Welcome to the "Lessons from the C-suite" series, featuring Managing Partner Eric Larsen's conversations with the most influential leaders in health care.
In this edition, David Shulkin, United States Secretary of Veterans Affairs (VA), talks with Eric about what the VA can learn from the private sector (and vice versa), his one-of-a-kind transition from the top levels of the Obama administration to the Trump administration, his vision for the VA Choice program, and more.
Editor's note: On March 28, 2018, President Trump announced that he had dismissed Shulkin as VA secretary, tweeting, "I am thankful for David Shulkin's service to our country and to our GREAT VETERANS!"
When David Shulkin and I sat down at Advisory Board's offices on Feb. 9, we had a great deal to discuss: his one-of-a-kind transition from the senior leadership levels of the Obama administration to the Trump administration, his experiences managing the nation's largest health care system, the debate surrounding the VA Choice program, and more.
The Secretary was generous with his time, addressing all of these questions and more. Since then, even more issues have been in the news: renewed efforts in Congress to expand VA Choice, a plan to centralize control of some VA medical centers to rectify management failures, a controversial inspector general report about the Secretary's travel, efforts to collaborate with CMS to counter fraud, and more.
I offered the Secretary the chance to share thoughts on those topics via email, but he decided to let our conversation stand on its own. It's one of the most in-depth CEO interviews in the history of this series, and I hope you'll find it as engaging and informative as I did.
Question: When we last spoke, you were serving as Undersecretary for Veterans Affairs, which is a colossal role in and of itself—$65 billion budget, 165 hospitals, and 1,200 outpatient sites. Now, as Secretary, your purview has increased exponentially: a Cabinet-level position running the second-largest government agency, with 350,000 employees and a $180 billion budget serving 21 million veterans.
Last year, you said veterans' health care is an issue of national security, because if our men and women in uniform are skeptical that we're going to take proper care of them when they come home, then the very premise of a voluntary army comes into question. Fair characterization?
David Shulkin: Yes, very fair. I feel strongly that having an enduring, sustainable, strong VA is essential to national security. With less than 1% of people in this country serving their country on a voluntary basis, so many Americans don't even know people who serve in the military—don't know what they're giving and what they're volunteering for. And if there is that disconnect between those who serve and the general population, I do fear for the security of the country.
I believe the country has to make a fundamental commitment that if people serve, if they do raise their hand, we will be there for them no matter what. That's been the mission of the VA since Lincoln said it was our responsibility to care for those who've borne the battle. We just happen to be the ones fulfilling that mission, 150 years later.
Q: You were the only high-level presidential appointee to transition between the Obama and Trump administrations. I'd be curious to hear your thoughts on this, and how you navigated the shift.
Shulkin: I came into the last administration knowing that I had only 18 months to serve, because political appointees always offer their resignations after an election. There is no room for flexibility in that: 100% offer their resignations, and almost all of those resignations are taken.
I had come to grips that that would be my fate, but there was somewhat of an emptiness in me, because I felt that while I had worked hard and made some progress during those 18 months, I had not fundamentally changed the direction of VA or assured its stability. The job felt incomplete.
When I was given the opportunity to stay on, as surprised as I was, I felt this was my chance to finish that job. Not all of the VA's problems will go away, but I want to use this time to set the VA on a path that ensures everybody appreciates its essential role in our country's security and in honoring our responsibility as citizens.
Q: One notable aspect of your leadership style seems to be an openness, even an assertiveness, about acknowledging areas where the VA has fallen short. That's a countercultural leadership characteristic in general, but it is especially rare here in Washington, D.C., where the instinct for self-preservation is especially well-developed.
I suspect, though, that this is one of the reasons you've been able to successfully navigate two very different presidential administrations. How has that transparency and willingness to acknowledge VA's shortcomings, such as the access issues you've addressed, shaped your tenure?
Shulkin: The idea of hiding problems is counterintuitive to me; I don't know how to go about solving problems without talking about them. Then you can legitimately ask people for help, ideas, and solutions.
I have really embraced the belief that transparency is a powerful tool in improvement, and that's the reason why we have published all of our wait times. We're the only health system that posts its wait times. We also post our patient satisfaction scores, our veteran satisfaction scores, our disciplinary actions, and we'll soon release our opioid prescribing by facility. There is no other system that does that either.
And one of the first things that I did as Secretary was to identify all of the significant problems in a list of 13 risk areas. It turns out that those 13 risk areas have been problems within VA for decades. They aren't partisan issues; you can't blame Democrats or Republicans for them.
I will continue to talk about the problems. Hopefully, if we make progress, that will be reported. If we're not making progress, that will put additional spotlights on the areas where we continue to struggle.
Q: On the one hand, you have immense personal influence and can set the VA's agenda. On the other hand, the VA is an enormous bureaucracy, with an inheritance that dates back to the Civil War. How do you navigate this natural tension as you seek to improve care?
Shulkin: It's hard. I'm impatient. Nothing happens quickly or boldly enough for me. It's my entrepreneurial DNA; I want to see the department move like a startup. But the VA is generally a risk-averse organization, and it relies on a process that many would call concurrence: to get change done, you have to achieve consensus among large numbers of people who don't have shared interests.
As a result, everything that the VA does is designed to prevent change from happening. So many of the strategies that I've employed as Secretary have already taken into account the forces that would bring me back to status quo. One example I can talk about is VA's EHR.
Q: You're referring to the debate over how VA and the Department of Defense (DOD) can make their EHR systems more interoperable.
(Editor's note: Last year, VA announced that it would replace its VistA EHR system with one from Cerner. The VA and DOD were expected to have separate Cerner-provided EHR systems, but they would be hosted on a similar platform and fully interoperable. The project is currently on hold.)
Shulkin: Yes. Instead of continuing this 17-year debate about whether to fix VistA or buy an off-the-shelf option, I launched a Determination of Findings process involving five other people. That process had never been done in VA, and it had only been used in government a few times before. But I felt comfortable using the process, which went around the usual contracting procedure, because it was in the public safety interest of veterans. I could not afford to have the usual forces that keep us in status quo when veterans' safety was in question.
Of course, when I announced the decision, it was immediately challenged in court. But the judge sided with us. And even though many forces have come out against us since then, I think VA is now on the very positive route toward discussions about interoperability and change management. Because your EHR system is really about how you want to practice medicine, how you standardize your practices, and how you manage change.
Q: To go a bit deeper into this, I believe the VA had already spent more than $1 billion to map the DOD's EHR and VistA, but then discovered would cost you $19 billion to finish the job yourself—so you picked Cerner to do it instead. But the project is suspended at the moment. Is there an update on that?
Shulkin: When I announced that we picked Cerner, I don't think I was clear enough about our objectives. I said the decision would fundamentally achieve two things: One, we would solve the interoperability issue with DOD, and two, that we would take 130 separate VistA systems and put them into a single instance. If those were my only two objectives, I would already have signed this contract. But I have a third objective: One-third of my patients get their care outside VA, and I don't have a system that can seamlessly track them when they go out.
So at the end of the day, I can't accept the status quo that the industry offers today, which is a system that doesn't talk to the other systems. If business as usual goes on, VA will end up with a Cerner system that talks to other Cerner clients. That's not what VA needs. VA needs something that doesn't currently exist: a truly interoperable system that will interact with Cerner and with Cerner's competitors too. This isn't a technical issue—this is a business proprietary issue, and I'm not going to allow the country's veterans to fall into that category.
Now, I'm not looking to erase the intellectual property of EHR companies. I am looking for a secure firewall solution that will eliminate that problem for veterans. And I will not sign a contract until I am convinced that we can do that. I've brought in experts on the issue, and we're having conversations about how to achieve the third part of that vision. Because if we can do this, it will be not only important for VA and veterans, but for all Americans.
Q: You mentioned that one-third of VA patients currently receive their care outside VA already, and some advocates inside and outside the VA are pushing to go further—even privatizing the VA. How do you balance wanting to adopt best practices from the private sector with preserving what is special and irreplaceable about the VA?
Shulkin: I'm an advocate for looking to the private sector for ideas and innovation. But I don't believe that it's in the best interests of the country, or of veterans, to privatize the VA. I do believe that the private sector has already dealt with—or is at least well on the way to dealing with—many of the issues that VA faces, so we can learn from that.
And frankly, that's what my background is. I'm taking my understanding and strength, very much from the private sector, and applying those practices to the VA. It's figuring out how to protect the things in VA that are uniquely working well, because it is a public service organization, while also ridding the organization of practices that would have been discarded in the private sector a long time ago.
Q: Collaboration with the private sector has been an abiding theme for you. When you think about collaborating with the private sector, what do you need from them—and where do you expect the VA to still serve as an innovator?
Shulkin: I have this concept of a high-performing network that combines VA's foundational services with the best of the private sector in areas where VA is not as nimble. I want the best of both worlds for our veterans.
Our foundational services, those services that VA needs to be best-in-class at to care for our veterans, include poly trauma, prosthetics and orthotics, PTSD care, blind rehabilitation. It's also primary care—an area where VA helmed innovation with the Patient Aligned Care Teams (PACT), a model that people in the private sector call medical homes—and integrated mental health care.
Then, from the private sector, our veterans need the best available organized systems of care, improvements in access and technology, and performance improvement.
Q: So let's talk more about your partnerships with the private sector. VA Choice originally launched in 2014, with a $10 billion allocation followed by additional investments, and now in 2018 one-third of VA visits now occur in the private sector. What's your assessment on where VA Choice is today? What would you like to see in the future?
Shulkin: While the Choice program has had a significant and positive impact, we have learned a lot in the last three years about what has not worked well. The program is administratively complex, expensive to run, and has created some barriers between veterans and the help they need.
I would describe the problem like this: Congress used administrative rules to govern the system, as opposed to health-based considerations. You need to live at least 40 miles away from a VA facility—and that's any VA facility, not necessarily the one that provides the care you need—to qualify for VA Choice, or you have to wait at least 30 days for your care. As a clinician, neither of those things has anything to do with a patient's health.
So I'm seeking a system that is designed as a clinical care system, not an administrative care system. We're asking Congress to eliminate the 40-30 rule and replace it with a system that makes sense for all veterans based on their clinical need.
My second objective for the Choice program is to move toward consumer-driven health care. Patient choice is the fundamental change agent that will fix VA and set it on a course towards sustainable improvement. When you have a system where your customers don't have a choice—where they get only what you have now—that system is not service-oriented, and it's not going to consistently deliver best outcomes. So the only sustainable way of fixing VA is to open it up more to competition.
Q: I'd also like to talk about your approach to measuring the performance of the VA's 168 medical centers. You've made a remarkable shift in deciding that the VA won't just be compared to other VA facilities, but against all facilities—civilian as well. What was behind that shift?
Shulkin: Veterans in Detroit aren't picking between the Detroit VA, or the Tampa VA, or the San Diego VA. They're picking among the Detroit VA, Henry Ford, the University of Michigan, or some other local provider. And in my proposal for VA Choice, which is still waiting on Congress' approval, I've proposed that a veteran should automatically be eligible for Choice if he or she is in a hospital that is performing below its local competitors.
If I were running a VA medical center in an area where I was performing below average, and I knew that my veterans could go to a better-performing facility, that would be a pretty strong motivator. That's how competition can increase performance and motivation. Ultimately, I don't think that underperforming VA hospitals will automatically lose all their customers. I think the system will simply give those hospitals the clear mission that they have to improve, while allowing them the time to do it. It's another tool VA can use to be as nimble as the private sector.
Q: Let's pivot to an area of real innovation for the VA: how you've addressed social determinants of health, especially chronic homelessness. Some remarkable numbers here: VA has housed 480,000 people—veterans and their families—since 2010. And in 30 states—60 markets—the VA has essentially eliminated veteran homelessness. What has your experience been addressing these issues? Are there lessons for private-sector providers as they take on more delegated risk?
Shulkin: To me, social determinants were the biggest difference between the VA and the private sector. The very first patient I saw at the Manhattan VA was a 19- or 20-year-old veteran, just discharged a few months earlier from the Army, and he presented with multiple, complex medical symptoms. When I asked him about his situation, he admitted that he was homeless—he'd been living in Central Park for the last five or six months. Fortunately, VA has the "No Wrong Door" program, so we were able to arrange his housing and help him go out and look for work and get the type of care and wellbeing that he deserves.
Now, if I were in the private sector, I would not necessarily have known what to do. And even though I might have found a social worker and we might have done some referrals, I am not confident we would have had that outcome.
Another moment that stuck with me was at our winter sport clinic, where we took 400 veterans out of their wheelchairs to go skiing down the mountains. As I spent time with them, they told me stories how even a few months ago, they had been suicidal, and how regaining this sense of competition, joy, and being active again—it had changed their lives.
As I continued to work in VA, I began to understand that my work as a doctor was actually a very limited aspect of helping people achieve their life goals. I could take out a prescription pad and I could order MRIs, and order referrals to specialists, but the things that really made a difference to people's lives—finding the homeless veteran a safe place to live, providing a person struggling with feeling happy some activity and purpose in skiing—those things that I couldn't address in the private sector, they were now available to me in this holistic approach towards wellbeing.
Q: Many private-sector health system CEOs are trying to navigate that same question: how to provide social services and find subsidies to support the needed investment, whether through Medicaid or complex Medicare risk contracts. What guidance might you have for your civilian counterparts?
Shulkin: I'd like to spotlight two other areas where VA has helmed critical innovations. First, I absolutely believe that every health system that wants to contribute to the community should look at what VA has done with suicide prevention coordinators.
Every hospital should have suicide prevention coordinators. Think about it: What do you do when your patients are in crisis? As a doctor in the private sector, that used to be my biggest challenge. If a patient was in crisis, you could send him or her to the ED, but those are always overcrowded; or find a psychiatric ED, but it's nearly impossible to quickly locate someone who can help them.
But VA has hundreds of suicide prevention coordinators who do miraculous things, and I'd like to see more in the private sector look into that, because suicide—while a significant issue for veterans—is also a public health crisis in the rest of health care. And frankly, it's a largely preventable crisis.
Q: I remember when you were Undersecretary, you convened a group to address veteran suicides and asked how long it was going to take to launch the program. When you were told 10 months you did the math and replied with, "That means 6,000 more will die." And with that call to action, you were able to launch the program in 30 days.
Shulkin: Yes, exactly. While it's not as easy to address as, say, a flu shot, there are a lot of effective interventions. For example, at VA, we're using predictive analytics. We have a program called "Reach Vet," through which we've reached out to 30,000 veterans who are at high risk, connecting with them proactively to see how they're doing and how we can help. And for the first time, we've been able to show that we've reduced mortality among those 30,000 individuals. Now, it's all-cause mortality, but that's an inherent limitation in working with suicide prevention.
Q: You mentioned two innovations here: suicide prevention, and what else?
Shulkin: If our top clinical priority is suicide prevention, our top aspirational moonshot is our "Choose Home Program." We want to deliver on the promise—currently aspirational—that no veterans should have to leave their homes at the end of life if they choose to stay in their homes.
Today, when we look at our modeling, we're going have to build so many nursing homes, but when I think about our veterans, many don't want to move into a nursing home. So, given VA's innovation in telehealth services—with tele-remote monitoring, with our ability to deliver drugs and durable medical equipment, our home-based primary care and specialty visit programs, our caregiver support—we have the ability to put this together in way that enables veterans to remain in their homes, and that's part of the social determinants of care. If we can make that promise to veterans, that they don't have to leave their homes if they don't want to, I think that would be huge.
Q: VA's work on integrated mental health care is also pioneering, especially in light of your recent announcement that as of March 9, all service members who leave the military will receive a 100% mental health benefit. Currently, only 40% of active service members who transition out of the military receive a VA benefit.
Shulkin: Yes, we're making progress here. When you walk into a VA exam room as a provider, you can always access mental health care services for your patient immediately, either by telehealth options—the monitor or tablet in the room—or simply by walking down the hallway and finding a colleague in Behavioral Health. That kind of access is unusual in the private sector. So VA has always been at the helm of integrated mental health care, and the 100% mental health benefit was a step we needed to take. It's for everyone currently in a combat zone or who already identified as service-connected, and we're going to do it by collaborating with the DOD to implement a system called "The Whole Health System of Care."
Under the system, which relies on both peer and professional counselors, we're going to orient all new patients to a way of understanding how to set their life goals and objectives and how we can help them get there. We're implementing group session models, where we're teaching veterans about the skills they need for a successful transition. Often, that involves addressing things that traditionally have been not seen as medical, such as mindfulness, yoga, creative arts, and adaptive sports, such as skiing, surfing, or golfing. It's really getting people back to feeling that they're contributing and being active, and getting them additional help if needed.
Q: When it comes to veterans' care, how do you define satisfaction?
Shulkin: Our overall stock price, our Dow Jones Industrial Index, is the veterans' trust. That is the single currency I focus on. In 2014, that number was 46%. Today, that number is 70%. So we've seen our stock price going up. But if you're at 70% and you're satisfied, there's something wrong with your evaluation system. So we still have a long way to go, because 30% of my customer base doesn't think that we're trustworthy.
Q: I'm curious how you're measuring the 70%, particularly because VA operates on two levels: You're uniquely positioned as an insurer, because you've got a natural population you're managing, but you're also running an operating system. How do you balance those metrics?
Shulkin: We track a cohort of 14,000 veterans, and we're constantly asking them about their assessment of trust in VA. And we are moving toward, and implementing now, an immediate feedback system with a much larger group.
That said, our metric system has lagged behind the Choice concept. Our metric system measures the VA system, and then there's a big gulf for information about what happens when a veteran goes outside. Our metric system needs to be able to catch up with that. This is part of our problem with being able to track the experience when a patient goes in and out of the VA. So when our health services researchers do the studies, they still are comparing the veterans' experience in the VA, versus the veterans' experience when they go outside the VA.
Q: What about the correlation between employee satisfaction and patient satisfaction? Are you looking at the clinician feedback as well?
Shulkin: I am convinced this correlation between employee and patient satisfaction is almost identical, and if you don't start with having engaged, happy employees, you are not going to impact the patient experience. In fact, employee engagement was one of my five priorities as Undersecretary.
Having said that, we measure patient satisfaction more regularly for the sake of transparency. It's is easier for us to report on that measure. In comparison, our employee engagement scores are only done once a year in a federal survey. But if I had widespread, more continuous employee engagement scores, I'd be fine using either one. They track almost identically.
Q: I've heard you tell the story that the medical records for the Civil War were so voluminous that they were physically wrapped in red tape—to which you quipped, "You see? VA invented red tape."
That said, I know you're impatient to cut through bureaucracy. We talked about your five priority areas in our last interview, when you were Undersecretary. At the time, you were focused on wait times and access problems, employee satisfaction, sharin best practices across the system, collaborating with the private sector, and regaining the trust of the American public. Have those priorities changed in your new role?
Shulkin: When I became Secretary, I also picked five priorities. All but one—reorganizing VA itself—overlap. This was deliberate.
While I was serving as Undersecretary, everyone inside had asked me to reorganize, to restructure, to give them more power, to implement their preferred agendas. But I told the organization—knowing I had 18 months, knowing it was an organization in crisis, and knowing that I had a mandate to fix wait times—that I wasn't going to focus on anything else. I told them not to bother coming to talk to me about reorganization, because it will suck the energy. We will end up focusing internally, and we need to focus externally. We need to make sure that veterans aren't waiting for care.
But once I became Secretary, that was the one thing I changed. I said, ""Look, now I'm in the position to fix the the systemic issues that helped create the problems that we have. Now I'm embarking on the modernization of the organization, where we give more delegated decision-making and authority out into the field.""
Q: What would constitute a home run for you for as long as you serve in your current role?
Shulkin: You know Eric, I don't think I'm a ""home run"" person. I'm not looking for a singular event so much as getting VA to a point where veterans say, ""We feel really good about where this department is in terms of meeting our needs, and that we know that it's there to have our back.""
But I think we've got a long way to go before people really feel that we're advocating for them, and that's at least in part—I believe—because of benefits. I believe that VA's benefits situation has made it an adversarial organization to its customers. VA is in the position of saying ""yes"" or ""no"" to a veteran's benefits. That's the wrong position for VA to be in. We need to be an organization that is helping veterans achieve their life goals, and helping them achieve wellbeing—not a ""yes"" or ""no"" type organization.
I also want the American public to understand that VA is an organization that is not only essential, but on a path that it is fulfilling its mission. The most motivating aspect of my job is the knowledge that the American public wants us to get this right. This is not a partisan issue: Everybody I meet, regardless of political affiliation, wants us to succeed and wants to help. So I want people to have confidence that we are doing the right thing for the country and for our veterans. To me, these are sort of higher level home runs.
Q: Given your unique vantage point, having been both in the private sector as an entrepreneur and a public servant serving in the cabinet, what are you most grateful for?
Shulkin: I am truly grateful for this opportunity. I am not the natural person for this role. I'm not a veteran. I'm not political. I wasn't part of anybody's campaign, and yet people agreed to give me this job. I feel grateful for that, and I want to fulfill the expectations that people had by giving me this opportunity.
And when I look back over my career, while I have not had experience in government, my experiences as an entrepreneur, a practicing physician, a health care executive, a health services researcher, and an educator have given me skills that I use every day in this job, skills that help me do this job better. I'm grateful for that experience.
The one thing that you can't go out and accelerate is life's experiences, and the mistakes that you've made, and the successes that you've had. This job requires the ability to look back and to tap in each of those experiences, because it requires so many different skills to address the issues you encounter, whether it's cemeteries, or benefits, or health, or politics, or operational issues, or research-based concerns, or strategy-focused problems. I don't think I would have been prepared earlier in my career to be in this position.
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