Former Senator Bill Frist's Health-Care Industry Outlook for 2014

The ex-physician talks about health-care breakthroughs such as personalized medicine
Former Senate Majority Leader Bill Frist at the Capitol on March 7 Photograph by Bill Clark/Getty Images

What do you see as the biggest disruption facing the industry?
Probably the skyrocketing increase in deductibles that we’ve seen over the last 18 months in the employer-sponsored insurance world and in the individual market. And the drive for high-deductible plans. I put that No. 1 because it drives the consumer to shop and ask questions. It drives technology. It drives apps. It drives how much an MRI costs in five different places in Nashville.

And now we have a channeling of 25- to 35-year-olds by Obamacare, or the Affordable Care Act, which is going to put a lot of smart consumers in the system. They’re going to have to pay for the first $2,000 of what they get, and they’re going to demand more value from health care.

Who are the big winners?
The health-care sector, because smarter consumers are going to drive this system to higher value. Higher value means a demand for more competition among providers. You have doctors, companies, and hospitals competing for patients because there’s a lot more money coming into the system—and they’re competing with true transparency. Because of IT, prices will come down. Efficiency will be demanded. Waste will be eliminated.

They’re going to be better providers. That doesn’t mean they’ll make more money, but they’re going to be better. And the patients will get more value by getting an MRI for $300 vs. $2,000. That’s huge value and huge savings.

What about new technology?
Traditional technology in health care drives up the cost, just about across the board. Doing heart and lung transplants or using artificial hearts or stents—all that drives costs up. Technology today is driving the costs down. My iPhone can do a full ECG, not just a pulse rate. That’s instead of a $200 ambulance ride to the hospital, a $200 admission fee, a $150 charge for the ECG, and a $200 over-read. Now I can do it for free in 30 seconds right here on my phone.

But is it a comparable quality?
Yes. If you look at AliveCor, which is the name of the heart monitor on my iPhone, it’s been cleared by the FDA to record single-channel ECG rhythms. It’s a clinical-quality monitor. Is it as good as the standard ECG monitor you’ll find in an emergency room? No. But for 90 percent of the heart disease that an ECG in the hospital picks up, this will pick it up, too. That’s transformative. Another example is in the laboratory space. In the next 12 months you’ll see a technology where, instead of having five tubes of blood drawn by a trained phlebotomist in a clinic, with the laboratory’s blood then sent to New Jersey to be run on a mass spectrometer, you’ll be able to do that same test with a few drops of blood from a finger prick. Instead of going to a lab, you’ll go to a drugstore. You’ll be able to use it to get blood from patients in long-term acute-care hospitals, instead of drawing blood from those central lines that people get infections from. It’s cheaper. It’s less invasive. And that technology was devised by electrical engineers in Silicon Valley and not by doctors at Vanderbilt Hospital or an HCA [Hospital Corporation of America] hospital. It was figured out by some very smart Ph.D.s outside of the health sector at a startup called Theranos. That’s the sort of disruption you see. Somebody might come back and say, “Well, the laboratory space is only 3 percent of the $3 trillion spend.” That’s true. But that 3 percent spend affects 8 out of every 10 clinical decisions being made.

That does disintermediate a lot of people, doesn’t it?
Yeah, that’s what disruptive technology is all about. That’s why you’ll see people like me working in the information technology world, in areas like cloud computing that get rid of the hardware and the IBM systems that hospitals are still on. That, coupled with new tools that give consumers the power to make smart, value-based decisions, didn’t exist two years ago. It didn’t exist 12 months ago. I call it the “grand medical inflection” because it’s this nexus of consumer empowerment through portable devices, coupled with the parallel development of supercomputing that can now be on the cloud. Along with reducing cost, it takes us to a level of personalization in medicine that we never thought was possible.

Are electronic medical records a positive change?
Electronic health records are a good thing. But that’s not going to be a disruptive change. That’s going to, probably for the first couple of years, decrease productivity. Some say three months. It could be longer. Unfortunately, the systems that are being applied are legacy systems. And you know the names as well as I do. I don’t want to name them because I’ll get in trouble. Those systems are too static, too proprietary, not open-sourced.

Are the big players in health care capitalizing on these transformations? Or are they the most at risk?
In pharma, they’re clearly at risk, mainly because the traditional tools of clinical trials and pharmacology developments are being disrupted by technology. The legacy IT systems are also at huge risk. You need connectivity, the ability to mine data. That’s what you get from the next generation of companies that focus on cloud computing. The good hospitals will do well as long as they adapt and transform.

Has any of this changed your behavior?
Sure. We didn’t talk about personalized medicine, but that’s exploding right now. It won’t just come from your genetic data but the sensors you wear, like the Jawbone Up band I’ve got on right now. It tracks my sleep patterns. It looks at the number of steps I take. I share data with my family, and we compare who’s slept or walked the most. Usually it’s not me. That social media part, that peer pressure, changes behavior. People who share their data are more likely to meet their goals, more likely to lose weight. And on the macro level, it gives us so much more data about the links between health and behavior. Putting those things together, which we haven’t been able to do in the past, will lead to healthier lives.

Edited and compressed for space.

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