Print BCTV: Mountain Climber -- Mount Sinai's CEO on Obamacare, new science, the future of medicine

Mountain Climber

Transcript of BioCentury This Week TV Episode 164








Icahn School of Medicine


Affordable Care Act

Steven Brill

Time Magazine




Valentin Fuster

Ketamine glutamate receptor blockade


Orphan Drug Act



Steve Usdin, Senior Editor




NARRATOR: Your trusted source for biotechnology information and analysis. BioCentury This Week.


STEVE USDIN: What do Obamacare and budget cuts mean for patients, hospitals, and the future of medicine?


This week, we'll ask Dr. Ken Davis, head of Mount Sinai Medical Center.


NARRATOR: Biotechnology is a complex world of passionate opinions and strong personalities. Point of View is a special BioCentury series, probing the thinking and experiences that have shaped some of Biotech's most controversial and influential individuals.


NARRATOR: Ken Davis first visited Mount Sinai Hospital in the Upper East Side of Manhattan as a seven-year-old to receive emergency surgery. He returned as a young man, graduating from Mount Sinai Medical School. He returned again to launch a career as a physician scientist, researching the biology of schizophrenia and Alzheimer's disease.


As Chief of Psychiatry, he witnessed alarming financial erosion, starting in the 1990s. By 2000, mounting losses threatened the medical center's future. In 2003, Mount Sinai's board of directors took a gamble, naming Davis, who'd never run a hospital or a large organization, as CEO and Dean of the Mount Sinai School of Medicine.


In July of this year, Mount Sinai combined with Continuum Health to become the largest hospital system in New York City. It has over 1,000 beds, 2,500 physicians, and provides services for over 600,000 outpatients visits a year.


Mount Sinai's medical school, the Icahn School of Medicine, has a faculty of over 4,000. It received about $200 million in NIH grants this year.


From navigating through shrinking NIH research budgets, finding funds to cover exploding uncompensated medical care costs, dealing with the unintended effects of the Affordable Care Act, and implementing new technologies that are transforming cancer treatment, Dr. Davis has a unique view of the present and future of medicine.


I'm pleased to be joined by Dr. Ken Davis, a physician, scientist, and head of the Mount Sinai Medical Center in New York.


Dr. Davis, it's still early days on the Affordable Care Act. But what's your impressions from where you sit, what it's meaning for patients, and what it's meaning for hospitals?


KEN DAVIS: Well, although it's early, the Act has been in effect for a couple years, as the hospitals have been dealing with it for some time.


What's new are the Exchanges, of course. What we see on the Exchanges is, at least our early impression, is that patients are very price sensitive around the Exchanges. And, of course, there's the entire problem with the websites breaking down.


But in New York, where they're functioning a little better, we see that there's an enormous price sensitivity, and people are looking for the least expensive product.


STEVE USDIN: And what are the consequences of that, because the least expensive may not actually be the most affordable for somebody who's actually going to get sick, right?


KEN DAVIS: Right. The least expensive have high deductibles and high co-pays. But all the policies have standard prevention components that are very important, that differentiate them from all those policies that are being discontinued around the country because they don't meet the standard for the Exchanges.


STEVE USDIN: One of the assumptions of the Affordable Care Act was that there would be no more uncompensated care -- everybody's going to be on an insurance plan. And there's something called the Disproportionate Share system that gave hospitals that treated indigent people more money. And that was cut.


What effect is that having? Are you really seeing the elimination of uncompensated care?


KEN DAVIS: Well, the presumption was that everybody would ultimately sign up and get insurance who is eligible, because there were mandates to do so and penalties if they didn't.


The calculations were based on citizens. It did not include illegal immigrants. And in lots of parts of the country -- New York, Florida, Texas, California -- lots of people who come to the emergency room are undocumented, undocumented aliens. By law, those people have to be treated.


STEVE USDIN: How much uncompensated care did Mount Sinai have last year?


KEN DAVIS: Last year we had $190 million of uncompensated care.


STEVE USDIN: And where's that money come from?


KEN DAVIS: It comes from cross-subsidies from other revenue streams that we have. It's why hospitals in urban centers like Mount Sinai have margins that are barely positive or often negative.


STEVE USDIN: So some people in looking at hospitals, you say you've got these barely positive or negative margins. A lot of people looking at the healthcare system say that the hospitals are the problem.


Steve Brill wrote this enormous article for Time Magazine and said that high pay for hospital administrators, opaque pricing and things like that. Basically, the hospitals are ripping everybody off and that's the problem. What's your response to all that?


KEN DAVIS: Well, Steve Brill focused on something called the Charge Master. Charge Master is what hospitals say the procedure will cost.


But the reality is that the Charge Masters have nothing to do with the vast majority of revenues hospitals receive, or what bills are sent to Medicare, Medicaid, or the insurance companies. Those are all predetermined, and they are some percentage of the Charge Master, or in the case of Medicare and Medicaid, it's all totally formulaic. It has nothing to do with the Charge Master.


Those patients that Steve Brill talked about were the unusual patient who has just no insurance, and winds up in an unusual hospital where they actually stick to the Charge Master price and don't discount it for people who have real financial difficulties.


In our case, it's a sliding scale that comes off of that Charge Master, and no one winds up paying that kind of price who -- it just doesn't happen.


STEVE USDIN: So one of the things -- I don't know if Brill wrote about this -- but one of things that anybody looking at the system now has to be concerned about, I think, is the enormous disparity in what different medical professionals, for example, get paid. A pediatrician might get paid 40 times less than a specialist. Does that make sense?


KEN DAVIS: No, it doesn't make sense.


The rewards in medicine are illogical and out of proportion to what, maybe, the population needs, and ultimately that has to change.


STEVE USDIN: And how can it change. The Affordable Care Act's not going to change that, is it?


KEN DAVIS: Well, the Affordable Care Act made some efforts in that direction with Accountable Care Organizations that we could, perhaps, talk about a little bit later.


But the macroeconomics of healthcare are going to change that. States and Federal government simply can't afford the cost of healthcare as it continues to rise. And employers can't afford those benefits packages.


So we're reaching the point that no one can afford healthcare. We've got to do what's called bend the cost curve. And we're not going to bend the cost curve in the current fee-for-service system.


Accountable Care Organizations began to restructure us toward thinking about being paid for whole populations and sharing savings with the government for providing more effective coverage in preventing disease.


STEVE USDIN: Mount Sinai's received over 2 billion in NIH grants over the last decade. What's been accomplished? And what do funding cuts mean for medical progress? We'll ask Dr. Davis in a moment.






STEVE USDIN: We're talking with Dr. Ken Davis, President and CEO of Mount Sinai Medical Center. Dr. Davis, we just saw a slide that showed that Mount Sinai received about $2 billion from NIH over the last decade. It's kind of a reasonable question for the taxpayers to ask, what have they gotten for it?


KENNETH DAVIS: A lot of good science, at least the new therapeutics and new diagnostics and understanding disease pathology. For instance, a discovery at Mount Sinai will ultimately lead to a new flu vaccine that instead of one that you need every year, you'll be able to get it every 10 years. We call it the universal flu vaccine.


Also, scientists of Mount Sinai have developed the newest treatment, in fact, a treatment for depression. There hasn't been a new treatment for depression in 30 years. We've developed a new one that looks to be quite robust and is being used by a lot of companies now.


STEVE USDIN: And that's based on keta--


KENNETH DAVIS: Ketamine glutamate receptor blockade. And earlier, as example of my work years ago, led to all the drugs that are currently used in Alzheimer's disease came from NIH-sponsored research.


STEVE USDIN: So I want to ask you about that. So your research led to drugs that are used for Alzheimer's, also some of the drugs that are used to treat schizophrenia. At the time that those drugs were created, there were breakthroughs. That was 30 plus years ago.


Everything that's come since has been derivative of those. We don't have any new drugs. Is the system set up now to be able to create drugs that are really going to reverse the course or prevent Alzheimer's or they're going to really do a better job of treating schizophrenia?


KENNETH DAVIS: Well, Alzheimer's disease has been a much harder problem than I certainly would have thought when I began doing research in that field. There are a number of drugs now that are still in clinical trials. But the real question that we have to face as a country around Alzheimer's disease, like diseases, like Alzheimer's and diabetes, is these are enormously costly diseases. If we're going to bend the cost curve in a meaningful way in America, we're going to have to find cures or ways to prevent or delay the onset of those diseases.


And to do that may require a restructuring of the ecosystem in innovation and therapeutics to align the incentives in the same way so that the country gets what it needs for the science that it's funding.


STEVE USDIN: So that's interesting. What kind of incentives? What kind of changes need to be made at Congress, if the funding agencies, if the FDA were to ask you and say, well, what do we need to do? Our highest goal is doing something to change the trajectory for Alzheimer's for diabetes for some of these chronic diseases. What do they do?


KENNETH DAVIS: Well, I would point to the Orphan Drug Act. The Orphan Drug Act gave us a blueprint for how to incentivize companies to create drugs where they otherwise wouldn't have done it. What they did was they granted exclusivity in the market against competition for a finite period of time.


What we could do is we could say, it is now essential in the public interest that we develop drugs that will alter the course of Alzheimer's disease or delay the onset of diabetes or the complications of diabetes. And if we have first in class in that kind of drug, we'll grant you 10 years of market exclusivity.


STEVE USDIN: So you're basically saying, give the companies more of a financial incentive to develop those kinds of drugs. Is that in itself going to be enough? Or does there has to be some kind of restructuring of the research enterprise to develop the discoveries that companies can actually --


KENNETH DAVIS: We might think about allocating somewhat more parts of the NIH portfolio to these diseases that are going to cost the country so much money. But I think a better case can be made for, why are we letting the NIH budget stagnate for a decade plus? And what are the consequences to the country's health by doing that?


STEVE USDIN: When you talk about rebalancing the portfolio, one of the arguments is to say that really, the research has to go where the scientific opportunity is, and you can't just say, we want to make Alzheimer's a priority and throw a lot of money at that if there aren't scientific opportunities there. Where would you stand on that?


Should we have more targeted research, or do we need this fundamental base of curiosity-driven research and take it where it goes?


KENNETH DAVIS: We need both. But right now in Alzheimer's disease, there really are a number of opportunities. There are a lot of good therapeutic targets. The problems that we have in a disease like Alzheimer's is that it takes a long time and a lot of money to find out if you really altered the course. And that's discouraging to a drug company that has to look at a return on investment in which there may be competition shortly after the drug goes on the market because the testing took so long and patent life is inadequate.


STEVE USDIN: So what you're proposing basically is to create a market incentive for drug companies to take on these really big challenges of chronic long-term diseases.


KENNETH DAVIS: That's right, to provide market exclusivity for really innovative drugs in those diseases that the public tremendously needs help with.


STEVE USDIN: So in the AIDS experience, for example, one of the things that also helped tremendously was the engagement of patients in it and the stress, the pressure that the whole system was put on to come up with something very rapidly. Do you think that that's also needed, this sense of urgency in Alzheimer's and some of these other diseases?


KENNETH DAVIS: Well, the Alzheimer's Association and related groups are really quite mobilized. I don't think it's for a lack of public wanting a drug. I think it's been a lot of scientific failures that have been surprising. And now, it's because the business model really isn't as good in Alzheimer's disease as it is to develop other drugs in other areas.


STEVE USDIN: One of the things we talk about on the show over and over again the idea of patient engagement, patient empowerment. Are those buzz words, or are they real? And if they are real, how do you make them real?


KENNETH DAVIS: Well, it's a good idea for patients to have more information about their healthcare, to know more about their prognosis, their risk factors. But we shouldn't overestimate the value of what that's going to mean for them making the right decisions. One of the most famous cardiologists in the world is Valentin Fuster. He's an iconic figure in cardiology, runs global studies.


He says this: In cardiac disease, we made enormous progress. We know how to lower cholesterol levels, bad lipid levels, control hypertension, do a very good job of preventive medicine in cardiac disease. Yet we still have an awful lot of cardiac disease. The reason is, despite the empowerment, despite the information, patients don't always do the right things.


They don't always take their medication. They don't go for regular treatments, regular care, preventive care. So we've got to do more than empower. We somehow have to mobilize people to make the right decisions.


STEVE USDIN: And how do you do that? Is that something that a hospital system, that physicians can do? Or is there a need for some other entity to come from the outside and do it? One other thing, does it need to change the way the physicians are trained?


KENNETH DAVIS: Well, I think that's the great question. Who's responsible for really making sure that people do the right thing and providing integrated care and keeping people well? In our case, we spend a lot of resources now trying to keep people out of the hospital, out of the emergency room, to take their medications, to do the right thing, to stay on their diet. But we have to do that with auxiliary personnel that there is no reimbursement for in order to prevent illness.


As we move away from fee-for-service and move to a shared savings model, which we have in the Accountable Care organization, we are suddenly incentivized to do that. Ultimately, I think it's going to be a partnership between all the payers and the patients and the providers to provide an infrastructure that will keep people as well as they can be by providing them with the information and making sure they make the right decisions.


STEVE USDIN: So hospitals, from where you sit, you're going to have a financial incentive to try to make that happen. And obviously the patients have an incentive to make it happen.


KENNETH DAVIS: If we can align everybody the same way -- patients, providers, patients, so all our incentives are the same -- then it will happen that way. Right now in fee-for-service medicine, we don't have that alignment. But in shared savings, in capitation, in population management, bundled payments, global payments, we can have that.


STEVE USDIN: Thanks, Dr. Davis. We'll have more with Dr. Ken Davis in just a moment.


NARRATOR: Healthcare is changing. And we are changing too. Each week, watch BioCentury's Affordable Care Update, a special part of every show dedicated to keeping you informed about this unprecedented transition.




STEVE USDIN: We're talking about the biomedical innovation ecosystem with Dr. Ken Davis. Dr. Davis, there are some things, I think, that are really important in healthcare costs that never get talked about or get talked about rarely, end of life care, they need to turn the corner on obesity in America. What should we be talking about and what should we be doing?


KEN DAVIS: Well, you're 1,000% right. Those are the areas that we haven't talked about that really need to enter this debate around healthcare. Too much of the debate is around stuff like the Charge Master, which, to me, diverts attention from where the real issues and how we're going to bend the cost curve.


25% of Medicare costs are spent on 5% of patients in the last year of life. We've got to find better ways to allow people to have a more appropriate death than in ICUs with unnecessary care. We don't use Advanced Directives adequately in the United States. And we don't use palliative care enough.


Palliative care has been shown to provide longer life and with better satisfaction for the patient and the family. We just don't use it enough. We've got to do a much better job of thinking about end of life care.


On obesity, it's an extraordinary expense to America. If Americans weighed today what we weighed 25 years ago, we'd save about $14 billion a year in healthcare costs.


We have just not tackled the question of why has sugar consumption gone up so enormously in the population in the last 25 years and done even less about it. Those things aren't entering the debate here on how we bend the cost curve in healthcare.


STEVE USDIN: So you, in addition to running the largest medical hospital system in New York, Mount Sinai also includes a large teaching facility. You train medical students --




STEVE USDIN: At the Icahn School of Medicine there. One of the things that you do is that every medical student who comes in has the opportunity to have their own genome sequenced. Why do you do that and what do they get out of it?


KEN DAVIS: Well, not every medical student. It's an elective. So those who want to look at it.


STEVE USDIN: I mean, they have the opportunity.


KEN DAVIS: They have the opportunity. And in the elective, they learn what a patient experience may be like in getting all that data and beginning to ask what are the implications of this for my life and how I should modify my lifestyle for the risk factors that I now know exist?


And so we're teaching students how to use the data, understand the data, integrate it into their own health.


STEVE USDIN: Is there anything that they can do with that that wouldn't make sense just to do, just to have a healthy lifestyle anyway? Does that additional data actually mean something to them?


KEN DAVIS: Well, I think it could. I think it definitely could. For instance, if you carry the APOE E4 type gene in Alzheimer's disease, we know that one of the only really mitigating factors for avoiding its impact on the likelihood of getting Alzheimer's is how much exercise you get. And more is always better, as it turns out, for the APOE story.


So it may get you to be more motivated to really exercise every day, at least 30 or 40 minutes, in a vigorous way, than it might otherwise.


STEVE USDIN: And how long do you think we are, routinely, from having most people getting that kind of information about themselves?


KEN DAVIS: I think the cost of genotyping people is coming to become so inexpensive that within 5 to 10 years, this will be a routine laboratory test. And what we're going to have to ask ourselves is when it becomes that routine laboratory test and we can begin to make predictions about your future health, how are we going to use that information.


STEVE USDIN: How are genomics and genetics changing the face of medicine? We'll ask Dr. Davis in just a moment.


NARRATOR: Now in its 21st year, visit for the most in-depth biotech news and analysis. And visit for exclusive, free content.




STEVE USDIN: We're talking about the future of medicine with Dr. Ken Davis.


Dr. Davis, one of the things that you're doing at Mount Sinai that's really fascinating is you have physicians who are doing gene sequencing on embryos, pre-implantation sequencing of embryos that couples might choose which one to implant -- basically, pick which one's going to be their baby. Can you talk about that a little bit?


KEN DAVIS: Well, as a hospital that had a background in Jewish history, we were always interested in Jewish genetic diseases. So lots of our patients would come in for screening of Jewish genetic diseases. Tay Sachs disease and diseases like that.


Well, that's grown because genomics has grown. And now, a number of infertile couples with in vitro fertilization have a number of embryos, and they have to decide which one to implant.


In the past, you would only look and ask, in our case, whether they had any of these horrible Jewish genetic diseases. But now, we can actually screen for many, many more diseases and actually get a health index on each embryo.


So we can ask questions like does that embryo have a BRCA1 gene, which would have a high risk for ovarian cancer and breast cancer. And is that the one you'd rather implant than another embryo that doesn't have the BRCA1 gene.


STEVE USDIN: So you're moving away from things that are fatal diseases that happen early in life, to risk factors for things that might happen to these babies when they grow up.


KEN DAVIS: That's right.


STEVE USDIN: That's a huge thing. How do you have those conversations? And how can anybody possibly make those kind of choices?


KEN DAVIS: We just give people the information. They have to decide. I think more information is better than less information. And women and couples should make a decision about what embryo they want to implant and what are the consequences to the health of that embryo.


STEVE USDIN: What are some of the other things, if you're looking forward to the next 20, 30 years, what are the things that we should be preparing for, thinking about in medicine?


KEN DAVIS: Well, cancer treatment will be revolutionized. I mean we're already doing things that are extraordinary and remarkable.


For instance, right now at Mount Sinai, we will take a patient with a tumor, particularly head and neck tumor. We'll sequence the gene of that tumor, the genome of that tumor, find the mutations. Then put those mutations in a drosophila --


STEVE USDIN: A fruit fly.


KEN DAVIS: A fruit fly. Treat the drosophila to see that we can prevent the drosophila from dying. Then repeat that experiment in a mouse, finding what drugs, from a huge armamentarium of drugs that may be out there for cancer that you might not think one of them would be used for that particular tumor. Identify a drug, and then use that drug in the patient.


We're personalizing medicine for every cancer patient.


STEVE USDIN: And is that a routine thing that everyone who comes through the door gets. And, well, who pays for it.


KEN DAVIS: It's not routine now. It's happening for us in head and neck tumors and some other tumors. I think it will be routine within five years. Right now, insurance companies are not paying for that. Medicare's not paying for that. People are paying for that out of pocket.


STEVE USDIN: So that brings up another issue, which are kind of disparities, which you deal with. You're right on the edge of the Upper East Side. Very affluent people on one side, people in Harlem who aren't affluent on the other side. How do you balance that?


KEN DAVIS: Well, Mount Sinai lives in the juxtaposition of the richest and poorest zip codes in America. And our core value is that we provide the same quality care to everyone. And the way we do that is with $190 million of uncompensated care at the end of each year.


STEVE USDIN: And is that sustainable, so something you can keep doing?


KEN DAVIS: This is not a sustainable business model, and we have to change the way we're doing business, which is part of the reason why we've just become a much larger healthcare system. Because we know if we don't move away from fee-for-service medicine, and move toward more shared savings, capitation, population management, we will not survive with the kind of efficacy that we need.


STEVE USDIN: That's this week's show. I'd like to thank my guest Dr. Ken Davis. Remember to share your thoughts about today's show on Twitter. Join the conversation by using the hashtag #biocenturytv. I'm Steve Usdin. Thanks for watching.