Boards Must Help Fix a Flawed Health Care System
It is not sufficient to assume that management will handle decisions on employee wellness.
In his new book, How COVID Crashed the System: A Guide to Fixing American Health Care, Jefferson College of Population Health founding dean emeritus David Nash, M.D., (with coauthor Charles Wohlforth) examines how America’s response to the COVID pandemic underlined failures of leadership, racial inequities and more, while noting that the missteps open opportunities to transform a flawed system.
Nash serves on the board of one public company, ANI Pharma (ANIP:NASDAQ), and three privately held firms (InfoMC in Conshohocken, Pa., Max Health in Tampa, Fla. and FOX Rehab in Cherry Hill, N.J.). He is also a board member in the not-for-profit sector, including the Foundation of the American Medical Group Association (AMGA) and the Commission on Accreditation for Healthcare Management Education (CAHME).
In a wide-ranging interview, Nash dives into the board’s role in ensuring a health care system that monitors the bottom line but also prioritizes employees’ health, a factor that directly affects both business success and the national economy.
Bill Hayes: Can you explain the social determinants of health?
David Nash: The term “social determinants of health” has only been in the vocabulary for the past three to five years. Research clearly shows over decades that the actual delivery of health care services accounts for 10-to-15% of somebody’s health, whereas all the social determinants — where you live, how much money you make, your education, whether you are in a food desert, whether you are in a high-crime area — determine way more about your health. Within those social determinants, it’s also not just poverty and education, but your own behavior, such as obesity, alcoholism and opioid abuse.
BH: In the case of COVID, how did a system designed to protect citizens against the pandemic crash, and what were the factors that caused the failure?
DN: It's a long list, but I would say the total lack of a public health infrastructure is number one. In 2019, the U.S. spent $10,000 per person, including children, on health care services and $400 per person on the public health infrastructure. So, contact tracing, local health department communication, keeping track of who got vaccinated: We weren’t able to do any of that because there was such a starved public health infrastructure, which had been going on for at least a decade. All the experts knew that a pandemic would crush the public health system. Clearly, that aspect of the system failed.
The second major thing is the lack of a primary care strategy. Most folks don't have a primary care doctor. Even folks with insurance don't identify themselves as having a principal source of care. We have a very fragmented system — urgent care, hospitals, insurance companies — with very little regard for, “Is there a person in charge of helping you coordinate your care?” Public health infrastructure and primary care connectivity were a total failure.
There were other structural issues: depleted personal protective equipment storage at the national level and the failure to take H1N1 seriously 15 years ago. There was also a very lackadaisical attitude about pandemics. “Well, that’s SARS, and it never reached our shores.” Part of our culture — exceptionalism and believing, “Everywhere but in the U.S.” — is a problem.
BH: What would you say can be done to repair the health care system post-pandemic, and what role will boards of hospitals and other health care system entities play in the recovery?
DN: From a governance perspective, the issue is, “Are we getting value for this incredible amount of money that we’re spending?” No board would ever tolerate it if health care were one big business. It would get a failing grade because, of the $4 trillion spent on health care, $1 trillion is of no value and probably even harmful. What organization would tolerate one quarter of its output being valueless? The board would fire the CEO that day.
This is a huge issue that boards really have not stepped up to the plate to ask about. Health care spend from a corporate point of view is a gigantic part of their budget, and boards have largely abdicated their responsibility as it relates to the health care spend because they’ve left it as a management prerogative, which I certainly understand. But in an endemic world where we’ve got The Great Resignation, we have labor unrest, we have inflation, we have a millennial generation that doesn’t want to return to the office, all of these issues are going to impact companies in ways that we can’t appreciate. It’s time for boards to take a more active role in health care spend. You would think that boards would be all over this. They’ve said, “This is a CEO problem, not my problem.” But in an endemic world, a post-COVID world, it’s going to be totally different.
BH: There are amazing technologies and developments in the field of health care, such as personalized medicine or genetic therapy. What's the board’s responsibility in deciding the allocation of those resources? What's the responsibility of companies in the health care space and other spaces to make sure that such resources are available to as many citizens as possible?
DN: This is all about our culture. There are three themes we talk about in the book, and this touches one of them: federalism. Governors were fighting one another to get ventilators. The second theme is exceptionalism: “We don't need to pay attention to Australia, Germany or Italy. Let’s just do it our way.” We failed to listen to some great lessons.
This is all about individualism. Do boards believe that a healthier society is good for business? Do you want healthy employees who are totally engaged and all in at the workplace? One way to think about that is the health of the population instead of, “As long as the senior management get their annual physicals and we have key employee insurance, our obligation is over.”
I don’t agree with that. I would argue that we’ve got to overcome this individualism to some extent to say, “We’re all going to prosper when everybody’s healthy.” Because, if you have a healthy population, people are going to work, they’re more productive. We’re all going to make more money and raise all boats. A healthy society means a healthy workforce means more productive workers means better returns for shareholders.
BH: What should boards be asking their companies about health care plans in a more digital age?
DN: I think it’s time for boards to ask questions about companies’ preparedness to harness new technology to make sure everyone has access to care. When the average Walmart manager asks their employees, “Who’s on food stamps?” the hands go up. Are those people going to take advantage of digital health? I doubt it. Boards have to press management: “Are we covering everybody, and can they get access when necessary? Do they have a primary source of care?”
Then, boards have to ask, “Are we measuring the health of our workforce?” If you don’t measure, how do you know where you’re going? Imagine if we started meetings with, “How is our workforce doing today?” I know we do that. We do it with net promoter scores and other questionnaires, and we look at turnover. These are standard things. I would add a health measure to the dashboard. Maybe it’s time for big companies to hire a chief medical officer on the corporate side. That person would report to the board periodically. I would be totally supportive of a chief medical officer being viewed as an SEC-named executive officer with responsibility and transparency, and with mandatory board metrics that he or she has to report.
BH: As part of the board’s guiding function, how should they be looking at benefit structure in 2023 and beyond? How can that benefit structure help to strengthen the employee/employer connection in a time where the fight for talent is fierce and you don’t want to lose people?
DN: If we assume that the tight labor market is going to continue — and everything I’m reading is there’s still great competition for talent — companies are going to have to get more creative on the wellness package. Not just health insurance, which is key, but what’s the overall wellness umbrella or infrastructure? Will companies support a work-from-home policy? Will companies support exercise and wellness coaching, much more than we have available today? Today, it’s literally a check-the-box exercise. “I had my physical, I got my exam done, I met my goal,” and here’s $400 off your $10,000 Blue Cross bill. Companies — innovative companies, especially with a younger, engaged, in-tune-with-their-health workforce — are going to say, “You get a Fitbit. You get a gym membership. There is a companywide competition for weight loss. Let’s take all of this to the next level. It’s not mandatory, but we’re going to provide that to employees who want to participate.”
This is a governance, tone-at-the-top, classic business challenge. If the tone at the top is our senior managers are all engaged and staying healthy, we have a no-smoking policy, we have a seatbelt policy, everybody has to have some mandatory time off for family activities, we support women’s reproductive rights — that is part of wellness. It’s not just the absence of disease. It’s, “Are we taking care of folks’ mental health?” Because we know that the four horsemen of the apocalypse are depression, alcoholism, opioids and suicide. What are we doing about those four? Are we asking those kinds of questions?
I’m concerned about boards that say, “We’re out of the health care business. Let’s just do a defined contribution and every employee is on his own.” Because the average hourly worker is not going to have the wherewithal to discriminate and make an informed decision and get the details about certain networks and certain hospitals. It’s a regressive way of tackling the problem. Boards are going to set themselves up in a very awkward way. Imagine a board that says, “Okay, it’s defined contribution, you go get your health care,” while at the same time the company pays thousands of dollars every year for every executive officer to have a Mayo Clinic executive physical. That’s sending a signal that you don’t care. And, in this era, if you send that signal, you’ll have no employees.
I believe a healthy workforce is a healthy bottom line. COVID shined a bright light on that at a time when most folks don’t want to talk about it.
BH: What would you say is the “true north” of the health care system, and how do boards in health care achieve accountability? Who's ultimately in charge of ensuring that accountability?
DN: In the health care industry, I think we’ve lost track of what true north is. To me, true north is achieving an improvement in the health of the population, but we’ve totally failed in that. In every measure, we’re in reverse gear. The second question is, “Are we at the tipping point to say we have this opportunity to think more carefully about achieving the true north?” That’s the confluence at the moment.
Outside of health care, I think it’s still an important question, since health care is the largest industry in America, with 20% of the GDP at stake. You would think this would be a top governance priority. It’s not. We’re all wrapped up in the complicated issues of discrimination and “wokeism,” and all of that is important. But it’s totally overshadowed by, “What is the core purpose for the largest business in America?” If it's just making money, we’re doing well at that. But we’re not improving health.