Innovation in sensors and cloud computing is changing health care. In this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, John Sculley (WG’63), former CEO of Pepsi Co. and Apple, talks about his investments in the $3.6 trillion sector and the potential he sees for more pricing transparency and patient control.
According to Sculley, pharmacy benefit manager RxAdvance, which he co-founded, is using technology to cut overhead costs, navigate heavy government regulation, and improve patient care. He discusses how the future of health care might be all about fewer hospital beds and invasive procedures, and more sensors and digital voice assistants.
An excerpt of the interview is transcribed below. Listen to more episodes here.
John Sculley: One of the big advantages of [cloud] platforms are that they’re able to take data across the entire horizontal structure of an industry, typically starting with patients, in the case of health care, or consumers in other industries, and then being able to take it across the entire system. What makes [RxAdvance] unique in this prescription world is that we can actually take that data across the industry, and as I said, that’s 5% of the population who are costing 50% of the U.S. health spend out of the $3.6 trillion. If you can get that data to the physician specialists, if you can get it to the other health professionals, if you can track dosage, if you can track are they taking their prescriptions? Are they being overmedicated with duplication because different physicians don’t know what other physicians are prescribing? If you can substitute generics for branded drugs. All of these things can save tens and tens of billions of dollars.
Equally important is that, as the industry in the U.S. shifts from a fee-for-service health care industry to what’s called value-based care, which means that CMS, the Centers for Medicare & Medicaid [Services], which sets the pattern for reimbursements of all kinds in health care, they said, “Look, we want value-based care. We just don’t want arbitrary fee-for-service. So we will give you incentives if you have better outcomes with patients, and we’ll penalize you if you have worse.” So the better outcomes can be done with better data. But at the same time, if a chronically ill person who has been discharged from the hospital within 30 days is readmitted back into the hospital, there’s a $10,000 a night penalty that is paid for by the health plans and the health providers. So the opportunity to align one’s business, but not only more transparency on cost, not only reducing costs through robotic process automation, so better productivity, but then also being able to align the health industry with a value-based care model is all part of what makes the PBM [pharmacy benefit manager] so foundational to everything in the future of healthcare.
“The thing that’s in common with everything I do, it’s always about disruptive innovation.” – John Sculley
Nicolaj Siggelkow: Now, you said, John, getting data is very important. So let’s switch a little bit quickly to another company that you co-founded, called Misfit, because I think that’s another company that generates data in the medical space, right?
Sculley: I co-founded Misfit with two colleagues from MIT several years ago. It was one of the first fitness trackers. We sold that company very successfully several years later, to Fossil for $242 million. And since then, sensors have gotten far more powerful. And the ability to combine sophisticated algorithms with sensors is now leading to an even more advanced generation of what you can do to capture evidence-based data. So, for example, I’m involved with a company in London, which is called Zedsen laboratory, and what Zedsen does is that they have the first noninvasive glucose monitoring system, which means that for, let’s say, Type 2 diabetics who have to test their blood glucose level six times a day, without having to have a finger prick, or without having to have some invasive device, this can be built into a digital watch or into a smartphone, and it automatically gives you that kind of readout. Well, that data can be transmitted across to other data that is captured. For example, ambient sensors are becoming more and more powerful today. … More and more patient care is being done on an outpatient or ambulatory care basis. That means that people who are very sick are being treated, more typically, in their own home as well. So you can start to use sensors to remotely monitor those people. And the case of ambient sensors, if you can be able to track sound, you can track temperature, you can track whether somebody has gotten out of bed or not, you can track where they are if they get out of bed and go into the bathroom at three in the morning. Now, all of those things can be tracked remotely. Then you combine that with things like Alexa health, or Google Assistant, which is also working in health, and you can start to see where the next generation of these digital voice assistants, which have up until now been a response to a request.
“Alexa, what’s the weather outside? Alexa, what movies are available tonight in New York at such and such a theater?” So instead of just being a request and answer, the ability to move to conversations where these digital assistants can actually be tracking feedback data from sensors, and then being able to coach the patient, who by the way, many of these seriously ill people living alone, are very lonely and the conversational systems are going to play an increasingly important role, not just on remote patient monitoring, but also being able to coach and build a relationship. So we’re moving into a very different world of how you think about health care.
I’m also involved with precision medicine and biotech and things like that. So I touch a lot of the areas. The thing that’s in common with everything I do, it’s always about disruptive innovation, it’s always about data science, because that’s the world I come from, and it’s always about pivoting health solutions where the patient has a bigger role in their own health.
“During the decade that I was CEO of Apple, I witnessed the change in the world of how we went from computers being focused on institutions to computers becoming empowering tools for individuals to do amazing things.” – John Sculley
Siggelkow: It’s fascinating, the words that you’re using. We’ve just published a book called Connected Strategy, and we describe different customer experiences. And one is respond to desire, which you talked about, coach behavior and automated execution. And that’s exactly what we’re seeing in development in what you were just talking about. So really, really fascinating.
Sculley: Let me just give you one other context. When I came into the computer industry back in 1983, the typical computer that people were aware of was a mainframe computer. Very few people had even heard of a personal computer at that point in time. So during the decade that I was CEO of Apple, I witnessed the change in the world of how we went from computers being focused on institutions to computers becoming empowering tools for individuals to do amazing things. Same thing is going to happen in health care. The way you make health care sustainable, is that you’ve got to empower consumers, who can also be patients, or family members who take care of other family members who are patients, empower them with tools that can gather evidence, tools that can coach, tools that can eliminate inefficiencies, tools to take data across the entire continuum of care. And when you think about it, it doesn’t sound that incredible, but it sounds very logical. One of the things which I’ve observed in the decades I’ve been in the high-tech world, is that what seems totally outrageous at one moment, and sounds impossible, a decade later, you discover well, we kind of take it for granted.
About Our Guest
John Sculley (WG’63) is best known today as the former CEO of Apple Computer. His corporate career began in 1967 when he was hired by Pepsi-Cola Company as a trainee. Three years later, he became the company’s youngest vice president for marketing, applying his ideas about “experience based marketing” to the Pepsi Generation campaign. He initiated the Pepsi Challenge taste tests, and oversaw development and launch of the first plastic soft drink bottle. By 1977, Sculley was Pepsi-Cola Company’s youngest president and CEO.
Drawing upon many years of experience as a corporate executive, investor, entrepreneur, mentor, and rainmaker, Sculley has become a sought-after global storyteller for the digital revolution. He is author of the newly released, Moonshot! Game Changing Strategies on How to Build a Billion Dollar Business. See more at his personal site.
Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.