Incentives, Liars, & Hospitals

My day started in a hot tub with Marcus Aurelius and ended with a man-eating dinosaur. (Don’t ask.)

In between, I learned 3 things:

  • Incentives Form Culture
  • Honesty is the Best Policy
  • No More Hospitals

(Oh, and gondola rides are awesome.)


  1. People talk about the CULTURE of healthcare all the time

“Medical professionals eat their young.” “Those on the outside have a better view of the problems within.” “Don’t risk life and limb [and career] by challenging the knowledge or wisdom of any superior —intern, resident, Big Doc on Campus, or admin.”

Well, I’ve got news.

Incentives form Culture.

It doesn’t just emerge from the ether.

And for the last 51 years, doctors have been financially, socially, and professionally incentivized toward shameful behavior.

  • If I harm the patient and just don’t report it, I get to keep more money
  • If I harm the patient and just don’t report it, I don’t get embarrassed
  • If I harm the patient and just don’t report it, I get to keep my license

#ThanksCongress #ThanksMedicare

As Rosemary Gibson put it in the movie about a little boy dying from professional neglect in a hospital: “We’ve been lying to patients and families in the aftermath of adverse outcomes… There should be NO CHARGE when a patient is harmed.”

And to quote Dr. Lucian Leape: “Shame on us.”

Instead, incentives should be geared toward the best interest of the patient. This is where the rubber meets the road for all the administrators and politicians who pay lip-service to a ‘patient-centered system’.

I call BS.

If you really cared, you would stop whining about CMS tying half of their reimbursement to patient outcomes by 2018 and actually encourage it. You would fire half your lawyers and tell the rest to stop denying patients access to their own data just for the sake of “hiding hypothetical discoverables”.

Which brings us to the next point.


2. Honesty is the Best Policy

Say Sorry Earlier. Seriously. Not just with your heart and your mouth, which should also be sincere. (Families can see right through it otherwise.) But also with your wallet.

Hopefully you agree that patients like Lewis Blackman and mothers like Helen Haskell should NOT have to pay for doctors’ mistakes. And yet onlyone big company has implemented a mechanism so far: Geisinger.

Last year they started offering total refunds, no questions asked.

Annual operating revenue: $1B. Patients asked back: only $80K.

Try to wrap your head around that. Every disgruntled patient suddenly has free rein to get as much money back as they want, but less than 0.01% of the budget disappears — all in exchange for valuable feedback on room for quality improvement.

Like I said, this is considered ‘pioneering’ in the healthcare world. They’re only decades behind other American industries that have to compete in a truly cost-transparent, price-elastic, free-market system reinforced by theConsumer Bill of Rights

For sake of industry comparison:

  • as soon as Zappos started offering free shipping on free returns, EVERY other online shoe company had to also start offering it to stay relevant. (and in business)
  • When was the last time you argued about a phone bill? Verizon or AT&T forwarded you to their “customer retention department” with one mission: win them back. (They know your lifetime value is worth it.)
  • I’ve replaced my FitBit for free twice this year. (broke & water-damaged)

And yes, they all had me fill out a survey.

These are steps towards overall transparency.

(Which is just a fancy word for institutional honesty.)

But there are other pieces of that pie: Process design. A culture of reliability. Seamless integration of human factors. Partnerships with patients + family. And outcomes, outcomes, outcomes.

Usually after a tragedy, families of the dead patient want 7 simple things:

  1. immediate notification
  2. review of mistakes
  3. continued communication
  4. a real apology
  5. dedication to improvement
  6. performance tracking
  7. education so the mistake never happens again

And now here comes one of those ridiculous statements that should never have to be a direct quote, but the guy who invented the CAndOR programfelt it was necessary to remind his millions of healthcare colleagues:

“Hospitals need to ‘normalize honesty’ to improve patient safety.”

Yeah. No sh*t, Sherlock.

I’m tired of people blaming the healthcare Culture.

Steps #5–7 require us to begin fixing it with Incentives.

Which brings us to the last point.


3. No More Hospitals

A dream of mine came true today. A person in high places mocked people who are building new hospitals … C-level execs are starting to understand that kind of infrastructure will only take us backward. He’s the VP of Quality & Safety for MedStar Health and claimed that the DMV area will downsize 1,000 hospital beds in the next year. (And yet, they are still being constructed right here in Colorado.)

Seriously guys, stop building. Less than 2% of your patients would actually want to see you in person if they had the leisure of calling, video-chatting, and emailing. (Or if a machine could automate treatment for them.)

With the onset of telemedicine and digital health tech [admittedly lurching], true patient care will look more like the olden days. House visits. Convenient calls. On-demand service.

If you haven’t noticed, the American consumer has already switched the paradigm from GO to COME.

  • When I wanted to travel, I used to have to GO catch a bus. Now an Uber or Lyft will COME to me.
  • When I wanted to learn something, I used to have to GO to school. Now online education will COME to me.
  • When I got sick and wanted help, I used to have to GO to the hospital. Now a care team will COME to me — on my phone, at my house, maybe even in virtual reality treatment-training simulations.

All of these are quickly becoming the cheaper, better, faster option. It’s only a matter of time (I give it 25 years) until hospitals will be mostly vacant, profit margins will disappear, and a majority of them shut down.

In summary (because I want some time in the hot tub):

  • Incentives Form Culture
  • Honesty is the Best Policy
  • No More Hospitals

P.S. Books I’ve already decided I need to read after one day here:

Safe is not an Option by Rand Simberg

The Structure of Scientific Revolutions by Thomas Kuhn

Wall of Silence by Rosemary Gibson

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