Regina E. Herzlinger is the Nancy R. McPherson Professor of Business Administration at the Harvard Business School. She was the first woman to be tenured and chaired at Harvard Business School and the first to serve on many established and start up corporate health care/medical technology boards. All of her health care books have been best sellers in their categories, recognized for their innovative research. Money dubbed her the “Godmother” of consumer-driven health care. Her work was key to introducing consumer-driven health plans and “focused health factories”, such as centers for orthopedics, cardiology, or cancer care. She is regularly named as one of the smartest people in health care by industry journals.
She teaches an HBS MBA course on Innovating in Health Care and founded an HBS Executive Education program on Business Innovations in Global Health Care (BIG).
VIDEO - DUwHF #959 - Regina Herzlinger
AUDIO - DUwHF #959 - Regina Herzlinger
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Howard: it is just a huge, huge honor for me today to be podcast interviewing one of my mentors, my idols, the legend Regina Herzlinger. She goes by Reggie. She is the Nancy R. MacPherson professor of Business Administration at Harvard Business School. She was the first woman to be a tenured and chaired at Harvard business school and the first to serve on many established and start out corporate healthcare medical technology boards. All of her healthcare books I have read have been best sellers in their categories, are recognized for their innovative research. I posted links to all her books today on Dentaltown, on Facebook, Twitter LinkedIn, all that so you can find it.
Regina: That’s great.
Howard: Money dubbed her the Godmother of consumer driven healthcare. Her work was key to introducing consumer driven health plans and focused how factories such as centers for orthopedics, cardiology, or cancer care. She is regularly named as one of the smartest people in healthcare by industry journals, and I'm saying there's no one even close, if she's the smartest, the next person is challenged and took the small bus to school. She teaches an HBS MBA course on innovating and healthcare and founded an HBS executive education program on business innovation in global healthcare, I started Creighton University in 1980 in Omaha, Nebraska. My first business course, you know, Warren Buffet lived in Omaha and he came over and lectured to our class, but he was in love with the instructor. Your first book is really a great question. Your first book was, “A Managerial Analysis of Federal Income Redistribution Mechanisms: the Government as factory insurance company and bank,” 1979. I read it at Creighton 1980.Your second book was,” Creating New Healthcare Ventures: The role of management.” 92 And of course that's right when the Internet started going crazy from 92 to 2000 with the leaders being Cisco, Intel, Microsoft and Dell and Dell, his dad was an orthodontist.
Regina: Dell started medical school in Austin. There's a new medical school it’s called the Dell medical school. Very unusual in its focus on innovation, just like the man himself. It's a one off.
Howard: And then your next book was”, Financial Accounting and Managerial Control for Non-profits” in 94.
Regina: Did you read that?
Howard: I did, I absolutely did because all the American Dental Association is a non-profit. A non profit that collects two hundred and fifty million a year, go figure. And then the one that had the biggest impact on me first was in 1999, “Market driven Health Care. Who Wins, Who Loses in the Transformation of America's Largest Service Industry”. And then your latest 2007 “Who killed Healthcare, America's $2,000,000,000,000 Medical Problem and the Consumer Driven Cure”. So, Regina I just want to start my first question, I've lectured to dentists in fifty countries and when you lecture in all the socialized medicine countries, Canada, Australia, New Zealand and everything in Western Europe, healthcare is just not controversial. Why is it such a controversial subject in America? I mean Obamacare, why is it so controversial? What makes Americans so unique as opposed to Western Europe, Canada, Australia.
Regina: Well the Europeans and Canada and the old English colonies, like Australia, they've had healthcare systems for a long time. And they've accepted a sort of single payer view of the healthcare system. We never did. We had a private pay system and then we got an employer sponsored system and then we kicked and screamed as the country was dragged into Medicare and Medicaid. So I think Howard that the American ethic is different from those in the European countries and in their former colonies, that we're much more individualistic, not so prone to give government a lot of power. And that's why you see all this yelling and screaming about healthcare.
Howard: So where do you think it's going? You've been in this game since 79, so you've been in this game for forty years.
Regina: Yeah, quite a while.
Howard: People with some podcasts are babies. They just got out of dental, kindergarten school. They're thirty and under. Where do you think it'll be forty years from now? Where do you think the trend line is going?
Regina: We're going in either one of two directions. One direction is that we become single payer, meaning that the government abolishes private insurance. No more Aetna, no more Cigna, no more Blue, Cross Blue Shield and the government pays for all of healthcare. Another direction is just the opposite and that is we go to a more consumer driven system where rather than third parties paying for healthcare, people are cashed out. The Medicare enrolees get the amount that the government now spends on their behalf. The people who get health insurance from their employers, they get that money and they choose how it will be spent. There are countries in Europe that have the latter kind of system. For example, in Switzerland there is no government health insurance. In Switzerland the employers do not pay for healthcare. People pay for healthcare out of their own pockets and if they can't afford it, the government subsidizes and they do the buying, not a third party, not the employer, not the government, not your Aunt Tilly, they buy what is right for them.
Regina: So we're going in one of those two ways. And the big driver of course is that healthcare costs so much and it's really crippling our economy. It now accounts for about 20% of our GDP and we compete with countries that spend on the average, if they're developed, 10% to 11% of their GDP on healthcare. So we're going in the competitive trade world with one hand tied behind our backs because of the huge cost of our healthcare system. So, one way to control it is, single payer government takes it over and says you can get it, but she can’t. And the other way is consumers drive the system.
Howard: Well, you have a DBA, a doctorate in Business Administration. I mean your book, “Market Driven Health Care: Who Wins, Who Loses?” What dog is Regina in this fight, are you in the consumer driven or the single payer?
Regina: Because my perspective is that of a professor of business, I look at what works, not at what should, not at what might, I look at what works, and in my mind, it is impossible for a government to run a healthcare system effectively. So can people run healthcare? Well, you know, people buy complicated things very well. They buy cars. Now a car is an advanced computer, back in our day you used to look under the hood of a car and you could kind of tell the pistons worked like this and the rotary worked like that, it was mechanical, but now it's entirely computer controled. So how does Josie Dosie buy a car? Well, she buys it very well because cars have improved substantially in quality while they've gone down in price. So my point is that when you let consumers loose on a market, they can buy complicated things and make them both better and cheaper. I learned that from business. That's not an ideological point of view.
Howard: And housing. I mean you can get anything from a trailer to an apartment, a condo, a one bedroom. I mean the diversity of our houses and cars is broad. I always thought it was weird. And I also believe when you're managing people, when they don't have any skin in the game, they don't manage it. Like for instance, healthcare fraud, the fact that there's no co-payment, they don't even look at the bill and you if you had a 5% co-payment on Medicare and you know right now the doctor just says, “you know, Howard, you're fat, you're bald, you're old. You need to get new knees and they're going to cost $50,000.” Well, the older people say, well you're the doctor, do what you got to do. But then they said, “oh, but the co-payment at 5% of $50,000 is 2,500.” How many people would say, “forget that, I'll just keep eating (inaudible 00:10:01) or I’m going to call my cousin who doesn't live in Manhattan. She lives in St Joe, Missouri and the guy there only charges 30,000 for knees.”
Regina: And so you know, there's a tremendous difference in the cost of the healthcare depending on where you live. Not surprisingly, the highest cost is in Washington DC and the lowest cost is in Utah. Now suppose you were paying more out of pocket and you lived in Washington DC and you could save a fortune by going to the great healthcare providers in Utah, Inter Mountain, the university of Utah, you would hop on a plane and get your knees done in Utah and maybe even ski after a while rather than get them done. In other words, when people have skin in the game, they induce competition and it's competition that makes things cheaper and better. But when the government buys, there's no competition. So you don't get the kind of innovation that makes things cheaper and better.
Howard: And the insurance like Medicare and Medicaid, the red flag for me that they're not trying to help, that they're trying to control is like Medicare. They always complain that not enough dentists and physicians are Medicare providers, but they don't ever say,” OK, here's the Medicare fee. You have to accept that fee.” Well, why not make it a subsidy? If they just said Medicare will pay $50 towards this filling and then I say, “well, I charge $100.” Now the market can say, well there's a Medicare clinic that will just do it for a fee, but I'm going to go to Howard and the government will help pay half of it , but you know, like Delta Dental and these big insurance companies, they say, "this is the fee and you have to be in system and you can only charge that amount." And then if you go out of the system they are so abusive, they won't send the dentist the money.
Howard: They send that money to the patient because they know a lot of them are just going to go cash the cheque and you'll never hear from them again. And it's a controlling mechanism. So, I think a lot of physicians, and then you have people like Bernie Sanders running around saying that healthcare should be free. What does that mean? Is he going to come arrest me and keep me up in my dental office and I have to drill, fill and bill for what? Until I'm 65 or a hundred. I mean, is it a life sentence ?
Regina: Howard people who are in single payer systems, they think it's free, but of course it's not free, doctors get paid, dentists get paid, nurses get paid. It's just they pay for it in taxes and they're not aware of it and because they're not aware of the cost, as you say, they're not spurred to do the kind of shopping that we do when we pay out of pocket and when we shop, we reward people who give us good value for the money. The federal government doesn't know what good value for the money is. Doesn't know if you're a better value for the money dentist, although I'm sure you are, than one hundred thousand other dentists, but a consumer would know.
Howard: Let's go over your last two books. Let's start with your last one. “Who Killed Healthcare? America's $2,000,000,000,000 Medical Problem.” I pushed that out all over today. Answer your own question. Who killed healthcare?
Regina: The status quo, killed healthcare in the United States. We have very powerful hospital systems, insurance systems, and they're getting more and more powerful as they consolidate. The economists give this jaw breaking term of oligopolist. They're not monopolies, they’re not like the single payer crowd, which would be the only payer in the room is the government, but then the next thing to it, and that is they are so powerful that if you want to innovate insurance, they're going to kill you one way or another. If you want to innovate the provision of care, it's going to be very, very difficult because the status quo doesn't want you to steal their market share away from them and they will make your life miserable and the book is filled with examples of that. What's interesting, Howard, is that in countries that don't have a lot of spending on healthcare, countries like India or Brazil or Turkey or Mexico and they have a new middle class that wants healthcare. You see innovations up the kazoo. For example, I just emerged from my MBA class and I taught a case on a Brazilian dental insurer, it's called Odontiprev, It's one of the fifty most trusted brand names in Brazil. It's inexpensive. It's high quality. The providers, the dentists that are in their network, they love it because they do so much for them.
Howard: And what's the name of it?
Regina: It's called Odontiprev
Regina: Yes. I have a case study that you can order from Harvard Business School publishing about it. Here's something you might like, Howard, if I signed up for Odontiprev, I would have you as my provider for three years, so you would be motivated and paid for making sure that everything that could go wrong in year three does not go wrong in year three. In other words, you have a long-term view of my dental health and they treat their providers. Brazil has two hundred and fifty thousand dentists. Twenty five thousand of them belong to this network and they treat them like kings and queens that they are. So why don't we have this is in the US? Well, because we have big dominant insurers and they don't like innovation. They like things just the way they are. Thank you very much.
Howard: One of the craziest things like, I just celebrated my 30th year anniversary as a dentist up the street in Phoenix here and to this day people come in and it's like, "Do you have insurance? or Where's your paper card? "Oh, I have to go back to work. (inaudible 00:17:05) Why don't they have an app? Why don't we just have an app for Delta Dental. And I scanned it on the (inaudible 00:17:09 ) and here is Regina Herzlinger and here's her whole med. They haven't had one innovation in three decades. I mean the smart phone has been out since 2007. This is 2018 and I've never used a patient's smartphone for their dental insurance. When they come in my office are Medicare or Medicaid. I mean 911, last time I called 911 she said, "Can you give me a description of the car?" I said, well why can't you Facetime me? I can Facetime my eighty year old mother, but I can't Facetime. 911. Does that concern you? That I can Facetime anybody on earth that has an iPhone, but 911, what do you want? A telegram, a telegraph Should I tie a note to a pigeon’s foot? So, the government can't innovate?
Regina: Let me generalize your point. Tele-Medicine is much more widely used in India and in Africa than it is in the United States, we are very, very slow to innovate. We pat ourselves on the back and we say we're great. And of course we have great doctors, great dentists, great hospitals. But are we great value for the money if we keep shutting out the innovators? We're not great value for the money.
Howard: You know, you said, hop on an airplane in Washington DC if the knees are going to cost 50 grand and you, had a 5% co-payment, $2,500 and someone you taught was doing it for 35,000, and you jumped on a plane to Utah. Well I see patients jumping on a plane to go to Romania, India to get a medical tourism. What? I mean people are starting to vote with their feet.
Regina: It's hard to aggregate the users. So, it's hard too, for the users to go to one agency, they're really. Tell me who is the brand name in medical tourism. You couldn't, smart as you are, you couldn't name the brand name, it is a very tough market, an individual market and it's hard to get to find those people who need medical tourism so that you get enough scale to be a viable business. However, if we had a consumer driven market right now, there are only nine million people who have individual insurance that's not provided by the government and not provided by their employer. They buy it themselves. Nine million, small market. If we had a hundred and fifty five million people who will now get insurance from their employers, get that money and buy insurance for themselves. You would see medical tourism evolve from being kind of a nice idea, but totally not viable business wise to be a real deal, after all we buy cars from Japan and Korea and Germany and increasingly we'll buy them from India, but that's because it's a retail market.
Howard: So, I know on my podcast, I don't ever like to talk about religion, sex, politics, violence, but I have the smartest economists in healthcare period in the world, I have been a fan of yours since 1980. Obamacare known as the, Affordable Health Care Act. All through the last election they were going to repeal it, repeal and replace, repeal and replace but then when they got in power, and they had the Congress, the Senate in the White House. It turns out it's not as easy to repeal as they thought it was. Why is that ? What did you think of the Affordable Healthcare Act? Why do you think the Republicans couldn't just throw it away? What do you think the next move is?
Regina: I think people like the idea of universal coverage. They want to know that if they get sick, that they will have health insurance. Because as you know, even in dentistry, sometimes the expenses are catastrophic and people just can't afford it. So as Obamacare kind of stumbled along, the American people got more and more used to the idea and the desirability of universal coverage that if I can't afford it somebody is going to help me out to buy my insurance. I think the Republicans never understood that. The thing that was so to me, reprehensible about Obamacare is not the idea that poor people should have health insurance. We're a rich country. We can afford it, but that it was so micromanaged by the federal government who told you what kind of insurance you needed to have, told you how much that insurance had to be worth, told.
the insurers that they had to spend from 80% to 85% of their revenues on providing medical care. It told them you can't earn profits and have administrative expenses greater than 20% or 15%. That's not the business of the federal government. The federal government should make sure that poor people can have health insurance, that they don't go lying in the street because they're so destitute. Federal government shouldn't tell you how to run your business. Shouldn't tell an insurer how to run their business? And the Republicans got this the wrong way around. They wanted to repeal universal coverage rather than to get rid of all of the micromanagement by the federal government that went with Obamacare.
Howard: The word insurance is what bothers me the most because insurance and you know, I got my MBA from Arizona State University, which is probably just a prerequisite if you're trying to go to Harvard, they'd say, “well, why don't you go to ASU and get yours first and then we'll see if we want you.” But you know, insurance is an actual real risk analysis versus moral hazard. I mean, we all have fire insurance on out house, for thirty years of living in Phoenix, I've only seen three houses burned down, but we all paid a little and three people made claims. Everybody has car insurance, but hardly anyone stacks their car every year. But when you look at health quote insurance, what percent is actually insurance? Catastrophic, broke a leg, cancer. My babies born with a hole in her heart versus I got a fever, I got a sniffle. I want to go to emergency room and see a doctor. I think I have arthritis. I'm going to get my blood pressure check. I mean, what percent of that 20% of GDP healthcare is actually insurance and what of the rest of it is benefits, because I don't make a claim on my housing insurance when I mow my yard and put in a sprinkler system and paint it and carpet and I mean, so what's insurance and what's just benefits?
Regina: That is a very good question, 20% of the people who have insurance account for 80% of the cost, they have catastrophic healthcare expenses and we should insure them, not all of us, Warren Buffet doesn't need that insurance and he shouldn't get it. But if, you’re at a certain income level, you should be insured against expenses that are catastrophic for you. That's it. So, a lot of expenses as you say are non-insurance they are not the old concept of insurance. And that’s I'm going to cover you for things that are so expensive that you cannot pay for it yourself. Health insurance has expanded to be everything you know. I was amused in the debate about birth control pills, whether they're covered or not covered. I don't know what birth control pills cost, but I would hazard a guess that most women can afford to buy them out of pocket, so why not buy them out of pocket? Because if you can afford it and you buy them out of pocket, you're going to create competition, you're going to bring down the cost, you'll reward the innovators who make it easier to use those pills. It's really a crazy system as you point out.
Howard: Well, it's funny how you're a woman so you mentioned birth control pills and I completely agree. What really makes me mad is when my taxes are paying for some lazy fat guy next door to buy Viagra and Cialis, you don't exercise, you eat ice cream, you smoke, you drink, and I have to pay. I have to buy your $10 pill so you can have sex with your wife. Maybe if I quit paying for it, maybe you'd be motivated to start exercising. So again, I shouldn't be paying for your birth control pills, you're Viagra you're Cialis and you know, you got a cold. I mean, when we were little, my mom said, she had seven kids. She was Catholic, so mom and dad had seven kids in three days and to go to the doctor you had to be bleeding in two places.
You weren't bleeding, and she'd say, " blow your nose, go to bed, have some chicken soup. "But today they're like, well no, I want to go downtown Los Angeles to an emergency room that costs $10,000 an hour to operate to show somebody that my baby has a fever or I need to blow my nose or you know they have no incentive to stay home and Google it or remember that their cousin, sister, neighbour is a registered nurse, may be they could drive by the house and talk to her. They have no skin in the game. So they overuse this stuff.
Regina: Plus, they put themselves at risk because as you know, there are very sick people in the emergency room and you can catch something from them. So the third leading cause of deaths or diseases you catch in the hospital that you didn't go in there with. Plus, if you're taking your little baby there in the emergency room, you're blocking people who have very serious medical problems. So it not only increases costs for no good reason, but you put yourself at risk and you delay care for people who really, really need it.
Howard: So number one, cause of death in America be heart, right? Number two, cancer. And three, what do you call that?
Regina: Atrogenic it means you didn't show up with that. So atrogenic causes of death.
Howard: And that's about what? Two hundred thousand a year.
Regina: That's right. Well, two hundred thousand is the number of unnecessary deaths in hospitals.
Howard: I mean I have neighbours that took their two year old daughter to visit their mother, their grandmother in the hospital because she got a hip replacement and now the baby's covered with MRSA. Three point eight million people live in the Phoenix Valley. The sickest of the sick are all in this box. And your best idea is to go stand in that box and bring your two-year-old baby, and they never talk about that. And that's why I agree to some extent, there is a lot of fake news because two hundred thousand Americans die each year in the hospital. But when you look at CNN, Fox News, MSNBC, so many ads are by pharmaceutical companies. It makes me wonder why they're not always reporting on all these atrogenic deaths in hospitals. We call it in dentistry and medicine polyphagia. By the time grandma or grandapa's on five prescription pills, everything's going wacko, but they never cover the two hundred thousand deaths on that. They'll cover, you know, they cover all these political far less important stories. And it makes me wonder if it's because there's so much big Pharma advertising in all these media outlets so that those stories were killed.
Regina: It may be that but is also that hospitals are thought of as being saintly, charitable institutions, whereas in fact they aren't. Many hospitals are non-profit in name only. They have profits like the fortune one hundreds and they wear real brass knuckles in order to protect their market share and the quality of care is quite erratic. That is why we have two hundred thousand unnecessary deaths in hospitals. A hospital is pictured as if it has a halo over its head.
Howard: When I was little in Wichita, Kansas, all the hospitals were named after a saint, Saint Mary, Saint Francis. They're all saintly.
Regina: Some of them are but many of them are not and I wish the media would deal more with the ones that aren't.
Howard: But here's where healthcare is almost laughable, so right here in Phoenix, next door in Chandler, five miles from my house. You go to the Intel plant and to make those chips you are going to take off all your clothes, put on this space suit. They filter the air to less than one part per billion because they're making chips for your iPhone, and smartphone and computer. There's just nothing going to contaminate that. Then I go across the street to Chandler Hospital. The doctors and nurses pull up in their cars wearing Nikes. They walk all through the parking lot through the water, bird crap, dog crap, ant crap, and then they take grandma they flay her open and all they do is they wash their hands religiously for like 15 minutes and the air is filthy. They're still wearing their Nike shoes or maybe they'll put like a little, a little a bow around it or some little sleeve sock here. But I mean, Intel has a, I would say a thousand times higher quality-controlled environment to make a chip than any hospital in America.
Regina: So that's another problem and that is people don't know the level of the atrogenic deaths, unnecessary deaths because of carelessness that occur in the hospitals. So if you don't know. People always say to me," Oh, I went to the best hospital. I have the best doctor". I said, “well, how do you know?" You know, I know more about the yoghurt I buy than I know about the hospital I go to or the doctor that I may see. So why do I know so much about the yogurt and I don't know about the doctor in the hospital. It's because I bought the yogurt. Whereas the hospital and the doctor is paid for by somebody else and they're not too interested in getting into all those details.
Howard: Back to Obamacare or the Affordable Health Care Act. Why do you think, they already had a system, a national system called Medicare that was a national, but they decided to push out the Affordable Healthcare Act through Medicaid. What is your, who's dumb and who's dumber, what do you like less Medicare, Medicaid. And why do you think the Affordable Healthcare Act tried to implement it? And back to that Affordable Healthcare Act I found that funny during last election almost everybody I knew that was against Obamacare. I said,” well, you're on Access. Do you like Access?” “Yeah, I love Access, but it's about Obamacare.” And so from a business branding point of view, all these people that loved Arizona access had no idea it was Obamacare. Why do you think they went through fifty different states Medicaid system with Obamacare instead of...
Regina: Medicare has an unfunded liability of most conservatively about $36,000,000,000,000. In other words, you would need to have $36,000,000,000,000 on the table right now to pay for all the likely expenses of Medicare and the reason that occurs is seniors vote and they're very aggressive and Medicare under pays providers and it under charges its customers, so net If I were on Medicare and I could be, but I'm not and the reason I'm not is Medicare, if I were on it, I would be adding more money to this unfunded liability and I'd be saying to my grandchildren, here you go, here's a gift. from grandma $36,000,000,000,000 of unfunded liabilities. Medicaid is not as bad. It's not great, but it's not as bad. So it was a more cost effective way to go than to go with Medicare. People say Medicare works great. Yeah, it works great if you're a senior, it doesn't work so great if you're the seniors child or grandchild who's going to be stuck with all the money spent on the senior's care, but they didn't pay for it.
Howard: but we both agree that if there was a co-payment an across the board co-payment, I mean, why does dental insurance say, OK, we'll pay 80% of the filling, but you're going to pay 20% we’ll pay 80% of the root canal you're going to pay 20%. And then if you waive those co-payments, that's go to jail stuff because the insurance know those co-payments puts massive downward pressure on utilization. Do you think Medicare should have an across the board, co-payment to a decrease utilization.
Regina: I think a deductibles, co-payments, other techniques should be used.
Howard: Aren’t they now?
Regina: but to some extent, it varies by site of care. It varies by provider, but it has to be adjusted for income because an across the board, co-pay, that you could afford or that I could afford might not be a co-pay that somebody who earns $30,000 a year can afford, and we are rich enough as a country to make sure that people have access without seriously streaming their financial status.
Howard: At what income levels should you do you think you should lose Medicare and social security.
Regina: I really haven't analysed it, but the seniors are the richest cohort in the American population. A two person couple is subsidized. In other words, the amount they paid for Medicare is less than their expenses by 100 to $200,000 per couple over their lifetime. A great deal of those people could afford to pay that themselves and not stick our children and grandchildren with paying for that money. So we need to income adjust Medicare. So Howard we have a country, a congress that lacks a critical body part? It's called the spine. If they had a spine, they would say,” look, you're rich and we're not going to subsidize you, you're going to pay whatever it costs, and we'll take that money and we'll use it for other good purposes, including subsidizing people who can't afford it.”
Howard: You know I should not say this on the record but at 55 years old I seem to be losing faith with democracy every year I get older. It's like, OK, I mean, really, I go to countries like Singapore and then I go to my own friend family Thanksgiving dinner and I'm looking around the table thinking how many of these people should not be allowed to vote? And it's almost 80% of my own family reunion. And it's sure, craziest system in the world.
Regina: You know what Churchill said, he said, "it doesn't work, but it's better than anything else we know. "
Howard: So recently the newspapers were filled with stories that Warren Buffet, Jeff Bezos and Jamie Diamond are going to start wading into healthcare. And watching these guys. The one thing, I've had dinner with Jamie Diamond a couple of times, but Warren Buffet lectured our business classes in 1980, never met Jeff Bezos, but I like him the most because he's bald, but the one thing I know about these guys, they have a very long-term perspective. So, when they say they're going to do something, you might not see anything for a year, two years, five years, but do you think they're going to bust a move and have an impact over the next ten years?
Regina: I hope so, I really don't know what they can do beyond their own employees. Bezos can clearly improve supply chain efficiency, which Arizona state, by the way, is marvellous in that field. And they have a lot of employees, millions of employees, they might put them into narrow networks, improve supply chain efficiency, will that have a big impact? I really doubt it.
Howard: You know, there's two hundred and twenty countries on earth and there's usually a in college about how many people are in your class, what's your class size that you just left? How many were in your class? (inaudible 00:40:29) OK, well usually everybody follows or cheats off the smartest guy in the class. Would you say right now the smartest guy in the glass is of all the countries in healthcare, Switzerland and do you think all these countries instead of trying to reinvent the wheel. It was kind of like when the Berlin Wall fell, Russia was going to try to reinvent economics and try to hang onto some of their past and Poland just said, you know what, that one's dead and there's nothing to reinvent and we're just going to do it like free enterprise. And do you think most of the world should just say, look, this race has been going on since 1950. It's almost, you know, it's a seventy year old race Switzerland's up front. Should everybody just started copying Switzerland?
Regina: Absolutely. But the problem with Switzerland is if you like the single payer model, Switzerland, while it affords universal coverage, but it's all private sector driven. So, people who don't like businesses, who don't believe in competition, who think that big is beautiful, who think that the government is smarter than consumers, they fight, Switzerland tooth and nail.
Howard: One thing, that my walnut brain thinks is extremely inefficient is when, and I've seen this happen in 30 years, my dental office is right next to a grocery store, you know, somebody passes out on the floor and when the ambulance gets there, they don't know who it is from Adam. They have records at five different places. They don't know what pills are. The grateful dead singer. I mean they didn't even know he was an insulin dependent diabetic if they just had known that he would still be on tour. And I would want to know how many times have I asked a family that just moved to Iowa. “Well, can you get your x-rays transferred?” and they can't do it or they don't know or they say, " Well that dentist retired" so he retired with four thousand charts and you know, to me it just seems like the whole system would be faster, easier, higher quality and lower costs if every medical healthcare transaction I did was in the cloud so that any doctor also for opiate addiction, I mean some of these people go to a different dentist every day trying to get pain pills.
So, what do you think about records on the cloud so that the ambulance, the emergency room, and any doctor you go to knows every transaction you have done.
Regina: But you know in our oligopolistic (inaudible 00:43:25) system, if these systems, whether they're hospitals systems or insurers, if they give up their records, they will make it easier for their patients to go someplace else. They're not about to do that.
Howard: They did it with the phone numbers, remember you kept your old A T and T because you wanted your business number. And then they made phone numbers portable.
Regina: So, you know, right now consumers do not have a lot of voices in the healthcare system. It is the big oligopolies, the big insurers, the big hospital systems. Doctors unfortunately have lost tremendous amounts of power even though they're fundamentally the keys to delivering healthcare and consumers don't have much power either. It's consumers who forced the transfer of telephone numbers, you know A T and T didn't want to do that. But it was consumer power that did it and buying phones is a retail system. So consumers have a lot of power. They hold the money.
Howard: I'm not trying to blow smoke, but I mean in my lifetime being a dentist. You were my Milton Fried and you were my Henry Maynard Keynes you are my Joseph Shutner. I'm asking you, who were yours who were your mentoring economists, and how do you rationalize a Henry Maynard Keynes versus Milton Friedman? And who were your great economic inspirations? Who are your mentors?
Regina: Keynes with his belief in government investments was all wet. The government cannot manage investments appropriately. It's a pipe dream. And I think Friedman with his view that it is the ordinary people, you and me who on mass control the economy. He was right in that. So, my mentor in Healthcare was a Harvard economist. His name was Martin Feldstein. Feldstein was, the head of the Council of Economic Advisors and he studied the British system, the national health system, and essentially said, this isn't the way we should go. We need to go to a more consumer driven system. I read his work in the late sixties, early seventies. Nobody really knows who he is, but he was a fabulous economist who turned to heath care and he didn't have an ideology. He wasn't for government, he wasn't anti-government, he wasn't for business, he wasn't anti-business. He was just an economist who looked at the data. I thought he was great.
Howard: I love he's bald.
Regina: You kind of look alike.
Howard: We do. He is a handsome devil isn't he?. Was he a part time model too? I think I saw him on a Hanes underwear commercial.
Regina: He was a nice and attractive man.
Howard: Milton Friedman, secret weapon, who gets no credit, is his wife Rose. Rose was the one in the office crunching all the numbers, you know, from sun up to sundown while Milton was on all the talk shows, getting all the press and the brand name.
Regina: If it worked for them.
Howard: Yeah so, you're a bigger Milton Friedman fan by far than Henry Maynard Keynes?
Regina: For sure.
Howard: Yeah. I couldn't agree more and I feel like I'm probably not even smart enough. I can't believe. First of all, I can't believe I got you on this show. That is just crazy.
Regina: Happy to be here.
Howard: And I've had you on there for fifty minutes and I hate to tie up your time. So, I'm just going to say, was there any other things, any subjects that you wanted to talk about or anything I wasn't smart enough to ask?
Regina: We didn't talk about dentistry and I think dentistry is kind of a ray of sunshine in the system because there's still a lot of self-pay in dentistry, the dentists by-in-large work for themselves rather than through some huge corporate group that employs and micromanages what they do. The dentists, I said to my class are among the most business like of the people in healthcare. So we didn't talk about your profession, which is a wonderful profession. And as I said, a ray of sunshine in the American healthcare system.
Howard: Well I already know everything about my system. I was trying to drain your brain not vice versa. I actually think dentists, chiropractors and vets are far closer to a business. I mean, even when you go to a physician's office, they still have the glass wall. They slide it over and they give you a chart. You know I have to go to the hospital probably every ten years I have to go to the hospital for a kidney stone. And each time it's so bad I go to a different hospital, but the last time I was in there I was in there for about forty eight hours. About every eight hours somebody would walk in there and say, “have you been helped? " I'm sitting here naked on a gurney with bands on each wrist and my ass is hanging out and you're asking every five minutes, how do you not know this?
And then every shift change, some idiot would come in and ask me the same questions. I'm like, “are you guys on different computers?” It's kind of like when I go to the department of motor vehicles they ask my address. I said, “Dude, I've lived here thirty years. You don't know my address. I haven't moved.” Just the government, I see big government and big healthcare as the two worst sectors in the economy. And then, if you want socialized medicine.. As soon as Carter started, the government Department of Education, education scores have been sliding down now we've gone from like the top five to like thirty eight and then what's their solution? More money, we've almost killed education. So let's double the budget.
Regina: I've got to go.
Howard: Okay, one begging thing from you. We got a magazine that's mailed to all one hundred twenty five thousand dentists every month and all ten thousand orthodontists. Its online digital. So it's emailed out to hundreds of thousands of people all around the world. If you ever have the time to write an article on dentistry and healthcare or whatever, it would just be, I mean, it'd be Christmas.
Regina: Be honoured to do it. So read my case study, let me know what you think about it. Then we might have a little section about what we can learn from the Brazilians.
Howard: Can you connect me with the owner of that company?
Regina: I could.
Howard: Do you think he'd want to come on the show?
Regina: He might.
Howard: Email him and cc me?
Regina: Send me an email about it and I'll follow up with it.
Howard: Regina, thank you for being my role model and mentor since 1980. I hope you have a rocking hot day.
Regina: Same to you Howard. Bye Bye.