It’s a daunting challenge: How do you improve patient care while lowering health care costs? Many health innovators and reformers believe the current “fee for service” system, which rewards doctors and hospitals based on volume, is outdated and unsustainable. Instead, they are experimenting with new “pay for performance” models with a focus on preventive care, coordination between doctors and ways to lower readmission rates. Kojo explores how hospital systems and providers are adapting to the changing health care environment.


  • Bob Kocher MD; Partner, Venrock; Co-Chair, Health Datapalooza IV
  • Toby Cosgrove President and CEO, Cleveland Clinic


  • 13:06:40

    MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington welcome to "The Kojo Nnamdi Show," connecting you with the Health Datapalooza at the Omni Showroom in Washington, D.C.

  • 13:07:02

    MR. KOJO NNAMDILater in the broadcast, technology is helping to put patients in the driver's seat when it comes to their health. But first, how do you choose a doctor or hospital? It's unlikely you shop around comparing the cost of treatment and the quality of care because you can't. That information is not available. If you're insured, you're probably not paying the bill anyway and there's little incentive for hospitals to keep costs down.

  • 13:07:31

    MR. KOJO NNAMDIIn fact, the more tests and treatment they administer, the more they're paid. But that's beginning to change. Healthcare reformers are looking to models that reward doctors and hospitals for keeping patients healthy. Joining us to have that conversation is Dr. Bob Kocher. He is an MD and a partner with Venrock, a venture capital fund specializing in health technologies. Bob Kocher, thank you so much for joining us.

  • 13:07:54

    DR. BOB KOCHERThank you, Kojo.

  • 13:07:54

    NNAMDIAlso in studio with us is Dr. Toby Cosgrove. He's an MD and president and CEO of Cleveland Clinic, Toby Cosgrove thank you for joining us.

  • 13:08:03

    DR. TOBY COSGROVEIt's a pleasure to be here.

  • 13:08:04

    NNAMDIYou, too, can join this conversation. Just give us a call at 800-433-8850. You can send email to How do you choose a doctor or hospital? Do you go by word of mouth? Do you wish you had more information? You can also send us a tweet @kojoshow You can use the #kojopalooza or you can simply go to our website and join the conversation there.

  • 13:08:28

    NNAMDIBob, you worked on drafting the Affordable Care Act, your focus, cost and quality and you insisted that those things could not be addressed without transparency. Can you talk a little bit about that?

  • 13:08:39

    KOCHERAbsolutely. The way people choose hospitals has historically been, which one's closest? Which one has my doctor told me to go to and my impression of how good it was. But in reality, hospitals are places to do many, many, many things with different prices, different outcomes and different doctors doing them.

  • 13:08:58

    KOCHERAnd so to have the market begin to be competitive, we had to make public the data for each procedure and each doctor and the price because your price is actually complicated and not what you think. It's a combination of the doctor and the hospital and if we're going to have competition, we have to make that data available.

  • 13:09:18

    KOCHERAnd the healthcare system, up to now, has been a place where it can confuse you and send you a bill later. And we need to have the competition be much more about, before you go, knowing what to expect, what you're going to buy and what you're going to get in terms of quality.

  • 13:09:30

    NNAMDIToby Cosgrove, presumably most patients would prefer to shop for a hospital or doctor based on price or quality as we do for most of the other things. What kinds of information does a typical hospital track and make public?

  • 13:09:43

    COSGROVEWell, we started a number of years ago beginning to try and make quality and metrics transparent and we started publishing those about ten years ago and put out books every year about the various specialties and what the mortality rates, complications etc. are.

  • 13:10:02

    COSGROVEAnd so we have been on this journey to be transparent about quality for some time. As Bob rightly points out, there is a great, black box about costs in healthcare which is really beginning to be addressed in a number of ways. The government is now beginning to put that information out increasingly and we just saw that happen for the first time a few weeks ago.

  • 13:10:28

    COSGROVEAnd there are companies now, such as Castlight, a startup in California, which are beginning to bring that information available. So it is becoming much more competitive around value of both quality and cost.

  • 13:10:40

    NNAMDIBob, when it comes to quality, right now, most of us choose our doctor or hospital based on word-of-mouth. You ask friends. You ask family if they know a good doctor or you check out a local best-of guide which bases its rankings on patient surveys, but without the kind of information we're talking about. What are we really comparing?

  • 13:11:00

    KOCHERRight now, we're asking Toby Cosgrove who his favorite doctor is and that might be a very good predictor if it's somebody at the clinic, but it doesn't work, it doesn't scale. And so I'm really excited about the medical data on doctor quality that is going to be made available very, very soon.

  • 13:11:15

    KOCHERThere's a dataset that doctors have been paid money to submit quality measures to for the last several years called the PQRI dataset that healthcare reform requires us to finally make available.

  • 13:11:24

    KOCHERAnd when you get that data in your hands, you'll be able to figure out important things like how many patients with that condition did the doctor take care of last year? And that's actually the single most important predictor.

  • 13:11:35

    KOCHERSo when you look me up on any of the best-doctor lists, you'll see that I'm an internal medicine doctor, but you'll have no idea what I'm actually good at. I could take care of any adult illness equally well, apparently, but in reality, there's a few things that I do better. And this data will allow you to discern as a patient and then choose a doctor who's more likely to have patients like you and that's a very important thing.

  • 13:11:52

    COSGROVELet me just add that I think that it's really important that this information comes out because one of the things that we found over time is you make doctors who are the world's most competitive people. And nobody wanted to be last in their medical school class. If you rank them all in order by name, by their grade, you'll find that all the grades go up and the bottom gradually starts to rise and the whole average comes up. So this is a terrific thing to do.

  • 13:12:18

    NNAMDIBut how easy is it currently to find that kind of information?

  • 13:12:23

    KOCHERIt's near impossible. So right now if you call up an insurance company, if you're lucky they'll tell you in their health plan which doctors they recommend, but that's a very imperfect snapshot of data and so the medica-data is the most important foundation dataset that you can make into (word?) .

  • 13:12:38

    KOCHERThere's places like the Cleveland Clinic that publish their entire history, but that's only a few places in the country and so it's not possible, as a patient today, to get this and that's why I'm so optimistic that we're going to begin to have patients begin to move market share towards doctors that are better once this data comes out.

  • 13:12:53

    NNAMDIToby Cosgrove, what are some of the reasons that hospitals are not eager to make this information more transparent?

  • 13:13:00

    COSGROVEWell, doctors have been very reluctant to do this over the years. It was a substantial departure that started first actually in cardiac surgery and one of the reasons it started in cardiac surgery is the endpoints are pretty clear.

  • 13:13:13

    COSGROVEYou either walked out or you got carried out. That was pretty easy to measure the quality there. And so that was really where a lot of the original data around quality started and then it began to spread to other areas. And frankly, doctors who did not have good results would say that they were treating different kinds of patients. They were sicker.

  • 13:13:37

    COSGROVEAnd so we had to go through this whole business of beginning to learn how to risk-stratify, which has been an enormous work, and one that is getting refined and getting better and better all the time.

  • 13:13:46

    NNAMDIBob Kocher?

  • 13:13:49

    KOCHERWell I think a big part of this too is that there was worry and probably correct o worry that prices might fall. Hospitals historically have been able to charge prices based upon their local market power and local market share and those prices have not been at all related to how good they are at actually doing what they do.

  • 13:14:07

    KOCHERAnd if that data was available patients might not choose that hospital and they either would have to improve quality which is hard or lower prices which is equally hard for a hospital and that's led them to be concerned about letting the market know this information. But for the market, it's great because it will allow you to get better value and so it's important for it to occur.

  • 13:14:21

    NNAMDI800-433-8850 is the number to call. In case you're just joining us, we're speaking with Dr. Toby Cosgrove. He is president and CEO of Cleveland Clinic and Dr. Bob Kocher is a partner with Venrock. That's a venture capital firm specializing in health technologies.

  • 13:14:40

    NNAMDIYou can call us at 800-433-8850. How do you choose a doctor or hospital? Do you go by word-of-mouth? Do you wish you had more information? You can also send us email to Toby Cosgrove, patients have a right to their medical records but it's not always on easy to get your hands on them. Access to your charts is something that you feel is important. What are you doing about that?

  • 13:15:02

    COSGROVEWell, we started a couple of things. First of all, we decided that when you are in the hospital, it's really your chart. It's not the hospital's chart. And so we made it open to all the patients and anytime you want to see your medical record, whether it's in paper form or whether it's in electronic form, there it is for you.

  • 13:15:18

    COSGROVEAnd then, the second thing that we did is when we moved to the electronic medical record exclusively, we enrolled patients and so they could, over the internet, with access codes, they could get their electronic medical records, their test results et cetera.

  • 13:15:40

    COSGROVENow what we found was that people who knew what their results were took better care of themselves and therefore lived better if they had access to their information. Now the big concern was, of course, that this was going to bring a raft of malpractice suits on us and it hasn't turned out that way at all. In fact, it's been just the opposite.

  • 13:16:00

    NNAMDIBob, you pushed to make sure that the Affordable Care Act addresses the issue of transparency that you talked about earlier, but what was the outcome?

  • 13:16:10

    KOCHERSlower than I would have hoped. I think we have glimmers that health plans are beginning to realize that patients have the right to know what cost and quality should be. And in the law, we required, last year, to Medicare to release the most important dataset, which is the claims dataset so you can begin to see what's happening in the entire market.

  • 13:16:29

    KOCHERTo my chagrin, it's been limited to what's called qualified (word?) so far, which are basically academic professors who have already had the data before and the law stipulates now with regulations that you can't use it for for-profit purposes. You must come out of every dataset and you have to make freely available for anything you do.

  • 13:16:47

    KOCHERAnd so that has sort of limited the entrepreneurial activity that would have happened around that. I think we're going to see that limitation reduced and then it's partly done for privacy purposes as people talked about in the prior hour. That's partly due to concern that people might misinterpret the data.

  • 13:17:02

    KOCHERBut I have great confidence that entrepreneurs and inventors and patients will be able to make sense of it and use the data to create a lot of value. And so I'm hopeful and crossing my fingers that the doctor dataset that's coming out soon will not have all the limitations that have been put on the claims dataset.

  • 13:17:15

    NNAMDIOn to the telephones, here is Amin in Washington, D.C. Amin, you're on the air, go ahead please.

  • 13:17:19

    AMINHi, yeah I want to echo the comment which was done which is that if you judge doctors by their results then you're really missing the big picture because my. I was a resident at Georgetown, Plastic Surgery and my dad required an open-heart surgery with one bypass and the doctor that I chose had the worst possible mortality rate in the whole greater area.

  • 13:17:42

    AMINAnd his name of Dr. Katsche (sp?) but I knew he was one of the best surgeons on earth because I operated with him. And the reason he had a bad mortality rate was because he'd operate on anybody. He was one of those humanitarian people that would not say no to anybody.

  • 13:17:56

    AMINAnd my dad had been seen by three other surgeons who wouldn't even talk to him when they saw his angiogram so what the doctor was saying about how a risk has to be factored in is very important, but it also makes it very hard.

  • 13:18:10

    AMINI'm a plastic surgeon. I'm in a completely free market, environment. I'm doing very well so I guess that means I'm good, but if you judge me by my -- judge cardiac surgeons the same way, then it's not going to work.

  • 13:18:30

    NNAMDICare to comment on that, Toby Cosgrove?

  • 13:18:31

    COSGROVEYeah, I think that this has been an enormous project. It started in New York State when they began to make the mortality rates for surgeons and hospitals available. It became pretty clear that hospitals with a bigger volume had lower mortality rates and doctors with bigger volume had lower mortality rates.

  • 13:18:50

    COSGROVEIt was not clear at that point whether that was self-selection or whether it was the quality of the surgeons. And so then that brought about the risk stratification and that has gotten continuously refined over time and things that used to be risks we found aren't risks anymore.

  • 13:19:07

    COSGROVEFor example, we didn't know until very recently that in cardiac surgery, the number of blood transfusions you have is a major risk factor and many of the other risk factors have disappeared over time as we've gotten more and more sophisticated. So that risk stratification of the patient has to continue to evolve over time.

  • 13:19:27

    NNAMDIWell, at the Cleveland Clinic, you are what you call team-focused. What does that mean for doctors and for patients?

  • 13:19:34

    COSGROVEWell, it's really interesting. You know, when we all went to medical school a thousand years ago, we were all treated as independents. We were entrepreneurs and I remember the motto as general surgeons we looked after the skins and its contents. And now we have specialists and it's gotten more and more and more sophisticated as there's more and more knowledge.

  • 13:19:59

    COSGROVEAnd so you have to have a team and the further we went to the team concept we really expanded. It's not just about the doctors anymore and there may be multiple specialists involved in one individual, it's the entire organization, everybody from the people who clean the room to the people who deliver the food to the nurses to the supply.

  • 13:20:18

    COSGROVESo what we've done is we've made now a major change in what we call people in the hospital. It's no longer doctors and employees. Everybody's a caregiver and we refer to them, everybody's a caregiver because it's a team concept. It's a team of doctors, it's a team of nurses, and it's all worked together. And any one of them can cause a problem. And so everybody has to be part of the patient-centered team to bring about the quality of care.

  • 13:20:47

    NNAMDIWhich mystifies me because when you use the term patient-centered care -- and we're hearing it a lot more these days -- people like me assume that that's what medicine was always about.

  • 13:20:58

    COSGROVEYou know, it's interesting that about ten years ago when I became CEO, I was looking at something that really brought everybody in the health care organization together. And I was thinking about it and saying, well gosh, you know, there's only one reason we have a hospital, only one reason we have a clinic, only one reason we all have a job, and that's the patient.

  • 13:21:18

    COSGROVEAnd so what we did is we said, we're going to have our mantra be patients first. And we, all of us, wear little buttons that say patients first, regardless of whether you're delivering the food or whatever you're doing. And it's changed the atmosphere so everybody now understanding why they're there and who the real customer or center of our activities are.

  • 13:21:41

    NNAMDIBob Kocher, another aspect that affects quality and cost is how our health care system is structured. For the most part it's a fee-for-service system. Can you explain how it works and why that can be an issue?

  • 13:21:54

    KOCHERWell, I think we all hope it changes from fee for service to paying for an outcome of care that a patient's chosen to get so we have a high quality outcome. Today, in most cases, doctors and hospitals are paid for each activity they do. And even worse for outpatient care, each test, each pill, each thing is paid for separately, regardless of whether or not you need it. And so there's this funny incentive that the system has, which is to do more to you. And they're not always made transparent to you the range of choices that you could have. And the provider makes more money for that.

  • 13:22:25

    KOCHEREven worse, you make money for complications because you're paid for all that extra care. And so we really aspire to health care reform and frankly the private sector, through what employers and health plans are doing, are rapidly trying to stop paying for all the ingredients and start paying for the meals and how good they taste and how reliable they're made.

  • 13:22:45

    KOCHERAnd so we're shifting towards things like accountable care organizations, like patients in medical homes, like capitation where doctors are paid a fixed amount and then they can reengineer the system to be more efficient. But fee for service really gets in the way because it leads to lots of extra stuff. And we think about a third of what happens probably doesn't have to happen.

  • 13:23:03

    NNAMDIToby Cosgrove, the Cleveland Clinic has a pay-for-performance model. Can you explain what's different about how doctors at the Cleveland Clinic are paid?

  • 13:23:13

    COSGROVEYeah, we are all salaried and there's no incentive for us to do more or to do less. For example, I used to get many patients sent to us for a heart operation and we'd say, gee you know, I don't think you really need a heart operation. And it didn't make any difference to my financial wherewithal if, in fact, I turned those patients down, because my salary was the same, and so all of us are salaried.

  • 13:23:38

    COSGROVEWe all have one-year contracts. We all have annual professional reviews like most for-profit companies around the United States. And that is one of the things that makes sure that we're not doing extra tests or extra procedures. And it manages the quality of our physicians.

  • 13:23:56

    NNAMDIWe got an email from a guy who said, "I have private health insurance from my job and I'm inclined to shop around, however, I run into the following obstacles. One, when I ask doctors what procedures or medicines will cost me, the doctors often say they don't know. Two, when I ask the insurance company what they're willing to pay they refer to something called a maximum plan allowance. But they overtly refuse to tell me what that value is."

  • 13:24:21

    NNAMDIAnd then here is Bijon (sp?) in Greenville, Md. Bijon, you're on the air. Go ahead, please.

  • 13:24:27

    BIJONHello, Kojo. I am a physician, I am a surgeon and also a trauma surgeon. I've been practicing in Washington metropolitan area for about 30 years. I know there are things that have to be done on the medical part of the equation to control the costs. But in my opinion, unless there is a very expansive and expensive tort reform, none of these really is going to take place or is going to happen.

  • 13:24:56

    BIJONLet me just give you a scenario. A patient comes in as a trauma and I have to work the patient up. In my heart and for my examination I know that certain X-rays are not needed but I order those X-rays anyhow because I know there are people out there who see the dollar sign on the forehead of any physician and they are making their living by suing them. And these kind of things that prohibit me from just ordering the things that I need to order on the patient.

  • 13:25:29

    BIJONRather than that I'll do -- I'll get the X-rays very, very -- I mean, too many X-rays that I probably should not get just to make sure that, first, the patient is okay, and then second, that I am going to be okay. I was wondering if your guests have any comments on that.

  • 13:25:45

    NNAMDIBob Kocher, our guest, says that before any of this can work we have to learn how to restrain the lawyers.

  • 13:25:51

    KOCHERWell, I think what you've described is a good example of waste. You've identified things that shouldn't happen in the health system, which costs us all extra money. And we should figure out how to get rid of the incentives that lead them to happen. And so I've been an advocate for a long time for tort reform, a good tort reform that would be designed around practicing evidence-based medicine.

  • 13:26:09

    KOCHERAnd so there's many, many academics and policymakers beginning to talk about safe harbors to doctors. So if you can justify that you're treating patients based upon the evidence and using decision support and your health IT systems to make sure that you're doing the evidence-based care, that you should be protected from being able to be sued if you're following a care pathway. And I think investments and things like Patient-Centered Outcomes Research Institute that we're doing to really expand that kind of knowledge will give us a lot of areas where we'll have great evidence the doctors could use to say this is what I didn't buy.

  • 13:26:38

    KOCHERAnd so I hope that we do that and I think congress is beginning to pay attention to this because doctors point it out as one of their concerns.

  • 13:26:44

    NNAMDIAnd clearly, Toby Cosgrove, the Cleveland Clinic has not gone under in the flood of lawsuits.

  • 13:26:50

    COSGROVENo, we haven't but it's interesting, he does make a good point. I think there's a couple comments I'd like to make. First of all tort reform in Ohio reduced substantially the number of lawsuits that were brought in Ohio and reduced the amount of money and the suits that the Cleveland Clinic paid out. The second thing that I would say is, I don't think we're going to see major reform around tort coming federally because an awful lot of congress is populated by attorneys and have a very strong lobbying group here. So I doubt that...

  • 13:27:25

    NNAMDIBut despite all that, when you began at the Cleveland Clinic it was a single hospital with 120 doctors. What is the Cleveland Clinic today?

  • 13:27:34

    COSGROVEWe're nine hospitals in northeast Ohio. We are -- one in Florida, Las Vegas, Canada and a huge facility in Abu Dhabi and 3,000 physicians and 43,000 employees.

  • 13:27:48

    NNAMDISo something's working.

  • 13:27:50


  • 13:27:50

    NNAMDIBob, can more transparency help in containing costs?

  • 13:27:55

    KOCHERAbsolutely. Patients have a great deal of cost sharing and they're often surprised by that after they get the bill. But what's exciting about it is the fact that price and quality today is not linked. And so you can almost always find better care and have it be cheaper. And that will allow you, as a patient, to move your business to those providers that do better care cheaper and lead to falling prices for all the other providers that suddenly want your business back. It's going to lead toward services that are designed to please you as opposed to view as a distraction or a, you know, non-patient first model that others haven't adopted.

  • 13:28:31

    KOCHERAnd so I think it's going to lead towards much better competition and that leads in every other sector of the American economy to falling prices and more value.

  • 13:28:37

    NNAMDIAnd finally, Toby Cosgrove, we've been talking about transparency and data. Presumably within a hospital you have to know how each department, how each doctor is performing in order to improve. How do you handle that at the Cleveland Clinic?

  • 13:28:50

    COSGROVEWell, we have the annual professional review for them. And we get as much data as possible, again, on an individual basis. And we look at them and the data and we discuss it with them and their department chairman. And we promote them or demote them or have them leave the institution on the basis of that.

  • 13:29:11

    NNAMDII'm afraid that's all the time we have in this segment but we'd like to thank our guests. Bob Kocher is an MD and a partner with Venrock, a venture capital firm specializing in health technologies. Dr. Kocher, thank you so much for joining us.

  • 13:29:24

    KOCHERThank you.

  • 13:29:25

    NNAMDIAnd Toby Cosgrove is president and CEO of Cleveland Clinic. Dr. Cosgrove, thank you so much for joining us.

  • 13:29:31

    COSGROVEEnjoyed it very much. Thank you.

  • 13:29:32

    NNAMDIWe're going to take a short break. When we come back, technology is helping to put patients in the driver's seat when it comes to their health. We'll be talking about that. I'm Kojo Nnamdi.

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