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Dr. Saum Sutaria is the Chairman and CEO of Tenet Healthcare and a former leader in McKinsey & Company’s Healthcare and Private Equity Practices, where he spent almost two decades shaping the field. In this episode, Saum unpacks the complexities of the U.S. healthcare system, providing a detailed overview of its structure, financial flows, and historical evolution. They delve into topics such as private insurance, Medicare, Medicaid, employer-sponsored coverage, drug pricing, PBMs and the administrative burdens impacting the system. Saum’s insights help connect healthcare spending to broader economic issues while exploring potential reforms and the role of technology in improving efficiency. Saum highlights how choice and innovation distinguish the U.S. healthcare system, explores the reasons behind exorbitant drug prices, and examines the potential solutions, challenges, and trade-offs involved in lowering costs while striving to improve access, quality, and affordability. The opinions expressed by Saum in this episode are his own and do not represent the views of his employer.

We discuss:

• The US healthcare system: financial scale, integration with economy, and unique challenges [5:00];
• Overview of how the US healthcare system currently works and how we got here [9:45];
• The huge growth and price impact due to the transition from out-of-pocket payments in the 1950s to the modern, third-party payer model [18:30];
• The unique structure and challenges of the US healthcare system compared to other developed nations [22:00];
• Overview of Medicare and Medicaid: who they cover, purpose, and impact on healthcare spending [27:45];
• Why the US kept a employer-sponsored insurance system rather than pursue universal healthcare [32:00];
• The evolution of healthcare insurance: from catastrophic coverage to chronic disease management [36:00];
• The challenge of managing healthcare costs while expanding access and meeting increased demand for chronic illness care [44:15];
• Balancing cost, choice, and access: how the US healthcare system compares to Canada [48:45];
• The role of the US in pharmaceutical innovation, it’s impact on drug pricing, and the potential effects of price controls on innovation and healthcare costs [56:15];
• How misaligned incentives have driven up drug prices in the US [1:05:00];
• The cost of innovation and choice, and the sustainability of the current healthcare cost expenditures in the US in the face of a shrinking workforce and aging population [1:11:30];
• Health outcomes: why life expectancy is lower in the US despite excelling at extending lifespan beyond 70 [1:18:45];
• Potential solutions and challenges to controlling drugs costs in the US while balancing choice and access and preserving innovation [1:26:15];
• Balancing GLP-1 drug innovation with affordability and healthcare spending sustainability [1:40:00];
• Reducing healthcare spending: complexities, trade offs, and implications of making needed cuts to healthcare expenditures [1:46:45];
• The role of government regulation, opportunities for cost savings, and more [1:56:15];
• Hospital billing: costs, charges, complexities, and paths to simplification [2:01:15];
• How prioritizing access and choice increased expenditures: reviewing the impact of healthcare exchanges and the Affordable Care Act [2:08:00];
• Feasibility of a universal Medicare program, and what a real path to sustainable healthcare looks like [2:15:45];
• The challenge of long-term care and the potential of innovation, like device-based therapies and AI, to improve health [2:23:15]; and
• More.

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