Mark Cuban is onto something. But there’s more to the healthcare story.

On January 9th, Mark Cuban resurrected Blog Maverick with an entry entitled: “A Few Words On Healthcare.” We need more of this. Healthcare conversations can feel so stale sometimes. It’s as if the major stakeholders haven’t updated their talk tracks in decades.

It’s safe to say that Cuban has certifiably “f***-ed” up (his words) the pharmaceutical world with Cost Plus Drugs. Be honest… hasn’t it been fun to watch? The pharmacy benefit managers (PBMs) weren’t expecting this “rude new entrant”, and we are all the better for it. He’s now dipping his toes into the bigger and messier waters of healthcare services, however, and some of his thoughts need to be unpacked.

“Patients go to providers for care. Providers provide that care. Patients get a bill and if they can afford it, they pay that bill. That’s it. The ONLY question in healthcare should be “How should care for people who can’t afford to pay for their care be paid?”

There’s a beauty in the simplicity of this framing, but I fear it is incomplete. For it does not account for the singular and existential challenge of American healthcare: waste.

I wish I were referring merely to the ills of middlemen and pricing games (which Cuban rightfully decries), but the issue runs far deeper. The legendary Brent James has famously proclaimed that at least 50% of all healthcare spending (possibly 65%) is waste. That’s a $3 trillion problem.

This waste falls into three categories. The first is population-level waste: inappropriate or avoidable care. This is the cardiac stent that you’re neighbor never actually needed, or the hip replacement that your father could have avoided. The second is case-level waste: unnecessary variation and avoidable injuries. This is the surgeon who uses expensive implants without superior outcomes, or the one who is a money-loser because of a high complication rate. The third and final is production-level waste, which deals with supply chain and administrative inefficiencies.

Suffice it to say… Cuban is onto something. But there’s more to the healthcare story than disintermediation and price transparency. Because that would only solve a fraction of production-level waste, which itself is only 15% of the problem. The remaining 85% of healthcare waste is case-level and population-level… inefficient and inappropriate care. This is trillions of dollars every year, and no sufficiently ambitious solution can ignore it.

So how does one defeat this 85%? It’s not trivial. You have to change how physicians and hospitals are paid. (Can you hear the swords being unsheathed?)

“Remove insurance companies from the equation. All payments are cash pay. First we will assume that Medicare and Medicaid stays the same. No operational changes.”

This is what Cuban suggests. He’s on the right track, but it’s a bit perfunctory (he’d admit this I’m sure). The unfortunate truth is that you have to fundamentally change not only the form and flow of payments, but also the underlying incentives and structure. Standard Medicare and Medicaid won’t work. You can’t simply pay for every unit of care (fee-for-service). You have to pay multidisciplinary care teams a lump sum to take care of populations of patients with specific conditions. This means wading into condition-based bundled payments, and even population health-based reimbursements.

Why all this messiness? Is the juice even worth the squeeze? Specialists in particular tend to despise the phrase “value-based care”. It’s seen as a codename for a race to the bottom. But the issue is simple: caregivers must be incentivized to achieve maximum outcomes at the lowest cost. This means they must be motivated to coordinate care longitudinally to optimize value at the level of conditions, rather than maximizing their own volume of services.

Is this even practical? Kevin Bozic has pioneered “integrated practice units” (IPU) for musculoskeletal health and piloted novel, condition-based payment models in Austin… but there’s a snag. It’s not cheap. There’s a classic debate at surgical conferences, where Team Bozic heralds the power of IPUs and value-based reimbursement, while Team Yesterday laughs it all off as impractical and delusional.

So what are we to do? It’s fun to critically analyze Cuban’s foray into the broader healthcare world, but what are the answers? Musings are easy… solutions are hard.

What we need is a combination of Amazon and Visa for healthcare. A software-enabled, cloud-based, universal marketplace with transparent outcomes and costs… along with friction-less, immediate payment. It sounds fantastical, I know. But also fantastic. And it’s not an original idea, in fact - Andreessen Horowitz described it in 2022. They said it would become “the biggest company in the world.”

I believe it. We’re in desperate need of a unifying infrastructure for seamless payments and coordinated care pathways. The endangered species of independent, private practice specialists would finally get a lifeline. They could get paid fairly and immediately. And if they wanted to form a network with other providers who complement their expertise, they could form an IPU “in the cloud” and engage in value-based reimbursements. And who would be their willing dance partners?

Self-insured employers. They are now the single biggest payer in American healthcare, and they’re fed up with all the abuses and deceptions. They’re perfectly aligned with physicians and patients, and they want alternatives.

Imagine an “app store” for value-based reimbursement models. Pick your flavor. Imagine a Consumer Reports for specialty care, where outcomes and costs are transparent and risk-adjusted. Imagine a digitally-powered “learning healthcare system” that disseminates best practices across entire patient journeys. The implications for health and wealth would be astronomical.

It’s all possible… we just need someone to build it.