Healthcare Needs Its Mary Barra

GM’s Mary Barra. Credit: GM

With all that has been going on, I’ve been remiss in reflecting on General Motor’s big announcement a couple weeks ago: it is going to have an all electric, zero emissions fleet of “light duty” vehicles (cars, SUVs, pickups) by 2035, and be carbon neutral by 2040. One of the largest manufacturers of internal combustion vehicles for over a hundred years is recognizing that its past is not its future.

Of course, I immediately wondered what the equivalent move in healthcare would be, and from whom.

In the announcement, GM Chairman and CEO Mary Barra declared:

General Motors is joining governments and companies around the globe working to establish a safer, greener and better world. We encourage others to follow suit and make a significant impact on our industry and on the economy as a whole.

You can just imagine Henry Ford fuming in his grave.

GM has had electric vehicles for some time, but they remain a small percentage of its business, as they do among the auto industry generally (Tesla’s market cap notwithstanding). GM had supported the Trump Administration’s policies efforts to rescind emission standards, which benefited internal combustion engines, but quickly changed course in light of Biden Administration priorities on climate change.

GM nowplans to spend some $27b on electric and autonomous vehicles over the next few years. “We’re committed to fighting for EV market share until we are №1 in North America, Ms. Barra said at an investor’s conference. “EVs are core to creating GM shareholder value.”

None of the major auto manufacturers immediately matched GM’s move, although all have introduced electric vehicles and Ford, in particular, vowed to invest $29b in electric/autonomous vehicles through 2025. A Ford spokesperson said the company was “committed to leading the electric vehicle revolution in the areas where we are strong.”

Although there are, not surprisingly, skeptics, most observers praised GM’s announcement. Paul Bledsoe, a climate expert at the Progressive Policy Institute, told The Washington Post: “When America’s most iconic manufacturer commits to carbon neutrality, that’s a huge signal to the rest of the economy.” Erik Gordon, a business professor at the University of Michigan, told The New York Times:

This is a guardedly bold move. It’s not that risky. Fifteen or 20 years from now, who knows where we might be? Mary Barra won’t even be C.E.O. But right now it’s hugely symbolic. This is very forward-looking.

To be sure, the 2035 emissions deadline is a goal, not a commitment. Mike Ramsey, a vice president at Gartner told Sierra: “I think GM is serious in the sense that it is an aspirational goal. If the market doesn’t move that way fast enough, they aren’t going to stop making engines and gas tanks just because they said they would.”

“The central point is that we made a firm commitment to carbon neutrality by 2040,” Jessica James, assistant manager of sustainability communications at GM, explained. “That is happening. But some things need to come together to meet the 2035 deadline — it’s out of our direct control.”

I don’t know if GM will live up to its announcement, or even if GM will still be around in 2035, but I love bold promises from otherwise stodgy companies. If Microsoft can become a leader in open source software, who’s to say that GM can’t reinvent itself? More power to them.

So what are some equivalent things healthcare organizations might do, changing core parts of how they’ve operated to better serve society? Here are a few suggestions:

· Epic could promise that data in its EHRs will be fully interoperable with other EHRs, with a consolidated patient record across health systems. “Patient data belongs to patients. Our job is to use that data to help patients and all of their health care professionals make better health decisions.”

· Sutter Health could announce it is getting rid of its chargemaster. “Medicare payments shall be our base payment level, and no payor will have rates more than 120% of that.”

· UVA Health could vow to stop suing its patients. “We’re here to help patients, not go after them during vulnerable times in their lives. Any billing/collection disputes will be worked out through third party arbitration.”

· UPMC could agree to pay local property taxes. “We are committed to helping improve the health of our community, and we recognize that paying our fair share of local taxes is an important part of that goal.”

· TeamHealth and Envision Healthcare, both owned by private equity firms, could put an end to their surprise billing practices. “We commit that all of our professionals will be in-network for all major health insurers, or will accept the payment level from the largest health insurer in the given market as our charge.”

· Pfizer and Eli Lilly could put an end to pricing practices that make their drugs much more expensive in the U.S. than in other countries, especially for such necessary products as Epipen and insulin (respectively). “We can no longer drive our profits from U.S. customers. Our U.S. prices will be consistent with prices charged in G20 countries.”

· The AMA and the medical specialty societies could agree to give up control of the Relative Value Scale Update Committee (RUC), which determines changes to RBRVS weights. “We recognize that, in this era of transparency, our involvement in helping set payment levels that our members may benefit from is no longer appropriate.”

· The Association of America Medical Colleges and The American Association of Colleges of Osteopathic Medicine could agree to merge. “Over 110 years after the Flexner report, we believe it is long past time that the historical differences between M.D.s and D.O.s be eliminated, in favor of a single system of education, training, licensing and oversight of physicians that will best serve patients in the 21st century.”

One difference between these promises and GM’s: we shouldn’t have to wait until 2035. These are things that can and should be done within a few years.

Almost seventy years ago, GM President Charles Wilson made his famous (mis)quote: “what’s good for GM is good for America” (although his actual quote was “I thought what was good for our country was good for General Motors, and vice versa.”) Healthcare is a much bigger portion of our economy than auto manufacturing is or ever was, and anything that is good for healthcare but bad for the people using it cannot really be good for either healthcare or the country.

Healthcare has a chance to re-stake its future. It should make, and keep, some bold promises. If doing so is good for GM, it should be good for healthcare as well. Where are its Mary Barras?

Healthcare Needs Its Mary Barra was originally published in The Startup on Medium, where people are continuing the conversation by highlighting and responding to this story.

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The Apple Car would wreck Apple, and Tesla's incredibly volatile history shows why (TSLA, AAPL)

Summary List PlacementIn case you missed it, the Apple Car is back. In the past few weeks, both Reuters and Bloomberg have reported that something is up with what Apple is calling “Project Titan,” after years of starts and stops. There have even been confusing statements about a possible collaboration with Hyundai.
I don’t think Apple seriously wants to get into the auto business — in fact, I think Apple would rather sell Project Titan and be done with it forever— but plenty of tech and finance folks seem to think that time is right for Apple to go mobile.
As in, four wheels mobile.
No one who’s enthusiastic about a revived Project Titan is really thinking much about the traditional auto industry. Because of course the traditional auto industry has been so thoroughly disrupted and invalidated over the past decade that it sold a mere 84 million vehicles since 2015 in the US alone. 
Tesla has sold some of those cars: approximately 1.2 million worldwide. As far as the US goes, less than 1% of the total since 2015. That’s not a disruption. It’s a rounding error. 
But there is a shift underway in the auto industry, toward electrification. It’s driven by a complicated cluster of factors, including increasingly stringent regulations in Europe, a growing China market, and the logical desire of automakers to get consumers to swap their old gas-powered vehicles for new electric ones.
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In this context, Tesla is getting all the attention because the company is run by an entertaining CEO in Elon Musk, has survived several near-death experiences, has developed an impressive level of customer loyalty, and has transformed easy money from central banks into a $600-billion market capitalization. Tesla is now the most valuable automaker in the world, by a lot.
Project Titan is back because Apple’s current innovation trough is its longest ever. Since the iPhone, the company has rolled out a watch, some new headphones, and a credit card. Hardly the stuff of dreams from a company that’s supposed to define how we live in the 21st-century, at the intersection of design, entertainment, and communications.
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Morgan Stanley’s tech and auto analysts published a joint research note last week in which they made a fairly straightforward case for Apple escaping this rut by offering a car. The global transportation industry is worth, by their estimation, $10 trillion, while the iPhone business adds up to about $200 billion. Apple doesn’t need to capture a commensurate share of transportation, it simply needs to nab a narrow slice to emulate its iPhone success.
That’s a nice case by the numbers, but a terrible proposition from an actual build-the-business standpoint. The iPhone advanced the triumph of the iPod, which built on Apple’s ability to deliver premium access to the internet with its computers. These were essentially all communications and entertainment devices, expensive in and of themselves, but cheap relative to something like an automobile. 
All Apple had to do was optimize its manufacturing supply chain and vertically integrate the user experience to post an enviable 20% profit margin on gadgets that had to be replaced every two or three years. 
Why a vertically integrated Apple Car would be a terrible idea
Morgan Stanley thinks that Apple would have to vertically integrate a car to make it a true product of Cupertino, but this is a ruinous idea. The modern auto industry — the one that manufactured and sold those 84 million vehicles in the US between 2015 and 2020 — did away with vertical integration decades ago.
Tesla is the only automaker that’s trying to return vertical integration to its former glory. And while its titanic market cap makes that effort look successful, in terms of manufacturing it has meant that Tesla has taken 17 years to sell as many vehicles in all of 2020 as GM sold in the US in the past two months.
In other words, you’d have to be completely, totally, utterly out of your mind to pursue a vertically integrated auto manufacturing model, unless your objective was to build and sell as few cars as possible using an antiquated methodology.
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Also consider that while Tesla looks great now, for much of the past half-decade, it has looked terrible. At points, it basically hasn’t been able to manufacture an automobile, at least not at the standards of the industry. It’s also been selling itself, through steady equity raises, to fund its growth. 
This has made Tesla into an investment that defines financial volatility. Apple, meanwhile, has been a rock of stability, perhaps the best set-it-and-forget-it stock of the 2010s, avidly shorted like any market darling but rewarding long-term investors who favor low risks and appetizing returns.
Messing with perfection
Apple currently has it all: wonderful market share, excellent management, beloved products, a stupendous brand, steady revenues, and magnificent profits. It’s as close to a perfect company as I’ve ever seen, and I can remember when it was on the verge of bankruptcy.
The payoff for perfection is a cash hoard that’s now at just under $200 billion. It has to be oh-so-tempting to look at Tesla’s risk-addicted ride and conclude that this is where the action must be. Why not spend some of that loot on a car? What’s the worst that could happen?
Well, Apple could blow it all. Car factories cost a few billion each to build, and an automaker can easily burn through $5 billion in a quarter. To achieve Tesla’s scale, Apple could incinerate the majority of that $200 billion in less than 10 years. And deliver, at best, two or three vehicle models. 
Meanwhile, GM spent what is usually spends, $7-9 billion, to deliver about 50 different models in the fourth quarter. That’s right: 50! From a single carmaker.
I’ve been dispensing this wisdom since Project Titan first popped up, several years ago, and I think it’s fair to say that I’ve been relentlessly critical of the idea. Still, I’m dismayed when enthusiasm for the Apple Car resurfaces, usually propelled by a tech media that thinks Apple can do anything and that’s been emboldened by Tesla’s unlikely ascent. 
“If you knew anything about the car business!” I typically holler into the void. 
Luckily, I think Apple’s leadership has learned a few things about the auto industry since Project Titan was christened. I hope they’ve followed Tesla’s fortunes, and more importantly, its misfortunes. And I can’t believe that they’d wreck a great company to do something so stupid as trying to build a car.

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