Ed Sullivan, the Beatles and Healthcare Strategy

by Tom Robertson

Executive Director, Vizient Research Institute

From August 30, 1993, to May 20, 2015, David Letterman entertained America in a mid-town Manhattan theater named after Ed Sullivan. Ed Sullivan hosted a television variety show for 23 years, beginning in 1948. The Beatles made their live U.S. debut on the “Ed Sullivan Show” in February 1964. I was not quite eight years old at the time, so the Beatles made less of an impression on me than a far more obscure performer named Erich Brenn. Brenn was a master of an art form dating back to the third century: plate spinning.  

As I stared at the grainy black and white images flickering on our early generation TV, Erich Brenn dashed from one end of the stage to the other, twirling long flexible poles, each with a spinning porcelain plate perched precariously and threatening to fall at any minute. His timing was impeccable. Just as one of the plates began to wobble out of control, he would arrive in the nick of time to save it. The art of keeping eight plates spinning simultaneously has relevance in healthcare strategy. 

I have of late come to question the long-term sustainability of relying on the market to govern the distribution and pricing of healthcare services. America has rightly become increasingly uncomfortable with health disparities—less tolerant of the gap between the haves and the have nots, both patients and providers. Markets by their nature create disparities, they don’t solve for them. To eliminate health disparities, we will eventually need to eliminate the economic disparities for providers associated with treating different groups of patients.  

As long as unit prices paid for services rendered to privately insured patients are markedly higher than prices for the same services provided to government-sponsored patients, even after accounting for disproportionate share (DSH) payments, health systems will feel economic pressure to compete for private sector market share in order to even partially meet the needs of the underserved.  

Public sector prices are too low to eliminate health disparities without creating economic hardship for providers. Price parity—private and public payers paying the same prices—would lower the barriers to eliminating disparities. 

I’m often asked if I am suggesting that providers abandon their current strategies in anticipation of an unpromised future state in which health care is widely considered a common rather than a private good. The answer is an unequivocal “no.” The status quo is a stern master. In order to afford the mission, providers must pursue strategies that deliver adequate margins on today’s playing field. Doing so, however, does not preclude us from preparing for a possible shift in thinking. If price parity came to pass, healthcare strategy could change dramatically. Competition over suburban market share could shift to competition over the historically underserved. Differentiation around carriage trade attributes could give way to differentiation around meeting the markedly different needs (both clinical and socioeconomic) of the traditionally underserved population. 

I have two daughters, both in their mid-thirties and with children of their own. The one thing that I would bet on is that the generations coming behind us will look at things differently. They will be more impatient with health disparities and less accommodating to the traditional financing system with its inherent inequities. As difficult as it may be to imagine our generation changing its views toward healthcare, it’s equally difficult to imagine the next generations not doing so. It would serve providers well to remain nimble. 

Webster defines the verb juggle as follows: to handle or deal with usually several things (such as obligations) at one time to satisfy often competing requirements. The old “Ed Sullivan Show” often had jugglers along with Erich Brenn. Plate spinning may go back to the third century but the earliest known reference to juggling is a drawing on an Egyptian tomb nearly 4,000 years ago. Humans have been multi-tasking for a very long time. 

Whether it’s keeping three balls in the air, eight spinning dinner plates on wobbly sticks or being prepared for what may come in healthcare finance, the key is having your eye on more than one thing at once.