Rewarding Good Results - Dr. Christopher Chen, CEO of ChenMed

SHIV GAGLANI:Hi, I'm Shiv Gaglani, and today on Raise the Line, I'm really happy to be joined by Dr. Christopher Chen, who's the CEO of ChenMed, which operates nearly 80 medical centers in 10 states focused on serving the elderly, poor and chronically ill. Due to its emphasis on preventative care, the organization's hospital admission rate is 30 to 50% lower than the national average. The company was started in reaction to an unsatisfactory experience Dr. Chen's father had with the healthcare system and uses a no-fee concierge practice model. We also had a Raise the Line guest, Dr. Vivian Lee, who runs Verily Life Sciences, who wrote the book, The Long Fix. In that book, she talks very inspiringly about what Dr. Chen and his team at Henchmen have accomplished. Dr. Chen, it's an honor to meet you and to have you on the show today.

DR CHRISTOPHER CHEN:Shiv, I'm so happy to be here.

SHIV GAGLANI:I'd love to start off by hearing more about your own background. What made you decide to go into medicine and then, specifically, cardiovascular disease?

DR CHRISTOPHER CHEN:It's interesting, when we were young, we moved to Miami and we found ourselves, as a family, in a very peculiar circumstance. We found ourselves extremely poor, and it's a longer story, but we actually spent about the first decade of our lives, at one point, either homeless, on food stamps, then eventually moving up just to becoming low income. I got to watch my father go through this journey of becoming a healthcare professional. As I watched this journey, I found it just absolutely fascinating that you could make an impact in people's lives in a very direct way.

Going through all that struggle as a family, we always had a very strong faith and so the concept of being able to heal and make people better was always something that we gravitated to as a family. Ultimately, when my dad started practicing and I saw the impact that he could make on patients, I remember showing up at restaurants and patients would come over and greet him and say, "Oh gosh, your dad did such a great job. He saved my life." I remember thinking, "I want that. I want to make that the kind of difference."

SHIV GAGLANI:That's pretty incredible. Thanks for sharing that and that personal experience. You aren't only a physician, you are an entrepreneur and a physician leader who knows a lot about the healthcare system. I know you're passionate about talking about the issues that the healthcare system faces. Do you mind giving our audience a bit more background on what led to that passion beyond just being a practicing physician and then anything you want to share about how you think about healthcare?

DR CHRISTOPHER CHEN:Sure. It's interesting, when I went to medical school, my goal was to help people and make a difference. As I got out of my training and I started really learning what was out there, what was going on, and I took my head from ground level and rose up maybe to about a 50,000 foot view, I said, "People aren't very kind about healthcare. There's a lot of challenges." I'll give you an example. I keep hearing health care is really expensive. GDP is growing at a particular rate and healthcare is growing at twice that rate. If you compare the United States to other wealthy nations, we spent two to three times more on healthcare and that number is actually growing.

So at one point, we may become three to four times the cost of healthcare. So you think about, "Well, the cost of healthcare is going up," and of course, as a practicing clinician, I say, "Well, that's because we're the best." I'm Chinese, so I was raised by my parents saying, "America is always the best." So I said, "That's because we're the best." At that point, I had just finished training in Boston and New York. Of course, every day, they tell you there that we're the best, right? So, "We're the best, we're the best, we're the best." So it's like, "Well, let's look at our results, right? Compared to these wealthy nations, we aren't the best, right?”

I think two or three years ago, we were number 31 in the country in terms of healthcare outcomes. We pay two to three times more on healthcare, but we were number 31. The year after that and now we're number 32, apparently. So we're going in the wrong direction. Then if you look at results, if you want to get down even more deep, you're going to find that not only are our health outcomes not getting better, just look at life expectancy. Over the last five years, our life expectancy has not gone up. In fact, on average over the last five years, it's actually slightly gone down.

To make matters worse – this is quite a scary thing – we live in a world in the United States, we talk about equality very, very frequently. We talk about equal opportunity. We talk about social justice and all over the country, you're seeing all these mini revolutions about this injustice that's occurring. If you actually look at that life expectancy that I just mentioned over the last five years is slightly either staying the same or coming down, you're actually going to find out that there is a particular part of the population with the life expectancy is going through the roof.

It's going up and it's amazing and that's wealthy people. But if you look at the grand majority of the United States, actually, in order to offset that substantial increase in life expectancy, what's going to bring it down? It's all the low-income people or moderate income people. What we're finding in every single state is a couple of problems. Number one, you have healthcare costs going up. It's happening everywhere, going up faster than everything else. Number two, as a whole, you have the results not getting better and, in fact, getting worse. Even worse, you have something called a widening gap of outcome disparities between the rich and the poor. So in New Orleans, as an example, there is a zip code that we are in, where the average life expectancy is 57 years old. Three miles away, same city, there is a zip code in which the average life expectancy is 83. It's a 26-year difference.

This phenomenon is occurring in every single city in the United States to different, varying degrees. There's a zip code in Chicago, versus the rich and the poor, it's a 30-year difference, and the problem is getting greater. So we have an outcomes problem. We have a cost problem, and then we also have a social justice problem. All three of them and that's why people are being unkind to healthcare, because the results just aren't there. If you look at other industries out there, tech. Every year, your tech gets better and it gets cheaper and healthcare, it gets worse and more expensive. This is the underlying problem. So what really pushed us into ChenMed was to solve this problem, solve the problem of why is this occurring.

I'm happy to talk deeper about it, but I believe the problem is you have an underlying system that is fundamentally flawed at its core trying to be run by beautiful people, because the kind of people that join health care, these are the folks that are natural healers. We want to save people. We want to make a difference. These are the mission-driven, loving people and we have a system that actually rewards them for actually getting bad results. Think about that. I know I'm thinking of the folks who decided to go into healthcare and they go, "How can this be?" I'm happy to tease this out a little bit, but I just wanted to put that out for a second and talk about, why in the world would a system reward somebody for bad results?

SHIV GAGLANI:That's powerful. A lot of our audience probably, at this point, are familiar with several competing models like the capitation value-based model versus fee-for-service, which as you're probably alluding to is one that leads to orthopedic surgeons doing more hip replacements than they need to – bad results – because it doesn't actually improve patient-reported outcomes longterm, as an example. Can you tell us about the founding of ChenMed, 80 centers in 10 states, a little bit more about that and how you guys are achieving such remarkable results for a pretty vulnerable population?

DR CHRISTOPHER CHEN: Let's just start quickly with fee-for-service. You have a system here in which people are paid just to show up. In our organization, we call it trophies for trying. I got young kids, they all go play soccer. From the ages of four to about eight, at the end of the season, they lose every game. They kick the ball in their own goal, but because they showed up, they get this wonderful thing called a trophy. Then at about eight or nine years old, you have to sit down each of the kids and you say, "Listen, that's not the way this world works. You don't get a trophy for showing up. You don't get reward for just showing up. You actually have to win. That's what you get." Healthcare never went through that change.

The system today rewards you for showing up, which means the more people that show up at the hospital, that's a bill. The more patients that you see, that's a bill. The more surgery that you do, that's a bill. If there's a complication, you get paid twice. I had an executive that worked for me once. I got asked to go to the top floor of the children's hospital. The CEO had called everybody up to celebrate, and he said, "Well, what are we celebrating?" He said, "We've nailed it. Our entire ICU in our children's hospital is full and the burn unit is full. We've nailed it." He resigned. We've got a system here that celebrates when people don't do well. JAMA came out with an article that showed that surgeons that have worse outcomes in the community actually make more money.

Then, if you just Google it, I know John Hopkins, they did a lot of work on this, which is, what's the number three cause of death in this country? Number one is heart disease. Number two is cancer. Number three, which you don't see on a CDC website, but the number three cause of death is actually hospital mistakes. Hospitals' mistakes – number three cause of death. The reason is, is that you're not rewarded for getting great results; you're rewarded for just showing up, prove you're strong. So what does ChenMed do? ChenMed is fundamentally different. Decapitated model says here, "I'm not going to pay you for doing more. I'm going to pay you for a great outcome.”

In fact, I'm going to give you a certain amount of money for your mom. Your mom, Shiv, joins ChenMed. I say, "Okay, great. I got a set amount of money and the only way I'm going to be able to make money is if I can figure a way to deliver healthcare under that certain amount of money, because it's not like the more complications, the more sick they get, the more money I make." That's the way healthcare works today, but the way our model works is that I've got to figure out a way to deliver great care and great results to your mom under a certain budget. So here's what I realized. I realized that the number one cost out there is when people get catastrophically ill, they get heart attacks, they trip, they fall and they break their hip. They get strokes, they get all these horrible things.

They show up at the emergency room, right away it's 4 to $7,000 and that admission is anywhere from 20 to $30,000. I said, "If I can get rid of that, figure out a way to stop those, just reduce that number dramatically, then I can manage that care for less. Then, actually the organization makes money. Okay? So here's what I'm going to do with your mom now." Now the caregiver, I go, "Wait a second. I've got to figure out how to stop catastrophic events, so I don't celebrate bad, negative events." I actually figured out a way to do whatever it takes to stop these negative events. So the first thing I do is, I can't have a typical PCP to doctor ratio of 2,300:1. I can't. In our neighborhoods, actually, it's even worse. 3,000 patients share one PCP.

You ever wonder why your doctor has no time for you? Because they don't have time for you. So your mom is immediately going to get a concierge doc where the ratio is 400:1. I want to see your mom every single month virtually or in person, like texting. Your mom has my cell phone number. Call me. Tell me what's going on. We're going to partner together for your outcomes. That's the first thing. Second of all, I'm going to make sure that your mom's on the right medications. I'm going to make sure also, something that's unique, I'm going to make sure that your mom actually is starting to change her behaviors and her lifestyles because if you talk to cardiologists out there, we may have some brewing cardiologists out there.

I'm a heart doctor. If you asked them, "If we could guarantee the change in the lifestyles and behaviors of your patients, how much heart disease could you reduce?" The answer is, if you said, "Hey, if you could force everybody to follow the healthy lifestyle, I think you can reduce 90 to 95% of heart disease in this country." Because just look at it. Compare the U.S. to Japan. Substantial reductions, and that's based on lifestyles and behaviors. But as a cardiologist — and I actually graduated with the equivalent of almost five board certifications — ask me how many exercise classes or nutrition classes or lifestyle classes that are going to help me achieve this 90 to 95% reduction of heart disease in this country, and the answer is zero. Not one class in all of the equivalent of close to 15 years of schooling. None.

Our doctors are now incentivized very differently. They're going to say, "We're going to get you on the right medications, but now I'm going to go after lifestyles and behaviors to try and go after reducing your risk for heart disease." By the way, The Lancet just recently published in recent years that you can reduce the risk of cancers. Cancers are due to lifestyles and behaviors, 40 to 50% of cancers are due to lifestyles and behaviors. So we start going after the holistic patient to reduce that negative outcome. What happens is now we can substantially improve the outcome and we can reduce the cost, so we do it for cheaper.

Your mom has a concierge doc that now can text and call their doctor on their cell phones. So your mom is so happy because now she has instant access, essentially, to every doctor. We manage the service side, we manage the cost side and we deliver better outcomes. That's how we're able to reduce the hospitalization rates by 30 to 50%, un-risk-adjusted. We just published that for our COVID patients, people who get COVID, we have a 40% lower mortality, un-risk-adjusted. Now let's talk about social justice here. ChenMed decided to take this model to the places where we needed it most. We actually took this model to those neighborhoods that I talked about, to the poorest neighborhoods so we could take care of the old, the poor and the sick.

So when I tell you that we have a 30 to 50% reduction, that's compared to the average. Our patients are not average. 98% any percent of our patients are within 300% of the federal poverty line. 74% of our patients have five or more major chronic conditions. Over 60% of our population in many of the markets are African-American and over 80% are minorities. So we're actually going after this social injustice and the reason is, is because delivery systems, hospital systems, are moving out of these neighborhoods because you can't make money in these neighborhoods.

The cost to bill those individuals, it's not enough. They're actually building in wealthier neighborhoods where the life expectancy is going up, and they're pulling out of poorer neighborhoods. So at ChenMed, we decided to go after this problem. We decided to go after costs. We decided to go after service. We decided to go after outcomes, and we started to go after social justice. That's why our vision is to be America's leading primary care provider, transforming care of the neediest populations. We believe we're doing that today.

SHIV GAGLANI:That's pretty remarkable. Obviously, we know a lot about the social determinants of health that go into lifestyle change, whether it's exercise or nutrition. A lot of these areas that you're in, when I was at Hopkins, man, I learned about food deserts. We were in a food desert in Baltimore. Apart from having the primary care clinicians incentivized to be value-based care and actually develop relationships with the Cashman area and patients, how do you integrate or incorporate things like that?

We recently had Marcus Osborn, who's the head of Walmart Health. Their whole concept is, “We can deliver to Walmart Healthcare Centers, and then there's the grocery store right next door. We don't even care if the healthcare is a loss leader, because now we're selling groceries to these patients." How does ChenMed incorporate social determinants of health? Then also, where do you see yourself in five years? 80 centers, 10 states, all 50 states? I'd love to hear more about that.

DR CHRISTOPHER CHEN:You want to know the secret to ChenMed? What we're doing right now is just called value-based care. Most people would consider us the gold standard for value-based care, being at global full risk, meaning we're accountable for the entire healthcare costs; not a portion of it, 100% of it. Our secret is two things: number one, is our caregivers. What we've discovered is that if you look at these large transactional systems, their job is to take these caregivers, stick them in a box and have them run as much volume as possible because that's how you make money. You just show up at any board meeting for any of these large systems, the number one thing they talk about is volume and money.

What do they do? You take caregivers, doctors, nurses, PAs, whatever it is, stick them in a box, say, "We don't want you to look at anything. Don't think. Don't worry about the system. Don't worry about the health. Just see patients. Just see patients. Give more MRIs, more surgeries, more volume. Just give me more of that." You know why doctors are burning out? They're burning out not because they have too much of something, because doctors can work hard. Listen, before The Bell Commission, I could do an internship where we worked 120 hours a week. You shouldn't do that, by the way, but I can do it if I needed to do it. So it's not because we're working too hard. It's not because it's too much of something, it's because we're missing something. You know what we're missing? We're missing purpose.

He's stuck us in a box. You've come taken away all my dignity away and you're just flipping me for volume. That's what every major healthcare system tries to figure out ways to do, either through the electronic medical record systems or through the billing programs or through RBUs. The entire system is designed towards that. It's not designed for these outcomes or trying to achieve results. So now you're delivering these transactions and you just feel like, "I have no hope. I have no leadership role here. I'm not changing the system. Am I really making a difference? Am I making people better?" And the answer is, you're not, because the studies have shown that your results are inferior to other countries.

So now what we do is we pull them out and say, "Join ChenMed. At ChenMed, we are physician-led. We are physician-led." Who's creating the ChenMed model of reduce and prevent these horrible downstream events? Our doctors are. We do not have business leaders running alone, no way. In fact, we do exactly the opposite. We put all of our practicing clinicians through business training. That's the first thing we did, because I had a choice to create the right outcome where you have to have the intersection of understanding costs and how to run a business and understanding how to deliver care to a patient.

We had to combine those two. So my choice is, I either take amazing business leaders and put them through med school, or I can take amazing doctors and teach them leadership and business training. So you obviously know what we did, right? We actually picked a lot of them. When you join ChenMed, we put you through six to 12 months, depending on the track that you're on, of intense, intense leadership, clinical and business training to deliver a particular outcome. We are training physician leaders. It is those physician leaders that go to their populations in their centers, in their panels, and create solutions.

We give them the tools and the tech to go after that and go after the social determinants of care. So we have tai chi classes in every single center, because — why? In the New England Journal an article came out and says, "If you have tai chi, you can substantially reduce the fall rate for people with Parkinson's." A doctor came to us with that idea. Within two weeks across our centers, we were running tai chi classes. That is how the model was born. COVID hit, we told our patients, "Stay happy, healthy and at home," when it first spiked. They're all running out of toilet paper, so a bunch of the doctors said, "Well, we can't have our patients running to Walmart to get toilet paper when COVID is hitting; let's go out and get them toilet paper or whatever it is that they need."

They all had different requirements. You can't fit a doctor in the box and say, "Just check this box off." You've got to expect that clinician and that team, which involves nurses and staff and a doctor, to solve all the holistic challenges of a patient in addition to their clinical challenges. Then you say, "Deliver an outcome." We are going to pave that outcome. These doctors, they love it, the staff. We have a compensation model that when the patients do well, everybody does well and therefore, our clinicians are able to really enjoy the fruits of that labor.

SHIV GAGLANI:That's brilliant. I love that example of Parkinson's patients and tai chi. To the question of where you see ChenMed at 2025, for example, how many states, how many centers, anything that you can comment there? Then also, to double dip that question, you've mentioned COVID a couple of times. The reason we launched the podcast was talking about how we can not only flatten the curve, but raise the line and improve healthcare capacity and outcomes like you all are doing at ChenMed. What are some of the lasting changes you see as a result of COVID, in addition to virtual care, which everyone talks about happening at ChenMed?

DR CHRISTOPHER CHEN:So the first question about our growth trajectory, actually, even the numbers that we're quoting are old because we actually own these centers as we speak. Right now, we're in 24 cities across the U.S. and I think it's across 12 states. So we're planning on probably tripling that number over the next three to four years. We discovered that this methodology of having physicians lead, selecting the right ones, giving them an amazing care team and the freedom to be able to deliver a set of outcomes and the training and the technology, it works and it's replicable. So probably we are the first truly scalable value-based care platform in the country and so it's predictable.

We know it works. We have 100% success rate and therefore, we're going to really push growth these next three years. That's the first thing. We also think that there's a huge outcry because the caregivers in America, they don't have a place where they can truly explore a new care model where they're not being stuck in a box and be whipped for volume. We are that opportunity for them. Second thing, in terms of what we think is long lasting from a COVID perspective, the fee-for-service system is a bad model. It delivers poor results. Our system delivers substantially better results, reproducibly. One would actually think it's unethical to continue to run the control group once you realize you have such an improvement. But there's a lot of money in healthcare.

It's going to be really hard to shift people's mindsets, but they're coming around and COVID has accelerated that. Why has COVID accelerated that? A couple of reasons. Number one, all those hospital systems, when COVID shut everything down, they went berserk because all of their surgeries stopped and they started losing money left and right. Meanwhile, they were waiting for Medicare to change billing for telehealth. They were waiting for all these things because they can't do anything unless they can bill for it. We went from 95% in person to 100% virtual in one week. We started handing out toilet paper and personal items and driving around and delivering to the patients that same week. We didn't have to wait for anything. Why? Because we actually are the care system. We don't have to wait for billable transactions.

Our goal is to take best care of the patient and figure out how to do it and deliver a great outcome, so we're highly dynamic. I think that has come to light. That's why we have such a substantially better result even when patients do get COVID in our organization. So I think that's out there. Second thing that's out there, of course, is the digital movement. We think that's out there as well, but again, systems are always behind because they're always waiting for, "Well, I've got to go and lobby to CMS or Medicare," or whoever it is.

"Will you pay for this new innovation? Will you pay for me to give healthier food, because I can't do it unless you pay for it." Whereas we're sitting here going, "Nah, we're going to do what we think is right for the patient to deliver this amazing results. That's what we're going to do. Regardless if it's a pandemic or there's this massive fall risk thing that just happens, who knows? We've got to solve it. We have the right people onboard to solve it with the right mindset and right incentives and the right technology.”

SHIV GAGLANI:That's very inspiring. Our audience is primarily current and future health care professionals, a lot of trainees. You clearly have a really interesting story at becoming a physician and creating this reproducible, scalable value-based care model. What advice would you give to them about their careers in healthcare?

DR CHRISTOPHER CHEN:Healthcare is fraught with folks who have this amazing picture of what healthcare really is, and they go through the effort to try to get in, first of all, because it's very competitive. You get the smartest people, period. Then they finally get in and then they get trained and they have all these skills and they're excited about what they're capable of now doing and it's a beautiful profession. Then all of a sudden they get out. The reality of what I started to just introduce folks to hits them and the let-down is tremendous. It's like the bottom gets pulled out from underneath you and the number of people that I have met, who've gone through that, is enormous.

So what I would encourage folks to do is walk in with a sound mind, realize that what you are being trained to do and what you're going to be able to do when you finish are two different things and start to push the envelope and look for alternatives. They're out there. We are one such company and we're growing rapidly. There are other ones out there that are going to be on the forefront of healthcare, as opposed to what we think is going to be a dying side of healthcare. So if you're graduating and you have this amazing opportunity to develop tech, are you going to join Blackberry? People don't even know what Blackberry is anymore for a reason.

Either you're going to go and join Blackberry, which at one point was the dominant device in this country, or you're going to go join the next thing, the more innovative, future thing. You're going to be let down. The chance that you're going to be really, really disappointed with the profession that you chose and in an environment that is dying where you have perverse incentives, is going to be very high. Go and look for it. Look for it. By the way, the more people looking for it, the more people will build it, believe it or not, because people will meet the demand.

I think you've got to find yourself as a healthcare professional in a much happier space, because you've now found an environment in which, number one, caregivers, their voice actually matters. Number two, they get to be a part of creating the new version of healthcare different from the one that's already failing. Number three, they get rewarded for delivering great results and delivering great population results and patient results. Number four, you actually get to go to med school. Yes, you get to do what you went to med school to do, which is find creative ways, evidence-based ways, but creative ways of how to heal people and enjoy that and be rewarded for that and be acknowledged for that. 

SHIV GAGLANI:That's some incredible advice to end on. When I was in med school at Hopkins, I kind of wish I had the opportunity to speak to you first before I chose a different path. So in any case, Dr. Chen, I really want to thank you for taking the time to be with us today, and more importantly, for the work that you're doing to spearhead and pioneer value-based medicine in the U.S.

DR CHRISTOPHER CHEN:Thank you, Shiv.

SHIV GAGLANI:With that, I'm Shiv Gaglani. Thank you to our audience for checking out today's show, and remember to do your part to flatten the curve and raise the line. We're all in this together. Take care.