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- [00:01]
Kurt Nickish
Innovation is what drives progress. But in healthcare, progress can feel frustratingly slow. New treatments, technologies and approaches have the potential to save lives and reduce costs. Yet systemic barriers often stand in the way. Are financial incentives in this regulated market holding innovation back? If so, how badly? And what would it take to realign them? Today, we explore the forces shaping healthcare innovation. What's working, what's broken, and what can be done to fix it. You're listening to Is Business Broken? A podcast from the Merotra Institute for Business, Markets and Society at Boston University Questrom School of Business. I'm Kurt Nickish. Our guests today are Jim Rebitzer, professor of Markets, Public Policy and Law at BU Questrom School of Business, and his brother Bob Rebitzer, national advisor at Manat Health. Jim, so great to have you here.
- [01:04]
Jim Rebitzer
Thank you.
- [01:05]
Bob Rebitzer
It's good to be here.
- [01:06]
Kurt Nickish
And Bob, thank you for joining us.
- [01:08]
Jim Rebitzer
Delighted to be here.
- [01:09]
Kurt Nickish
So you two together wrote a book about healthcare innovation. The title is why Not Better and Cheaper. So let's start with that. Why not? Why has it been so hard to innovate in this way in healthcare?
- [01:24]
Jim Rebitzer
So we wrote the book to answer a single question, really, which is how come healthcare doesn't get better and cheaper like our cell phones do? And our answer is that it's too easy to make money with low value innovations and too hard to make money with innovations that reduce cost.
- [01:41]
Kurt Nickish
Explain that.
- [01:43]
Jim Rebitzer
Yeah. The reasons for that have to do with the way financial incentives work in healthcare, the way professional and social norms operate in healthcare, and to an issue that we call reluctant incumbents. The slowness of incumbents under certain conditions to adopt new technologies. And the combination of those three things create the problem. And we wrote the book because, you know, typically when people talk about healthcare, they talk about three vital signs. They talk about cost, they talk about quality, and they talk about access. And we wanted to introduce a fourth vital sign for assessing the health of the healthcare system, which is the rate of innovations that are taken up that improve the quality of care for society and for individual patients.
- [02:29]
Bob Rebitzer
I just want to point out that we live in a time of miraculous discovery in the biomedical sciences. You open the paper and you can't miss it, right? It's all over the world. So it's kind of audacious and unusual for two folks who are not scientists. I'm an economist. Bob is a strategic consultant, and neither of us have been in a lab since our undergraduate biology days. And one of us didn't do very well, not to mention any names, wasn't me. So it's an audacious idea that there is something amiss about the innovation system in healthcare. And we're aware of that. And that's part of the story that we tell.
- [03:13]
Kurt Nickish
What do you mean by innovation? Like, how do you define it? How is it different from other sectors and industries?
- [03:20]
Bob Rebitzer
We mean innovation in a very broad sense, but the best way to answer it is through some examples. So antibiotics are essential to modern medicine. You basically can't do cancer treatment or dental treatment or all kinds of stuff without effective antibiotics.
- [03:38]
Kurt Nickish
It's one of the best things about living in the 20th and 21st century.
- [03:41]
Bob Rebitzer
It's one of the best things about living in the 20th, 21st century. And the reason we're talking about antibiotics is not only because they're very valuable, but the pipeline of antibiotics has become dangerously thin. Bacteria evolve resistance to antibiotics. We need to be constantly developing new ones.
- [03:58]
Kurt Nickish
So strong need, strong benefit.
- [04:00]
Bob Rebitzer
Strong need, strong benefit. But the incentives for developing new antibiotics come from the patent system. And the patent system does something remarkable. What it does is it says if you develop something that people want to use, you get a monopoly on that for time limit monopoly, you as the innovator and you get to charge a high price for 10, 20 years. The lovely thing about that is it rewards innovations not because some influential scientist thinks they're important or a government bureaucrat falls in love with technology, but because people are actually using it. They're buying it. Right? And so you'd think that with that kind of incentive system and reward structure, that developing new antibiotics would be a very profitable business because everybody wants to use them. But we have this paradox, this puzzle, that the pipeline has become very, very, very thin over the last 20, 30 years. They're almost guaranteed money losers. So what is that? What's going on there? The answer has to do with the incentives in the patent system. The market test in the patent system has this great feature that nobody makes any money unless people want to use it. But what's the first thing you do if you develop a new antibiotic? You try not to use it. Because every time you use it, there's a risk that the bugs will develop resistance to the new antibiotics. So wise stewardship by physicians places enormous pressure on, on prescribers not to prescribe the new antibiotics. In addition, the new antibiotics tend to be more expensive and they tend to be no more effective against the non resistant drugs. So you have this enormously socially valuable innovation that the incentive system, the patent system, makes it very difficult to make money on, because you can't do sales.
- [06:00]
Kurt Nickish
Yeah. Okay, so just to kind of underline this, you have a demand for new antibiotics, and it's something that physicians everywhere would love to have in their toolbox, but only when they really strategically need to use it. And because there isn't a high volume of purchases there, it just doesn't financially make sense for companies to develop these.
- [06:20]
Bob Rebitzer
It's a little bit worse than that. Remember, you only make money as an innovator for the duration of your patent. So let's say you get a patent, and the patent protection lasts 20 years. It takes you 10 years to develop the antibiotic. So you got 10 years essentially, to recover the upfront costs of drug discovery. And if the reaction of the healthcare delivery system is to delay usage, to hold it in abeyance, well, that period of time gets shorter and shorter and shorter, and so the ability to make money on the next patent is inhibited.
- [06:59]
Kurt Nickish
Yeah. The Runway is thin and short. Yeah. Bob, what's your reaction to that?
- [07:05]
Jim Rebitzer
Well, I saw this in practice, but actually, our story actually goes beyond patented drugs. So let me give you an example from my life as a consultant. A very brilliant professor of engineering came up with a way to teach people how to alter their gait, alter how they walk. That was equivalent to losing about reduced pressure on the knee, equivalent to losing about 20% of your body weight. And they said, well, what do you think of the idea? And I thought, wow, this is a really cool idea if it works as advertised. You know, the way we deal with knee pain for many people is to replace their knees, which is costly and painful. And if there was a way to alter how people walk, that would reduce the pressure on the knees and maybe postpone or even obviate the need for that kind of surgery. That's a pretty cool idea.
- [07:56]
Kurt Nickish
Yeah. And we're talking gait, as in G A I T. So train people how.
- [08:00]
Jim Rebitzer
You walk, how you walk. Yeah.
- [08:01]
Kurt Nickish
So basically spend some money and train somebody to walk differently. And they don't need a knee replacement surgery.
- [08:07]
Jim Rebitzer
At least in their initial, you know, experiments, it wasn't so hard to do that. It didn't take too long to teach people how to shape, change how they walk. And so I thought, it's a very cool idea. And then they ask, is there a good business here? And I said, that's a different question. Let's who's the customer for this device, this service? And so we kind of went through the list. Well, maybe orthopedic surgeons. We'd start there. And, well, orthopedic Surgeons would care about innovation like this, but their job is to run very sophisticated, high throughput joint replacement factories. And so they would be interested in this, but it would be at best a sideshow to what their main business is. We say, okay, well, maybe health systems would care a lot about this, and they do, because they care about the health of their patients. But the most profitable line of business for most health systems, well, certainly one of the top few are joint replacements. Then you say, okay, well, payers would certainly care about that. And yeah, they do, and they care and they care a lot about it. But payers are rarely in the position to instruct providers about med, what, which medical devices and services they need to use for specific conditions. So you kind of go through the ecosystem and you say, well, here's a really cool idea. It would have the property potentially of reducing costs and improving quality of life for patients. And there's no obvious customer for it. Now, economists have a solution to problems like that. My brother told me all about it. And it's called shared savings. And the way it would work is the payer would say to the doctors and to the patients, look, if you engage in a solution like this as part of the process of treating knee pain, we'll share the savings with you. We'll give you benefits commensurate to the savings that we're experiencing. And in many other sectors of the economy, that works pretty well. But in healthcare, those shared savings arrangements don't turn out to work so well. And I'll give you one, one obvious reason, Ryan, There are a couple others, but one is what we call the time horizon problem. Most people change their insurance companies pretty frequently. And so let's say you're the insurance company and you invest in a solution like this, and you may postpone the need for knee surgery for, let's say, five years or maybe 10 years. And by then the patient has shifted payers two or three times. And so you've made an investment, but you're in no position to recoup the future benefits. And so you don't tend to invest in solutions like that. You could see how the time horizon problem works a little bit like the patent incentive problem that Jim talks about. Certain types of valuable innovations, in this case particularly those that deal with chronic conditions like knee pain that take place, that develop and take place over a long period of time, tend to be underinvested in, in the healthcare system.
- [10:52]
Kurt Nickish
So it sounds like a lot of these innovations may be in the system itself and not necessarily even in new Technologies. So you two both spoke on a panel at questrom with another panelist there, Daron Acemoglu. He's an institute professor at mit, recently won the Nobel Prize in Economic Sciences. I want to play something he said from that talk. Here's what he had to say.
- [11:18]
Daron Acemoglu
We tend to think that innovation is the solution to all or most problems. Oh, climate change. I will find AI to solve climate change or legal bias. Well, technology has to solve it. It's actually the tip of the iceberg in that we somehow think that expanding our capabilities, which successful innovation of course does, is by itself going to be a solution to human made and human problems. And that is obviously not true.
- [11:50]
Kurt Nickish
What's your reaction to what he's saying here?
- [11:52]
Bob Rebitzer
I think he's trying to say two things. I think he's trying to say that technology doesn't come down from the heavens as a good fix to social problems. It's driven in part by the incentives that Bob and I were just talking about, but it's also partly driven by, by the values and norms and choices innovators decide to give attention to.
- [12:17]
Jim Rebitzer
This problem that Daron identifies can cut two ways. It can be an inhibition for valuable innovation, but it could also be a spur for one. So there's a woman named, a physician named Diane Meyer, who with a bunch of colleagues, initiated something in the early 1990s called palliative care, which is a better way to deal with people who are quite sick, often with multiple conditions. And it's a way of managing, focusing on the management of symptoms as part of the care delivery process. And in the 1990s, early 90s, when, when Diane Meyer and her colleagues were working on this problem, there was no specialty of palliative care. It didn't exist as a practice in most medical institutions. And now today, a few decades later, it's a recognized specialty. Every hospital worth its reputation has a palliative care practice. She made that happen. In the near complete absence of financial incentives, nobody gets paid more money for becoming a palliative care specialist or implementing palliative care programs. Instead, what she mobilized was the values of nurses and doctors and other healthcare professionals to relieve suffering in their patients. And she found a way that she could demonstrate was superior and without any financial incentives at all, transformed in this area, the practice of medicine. So this is an example of how social values kind of on their own can drive very valuable technological innovation.
- [13:51]
Bob Rebitzer
But it could also work the opposite way. Norms are a very powerful motivator in healthcare because of the way professionals see themselves and because of the way they're.
- [14:00]
Kurt Nickish
Socialized and trained, this is sort of what people often refer to as mission.
- [14:05]
Bob Rebitzer
Mission, exactly. And mission can be very powerful as a shaper of what people do, but it's very hard to control. And sometimes you get mission filling in gaps, like the example of palliative care, where the incentive systems, monitoring incentive systems fail, but other times they could get in the way. Think about mini clinics. Mini clinics were these clinics that were set up where nurse practitioners would, working not under the supervision of a physician, would offer treatments for minor ailments, earaches and stuff at a reasonable price with easy access. It became very popular, but it was promoted by and developed by pharmacies. Ask yourself the question, why was it that it was the pharmacies who took advantage of this unexploited opportunity and not the pediatricians and the primary care physicians who could have done the same thing? And the answer has to do also with social norms, but norms around the autonomy and prerogatives of the professions. Right. So nobody delivers care but under the direction of a licensed physician. And the existence of these minute clinics, even though they offered a lot of value, was offensive to that norm. And the professional societies waged very large and almost successful campaigns trying to prevent the formation of this. And as a consequence, this valuable new innovation wasn't driven by them. The pharmacies did it because they didn't have this normative resistance to the innovation that the physicians did.
- [15:43]
Kurt Nickish
That's really interesting. Let's play another thing that Daron said on that panel about why financial incentives might be misaligned when it comes to innovation. Here's what he had to say.
- [15:55]
Daron Acemoglu
There are what economists call externalities. There are effects on others. And in the case of energy, that's very clear. The market can never get that right because nobody who does the money is directly going to care about what goes on with the pollution and the other people who suffer. And that's why you need various kinds of policy levers to do that. But the second one is that there's going to be a vast set of factors determining how easily you can monetize gains. So the health care is again a case in point. Because if you do an innovation in public health, that's going to be much harder to monetize than if you extend the lives of billionaires. And so that means that that monetization difference is going to induce a lot more of the inequality inducing and inefficient and probably brainless type of healthcare investments in trying to reach immortality. For a very small group of people when infant mortality is still high and life expectancy has been falling in the United States for close to a decade.
- [17:00]
Kurt Nickish
Jim, you're nodding your head here.
- [17:01]
Bob Rebitzer
Well, I think he's making two points. One point is that sometimes the incentives for innovation in healthcare are too focused on the problems of rich people in rich countries. And we see that especially in the patent system. That's his point about billionaires and immortality, and that's a problem in the patent system. But the other point he's talking about is that there are lots of important areas where the incentive structure actually get in the way of developing socially valuable innovations.
- [17:37]
Kurt Nickish
Let's talk about another problem that you identified in the book, and that's the problem of reluctant incumbents. The point here is that despite the need to advance and the hunger for innovations, some of them come very, very slow. And electronic health records might be an example because they were founded long time ago, took billions of dollars of incentives to make happen. Even today, you still have to fax. Famously, you have to fax records around. It's a common complaint of where healthcare is today, that it's not modernized. Can you explain this problem and make it clear to us?
- [18:17]
Bob Rebitzer
Yeah, I think the problem is particularly severe when you're talking about transformative innovations. And that's very relevant because we're on the verge of another transformative innovation in healthcare emerging from artificial intelligence and computational genetics and things like that. So thinking about how the health system handles transformative innovations is really worth giving some energy to.
- [18:40]
Kurt Nickish
So where's this reluctance come from?
- [18:43]
Bob Rebitzer
The best way to illustrate it is with a contrast. Compare two different transformative innovations from another era. The first is, as you suggested, electronic health records, which were identified already in the 1990s as an urgent and potentially extremely valuable innovation. And the healthcare system simply didn't develop them for 20 years. And they didn't start doing it seriously until the great financial crisis when the federal government decided to, as part of its stimulus program, devote a lot of resources and a lot of regulatory pressure to hospitals and providers to invest seriously in these at a time when the rest of the economy was investing like mad in all kinds of electronic record keep.
- [19:30]
Kurt Nickish
There's a boom in digitization.
- [19:31]
Bob Rebitzer
There's a boom in digitization and Walmart could do it and our major hospitals could not, and our physician practices could not contrast that with another transformative invasion, which was minimally invasive gallbladder surgery. Bob could say the name. I can't say the name. What's it called?
- [19:49]
Jim Rebitzer
Bob Laparoscopic. Cholecystectomies.
- [19:51]
Bob Rebitzer
There you go. And that totally transformed one of the most common surgical procedures in the United States. And it happened within just a few years.
- [20:03]
Kurt Nickish
So what's the difference?
- [20:04]
Bob Rebitzer
That's a really important question. And I think the answer is something we call switchover disruptions. When you introduce a transformative technology, there's a lot of disruption to your ongoing business practices and care practices.
- [20:19]
Kurt Nickish
Is this the switching costs?
- [20:21]
Bob Rebitzer
Yeah, I'm switching costs. And everybody has to relearn their roles and relationships between providers, payers and patients. All have to be rethought. And in the case of electronic health records, those switchover disruptions were very large. Bob was involved with the implementation of electronic health records at Kaiser Permanente, which one of the leaders in this.
- [20:46]
Kurt Nickish
What's your, what was your experience?
- [20:48]
Jim Rebitzer
Yeah, and of course, cornerstone of that was an enormous investment, billions of dollars in the design and implementation of an electronic medical record system that itself was connected to all sorts of other digital transformations that had to go on at the same time, ranging from clinical call centers, secure emails, and it was a transformation of nearly every aspect of the organization.
- [21:13]
Bob Rebitzer
But those costs, those switchover costs weren't there with minimally invasive gallbladder surgery. Everybody was still on the same mission. They were trying to get people in and out of the operating room as safely and efficiently as possible. So there weren't the same kind of switchover disruptions.
- [21:32]
Kurt Nickish
The number of stakeholders involved is smaller in that problem.
- [21:35]
Bob Rebitzer
Yes. Right. But the way to think about it is not simply with the number of stakeholders, but with the kinds of disruption to your ongoing operations that the transformative technology entails. And so in one case, the switchover disruptions were large enough that all the other major players kind of slow walked the electronic health records because they understood that it would disrupt our profitable, ongoing operations. And it wasn't until Kaiser perceived a threat to their dominant market position that decided, okay, we gotta do this. So that becomes like a barrier to the introduction of a transformative technology. And the same thing is true. I think Bob and I both think that that's a really powerful framework for thinking about the introduction of artificial intelligence, which also has potential to be transformative of business processes and care processes. And there are ways of implementing it that maximize switchover disruptions and resistance. For example, we're going to replace all our radiologists with artificial intelligence, or in their ways that actually try to complement your existing talent and your existing staff that will face far fewer switchover disruptions. And so we think that this framework of thinking about switchover disruptions caused as a result of transformative new technologies is both a way to understand history, but also a prescription for the future.
- [23:09]
Jim Rebitzer
Let me give a concrete example of what that means in practice. That means when you're starting to introduce AI into a health system, start with the back office, start with eliminating using AI to eliminate the patient work, the paperwork that gets in the way of doctors and nurses being able to do what they want to do, which is to care for their patients. And if you start there, that's a complement to their roles as physicians and as care providers. It becomes a tool that people welcome as opposed to a threat that people oppose.
- [23:37]
Kurt Nickish
Artificial intelligence is a great example. Right, because if you develop the technology to look at, to identify breast cancer earlier, you want to be able to bring that to market. It has benefits, but it's a complex system that you're bringing it into. And the worst case scenario for everybody involved would be if this technology really got slow walked again. Right. Where it takes 20 years for powerful technologies and early diagnoses to actually become part of medical practice.
- [24:03]
Bob Rebitzer
Correct. I agree completely with what you just said. But there's another implication of this thinking about in terms of switchover disruptions that's less obvious, but I think no less real, which is that switchover disruptions are gonna. Who's gonna slow walk those disruptions? It's the dominant market players because they're the ones whose operations are most profitable, where the costs of disruption are going to be largest. So if you have, as we do, unfortunately in the health sector, lots of market concentration where people exact a lot of market power, those folks are going to be resistant to thinking carefully about this. More so than if we had a.
- [24:50]
Kurt Nickish
More competitive system to solve problems. You have to identify them first. And you two have both done a great job of identifying these problems. Let's talk about solutions, like where does actionable change come from? Now that you know this, we sort.
- [25:07]
Bob Rebitzer
Of break up our solutions piece into two parts. One is how to make the patent system and the incentives in the patent system align more closely with what produces value for society.
- [25:23]
Kurt Nickish
You made some suggestions there and you hinted at them earlier when you said economists have solutions for these problems. You recommend advanced market commitments, you recommend buyouts and auctions. What are these and how could they improve things so that we get more antibiotics, for instance?
- [25:40]
Bob Rebitzer
Okay, so Bob and I were just talking about this yesterday. There's this amazing new class of drugs called semaglutides, which GLP ones. GLP1s are these sort of diet Drugs or diabetes drugs that cause people to lose a lot of weight, they seem to be very effective for weight loss. They may have lots of benefits for other things as well, having to do with addiction or having to do with certain neurological issues, maybe even Alzheimer's. They're kind of remarkable drugs. And the companies that first figured this out and commercialized it, Novo Nordisk is the leading one, charged very high prices for those patent systems, which is kind of the patent system working as it should. Right. Because you have these high prices and then you get a lot of return. And that's going to encourage a lot more innovation around these semi glutadides. You spend more time trying to figure out ways to tweak them, make them better, because there's a possibility of making a lot of money. But because of those high prices, the drug isn't taken up. Many insurance companies won't reimburse for semaglutide. Many Medicaid programs won't. And as a consequence, lots of people who would benefit from the drug don't get it right. Because this high price. And then it makes it worse because then the high price, there's so much demand for the drug even at these high prices, that you get shortages. And because of the shortages, then the FDA lists them as shortage of drugs, and that lets other pharmacies jump in and start producing them, not on patents. So you get switched to generic drugs super fast, and it's just like a mess. So how do you fix that problem, this problem of the monopolists who invent something really cool? The first thing they do is they charge a high price. And that makes it really hard for society to use this stuff.
- [27:31]
Kurt Nickish
Yep. On the other hand, they can't make nothing or nobody will make those things.
- [27:36]
Bob Rebitzer
Exactly. They got to. So what's the right. You want the market tests, you want them to be reimbursed, but you don't want it to be. Every pill is so expensive and nobody buys the pill. Pills.
- [27:46]
Kurt Nickish
Yeah.
- [27:47]
Bob Rebitzer
Okay. And so a fix for that was invented by. First proposed by the Nobel Prize winner in economics as well. What he said is what we should do. He said this is kind of what the French did when they went with the invention of Der archetype photography is you have an auction. And that auction determines sort of the market price of the drug. And then most of those drugs are purchased by the government and then sold at marginal costs, sold at some very low cost. It just barely covers the cost of production, near zero for many drugs. And what that does, if the auction works Right. Is the innovator gets a big chunk of money to reward them for creating this thing. But you don't have these high prices getting in the way of utilization the way you see with these GLP1s. Yep. And it's a very dramatic rethinking of the incentives in the patent system, but it's pretty interesting.
- [28:46]
Kurt Nickish
Yeah, yeah, no kidding. I mean, we heard earlier about this tension between mission and profit and you know, the effort it takes to try to make those two work in concert rather than against each other. One of your recommendations is also to mobilize social and professional norms as a way to improve healthcare innovation. What do you mean by that?
- [29:07]
Jim Rebitzer
Well, anybody who tried to develop new technology in healthcare and who doesn't engage physicians and other healthcare professionals in the process of research, design and development is making a serious mistake. And we've seen that mistake play out all over the place, particularly you see in all the digital health companies that began with the premise of, you know, look how screwed up healthcare is, how hard could it be to fix it? And there's a elephant's graveyard somewhere with the bleached bones of these companies that have failed. And part of the problem is we don't teach physicians particularly, but nurses either. We don't teach them how to engage in the process of innovation, in the design and deployment of new technologies.
- [29:51]
Kurt Nickish
In some ways they're supposed to stay out of it.
- [29:54]
Jim Rebitzer
They're supposed to stay out of it. But there's some bright spots, there's some places where people are doing the experiment and training people to with the tools to be participants in the process of innovation. And the results are very promising. One is at Stanford at the Clinical Excellence Research center, did that. Texas A and M has something called the NMED program where they train physicians in both engineering and medicine. I think those sort of programs should spread. I think there's a second dimension to it that's more philosophical but also very important. Physicians are exquisitely trained to be sensitive to their role as advocates of their patients. And they, they'll do whatever it takes to deliver the care they think their patient needs. But physicians have a second role and it's a role about which they're trained for very little. And that is they are also stewards of scarce social healthcare resources. And they're not provided with the ethical framework or the analytical tools to understand the trade offs involved in their stewardship role. And so I think if we did two things, one is to equip physicians and nurses and other practitioners with the tools in their training to participate as innovators. And the second is to provide them with the ethical foundation to understand and participate in the role of stewards. I think that would unleash a lot of very positive innovation. And it's something that does not require an act of Congress. There's some very nice examples of people who are doing that in the education system are ready and we need to spread it more widely.
- [31:25]
Kurt Nickish
So it sounds like if you do this, your hope would be to get more Diane Meyers.
- [31:30]
Jim Rebitzer
Exactly. She was a brilliant innovator. I mean, she's sort of in her way, a kind of a Steve Jobs right, in the medical profession. But I think we can train more people like her.
- [31:43]
Kurt Nickish
You've suggested some ways to improve healthcare innovation in ways that don't mean innovating new technologies. What's your hope now that you've kind of illuminated the causes of some of these problems and pointed to some solutions? What are you hoping for?
- [31:59]
Bob Rebitzer
Healthcare has been so difficult and so problematic for so long in the United States that people's thinking about the system tends to fall into ruts. And those ruts are focused on the real problems that we spent my lifetime wrestling with, which is the ones Bob mentioned at the beginning. Cost, quality and access. But there is another set of issues that may even in some sense be more important long term for determining the kind of healthcare system that we have. And that's the problem of innovation. And to think about innovation in a clear headed way, in a way that mobilizes, that thinks in a clear headed way about the incentives and social norms and the reluctance of incumbents is, would seem to me to be an important expansion in the way in the policy space and maybe get us around certain of the political gridlock that paralyzes discussion of healthcare.
- [32:57]
Jim Rebitzer
If I could add to what Jim said, you asked. What I'm excited about is I'm excited about innovation. I'm excited about the potential of new ideas, new technologies, new business models to make life better for patients and to make life better for our society. And I'd like our focus to be, my vision for the future is that we focus on how do we get more of the types of innovation that produce that kind of widespread benefit for patients in society. And that's my vision, is I think we can get there and I'm excited about what future remain home.
- [33:30]
Kurt Nickish
And what do you both say to people who kind of see this as a duality problem, right between oh, there's too much profiteering, we never really get social benefit, or we should really scale back the capitalist system to try to get better results here. That's kind of at the heart of the problem.
- [33:50]
Bob Rebitzer
Yeah, that's kind of the greed question. Isn't it all just a question of greed? And I think when people talk about greed, they're really talking about two different things. One is deceitful and criminal things that people sometimes get up to. And there's no defending that. And that's what we have criminal laws for and social norms and social sanctions for. But the other sense of people talking about talk about greed is they talk about people responding to the incentives that are implicit and explicit in the healthcare system. Whenever you have something as big and as complicated as the US healthcare system, people are gonna respond to the incentives they see in front of them. And thinking in a clear headed way, not a moralistic way, but a clear headed way about what problems that causes them to prioritize. That's a good way to go.
- [34:41]
Jim Rebitzer
Everybody wants to find the devil in healthcare, right? For the insurers like to blame the doctors and the doctors like to blame the insurers, and everybody likes to blame the drug companies. And our way of thinking is that the search for devils and demons is not productive. As Jim says, people are responding to incentives. We can change the incentives. If we had to point to a demon in the room, it would be monopolization. If we're going to rely on market incentives and market systems for the development of innovations and for delivery of care, then it really doesn't do us any good to have highly concentrated insurance sector, highly concentrated delivery sector, where you have a handful of health systems dominating the major healthcare markets or a handful of pharmaceutical companies dominating the innovation process.
- [35:31]
Kurt Nickish
You want more. More capitalism. You want more competition, not less who.
- [35:35]
Bob Rebitzer
Had less market power.
- [35:36]
Jim Rebitzer
Less market power. Yeah.
- [35:37]
Kurt Nickish
Yeah. Okay. All right, Jim and Bob, this was really great. Thanks so much.
- [35:43]
Jim Rebitzer
Thank you. Thank you. This is fun, really fun.
- [35:50]
Kurt Nickish
That's Jim and Bob Rabitzer. Their book is called why Not Better and Healthcare and Innovation. Next week we look at common ownership. When big institutional investors buy large ownership stakes in competing companies, are they incentivized to stifle innovation, raise prices and hurt consumers, or is it just fair business? That's next week. To get that episode and more, please follow the show on Apple podcasts, Spotify or wherever you listen. Thanks. Thanks for listening to Is Business Broken? I'm Kurt Nickish.