In 2025, we may see radical top-down changes to our healthcare system as new heads of the NIH – National Institutes of Health, HHS – Health and Human Services; the CDC – Center for Disease Control and Prevention. And the FDA – Food and Drug Administration as well as CMS – Center for Medicare and Medicaid services.
How will the heads of these government agencies ignite tech innovation in the healthcare industry?
We’re speaking to many healthcare tech CEOs and executives to see what they think.
In 2025, we may see radical top-down changes to our healthcare system as new heads of the NIH – National Institutes of Health, HHS – Health and Human Services; the CDC – Center for Disease Control and Prevention. And the FDA – Food and Drug Administration.
How will the heads of these government agencies ignite tech innovation in the healthcare industry?
We’re speaking to many healthcare tech CEOs, scientists, academics to see what they think.
Joining us is Dr. Robert Pearl, who served as CEO of The Permanente Medical Group (Kaiser Permanente), the nation’s largest medical group, for 18 years. During his tenure, he led 12,000 physicians and 43,000 staff, overseeing the nationally acclaimed care of more than 5 million Kaiser Permanente members on the east and west coasts.
Named one of Modern Healthcare’s 50 most influential physician leaders, Pearl is an advocate for the power of integrated, prepaid, technologically advanced and physician-led healthcare delivery. More than 60,000 readers subscribe to his newsletters on healthcare, including his widely read Monthly Musings on American Healthcare.
Pearl is a clinical professor of plastic surgery at Stanford University School of Medicine and a faculty member at the Stanford Graduate School of Business, where he teaches courses on strategy and leadership and lectures on information technology and healthcare policy.
Highlights from the conversation:
3:51 – Trump’s move to cut spending outside Medicare and Social Security: “The biggest concern is going to be for two kinds of programs. The first is a variety of public health programs, because the healthcare that is done nationally requires that we have coordination, that we have information going back and forth across states, between leaders in each individual geography, and that funding is going to be at risk of being continued. And the other part that we don’t really know about yet is Medicaid. Medicaid, unlike Medicare, is paid directly from the federal government to states, and then states use it to fund about 70% of the healthcare they provide to individuals who are socioeconomically challenged, either below the poverty level or a little bit above it, after the Affordable Care Act went into play. That money is required, it’s paid on a quarterly basis, and if the states, which are required by law to balance their budget, if they do not have these dollars guaranteed, they have no choice but to cut back on the care that they provide. Whether through the actions led by Elon Musk through DOGE, there’s going to be ones that are going to cut back on Medicaid payments through the government, as well as other payments from the government, or whether they’re just going to depend upon the states to realize that they’re in a financial jeopardy, that if they don’t cut back either the coverage, or in some other way the dollars that they have, they’re going to find themselves on the hook for the difference that the federal government otherwise would pay. So, we don’t even yet know whether this is going to lead to a reduction in payments, because, remember, the payments are made differently by states, in quite a number of areas they’re made on the basis of dollars spent. In some areas they’re made on the basis of a single block grant and if those are not going to become available, then what we’re going to see is individuals losing their coverage and we could see as many as 20 million Americans who today have access to healthcare find themselves without that access, and the consequences would be devastating.”
9:51 – Reducing healthcare spending may lead to people losing coverage: “The only place you can reduce spending is in healthcare, where you have three very large parts of the federal government today. Number one, Medicaid. Medicaid is approaching $1 trillion dollars a year, it’s about $800 million right now, and you could theoretically be able to reduce the number of people there, and one of the ways that has been talked about is through work requirements. The data and the research says that work requirements don’t actually increase employment because most of the people who are getting the money are either already working or, for whatever reason, they can’t work because they either have a disability or because they have home obligations that they don’t have an alternative to achieve. But that’s one way to reduce the number of people who are covered. The second way to reduce it is that under the Affordable Care Act there was an expansion by President Obama to increase the coverage up to 138% of the poverty level; Medicare has always been covering up to the poverty level, now we’ve got 138%, and the assumption was that every state would do this, but something like 10 states have yet to do it. But in the other states, it has been expanded, and Congress could cut that back under a presidential push. Once again, what’s going to happen to these people who now are covered, but now would have a tremendous amount of out of pocket expense to be paid? And the third way you can do it is to go through block grants. So, some states are given a chunk of money to use how they want; in the Affordable Care Act, there was a lot of consistency required, a lot of regulatory requirements, but you could go back to block grants states and those states facing a budget shortage could also make a cutback. And if they cut back on Medicaid in terms of who’s covered, once again, you’re in a situation where the federal government has less expense. So, Medicaid is a big opportunity, and if they did that, the reason dollars are going to be saved is not because the program becomes more efficient and effective, it’s because people are kicked off of it.”
16:13 – Focus on chronic conditions: “What do I diagnose as the big problem in medicine today? It’s chronic disease. Chronic disease affects 60% of Americans and is 70% of healthcare costs. We’re talking about hypertension, heart failure, and diabetes. These are problems, according to the CDC, that account for 30 to 50% of heart attacks, strokes, kidney failure, and cancer. Just imagine what would happen if we had 30 to 50% fewer heart attacks, strokes, kidney failures, and cancers a year. You’d have a much more healthy nation. The USA’s longevity, which today is lagging the other nations, would start to rise. You would have people being healthier, better able to work, being able to support their families, and you would certainly watch costs plummet if we could avoid 30 to 50% of those very expensive problems to treat. So, you have to, in my opinion, move to the front of that pack, not just simply take care of the problems when they arise. So, when we look at the front of the pack, what do we see? What we see here is that one of the causes of chronic disease, as you note, is obesity. One of the causes, not of chronic disease, but its complications, is how poorly we manage these problems, bringing the blood sugar back to normal, bringing the blood pressure back to normal. We manage hypertension, which accounts for 40% of strokes, only 60% of the time effectively. Diabetes, which accounts for the number one cause of kidney failure, heart disease, attacks, leg amputations, we manage that even less than half of the time. And so here is where we have the opportunities.”
21:33 – The way you cut budgets is by increasing the quality of healthcare: “I don’t believe that just cutting allows you to get the improvement in outcomes that we need. The way you cut your budgets is by increasing the quality. So, the way you increase your quality is you have to change your healthcare delivery system. There’s no short term fix, there’s no easy fix, but it could be done over a five year time period, let’s say, moving from paying clinicians on a fee-for-service basis to a capitated basis. A single payment to take care of a population of patients. And now think about it this way: if you’re going to benefit not by doing more, but by keeping people healthy, what are you going to start to prioritize? I’m going to prioritize prevention, I’m going to prioritize better management of chronic disease, I’m going to prioritize patient safety. In my population, if I could lower the heart attacks and strokes and kidney failures and cancer by 30 to 50% my income has just gone up significantly, particularly for primary care clinicians, who are the ones who are in greatest shortage now and the ones who are best able to increase the health of people.”
24:32 – There’s an opportunity we’re completely missing around generative AI: “Right now, we have an opportunity we are completely missing around generative AI. If you’re talking about managing chronic disease, we manage chronic disease in a doctor’s office once every three to four months. This is a problem that exists every single day. The opportunity to now is to use technology to empower patients. Every technology up to this point has been technology for the doctor. If you now put technology in people’s homes, you combine that with wearable devices, we would know how your chronic diseases are doing every single day. If you came in to see me with hypertension and I prescribed medication rather than seeing it back in four months, by the end of the month, you’d have 100 readings. 92 are normal, eight are abnormal; he’s doing well because 92 are normal, terribly because eight are abnormal. No, the technology using first and second derivatives would tell us, and I can make a change in your medication at month one and be able to bring your blood pressure back to normal, bring your blood glucose back to normal. I’d be able to anticipate when your heart failure is going to get worse, so rather than going to the hospital three days from now, I intervene today. That technology is very available, it’s just that, as you know very well, until OpenAI released ChatGPT only two years ago, we didn’t have this tool, and we needed to use that tool.”
27:33 – The rise in autism might be because of environmental factors: “What we see is that it’s being diagnosed a lot more frequently but we have no idea whether it’s actually happening more commonly. So that’s the first piece. And the second one is that there are hundreds or thousands of environmental factors, and to talk about the vaccine as the cause without any scientific reason for it, it’s a nice story, but there’s no reason to think that that’s any more true than challenges with pollution in the air, or challenges within the food that we eat, or challenges within maternal health. There’s a lot of reasons why autism could be happening. So, there’s probably some environmental factors that we don’t understand, but if you look at the studies within a given year, so you’re not looking across time at diagnostic changes, but you’re looking within the time period that exists, the data fails to indicate that, and the data that demonstrated that it did had to be retracted by the British Medical Journal because the research numbers were fallacious. So, that’s not the cause. It’s definitely a big problem, don’t get me wrong, it’s a major issue, and it’s good that we’re diagnosing it more frequently, but we don’t really know what’s happened to the actual prevalence of the problem.”
31:27 – Science vs skepticism: “There’s a difference between science and skepticism. Skepticism says, ‘we think there’s a big problem here.’ Now, if you want to look at cancer as an example, where is cancer coming from? 40% of cancers come from obesity. We know the cause of cancer in 40% of patients, particularly by the way they come into breast cancer in women and a variety of other cancers that have hormonal relationships, and we have an exact scientific explanation for how this comes about. It’s a causation, it’s not just a correlation. So, if we really want to decrease cancer, that is a great way to go. We also know that the HPV vaccine is one that will prevent cervical cancer. If you are vaccinated, your chances of getting cervical cancer drop dramatically, and we can test for the virus, and if you don’t have the virus, your chances are less than 1%. That’s great progress. We’re talking about saving literally tens of thousands of lives from the past, and today there’s still 4,000 women who are dying. We shouldn’t have doubt and skepticism when the numbers are so great on one side of the balance scale and potentially small on the other. We should look at the smallest, don’t get me wrong, but we should not be delaying those situations, whereas plus-minus, we’re not quite sure, that’s a different circumstance. But when it comes to most of the vaccines we’re talking about, the data on life saving, the scientific data, the research data, is 99.9% and to withhold that at the .1%, that’s something that, to me, doesn’t make any sense.”
35:33 – Higher taxes can help tackle obesity: “We have evidence that when you impose a tax on cigarettes, cigarette smoking goes down. You impose a tax on sugary sodas, which are a major contributor to obesity, utilization, use of it goes down. If a fast food place is selling high fat, high calorie food, and we know that the likelihood is that, as a consequence of consuming that people even become obese, and we know that that’s going to account for 40% of cancers, it’s going to increase the likelihood of diabetes. It’s going to increase heart attacks and strokes and cancers and all the other parts there, we should tax it, just like if there’s something else that a company is doing that is going to harm the environment, that we’re then going to have to spend federal governments to repair, state dollars to repair, we should have that company pay for that, and that’s what I would see. And I would actually then recommend that the dollars that are used to tax these highly processed, high fat, high caloric foods then be invested in fruits and vegetables that we know are healthier for people. We know the micro ingredients that they have and make these foods more accessible. Right now, a lot of people, particularly individuals who don’t have much money, and you mentioned it earlier in this podcast, they buy fast foods, high calorie foods, because that’s the cheapest way to feed your kids. And if your kids are starving, it doesn’t matter what they eat. They need more food, they need more calories. It’s just that when you have enough ability to feed them that you have the opportunity now to move their diet from the areas that we know are unhealthy to ones that are healthy.”
39:03 – Big pharma is broken: “The biggest challenge that we have right now is that we have a broken pharmacy system in the United States. The average price of a new drug last year in the United States, $300,000 a year. It’s just not affordable. The United States spends twice as much as the other countries, we’re talking about Europe and Asia and Australia, Canada, twice as much for the exact same drugs. I don’t mean the quantity, I mean the cost of a pill. Why is that? Because the pharmaceutical industry, which lobbies and makes campaign contributions, got Congress to pass a bill saying the federal government can’t negotiate for the price of drugs that they cover under Medicare and Medicaid. Think about how absurd that is. Every other country does it and so we pay so much more. That needs to change. We also know the Pharmacy Benefits managers, the so-called PBMs, these intermediaries, are not acting in the best interest of consumers, despite what they claim, they’re figuring out ways, sometimes with a wink and a nod with the manufacturers, to be able to move higher priced drugs into the formulary where they’re going to get and able to keep, at this point, the dollars that are called rebates that should be going to the consumer, but instead are being used for the profits of the intermediaries.”