Episode Details

First, let's talk about reducing administrative waste in the US healthcare system. There was a pretty famous 2019 study by Shrank et al. that estimated about 25% of the $3.6 trillion the US spends on healthcare annually is potentially wasteful. This is each person spending $2500 unnecessarily.

Robert Kocher wrote a really interesting article about getting rid of administrative waste and inefficiencies, and he said that it is the "safest form of health care cost savings; virtually no one argues that administrative costs should remain high. Reducing administrative waste should be the highest priority … [because] everyone, including patients and clinicians, would benefit from lower health care costs." In my mind, "everyone" means payers, policy makers, and also providers who are or want to take some accountability for the total cost of care here.

To talk about the possibilities, I have the perfect guest: Gary Campbell, who is the CEO of Johnson Health Center, which is an FQHC, a Federally Qualified Health Center, in Lynchburg, Virginia. Why is the CEO of an FQHC a great person to talk about cutting out administrative waste with? Well, first of all, the patient population is what many would consider challenging at an FQHC. Second, they really have to cut out as much waste as possible because there is zero potential to cost shift. They do not have the option to charge their commercial lives 4x Medicare or whatever and effectively cost shift the impact of inefficiencies. There basically are no commercial lives. You either figure out how to be efficient, or the patient population does not get care.

As Gary and I were talking, however, it became clear that when you cut out administrative waste, you wind up actually with the potential to become a great place to work. One reason for this just has to do with the process of cutting out waste, which requires culture and process. And a by-product of a great culture and a great process means a great place to work.

You might be thinking, as I was thinking, that this show, which is supposed to be about cutting administrative waste, is going to be all about how to do lean and Six Sigma and pretty much go peak MBA. Spoiler alert: It's not. When I asked Gary how to be operationally efficient, it all ladders up to organizational leadership: leaders who commit to putting patients first, to have core values with the expectation to actually achieve them (for reals—not just in the marketing). Because without effective, accountable, committed leadership, patient first, lowering the cost of care, removing administrative waste … it ain't gonna happen. Leaders should be visible, have a vision, a strategic plan, project plans, and be inspirational. They also need to not be afraid to "move along," as they say, people who are pulling the team down and holding it back—maybe even if a short-term revenue hit will transpire.

Before we get started here, let's talk about FQHCs for a sec just in case you're unfamiliar. Besides the acronym giving me fits of dyslexia—my brain always wants to invert the letters, so I have a Post-it Note here and I'm staring at it so, hopefully, I'll be able to keep this straight—FQHCs (Federally Qualified Health Centers) are usually nonprofits that are oriented to take care of the underserved. Today they serve upwards of 30 million people in the United States, and that's a growing number. There's something like 1500 of them across all 50 states. They're federally funded. They are a safety net really for individuals out there who may not be able to access care anywhere else. There's generally bipartisan support for FQHCs and often a real purpose and passion to really care for people regardless of their ability to pay. They also tend to offer a lot of resources under one roof (eg, medical care, dental care, other things, mental health care), which can add substantially to the operational complexity.

Gary Campbell, my guest in this healthcare