Mission, Margin, and the Tradeoffs Facing Hospitals with Omar Lateef

Transcript

Harlan Krumholz: Welcome to Health & Veritas. I’m Harlan Krumholz.

Howard Forman: And I’m Howie Forman. We are physicians and professors at Yale University, and we’re trying to get closer to the truth about health and healthcare.

Harlan Krumholz: Today, Howie, we’re lucky to have Omar Lateef coming as a guest. But first, I want to hear what’s on your mind this week.

Howard Forman: There is a lot of news right now to cover. And quite frankly, we could have gone a lot of different ways, but on Monday evening this week, a federal judge in Boston blocked the Department of Homeland Security rule one day before it was set to take effect. I guess most of our listeners have never heard about this. I follow this type of stuff closely. And it barely registered with me until several of my students over the last six months, or a little more than that, were asking questions about it. The rule eliminates something called duration of status. For more than 40 years, international students and J-1 exchange visitors, those are people that do residencies here, have been admitted for as long as their program takes, with the university signing off on any extensions. The new rule replaces that with a fixed expiration date capped at four years and moves every extension to U.S. Citizenship and Immigration Services.

The decision shifts from your school’s designated official to a federal adjudicator. So why did it stay under the radar? It was built to produce no news event. Transition provisions meant nobody was deported on day one. It was competing with $100,000 H-1B fee. And most of the coverage called it a four-year limit on student visas. That’s not what it does. The four years caps a single admission, not your total time here. You can still stay six years or eight, but each time the clock runs out, you have to now go back to the federal government and ask for more. Here’s why it matters. International researchers are roughly a quarter of life science PhD graduates and about 60% of our postdocs. The average biomedical PhD takes five to six years. So that request comes due mid-dissertation. And the standard is a “compelling academic reason” judged by someone who has never met a student.

The American Hospital Association counted 17,000 J-1 physicians in residency and fellowship, many in rural and underserved communities. Many residencies run four years or longer before anyone begins a fellowship. The four-year unit is shorter than the training arc in many of the fields we claim to care about. But four years isn’t really the problem. The failure mode is. Under duration of status, a paperwork lapse was fixable. Under a fixed date, a four-year date, missing it starts “unlawful presence” accruing, and that triggers a 3- and 10-year reentry bar. DHS’s own estimate is more than 400,000 additional filings a year into an agency carrying an 11.3-million-case backlog where these applications routinely take five to six months. Judge Saylor wrote that the government’s national security rationale “borders on the absurd,” but that’s a preliminary injunction, not a final answer. And deterrence doesn’t wait for litigation. When a brilliant student chooses to go to Canada or France or Germany, rather than the United States, we lose out, and their absence is not picked up in any data.

Harlan Krumholz: Howie, that’s incredible, though. I wish I could say it was surprising, given everything else that’s going on, but this is really disrupting individuals’ lives. So how can people plan? You get this injunction.

Howard Forman: That’s the issue.

Harlan Krumholz: That people don’t know what’s going on. And these are people who are adding so much, so much to our clinical and research infrastructure, and yet—

Howard Forman: That’s right.

Harlan Krumholz: ...we’re basically forcing them to look elsewhere and just make decisions today because even with the injunction, they can’t depend on that.

Howard Forman: That’s right. Not to mention in my situation, where I became most aware of it is, we have international students who are in the medical school who might want to do an MBA, might want to do even a PhD, you know, add-on, might want to do a master’s of public health. This sort of makes it almost impossible.

Harlan Krumholz: I really wish we could put together a list of people who have used these kinds of mechanisms and just how remarkable a career these individuals have had over time and the degree to which they’ve contributed to the greater good of our society and how much we’ve benefited from being a place where people wanted to come. I’m very concerned about how shortsighted this is. Even if you want to say, “America first,” this is how America becomes first, by attracting this kind of talent from around the world.

Howard Forman: That’s right.

Harlan Krumholz: And it’s not a foregone conclusion. You know who led the world in science in 1920, Howie?

Howard Forman: Germany.

Harlan Krumholz: Germany. Germany. Everyone looked to Germany as the leaders in science. It wasn’t that they were going to be that way forever. Bring in the Nazis, World War II. They destroyed what was the leadership in science. And we can also destroy our leadership in science.

Howard Forman: I couldn’t agree more. We’ve talked about this on a lot of different levels. And I think this is the second time we’ve talked about an immigration topic. But I just wanted our listeners to understand how they’re getting into the cogs of the machine and trying to stop it from turning. And this is very unfortunate.

Harlan Krumholz: Yeah. I want to credit Bob Harrington, dean at Weill Cornell Medical School, who was telling me about his multiple trips to D.C. trying to make this point about what was it like in the 1920s? America was not first. America first now doesn’t mean we will forever be first, unless we—

Howard Forman: Right. That’s for sure.

Harlan Krumholz: ... do make the right decisions about it. Well, thanks. Howie, I have a special treat for you today. Sometimes we’re able to get a big fish. Today, we got a big fish. We got a rock star. A person I believe is arguably the best hospital CEO in the land. So let me give you a little bit of an introduction.

Howard Forman: Yeah.

Harlan Krumholz: Dr. Omar Lateef was appointed CEO of Rush University Medical Center in 2019, May of 2019. Can you remember back then? That’s—

Howard Forman: Pre-COVID.

Harlan Krumholz: ... pre-COVID days. Pre-COVID days. He didn’t know what he was getting into. He became president of Rush in 2021 and CEO of the system in July 2022. Prior to that, and I think importantly, he was chief medical officer at Rush University Medical Center and a highly respected clinician within the group. But I want to give you a sense of this. So Rush is in a challenging environment. People talk about case mix, the kind of patients you get, the payer spectrum of what you get. And they serve the neediest, most vulnerable patients in Chicago. They’ve got to make a go of it in a situation where there’s not a high level of lucrative payer contracts coming their way, and yet they are firmly committed to their community. Omar has really, as a leader, helped Rush set the standard in healthcare quality, safety, and I would say equity.

And they’ve modeled excellence in clinical leadership regionally and nationally. And importantly, since he’s come on, they’ve repeatedly received the highest marks for quality and patient experience from CMS, Center for Medicare & Medicaid Services. Vizient has ranked Rush among the very top tier of academic medical centers for quality and accountability. They’ve been ranked by the U.S. News and World Report Hospital Honor Roll seven consecutive times, all of this under Omar’s leadership. They’re expanding their reach, making care more accessible through robust digital experience strategy. I would say they’re some of the leaders in the use of new technology and the use of AI in working with industry in a variety of ways and always putting the interests of patients first. Omar himself has received numerous awards, including STAT News naming him one of the top 50 leaders shaping headlines in their 2025 STATUS List. I would say he is the top.

He’s the only president/CEO of an academic medical center to appear on a wide-ranging list of healthcare industry influencers. He earned the honor following an in-depth report about Rush’s commitment to health equity and innovative approaches to the community. I hope we’ll talk about that. But I want to say one thing. The interesting thing about Omar is, deeply committed to clinical excellence, and with a lot of credentials and credibility, having delivered outstanding care, started as highly respected clinician, comes into this role and recognizes his responsibility to make the bottom line work. So the business side of Rush is in the best shape almost it ever has been in. And at the same time, without compromising on the commitment to the community, clinical excellence, the research side and endeavors, I’ve rarely seen someone be able to do it in all dimensions like this. And I know that it’s hard, but he makes it look easy.

And it’s just such a pleasure for us to have my friend and someone who I greatly admire, Omar Lateef, to tell us some of these secrets. But, Omar, as we get started, just to give the listeners some perspective, I wonder if you can just talk about your journey, because it’s a really interesting journey. And I think also, for students listening, there’s often not a straight approach. And when you were at the University of Florida, you may not have been thinking this was going to be your career direction, but you end up here. How do you go from Youngstown to running one of the most preeminent healthcare systems in the country?

Omar Lateef: Well, first, thank you so much for that incredibly kind introduction. And it’s really an honor to be with the scholars and the leaders in healthcare, which are you two, Dr. Forman and Dr. Krumholz. It’s like being a very junior person meeting Yoda and Obi-Wan Kenobi at the same time, of the people that have not only created a sense of quality but a profound sense of expectation of doing what’s right in healthcare. And I think you both do such a fantastic job of using your voice to create an environment that makes people want to do what’s right in healthcare. My journey’s pretty simple. My life started pretty early as a second-born, where most of my problems happened. Culturally, my brother was far more successful and popular and handsome than I was, and so everybody looked up to him. I grew up in Youngstown, Ohio, and ended up at the University of Florida with a major in religion. And always fascinated by faith and always driven and motivated by faith, and was always interested in healthcare and in medicine.

I ended up taking the pre-med requirements, but most of my work was writing papers and talking about the differences in textual critiques of various faiths and religion and understanding how they were all the same. And that’s far different from the circles of biochemistry. And so I studied for the MCAT, took it, and I ended up going to the Des Moines University College of Medicine in Des Moines, Iowa, and graduated from there and ended up in New York City for my residency. And after living in New York for three years, ended up in Chicago for my fellowship. My journey was one that was filled with, I think, intermittent failure. I never felt like I was where I needed to be. I never opened an envelope and it was my first choice. I never got the test result that put me on top of the list. And that always made me want to work harder and be super motivated to try to make sure I didn’t fail.

And there’s all kinds of fancy words for that now, imposter syndrome and whatnot. But back in the day, it was just a kid trying to figure out how to make it. And I made up for whatever I didn’t know in the circles of the liver with showing up at work early, trying to stay late, and just trying to be a good doctor and listen to my teachers and do everything I could possibly do. And I realized in that journey, through residency and then ultimately in fellowship, that if you worked hard and if you took care of patients and you put patients first and you try to do what was right, that healthcare really is a meritocracy and people wanted to work with people that can work in a team, trust one another, and just get great outcomes. And I really felt like that was all that mattered.

And getting a phone call at 2:00 in the morning and hopping in your car to drive to work, that was easy. I didn’t need coffee to come to work. I needed coffee to make the drive home because I was so excited to practice medicine and I thought it was such an honor and privilege to round in an ICU and be around all these patients and try to make a difference. And that was really what made me motivated. But my journey into being a CMO started when I got a phone call from, at the time, my chief medical officer, who told me our outcomes in the ICU were not good. And I thought to myself, “He must have really good eyes to see him from his office.” And I remember saying, “Well, our patients are really sick,” as if I was the first person who ever came up with that concept.

And he said, “Well, I don’t care. Just prove it. But from what I’m looking at, you’re not doing a great job.” So I was a young director of an ICU taking an incredible amount of pride in our care and being told our outcomes weren’t good. And that took me down a different journey of trying to ensure that everything that we did had a good outcome but also try to understand how quality was measured and make sure that the results we thought we were getting is what we were actually getting. And I realized then that it’s pretty easy to sit outside and complain about all the problems, but if you really want to change it and you really want to make the ICU better, if you really want to show that you’re having better outcomes, it’s better to do it from the inside and be part of the solution. And so that’s how I got interested in administration. And that was sort of my story.

Harlan Krumholz: Just want to follow up with one thing. My estimation, you’ve been underestimated at a lot of different junctures and you’ve always overdelivered. That was a big leap to go from leading the ICU to chief medical officer and then to CEO. One of the principal challenges is the need for you to pay attention to the bottom line, to make sure that the books balance, and even more, that you develop a margin. And you guys are in a very difficult situation. And yet, you’re so committed to ensuring that the research and that the clinical care remains unparalleled at Rush and actually becomes greater. How did you manage that leap? And how were you able to be so successful in both dimensions, that is pushing the mission side but also making sure the margin was going to be taken care of?

Omar Lateef: Yeah. I think this is a really important question. And it’s not just that we had to struggle with for the last decade but it’s going to be the single biggest challenge of the next decade. I’m not an economist. And I would sit in rooms with people. And when I became the CEO, I had to learn what words like debt covenant, bond covenant, disclosures, and EBITDA [earnings before interest, taxes, depreciation, and amortization] even meant. And there’s no class in med school where you talk about these issues, but there is this assumption in healthcare that there’s all kinds of resources that are there and you could do so much. I learned early that the more good you do, the less money you actually make, if you’re running a hospital. And the basis for a statement like that would be, I think, best put out with an example. If you look at breast cancer disparity rates in this country, you’d find that a Black or Brown female with breast cancer has as much as a three to four times higher mortality than a White patient in the same city.

And you realize that the reason for that is a lack of access. The reason for that is you can’t, in that neighborhood, go get a mammogram. There’s not a primary care doctor. There’s not an appointment. There’s not an awareness. There’s not a structure that helps support it. And I think that when you go through it like that and when you’re living in this environment, you realize that you could fix that by putting a clinic in that neighborhood. And you could actually decrease that mortality in breast cancer in that community. But you could also open a dermatology clinic along the north shore of Chicago. You can also open a elective care surgical clinic on the north shore of Chicago in the bougie neighborhoods along the lake, and that would generate a higher profit. So everything that you do has to have a balance. And what was critical to Rush was being really clear on what we were and what we were trying to do.

We decided that our strategic plan was to decrease the death gap in the city of Chicago and that everything that we did would decrease the death gap. So that death gap was that if you’re born on Michigan Avenue, you live 18 years longer than if you’re born on the west side of Chicago, five subway stops west. That’s a solvable problem, but it takes a significant amount of effort and conformity around partners to solve that together. And once we clarified that that was our strategic plan, that’s at the core of what we did, we recruited an entire team that believed the same thing, and that was critical. And then you have to be transparent to your organization on what your goals are and what you’re trying to do. So if you lead with transparency, you have a clear purpose of what you’re doing, it’s suddenly much easier to have these community-based programs.

At the same time, we also learned that it doesn’t have to be a net negative financially. And I think that’s one of the biggest lessons that we learned. For example, Rush was one of the original organizations that was involved with creating the Anchor Network. And many, many hospitals, hundreds and thousands of hospitals have joined the Anchor Network. And it’s the idea of being an anchor to your community. Being an anchor to your community doesn’t necessarily cost money. Investing locally or hiring services for your hospital that infuse jobs or capital into your local neighborhood, it’s good for your neighborhood, it’s good for your city, it’s good for your state, it’s good for America, and it net-net improves the health of your community. So that also doesn’t have to come at a loss. And the specific example I would give you is the Fillmore Laundry Linen.

Fillmore Laundry Linen was a concept. When I first took over, I realized that ... and I was told that we were sending our laundry in the hospital to Wisconsin to get washed, and then it would get driven back. And we’re in Chicago, so it’d be driven an hour up the road in a truck, cleaned, and brought back. We partnered with some board members, with some local foundations to provide low-interest loans to create a laundry facility in one of the most challenging neighborhoods in Chicago, Lawndale. And we went to an area and we actually helped build and design a commercial laundry linen facility. They now do the laundry, not just for us but for other institutions in the city of Chicago, including a very large health center, Endeavor Health. They’re expanding, they’re growing. The only rules were that everybody they hired had to be local. The rules were that the people they hired had to be from the neighborhood, that we would encourage them to be in retirement plans.

You had to opt out to be out of a retirement plan. So we physically changed the neighborhood. We hired people from that zip code to work and give actual local jobs to people. And the net-net was Rush saved almost a million dollars in our laundry bill by not shipping it up. Created jobs, created a profitable business. They’re paying back the loans to the organization, and everybody wins. So you can have a margin and have a mission. It may not be as high of a margin as you’d like to have, but you have to get everybody in your organization to understand the why you’re doing all these projects, and then you can get to the how.

Howard Forman: Let me just say, first of all, what you’ve done and your ability to manage not just operations, per se, but to be able to get cultural change to happen within your organization so that all the people that you’re working with can move in the same direction, because that makes an essential difference as well. But hospitals are in a uniquely challenging position right now. If you look at their reputation nationally, they’re looked at as the highest cost problem in healthcare. And it’s true that if you look at single slices, they’re one of the biggest slices of healthcare spending. They’re like $1.7 trillion a year, maybe more at this point. They’re also expected to always have the best technology. And for you to be able to compete and bring in commercially insured individuals, who do bring in a margin with them, you have to have the robots and the proton beam therapies, or whatever the latest and greatest thing is, in order to compete.

And then you have the government cutting back on reimbursement for Medicaid occasionally, Medicare as well, other regulations. When you’re in the CEO position, you’re managing all of these things. Can you tell me how do you think about making those type of pivotal decisions about where do you deploy capital in an environment where everybody is coming for your margin or trying to take it away?

Omar Lateef: Yeah. I think you brought up so many important points that really do require a little bit of conversation around. One is how hospitals are viewed across the country right now, the idea of inflating costs. One of the challenges that hospitals in America have is that we haven’t told our narrative. We’re not organized. We’re so competitive and fragmented that there’s not one unique hospital story. Every hospital is different, every neighborhood is different, every bottom line is different. And you can’t paint all hospitals with the same brush. A safety net hospital in the inner city of New York or the inner city of Chicago can’t be compared to a hospital with $50 billion in endowments of unlimited amounts of philanthropy and support or being in a neighborhood where everybody has primary, secondary, and tertiary insurance. So one of the biggest challenges we have is the idea that all hospitals are the same.

So that’s something that we have to sort of take a step back from and realize that each hospital is different to their city and unique in their environment. The second thing that I would say, before we get into technologies, around the reality of what margins are in hospitals, when people say that they’re driving up cost, as many as 40%, 40% to 50% of nonprofit hospitals in America, and, Howard, you would know this better than me, are below zero in their operating margin, according to their bondholder disclosures from last year. So 40% of hospitals in this country are not profitable right now. They’re living off of historic endowments, they’re living off of alternative investments their investment funds have made over the years, yet they’re expected to compete with other industries and technology, like the airline industry or the pharmaceutical industry, which many of these other industries have double-digit profits, triple-digit profits, $100 million profit margins.

So their ability to invest in technology is significantly greater than the ability to invest in a hospital that’s below zero on an operating margin. So if you’re net-net losing money and you have to figure out how to survive, every dollar you invest in technology that may decrease your longitudinal costs is a dollar you take away from your hypertension community screening program that you know will improve the health of your community or your cancer screening program in the inner city that will dramatically change outcomes. So healthcare is in such a precarious situation because we need to embrace technology to drive down the cost of care and improve access and improve the patient experience, but we almost don’t have the margins to take the chance on doing something that doesn’t work. So when you’re the CEO, you ... before you’re the CEO, it’s super easy to say, “I’m going to go run this health center,” because you’re just going to know exactly what to do and who you’re going to partner with, and then you’re going to be the next Anthropic or the next Amazon of healthcare leadership.

When you get in the job and you realize that every dollar that’s spent or everything that you do is a trade-off, that’s when it becomes incredibly challenging. And that’s why hospitals in America still have tape on the floor that tell you how to find the cardiology center or the cancer center, but an airport uses wayfinding on an app. There’s so much technology available, but the technology comes at a cost because it has to work, it has to have a return on investment if you’re at a point where you’re just trying to break even. And so that’s slowing down our adoption. If you seek slowed down adoption with the challenge of a society demanding technology, that’s when you create this frustration at the patient level. And so we have to be honest and transparent about why we’re where we are. And I think the solution is going to come in not expecting the hospital to solve the problem alone but expecting the hospital to have the wherewithal to partner in a synergistic way with technology companies on the outside to figure out solutions that actually help human beings.

Harlan Krumholz: Yeah. I think it’s incredibly important. And you’ve been at the forefront of these kind of partnerships and have negotiated positions, I think, that really put you in leadership. I want to pivot for a second, though, to get your view on this. I’ve observed that many academic institutions, when you look at the hospital and health system side, are retreating from the academic mission. They’re basically saying, “We lose money on every research project that comes in. The overhead doesn’t really accrue to us. And we’re trying to retrench here a little bit because we’ve got to survive as a clinical care hub. And we can’t keep going.” I’ve seen you do the exact opposite, that you’ve doubled down on your academic mission. You’ve said, again, just like you’re committed to the community, you’re committed to the medical school, the research. You use it as a differentiator for your institution.

Can you just talk a little bit about the tensions that exist currently today in trying to be a stellar, true academic health center when part of that is continuing to be a champion for medical research?

Omar Lateef: Yeah. I think it’s such an important conversation. And the timeliness for it has never been more important than now. We recovered from a national pandemic because of science. We recovered from an international, a global pandemic because incredible scientists figured out a way to develop a vaccine that effectively brought the world back. And yet, somewhere along the line, science became challenged. Somewhere along the line, people started questioning actual real science, and the narrative got contorted, and it was unclear what was real and not real, and we created a sense of distrust. What made America the most innovative and greatest scientific country was discovery. What makes America one of the most amazing places to be in today and continue to be in tomorrow is the idea that we lead, we don’t follow.

Science is how we lead and we don’t follow. And it’s not just academic medical centers, but every doctor I’ve ever met, every single doctor, every single nurse, everybody I’ve met in healthcare that comes out and practices wants to make a difference, wants to make an impact. They want to save a life, they want to discover something, they want to make someone else’s life better. There’s many different ways to do that, but you can’t walk away from the reality that supporting clinical research, supporting basic science research, no one institution could do all of it, but each institution has to partner with one another to figure out how we can be a part of continuing science so we can be a leader in this world. And if we come away from that, nobody wins. If we come away from that, then healthcare long-term will end up costing more.

So we have to be willing to make sacrifices now in research and education that will decrease the cost of care and improve life expectancy in the future. Things like targeted medication, things like specific genetic studies that we do, these are the things that are going to change the future of healthcare. And stopping funding them now so I can have a quarter where I have a better outcome is very shortsighted. So I think a lot of this has to do with working with your organization to establish and clarify the why. Why are you investing in these research programs? And how is this helping, long-term?

Howard Forman: You’re going to be stepping down in a little more than nine months, I believe, from your position. And you’re a young man and you have a lot of years ahead where hopefully you can do a lot of good things. I’m always curious about if we’re preparing our leadership in hospitals, and particularly physician leaders in hospitals, appropriately for the types of jobs they’ll face. You said it so well before when you said everybody comes into the job believing they know exactly what to do, but then they’re constrained by so many things. Do we have the appropriate mentorship and support in place for a younger version of yourself? Did you feel that you had people around you when you took the CMO position on and certainly when you took the first CEO position on to support you in your journey at that point? And whether so or not, what can we do better to help prepare people for this?

Omar Lateef: The business of medicine is one of the most confusing businesses on the planet. When you put a board together, you can bring CEOs from industry, and they come into a hospital board, and they have no idea what the heck is going on when you’re presenting at your first meeting. There’s this concept of one-sided capitalism in healthcare that no one really talks about, that your costs go up every year, but your payment goes down. So if I open a donut store and the cost of my supplies goes up, I could increase the cost of the donut. In healthcare, as the cost goes up, the reimbursement will actually net-net go down, and that’s lost somewhere in the business model in this country, and it’s not intuitive. Your question is are we preparing physician leaders, nurse leaders, various leaders from all over the healthcare space to go run healthcare institutions?

I’ll speak personally. There was nothing in my pulmonary critical care fellowship, my internal medicine residency, or my medical school that taught me what operating margins would be and what the pressure is, or what contract negotiations with payers should be, or how best to negotiate supply chain increases over a pandemic. I think that so much of the learning in healthcare, so much of business is intuitive. I think Warren Buffett has historically said that things have to make sense before you invest in them. That part is true in healthcare as well. But the uniqueness of the business of healthcare and the one-sided nature of capitalism and costs, but not in reimbursement, makes it a very unique challenge. And if I said, “Are we preparing the next set of leaders for the future?” I think that the keys for who takes these roles in the future are going to be around mentorship, are going to be around... there must be a sense of humility, in my opinion, on the leaders that take over these jobs. You take over these jobs, and you have to work and learn from some of the most brilliant minds around. There are people that have grown fantastic health centers. There are people that have profitable health centers that are still mission-driven, and they have a playbook. It’s not the same playbook. Every city is different, every area is different. But we’ve watched some health centers in very challenging areas actually grow and accomplish things that no one would have ever envisioned a decade or two decades ago. And I think leveraging those leaders to help teach us all how to mimic that success is always a smart thing to do. I’ve always said you don’t have to be smart, but you have to be willing to learn and listen to very smart people and track what other people have done, take advantage of the lessons before us, and be innovative and courageous and transparent moving forward.

The healthcare leaders of the future are going to be a new level of innovative thinkers that have to subvert the dominant paradigm of how we’ve always done things in healthcare and be willing to change. Otherwise, we’re just going to keep bending. There’s only so many clinics you can add on a Saturday to make your margins work. At some point, you have to say, “We need a different model of healthcare,” and that’s the exciting part of the future. And we have to be willing to invest in the people that want to be change agents.

Harlan Krumholz: I wonder if I could prevail on you, as we sort of get to the end here. We’re at an interesting juncture at Yale. We are transitioning with our leadership in the health system. We have a very strong record on the medical school side, which has taken on more responsibility for the clinical care with regard to the Yale faculty. Our basic science and research and our funding on the NIH has never been stronger. The hospital ... I don’t want to say “in contrast,” but at the same time, I’ll just say “at the same time,” is experiencing a lot of financial headwinds. As you’ve mentioned, a lot of hospitals are. And some negative margins and some tough decisions ahead. If you’re going to give us any advice as we look toward the future here, then you see that kind of combination. Do you have any advice for us about how we should be looking at what role Yale and Yale New Haven Health can be playing in national, international healthcare going forward?

Omar Lateef: What I would say, honestly, is that there’s this presumption that running a healthcare center is somehow logical. And I would tell people on the year where Rush got rated number one in the country in quality in Vizient, our operating margin fell relative to the year before. And any other business, if you were number one in quality, if you were number one in patient experience, if you were number one in the product you were delivering, you would probably do better. And that doesn’t work in healthcare. Healthcare is really designated by as much outside forces as inside forces. I believe that every healthcare institution in this country has to understand their immediate environment. What are the needs of their environment? And what are the opportunities where they could solve some of those needs in the environment? And how can they develop synergy? I think anytime you’re involved with a turnaround or anytime a healthcare institution is losing money, the first thing you have to do is become very transparent in understanding the why.

What are the reasons we’re not performing where we want to perform? And I’m not saying Yale is not performing. Yale’s probably crushing it. But any institution has to understand, take a step back, and say, “Where are we knocking the ball out of the park? And where are our opportunities for change?” If you’re transparent about those, you’ll be shocked at how many phenomenal ideas can come out of your faculty, out of the people that work in the institution that want to be part of the solution. I think those are the voices that have to be heard. I think listening to your front line, elevating the leaders that know what’s happening, and understanding your local environment are critical to succeeding. You can’t take a national playbook. And the playbook that works in Naples, Florida, is going to be very different from the playbook that works in New York City. It’s going to be very different from the playbook that works in New Haven, Connecticut. What has to happen is clarity in what is it that you’re trying to do and what are the reasons you can’t get there. And I’m a very simple person, but without that clarity.... There’s many, many very famous organizations where if you went to five different leaders and said, “What are you trying to do? What does success look like in one year, three years, in five years?” if you can’t answer those questions, I think it’s going to be incredibly hard to lead an organization. So I think any organization going through a change or a new leadership period really has to decide what does success look like. Once you decide what success looks like, I don’t think it’s remotely as complicated as putting those pieces in place.

Howard Forman: Last quick question. What do you look forward to the most for next July 1?

Omar Lateef: It’s so interesting. I was going through my own personal future and my own journey. And I think that what I’d love to try to do is really make a difference or make an impact. And I don’t have a plan for how I’m going to do that. The problem is every time I go running or I go jogging or I’m sitting on a table just looking outside the window, I have a different idea of what I’m going to do when I step down. Some days, I decide I’m going to go work in the international health space and join Doctors Without Borders, and then other ideas, I say, “Maybe I’ll move to Youngstown and go back to practice.” All I know is I was the chief medical officer for years and years before I was a CEO, so I spent the better part of over the last decade being one of the tips of the spear in an organization where I was surrounded by really brilliant people that had great ideas.

I had the benefit of learning from them, taking their ideas, scaling them with them, and getting great outcomes. What I’m looking forward to when I leave is leaning on people like Howard and Harlan and say, “What are things that we can do to make a difference on a broader scale?” I think healthcare has to take a step back and decide. And I would love to be a part of the solution of breaking up all the silos that we have that are driving the problems in healthcare and saying, “How do we solve this together?” And if I could take a minute and just sort of explain what I mean is, healthcare is so fragmented in America. We know that roughly 20 cents out of every dollar of our country’s GDP goes into healthcare. And of that 20 cents, 4 cents will go to the hospitals, will go to the providers, and 16 cents goes outside that.

Relying on the people getting that 4 cents to solve 250 years of inequity, it’s not going to work. Relying on that 4 cents to solve all of the challenges in healthcare and bending back the cost curve is not going to work. Yet, we constantly fill a table up with people that are going to solve healthcare’s problems, but we don’t put all the different people at the table. We need to put the pharmaceutical companies at the table, the insurance companies at the table as partners. Not as antagonists to one another, but as partners. We need to bring the electronic medical record company to the table because we can’t have a conversation about how we’re going to fix healthcare without talking about who controls the data. What I would love to do after I leave here is figure out ... We had a lot of cool programs like Fillmore Laundry Linen that worked. How do we scale those in every city in America? And then how do we take the fragmentation that’s stopping us from solving the biggest challenges in healthcare, blow that fragmentation up, sit around a room together, and develop solutions as a team? If I could just be a part of that, of bringing people together, I think that would be the greatest honor I could have.

Harlan Krumholz: Your work at Rush showed what’s possible, what’s possible even in a very challenging environment. And I’ll just highlight one other thing. In the midst of being a remarkable CEO and managing at that highest level, I’ve seen what you do to mentor individual students. I’ve seen what you do on a tough, stressful night in the ICU to show up at midnight with pizzas and to be able to connect with the people on the front lines. And I’ve seen the kind of respect you show for the people who are doing the work in the front lines in your institutions in a way that lets them feel honored, respected, and ultimately motivated to continue to contribute in ways that isn’t common in all institutions. So much honor to you and respect. And thank you so much for joining us on the program.

Howard Forman: Thank you.

Omar Lateef: Thanks for having me, guys. I look forward to seeing you soon.

Harlan Krumholz: Thanks.

Howard Forman: Thank you.

Harlan Krumholz: Okay. As advertised, he’s a rock star. He’s amazing.

Howard Forman: Yeah. So he was great, Harlan. Thanks very much for making the original connection several years ago. And I’m just glad we finally got him on.

Harlan Krumholz: People don’t realize, actually, we schedule people like a year in advance.

Howard Forman: That’s right. That’s right.

Harlan Krumholz: But we’re lucky that he was able to make the commitment. And it was so nice to have him here.

Howard Forman: Absolutely. So tell me, Harlan, what do you have for us today?

Harlan Krumholz: Okay. Well, thanks, Howie. I want to talk about a proposal that’s buried in this year’s Medicare physician fee schedule, the proposed fee schedule, which is just at the end of collecting comments, but I think it’s worth talking about. This is the annual rule that sets what Medicare pays clinicians. Like I said, this comment period closed on Monday with tens of thousands of comments. And the final rule usually comes out in early November. The part of the proposal I want to talk about is about remote patient monitoring. So a patient at home gets connected to a device, for example, like a blood pressure cuff or a scale. The readings go to a care team. And someone is supposed to review them and adjust treatment. Medicare began paying for this separately in 2019. And payments went from about $15 million that year to $536 million in 2024, covering about a million people.

CMS has been looking at this for a while. And they proposed four changes that were intended, again, in this proposed rule starting January 1st, so really in the very near future. First, the staff doing the monitoring would have to be direct employees of the billing practice. A practice could no longer contract with an outside company to supply the nurses, which is how many of these programs work, especially for small practices. They contract with a company that uses remote monitoring, but then they’re the ones who are managing the data and connecting with the patients, and then they’re the ones doing the billing. CMS says that outsourcing can fragment care. Second, the clinician would have to see the patient in person or by telehealth and discuss monitoring before it starts. Third, there’s a large payment cut. The device payment would be based on the inputs from much simpler home blood pressure code, and the cost of clinical staff would be removed from the monthly management codes.

And fourth, CMS floated collapsing 17 billing codes into four new codes of its own. So let me just put this in perspective for you first. And let me start with CMS’s argument because I think it’s a little stronger than industry has acknowledged. The Health and Human Services inspector general found that in 2022, 12% of the patients billed for monitoring received no treatment management at all, which is the part where a clinician acts on the data. And last year, it found one practice billing for more than 30,000 patients it had no prior relationship with. Companies were cold-calling seniors to sign them up. And the evidence for monitoring alone is relatively thin. I have some history here. In 2010, we published a project we called “Tele-HF” in The New England Journal of Medicine. We had randomized over 1,600 patients who had been recently hospitalized for heart failure. And we got this sort of telemonitoring system up where they were reporting symptoms of weight by phone every day.

Readmission or death at six months was the same in both groups. There was no real effect. There are other studies, BHF, a later trial in California, no reduction in readmissions. What we found largely is that just collecting the data and transporting it and showing it to clinicians actually can have no effect. It’s all about what happens with it and whether there are systems in place to ensure the proper reactions. As I reflect back on the trial we ran, I think the problem wasn’t that we were getting a better view of what was happening with patients but when it was being shared with the practices, there was a wide variety of reactions and approaches to that data. Even though we had a simple protocol that everyone was supposed to follow, it was very difficult for them to follow. So these are what we call complex interventions.

The data is just part of it. And the effect can be undermined by what happens afterwards. The problem with the CMS proposal is that abuse was concentrated so that ... most practices weren’t doing that. And employment status is also not what makes the monitoring work. It doesn’t necessarily have to be fragmented if there’s integration between these companies and the institutions that hire them. So it just depends. It depends how they’re set up. The rule’s also inconsistent in part. It says nurses must be employees for their time to count in the same section. It says monthly management service typically involves no clinical staff time and it removes the cost from the payment. And the cut’s really very large. So it’s going to serve as a disincentive to use these new technologies, which could, if optimized, actually have a beneficial effect. And I’ll just say, finally, the bigger story may be where CMS wants to go with this.

This summer, they launched what was called the ACCESS model, which pays a flat amount, about $30 a month for the first year for hypertension with full payment tied to the results of blood pressure control. So it’s kind of like value-based care, they’re giving you a certain amount money, they’re saying, “Use whatever tools you want. And it’s going to be up to you to be using things that are effective. And what we’re doing is paying you for the result, not for a fee for service, for utilization of a particular service, but we’re trying to move in that direction.” The one other thing that they did, which is very interesting, is that they started saying they want to take a hard look at AMA’s billing codes and to see whether these codes are really up to date for these new technologies or whether they really just, because they were anchored in a different time, primed for abuse and actually leading CMS to what they consider to be overpaying for services.

So like I said, comment period ended, tons in, of course, everyone who had a stake in the benefit here, the industry, health systems, everyone was complaining about this. Question will be how will CMS receive this? What will they do ultimately? We’re going to hear probably in about six weeks or so. And everyone’s waiting with bated breath because it has a big effect on whether or not these remote monitoring programs are going to be incentivized and will continue in the ways that they have.

Howard Forman: Yeah. It’s going to be fascinating to follow up and see the response to the comment period, but more importantly, to look a year or two from now to see what the impact has been.

Harlan Krumholz: I think many of us who are optimistic about technology are hopeful that we will find ways to optimize it, but we do feel that everyone should be held accountable, not just for getting paid for producing the service, but having to demonstrate that—

Howard Forman: Outcomes.

Harlan Krumholz: ... actually patients are better off as a result, right? You know me, I’m an—

Howard Forman: Absolutely.

Harlan Krumholz: ... outcomes guy, so we want to see the outcomes. You’ve been listening to Health & Veritas with Harlan Krumholz and Howie Forman.

Howard Forman: So how did we do? To give us your feedback or to keep the conversation going, email us at health.veritas@yale.edu or follow us on any of social media, including our very active Instagram account.

Harlan Krumholz: Yeah. We urge you to give us feedback. We love to hear from you. We love to hear how we can do better. And it’s nice to have so many listeners who do reach out.

Howard Forman: Health & Veritas is produced with the Yale School of Management and the Yale School of Public Health. To learn about Yale SOM’s MBA for Executives program, visit som.yale.edu/emba. To learn about the Yale School of Public Health’s Executive Master of Public Health program, visit sph.yale.edu/emph.

Harlan Krumholz: You know what my really favorite part of this whole podcast is?

Howard Forman: Thanking people.

Harlan Krumholz: Thanking people. I love this. I get to say, with much gratitude, we’re so fortunate to work with superstar students, like Gloria Baek, Donovan Brown, such terrific producers, Miranda Shafer, Blake Eskin, who’s joining us today and standing in for Miranda. And of course, the biggest privilege is I get to work with the best in the business, Howie Forman.

Howard Forman: And I can’t agree with you more, Harlan. Getting to work with you and the team is a true pleasure. I’m so glad that we’re back. And we have a lot of great episodes ahead.

Harlan Krumholz: Yeah. Thanks, Howie. Talk to you soon.

Howard Forman: Thanks, Harlan. Talk to you soon.