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Saul Marquez:
Hey everybody! Welcome back to the Outcomes Rocket, and welcome back to this Future of Health Podcast series. We are having incredible conversations with Deloitte’s leaders in healthcare, and today I have the privilege of hosting the amazing Andy Davis. He’s a Future of Health leader and actuarial practice lead. He’s a principal in the Deloitte Consulting Healthcare Practice with over 18 years of experience and is a fellow of the Society of Actuaries. He’s been active in the space of healthcare transformation in recent years, working as a leader through strategic decisions related to health insurance market entry, value-based care, innovative contracting between payers, providers, and life sciences companies, and many more. He’s one of the leaders of Deloitte’s Future of Health perspective and the impact in 2040 on revenue. He works across healthcare landscape, including work with national and regional health plans, hospitals and provider groups, integrated delivery systems, large pharma companies, MedTech companies, and many more, and also has experience with commercial Medicare and Medicaid. I’m so excited to have Andy here on the podcast to address breaking the cost curve. So with that intro, Andy, so glad that you’re with us.
Andrew Davis:
Yeah, thank you, Saul. It’s, so excited to be here.
Saul Marquez:
Yeah, it’s so exciting to have you here. In the previous episode we had with Neal Batra, we covered really kind of change that accelerates disruption, and today we’re going to be really focused on the cost curve. So talk to us about what is the current trajectory of healthcare spending in the US.
Andrew Davis:
Yeah, let’s break down just what we spend in today’s world, Saul, because I think that’s super important to make sure your listeners really understand. And one, we spend over $4.1 trillion on healthcare expenditures, that’s based on the most recent publications in 2021. If you look at high-income nations, on a per capita basis, that’s more than $4,000 more per capita than anyone else spends on healthcare. And then, if you look at that against the outcomes we have amongst those same high-income nations, we have the lowest life expectancy, and we have the highest rate on avoidable deaths, meaning that if you compare cost and outcomes, we’re really not performing well as a country. And then what you have to look at is how do we project forward, and what the Budget Office and others would project right now is that the country is going to grow at a rate about 5.1%, so a little over 5% every single year in our healthcare expenditures, but that’s not necessarily the view that we have at Deloitte because the Future of Health is here. As you had mentioned before, you talked to Neal about that already, and that transformation we’re seeing, but our view is actually that you don’t necessarily have to grow at that rate. We can not only just bend the cost curve, but, as you mentioned, break that cost curve down by a shift in how we move to this Future of Health and the prevention that’s there.
Saul Marquez:
Andy, thank you for that data. 4.1 trillion. I didn’t know it was there, I was, I thought it was still in the threes, but now it’s in the fours.
Andrew Davis:
Yeah, and if you look at that, it’s four today. If you project that out to 2040 at a same, at about a 5% click, you end up at $12 trillion. $12 trillion, and what we project out forward, so we had an actuarial exercise to walk through, how could you get to a different landscape through this Future of Health and moving towards prevention, and we don’t get to 12. So what we get to is a little over $8.3 trillion. So you have $4 trillion worth of what we would call saving. It’s the dividend to actually moving towards this Future of Health, which is out there for everyone to capture, which is super exciting, but it requires change.
Saul Marquez:
Wow, guys, I just got goosebumps on that. But if there’s a pathway to save $4 trillion a year, I want to know about it. So, Andy, I’m glad you’re here. Why do you think the Future of Health creates such an impact on the trajectory of US healthcare spending?
Andrew Davis:
If you think about why the Future of Health does that, I mean, we talk about the six truths, and I’m sure Neal talked about those during your last session, but as a reminder, there is data and interoperability that happens within the Future of Health. And what that does, Saul, is it puts information at your fingertips, which is action-oriented. In today’s world, we have wearables, smart watches, smart devices; oftentimes, you have to figure out how to interpret that data. But the minute we can make things interoperable, now, instead of providing you tons of data that you have to interpret, you can have clinicals or health professionals helping you assess what’s happening, and also it gives you the ability to get in front of disease, more often using AI and algorithms that can help you predict things that you can’t see. That’s just data and interoperability. You have an empowered consumer and behavior change, which are extremely critical components. 40 years ago, no one embraced their healthcare the way we do today. You went to an office, you talk to a doctor, they told you what was wrong with you. Today’s world, even I do this: I’ll go out, I’ll look at what’s happening to me, I’ll look at websites, credible websites, find out what I think I’m feeling, and I bring a perspective to a health professional that you didn’t do 40 years ago. And more and more often now, we’re using data and new technology to do that. I actually leveraged a device the other day that did a; it’s an EEG scan for your brain. It’s a new innovation. They actually use it in South Korea. Actually got some interesting assessments out of that that made me actually go have a really informed conversation with a neurologist about not necessarily a disease state that I have. But I am genetically predisposed to Alzheimer’s, I’ve been very public about that and some of the genes that I carry, and so I wanted to have an informed conversation about, at my age, what can I do to prevent that and get in front of disease? And I probably never would have engaged in that without the data and the diagnostic that brought that to my attention. So that’s an empowered consumer. We need more health literacy in order to get everyone to engage the way I did. And then you have scientific breakthrough, which I think is probably one of the most important elements that we talk about, but what most people don’t realize is it’s already here. Curative therapies are in the marketplace now with a pipeline that is extremely robust to targeting much larger populations like hemophilia. We have innovative technology that aren’t just necessarily wearables, but they’re like a blood test that can detect up to 50 different types of cancer indications. So instead of having to go in and get a physical screening, you can see the unseen, right? The blood cancers and lung cancer that without an actual image you wouldn’t be able to detect, it’s extremely accessible to the average consumer, and then you have innovative diagnostics. So all of those things within the Future of Health drive this trajectory that my team worked on, the math that kind of sits behind it, that says, if you think about this innovation, an empowered consumer, and the ability to connect data, there is a path to get to $4 trillion worth of savings and really break the cost curve and get the outcomes as a country we pay for today but don’t receive.
Saul Marquez:
That’s phenomenal. One of the things that comes to mind with what you just said, Andy, is the idea that the future is here, it’s just not well distributed. And if we do the right things along the plan and the path that you guys have laid out, that will be better distributed and help save us that $4 trillion. It’s in all of our best interests to do that, not only financially, but for our well-being. And so the vision is big, and I love big visions. That’s why it’s the Outcomes Rocket. It’s about 10x, not 10%. And so we need to make moonshots to make this happen. The Future of Health vision anticipates this fundamental shift in healthcare spending from treating sickness to delaying symptoms, to restoring health and promoting health. Can you describe why this shift is possible?
Andrew Davis:
Yeah, and we touched on it a little bit already, and I think this is important, as I think the science and innovation sits at our fingertips. So curative therapies I mentioned like hemophilia. There’s a couple of other interesting examples that we have in the paper as well that I talk about; think about gene therapy and think if you look three years ago, no one would have expected mass-scale gene therapies. At that moment in time, gene therapies were for very isolated populations, you know, trying to fix a genetic defect or one cell or one protein. What we found through the COVID vaccine is actually gene therapy can be done at scale, it can be approved, and now what you’re seeing is, I think, an acceptance of this as a way to provide treatment. And now the curative therapy pipeline, which is 60 to 70 different things in the pipeline, curing things like we had mentioned before, hemophilia, are going to drive some of that change. One of the other interesting things when you talk about from treating sickness to this prevention, what I would call restoring health and promoting health is the fact that you’re seeing new innovation come in. And I had the opportunity when I was at the Consumer Electronics Show to test a whole bunch of these innovations, and I’ll give you one example. There was a facial recognition that uses transdermal optical imaging. You look at it for 30 seconds, it does a scan of your face, and what it provides back was information, some of which you can get from a wearable. Things like heart rate, things like your cardiovascular stress, and blood pressure. But what it also identified was some of the risk that you carry, risk of type two diabetes.
Saul Marquez:
Really?
Andrew Davis:
Risk of hypoglycemia. It gave you a point in time of mental stress at that moment. And by the way, Saul, for everyone that’s listening here, I’m a little bit of an introvert, and I love my personal space, so being in a mass conference forum surrounded by thousands of people might not be my least stressful moment, and it picked up on that. Think about that, and for two reasons. One, no longer do you have to wear the device in order to get that information. That’s really incredible, and the science has progressed to that point. The other element that is important, and I’m sure we’re going to touch on this later, is for the average consumer, not every average consumer can get that data and afford it if it’s in a watch or a wearable. If it’s a nearable, something where you don’t necessarily have to have it on your body all the time, other organizations can invest to make sure that it’s technology and science that can be driven for everyone and not just for those that actually have the wallet to afford it.
Saul Marquez:
Man, that is so good, Andy. I never heard that word before, nearable. That’s awesome, a nearable. And thinking of ways on how we could democratize this technology, the framework is clear. It’s data interoperability, it’s the empowered consumer and behavior change, it’s scientific breakthroughs, as Andy has shared with us. By the way, if you guys haven’t had a chance, you listen to this, you haven’t had a chance to go to the CES show, they have an impressive healthcare section now. And some of these technologies that Andy is sharing with us, I was blown away this last year by that show, too, and certainly was surprised at how deep and wide they go in healthcare. So I’m glad you brought that up too, Andy. As we think about that consumer, what role does the consumer play advocating towards the move from sick care to well care?
Andrew Davis:
Yeah, the consumer has a, they are at the center of it, Saul, and I think that’s what becomes really important, as we had mentioned this earlier: the science and innovation, for the most part, exist. We were talking with one of our clinical professionals, one of my colleagues, who I love and trust, his name’s Ken Abrams, and he was talking about how you can walk back from, and he has seen it, walk back from almost type two diabetes, pre-diabetic, and walk back into a healthy lifestyle with just behavior modification and lifestyle changes. What that takes is really two things for a consumer to have. One, the literacy to know that; two, the incentives to actually modify that behavior. And so, for a consumer, their role is really about understanding what is at stake here. I think this conversation is an important one. We pay so much for healthcare, we could save $4 trillion if the average consumer today started to invest in lifestyle and behavior modification, screenings, and diagnostics that we know exist. There’s $4 trillion that sits out there in 2040 that we can capture and spend in a different way. The other element, and we’re already researching this now, is actually the life that you gain by doing that as well, and not just the life years, but the healthy life years that you can gain in actually investing into your healthy behavior, and so the consumer is the change agent here. I think the question, too, will be how do you actually get this technology, which not everyone understands and/or could be literate on? How do you actually get that in the hands of a consumer so they can start to make the choice for themselves?
Saul Marquez:
That’s great. I appreciate that, Andy. And so, at the end of the day, as consumers, we are at the center of it. It’s understanding, and it’s incentives. And then there’s the role of government, too, right? Like with the nearables and helping those that are less able to help themselves, making sure that we cast a net that’s wide to really serve the greater population, but the opportunity to reduce that cost is there, as Andy is sharing with us. You’ve studied these trends, Andy, and the impact of health inequities. How does this projection change based on the inequities in our system today and the trends?
Andrew Davis:
I’m glad you brought that up. We talk about the projections, and I’ll restate a couple of numbers just to give you an impact around what bias and inequities do. So again, current trajectory for healthcare expenditures, a little over 5%, when you project that out to 2040, almost $12 trillion. We think you can actually get that curve down to about 3.5%, which drives you to that $8 trillion number, so $4 trillion there to capture. Here’s the biggest issue, Saul, all right? Is that the health inequities and bias are growing at a disproportionate rate to even our current trajectory. They grow at 6.2%. By the way, that’s both the manifestation of late-stage disease that we will continue to see at larger proportions in our non-white populations or those that are subject to disparities both by age, gender, and socioeconomic status, but then also the fact that the US continues to become more and more diverse, we actually have more populations growing that are subject to bias and inequities. So it’s the crisis that sits in front of us today growing at a disproportionate rate. And when you do the math in today’s world, we spend $320 billion, yes, with a B, on inequities and bias in our healthcare system.
Saul Marquez:
How is that? Andy, help us understand that. How do we spend $320 billion?
Andrew Davis:
Let me give you a couple of examples. One that I’d love to use is around colorectal cancer. It’s a really easy example for someone to see, and we’re talking about screening, Saul.
Saul Marquez:
Yes.
Andrew Davis:
The average non-white individual goes in for a colorectal screening 60% of the time.
Saul Marquez:
Got it.
Andrew Davis:
The average white person goes in 65% of the time. Now, the difference when we’re calculating that $320 billion isn’t saying everyone goes in and gets it 100% of the time; that would be a utopian environment, the ideal state, right? What we’re really saying is, how do we bridge the gap between the 60 and 65? That 5% represents late-stage cancer diagnosis because we missed it during a traditional screening. It represents chemotherapy and radiation therapy and sometimes end-of-life treatment, that is the most costly thing that we pay for. And so what you’re finding is that 5% missing the screenings, if you add up all of the other examples across all of the disease states, represents the $320 billion. And what we’ve, also what we did is we looked at not just what does it cost you today, but what will it cost you tomorrow, and in 2040 if you do nothing to address this, it goes from $320 billion to $1 trillion.
Saul Marquez:
Wow, that’s wrong. That’s so wrong.
Andrew Davis:
It’s so wrong. And then, some would say, and this is a study that combined racial and ethnic, gender, and socioeconomic status into one study around the costs that this is driving within our system, what’s most important is that when you translate that number to the average individual, I still in some way today am paying $1,000 a year through taxes, through additional premium that you could be paying that through cost sharing, all of those things, $1,000 a year. Everyone is subject to the burden that we see within bias and inequities. If we don’t do anything, it grows to $3,000 a year in 2040. That’s for a household of four. I have a wife and two daughters, and $12,000 a year if we do nothing.
Saul Marquez:
Wow, so all of this trickles down to N of 1, folks. So, you know, when you take a step back, and you say, you know, I’m a small part of this, I’m not going to make a difference, the answer is, that’s not true. You’re actually going to make a huge difference. And I’m glad you went there, Andy, because we all have a responsibility to improve this because it makes both financial and well-being sense, and so thank you so much for that example. It makes so much sense. And then the other thing is, this is just colonoscopy. There’s so many other things that we could be looking at, and, you know, the thing that’s inspiring is that 5% is not a big number. And if we could shift the tide on that 5%, that’s how we get one of the steps that we can take to get to that $4 trillion in savings.
Andrew Davis:
That’s right. When I think about disparities and bias and how they show up, I think there’s a lot and a role that we could play within access. I think access is huge. We talk about that a ton. Trust is another one. I was working with an organization on the West Coast, and they were talking about, it’s not the access to prenatal care that might prevent an expecting black mother from having a preterm birth or a complex delivery. They’re like, it’s the trust they have in their healthcare professional to make a call when they don’t feel right at midnight, and that’s the trust bridge that we’re trying to create, and that requires a lot of other ecosystem stakeholders to play a role. How do you actually build trust in a system that hasn’t worked for you essentially in your entire lifetime? And then there’s another one, and I’m going to use an example here, Saul, it’s like the application of science. I essentially live in a household of women with my wife and two daughters; it’s a baffling statistic that when you think about cardiovascular science, the average person probably realizes, if you have heart disease and you’re about ready to have a heart attack, what we’ve seen on the movies and what you expect is chest pain and left arm pain. We’ve known actually since there were studies by the American Heart Association around the signs and symptoms for women are just different. Yes, chest pain and sometimes left arm pain, a lot of times back pain, jaw pain can represent itself as stomach pain. And even as cardiologists are trained on this, at the point of care, when they have to apply that thinking and science, they still actually say, well, that could be stress, that could be work-related, could be the things that are happening to you at home, it could be cramps, it could be a number of things, and they’re not actually diagnosing the person that sits in front of them with the signs and symptoms they’ve been trained on. And so think about the bias that shows up within healthcare. If we don’t address this right, if everyone doesn’t play a role, this healthcare system is still going to be doing that same thing for my daughters when they grow up, which is just unfair.
Saul Marquez:
Wow, this is fantastic. Andy, look, we need to talk about this. I love diving into the numbers because when you look at the numbers, they reveal truth, and what you’ve shared with us, tip of the iceberg, there’s more here. And folks, this is the Future of Health. We’re just covering the beginning of a lot. So in the show notes, you’re going to find links to resources that extend beyond our conversation today. But when you look at the numbers, you see what could be, and what it shows us is that equity and access makes sense. It makes dollars and cents, it makes well-being, and at the end of the day, is how do we make all of these things happen. Today we’ve covered breaking the cost curve with Andy Davis, and on our next episode, we’re going to be talking to Simon Gisby around business archetypes, the shift to new business models that are going to allow these types of changes to take place for us to see the savings to increase our life expectancy, to make those unavoidable deaths avoided. So, Andy, I’m really excited. You got me really excited because I’m a numbers guy, and so I know that the listeners are also enthused to continue the conversation, but as we conclude today’s episode, what do you want to leave people with?
Andrew Davis:
Saul, thanks for that. And I also, as an actuary, get excited about the numbers, so always excited to talk about that. I would say for listeners, and there’s two big points. One, this $4 trillion isn’t something we have to wait for; that well-being dividend, the savings that exist, we can go capture that right now. And I would, and the second component of that is working together because I both think capturing that and engaging a consumer as well as we know that addressing health equity and this bias in this crisis that sits in front of us, organizations, and individuals can’t do it alone. And so I think going it alone is not the right answer. How do we solve this together? Because I think working together, bringing the competencies that you have will deliver on the Future of Health vision, which we’ve already started to see, and it will start to solve the bias and inequities in care.
Saul Marquez:
Love that, and that’s exciting. You can obtain this well-being dividend today, don’t wait. Ladies and gentlemen, Andy Davis. Andy, thank you so much for being with us today.
Andrew Davis:
Yeah, thank you, Saul. Great to be here.
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