Cleveland Clinic CEO Shares His Incredible Vision For The Future Of Healthcare

Of the many policy battles being fought in the United States, few are as important to the long term future of the country as that over healthcare.

Simply put, if we don't find a way to slow down the growth of healthcare costs, we're eventually going to drown in debt. Increasingly expensive treatments, longer lifespans, chronic illnesses, and demographic trends all but guarantee it. 

The passage of the Affordable Care Act was the first big effort in many years, and turned the issue into a political live wire, making progress even more difficult. Part of the effect has been a movement towards hospital consolidation as small practices are pressured and bigger systems hope to gain efficiency through scale. 

But bigger hospitals are only the beginning. For costs to come down, hospitals need to embrace innovation in how they do business, and start to change some of the behaviors that have made healthcare more and more expensive without making it any better for patients.

We spoke to Dr. Delos Cosgrove, the CEO of the Cleveland Clinic. In the Presidential debates, both Barack Obama and Mitt Romney mentioned the hospital as a model of innovation and of how to bring healthcare costs down. 

"You've seen by the recent shout-outs we got in the Presidential debates that we're being looked at a model of how to go forward," Dr. Cosgrove said, "And I really think our model is our secret sauce."

98 percent of the people that request a same day appointment at the Cleveland Clinic get one, and there were over one million such appointments last year. Focusing on costs doesn't have to come at the expense of the patient. 

Changing the incentives 

So what exactly do they do? One of the biggest issues in healthcare in the United States has been an emphasis on quantity of care rather than quality, as insurance companies and doctors often get paid more for expensive tests and procedures. That's led to a great deal of inefficient, expensive treatment. 

The Cleveland Clinic's solution? All doctors are salaried and on one year contracts. " We have no financial incentives to do more or less. We just try to look after what the needs are for a patient because it doesn't make a difference to us personally," Dr. Cosgrove said. "We all have one year contracts, there's no tenure, and we have annual professional reviews. I don't know of another institution that has annual professional reviews and one year contracts. In the annual professional review we go over all individual contributions to the organization, and that contributes to our decisions about what we do about salary or whether we reappoint or don't."

Doctors focus on what's best for the patient, rather than what gets them paid, leading to fewer unneeded tests and surgeries. They're evaluated on the quality of care rather than earnings. When you can have cheaper care that's also better for the patient, it's clear that there needs to be some change in the industry. 

Those one year contracts go all the way to the top level. Dr. Cosgrove's had 37 one year contracts in his time at the hospital. "You stop and think, almost every major business I can think of has annual reviews. And healthcare traditionally has not," Dr. Cosgrove said. "You got privileges at a hospital and they were yours for life unless you committed murder or something. So it's very seldom that people look at the qualities and the outcomes for each individual."

The data revolution

Part of changing the focus and how people are evaluated is actually having the data to do so. That's an area where hospitals can improve on cost and quality. "The more we measured, the more we found problems," Dr. Cosgrove said. " And when you found a problem you could really sort of screw down into it and find out what the root of it was and begin to deal with that particular issue. And what resulted is that we got better and better as we went along."  

Now, every part of the hospital system transparently publishes its outcomes, adds more data every year, and continually works to get better. Cost is even easier to measure, and it needs to start to be a part of every decision.  "Cost has been looked at what you get paid to do something, not what it costs to do it," Dr. Cosgrove said." So what we've done, over the years we've begun to understand how much it costs to do each one of our procedures. We've asked each of our institutes to go and look at the cost of their number one or two or three things they do. The urologists looked at prostatectomies , they looked at the cost of the sutures, how many instruments they had on the table, how long the patients stay in the recovery room, etc. and they were able to take 25 percent out of the actual cost of what they did."

Ending the Departments of Surgery and Medicine

One of the keys to what the Cleveland Clinic's done is not being afraid to change structures that have been around forever. Just because something's persisted, doesn't mean it's good, especially in an industry that's slow to change. 

"Most hospitals are organized around the department of surgery, the department of medicine, the department of pediatrics. There's essentially a guild system for whatever your profession is. And what we said was, wouldn't it be nice to organize a hospital around what a patient needs? Novel idea, right?" Dr. Cosgrove said. "If you've got a headache, you don't know whether you need to see a psychologist, a neurologist, or a neurosurgeon. So let's put everybody who deals with a neurologic system in a neurologic institute, and we'll have one head. So if you go in for your headache you can see, there in one location, everybody who you could potentially need to see. And they talk to each other, they're physically proximate to each other."

It's more efficient and less costly because patients spend less time in the hospital bouncing around between departments. It was a huge change. Hospitals have been organized around departments of surgery and medicine for years, and people were nervous at first. Rather than slow down, Dr. Cosgrove sped it up.

"The whole organization was anxious. We started one by one to move people to various locations, and finally everybody was so nervous that we said we're going to do the whole thing at once. In one year we changed the whole organization, so there's no more department of surgery, no more department of medicine, it's all by institutes," Dr. Cosgrove said. "It wasn't beating guys over the head. Nobody came to me and said that's a terrible idea, not one person, but everybody was anxious. And nobody has come to me and said we have to go back. So everybody could see the value of doing it."

Cutting costs is also about doing little things, and being physician led has helped the Cleveland Clinic do that. "We also put a price tag on supplies in the operating room," Dr. Cosgrove said. "In the past, if a doctor thought he needed a suture he would just grab it, open it, and throw it away. Now, they see the price."  

As a former surgeon, Dr. Cosgrove knows how they behave. "We didn't know what things cost, so we'd just say, 'give me one of those.'" 

Where are the copycats?

So if this has all been so successful at the Cleveland Clinic, why haven't other hospitals emulated it? Dr. Cosgrove told this story to illustrate how entrenched certain habits are.  

"Two years ago, I was invited to the White House and I'm there with 9 other CEOs of hospital systems, you know there's the New York Hospital System, Columbia, Penn, Hospital CEOs from all over the place. Everybody's given three or four minutes to tell their story about what they can do to improve healthcare delivery. I'm the last guy to talk and I described our system, how we're integrated and how we're all employed. And everybody says, 'Oh we couldn't do that.' I said, 'Wait a minute, guys. How many of you would like to have that system?' Everybody raised their hand. So the point is, that we're entrenched in a different system. We're going from an individual sport ot a team sport, and getting everybody to change their headspace is a big deal."

We're only at the beginning of what's going to be a long period of change for the healthcare industry. The Affordable Care Act hasn't even been fully implemented yet. Hospitals either need to be proactive about changing, or they're going to be forced to. 

"I think the pendulum is moving fast," Dr. Cosgrove said, "it's really amazing how fast things are changing."

NOW READ: The One Massive Trend That's Going to Change Healthcare Forever

More From Business Insider


Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • Mobile, video pump up profit at Google parent Alphabet
    Mobile, video pump up profit at Google parent Alphabet AFP News - 8 minutes ago

    Google parent Alphabet delivered higher profits for the third quarter, lifted by gains in mobile and video advertising as the tech giant narrowed losses on its "moon shots." Net profit climbed 27 percent to $5.1 billion. "We had a great third … More »

  • Amazon loves its Fresh grocery service, calls it a ‘key part’ of the business
    Amazon loves its Fresh grocery service, calls it a ‘key part’ of the business Business Insider - 15 minutes ago

    Grocery Outlet on Instagram Amazon is happy with … Continued The post Amazon loves its Fresh grocery service, calls it a ‘key part’ of the business appeared first on Business Insider. … More »

  • Amazon forecast for holiday season disappoints as investment rises Reuters - 19 minutes ago

    Amazon is racing to ship packages as quickly as possible by building out its own delivery system. It is making heavy U.S. investments as well as pouring funds into foreign markets, and it also is building out its home electronics and video … More »

  • GE in discussion with Baker Hughes on potential partnerships
    GE in discussion with Baker Hughes on potential partnerships Reuters - 20 minutes ago

    Baker Hughes shares, which had jumped nearly 14 percent in extended trading after the Wall Street Journal had reported that General Electric was in talks to buy the company, pared some gains and were up about 7 percent. The Journal had reported … More »

  • Tokyo stocks open higher AFP - 25 minutes ago

    Tokyo stocks opened higher on Friday as a weak yen triggered buying of exporter shares. The benchmark Nikkei 225 index rose 0.65 percent, or 111.97 points, to 17,448.39 in the first few minutes of trading. ... … More »

  • Singapore's UOB profit falls 7.8 percent; bad debt charges jump
    Singapore's UOB profit falls 7.8 percent; bad debt charges jump Reuters - 28 minutes ago

    Singapore's United Overseas Bank (UOBH.SI) posted a 7.8 percent drop in third-quarter net profit on Friday, hurt by a jump in bad debt charges due to losses from its exposure to the oil and gas sector. Singapore banks are facing mounting risks as … More »

  • UOB Third-Quarter Profit Falls 7.8% as Soured Assets Rise (1) Bloomberg - 28 minutes ago

    While net interest income was little changed, provisions for bad debts increased by almost 16 percent to S$185 million, UOB said. UOB also posted a 33 percent jump in nonperforming assets to S$3.6 billion as of end September, compared with a year … More »

  • Eyeing a brighter future of O&G at GE's iCenter Business Times - 34 minutes ago

    With the declining oil prices, players in the oil and gas industry have been forced to re-evaluate the way they run their businesses. Operational efficiency is especially crucial to O&G companies. GE Oil & Gas’ iCenters provide digital industrial … More »

  • AMP Faces A$668 Million Charge as Insurance Woes Hit Profit (2) Bloomberg - 39 minutes ago

    “We’ve seen consistent deterioration in the insurance sector over the course of 2016,” AMP Chief Executive Officer Craig Meller said in the statement. Insurers’ revenue fell 36 percent to A$28 billion in the year to June 30 from a year earlier, … More »

  • Lumentum reports 1Q loss Associated Press - 47 minutes ago

    The Milpitas, California-based company said it had a loss of 6 cents per share. Earnings, adjusted for one-time gains and costs, were 49 cents per share. The results surpassed Wall Street expectations. ... … More »

  • Japan’s Consumer Prices Keep Falling, Household Spending Slips Bloomberg - 54 minutes ago

    Consumer prices excluding fresh food, the BOJ’s primary gauge of inflation, dropped 0.5 percent in September from a year earlier (forecast -0.5 percent). Household spending fell 2.1 percent from a year earlier (forecast -2.7 percent). … More »

  • Deal struck for world's biggest marine reserve in Antarctica
    Deal struck for world's biggest marine reserve in Antarctica AFP News - 57 minutes ago

    The world's largest marine reserve aimed at protecting the pristine wilderness of Antarctica will be created after agreement was finally reached Friday with Russia dropping its long-held opposition. The deal, sealed by the Conservation of Antarctic … More »

  • CenturyLink nears deal to merge with Level 3 - sources Reuters - 59 minutes ago

    CenturyLink Inc (CTL.N) and Level 3 Communications (LVLT.N) are in advanced talks to merge, according to people familiar with the matter, in a deal that would create an enterprise telecommunications player worth more than $50 billion, including … More »

  • Forex Trading Singapore: How The Bid-Ask Spread Works?
    Forex Trading Singapore: How The Bid-Ask Spread Works? - 1 hour 5 minutes ago

    It's easy to understand once you know the basics. The post Forex Trading Singapore: How The Bid-Ask Spread Works? appeared first on … More »

  • Crisis Gauge Flags China Cash Squeeze Followed by Growth Hit (1) Bloomberg - 1 hour 6 minutes ago

    Bond investors are preparing to benefit from the slower economic growth that may result. “This is a signal in the market that swap traders are readying for tighter liquidity as the government tries to prevent a property bubble,” said Iris Pang, … More »

  • GE explores acquisition of Baker Hughes - source Reuters - 1 hour 11 minutes ago

    It is not clear whether Baker Hughes will engage further in deal talks, the person told Reuters. Baker Hughes, which has a market capitalisation of $23.1 billion (18.99 billion pounds), declined to comment. Baker Hughes shares were up 13.7 percent … More »

  • Yen Weakness Seen Boosting Japan Stocks as Asia Pauses on Fed Bloomberg - 1 hour 11 minutes ago Inc. fell after warning it may not make any money in the holiday quarter. Nikkei 225 Stock Average futures climbed 0.6 percent in Osaka and the benchmark share index is on course for its best month since July, as the yen weakened above … More »

  • OSI posts 1Q profit Associated Press - 1 hour 13 minutes ago

    The Hawthorne, California-based company said it had net income of 3 cents per share. Earnings, adjusted for restructuring costs and amortization costs, were 44 cents per share. The airport security and ... … More »

  • Macquarie Group Profit Beats Estimates on Asset Sales (1) Bloomberg - 1 hour 22 minutes ago

    Chief Executive Officer Nicholas Moore has focused in recent years on expanding the bank’s stable businesses such as lending and leasing to shield earnings from the cyclical nature of investment banking fees. Macquarie is also benefiting as … More »

  • Amgen tops Street 3rd-quarter profit and revenue forecasts Associated Press - 1 hour 23 minutes ago

    Amgen Inc. on Thursday reported third-quarter net income of $2.02 billion. The Thousand Oaks, California-based company said it had profit of $2.68 per share. Earnings, adjusted for non-recurring costs, ... … More »

  • SPS Commerce tops Street 3Q forecasts Associated Press - 1 hour 29 minutes ago

    On a per-share basis, the Minneapolis-based company said it had profit of 14 cents. Earnings, adjusted for one-time gains and costs, were 27 cents per share. The results exceeded Wall Street expectations. ... … More »

  • Digi International beats 4Q profit forecasts Associated Press - 1 hour 33 minutes ago

    On a per-share basis, the Minnetonka, Minnesota-based company said it had profit of 14 cents. The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment ... … More »

  • Flextronics meets 2Q profit forecasts Associated Press - 1 hour 41 minutes ago

    The Singapore-based company said it had a loss of less than 1 cent on a per-share basis. Earnings, adjusted for one-time gains and costs, were 28 cents per share. The results matched Wall Street expectations. ... … More »

  • Google parent Alphabet beats on revenue, earnings; sets buyback
    Google parent Alphabet beats on revenue, earnings; sets buyback Reuters - 1 hour 47 minutes ago

    Alphabet, along with Facebook Inc, dominates the fast-growing mobile advertising market. Shares of Alphabet, the world's No. 2 company by market value, were up 1.6 percent in after-hours trading. The company posted third-quarter adjusted earnings … More »

  • Teligent reports 3Q loss Associated Press - 1 hour 47 minutes ago

    On a per-share basis, the Buena, New Jersey-based company said it had a loss of 5 cents. Earnings, adjusted for non-recurring costs and stock option expense, came to 1 cent per share. The results surpassed ... … More »

Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
to view quotes in your portfolios.


    Market Data

    • Currencies
      NamePriceChange% Chg
    • Commodities
      NamePriceChange% Chg
    • Bonds
      TreasuryYield (%)Yield Change