JPM 2014 – Dr. Delos M. “Toby” Cosgrove, CEO & President, Cleveland Clinic: on Challenges, Opportunities & Affordable Care Act

During the luncheon keynote, Cosgrove began by quoting Lenin, “there are decades when nothing happens, and then there are weeks when decades happen”.  Clearly there is tremendous activity and major and disruptive overhaul happening in the healthcare sector.  To meet increasing demands proactively, Cleveland Clinic has made some significant changes in how they operate.  These include, one year contracts for employees, eliminating tenure tracks, implementing annual performance reviews, offering high deductible insurance policies, and greater transparency throughout the system, said Cosgrove.  Many other businesses are also moving towards some of these reforms.   In the new healthcare environment, retail clinics like Walmart and CVS will play a significant role.  Over 813 branded clinics and hospitals and other providers are partnering with these retail clinics, in anticipation of the shortage of physicians that will hit the system.  Cost pressures will also intensify as providers are increasingly pressured to move from the volume based system of providing care to value based system, linked with outcomes, said Cosgrove.  Cost pressures are coupled with pay cuts in education for physicians and other practitioners and there less money coming from VC funding sources.

Among the challenges, are hidden opportunities that can help overhaul the system to make healthcare better.  For instance VC funding for Health IT has gone up, M&A continues at rapid pace, and some of the focus on behavior changes is yielding good outcomes, said Cosgrove.  Genomics and behavior modification represents some of the largest unmet challenges and they account for 70% of premature deaths in the US.  At CC, with a relentless focus on behavior modification, employees collectively lost 430,000 pounds.  Similarly, genomics has opened up a huge opportunity in healthcare.  Approximately, 4300 single gene diseases have been so far been identified, and the cost of sequencing of full genome is dropping rapidly.  Other huge opportunities are with respect to patient health records and management of big data in healthcare.  CC has given 1.8 million patients access to their electronic health records.  Quoting “IBM’s Watson Computer”, Cosgrove observed that artificial intelligence is opening huge opportunities in healthcare.

All the disruptions in the healthcare should eventually enable society to “build a healthcare system that is humane, high quality, and sustainable”, said Cosgrove.  But this transformation will not be painless.  It will require a great shift in mindset for physicians and also in how people view healthcare, in society at large.  Roles of care providers are changing rapidly.  Only about 10 years ago, hospitals used to be epicenters of care.  Now increasingly care is delivered outside the hospitals and we need to develop systems that support and scale out of hospitals care delivery, said Cosgrove.  A few hospitals will need to be very high tech and to offset costs, they will need to share and partner with other care providers.  Cosgrove gave the example of CC’s high tech data center built at the cost of $170 million.  Cosgrove said, healthcare is the only industry that has not consolidated and it will need to consolidate in the coming years.

The only criticism Cosgrove offered with the implementation of affordable care was that it has not built in incentives for wellness.  Obesity is sharply rising in the US and it needs to be contained, in order to control costs, said Cosgrove.  Affordable care bill is not perfect and there will be unintended consequences, but they can be dealt with.  One of the shocking thing that Cosgrove opined upon was that US will one day have a single payer system, with basic healthcare provision for everyone, and optional choices in supplementary insurance on top of that.  This was an exciting keynote.  The whole bar in healthcare is being raised and Cleveland Clinic is clearly taking a leadership role in meeting the challenges head-on.