Worthy Podcast | Ep.4: Tech, AI, and Building a Healthcare System Worthy of Us All with John Doerr

All my thanks to you. I'm humbled by that introduction that you gave me and really think I should be interviewing you. You after all the road scholar and the custodian of the health of 4 million Californians and so I want to be sure that we hear the Worthy community about what you believe.

Well, I think of what I do as assisting entrepreneurs. And what drew me into it is my father. He's a hero, a role model. And he started several companies with partners, always teams of people to make change happen. Change for the positive in the world we're blessed to live in.

Well, I think it's to meet an entrepreneur, and entrepreneurs by definition do more than anyone thinks possible with less than anyone thinks possible. More and less. When I meet one of those entrepreneurs who is truly a missionary on a mission that's bigger than themselves, even bigger than their team, it's part of the world that they're trying to serve. That gets me going.

Well, the very best of the entrepreneurs have a vision that's large, not embraced by everyone that they're fighting to create. And then they'll take that vision and be ruthlessly intellectually honest about how to execute on it. I'm reminded of something my mentor Andy Grove once told me. He said, 'Doerr, I don't care what you know. It's what you do that counts.' So he translated that into a mantra that I put into a book honoring him called Measure What Matters. It's his ideas and it's simply that ideas are relatively speaking easy. It's execution that's everything. And we know this about execution. To do almost anything of consequence takes a team. So ideas are easy. Execution's everything. It takes a team to win.

Yes.

Well, I can imagine that you've learned a lot as you've gone along. You just seem like a lifelong learner to me, constantly curious. What would you highlight as maybe your most valuable lesson over your career and how did you come by it?

Yes. And so the idea, at least what I think I hear you saying is, I want to know what it's going to be like when the going gets tough. I want to know that I'm going to be able to work with this person and have them, you know, it's one thing to have principles when everything's going well. It's maintaining your principles when there's serious risk, maybe even existential risk. That you really find out about people. Back to what inspires me and the lessons that I've learned.

My dad loved people and the part of the venture capital business that I love is the people part. I'm a technologist. I like to know how all these technologies work but in the end the magic is in the team.

Well the origins of it are again in my family. My brother Tom Doerr was a superb PCP in the St. Louis area where we grew up and he was in a private practice in St. Louis called me up one day and said, 'John, our big national insurer is about to triple the reinsurance rates for our partnership, and that'll drive us out of business. Would you back me and other physicians in starting a health care plan, an insurance business that would be patient oriented, founded by physicians and at least partly run by physicians?' And I thought about this, not for very long. I said, I know nothing about that industry. No, I won't. It's regulated.

And I slept on that decision and the next morning called him up and said, 'No, I'm going to back you because you have to back your brother.' And 15 years ago, he started an evidence-based e-prescribing company. I'll come back to that full circle. And they grew it into for a decade a four and a half or five-star rated Medicare Advantage plan serving 66,000 seniors in St. Louis, Missouri. Tom passed away prematurely, but left a reputation for patient first care. All of his patients had his mobile phone number and he just saw a lot of stress in the health care system where it was almost impossible to keep up with all the literature, the burnout that we all see of providers. So that was the start.

So, one of the entrepreneurs I've backed, Jeannie Kim, says that Silicon Valley types think they can tech their way out of a health care problem. And that's naive and wrong both. I think the challenges in the health care system are the most demanding of any segment of our life. I like to say it's the second most screwed up part of our American institutions. The most challenged being public education. But there's an interesting analogy because I think both with public education and the health care system, the payers, the beneficiaries and the providers are not linked in any kind of a functioning economy or system or marketplace. Health care cuts really deep. People die when we don't deliver a solution and a service that's worthy of our parents, our family, our loved ones.

I love the theme that you've chosen not just for your pod but for your life. You've been saying for some time that it's our obligation to produce a system that would be worthy of our loved ones. And we're not doing that today.

I like the passion of the people who have not burned out. I like what AI is going to make it possible for us to do. What I don't like is how complex health care is. The quality of the care we get. If you have cancer, there's no place I want to go for health care more than in the United States of America. We have excellent quality for acute diseases, but I think we're failing to deal with chronic disease. Someone said the health care system we have is the sum of all the policy makers we've elected and that Americans just want the best health care that they think other people's money is going to buy. But it's our own money and our own care that's on the line here.

Well, that's a big problem. I don't think I've seen for the health care system an effort that's worthy of what it deserves. Governor Gavin Newsom convened a two-day offsite at Sunnylands to come up with OKRs that in his view would make California the healthiest state in the nation, which California is not today.

It's not. But he asked me to come and give Andy Grove's course on OKRs to the leaders from the industry that he'd assembled. And this OKR thing is not my idea. It's Andy Grove's system. To divert for just a moment, the best way to think about it is to look at Grove's background. So Grove was an immigrant from Hungary who came to the US speaking very little English, went to City University in New York, then came out to Berkeley and taught here and he democratized computing. He made the microprocessor a practical affordable device. He worked at the Shockley transistor lab when they invented it there. But what Grove understood was that to make a chip factory work, thousands of people had to get lines a millionth of a meter, one micron wide, exactly right, or nothing would work at all. And this required in Grove's view a sort of discipline and rigor that meant that you had to get all these people coordinating their activities. So he said let's be really clear about what the objectives are, the what I want to have accomplished, and then the key results. That's how I'm going to get it done. Objectives and key results. What and how. If I go back to Gavin Newsom, he went into that offsite with a great deal of skepticism and at the end of that experience, he said, 'I want to establish objectives and key results for every agency in my administration.' He wrote me a note and said, 'Doerr, I was very skeptical about Andy Grove's system.'

We do. Yeah. I mean we don't call it OKRs. It's amazing if you have a clear set of goals how you can get a team to drive for them.

Three to five objectives.

Each objective has three to five key results. And it's hard to build the goal setting muscle of your organization.

Having a kind of social contract that everybody who succeeds with the system adapts it. They don't just adopt it. They tune it up for their own culture. Their own willingness to take risk. Is a good grade to get all your goals achieved? Well, Sergey Brin of Google would say no. If I get 70% of my goals achieved, then for his taste, you've got the right balance between risk-taking and encouraging outcomes and performance.

One thing we might do for the Worthy community is the leading website which has all the free case studies and stories. It's called whatmatters.com.

You just go there, you'll find a rich set of resources.

Well, you see, I don't know the answer to that question.

I would make sure every American had a comprehensive real-time digital health record and I would change the payments to physicians and hospitals and others wherever possible to tie it to improved health rather than just more health. I would turn the pharmacy pricing and distribution system on its head in ways that we've described so that the system tries to get the right drug to the right person at the right time the most efficient way possible and all the incentives and rules follow that. And I would put healthcare on a budget like everyone else has a budget. As you said, there's a dynamic both in higher education and in health care where the person ultimately using the service is not the person actually purchasing the service. And so there's not that market dynamic as there is in like my phone or my cellular service or almost anything else that we do where there's a natural ceiling to how much you might try to price for something because if you raise your prices too much for say a phone, there's going to be an alternative and you're just not going to be able to make your business work. In health care when the bill is generally being paid largely by someone else, government, employer, other people's money, you just everyone spends other people's money differently than they spend their own. And so it creates this dynamic. So you have to create what I think is a kind of like a market dynamic without a market. And I think the way to do that is to put the industry on a budget and have some financial consequences if they don't get more efficient. There's more than that, but those are the main points.

To an extent it is, but what it hasn't done is that it's set prices, but the prices are still fee for service prices. And so I think California has actually done a pretty good job. It's early, but the Office of Healthcare Affordability has set goals of ultimately a 3% trend in health care costs and the ability to fine organizations for not hitting their budget targets. And so it's still early days, but I think that construct has a lot of potential.

I did.

Well, we got a group together of different parties, consumer and labor groups, the California physicians, Blue Shield of California, and we were talking about this challenge of the affordability of healthcare and what to do about it. And we were brainstorming ideas where we might be able to agree on policy that would make sense. And as we were doing that, one of the things that some folks raised, particularly the consumer and labor groups, was, well, it might be that this would save administrative costs or even health care costs, but then where do those savings go? Because in their experience they became pretty skeptical about whether those savings actually went back into the premium and therefore made health care more affordable for a consumer or the customer at the end of the day. And so they were worried that we were coming up with these ideas to effectively save money, but that savings wasn't going to get back to the beneficiaries, the patients. So that's when I drafted this mechanism where you would create some kind of entity that would set a budget. So that for example, if you did a digital health record, which we have done at Blue Shield of California, and you started to do things like automate real-time prior authorizations, claims, a whole series of things that create a lot of frustration and a lot of administrative costs, by virtue of having that budget, it would kind of force the industry to not only drive the savings but put the savings back to the beneficiary. So we drafted up a mechanism and then it ended up being that concept ended up being in the law. Obviously the way it got drafted there was a lot more details associated with it but it came out of that discussion with a group of constituents and in fact that's also what helped influence me to start this Worthy effort because I saw the power in having a set a group of people agree that something's not working and agree that we need to change it. Like the status quo is not working. We need to change it. And the power of what can happen when you get a group of different organizations and people together and push our democracy and our political system to make those changes. And so it was not only something we're very proud of being a part of and gives me a lot of optimism for what can be in the future in terms of affordability of healthcare. But I think it's a model for what we're hoping to emulate here with Worthy.

Well, it's early innings, I'd say. I think it's working reasonably well in the sense that you've got a board that is running the Office of Healthcare Affordability. They've set long-term targets that I think are appropriate to try and match wage and price inflation. They've set a glide path to do that. They've been looking at a lot of data and analysis to support that. Potential fines are still like a couple years away. So we're still in the early days to see what happens if and when the industry misses and certain companies miss their targets. How is that going to be handled and is it going to be handled thoughtfully or with a heavy hand or perhaps not with enough of a heavy hand? That remains to be seen.

Yes. And health plans. To the extent up to the amount that they miss their target by. And so it's got teeth. And I think that especially who sets the targets, it's the Office of Healthcare Affordability. That board sets the targets and they already have. And they're ambitious. There's no question about it. And I think appropriately ambitious. But one of the things we're seeing John is that it's creating a different dialogue where we are talking to different hospitals for example who are saying in our negotiations, how can I be financially sustainable but how do we work together for a contract that helps me hit these targets? And so that's not true of all of them per se but for a number of them we're seeing that shift, that dynamic shift, which is what we're hoping for, that kind of movement towards sustainability.

Well, I think what you have to do is make health care more productive. And what we've seen in a lot of studies is that physicians, nurses, others that are providing clinical care are often spending like 30, 40 plus percent of their time doing administrative tasks, and not necessarily leveraging tools like artificial intelligence and other technology to expand their ability to see patients. It's like when I was a consultant in the early 1990s, probably 1993, I was doing a model for how many patients a primary care physician staffing model, and how many patients would a full panel be for a primary care physician, which is roughly 2,000 patients back in 1993. And now, even with all the technology that we have, it's between 1,800 and 2,000 patients typically. But there's really no reason why with the right support that you couldn't have highly personalized care, actually know your patients and support them and have that be two or three times that number.

I think artificial intelligence is a perfect match for health care. We have an insurmountable opportunity. Everywhere you turn there's health care data that we're gradually wrangling into some usable form. But AI is the power tool that can let us find insights in that data. And I think healthcare is a knowledge business. It's a knowledge industry. So you can see AI transforming how drugs go through clinical trials. I'm not talking about AlphaFold 15, but some real basic fundamental processes that are inefficient today. I see AI powering the LMIS service which they call primary care as a service and they've named their AI Tom after my brother. That's great. What a salute. What a tribute to him. What an appropriate tribute. I'm getting emotional. But for example, the Ochsner Health System said we can't get enough primary care providers to serve the needs of Louisiana. Let's use TOM as a tool and we can raise the level of practice. Practice at the highest level of your license. So you don't have passionate, incredibly skilled primary care docs scheduling appointments. Anticipating when someone needs a checkup for a preventative measure. Tom should take care of all that. And I think they will at an improvement rate of 20% a year, double their panel size over the next five years. AI is making that possible. That to me is incredibly exciting. I'm very inspired by the quality of leadership and the ambition of Dr. Oz's team in CMS and CMMI. I think Abe Sutton could go down as the best leader of CMMI. We've had quite a few good ones, but they're developing now payment models, as you know, that meet the criteria that you laid out, which is pay for outcomes, not for activity, set aggressive goals, and then leverage this AI, mobile device technology, so we can have more care occur in the home as opposed to the clinic, self-care, and deal with our chronic diseases that way. So I see entrepreneurs incredibly excited to go after those opportunities.

You can find a YouTube video of me smashing a fax machine, which we introduced at an industry conference in Las Vegas about a year and a half ago. If you're interested, you've actually seen different waves of major technology adoption over the course of time: the internet, cell phone, smartphones and cloud based services.

It's bigger. It's much, much bigger. And I strongly prefer to think of it as a tsunami because of its power to restructure, to change everything. It's terrifying. Also, I don't think we know what AI is going to mean to jobs and employment. And I dare say the 2028 election, AI will be a factor. By the 2030 election, I think it'll be the issue: how our society deals with the responsible, aggressive adoption of a technology that can and will improve itself.

Well, I have several pieces of advice. One of which is to use the AI yourself at all times. Your personal potential, your personal power could turn on how skilled you are in using these tools to accomplish your mission.

Oh yeah, I can't imagine not using it now. Same way I can't imagine not using the internet. And it's profoundly more powerful, more promising, more threatening than the other tsunamis that preceded it. I want to tell you something about tsunamis. What I've seen happen is that the time constant to adopt a fundamental technology rings in right about 13 years. And I demarcate that by the PC was enabled by the microchip, Andy Grove. The IBM PC was around 1980, 1981 and it was driven by Moore's law which said we could double the number of transistors every two years and costs would go dramatically down. 13 years after that, if you fast forward to 1993, what happened? That was the internet. That was the Mosaic web browser. And it made the internet popular, accessible. And the internet changed everything. How we entertain, learn, work, play. 13 years after that takes us to what, 2006? The iPhone. Another tsunami. And it wasn't just the iPhone, at the same time the cloud came along. So I can't imagine the iPhone succeeding without the cloud or the cloud really succeeding without the impact of the iPhone. Next tsunami 13 years later, GPT gets released. It's funny how that works. Is that just random or do you think there's some, is this Doerr's law now, every 13 years we have a technology tsunami?

Two separate questions. The health care system at large, I see signs of progress in the first three goals you set out. The fourth one, how we deal with problems in pharmaceuticals. I just can, it's probably obvious to you, but I confess it's not clear to me how we get the right balance of innovation and risk-taking and regulation. The whole system needs to move faster. I think inherently it's conservative historically for good reason. Lives are at stake. But either the tech industry has poorly served the healthcare industry or the healthcare industry has been really resistant to the kind of change and innovation. We've got to pick up the pace.

I want to share with you a profound sense of gratitude and optimism. I think there's never been a better time than now to innovate in the health care system. I think we have visionary, radical revolutionaries like you, like Dr. Oz, like many of the guests that you're going to bring into the community that's worthy of dealing with this challenge. And I think that we could set out, we should get a group to drop a set of OKRs.

I think that would be a worthy, practical thing.

And as a starting point we can look at the work that Gavin Newsom did in Sunnylands and take it from there. But I've had really good luck, positive response from health care groups that I've taken Andy Grove's system to. One I'll refer to you and your audience is what Dr. Tom of the Cleveland Clinic did. When he took over from Toby, he called me up and he said, 'John, I want to use OKRs to transform the Cleveland Clinic. I want every caregiver to have her own OKRs publicly displayed, graded every quarter, refreshed, challenged to animate our organization.' And there's a 68-page case study from the Harvard Business School about their success in using them there. Another story I'll tell is I got a phone call one day from Seema Verma. She said, 'Hey, John, I didn't know you'd written a book.' I said, 'Well, I mailed you one last year.' She said, 'Well, I want to use OKRs to liberate the data inside CMS. Will you come give a short course on OKRs to my team?' I dropped everything. What an opportunity. And she used them to great advantage even though in a political setting there could be considerable risk with putting goals out there because in politics there's always somebody trying to kill you.

Exactly right. And other places, entrepreneurs, almost all the alumni of Alphabet, Google now swear by OKRs. Eric Schmidt has said I wouldn't know how to run a large organization without them. So I gave an OKR talk two weeks ago to the leaders in Indiana of their rural health technology effort.

Yeah, I hope in our Worthy community we talk about that. I don't think there's easy answers there, but one of the measures that's been put forth, I think by Lisa Marowski, was $50 billion for rural health, rural hospitals.

Okay. They want it to go to transformational technologies that can be sustained to meet the needs of rural health. By the way, we have a rural health problem in our inner cities as well. So if it works in a rural setting, it can benefit and uplift the whole system.

$50 billion is a lot of money.

Yeah, absolutely. Well, and so it sounds like our next step is to go develop for the health care system and maybe get a group together to develop some objectives and key results for healthcare in America.

Sure. Or certain services. What would it mean to develop OKRs for the health care system of the Veterans Administration? It's a single system. It's national in reach. They may have those kinds of goals already. If they don't, they should. If Andy Grove were here, he'd be smiling.

I thank you for your leadership.