Why do politics matter to health? Because government, when focused, can do incredible things to move our health forward. Here are just two examples that I was directly involved with while in the United States Senate.
First, in 2003 we passed the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR), the largest commitment by any nation to address a single disease in history. It turned the tide on the global HIV/AIDS epidemic, which in the late 1990s was the fourth most frequent cause of death worldwide, and the number one killer in Africa. Twenty million people are alive today because of the leadership of the U.S. government. We went from having only 50,000 people in Africa on lifesaving HIV treatment, to today supporting more than 14 million men, women, and children in 63 countries through PEPFAR. This uniquely American initiative brought nations back to life. In Botswana for example, life expectancy jumped from 39 years to 63. This leadership and funding spurred medical innovation through the private sector, which cut the cost of anti-retroviral treatment from a prohibitive $10,000 to less than $100 per person—allowing millions more to be treated without increasing annual U.S. spending on the program. The global impact of the bipartisan PEPFAR program in terms of health, safety, and security, is nothing short of miraculous. And it would not have happened without the leadership of those we elect to go to Washington.
The second example is the Human Genome Project—biology’s equivalent of the “moon shot.” We finished this monumental government-led undertaking in 2003, under budget AND two years ahead of schedule! Just a half-century prior, the scientific community discovered the double helix structure of DNA. With U.S. leadership—spearheaded by the National Institutes of Health and the U.S. Department of Energy—joined with international partners and the private sector, we took a major leap forward in understanding the genetic factors in human disease by sequencing the 3 billion bits of information in the human genome in record time. That foundational step spurred a revolution in biomedical innovation. Since those data were made freely available, well over 1,800 disease genes have been discovered, 2,000 new genetic tests have been created, and over 350 biotechnology-based products resulting from the project are currently in clinical trials. Researchers can now find a suspected disease gene in a matter of days instead of the previous years needed. We are well on our way to many new treatments and cures.
People today have less respect and less trust in our government institutions, but let’s not forget how our federal government—and whom we choose to lead us—can radically improve our health and wellbeing by providing the framework and resources, and exercising the leadership, to spur innovation.
But not all innovations are created equal. Only some can be considered “disruptive” —a phrase and theory originally coined by Harvard Business School professor Clayton Christensen. Christensen explains that for an innovation to be truly disruptive it needs to have three things:
- Enabling Technology: An invention or innovation that makes a product more affordable and accessible to a wider population.
- Innovative Business Model: A business model that targets nonconsumers (new customers who previously did not buy products or services in a given market) or low-end consumers (the least profitable customers).
- Coherent Value Network: A network in which suppliers, partners, distributors, and customers are each better off when the disruptive technology prospers.
I have seen innovation from a front row seat, with some of the original health service disrupters: my dad and brother, Tommy. Tommy, a young surgeon at the time, was inspired in part by a college roommate whose family founded the Memphis-based Holiday Inn hotel group, which at the time was a relatively new business that had mastered the concept of chain facilities that provided consistent quality and benefitted from economies of scale. Then, hospitals were largely government-owned, faith-based, or independently operated. It was a cottage industry. No one had applied the principles of multi-facility scale and access to capital markets to hospitals—until my brother and dad did with the founding of Hospital Corporation of America. This model, developed by Tommy (the instigator and entrepreneur), Dad (the physician and driver of culture), and Jack Massey (the businessman of Kentucky Fried Chicken fame), allowed expansion into areas that previously did not have nearby access to a hospital – reaching underserved patients in need. And it created a coherent value network by, for the first time, applying modern business principles to healthcare, which allowed hospitals to provide higher quality care with newer, more advanced treatments, and offer better pay for hospital workers and physicians, reaching more people. Listed on the New York Stock Exchange in 1970, HCA became the first NYSE business to achieve $1 billion in revenues in its first decade of operation. And in 2006, HCA underwent the largest leveraged buyout in Wall Street history. Fifty years since its founding, it’s a Fortune 100 company and one of the largest and most respected operators of health care facilities in the world.
HCA transformed an inefficient and variable American hospital system and became a model that has been replicated around the globe. Today, high costs and uneven access are indicators that the healthcare industry is again ripe for disruption. So why aren’t we seeing more disruption in the healthcare system today? Where are the Uber’s and Netflix’s of healthcare?
The reality is that, when HCA was founded in 1968, the healthcare sector had lower barriers to entry. Health delivery was local, not national or global. In fact, there were no healthcare companies in the Fortune 100 (now there are 18 including pharmaceutical companies and insurers). And the federal government played a minor role: Medicare and Medicaid had only just been created in 1965. In 2018, more than one in three Americans are covered by government-backed insurance.
The health sector has become so highly regulated and so extensively covered with third party payors that any innovator serious about disrupting the current system will have to engage with federal and state government in some way—whether achieving FDA approval, gaining Medicaid or Medicare reimbursement coverage, or navigating complex compliance requirements. There cannot be the equivalent of an Uber or Netflix of the healthcare industry because our health innovators must work within the framework of a highly government-regulated industry.
Unlike in 1968, disruptive innovators in healthcare today will need government. And for all the challenges of working through government bureaucracy, when focused—as we saw with PEPFAR and the Human Genome Project—government can be a powerhouse accelerator to move our health forward.
Some of the best opportunities to innovate come from changes government is making to facilitate new models of care and improved outcomes for the consumer. Here are five areas where I see government driving innovation in healthcare:
- Increased flexibility with Medicare Advantage plans, which can serve as a testing-ground for capitated and value-based payment models,
- Innovative payment and delivery models designed by the Center for Medicare and Medicaid Innovation, led by former Landmark CEO Adam Boehler,
- Secretary Alex Azar’s emphasis on incentivizing and advancing price transparency,
- Increased flexibility for states to reduce costs and innovate with Medicaid waivers,
- 21st Century Cures Act accelerating medical product development and FDA’s Scott Gottlieb speeding pace of approvals of new treatments and generics.
I’ve personally been involved in several healthcare companies that have met Clayton Christensen’s “disruptive innovator” definition, and for all, government played some role in their success. Aspire Health, for example, a company I co-founded in 2013 that has grown to be the largest community-based, non-hospice palliative care company in the nation, was able to succeed because of the modern capitated payment model of Medicare Advantage plans. Only in those government-designed payment structures were we able to deploy the highly effective coordinated care teams—inspired by the teams we wrapped about my transplant patients many years ago—that could care for a patient’s mental, emotional, spiritual, and physical health in the home-setting.
Another example is IDx, an Iowa-based company on whose board I sit, that designed the first autonomous AI-based diagnostic system cleared by the FDA. This unique system can be deployed on the front lines of healthcare to detect early stages of diabetic retinopathy during routine office visits with primary care providers, with results available in minutes. IDx was granted expedited review under the FDA’s Breakthrough Device program (established in the 21st Century Cures Act) and received expedited approval. We are more efficiently and effectively speeding sound treatments, and in the case of IDx, the beneficiaries will be the 30 million Americans with diabetes who are at risk of the condition that is the leading cause of vision loss and blindness in working-age adults.
And I’ve seen it in Teladoc, the world's largest provider of virtual healthcare delivery services with 3,100 board-certified physicians and behavioral health specialists and 40 million members. As a board member, I’ve witnessed how virtual care has faced huge challenges with reimbursement and cross-state licensing barriers—but these are issues that are being systematically addressed. Washington is increasingly embracing telehealth as a solution to help veterans receive care in the home setting, as a method to expand access to behavioral health care to those struggling with opioid addiction, to reach rural and underserved populations, and reduce costs to the system. Over the past two years, over 70 bills were introduced in Congress that address telehealth, covering the issues of broadband expansion, rural health, specific treatments and conditions, and reimbursement policies, among others. Many of these are bipartisan. And this year, the Balanced Budget Act of 2018 brought significant advances for Medicare telehealth coverage: beginning in 2020, Medicare Advantage plans will start fully reimbursing for telemedicine, and it also expanded the use of telehealth for home dialysis therapy, stroke patients, and ACOs. Government is playing an activist role in advancing the future of telemedicine.
I will always believe that our most innovative, creative, groundbreaking solutions to the health system’s needs and challenges will come from the private sector, but government more often than not provides the enabling framework. Thus we as innovators should continue to actively engage those who lead our government. Let’s work with government as an ally and partner in improving the health and well-being of Americans.
Watch Senator Frist’s recent presentation on healthcare innovation and why government matters here.
