On today’s show, guest and free market champion Don McDaniel explores what it means to apply free market principles to healthcare, why being a stage-agnostic partner is a good thing, and the role of educational institutions in transforming the industry.
Don is a serial entrepreneur with more than 25 years of experience in healthcare leadership. As CEO of Canton & Company, he helps pioneering healthcare firms across the industry achieve growth and success. He is a recognized thought leader and health economist, and a sought-after speaker, writer, and facilitator. Consistent across his diverse background is helping disruptive healthcare companies of all sizes and stages succeed through strategic growth.
Mark Redlus [00:00:02] Welcome to the 10XTotal Podcast hosted by me, Mark Redlus, and Gabriel Eichler.
Gabriel Eichler [00:00:08] Hi, everybody. Great to be here.
Mark Redlus [00:00:09] Gabriel just talked. I try to do that on every podcast, every single one. It’s so dramatic. It’s almost like people expect it.
Gabriel Eichler [00:00:16] Kind of embarrassing though.
Mark Redlus [00:00:17] I’m gonna keep the recording of your voice just so you say, “Hey, everybody!”, no matter what happens. So that’ll be really great. Um, and we have today our guest, CEO of Canton and Company, Don McDaniel.
Don McDaniel [00:00:31] Hi, everybody. Thanks for having me.
Mark Redlus [00:00:33] Great to have you here as well. So, this should be a great conversation. We’re…Based on the intro that we just left everybody with I think you get a sense of who our guest is and we’re gonna…We just got done having what we like to think of as our pre-podcast lunch and had a great conversation. That should make this a very fun next forty-five minutes or so. So, with that, I guess you know, Gabriel, do you want to open it up?
Gabriel Eichler [00:01:01] Yeah, sure.
Mark Redlus [00:01:01] Ok.
Gabriel Eichler [00:01:02] Well, listen, Don, thanks so much for coming and chatting with us a little bit. You know, I guess we would really think it’s a great place to start to tell us a little bit about why you started Canton and you know, what led you to this decision and what special role do you think that you play in healthcare with the work you guys do there?
Don McDaniel [00:01:22] Okay, great. Good. And I just want to say, I just learned something about DNA in my ancestry kit that I am predisposed not to having the asparagus impact, my urine flow, the smell of my urine flow. So, you’re always learning in these things. And I’m thrilled, but I’m happy that…They told me not to free lib, but anyway.
Mark Redlus [00:01:46] We love it. I can’t get enough. I mean, the peloton is going to find its way in here in minutes.
Don McDaniel [00:01:51] That’s wonderful.
Mark Redlus [00:01:52] Yeah, perfect.
Don McDaniel [00:01:53] So Canton and Company is a healthcare strategy, and innovation firm, and we’re based in Baltimore. But that’s…we’re really a distributed firm and my partners and I came together a couple of years ago–and I should say…I should tell everybody that, as I tell everyone in the news, me, I have a massive case of ADHD and I’m not medicated today. So, some of these stories may meander a little bit. We’ll see how this…If Mark smacks me in the head, I’ll come back to reality. But, um…
Mark Redlus [00:02:26] It’s a big table. It’s hard to hit across it.
Don McDaniel [00:02:29] The–I’ve always been intrigued sort of by this dichotomy in health care. The mission orientation of health care I think is fantastic. As I’ll tell you throughout this thing, I’m really sort of a free market guy; I believe very much in the power of markets and true markets and true capitalism align, you know, doing good for a long period of time and then doing well. So that’s appealing to me. And in terms of problem solving and health care. So that’s an exciting element of this. And then candidly, I’ve always been–it’s like a motor vehicle accident. I’ve always been attracted to health care because it’s been so patently dysfunctional and challenged and problematic. And, my friend Steve Klasko, the President at Jefferson [University] said one time, you know, in all of the things that we take for granted in the 80 percent of our economic lives, it’s not health care, our challenge is in health care. And I thought, jeez, that is really so true. And, you know, why is that? So, we wanted to start a firm that could help. We wanted to start an enabler or an accelerator, in a sense that could help firms that really wanted to make an impact and change the game. And, you know, not just make money, not just flip burgers, not just turn, you know, turn profits in those kinds of things. And not that there’s anything wrong with those things, but if they are divested of the mission and improving what consumers need and want, then, you know, we have a problem with that. So, a group of professional colleagues that I’ve worked with in various scenarios for a long time–we started talking about this concept of smart health and started thinking about health care very holistically. And, you know, I think that we were challenged by or we thought that there was this exciting opportunity because with the advent of a change in the payment system, in accountability, really in driving to more of a–like we expect in the rest of our economy–a results oriented or results outcomes based payment system that we could actually drive, you know, dramatic improvement. We could become customer, you know, consumer centric. We could be very focused on driving transparency. You know, I’ve always been incredibly bothered by variation and the tremendous lack, the tremendous variation and not the variation we can’t control, but the variation we can control–.
Gabriel Eichler [00:04:56] Unwarranted variation.
Don McDaniel [00:04:57] Unwarranted variation. You know, hospital acquired infections, prices, I mean, there’s a million myriad of examples. And so we said, hey, you know, in in our small way we can do better. And so what? And, you know, candidly, we thought the nexus of that opportunity is really around entrepreneurs and helping entrepreneurs that have great ideas, that really want to make an impact and want to make a difference. You know, helping them, you know–they’re the Pied Piper. And we wanted to be sort of the counterpart, Pied Piper. So, it’s been an incredible journey for us. And we’ve tried to build a firm that, in a sense, whatever our partner needs–and a lot of times this is stage oriented. In other words, these needs are acute for some period of time that, you know, whether it’s a marketing support needs or strategy support or operation support, transformation, data analytics, whatever these things are. It’s a little bit like income where most of us are not really low income forever, but all of us have been in a low-income segment. So, it’s this sort of strata that moves and migrates. And, you know, the best excitement that I have is, you know, watching a partner company hit it out of the park and change the game and change lives and all of those things. It sounds trite, but it’s really why we do it. So, I think it’s–you know, these are coming up on halcyon days. I mean, this is–I really feel like I’m very excited about the future, despite all of the challenges, despite all of the concerns and issues. But I think that there are tremendous opportunities to help people improve holistically, improve their health status. And we want to be part of that.
Gabriel Eichler [00:06:40] Wow, that’s a great story and amazing, amazing intro here.
Mark Redlus [00:06:45] Yeah, I mean, following up on that because, you know, full disclosure, we get to work with Don over here at my other job. How do you make a decision on the clients that you take on? Because, you know, you’re a pretty boutique shop and you’re doing very intense strategic level thinking, high impact stuff. You do drive results. You get these things done, but how–you can’t take on everybody and have limited bandwidth with your senior team. So how do you pick and choose what you’re going to do?
Don McDaniel [00:07:22] You know, it’s such a great question. It’s like the quintessentially most challenging part, I think, of the work that we do and what I do. And, you know, it’s challenging both because I just love the diversity and you know I can’t even spell focus, so that’s part of the issue. And I have, you know, really incredibly talented colleagues who we can always push. I think they always push the envelope. And I think this is really important, by the way, I think a character is important. And we have people with high character quotient. So that means it’s not just good enough to take home a paycheck. You know, they want to impact. They want to impact the work. You know, they want to impact your work, you know, and help your company grow and help the people in your company, because people are sweating, you know, blood, sweat and tears and these things that. You know, I’ve been a big Patrick Lencioni fan for a long time. I think I’ve read, you know, basically everything. And I even love the genre or the light motif of how he uses the fables to introduce these concepts. But the recent book, I think it’s called Ideal Team Player, maybe, he talked a lot about this concept of, you know, it was really about evaluating people for your team. And he talked about this concept of humble, hungry and, you know, people centered, or person centered…excuse me. And that struck me. And it struck me both as a construct to help us think about how we add talent. We’re in a knowledge business. You know, this is really about–you know, there’s technology and automation, all these other fun things, but it’s people, process, technology. And all of those elements are critically important. Not the least of which is people. Right? So, we’re about a talent business. And so we think about that a lot in terms of, you know, who we hire. And sometimes, as I’ve always told folks, I’ll take, you know, attitude, you know, all day long over aptitude. I mean, I want–you know, we want smart people, we hire smart people, but we want people that are really all in and have a “yes” mentality and those kinds of things. And that’s what we look for in customers. And so that’s one aspect. We do have to make choices about who we work with. And candidly, you know, part of my–part of the design plan is to figure out how we become less dependent, as an example, on clients that can always pay us day one. You know, and so because we want to be along and be supportive and be along for the ride, we want to make as many bets as we possibly can. We love working with early stage companies. I’ve talked a lot to investors about trying to be stage agnostic and they laugh at me. You know, it’s sort of like, well, you can’t, you know, you can’t do things that are stage agnostic because, you know, if you’re a venture investor, there’s a certain set of requirements. And if you’re a private equity investor, there’s a different set of requirements. And the twain shall sort of meet. And I said, well, that’s interesting, except that, you know, again, I think part of this disconnect with this health care business is if a company can solve problems, then why do we go through this stage? Like–I mean, I understand the financial stage and the maturity model, the company, but let’s try to figure out how to get the impact players in faster and soon earn an earlier. And I hate the notion that we are limited by financial constraints in who we work with. We’d be working with a lot more folks if obviously, you know, sort of basic tenets of economics, if things were free, you know. We’ve got scarce and finite, but we try to do that. The other thing I would say is we want to work with people that align with our thinking around the power and the importance of markets and alignment with. A lot of the people that we work with spend a lot of time thinking about alignment and efficiency and effectiveness. They spend a lot of time thinking about how to knock the cover off the ball, vis-a-vis serving their customers. They want to exceed expectations. A lot of our customers are really motivated to solve a problem that might have started in their personal life or had been impacted. We have a number of companies that have had, you know, founders or others who have been impacted by, you know, various health concerns and issues. So those things are very impactful and powerful. And then I think a lot of times there is a little bit of an “it” factor when we talk to a company or a founder or a leadership team or whatever. And you sort of just figure out they get it. They think beyond, they’re willing to ask the questions that other people aren’t. But, you know, they’re humble, hungry, and people oriented. So, you know, it’s a constant battle, but it’s, you know–but and hopefully we solve that and broaden the lane. But I think it’s great. The last thing I’ll say on that is, you know, even I am aware of the fact that you can’t delude yourself to the point where you’re basically not serving anybody. You know what I mean? So that’s another aspect of this that’s challenging. But, yeah, we’re looking forward to doing this more and growing it.
Gabriel Eichler [00:12:41] You know, it’s funny. You talked about people, process, and technology, but you also didn’t name it. But clearly, this book about it, it’s also culture. You know, it seems like culture pervades everything to the point that you don’t even name it, but it is everywhere in what you guys do.
Don McDaniel [00:12:55] Yeah, I’m a big Deming fan. W. Edwards Deming. And one of the things that I remember from all of my Deming reading is that he talked about like, if you need a slogan or a tagline, it’s probably not real. It’s not going to stick. It’s not acculturated. It’s a sign on the wall, you know, and it’s a management fad. And people see through that. You know, people see through that stuff. And so I think, you know, that a big part of our job as a firm in terms of the people that we hire, certainly the people that we surround ourselves with, the partners that we have, that that acculturation is important. Do they have a team-oriented acculturation? You know, I talk a lot about–I love, and I think it’s important, the concept of servant leadership. But, you know, the proverbial, sort of, turning the pyramid upside down, you know, and the leader shouldering this. I’ve been very fortunate to be involved in a number of organizations where, you know, literally the most senior people would, you know, do anything, clean the bathroom floors if that’s what they thought was needed to be done to get the organization ahead. So, I think it’s great. And it’s also humbling for me that, you know, I sort of get to work and I look around, I talk to my colleagues, and these are people that, you know, that really put team first, you know, and put team ahead. So that’s great. That’s a great thing to be in. The other thing I’ll say about that is, and again, [I’m] a big champion of entrepreneurship, you know, it’s very–you know, entrepreneurs get promoted when they hit. But, you know, many of them don’t hit. And there’s a lot of sweat and a lot of toiling in the vineyard and a lot of stuff that doesn’t end up happening. And people take mammoth risks, you know, and change their lives and, you know, all in an effort to try. And at the end of the day, it is to try to make things better. I think people are jaundiced and might say, well, you know, it’s to hit the lottery. Well, you know what? That’s not hitting the lottery. Working 12 hours a day, seven days a week and busting your hump and then finding the business fails–and most of these businesses fail, you know, and so we want–we love that notion of, hey, that person who really deserves to be in a role. And I’ve worked with a number of folks who have failed before and keep coming back. I’ve failed a ton. You keep coming back. Take another bite at the apple. Keep going. That’s incredible. So that’s what motivates us.
Gabriel Eichler [00:15:20] Yeah.
Mark Redlus [00:15:21] I want to go down that road on acculturation and also culture, especially in healthcare innovation. Because when we talk about, you know, again, in my other job about putting innovation into, you know, our partner health systems or plans or what have you, you know, we sometimes we get so hyper focused on the products that we’re building. Like how innovative they are, how much they solve that problem. The user experience, you can go on and on about how consumptive they can be for patients, providers and the like. But you know, the question I have for you, because you see so much more both on what would be the health plan provider system side as well as these companies that are trying to break out, be successful and do it. Culture feels like an important part of being able to align what you’re doing technologically, and in many cases, but it could be a new med device or something like that, but bringing it into these environments where, you know, their culture is one way and it’s been that way for a long time…This is a hell of a question. But what is your–if you could think of one or two or even three things that, you know, just really kind of scream out at you as what’s a common–what are the common factors that allow digital health or health care innovation companies break out, breakthrough in these partner organizations that others don’t? They just don’t have it.
Don McDaniel [00:16:59] Yeah. Yeah. No, it’s actually–and I know it was a labored question, but for good reason.
Mark Redlus [00:17:04] Yeah, sorry, going on a journey of my mind.
Don McDaniel [00:17:04] No, no, for good reason, because I think this is, you know, this is the proverbial sixty-four thousand or billion or billion, whatever question these days. I think, you know, innovation is overhyped. I mean, it’s become a really watered down, neutered word. I mean, what is really innovation. But it’s critical. You know, my colleague, our marketing leader, Kathleen Hertzog, talks a lot about pragmatic innovation. You know, it doesn’t have to be, gee whiz, you know, grand slam, not the–you know, whatever. And I think sometimes in healthcare, we get–we have shiny object issues. And, you know, I’ll say with a lot of health systems as an example, I mean, you know, without naming names, you know, if you look at the litany, as an example, of capital expenditures over the last 15 or 20 years, in most health systems that have more than a couple hundred beds, it’s a graveyard of really, really poor investments that haven’t been deployed, assimilated, integrated. You know, they’re not adding value. And so you say, okay, you do that a couple of times, that’s bad luck. Or maybe you had bad people. You do that over 20 years and that’s institutionalized. And this notion that we’re making investments for the sake of making investments, we’re chasing the shiny object, all of those other things. So, number one, I would say, you know, innovation can be very simple. And, you know, we find a lot of situations where, you know, a process tweak as an example could really be the innovation that’s needed. Now, I don’t want to dismiss the gee whiz, grand slam, wham, bam. You know, those innovations are absolutely critical. Also, the challenge that I’m having right now, and as–you know, we’re dealing–you know, it’s sort of like the worst of all climates in a sense. Right? So, you have, you know, this me too, lemming environment with hospitals and health systems. So, you know, one hospital creates a venture fund and then the other one has to have it. You know, I used to say to people in the 90s–and I was with the Bon Secours Health System at one point in my career–you know, all of the hospital CEOs went to an advisory board meeting in the early 90s and they said, go and buy medical practices and buy health plans. And they all went out and did that. And then in 1999, they went to another Four Seasons in another city and they said, now sell all your physical practices, and sell all of your health plans. And, you know, so dutifully all the CEOs went away. And, you know, I may sound a little irreverent, but–Catholic school upbringing–But…
Mark Redlus [00:19:43] This should be called the irreverence podcast.
Don McDaniel [00:19:46] Yeah, yeah. Yeah. Although I will say I have this concept of the innovation over-under if the CEO is less than five years away from retirement. There is a very good chance that not a damn thing’s gonna happen in that system. But that’s a different discussion for a different podcast. But here’s what–number one, you know, I have tremendous respect for physician leaders. I’m still at the core, a payer-provider guy and still at the core, a provider, a physician champion. I love the opportunity that physicians and community-based providers have to change the game. I think if we look at the innovation ecosystem over the next, let’s say certainly 10 or 15 years and we think about what’s happening in terms of demography and economics and social mores and all of these other things, we’re going to see dramatic–and it’s already happened, it’s already happening–dramatic volume move out of the institutional settings and into the community settings. And so, a long-winded thing–one of the things you said was, you know, a couple of things. Well, if there is very strong physician leadership for change, that is a really strong, you know, imprimatur. That’s a really strong leading indicator that things are going to get done. That’s–I would say, you know, number one. Number two, the governance of those organizational partners is important now. I recognize that for everybody in this audience that’s listening and, you know, sell stuff to hospitals and health systems or long term care or payers or these kinds of things, you know, it’s not necessarily the happy part of the program, but the point is, when the governance gets complicated, when you don’t understand who the champions are, when you don’t understand cause and effect in terms of how your tools are used, you know, a lot gets lost in the sauce and you can’t really drive this innovation. So…
Mark Redlus [00:21:37] And the governance is so complicated.
Don McDaniel [00:21:39] Governance is so complicated.
Mark Redlus [00:21:39] Even in what are conceivably, you know, are considered small or smaller regional systems, they are just incredibly complicated.
Don McDaniel [00:21:46] Actually sometimes more complicated. There was just a piece, I can’t remember, let’s say over the summer in Health Affairs and it was talking about merger and acquisition activity in hospitals. And I think maybe Health Affairs don’t quote me this, but there was a comment like, you know, hospital–local regional hospital systems will sometimes affect M and A [merger and acquisition] activity to the point where they won’t drive an M and A effort with a certain buyer because it will displace them.
Mark Redlus [00:22:12] Mm hmm.[00:22:12] So they will make a decision that sub optimizes the community and the organization to benefit them. And that’s really not how things should work. You know, and candidly, if the governance were stronger, if there was more accountability, we wouldn’t, you know, we maybe wouldn’t have that. The last thing I’ll just say and by the way, I am bullish on innovation and I’m excited about it. And I think that what we’re trying to do is say, hey, let’s solve real problems in real markets. Let’s stop doing pilot after pilot after pilot with no end in sight, with no ostensible next step. Let’s test the stuff in the market, right? I am still very concerned, and people scoff at this–but, you know, I think about consumers and I think about consumer sovereignty. And basically, consumers have been–there’s been a lack of aggregate consumer sovereignty since the mid 1960s. Consumers have been checked out of the health care business economically and otherwise for a very long time. And so, you wonder at the end of the day what has to happen there? And some people say, well, deductibles are going up and there’s more skin in the game. And I think there’s some of that. I think more impactful is the digital native generation. I think that, you know, millennials, younger folks who even in absence of, you know, the sort of prima facie economic relationship with the health care system, want to know what’s happening to them. And they want to have easy access and they demand all of the things that they demand, whether they’re ordering food or playing video games or, you know, any other, you know, sort of this on demand. That’s great. That’s great for this business. So, then the question becomes, can we turn the battleship, which is again, why I’m so bullish about community-based approaches, because we can turn those battleships quicker. You know, we can affect more. So, you know, I’m incredibly bullish and excited about innovation, but I sort of think you’ve got to sort of call it what it is and you’ve got to be able to identify, you know, this is faux, you know, versus, you know, something else that’s real.
Mark Redlus [00:24:16] That makes sense. Before you ask your question, though, I just want to make a statement. He’s hit the golden bell of candidly…
Gabriel Eichler [00:24:23] I’ve heard…three times. I know.
Mark Redlus [00:24:25] You got three times too? Oh, that’s nice.
Gabriel Eichler [00:24:27] I thought, he’s definitely qualified to be on this podcast.
Mark Redlus [00:24:29] Oh, my gosh. Candidly, this has been really good.
Gabriel Eichler [00:24:32] Yeah.
Don McDaniel [00:24:34] I’m sorry.
Mark Redlus [00:24:34] No, it’s hilarious.
Gabriel Eichler [00:24:34] No, that’s my tag. It’s candidly. And he makes fun of it. So, I’m glad that I’m not wrong.
Don McDaniel [00:24:38] That and I’m not being candid all the other times, cause people could tell you that I’m holding back.
Mark Redlus [00:24:44] Candidly, how is the Peloton going?
Gabriel Eichler [00:24:46] Candidly, I still love the Peloton. I’m telling you, man. You know, if health care had devices that worked as well as an experience, as engaging as the peloton platform is, we’d be in a much different place. Right? I mean, seriously. Why can’t health devices, medical devices, digital health experiences be as experiential as something like a Peloton?
Don McDaniel [00:25:09] Oh, yeah.
Mark Redlus [00:25:09] Yeah.
Don McDaniel [00:25:10] Think about even, you know, highway safety. Right? If you looked at a chart over the last 50 years of, on the same chart, of the miles driven versus the fatalities. It’s a complete inverted model. I mean, we’ve tripled our highway mileage and we’ve cut by an order of magnitude of four or five hospital fatalities. And when you have a company like Volvo that says, hey, our mission is no one dies in a Volvo. By the way, we didn’t say no one dies in a Volvo if you’re not impaired or if you’re not hit by somebody who’s impaired or if you’re not on a rainy or icy road, they say no one dies. Well, whereas our BHAG [Big Hairy Audacious Goal]? OK? Where is that in health care?
Gabriel Eichler [00:25:51] Yeah, well, we don’t have health care. We have sick care. Right? As we all know.
Mark Redlus [00:25:55] It’s so true.
Don McDaniel [00:25:55] You’re right.
Gabriel Eichler [00:25:55] You know? But back to your point about pilots, because I think this is such a challenge. I spent a lot of time in the AI space, in the AI world. And at this point, it’s such a nascent space. And I have the sense that it’s very difficult for consumers to get a sense of what works, what doesn’t work, where they should invest. And ultimately, this leads to people doing a lot of pilots and seeing the performance of various options in the market. So, pilots are yes, they’re hateful to the entrepreneur, but to the consumer, they provide a level of evidence that’s necessary to get the bureaucracy to roll in the direction of that support in supporting that technology or innovation.
Don McDaniel [00:26:35] Yeah. Yeah.
Gabriel Eichler [00:26:36] And so, you know, what’s an alternative to pilots, if you just had to think practically, here?
Don McDaniel [00:26:40] I mean it’s a–and it’s much more an indictment.
Mark Redlus [00:26:43] Such a good question. You know, pilots are a big problem in health care.
Don McDaniel [00:26:46] And it’s like the necessary problem. It’s the necessary evil, right? It’s much more–as we were leaving our celebratory pre luncheon where I didn’t actually have asparagus, but…
Gabriel Eichler [00:26:58] Smelled like it though.
Don McDaniel [00:27:00] Yeah, well, sorry about that.
Mark Redlus [00:27:01] That’s what the mints were for.[00:27:04] [laughing].
Mark Redlus [00:27:04] I don’t know if everybody got a mint. I think Don got a mint. I got a mint.
Gabriel Eichler [00:27:07] Should have taken a mint.
Mark Redlus [00:27:08] Yeah. The mint free.
Gabriel Eichler [00:27:10] Somebody air out this microphone, I tell ya…
Mark Redlus [00:27:12] It’s terrible.
Don McDaniel [00:27:13] You know, I’ve always–you know, five, six, seven, eight, nine years ago, the Holy Grail was people would always ask me, hey, can you help me get a pilot? You know, early companies, can you help me get a pilot with such and thus and that was a brand imprimatur thing or whatever. And that was very important. And, you know–I was gonna say candidly, I’m now very sensitive…
Mark Redlus [00:27:31] No, no. You should use it.
Gabriel Eichler [00:27:33] If you don’t I will.
Mark Redlus [00:27:34] There’s no limit on it. So, go for it.
Don McDaniel [00:27:35] I’m very sensitive now. I’m very self-conscious of using candid. So, you know, I mentored–There’s a really neat, early–but not so early anymore–a company called Protenus in Baltimore, which is a privacy and security company that was started by two Hopkins Medical School students who went on sabbatical to start a company, which was a proof of concept. But the long and the short of it is–and they’ve built a really, really fantastic company, sort of incorporating data science and A.I. and, you know, a bunch of other things. But the important takeaway there is that they had an interpersonal relationship with the CMIO at Hopkins and they were talking to that person at a time when Hopkins was deploying Epic.
Mark Redlus [00:28:20] Mm hmm.
Don McDaniel [00:28:20] And he had some significant privacy and security issues. And so you think about the nirvana, the serendipity of I’m talking to, you know, the leader-a major leader- who is almost solely principally responsible for this billion dollar deployment, and he’s telling us the thing that keeps me up at night is X, and we’re in that space, and, you know, can you spell pivot, you know, and how fast? And that was a company that started as a series of interested pilots. And Hopkins was interested in it both to solve problems, and they also gained an interest from an investment perspective. And guess what? That was a great–if you think about that path and the nurturing path–that’s a fantastic story. The flip side of that is what I’m seeing now is, you know, you somehow reach, you know, a C level person and then, you know, you get sort of foisted upon somebody else and they hear, you know, I’m supposed to sponsor a pilot and there, you know, there’s no sort of end game. It’s not–again, it’s not outcomes based. And so I’ve seen a lot of, as an example, a lot of technologies that have had very good results during pilots, but it hasn’t led anywhere. So, part of this is working with companies to help them understand. OK. You know, of course, we have to do pilots. How should we negotiate those pilots? What are we looking for? Who’s the right kind of pilot partners and so forth? Is the pilot a pre-commercial activity or are we addressing, you know, if we hit goals, you know, the things that you talked about. So that’s, I think, that’s one element. The second thing and I’m gonna be at a MedCity Invest conference hosting a panel next week that basically is talking about the challenge in health care around B2C investing. Right. So why can’t we drive more B2C tech firms? You know, early stage companies. And I and, you know, I’m by no means an expert, but I was thinking about like, you know what, if somebody said to Zuckerberg early on, will be the key is not the C [in B2C], the key is you have to sell to other businesses who then sell through to consumers. You have to stop this model. Don’t engage consumers. That’s the dumbest thing ever. Well, you know, we sort of know the end of the story. So, it’s pretty interesting. The industry is so jaundiced against consumer engagement. It gets back to what–you know, obviously, I think investors even discount the ability of consumers to impact decision making, you know, in health care or they would be promoting more investment. So that’s another element of this that I think is challenging. And in most cases, you have to, even if you didn’t intend on doing this, there has to be an enterprise play strategy in your technology workflow or otherwise, because that’s how you’re going to really attract investors. Then you might add on a C component. The third thing, though, in a more practical sense is, you know, and I know there’s a lot of discussion about what A.I. will do with workforce and so on, so forth–and by the way, you know, I’m just learning a ton. I don’t know anything about it. But you know the workforce changes that are about to happen are just mammoth. You know, and gig economy and digitization, and remote [work] and then, you know, jobs changing all these other things. And I’m not a Malthust, you know, who says, “hey, we’re going to run out of food in 200 years”. We’re going to–I think we’re gonna be fine. But I will say, you think about some elements of health care–I mean, I think if you look at the data from 1980 or 1990, health care and edu–higher ed had been the two sectors where we’ve had actually negative labor productivity. We’ve had like 3 percent negative labor productivity in the health care industry since 1990, which means the only way we’ve grown is adding more jobs. So now we’re at this point where one in seven jobs are in health care etc. etc.. But you think about things like functional, tactical, transactionary elements of health care revenue cycle in hospital settings or physician settings, [they are] incredibly manual, people oriented. So impacts for A.I. I would say to, you know, innovators and early stage entrepreneurs, “hey, these are areas where somebody in the finance department is going to listen to you if you say that this tool can reduce your headcount.” I mean, I hate to say it, but can reduce your headcount by 10 FTEs [full-time equivalents]. You know what I’m saying? So, you know, it’s an evolution thing. I am beating the drum, though. I do think that there has to be consumer engagement–a consumer engagement component. And so, anyway, you know, I think that we’re going to see this evolve. It’s a shame where it’s gotten. But I would also say to early stage companies, if you’re in a pilot, [it] doesn’t mean it’s a death knell, but you better manage that relationship.
Gabriel Eichler [00:33:18] You know, I spent four years running part of a company called Patients Like Me, which is one of the (probably) biggest B2C players…
Don McDaniel [00:33:25] What a terrible outcome…
Gabriel Eichler [00:33:27] Yeah, what a terrible outcome with CFIUS. Yes, I know, exactly.
Don McDaniel [00:33:29] Yeah. Disgusting. Sorry.
Gabriel Eichler [00:33:31] Got bought by Optum. I know you’re a free market guy.
Don McDaniel [00:33:34] I’m a free market guy.
Gabriel Eichler [00:33:35] That must really be upsetting you.
Don McDaniel [00:33:35] And you know that company was driven by the brothers…
Gabriel Eichler [00:33:38] Ben and Jamie.
Don McDaniel [00:33:39] …Solving problems. You know, the love, right, and the passion.
Gabriel Eichler [00:33:43] And every single patient there was donating their data for good. And then all of a sudden that now got turned off basically.
Don McDaniel [00:33:48] Yeah. It’s terrible.
Gabriel Eichler [00:33:49] Yeah. It’s an awful outcome.
Don McDaniel [00:33:50] But better value destruction like, you know, crazy.
Gabriel Eichler [00:33:54] Right, right. But I guess that, you know, I saw the lessons of B2C there. It’s a conversation for another time. But absolutely, I’ve seen how it’s a challenge in engaging, you know, patients. You know, the reality is that most people in the world are not a patient today. Everybody in the future will be a patient.
Mark Redlus [00:34:11] That’s right.
Gabriel Eichler [00:34:11] Yeah. And so the sick among us are 5, 7 percent of people. That’s it.
Don McDaniel [00:34:16] Yeah. Yeah
Gabriel Eichler [00:34:16] And they are a tiny minority. So we look at health care satisfaction with health plans. Most of the people voting on that or reviewing their health plan are pretty healthy.
Don McDaniel [00:34:25] Yeah.
Gabriel Eichler [00:34:25] It’s the sickest people who are getting screwed by the health plans sometimes.
Don McDaniel [00:34:27] Yes.
Gabriel Eichler [00:34:28] And having the biggest challenges, you know, and they’re the ones that have a minority of the vote…
Don McDaniel [00:34:32] Yeah.
Gabriel Eichler [00:34:32] …On which health plans are good.
Mark Redlus [00:34:33] But, you know, riffing on the consumerization, because this is really near and dear to me, too. Is this idea that, you know, it’s almost the only way health care can go because you kind of wrung out what we can do institutionally, I think. And if we can move the needle closer to the patients kind of “quantified self” to steal that term and do consumerization pieces, if they can–And look, it’s not for everybody a lot of people out there do not feel like or are ready to take control of their own health care like they…
Don McDaniel [00:35:06] That’s true.
Mark Redlus [00:35:06] They kind of turn it over to their primary care physician or somebody in their care ecosystem to take care of it for them, but it feels like it’s–you know, you were saying this at lunch, or something like this–which is, it’s really, it might be a contrary view to best practice in building a successful health care company–Digital Health Company. But really, I mean, it’s going to be the breakthrough that unlocks, you know, what this podcast is about, which is, you know, 10 Xing…
Don McDaniel [00:35:44] Yes.
Mark Redlus [00:35:44] …Outcomes, you don’t 10 X them improving, you know, how we intake a patient necessarily in a waiting room.
Don McDaniel [00:35:50] No, no, right.
Mark Redlus [00:35:50] It’s not going to happen.
Gabriel Eichler [00:35:51] Incremental, yeah.
Don McDaniel [00:35:51] No. This is–and you know, and not the incremental that also ties out to quality and value. That’s a good thing, right, but I will, this is, I think a very interesting topic. And so we think about like pockets that we’re very interested in. I talked about smart health. Well, this concept of smart aging, which has been heavily invested in in many other countries in Europe, it’s been heavily invested in by the you know, by the public sector. But there are segments, aging is a great example of a segment where there’s been significant personal consumer investment in, you know, things that we more closely identified with health care related services, i.e. institutional care or whatever the case may be, where I think we’re starting to see the sunlight come through a little bit. Right. Because, you know, if a set of digital tools and your screening and diagnostic tools can be done remotely and the ability to tether and collaborate and do all of these other things can happen in the context and under the watchful eye of the health care team, both official and unofficial, including family, and we can avoid spending seven grand a month sending Mom or Dad or both to the assisted living facility, that’s a straight line investment. We know that seniors want to age, you know, seniors want to live at home. Seniors want to die at home, you know. So that’s a natural thing. We know you know better than anybody that, you know, the tie up between home status and health status, behavioral health status as an example, you know, I mean, all of these things tie together. What’s this discussion now about loneliness, you know, is maybe a bigger killer than, you know, some other, you know, environmental factors. So I think that there’s enough spend in some of these pockets where we’re starting to see some breakthrough that says, hey, you know, here is–and you know, candidly, part of this is you know, and this is why this royals made this whole discussion about socialized medicine, because if we further take if we further distance the participant from the economic activity, we’re going to use the word neuter or numb, I can’t remember, but we further numb, you know, we distance there’s that dissonance, and that’s the challenge. Right. And so I think there’s a couple of interesting things that are happening. One is that as patients age out and we know that demographically we’re facing this, you know, silver tsunami, but the other thing that people are talking about right now is, you know, and it’s starting now and maybe it’s a little bit behind, but what’s happening is, you know, the people that are now aging, these are no longer people that are health plan neophytes. These are people that have been in the group health plan through their employer for their entire lives. Okay. So that’s number one. So there is an openness to M.A (Medicare Advantage). There’s even a selection of M.A., Right? We now know as an example that African Americans, Latino Americans overwhelmingly choose in majority to go to an M.A. plan as opposed to traditional Medicare. Right. So we have that dynamic changing. We also know that the digitization is they might not be digital natives. You know, I’m not a digital native. I think my kids intuitively solve problems using technology or thinking about digitization. I’m not exactly there, but I’m, you know, I’m pretty good, you know, and I’m pretty thoughtful. And I’m trying to use technology. But every generation basically from here on out is gonna be a digitally native generation. Right. So, think about those dynamics that are changing over time. I think we are going to, you know, to start to drive this. The last thing that I’ll say, and it’s still really interesting to me, sitting here in two thousand, almost two thousand 20, I was at a conference a couple of months ago and they had a panel of employers and Boeing was there, and maybe IBM, I can’t remember all of the employers, but large employers, sophisticated employers and it was really weird and wild, like the whole employer, you know the bevy of talent that the employer hires to hold the health plan honest, and the health plans not even at risk, the employer is self-insured, but did you pay somebody you shouldn’t have paid? Did you direct care to places that we didn’t want you to direct care to? So the people that really understand this system, they understand some of these nuances that not everybody understands. I mean, a health plan doesn’t really care a whole heck of a lot about where you go to the hospital if the spend is not on their dime and in fact they might want to curry favor with that hospital for other, you know, to build relationships, right. So we start to think about how this whole thing gets very nuanced in the strange bedfellows. And I, but I think it’s going to evolve, you know, and I’m hopeful that it’s going to evolve, and it seems like we’re having more of a discussion now. You know, there’s at the younger end there’s a lot of also discussion about, you know, for free, you know, and socialize. I think, you know, we’ll see how that sort of plays out. But I’m hopeful that, you know, with knowledge will come improvement in the system. So that’s a good thing.
Mark Redlus [00:41:08] That’s cool.
Gabriel Eichler [00:41:11] Go ahead.
Mark Redlus [00:41:12] Yeah. OK. So, this is kind of a fun digression, but not super digression that I’m going to ask. So we were chatting about this at lunch, joking about it as this question. But, because he, Don, turned the tables on me and really made me think. So, that’s taking my medicine, if you will. But the question, you know, for Don is, you meet a lot of people, I mean, you are all over the place talking to movers and shakers, real thought leaders. Who in that crazy cadre of folks over the last five years has really struck you as the most interesting person in your world?
Don McDaniel [00:41:52] So, I am very fortunate that I get to meet and talk with a lot of interesting, really smart and really good people and it’s you know, that’s without question a blessing. And so I could, I have, you know, I could name drop a couple of interesting people who are sort of idols to me. You know, Clayton Christensen is a guy that I’ve loved forever and read everything, and I had the good fortune of speaking at a conference at SAS with him and got to meet him and talk with him, and he’s just a marvel. And by the way, you know, very tall guy played basketball in Great Britain. Great story, you know, great history. I had a long relationship with G.E.. I spoke at a conference at G.E. and Jeff Immelt spoke right before me, and I got to spend some time with him, which was, you know, a really great, fascinating guy. I talked to you guys. There’s a young entrepreneur that I think…
Gabriel Eichler [00:42:42] (To Mark) You hear that? You’re the next Jeff Immelt.
Mark Redlus [00:42:44] Yes. That’s my dream.
Gabriel Eichler [00:42:45] Or Clayton, whichever you want to be. Yeah.
Mark Redlus [00:42:47] Oh, If I could be taller, that’d be great.
Don McDaniel [00:42:51] The, there’s a young guy that I talked about in Nashville named Brad Smith, who is in his mid 30s and started Aspire with Bill Frist, with Dr. Bill Frist. And I got to meet him a little while ago and was just absolutely humbled by his humility and his servant leadership style, and he’s somebody that I’m gonna really watch. But the most, I have to say, as a Baltimoron and someone who, you know, really loves, loves, loves Baltimore, one of my idols growing up and sort of somebody that’s always been in the forefront for me is a Brooks Robinson, who is a third baseman for the Orioles, and number five, which is my favorite number. And, so, we knew him a little bit, but I got to spend some time with him a couple of years ago, and he’s just an incredibly, unbelievably good guy. And I’ll tell you just real quickly, my I had a bat that my father had gotten for me. A Brooks Robinson, that Brooks Robinson signed and he used it in the game. And I love this bat. And I was really lamenting that I couldn’t find this bat. I didn’t know what happened, this bat. And so, and I’m really upset, I’m telling my wife, where’s my bad blah, blah, blah? You know, she’s like, who cares about a damn batt?
Mark Redlus [00:44:08] What a strange thing to ask inside your house. “Where’s my bat?”.
Don McDaniel [00:44:10] Yeah, well. And so my in-laws, my in-laws moved and downsized, you know, and so I’m over at their new house. I’m helping them. And my brother-in-law pulls up and he’s got, I get some stuff out of the car. And there’s two bats in the car and sure enough off my bats are in there. I’m like, well, that’s my bat. Honestly, was like a religious experience. He said, “I think you teared up” and I’m like “that’s my bat.” So…
Mark Redlus [00:44:37] Wow awesome.
Don McDaniel [00:44:38] And Brooks Robinson is just a once in a lifetime person. So anyway…
Mark Redlus [00:44:42] That’s awesome.
Don McDaniel [00:44:43] Yeah. Yeah.
Mark Redlus [00:44:43] Very cool.
Gabriel Eichler [00:44:44] That’s amazing.
Mark Redlus [00:44:44] That’s really good. Do you, are you going to follow up Brooks Robinson with something?
Gabriel Eichler [00:44:50] No, no, no, no. Please, please.
Mark Redlus [00:44:51] You want me to go?
Gabriel Eichler [00:44:53] Yeah, yeah, yeah. You are good at this.
Mark Redlus [00:44:54] This is super fun.
Gabriel Eichler [00:44:55] This is your podcast, man.
Mark Redlus [00:44:55] My podcast? Yeah. Sometimes Gabriel is allowed to speak.
Gabriel Eichler [00:45:01] Not, is my microphone on?
Mark Redlus [00:45:03] That’s, that’s too much. Yes. Hush it down. So obviously, among your other jobs as CEO, marketeer, innovator, speaker, a thought leader, now podcaster. Right.
Gabriel Eichler [00:45:17] Welcome.
Don McDaniel [00:45:18] Thank you. Good times.
Mark Redlus [00:45:20] Yeah, super good. You just recently been named to Jefferson College’s population health first entrepreneur in residence or EIR, pretty cool. So, so prestigious because of their pop health school with Dr. Nash over there.
Don McDaniel [00:45:34] Yes.
Mark Redlus [00:45:34] This is his swan song year. Right?
Don McDaniel [00:45:36] Yes.
Mark Redlus [00:45:37] What is your plan? What do you accomplish in that role? And tell us a little bit about that.
Don McDaniel [00:45:42] So it’s not only a dream gig, it’s, you know, I can’t even describe how much of an honor it is. And, you know, it’s, a lot of that is really about Dr. Nash. And, you know, what he’s meant to me and both personally, professionally, he’s, for those that know him they’ll know, I don’t use the word mensch lightly, but he’s an uber mensch. Okay. And an incredible person and really a pioneer, you know, really, you know, you think about this was a guy who was toiling in the quality vineyards throughout the 90s. Super smart. Super smart, by the way, wife, who is a physician executive who’s been in managed care for a long time. So, you know, multiple brilliant kids. It’s sort of like the you know, you either love them or you take an ax over to their house and whatever. And that’s a horror movie scene. Sorry about that. I forgot the. No, but I loved David and, you know, very, very pragmatic. And I think he’s done more to advance the cause in general around thinking holistically than anybody else, but at the same time, when you meet him, number one incredibly humble, soft spoken. We’ll give you the shirt off his back, but also not highfalutin and market oriented. You know, he spent 10 years on the Humana board and been on a myriad of other boards and activities. He’s, he was just really the driving force. And when we started talking about this, you know, we said, you know, I wanted to be more involved. I’d spent a long time teaching at Hopkins, almost 20 years. And then, you know, had been traveling so much, it sort of became tough to do that. But I really miss that interaction. I love the interaction with students and venture and early stage things. And, you know, Jefferson is a very entrepreneurial place. You know, it’s a category busting place because of Steve Clasco and Dave and other folks. I mean, Steve Clasco has done an incredible job. You know, he inherits a billion a half dollar business and it’s, you know, probably approaching seven or eight or what, you know, whatever the number is now, and also iconoclastically doing things that people have said, “hey, that was really–why did you do that?” That was including me. You know “What? Why would you do that? Why would you?” And they happened to work. You know, there’s some method to the madness. So I thought, geez, this is a place that’s in line with how I think about the world. I don’t agree with everything they do. They don’t agree with everything I do, certainly. But I wanted to help in every way that I could. And it is David swansong, officially, although I will say, you know, he is incredibly vibrant. I think this is like just a chapter end and a new chapter beginning for him, and so, I am just excited to be close to that. There is a new dean in the College of Population Health Billy Ogelsby who has been fantastic, smart guy, you know, really supported the school for, you know–young guy, too, young leader–so I’m thrilled about being there. You know, what we’re really looking forward to is we’ve started to work together with them around programmatic development. I think we’re going to do more things around ventures. There might even be some specific activities, you know, one of the things that we’ve talked about is, you know, helping to prepare talent, you know, readiness for this sort of next phase, you know, whatever you call it. I mean, you know, the names will migrate through – population health, value, accountable care – you know, this stuff cycles. But, you know, that sort of holistic view of the world and the environmental view of the world was really something that Dave Nash taught me, you know, and so I’m just thrilled to be affiliated with him and with the school.
Mark Redlus [00:49:27] It’s awesome. It’s really exciting.
Don McDaniel [00:49:28] Really a great, great place.
Mark Redlus [00:49:30] Now we’re here today. We’re here In Philadelphia in Center City.
Don McDaniel [00:49:33] Yeah.
Mark Redlus [00:49:33] Just, just three guys having a conversation.
Don McDaniel [00:49:36] Yeah, yeah, yeah.
Gabriel Eichler [00:49:36] I love it. That sounds great.
Mark Redlus [00:49:38] Maybe two and a half. That’s enough, Gabriel.
Don McDaniel [00:49:42] Gabriel takes a lot of stuff here.
Gabriel Eichler [00:49:43] I know he does. This is the way he usually is.
Don McDaniel [00:49:46] He kids because he cares.
Mark Redlus [00:49:47] He does. I do.
Gabriel Eichler [00:49:49] Yeah. You know, it’s funny that this preparation of leaders, I feel like across health care, we haven’t cultivated leaders to bring in the next generation of innovation. And I see that a lot in digital health, as well. Right. Most health care folks don’t understand technology, they don’t understand data, they don’t understand analytics, and I always feel that there is this massive inhibition of the innovators, because who they’re selling to is not a sophisticated consumer in terms of health care administrators…
Don McDaniel [00:50:20] Oh my gosh.
Gabriel Eichler [00:50:21] …And, you know, I, this is a theme I think we’ve touched upon, and, you know, I’m curious that you’re thinking about this from the quality angle, because as well, quality and population health and accountable care and value, those are also concepts that people have to get their heads around. Right. So I’m just curious, you know, I mean, how do we think about that model and in the very broad sense about developing the leaders for tomorrow’s health care, you know, with training programs with education, with experiences that help them be ready for tomorrow?
Don McDaniel [00:50:49] Yeah. So, I mean, gosh, I could riff on this question. It’s such a phenomenal question, and it’s also, you know, it’s a, you’ll see some of the dark underbelly of how I think about this even more because, you know, I should preface this.
Mark Redlus [00:51:06] Wo wo – this is a family podcast. Oh my god. A reverent family R rated podcast.
Don McDaniel [00:51:12] Yeah. The, I want to qualify this by saying I’m a recovering hospital administrator and I’m not the sharpest tool in the shed, but, you know, the C suite at the local hospitals, not exactly a Mensa club. Okay. And so, you know, the thing that really, I tell you, this is really interesting, it’s very insular. And, you know, so why in the heck are we hiring CFOs? And, you know, we hire them as an accountant and promote them through the system. Why aren’t we hiring CFOs from Boeing? I mean, why aren’t we challenging the talent equation? Why aren’t we driving the best and the brightest? There’s also this fiction, by the way, which I don’t need to go this far, but there is a real fiction around–and I just saw this the other day and I’m gonna write a little blog blurb about this–a CFO of a not for profit hospital basically saying, well, you know, us not for profits, we, we’re more patient. We make more investments. We’re more mom and apple pie. We’re quality focused, you know, blah, blah, blah. Well, all of that stuff is basically bunkus. I mean, there’s really very little truth to that. In fact, it’s, I think even today, HCA probably makes more investment in uncompensated care in most of its’ markets than if you looked in those markets at the Catholic or the unaffiliated, not for profit systems in those markets. Right. So part of this is and, this is a fundamental question, you know, is health care an employment business, is this about employment or is this about becoming more efficient? And I think it’s also about lives. Right. So we want to get the best and the brightest and I think it’s, there’s no question, I think clinically, we’ve had the best and the brightest for a long time. Although that models being challenged now. You know, I think we’re seeing physicians for the first time in generations who are not telling their kids in the majority to go to medical school, you know, to follow in their footsteps. But we’ve got to get more talent in the business, and we’ve got to challenge the status quo more, you know, and so that happened–that’s a macro issue and a micro issue. You know, we’ve got depending on how you count them, probably five or seven of the most significant lobbies in the country, in the world, are health care, protectionist racket, I mean, lobbies, sorry, schemes, as they say, in South Africa. And, you know, somebody was talking to me about the AMA and they said, you know, the AMA–and this is true–the AMA really, you know, one big ask of the AMA is the CPT, you know, the CPT, well, then you start to figure out, well, you know, that might impact, you know, how they view reform or how they view value or how they want this market to progress, because at the end of the day, they still want you to use that, damn CPT book, you know, and I’m like, wow, this…
Mark Redlus [00:54:00] You can innovate as long as it’s in a CPT Code.
Don McDaniel [00:54:02] Yeah, yeah, yeah. Fell off a tree and broke my, you know, left butt cheek with this and there’s a CBT and an ICD code for that…
Mark Redlus [00:54:11] Right. Yeah.
Don McDaniel [00:54:12] So. So I think that this is a significant area. This is also an area I think where a lot of smart entrepreneurs come in. They underestimate the complexity and I would say the differentness of healthcare. There’s no question about it. You know, they, you know–but I do love these questions, like why do you do it like that? What? Why? That seems to be really stupid. I’m like, that’s the way we’ve always done it, you know, and, you know, that’s sort of the common answer. So I am very hopeful that we’re starting to see a change. We are, and not that this is in and of itself critical, we’re seeing more and more masters prepared people, you know, I mean, I think that that’s part of it. There’s been a proliferation of, you know, professional education programs. I think generally they’ve been they’ve been pretty good. I’m actually, a lot of people aren’t, I’m a pretty big fan of physician executives. You know, a lot of physicians now in the MBA program that I taught at Hopkins. You know, we had one whole segment of our program that basically physicians that wanted to get an MBA because, you know, they didn’t want to practice, they wanted to do something else. You know, they viewed that as a means to an end. I was okay with that, I thought they, in many cases, they made actually pretty good executives if they had the base line of support. So once again, I might, all boats rise. Right. The more pressure we place on the system to improve, the more, you know, we’re going to see improvement. Now, we’re coming, back to what I’m saying about that that conference a couple of months ago, the woman–and I don’t remember her name or her role at Boeing–she was really freaking impressive. You know, so I know that’s a really sharp finance leader who knows where every damn penny is and she’s beating the hell out of somebody on the other side and we are either going to figure out how to up this game a bunch, you know, or not. The last thing I’ll say in just, this just puts things in perspective, you know. Number one, the average hospital in America, I think, has somewhere in the neighborhood of about 40 days of cash on hand, about 40 days. So, in other words, you know, that’s the cushion that most community hospitals have. All right. If we went to–and this is not an anti Bernie political protest, although, yes, it’s anti Bernie–but anyway, the, if we went to Medicare for all if we paid hospitals Medicare rates, we’d probably see a 30 or 40 percent dropout rate of hospitals we would close, because the hospitals are so heavily subsidized by commercial payers. So it’s those kinds of economic realities that we can’t change, even if we don’t like the calculus or we don’t like the environment, we have to face those facts, so we need people that understand that. Part of that answer is the hospitals are too expensive. That’s why, you know, they need to lower their cost. But the point there is that we need to raise the bar and there’s no question about it. There are absolutely, positively not enough technology experience, again, though, I think generationally, you know, I’m really I am struck by a lot of young people, have seemingly an innate technology, understanding–they might not be technologists or have technology schooling, but their workflow technologist, you know, the way they think, and I think it’s part of this like, native, you know, digital native mindset. So, I think that’s going to change a little bit also, but you know…
Gabriel Eichler [00:57:40] Silicon Valley doesn’t have that problem. Lockheed Martin doesn’t have that problem.
Don McDaniel [00:57:43] Well, you’re right, you’re right. Now, Silicon Valley doesn’t have that problem because it’s a crucible. It’s a meritocracy. Right. Health care has been anything but a meritocracy.
Mark Redlus [00:57:52] Yeah. No, I almost health care feels like the education sector in that, like, even people who you wouldn’t perceive as tenured, it just feels like a tenured workplace.
Don McDaniel [00:58:00] That’s exactly how it feels.
Gabriel Eichler [00:58:02] So are the chartered schools of health care, then the Iora healths and the landmark healths that are reinventing models and the one medicals of the world?
Don McDaniel [00:58:10] I, you know, number one I would say, you know, I think there are a lot of interesting new models. I happen to think parenthetically, as we talked about, a lot of those interesting new models have a prism focus on primary care, on changing the primary care game, which I think is exciting. You know, I, if, and again I don’t have a crystal ball, but you think about workforce changes. I mean, I think primary care – really good, talented primary care physicians are, you know, those roles are going to change, morph, develop. There might be more specialization. I’m not generally a fan of specialization for specialization sake, because I think most of the time that’s done around income protection, but I think in this case, we’re going to see, as an example, we could see a whole group – a cadre of PCPs that are sitting, you know, in a NOC somewhere, and they’re doing, you know, they’re doing population level epidemiology work and that’s their role, you know. And so, because we’ve seen the, you know, sort of the system morph, I think we’re going to see, you know, much more or better alignment of input costs with outputs as we sort of realign this system. So I’m a big fan of primary care innovation. I think that’s huge. I have, you know this is going to sound ridiculous because, you know, we all know that not everybody is above average, but I’ve rarely talked to a, you know, a primary care physician that’s not pretty damn smart and practical. I mean, most primary care physicians, they are smart, they’re well-trained, but they’re also, you know I’m going to date myself, there’s this MacGyver dynamic in a good way. Because they, in a system of riches – in a three point seven trillion-dollar sickness system, you know, the PCPs have had to, in a lot of cases, figure out creative ways to help patients, you know, get along. And they’re creative, you know, and so I’m excited. I want to be involved in models where we can change the economics for the PCP. Let’s double or triple the best performers – let’s double or triple their income. If we paid all of the best primary care physicians in America a million dollars, it would do nothing, in fact, it would reduce the overall spend, but it would do really nothing to the spend tail if you think about it. You know, so that’s the opportunity. You know what? How would that change the dynamics in terms of folks that go to medical school, medical school sourcing and alignment? Right. But we know that the medical school model is so skewed by NIH and, you know, grants and all of those things. You know, PCPs don’t make good, great grant, you know, they don’t get a lot of grants right now. Right. But I think if, you know, if good PCPs can make a half a million bucks, I mean, that’s a really, that’s a very positive change. We want the best and the brightest in this mission critical…
Gabriel Eichler [01:00:59] Frontline medicine…
Mark Redlus [01:01:00] Frontline medicine, the closer, closer you can get to the intake point the healthier these people are gonna be probably.
Don McDaniel [01:01:06] You know, the other thing that I learned a number of years ago from a friend of mine who runs an analytics company, which, you know, whether I’m off a little bit. And by the way, you know, I embellish almost everything that I say. So just take it with a grain of salt and just trust me, don’t look anything up. But an analytics guy who said, look, you know, here’s the problem with use rates and pattern changes. If you look at the poly chronic spend in any given year, about 15 percent of that spend comes from patients who basically didn’t avail themselves of services in the prior year. So the way that this spend map, to your point, Gabe, when you were talking about, you know, the Pareto condition set where we’ve got three percent that is spending 50 or whatever, you know, that is a very complex thing because we don’t know the fine line between really healthy and, you know, train wreck waiting to happen is sometimes very thin. Right. And so how do we, how do we manage that? We have to think holistically. We have to engage people across this system.
Gabriel Eichler [01:02:06] So speaking of Aspire, which was managing end of life care decision making. Right. Well I in a former life developed an algorithm with a company of mine, we could predict the forthcoming deaths of patients in Medicare Advantage programs and our rate was 40 times more accurate than clinicians.
Don McDaniel [01:02:26] Wow.
Gabriel Eichler [01:02:27] Because clinicians are just awful at figuring out who’s going to be sick in the next 18 months and die.
Don McDaniel [01:02:33] Now, what you didn’t know is that there were some secondary market for, you know, assassinating these patients. That what happened?
Mark Redlus [01:02:39] Yeah, I mean, it sounds bad.
Gabriel Eichler [01:02:41] Yeah, no, I know. It’s a very helpful…
Don McDaniel [01:02:43] Speaking of death panels.
Gabriel Eichler [01:02:44] Patients want to live or die in their own home.
Don McDaniel [01:02:47] Well, they do.
Gabriel Eichler [01:02:48] They want to have their last rights…
Mark Redlus [01:02:49] What was that Tom Cruise movie, where they had somebody who could like they had these little.
Gabriel Eichler [01:02:54] Minority report?
Mark Redlus [01:02:54] Yeah. Feels like you did a minority report.
Gabriel Eichler [01:02:56] My God, we got to talk about this, guys.
Mark Redlus [01:02:58] This is really intense.
Don McDaniel [01:02:58] Well but you know, there’s been a lot written now about DNR. Do not resuscitate if we just had acted in our status.
Gabriel Eichler [01:03:06] They’re ignored.
Don McDaniel [01:03:07] They’re either ignored or they’re not..
Gabriel Eichler [01:03:08] In place.
Don McDaniel [01:03:08] They’re not in place.
Mark Redlus [01:03:09] I have one in my office, for myself.
Gabriel Eichler [01:03:13] I wrote it and stuck it on your wall.
Don McDaniel [01:03:16] By the way, if he moves out, could I have the…
Gabriel Eichler [01:03:20] Corner office?[01:03:21] Yeah, it’s super nice, yeah. We kind of have to cut it off. We got to wrap it up because I mean, I’m sure people are like, wow, this is something else, but..
Gabriel Eichler [01:03:29] Shoot me now.
Mark Redlus [01:03:32] Or shoot me now.
Gabriel Eichler [01:03:32] You can just push, stop. You don’t have to listen to the rest of this.
Mark Redlus [01:03:34] Yeah. It’s not required, everybody. I mean, we appreciate you.
Gabriel Eichler [01:03:37] No quiz at the end, we don’t think attendance.
Mark Redlus [01:03:40] There will be a secret code at the end of every podcast.
Don McDaniel [01:03:46] Buy more Ovaltine.
Mark Redlus [01:03:47] It will unlock a ring for the incredible. But, you know, we like to ask this of everybody at the end of the podcast. So this will be no different, Don, cause I can’t wait to hear what you think about this, but, what are we going to look back in five years with respect to health care today and say, I cannot believe we used to do it that way?
Don McDaniel [01:04:11] Well, I, you know, I think it’s going to have to be something to do with why care was so provider and location centric to accommodate the provider and the medical industrial infrastructure and not consumer centric, I think. And, you know, when I was thinking about this a little bit more, about this five-year lapse, I think we’re going to see exponential, you know, I do. I’m hopeful, right, that we will see exponential change growth in five years. We’re not going to have straight line, you know, well so, I think one big thing, and I think we’re already seeing this, is that there will be, you know, there will be elements, significant elements, I believe, of an on demand system that are much more consumer centric. That’s number one. And number two. One of the things that we are now hearing about is, you know, with these higher deductibles and particularly with patients that do have, you know, are a little bit more affluent or whatever the case may be, that they, as the deductible rises, there will be, I think, a lot of innovation around the spend in that, you know, whether it’s HSA, HRA or some kind of derivative and how that gets morphed and molded and the kinds of models people do. So that’ll be a big change. And then I think, you know, if, you know, World Economic Forum or other prognosticators are even remotely accurate around the gig economy and what happens there, that could be really foundational because then we’re forced to face, you know, as an employer and a relatively small employer, I tell you the toughest thing, my toughest job is to find health insurance that’s you know, we have people in multiple markets, ok, so, believe it or not, that’s the toughest job. Find affordable health insurance that seems to be fair and equitable. Now, multiply that by a hundred, because we’re going to have people who are self-employed. They still need, you know, health insurance. I think the only way you solve that, ultimately, is a continued migration to what we, our parents, used to call major medical or more sort of catastrophic to your coverages where then you’re in the driver’s seat. And I think something as simple as, you know, there’s no question at a macro level, the entitlement programs are moving from a defined benefit, to a defined contribution system. I think we’re going to see more innovation around that in the employee’s pocketbook, where if I manage the spend well, I can roll that into my 401k. If I have a bad year, that’s what it’s for. You have insurance, right. But let’s reward the kinds of incentives because, we’re not going to have much price elasticity if we’re being wheeled into the ED with a gunshot wound. But candidly, those are fewer and far between events than most of the events that are controlled or can be planned for with some foresight like DNR and other things. So I think we’re going to see a tremendous amount of change…
Mark Redlus [01:07:00] That’s neat.
Don McDaniel [01:07:00] You know, over the next five years. I’m hopeful.
Mark Redlus [01:07:02] Yeah, that’s great, well…
Gabriel Eichler [01:07:03] Great vision..
Mark Redlus [01:07:04] Yeah, really great, I mean, we say this at the end of every podcast.
Gabriel Eichler [01:07:07] I know I say it to everybody, it doesn’t mean I don’t get excited.
Mark Redlus [01:07:10] This is awesome. That was a great conversation.
Gabriel Eichler [01:07:13] It was.
Mark Redlus [01:07:14] We will probably keep going after we hang this up. But, we’re just really grateful for you to come on and do this. This is a lot of fun. Will definitely have to be a sequel, if not more and, look forward to doing a lot more of this.
Gabriel Eichler [01:07:26] Thanks so much for your time, Don.
Don McDaniel [01:07:28] Absolutely. An honor to be here. Thank you guys, very much.
Mark Redlus [01:07:30] Thanks.
Gabriel Eichler [01:07:31] Real Pleasure.
Mark Redlus [01:07:31] All right.