As Atul Gawande steps into a risky health CEO role, here are five challenges he faces

Dr. Atul Gawande will step out of health care’s limelight on Monday to put himself under its microscope.

Taking the helm of the new health venture funded by Amazon, JPMorgan Chase, and Berkshire Hathaway is the riskiest move of his career — one that will subject his acclaimed New Yorker narratives to a real-world stress test whose outcome is far from certain.

In the balance will hang not just his reputation as a physician and writer, but perhaps the highest-profile effort to date to leverage the private sector to fix America’s fragmented and dysfunctional health care system. Gawande has made a name for himself by proposing novel solutions to the system’s many shortcomings — from surgical checklists to rooting out unnecessary care — and testing them in specific hospitals or markets around the world.

“All the eyes of American health care will be on this new initiative,” said Andrew Dreyfus, chief executive of Blue Cross Blue Shield of Massachusetts and an acquaintance of Gawande’s. “Atul understands this is high stakes, and I think that’s why he took the job.”

After interviews with leaders across the world of health care, STAT has identified five challenges Gawande will take on in his new role. Each one carries substantial risks and complications that range from the political, to the personal, to the professional and ethical:

Challenge: Controlling costs while improving quality

How: Leverage technology to inform patients, demand lower prices

Risk: Coming off as a corporate stooge, rather than a steward of better health

Gawande’s biggest test will be to make changes that will simultaneously lower costs while improving the quality of care for 1.2 million employees who range from investment bankers, to short-order cooks, to Amazon pickers in fulfillment centers across the U.S.

The combined workforce is a microcosm of America, which is why it can serve as a powerful example for the rest of the country and why it will be so difficult to develop effective solutions.

To succeed, Gawande will need to make clear who his real boss is — the employees or the business leaders who have an inherent interest in reducing their runaway health care expenses. Gawande has emphasized that the new venture will be a nonprofit, and therefore somewhat insulated from corporate financial pressures. But health care business specialists said he will need to set the tone early among patients who will be skeptical of the new venture’s motives.

“It’s a sensitive political area: Are we here to just cut costs? Will we lose the trust of those under our care if that’s a stated mandate?” asked Zen Chu, faculty director of Health Care Ventures at the Massachusetts Institute of Technology’s Sloan School of Management. “Setting it up as a nonprofit helps, but there will still be trust issues.”

Gawande will need to muster his considerable talents as a communicator to explain the rationale behind his changes — whether it’s sending employees to a particular provider to get care, or more carefully scrutinizing when they get certain tests and procedures.

Challenge: Lowering hospital prices

How: Shift care to lower-cost settings, get more employers to join the effort

Risk: Alienating academic centers that dominate some markets

It is impossible to save money without getting lower prices for medical services. Americans pay the highest health care prices in the world, which is a primary driver of the nation’s sky-high health care tab, according to a recent study by researchers at Harvard University and the London School of Economics.

But several industry specialists said that Amazon and its partners, though large and influential, lack the concentration of employees in specific geographic regions to force hospitals to cut their prices.

“The quickest way to get a bang for your buck in cost control in health care is for purchasers of care to negotiate better prices, and that’s what limits them in local markets — they don’t have enough purchasing power,” said Dr. David Blumenthal, president of the Commonwealth Fund, a private foundation that conducts health care research. “If you can’t negotiate better prices, the alternative is to send your consumers to places that charge lower prices.”

In some cases, that might mean directing employees to steer clear of large academic medical centers that dominate local health care markets and charge the most for their care. Gawande himself is a surgeon at Brigham and Women’s Hospital, a prominent Harvard-affiliated hospital in Boston, so his effort in this new venture may run counter to the business interests of his own hospital.

Another way to counter hospitals’ pricing power is to convince other large employers to join the new venture, which may be a relatively easy to do given the prominence and promise of the effort.

“It wouldn’t surprise me if lots of other self-insured employers piled into whatever Atul is running,” said Chu. “It’s structurally a nonprofit and it improves with scale, so very quickly you could have 50 million covered lives, way beyond the 1 million employees the founding companies charged him with.”

Challenge: Cutting out the middlemen

How: Create innovative business solutions that streamline health care’s supply chain

Risk: Alienating key stakeholders needed to access or serve customers

Amazon has built its business on simplifying supply chains and cutting out industry gatekeepers who either add unnecessary costs or undermine the customer experience. Think books. Think home goods. Think groceries.

Gawande must accomplish the same feat in health care, where it is much harder and more complicated to do so. The market is filled with entrenched incumbents who control access to prescription drugs, medical services, and even the customers themselves.

But Amazon’s recent acquisition of the mail-order pharmacy PillPack points to a way forward — and not just in pharmacy sector. PillPack successfully battled with pharmacy benefit managers, which operate their own mail-order pharmacies, to get access to networks that include hundreds of millions of U.S. customers.

Chu, who was the first investor in the company, said it accomplished that by using technology to create a better service. PillPack uses software and robots to deliver medicines in presorted packets to patients across the country that take multiple medicines. It provides them with instructions on taking the medications and avoiding adverse interactions.

When Express Scripts, one of the nation’s largest pharmacy benefit managers, sought to block PillPack from its network, the company got its customers to protest the move, putting pressure on Express Scripts to reverse course. It did so in 2016.

“From the beginning they knew they were competing on customer satisfaction,” Chu said of PillPack’s founders, who added that Amazon’s acquisition of the company will spur a transformation of the industry. “My prediction is this is the beginning of a sea change, as Amazon will be able to serve on the front lines of consumer health care.”

Amazon will also likely become the pharmacy supplier to the 1.2 million employees covered by Gawande’s venture, which could help improve care and lead other employers to sign up.

Challenge: Attacking chronic disease; and variations in care

How: Leverage technology to improve patient knowledge, contract with select providers

Risk: Changing patient behavior is the hardest thing to do in health care, and may prove costly

A crucial part of Gawande’s efforts will be addressing the crushing burden of chronic disease. These preventable illnesses, such as diabetes and heart disease, dramatically magnify costs: Studies have established that 5 percent of U.S. patients account for nearly 50 percent of spending in the U.S.

“Most of those 5 percent have multiple chronic illnesses that tend to not be well-managed within our fragmented health care system,” said Dreyfus, the Blue Cross chief executive. He added that one of Gawande’s first efforts will likely be trying to understand the extent of the disease burden among the 1.2 million employees.

The new venture could help improve their care and cut costs by standardizing treatment regimens and directing employees to providers with proven track records. Given the expertise of Amazon, JPMorgan and Berkshire Hathaway in analyzing data and assessing risks, Gawande will be able to use machine learning software and other technologies to better predict the onset of disease and take preventive measures.

That’s where Blumenthal sees the greatest potential for Gawande and the new health venture — using the power of technology to help inform patients and deliver care at the time when it can make the most difference.

“The one major advantage that this combination has is Amazon and its IT capabilities and the network of consumers that Alexa touches,” he said, adding that the PillPack acqusition further enhances its ability to leverage technology.

“I would extend that well beyond the pharmaceutical market to begin to try to influence the decisions that consumers make with their clinicians about health care in a very personal way,” Blumenthal said. “That doesn’t mean changing the way providers behave so much as it means changing the way consumers behave, making them smarter purchasers.”

Challenge: Writing for the New Yorker while leading a national effort to reform health care

How: Carefully selecting subjects and avoiding conflicts

Risk: Compromising the progress of the new venture, or undermining his credibility as a journalist

Gawande holds many jobs — surgeon, writer, teacher, entrepreneur — and intends to retain them while leading the new venture. But it may be difficult to keep the roles separate, particularly as it relates to his most public job as a staff writer for the New Yorker.

The power of his writing is what put him on the radar of the executives who formed the new health venture. In 2010, Warren Buffett publicly praised “The Cost Conundrum,” Gawande’s New Yorker piece, which examined why health care was so much more expensive in some parts of the U.S. than others, despite little difference in the quality of care or the sickness of people getting it.

But writing on matters related to his work for the health care nonprofit could pose conflicts, potentially by disclosing information or strategies the new venture would want to keep quiet — something Amazon in particular insists upon in its business dealings. He might also have to tiptoe around certain topics to avoid infusing bias.

“I see a lot that intersects pretty directly with the work he’ll be doing as part of his new venture,” said Dan Kennedy, an associate professor of journalism at Northeastern University. In addition to health care costs, Kennedy noted that Gawande has written about President Trump’s attempts to do away with the ACA, unnecessary medical procedures, and other controversial subjects.

“Given his journalistic focus on policy matters, it strikes me that it’s going to be difficult for him to avoid writing about issues that he’s not involved in,” he said.

More broadly, Gawande will have to learn to manage the new venture, and his other interests, in a fish bowl, as his every move and misstep will be the subject of intense media coverage and scrutiny. But keeping one foot in his existing endeavors also provides a cushion if the new venture doesn’t produce the results many are hoping for.

“I do think this is brave,” Blumenthal said of Gawande’s new job. “On the other hand, he starts from a foundation of enormous prestige and influence and he’s not giving up the career that has brought him to prominence. So if it doesn’t work, he can return to being the extraordinary thinker and writer and innovator he’s always been.”