The Peter Attia Drive - Qualy #85 - The past, present, and future of medicine, hospitals, and healthcare

Episode Date: December 31, 2019

Today's episode of The Qualys is from podcast #06 – D.A. Wallach: music, medicine, longevity, and disruptive technologies. The Qualys is a subscriber-exclusive podcast, released Tuesday through Friday, and published exclusively on our private, subscriber-only podcast feed. Qualys is short-hand for “qualifying round,” which are typically the fastest laps driven in a race car—done before the race to determine starting position on the grid for race day. The Qualys are short (i.e., “fast”), typically less than ten minutes, and highlight the best questions, topics, and tactics discussed on The Drive. Occasionally, we will also release an episode on the main podcast feed for non-subscribers, which is what you are listening to now. Learn more: https://peterattiamd.com/podcast/qualys/   Subscribe to receive access to all episodes of The Qualys (and other exclusive subscriber-only content): https://peterattiamd.com/subscribe/  Connect with Peter on Facebook.com/PeterAttiaMD | Twitter.com/PeterAttiaMD | Instagram.com/PeterAttiaMD 

Welcome to the Qualies, a subscriber exclusive podcast. Qualies is just a shorthand slang for a qualification round, which is something you do prior to the race, just a little bit quicker. Qualies podcast features episodes that are short, and we're hoping for less than 10 minutes each, which highlight the best questions, topics, tactics, et cetera, discussed on previous episodes of the drive. We recognize many of you as new listeners to the podcast may not have the time to go back and listen to every episode, and those of you who have already listened may have forgotten. So the new episodes of the quality is going to be released Tuesday through Friday,

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So without further delay, I hope you enjoy today's quality. [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ OUTRO MUSIC PLAYING [♪ [♪ OUTRO MUSIC PLAYING [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUTRO MUSIC [♪ [♪ OUT [♪ OUT So without further delay, I hope you enjoy today's quality. You know, it's interesting when you look at all of the businesses that have been disrupted by the internet and contrast it with those that have not. Right, so you've just given us a very eloquent description of how the music and history was disrupted, but you also pointed out something interesting, which is it wasn't just the internet that disrupted. It was the desperation that followed the decimation

that permitted the restructuring. Of course, then you can write off all the glib and obvious examples, right? What Amazon has done to retail, what Netflix has done to blockbuster and stores on the side of the street, what Uber has done to taxis, what all of the travel sites have done to travel agents.

I mean, it's been incredibly disruptive. And yet, when I think about medicine, what, you know, all of the travel sites have done to travel agents. I mean, it's been incredibly disruptive. And yet, when I think about medicine, it's like one of the least disrupted industries by technology. And, you know, you basically still have hospitals eat all the rent, payers, although most people generally perceive them as bad guys, generally don't get paid that much, providers get less and less on a per encounter basis. And it's overall a pretty much similar system to what it was 20 years ago. And that's, I don't know, I guess I'd have to think about it, but I can't think of too

many industries that are as unchanged in the presence of this revolution as healthcare. No, I think you're right. The appeal of investing in health care is exactly what you just expressed, and that's what drew me into it several years ago. And what I've learned since then has been slightly disillusioning, but I'll give you my take on it. The first thing I would say is that health care is still an industry that largely gets paid through labor. So most of the money ultimately goes to labor. Goes to doctors, it goes to the healthcare personnel.

The hospitals don't make that much money. They're not that great of business. If you look at Kaiser, for example, which is an integrated payer provider in California, I think they have a 3 or 4% gross margin. It's not a phenomenal business. The payers, to your point, have very low margins. They, in fact, have legally imposed limits on the amount of gross margin that they can generate, which you can argue about the ethics of. The pharmaceutical companies,

who everyone hates, seemingly extract enormous profits. On the other hand, it's a very competitive industry. And apart from the legalized monopoly given to them via patents on new drugs, they are the only companies, sort of as I said about record labels. They're the only ones who are out here designing new solutions. And taking an enormous risk.

Taking an enormous risk, and their shareholders are taking that risk. Now whether they're being overpaid or underpaid to take that risk is totally debatable. The other thing is that it's unclear where technology can deliver dividends in terms of human health. And so we're thinking about medicine at a moment in which we as a species have already made an enormous progress. I mean, whatever we've doubled or tripled lifespan and, you know, these numbers better than I do, but even if you get rid of the infant mortality factor and these other things that distort the numbers,

people are living quite a bit longer on average than they were even seemingly 30 years ago. That's especially true of affluent societies until they get afflicted by the diseases of affluence. So where can we get more life from or where can we reduce suffering and disease by way of technology? Is a little unclear. There are all sorts of things that we could of course do to make hospitals more efficient

and to spend less than we do on things like end of life care that maybe aren't a good use of capital, but there's not so obviously a Spotify of healthcare waiting to happen. It's more like there are a million little IT operating efficiencies that McKinsey consultants will over the next several decades implement in large health organizations. And then the big promise is around new types of medicine that I think will arise in the biotechnology industry. And that's where I'm now spending a lot of my time and attention. Yeah, it's sort of interesting

because I think one of the challenges of healthcare and I think this was most evident during the debates many years ago, not many, but what I call it eight, 10 years ago, around the ACA and around, revisiting a restructuring of healthcare. And one of the things I found a little painful in listening to politicians talk about healthcare was they spoke about it like there was just one problem to be solved. But the way I sort of think about it is there are at least three completely separate but highly

related problems, which is quality of care. And that can be broken down into two levels. You can sort of have it as just keeping people from dying versus like generating alpha. So really improving quality. There's cost, which is just the cost to the system. And about 90% of the dollars are basically spent by three entities, the government, the employer, and the payer, depending on who's at risk.

The consumer is on the hook for about 10% of that cost. So how could you reduce the cost? And then the third leg of that stool is access. How do you ensure access? And so when we talk about technology disrupting healthcare, it's like, where do you start? Right? Because, you know, for me, I can see things where technology can be quite helpful on quality of care. Not entirely obvious to me how to leverage technology to lower cost. People much smarter than me, I'm sure, think about that. And not entirely clear,

at least at a practical level, how it can drive access. Although in theory, that should be the first place you'd want to go after leveraging technology. But I think I'm trying to think about what you said about how Spotify went about it and trying to see is there a parallel there. Because the thing with Spotify that was hard

was you had multiple constituents, right? You have artists, you have labels, you have consumers, and they all kind of want something a little different, and that speaks of an optimization problem, which is clearly what healthcare is. But going on what you said a moment ago, it sounds like today you're a little less encouraged than you would have been four years ago and you're thinking on this problem.

Well, let me try and recapitulate your three legs of the stool in one simple framework, which is something that we should all be aiming for is to generate universal access to the current best available healthcare that anyone in the world receives. You know, one of my favorite quotes, I always forget who's quoted is, but venture capitalists talk about it a lot, which is that the future is already here, it's just not evenly distributed. And I think that's almost always true.

Look at what rich people are doing and assume that in 20 or 30 years, everybody will have that. And so what are rich people doing right now? Well, they're paying doctors like you a lot of money to do very bespoke types of medicine that leverage all sorts of deep biometric analyses of their bodies, a lot of thinking by you and your team. And a lot of spend on the usage of what are currently expensive machines, MRI machines

to do preventative screening for tumors every year, things like this that if you're really rich, you know, you might as well go get an MRI every, get a full body MRI every year. I mean, just see if there's anything going on. Why not? And so what stands between today and orphans in Somalia receiving that level of care? And what stands in the way I think is, to some degree, a level of technological leverage. What is happening in your head when you look at a patient's blood tests and try to gel that with your biophysiological mental models is something that I believe computers will be able to do in the future. physicians for thinking and for bedside manner and for guidance.

And then we use some physicians like surgeons for physical procedures that they're essentially athletes at. You know, you want high performing athletes who don't mess up who are very precise who've done it a million times. Well, the roboticization of physical medicine like surgery is something that I believe will just continue to get better and better. It may take longer, it may not be replaceable immediately, but that will, you know, we will be primarily doing robotic surgeries a hundred years from now, the cognitive work that physicians do will I believe largely be replaced by computational systems that can leverage the same types of

theoretical frameworks that our minds are utilizing to make good decisions. And what you're left with is all the touchy-feely personal stuff that you as a physician and any other physician knows really matters. It's not superficial. The ability to help someone make good decisions about their own health, to make someone care about their physical health, to help them navigate difficult decisions that aren't straightforward that involve trade-offs, are the sort of things that physicians right now don't have the time to do that they did when they were taking their medicine bag around to people's houses and hanging out for a couple hours.

And so in a certain way we may go back to an older style of medicine, but the people who do that may look more like highly skilled nurses than like physicians. So I believe that what you'll see is globally a lot more technology involved in the deployment of medicine and a shift in the composition of the labor market around medicine towards something that looks more like a large population of highly skilled nurses, fewer overpaid or appropriately paid, but maybe over-trained physicians that right now are very scarce, that only rich people can access. And then most excitingly, you're going to see a lot of new medicine. That's the stuff I'm focused on now as an investor, and that's the stuff that I think is going to be the most game-changing. That's the stuff that's going to buy us years of additional life.

I hope you enjoyed today's quality. Now sit tight for that legal disclaimer. This podcast is for general informational purposes only and does not constitute the practice of medicine, nursing, or other professional healthcare services, including the giving of medical advice. And note, no doctor-patient relationship is formed. The use of this information and the materials linked to the podcast is at the user's own risk.

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