making care better?
Yeah, I think there'selegance in simplicity.
I think there's elegance in transparencyto say, look, this is what this
particular treatment or treatingthis condition usually costs us.
If you can come in underneath thatcost and you can still achieve
great outcomes, however you wannadefine that, I think we have to
(21:39):
get more, you know, straightforwardin how we define quality outcomes.
Then you're delivering value.
So how do we do that simply, elegantlywithout creating this administrative
burden that people don't wannaparticipate in these programs or
the cost of administering theseprograms, you know, offsets any
kind of savings you get from it.
And again, that's something I hopeto work on, but really, how do we
(21:59):
nail that discussion of what arewe trying to achieve and how do we
achieve that measurably, but simply,and how do we prove that we're
improving costs or reducing costs?
And it may be the 80/20 principleof, you know, 20% of the patients
responsible for 80% of the cost, or maybe20% of the providers are responsible
(22:20):
for percent of the inefficiency.
And, and start there.
But I think we haven't really hit onexactly how best to measure these things.
I'm thinking a couple ofthings as you're talking.
One of them is Goodhart's law, ofcourse, where I think the second
that a measure becomes a metric,it ceases to be a good measure.
I did a show with Dr. Rishi Wadheraabout that, where what winds up happening
(22:41):
is that those who are best equipped tofigure out how to measure things in a
certain way are the ones that do beston the metric, which basically means
rich healthcare organizations get richerand those who can't afford coders and
analysts and all kinds of expensive thingswind up not doing as well, meaning the
essential safety net hospitals typically.
(23:03):
But it certainly sounds like one very bigaspect of what you think needs to happen
here is really to figure out exactly howwe are going to for real, define outcomes
and then align that with what amountsto a fair price, which I think we've
spent 10, 15 minutes here talking aboutjust how unbelievably difficult that is.
(23:24):
Another thing that you have mentionedin the past is dyad leadership, and that
has come up quite a bit also on this pod.
Do you wanna talk about that a little bit?
Sure.
You know the, the healthcare context,it's a clinical leader and a business
leader, and those two people sortof working in harmony to make sure
(23:44):
that the business, the clinicalside of things are in balance.
I think of the classic yinand yang symbol, right?
It's not a pure white swirland a pure black swirl.
It's a white swirl with a black dot,and it's a black swirl with a white dot.
And to me that means that bothsides of the equation have to
have some comfort and level ofunderstanding with the other side.
So if you're a clinician, it's veryhelpful to have some business strategy
(24:08):
sort of acumen or ability to understandthe business strategy part of it.
And if you are on the business sideof thing, it's very helpful to have
at least some understanding andknowledge of the clinical side of it.
Because that's really how you'rein true harmony and balance.
If you don't, then you're just sort oftwo separate circles trying to do your
own thing, and that's not a true diad.
(24:29):
And it can't be a clinical figureheadwhere you're just doctor, they trot
out to wave at everybody to say,Hey, we have clinical leadership.
It has to really be a seat at the table.
And if you're, uh, on the business sideof things, it can't just be, I sit in
an office, I look at spreadsheets andthat's all I really understand, and
you have to have some understandingof what goes on and appreciation
for what goes on on the front lines.
(24:49):
Yeah, so another way to say yinand yang might be mission margin.
Yes, the clinician is the missionpart of it, and the business
person is the margin part of it.
But those two things can't beseparate as we were talking about.
You know, both of those thingshave to be able to work together
to thread that needle and makesure there's not a, a cause of tug
of war between those two things,
I'll tell you where I am right now.
(25:12):
I might be focusing less onwhat is a good business model
or what is a bad business model.
I also might be focusing less ontrying to police what someone is doing.
And I might be thinking morebecause I'm thinking more about
the kind of individuals who are indecision making or leadership roles.
(25:33):
I'm thinking that that mightactually matter the most.
For example, I heard someone saythe other day, you can't make a good
deal with a bad partner, and if youdon't trust somebody and speaking
entirely of my, from my own experience.
But if you don't trust someone, you cannotcontract your way or measure your way into
(25:55):
forcing somebody who's not so inclined todo the right thing, to do the right thing.
Actually, I was having a conversationwith Doug Geinzer about this recently, and
he gives all of his partners a contract.
I don't know that it's literallya contract, but it's a document
and he asked them to sign it, andit's sort of a more professional
(26:17):
version of a no A-holes policy.
Like I loved it, could not haveloved it more, and maybe that's
really the way to do this.
And I'm actually almost thinking at thehuman level, like human to human, not
even the organizational level, right?
Like everybody let in the room, you make'em look through this, something like
this because it really specifies like, areyou in healthcare for the right reasons?
(26:40):
And who can we trustat a very human level?
And I'm thinking here, if we're tryingto find the sweet spot and the mission
margin ratio, it could really justboil down to who's doing the math.
I mean, maybe the best idea is justbring back the nuns, bring back people
who think like Sister Irene Kraus.
(27:03):
And you know, circling up to what you weretalking about before, maybe that's really
hammering on the dyad leadership model.
It also could be hammering on fiduciaryresponsibility to patients such that
there is a legal commitment to mission.
It really just, the more that we'retalking, the more I'm putting my finger
(27:23):
on, it is trust between individuals.
It's about trusting who is making thedecisions, which might work out better
than trying to, I don't know, get amagnifying glass and study every single
decision that winds up flying by.
It comes down to trust.
Yeah, like, like most things inhealthcare, it comes down to trust.
(27:44):
Scott Conard gets at that.
That's kind of the approach that he took.
He didn't do value-based care, but whathe did is he said, I'm gonna deliver
really great kind of fee for service.
I'm gonna prove that we'retaking great care of patients.
Our outcomes are great.
We're saving money at the same time.
And I think if you do things the rightway and you do them well empirically or
(28:04):
intrinsically, you're delivering value.
And so value becomes a byproductof doing things the right way.
Not something you're trying to forcevia a payment model, but something
that just kind of arises inherentlyand naturally from doing things well.
I think it's Pollyanna tothink that everybody is gonna
take a similar approach.
The question is, are enough peoplegonna take that approach that we
(28:25):
can crowd out the ones that don't?
Are we cynical enough tothink that there's not that
left to their own devices?
People are gonna engage inprofiteering, and we need
stricter rules and regulations.
I don't think that that's the case.
I think you do need to have someguardrails, but I have enough faith
that there are enough people out therethat are willing to do it the right way.
(28:45):
That if we allow them to be rewardedfairly for that, if they're willing
to embrace transparency withtheir cost, their outcomes, we can
start to move the needle there.
I think right now we struggle to dothat because the way the system is set
up through regulatory capture, it's,it's harder to support those people
trying to do things the right way
And you're talking about Dr. ScottConard from the first episode with him.
(29:10):
We will link to it in the show notes.
You also mentioned regulatory capture,which is a brutally real thing.
It means some hugely powerful player inany given market who is now so powerful
they actually have started to controlthe regulatory body in government
that's supposed to be regulating themand kind of bringing this all together.
(29:33):
Then you also talked about enoughpeople who are willing to embrace
transparency of costs and also outcomes.
And I'm gonna say right out of thegate, something that Andreas Mang
said in the first show with him.
Again, we will link to all ofthese shows in the show notes.
But in that first episode with AndreasMang, he said that, and he was talking
(29:53):
about employee benefit consultants here,but it's probably true across the board.
He said, you can easily tell who iseager to be transparent and forthcoming
about their costs and their outcomes,and you can usually just as easily
see who is hiding behind prettywords like trade secrets or IP or
throwing around the disruption word.
(30:15):
Like if you ask for something and atevery turn somebody is telling you why
you cannot have it, that is somebodywho does not practice in the halls what
is written on their walls, you know?
Or has beautiful marketing materials,and then some kind of half-assed approach
to actually fulfilling them and, yeah,not, not trustworthy, not transparent.
(30:36):
Yeah.
I think the take home is transparency.
You know, being willing to sharetransparency of your outcomes,
transparency in your costs is going togo a long way to solving these issues
and allowing people to make importantdecisions and find good high quality care.
And I think at some point we have tomake it easier whether through changing
(31:00):
laws and regulations for people whoare independent and trying to do the
things the right way to be able tosurvive on their own and not be squeezed
out by larger entities that maybe areusing consolidation to drive up costs.
Value is intrinsic.
You know, I think you can't force value.
(31:22):
I think there are people, entities outthere delivering value intrinsically.
How do we identify them and elevate themand, and make sure that they succeed?
So it sounds like your vectors ofchange, if you will are transparency,
regulation to curb some of the moreegregious profiteering, uh, so that
those trying to do the right thing cankind of come out from underneath the
(31:45):
shadow of the market distortions thatare created by these entities who have
captured the regulatory and capturedmarkets and just have so much power.
It's interesting, Dr. Ben Schwartz,that you are saying two of the same
exact things that Peter Hayes wastalking about a couple of weeks ago
on the pod as he was contemplating howclose we are to an inflection point.
(32:06):
And the two things that he said whichoverlap with exactly what you said are
we need transparency and there is enoughtransparency in the marketplace right now,
uh, a greater amount than we've reallyalmost ever had, as well as regulatory.
There's a number of different regulations.
The Consolidated Appropriations Act.
There's a bunch of different stuffthat's going on at the state level,
(32:28):
which is creating a situationwhere, you know, in his case he
was talking about inflection point.
In our case, we're talking aboutwhat's necessary in order to create a
mission and margin, balance, a balanceof the two, which is sustainable.
Yes.
I think public awareness of theseissues is definitely important to
(32:49):
have these discussions, and it's animportant part of driving change.
And the more public awareness thereis and more public discourse about
these things, the better off we are.
And I think we are seeing more publicawareness and more public discourse
that is going to eventually getpeople to listen and drive change.
We ride at dawn!.
Exactly.
Dr. Ben Schwartz, we've talked abouta number of different things today as
(33:12):
we try to parse the mission margin.
How do we figure out the sweet spot there.
How do we find the line betweenprofit and profiteering.
Is there anything else that youwanna add that we haven't covered?
Yeah, obviously these are not easy topics.
Even if you don't come to aconclusion, I think it's important
to talk about them and think throughthem and continue to work on them.
(33:34):
because it's gonna be piecemeal.
Maybe we'll come to anaha moment at some point.
But just having thediscussion is important.
I agree.
Dr. Ben Schwartz, thank you so much forbeing on Relentless Health Value today.
Thanks for having me.
Hey, this is Matt McQuidewith Synergy Healthcare.
I listen to Stacey and RelentlessHealth Value every single week.
There's valuable information everysingle week to take from it, and I
(33:54):
just so appreciate this is around.
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