An Insurance Insider’s View on How to Fix the U.S. Healthcare System - Jeb Dunkelberger, CEO of Sutter Health|Aetna

SHIV GAGLANI: Hi, I'm Shiv Gaglani. If the title of our guest's book is any indication, we're in for a very frank discussion about what ails the US healthcare system and how it can be fixed. Jeb Dunkelberger is CEO at Sutter Health Aetna, an insurance provider in Northern California, and author of the new book, Rich & Dying: An Insider Calls Bullsh*t on America's Healthcare Economy. By the way, all profits from the book will go to paying for medical care for uninsured and underinsured Americans. He brings a wealth of experience to these issues, including a decade of varied experiences in the provider, insurance, technology, and advisory sectors of healthcare. He also holds healthcare-related degrees from Penn, Cornell, and the London School of Economics, among others. Jeb, thanks so much for being with us today.

JEB DUNKELBERGER: Thanks, Shiv, for having me.

GAGLANI: We always like to ask our guests what first got them interested in healthcare as a career. What led you to earn so many postgraduate degrees?

DUNKELBERGER: Well, I think like many others, everyone has their personal story. For me, I lost my stepmother when I was about 16 years old to brain cancer, and watched her fight for about six years. A few years later, we went through all the medical bills, and the financial devastation that was left behind amounted to what would be about $2.3 million in today's dollars from both medical and prescription expenses. I think it was a little bit of that, and then also the fact that my stepfather was a physician at a Level 1 trauma center. That was actually my first job. I was a scribe within that Level I trauma center, working directly with all sorts of clinicians, and getting to see the efficiency and inefficiency from the inside out. 

I think it was a combination of the high cost of care, as well as getting directly into the clinical setting, that probably let me realize there's got to be a better way. Then the post-grad degrees, I think, again, anyone that's in healthcare, it seems like the more you learn, the more you realize you don't know. For me, I spent quite a few years just continue to realize I don't know enough, and then eventually I think I just gave up.

GAGLANI: That's amazing. Sorry to hear about your stepmother, but obviously, a good thing has come out of that in terms of getting you into healthcare and the work you're doing here. Tell us about your current role leading Sutter Health Aetna.

DUNKELBERGER: Yes, it's great. It's a very fortunate role to be in, especially during this time. Sutter Health is an insurance plan based out of Northern California. We service 16 counties in Northern California and we're in the backyard of Kaiser Permanente. Within our market, we have some really good blue-on-blue competition between Anthem and Blue Shield of California. The reason I call that out is it really brings out the best in terms of the competitive environment, not to mention the fact that many of our employer clients are some of the largest organizations in the entire world. Those technology organizations also have high expectations and standards for the healthcare benefits that they're going to provide to their employees. That alone was a major draw for me to come in. 

Now, what makes up Sutter Health Aetna is obviously Sutter Health, which is a 24-hospital integrated delivery network, and Aetna, which is a CVS-owned company. For me, it was also the opportunity to really breathe life into this three-legged stool, which was an integrated delivery network through Sutter Health, combining its forces with a payer that is a national powerhouse in Aetna, and then also the nation's largest retail pharmacy chain, which is CVS, and getting to pool all three of those together to create a unique experience for our members. So it was exciting for a number of different reasons. The things that we're doing now, for me, I feel like are really pushing the limits of where we need to be heading in healthcare.

GAGLANI: Yes, it certainly gives you a great perspective, which brings us into the next set of questions around your book. We've been fortunate to have several authors on the Raise the Line podcast ranging from Arianna Huffington to Dr. Vivian Lee, who ran the University of Utah and now is head of Verily at Google Life Sciences, as well as Dr. Shantanu Nundy at Accolade, who just came out with the book Care After Covid. 

Now your book, Rich & Dying, can you tell us a bit about what prompted you to write it? What are some of the key ideas that you want to make sure are expressed to our audience, which is primarily current and future healthcare professionals?

DUNKELBERGER: Well first off, it's just an honor to be on this podcast when you list out all those folks before me, but hopefully, you guys will all find that the book is of some value that's equivalent to what many of those other authors are pushing out right now. First things first, what prompted me to write the book. Well, over the last year, my fiance, as a trauma surgeon at LA County, USC, and watching her get up every single day and continue her normal regimen, even during COVID. I mean, you're living right next to a frontliner, who is dealing with the stresses of COVID, but also putting in 90–100-hour weeks. For me, that was the wake-up moment of, "Hey, I have time here. If there's ever a time to write a book, it's probably during a year-long shutdown in California." So definitely had the time, finally; that wasn't an excuse for me. From there, I think, I also just felt I had created an informed perspective, given my roles within the payer-provider technology advisory space.

Now that perspective is obviously continuing to grow and morph and evolve. But it also became a point where, so many of my friends and colleagues said, "You're constantly pontificating on this and expressing your opinions on that. Why don't you write it all down?" Again, it was the support of many others that congealed me to actually writing this down. I think that when you think about the book, and why it's important to the audience that we're talking to today, what I found is that healthcare is probably deliberately complex, and providers really sit at the center of solving many of these issues. Oftentimes, we do not position the provider in the center of these issues.

The book really focuses on three core parts. The first part is, I take the time to really denounce both ends of the spectrum that so many folks that tend to find themselves in. The fact that it's ascribed to the political views of the right and left, free-market economics versus Medicare For All. I just really wanted to steer directly into those two elephants in the room, and make sure that I explained why both of those things will not work in the future, at least from my humble opinion.

Part two, I then really dig into the insurance role within the healthcare value equation, and a number of the things that insurance companies are doing today to really improve the trajectory of where we're heading within our sector. Again, I implore, most providers need to understand this. It's where the dollars are coming from. The very top of that totem pole, you have to understand the flow of funds that are driving so much of the behavior within our sector.

The final part really lays the foundation for the future. I put out a few ideas of my own. I also put out a few ideas around things that I think are like fixed variables that are going to be very hard to change. From there, it's more of a rallying cry to get others to engage in this conversation. I think the biggest thing for me is, I'm a millennial. The workforce today is quickly evolving, so much so that about 50% of the US workforce will also be millennial. Benefits and insurance is an area that I think few folks really understand just how costly it is. I mean, when I say things like, “Starbucks spends more money on healthcare than they do coffee beans,” I think it awakens a lot of folks.

When we talk about millennials and the inability to purchase a house, even though you're doing fairly well financially, you have to ask yourself, "What's really going on behind the scenes?" When you find out that for most employers, the largest or second-largest line item on their cost structure is their health insurance bill, that means that we've got to do something to fix it.

There's never been a better time to really dig into this. I think that the political window is open in terms of people's minds at least allowing new ideas, especially in this post-COVID environment. I feel this is going to time nicely with how the workforce is changing, and the demographic there, and he fact that we also are coming out of this global pandemic with a new expectation on what we do and don't want within healthcare.

GAGLANI: Yes, I think that's really well laid out, and the book is as well from the three parts. You touched upon this, that the health insurance industry has attracted a lot of criticism just for its role in making the healthcare system expensive or inefficient. Do you think it gets a bad rap? What are some of the innovations you're seeing, whether it's capitated models, or your work in the IDN that is obviously quite innovative, to other consumer-driven healthcare innovations that you think will help reduce the cost eventually?

DUNKELBERGER: Healthcare insurance definitely has a bad rap. I'm not the one to come out and say that it doesn't deserve that. That being said, I think what I would love to call out is the fact that it is simply a proxy or derivative for what's happening behind that, or downstream. Oftentimes, the insurance premiums people think are just a health insurance company looking to make more money. But in reality, there's a lot of governing rules and regulations around what an insurance company can do in terms of profit margin. They can't hold onto large sums of money that equate to a large percentage of profit margin. When the premiums are going up, really what that is, it's a proxy for what's happening behind them, downstream. What that is, it's an increase in reimbursement to hospitals, health systems, facilities, imaging, pharmaceuticals, and whatever else the insurance company might be paying out. I always have to call that out because I think that most people, they look at the insurance premium and they think only about the insurance company, and not the fact that the insurance company is representing the amount, or the payments, that are going out to all those downstream stakeholders that are involved.

I also love to call out the fact that people love to talk about how all the insurance premiums are going up: “We just need to curb that cost, and then everything else will get fixed.” What's important to call out is that you have to think about the largest employers, in most states. In most states, the largest employer is either a health insurance company, a healthcare system, or Walmart. For us, as you begin to make these adjustments, you have to think about the global economy and our national economy, and the fact that one in seven people is employed by some sort of healthcare sector job. When folks yell at me and tell me, "Well, 30 to 40% of our healthcare costs is waste, fraud, and abuse." I always love to remind them, then that means that 30 to 40% of waste is employing one in seven Americans. To get rid of the waste, we have to think about the downstream issues that ensue. I know I'm going down a bit of a rabbit hole here, but I think it's important just to call out that you can't stop at the proxy, which is the health insurance premium amount. You have to think about everything behind that.

You ask the question around, what are some innovations that are coming out that are exciting? First things first, I would love to remind people, too, that insurance companies have one of the most aligned incentives to that of an individual. Which means that keeping individuals happy, healthy, and keeping them preventative, in terms of the actions that they're taking, is one of the core business values that we have. It's something that, both ethically as well as financially, is good for business. That's what we aim to do. When you have insurance companies partnering with providers, like what you have within Sutter Health Aetna, it really gives way to some unique innovation. For instance, there are models now where we see that asthmatics who are low or out on their refill for their inhaler, who may be living within three to five miles of -- I'm thinking about the smoky days a few months ago in California from the forest fires -- we now have an automated ability to actually send inhalers out free of charge to your home to make sure that you're not showing up at the emergency department for any type of asthmatic-related issue. Simply because we have aligned incentives now, right? To send out an inhaler to somebody costs a fraction of what it costs for an avoidable emergency department visit. For us, when we get incentives aligned, it gives way to incredible innovation that I think we need more of in the market.

GAGLANI: That's really well-stated. I appreciate that perspective. I know one thing that came out during COVID last year was how so-called elective procedures, people were delaying that care because healthcare capacity was lower. You don't want to risk going into the hospital for something that truly was elective and contracting COVID. But then there's this wave—just like people hadn't been able to travel last year in the US, and now that it's the summer and the vaccinations seem to be working, there's this incredible surge and wave of people wanting to get together and flying and whatnot. I'm curious what you're seeing, as a leader of a large insurance company, in terms of consumer behavior, or at least your member behavior, on healthcare utilization.

DUNKELBERGER: Yes. One of the things that we were waiting for with bated breath, and we still are, is, is there going to be this tsunami of utilization that's been pent up over the last year? All these elective procedures that were pushed out, are we now going to see those doubling or tripling in the coming months? That's something that we're still waiting on. I think that the other question becomes around preventative screenings. How many of those serendipitous moments were missed when you're talking with a primary care provider? Maybe you are, or not, a polychronic and you have an ability to have this intervention from the provider simply because you're sitting in their office. Because you're interacting with them, something is picked up by the provider, and then that screening allows you to catch something earlier. That's one thing that keeps me up at night, those things that are sitting out that could have been picked up that we've completely missed. The preventative screening side actually worries me quite a bit. 

In terms of utilization trends, I also think that although telemedicine had such a massive surge, I'm making the prediction right now that we're going to see a little bit more of a return to normal than a lot of people expect. I do not think that we're going to see patients continuing to go through telemed when they do have the option for in-patient or in-person care. It's important to call out the fact that this modality of care is very much needed; there are certain demographics that are going to lean towards it, and anytime that you improve access to care, you're checking the box and winning in my book. That being said, to think that we're going to go to a completely virtual-first environment, and that the majority of patients are going to prefer that over going in person, I'm still waiting to see the data actually support that.

In fact, I've seen the opposite when talking with health system CEOs. We're actually seeing that as they open up and allow patients to come back in, patients are taking up that opportunity. Also, I think providers want that as well, to bring the patient back in. There's so much that can be done in an in-person setting that can't be done from a virtual perspective. I think it's important to drive towards that relationship. There's a lot of folks have been pent up in their house for a year. They're looking for excuses to get out. For that, I think also, you're going to see some in-person care. 

There are some definite strides that we've taken forward in terms of telemedicine and the virtual aspects. We even launched a virtual-first primary care offering, which is great for the demographic that we're supporting within the Bay Area and Sacramento regions. But at the same time, I also wouldn't be surprised to see in-person care return to maybe 60–80% of what it previously was as we get through the end of this pandemic.

GAGLANI: That's a really great and interesting prediction. It will be very fascinating to see how it plays out over the next few months or years. I'm curious, a lot of consumers who have not just healthcare but say they have car insurance. Companies like Geico are often providing incentives, whether that's premium reductions or other incentives, to their policyholders, to, say, take an online safe driving course or to install a driver monitoring system. I know health insurance companies have experimented with things like Fitbits, and behavior change and education. What is your thought on anything related to that? Are there courses, teachings that patients could have, or even providers, who accept your health insurance, that could have been proven already, or could help improve the outcomes, and maybe pass on some of those savings to the consumer directly, too?

DUNKELBERGER: It's an interesting point that you're bringing up. I think that this is actually where things start to get into semantics a bit, but I want to call this out. When you look to those direct-to-consumer type of offerings that you reference with Geico, Progressive, and others, where you get that safe-driver-discount type of thing, the problem that we have within health insurance is that the purchaser, typically, is not the individual. For 160 to 180 million Americans, the purchaser is the employer. When you look at the fact that the employer is purchasing the health insurance, and then they're passing those benefits down to the employees and those dependents that are affiliated with that employee, a lot of the decisions that are being made actually run back up through the employer and through the broker consultant that they're working with on making that insurance decision. So many of the benefits that are created are selected by the employer, and oftentimes not the provider or the insurance carrier.

There's some semantics there in terms of what's happening, and it's a really important topic to understand. But that being said, I am a personal fan of behavioral economics and believe a lot in aligned incentives. I think that what I have seen, at least at a high level, is that in the early years of going in this direct-to-consumer behavior change, what you find is that, if it's not deliberately marketed and pushed towards a certain patient demographic, your target audience who tends to pick it up is exactly what you just said, Shiv, which is the Fitbit crew. It's the folks that are typically already engaging, and already monitoring their health, versus the polychronic and the person that's disengaged, that you need to get enrolled.

For me, I also think a lot about what is more efficacious, an insurance carrier calling an employee or individual, or a provider calling an individual? For me, it's the latter that actually is going to be effective. It's really about the insurance carriers empowering providers to provide new things. 

One of the biggest things that we're pushing right now is digital therapeutics. Instead of going on Ambien, for instance, we have Sleepio, which is a digital therapeutic. Now it can also act as an adjunct therapeutic, where you put one with the other. But for us, it's really important to allow people to change their behavior without trying to modify it with a prescription or medical procedure. Again, thinking about prevention, thinking about how you incentivize people for good behavior, we're all about that. It comes back to how do you partner with the brokers and the employers who are purchasing those things on behalf of their constituents.

GAGLANI: That's really well said and very interesting to hear your perspective on. I know we're coming up on time, so I wanted to just ask two more questions. The first is, since we have many students and early-career healthcare professionals in our audience, what's your advice to them about meeting the challenges of the pandemic and beyond as they approach their career in healthcare?

DUNKELBERGER: Yes, it's a tough one. What I would say is that we are currently on a trajectory that is simply unsustainable. The fact that we cannot continue down this path means that we need people within the industry to help us change our trajectory. Anybody that's currently in the industry that's listening to this, I feel like they're now implicated in terms of helping us solve this. 

I guess there are probably three things that I would say. First off, always ask why. If something seems convoluted or too complex, just keep asking why. I don't think enough people actually push the envelope there. Two, I think that you have to follow the dollars. When I did this during my exercise writing the book, it's incredible where it will take you. Being a little bit of a detective and understanding what are the incentives behind different things that are happening, and understanding both the perverse incentives, as well as those macro-level regulations that are driving things in one direction or another. Then finally, I would really underscore, know the difference between innovation and iteration. One of those things is going to drive us forward, and one of those things is going to claim to drive us forward. What we need is true systemic innovation. What we don't need is just iterating on the status quo. I think for us, in the trajectory that we're on, we need some pretty seismic changes. We don't need just an iteration and refinement at a micro level.

GAGLANI: Wow, that's great advice, and also very clear. My last question for you is, is there anything else we haven't covered that you'd like to cover or be able to share with our audience about you, your work at Sutter, or the book, etc.? 

DUNKELBERGER: I think that the one thing I would say is, it's podcasts like this, it's audiences like this, that give me the energy and faith that we're going the right direction and that we're changing things. But that needs to happen with a course. In order for us to really see a change, there's a lot of people that have to play a role in this. If you're ever looking for more information, always feel free to reach out to me directly on LinkedIn. We have a growing network of individuals that have a similar perspective on this problem that love to share perspectives and best practices. 

At the end of the day, it's an exciting time for us, because although things at times feel broken and sad and confusing, and you're ready to pull your hair out, similar to the pandemic, there's a light at the end of the tunnel. So many of your audience members were a part of creating that light for so many others. For that, I just want to say thank you. I think it's practicing gratitude every day and realizing that we're fortunate to have this opportunity to really improve something that's going to make a lasting impact on so many lives. For that, thank you for having me on today.

GAGLANI: Jeb, those are some great words to end on. I really want to thank you for taking the time to be with us today, as well as the work that you and your group do to raise the line. With that, I'm Shiv Gaglani and I'd like to also thank our audience for checking out the show. Remember to do your part to flatten the curve and raise the line, since we're all in this together. Take care.