CEO of Cardinal Health | View from the Top

Well, it's been a busy past two years for sure, maybe even three years on the M&A side around the industry. It's really a byproduct of companies positioning or repositioning for a lot of the changes that we're seeing in healthcare. I'm happy to come back to those, but as it relates to Cardinal Health, we have done some important moves that I think help position us on some of the key issues. For example, we've made a move recently to expand our position in generics, which are 85% of prescriptions in the US. We've made some moves in the specialty pharmaceutical area, which helps us access these unique patient populations and connect the biotech and biopharma companies to them. And of course, the acquisition of Cordis for us was really a recognition that a lot is changing in the medical device and procedure world, and it's not just about the devices. We think that what's happening is that even the payment systems for certain kinds of procedures is going to be changing.

First, let me talk about part of what's driving it, which is this incredible explosion of demographics. We have a huge population of 60 and 70-year-olds. That baby boom generation is aging, and we now have 11 million people over the age of 80, and that's going to double over the next eight or nine years. These are incredible forces because that aging population consumes more healthcare products and services, and we have some public health issues that we still wrestle with. So I think the demand is going to be there. Spending 18 or 19 or even 20% of GDP on healthcare is probably an unsustainable model for us as a country, and I do think there are going to be pressures for us to try to manage that more effectively. It's not just unit cost; I think it's about changing behavior. A lot of our business is actually about helping the system change those behaviors, whether it's the efficiencies that we bring through our distribution systems, standardization—which every other industry has really embraced and healthcare has yet to embrace. Standardizing, for example, around consumable products used in a hospital setting is important. More care delivered in different settings: instead of having moderately sick people in acute care hospitals, we're likely to see really sick people in those hospitals and more care being delivered in ambulatory and more efficient settings, and more people being treated in the home. So I do think what we're going to see is systemic changes. It is likely we are going to spend more than other countries, partly because the innovation being driven out of the US is still quite extraordinary. But I do think the things we need to do to moderate this really have to do with the way we approach the system: coordination, right treatment, right caregiver, right sequence, right time, and whether we're starting to use innovation to actually build efficiency, not just innovation to create the next new thing.

Right, so I think the question is: is it here to stay in its basic form? I believe it is. Repeal is very difficult both politically, and there are enough Americans who are benefiting from it. You've seen the reduction in the uninsured rate, so I think there are enough people that feel they're benefiting from it that it's hard to imagine this going away. I do think it's going to be changed and tweaked over time. It's a major piece of social legislation. I think this happened with Social Security and Medicare decades ago, so I think we have to think of this as a start point that probably is going to go through changes. I think most of the industry has adapted to it. That doesn't mean we love every part of it. There are plenty of things that need to be changed. We've struggled with the medical device tax and its underlying byproducts, for example. But I do think that fundamentally, the idea of providing more access to more Americans is something that is likely to stay. I think we'll see it evolve over time, and I think most of the industry has begun to adapt to the things that come from that. I would add this though: I think Obamacare or the Affordable Care Act needs to be thought of in the bigger sense, going back to your earlier question about overall healthcare spending and access. I think even the things happening in the private sector are driving a focus on efficiency and outcomes. So I do think we have to think about the public phenomenon, which is the Affordable Care Act, and the private beginning to work somewhat in alignment.

I will do my best.

Long.

A start.

Long.

I'm gonna say long.

Long.

Pleasure.