WEBVTT - Fed Doesn't Have the Adequate Tools, Koesterich Says 0:00:06.320 --> 0:00:12.719 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:12.800 --> 0:00:16.239 with David Gura. Daily we bring you insight from the 0:00:16.239 --> 0:00:21.640 best of economics, finance, investment, and international relations. Find Bloomberg 0:00:21.720 --> 0:00:27.000 Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 0:00:27.320 --> 0:00:34.320 on the Bloomberg. Our first guess Russ Castrick, who joins 0:00:34.360 --> 0:00:36.320 us set now from our studios in New Yorker Bloomberg 0:00:36.360 --> 0:00:38.880 and living three at studios. He is at portfolio manager 0:00:38.880 --> 0:00:41.560 for black Rocks Global Allocation. Russ, great to speak with 0:00:41.560 --> 0:00:43.360 you once again. Sorry I couldn't be there in person. 0:00:43.479 --> 0:00:45.120 Let me ask you first of all, just what you're 0:00:45.120 --> 0:00:47.639 gonna be listening for tomorrow? As I mentioned the FED 0:00:47.720 --> 0:00:51.159 kicking off this two day meeting today, I expect we'll 0:00:51.200 --> 0:00:53.280 get some commentary on on the balance sheet. What are 0:00:53.320 --> 0:00:55.480 you gonna be listening for? When FED chere? Jannyellen takes 0:00:55.520 --> 0:00:58.080 to the podium after that meeting, concludes tomorrow, Well, good morning. 0:00:58.080 --> 0:00:59.600 I think there are a couple of things. Obviously, the 0:00:59.640 --> 0:01:01.800 balance she's gonna be front and center. I think the 0:01:01.880 --> 0:01:05.839 other is we had up until August a string of 0:01:05.920 --> 0:01:09.720 consistently weak inflation reports that started to shift in August 0:01:10.280 --> 0:01:13.800 thanks to some some hike in gasoline and energy prices. 0:01:14.560 --> 0:01:16.720 What is the Fed's view of inflation. Are they still 0:01:16.720 --> 0:01:19.640 concerned about the disappointments earlier in the year, or do 0:01:19.680 --> 0:01:22.600 they believe those are transitory and therefore a December hike 0:01:22.720 --> 0:01:26.560 is more likely if we see indications that that that 0:01:26.680 --> 0:01:29.720 inflation area had wins. Our transitory confirmed something that Janet 0:01:29.800 --> 0:01:31.720 Yellen said now many months ago, she walked it back 0:01:31.760 --> 0:01:34.080 a little bit when she was speaking and testifying on 0:01:34.080 --> 0:01:36.800 on Capitol Hill. Has her initial assessment of that been 0:01:36.800 --> 0:01:38.560 confirmed by the data that we've seen here over these 0:01:38.640 --> 0:01:41.280 last few months. Well, certainly the August print was stronger 0:01:41.280 --> 0:01:43.400 than we've seen. But I think there is a legitimate 0:01:43.480 --> 0:01:46.959 question here because many times we talk about the transitory 0:01:47.040 --> 0:01:50.120 nature of the data. We cite particular instances, whether it's 0:01:50.440 --> 0:01:55.000 hotel accommodations or data charges going down, and the fact is, well, 0:01:55.000 --> 0:01:58.080 those might be one off events. You could also view 0:01:58.120 --> 0:02:02.960 those through the prism a secular downward UH price pressure 0:02:02.960 --> 0:02:07.000 in many industries and telecom in hotels, and that's something 0:02:07.000 --> 0:02:10.040 that that may continue, and perhaps the inflation numbers are 0:02:10.040 --> 0:02:13.919 not quite as transitory as we think we're focusing here 0:02:13.919 --> 0:02:16.080 on inflation. I think it's safe to say that, uh, 0:02:16.360 --> 0:02:18.639 since since these last few meetings, we've been speaking less 0:02:18.639 --> 0:02:20.560 about the labor market. When you when you look at 0:02:20.560 --> 0:02:22.800 the US labor market today, the health of it, how 0:02:22.880 --> 0:02:24.400 much of a concern isn't Do you think that we've 0:02:24.400 --> 0:02:26.320 been a bit neglectful here not talking more about the 0:02:26.480 --> 0:02:29.160 state of the labor economy, focusing so much on inflation. Well, 0:02:29.200 --> 0:02:30.800 you know, the funny thing is, the labor market has 0:02:30.840 --> 0:02:33.520 been so steady, uh in some ways, you know that 0:02:33.600 --> 0:02:35.919 the CPI print has become what the non farm payroll 0:02:36.000 --> 0:02:38.840 number used to be. I think what's remarkab about the 0:02:38.919 --> 0:02:42.440 labor market is not the consistency the job gains. It's 0:02:42.480 --> 0:02:46.080 the fact that we're creating jobs at a faster pace 0:02:46.240 --> 0:02:49.920 than than to to keep a neutral unemployment rate, and 0:02:50.000 --> 0:02:52.680 yet wages remain stuck at around two and a half percent. 0:02:53.160 --> 0:02:54.920 And that, to me is the big conundrum. And it 0:02:54.960 --> 0:02:57.600 ties back to this inflation argument. When are we going 0:02:57.639 --> 0:02:59.720 to start to see will we start to see that 0:02:59.760 --> 0:03:03.760 for aditional relationship the so called Phillips curve between the 0:03:03.840 --> 0:03:08.160 labor market and inflation. So far, it just hasn't manifested 0:03:08.440 --> 0:03:11.919 the way economic textbooks say it should. So that's the question, 0:03:11.960 --> 0:03:13.560 as you've been chewing this over, are you Are you 0:03:13.600 --> 0:03:15.880 any closer to, if not an answer a theory on 0:03:15.919 --> 0:03:18.320 why that's the case. Well, I think the theory is 0:03:18.360 --> 0:03:20.360 that there has been some things that have changed, and 0:03:20.400 --> 0:03:22.320 it's not as if the laws of economics have been 0:03:22.320 --> 0:03:24.840 repealed at some point. I think if the labor market 0:03:24.880 --> 0:03:28.440 remains tied enough, you will nudge wages higher. But clearly 0:03:28.480 --> 0:03:31.320 some of the mechanisms have changed, and I would cite, 0:03:31.720 --> 0:03:35.200 uh the role of globalization, I would say technology. I'd 0:03:35.200 --> 0:03:38.880 also probably cite the decline in private sector union membership 0:03:39.120 --> 0:03:42.280 as severing one of the links between cost pressures and 0:03:42.280 --> 0:03:46.440 wages that existed up more clearly thirty or forty years ago. 0:03:46.600 --> 0:03:49.440 Broadcaster with a set from Blackpark, Tom Keane wandering you 0:03:49.480 --> 0:03:51.520 walk to work today? Tom? How did you get in 0:03:51.560 --> 0:03:55.080 with the the traffic? I walked to work, of course, Key. 0:03:55.120 --> 0:03:57.839 It was so busy and the security was so There's 0:03:57.880 --> 0:04:00.320 a little knoll on Central Park where the risk you 0:04:00.360 --> 0:04:02.720 can get down to pick me up. They usually do 0:04:02.840 --> 0:04:06.280 that at three SHO couldn't even do it today even 0:04:06.280 --> 0:04:08.280 know It's like where Nathan Hale was before he got 0:04:08.280 --> 0:04:10.880 over the third Avenue. It was tragically killed and it 0:04:10.920 --> 0:04:13.840 was like a revolution kind of thank good morning, David. 0:04:13.840 --> 0:04:17.080 Gr Lots lots going on here in New York. Terrific 0:04:17.120 --> 0:04:19.719 news flow. We'll get to that through the hour. Good 0:04:19.720 --> 0:04:23.200 morning everyone, coast to coast and worldwide as well. Russ 0:04:23.240 --> 0:04:27.200 consters with us and just brilliant ideas for us over 0:04:27.240 --> 0:04:29.839 the last hour and a half with you. Let me 0:04:29.920 --> 0:04:33.000 tie in your work with one Jeffrey Rosenberg, he of 0:04:33.080 --> 0:04:35.840 Carnegie mel and Mr Rosenberger black Rock will join us 0:04:36.120 --> 0:04:40.520 on our FED show this tomorrow. Are you strategizing in 0:04:40.760 --> 0:04:46.680 a one unit one economy Gaussian probability world, a Bell 0:04:46.800 --> 0:04:51.479 curve of one America? Or are we so split in 0:04:51.560 --> 0:04:55.039 our wealth, in our inequality, in the amount of equity? 0:04:55.520 --> 0:04:59.160 Were we so split that it's not only two America's politically, 0:04:59.520 --> 0:05:04.120 but it's who America's financially. For black Rock, well, certainly 0:05:04.120 --> 0:05:06.120 the economy looks different, and I think you're asking a 0:05:06.200 --> 0:05:09.000 very legitimate question. You We spoke back on on the 0:05:09.040 --> 0:05:12.279 air a few minutes ago about the wealth effect. Now 0:05:12.360 --> 0:05:15.320 the wealth effect goes exactly to your question. We've seen 0:05:15.320 --> 0:05:19.720 this enormous surgeon wealth household wealth up fifty in about 0:05:19.760 --> 0:05:23.000 six years. That is very significant for one part of 0:05:23.000 --> 0:05:26.800 the country. It's almost irrelevant for another part, particularly to 0:05:26.839 --> 0:05:30.440 the extent that much of those wealth games came through 0:05:30.480 --> 0:05:33.480 the stock market, whereas you will know, many Americans simply 0:05:33.520 --> 0:05:35.839 don't participate. And I want to really emphasize, folks, this 0:05:35.920 --> 0:05:38.320 is something David and I've talked about, which is it's 0:05:38.360 --> 0:05:41.960 not East coast, West coast anymore, or you know Nashville 0:05:42.040 --> 0:05:45.480 saying they're the third coast. It's about in every region. 0:05:45.800 --> 0:05:48.600 David helped me with the Carolinas here. I mean in 0:05:48.640 --> 0:05:52.719 every region, there's a city here, a city there that's booming. 0:05:52.880 --> 0:05:56.080 Is that right, David Caroline, you mentioned North Carolina where 0:05:56.080 --> 0:05:57.640 I'm from. Of course, a lot of that seems to 0:05:57.680 --> 0:06:01.040 center around places where you have us tuitions of higher education. 0:06:01.040 --> 0:06:03.159 You've got universities and colleges, and that seems to to 0:06:03.200 --> 0:06:05.640 make a difference. And you see a lot of effort, 0:06:05.680 --> 0:06:08.279 particularly in western North Carolina, central and western North Carolina, 0:06:08.320 --> 0:06:11.040 to to kick start communities that had relied on furniture 0:06:11.080 --> 0:06:12.800 other forms of manufacturing. And then do we have a 0:06:12.880 --> 0:06:15.920 fed dealing with that Russ and then that lead us 0:06:15.960 --> 0:06:19.320 to bubbles. You know, Steve roach X Morgan Stanley now 0:06:19.360 --> 0:06:23.839 at Yale University. Uh lad the charge on bubble analysis? 0:06:24.360 --> 0:06:28.080 Are we bubbly? Are we bubblicious? Well? I think there's 0:06:28.040 --> 0:06:29.479 a couple of things. I mean, first of all, on 0:06:29.520 --> 0:06:31.600 the FED. In fairness to the FED, people have leveled 0:06:31.600 --> 0:06:34.640 a lot of criticism at them. The FED really doesn't 0:06:34.680 --> 0:06:37.760 have the tool set to adequately deal with some of 0:06:37.760 --> 0:06:40.200 the issues we're talking about. You know, rates are very 0:06:40.200 --> 0:06:43.200 blunt instrument, and I'm not sure that the ideal mechanism 0:06:43.520 --> 0:06:46.920 to tackle inequality. Uh. In terms of bubbles, you know, 0:06:47.920 --> 0:06:50.400 I don't think we're necessarily an equity bubble. What I 0:06:50.440 --> 0:06:53.279 do believe is that we're in this unusual set of 0:06:53.320 --> 0:06:57.119 circumstances where stocks and bonds are expensive at the same time. 0:06:57.560 --> 0:07:00.320 We haven't seen that, at least to this extent, in 0:07:00.360 --> 0:07:04.280 many decades. Let me ask you just about the prospect 0:07:04.279 --> 0:07:06.560 of change at the fedizer If we've talked about this 0:07:06.720 --> 0:07:09.679 a little bit this week and the week before, of course, 0:07:09.760 --> 0:07:12.200 fights chairs stand Fisher announcing his resignation effective in a 0:07:12.200 --> 0:07:14.320 couple of weeks at time. Who knows what's going to 0:07:14.360 --> 0:07:16.440 happen to the FED chair. There are other vacancies on 0:07:16.480 --> 0:07:19.800 the FED as well. How what transformative is this moment 0:07:19.840 --> 0:07:23.760 for the FED? You know, it's it's a great question 0:07:23.800 --> 0:07:25.560 because we talked about the FED, we talked about the 0:07:25.600 --> 0:07:29.080 fans reaction function. But obviously the FED is an organic 0:07:29.120 --> 0:07:32.640 institution and it will change as its members change, Which 0:07:32.720 --> 0:07:34.680 raises the question, what is the FED gonna look like 0:07:34.680 --> 0:07:37.240 in a year? Uh? You know, my my own view 0:07:37.320 --> 0:07:39.840 is I don't believe we're going to see a significant 0:07:39.880 --> 0:07:42.960 shift in policy, uh, given some of the comments from 0:07:42.960 --> 0:07:45.960 the administration, given some of the views they've expressed on 0:07:46.000 --> 0:07:49.600 the dollar, I would personally be surprised if we saw 0:07:49.720 --> 0:07:53.920 many of the open positions filled by UH economists or 0:07:54.040 --> 0:07:58.960 or or others that have a reputation as being fairly hawkish. 0:07:59.120 --> 0:08:01.080 Do you think we're to see more business people? In 0:08:01.080 --> 0:08:03.560 other words, is the day of the FED stacked with 0:08:03.560 --> 0:08:06.400 with PhD economists coming to an end? Well, I don't 0:08:06.400 --> 0:08:08.600 think it's coming to an end, but I certainly think 0:08:08.640 --> 0:08:11.720 you will see more business people. There's been that Tennessee 0:08:11.720 --> 0:08:15.160 already with the administration up and again that's not necessarily 0:08:15.160 --> 0:08:18.120 a bad thing. I mean certainly the economy is changing 0:08:18.160 --> 0:08:21.320 in ways that are not fully captured by textbooks and 0:08:21.320 --> 0:08:25.280 getting some of that granular, more tactile experience. I don't 0:08:25.280 --> 0:08:27.920 think that would be bad. And Browing Russ Costers, thank 0:08:27.960 --> 0:08:30.640 you so much for a perspective with black Rock with 0:08:30.760 --> 0:08:46.760 their strategy and sset allocation as well. David Burrick here 0:08:46.800 --> 0:08:48.880 in Washington, d C. And the Ronald Reagan Building for 0:08:48.880 --> 0:08:51.760 a Bloomberg Live event on the future of healthcare, Unlocking 0:08:51.800 --> 0:08:54.480 and supporting value. Tom Keane in New York and our 0:08:54.480 --> 0:08:56.600 Bloombergo eleven three oh studios, and I'm joined by Dr 0:08:56.640 --> 0:08:58.959 Toby Constate with the CEO of the Cleveland Clinic. I'll 0:08:58.960 --> 0:09:00.520 be speaking with him a little bit late or on 0:09:00.559 --> 0:09:02.840 a panel with three other CEOs, the head of American 0:09:02.880 --> 0:09:05.400 Cancer Society, the head of Visor, and the head of 0:09:05.440 --> 0:09:07.960 Walgreen's Boots Alliance as well, and we're gonna be talking 0:09:08.000 --> 0:09:11.200 about value based healthcare. I told you, what is it, 0:09:11.400 --> 0:09:13.319 uh exactly? Help me do my homework here head to 0:09:13.440 --> 0:09:16.080 the panel. This is the new watchword. We're hearing this 0:09:16.160 --> 0:09:18.920 a lot across the healthcare spectrum. What is it exactly? Well, 0:09:19.280 --> 0:09:21.880 currently and most places are being paid on the basis 0:09:21.920 --> 0:09:27.360 of uh, an individual procedure or treatment. And what we're 0:09:27.360 --> 0:09:29.719 really looking at is beginning to treat people on the 0:09:29.760 --> 0:09:33.040 basis of the outcomes and that and the idea is 0:09:33.080 --> 0:09:35.000 to keep people from getting sick, keep them out of 0:09:35.040 --> 0:09:38.480 the hospital, and we'll be paid on the basis of 0:09:39.120 --> 0:09:42.240 maintaining their health. And so the healthy you are, the 0:09:42.280 --> 0:09:44.480 better off it will be for us. And uh so 0:09:44.559 --> 0:09:48.040 the objectives aligned with the patients. You say we uh, 0:09:48.040 --> 0:09:50.079 and I wonder what we means in this context. I'll 0:09:50.080 --> 0:09:52.000 be talking with you you run a big, big hospital, 0:09:52.200 --> 0:09:53.679 big medical center, and be talking to the head of 0:09:53.679 --> 0:09:57.160 the pharmaceutical company Walgreens Boots Alliance in the American Cancer scize. Well, 0:09:57.200 --> 0:09:59.320 are all the parties together working on this. Who's who's 0:09:59.360 --> 0:10:01.480 taking the league when it comes to this transition. Well, 0:10:01.520 --> 0:10:03.959 the risk are really going to be on the providers. Uh. 0:10:04.000 --> 0:10:07.120 You know, we will be paid a certain amount per months, 0:10:07.160 --> 0:10:10.800 remember per months to look after patients. Uh, and we 0:10:10.840 --> 0:10:14.360 will be responsible for all of their care. Uh. And 0:10:14.440 --> 0:10:17.120 so the really the providers, I want to take the 0:10:17.240 --> 0:10:21.040 risk and the WIE as the providers, what's the risk exactly? 0:10:21.120 --> 0:10:22.920 It sounds at face like this makes a lot of 0:10:22.960 --> 0:10:25.160 sense that that you should be paying for something that works, 0:10:25.640 --> 0:10:27.320 you should be paying for things that are bundled, paid 0:10:27.320 --> 0:10:29.280 for the whole the whole day. What's what's the risk 0:10:29.320 --> 0:10:31.240 that you're taking on with this transition. Well, the risk 0:10:31.360 --> 0:10:35.360 is UH twofold. First of all, Currently there's an upside risk. 0:10:35.440 --> 0:10:38.520 If we do better, we get to share in the 0:10:39.040 --> 0:10:42.920 UH in the difference if we then eventually it will 0:10:42.960 --> 0:10:45.360 be downside risk too. And if we don't do is 0:10:45.400 --> 0:10:48.160 well and cost less for taking care of patients, we're 0:10:48.160 --> 0:10:50.319 going to be responsible for that and we will lose 0:10:50.360 --> 0:10:53.680 money on it. So there's incentives both up and down. 0:10:54.120 --> 0:10:56.160 Where did this this idea come from? Does it date 0:10:56.200 --> 0:10:58.120 back to Michael Porter at Harvard Business School who had 0:10:58.160 --> 0:11:00.520 this revolutionary idea? Why are we doing it at this 0:11:00.559 --> 0:11:02.680 point in time? Is it's something catalyzed by the Affordable 0:11:02.679 --> 0:11:05.280 Care Act? Well, it actually dates way back before that. 0:11:05.640 --> 0:11:09.200 Romney really I brought this in in Massachusetts, uh and 0:11:09.520 --> 0:11:11.640 with the idea and we've really been looking at a 0:11:11.679 --> 0:11:14.640 new way over the last decade or so on how 0:11:14.640 --> 0:11:17.320 we get paid in healthcare and what the objectives of 0:11:17.679 --> 0:11:20.640 the reimbursements are. Ducher cosgrew wonderful to speak to you 0:11:20.679 --> 0:11:23.959 again after Davos this year, when when you look at 0:11:24.120 --> 0:11:26.839 the four or seven or eight, I can't keep count 0:11:26.920 --> 0:11:32.200 iterations of Republican proposed legislation in Congress, in Senate at 0:11:32.240 --> 0:11:38.040 six Pennsylvania Avenue. What's the best proposal for doctors and nurses? Well, 0:11:38.040 --> 0:11:40.360 I'm concerned about all of them. To be honest with you, 0:11:40.880 --> 0:11:43.280 I think the concern is that there's going to leave 0:11:43.320 --> 0:11:46.480 a lot of people uncovered. Uh. And I frankly don't 0:11:46.520 --> 0:11:49.959 think that the bills, the repeal bills, deal with the base, 0:11:50.520 --> 0:11:52.480 the root cause of the problems. The root cause the 0:11:52.520 --> 0:11:55.880 problem is, I see, it is the rising cost of healthcare. 0:11:56.240 --> 0:11:58.839 And that happens really for two reasons. First of all, 0:11:58.880 --> 0:12:02.400 you've got an older population. Uh. And secondly, there's more 0:12:02.440 --> 0:12:04.960 things that we can do as healthcare providers to to 0:12:05.160 --> 0:12:07.760 take care of them. So you're seeing across the world 0:12:07.960 --> 0:12:12.840 increasing costs of healthcare. Uh and uh, none of these 0:12:13.000 --> 0:12:15.600 bills really begin to deal with that. Are we going 0:12:15.640 --> 0:12:18.360 to go across Lake Erie and do a Canadian plan? 0:12:18.679 --> 0:12:21.720 Are we heading for some form of Canadian or United 0:12:21.800 --> 0:12:24.800 Kingdom plan? Well, I don't think that's a political reality 0:12:24.800 --> 0:12:27.280 at this point in the United States, I think that 0:12:27.559 --> 0:12:30.120 what I would like to see is that none of 0:12:30.160 --> 0:12:34.760 these repeals really take effect. If you look at the 0:12:34.800 --> 0:12:37.120 bill and you go back and what it really started 0:12:37.160 --> 0:12:39.720 out to do. It really wanted to increase coverage, which 0:12:39.720 --> 0:12:43.160 it did. It needed to improve the quality of healthcare. 0:12:43.240 --> 0:12:45.360 And if you see across the country over the last 0:12:45.400 --> 0:12:49.200 eight years, gradually you've seen an improvement in quality of 0:12:49.200 --> 0:12:53.000 healthcare for hospitals. UH. And then UH, the thing that 0:12:53.040 --> 0:12:56.760 it has not done well is control the cost of healthcare. UH. 0:12:56.800 --> 0:13:00.120 And so UH and I would hope that what we 0:13:00.200 --> 0:13:05.080 would see is UH coming together and a bipartisan fashion 0:13:05.240 --> 0:13:07.840 to begin to look at the cost of healthcare, both 0:13:07.880 --> 0:13:11.760 the efficiency of how we deal with patients who are sick, 0:13:11.800 --> 0:13:14.480 and also how we begin to keep people well and 0:13:14.559 --> 0:13:17.120 deal with the three epidemics which are really plaguing in 0:13:17.160 --> 0:13:21.800 the United States right now, which is smoking, obesity, and UH, 0:13:21.960 --> 0:13:24.680 the opiate condiction. David Gern, I want to get to 0:13:24.679 --> 0:13:27.120 the opioid issue here at a moment. Thank you Allen 0:13:27.160 --> 0:13:32.000 Krueger of Princeton for important comments yesterday. Dr Cosgrove, David Gerrn, 0:13:32.040 --> 0:13:34.480 I have to rip up the script and we do 0:13:34.600 --> 0:13:38.000 that with Toby Cosgrove, who wandered out a medical school 0:13:38.640 --> 0:13:41.959 in three cups of coffee. Later was in Denaying running 0:13:42.000 --> 0:13:46.120 twenty two casualties, staging flight, trying to get people on 0:13:46.200 --> 0:13:49.400 airplanes so that they could live coming out of wounds 0:13:49.440 --> 0:13:52.240 in Vietnam. We do this with a backdrop of ken 0:13:52.240 --> 0:13:56.080 Burns the Vietnam War. Yes, Mr Burns will join us. UM. 0:13:56.160 --> 0:13:58.200 We've been really trying to work with his schedule, and 0:13:58.200 --> 0:14:03.120 we'll have ken Burns on October. Dr Cosgrove George Will 0:14:03.200 --> 0:14:07.040 calls ken Burn's effort a masterpiece. What did you see 0:14:07.120 --> 0:14:10.680 in Vietnam that you need ken Burns to tell in 0:14:10.760 --> 0:14:16.720 his documentary? I think ken Burns will tell a story 0:14:17.200 --> 0:14:21.400 UM that is clearly the horror of war. UM. And 0:14:21.440 --> 0:14:24.080 there are no good, good guys or people who wear 0:14:24.120 --> 0:14:27.400 a high how white hat and a war UM. And 0:14:28.160 --> 0:14:31.480 I think until you have participated in war and you 0:14:31.560 --> 0:14:34.880 really don't recognize the magnitude of the destruction it is 0:14:34.960 --> 0:14:39.640 in both human lives and property within that is the 0:14:39.720 --> 0:14:43.720 medicine that you learned. We've gone to a medicine that 0:14:43.840 --> 0:14:46.040 is so removed most of us barely know who the 0:14:46.080 --> 0:14:50.160 pediatrician is. Or maybe the surgeon wandering by and three 0:14:50.240 --> 0:14:51.760 levels you may be not even sure who's going to 0:14:51.840 --> 0:14:54.760 operate on a given day. What can we learn about 0:14:54.800 --> 0:14:58.920 the medicine of another time and place around Vietnam, around 0:14:58.960 --> 0:15:02.040 the general care we knew that we can bring forward 0:15:02.040 --> 0:15:05.560 and rekindle today. Well, first of all, I think that 0:15:05.640 --> 0:15:09.400 you clearly recognize that the quality of care across the 0:15:09.440 --> 0:15:13.720 country has improved and dramatically over time, and uh, even 0:15:13.760 --> 0:15:17.000 since the time of the Vietnam War. Just uh, let 0:15:17.000 --> 0:15:19.240 me put it in perspective for you for a second. 0:15:19.560 --> 0:15:23.640 During the Civil War, of everybody who was injured died 0:15:23.960 --> 0:15:27.560 an he started injury in Vietnam, ninety five percent of 0:15:27.600 --> 0:15:31.000 the people who are injured survived. Now it is closer 0:15:31.040 --> 0:15:36.440 to so the quality of the care, both for civilians 0:15:36.440 --> 0:15:40.520 and the military has improved enormously. I think what is 0:15:41.080 --> 0:15:46.040 being lost and in fact, what we're trying to improve is, uh, 0:15:46.280 --> 0:15:51.280 the fact that we need to to concentrate on patients 0:15:52.080 --> 0:15:56.240 um and all of the things that surrounded patients, particularly 0:15:56.680 --> 0:16:00.160 the emotional aspects and the empathy that are require are 0:16:00.240 --> 0:16:03.400 to drive that. And at the Cleveland Clinic, one of 0:16:03.440 --> 0:16:05.960 the things that we did is we UH said that 0:16:06.040 --> 0:16:08.600 our matra is going to be petting patients first and 0:16:08.680 --> 0:16:11.600 everything that that involves, and everybody in the hospital, whether 0:16:11.680 --> 0:16:14.880 you are a neurosurgeon or you're driving the bus, UH 0:16:15.680 --> 0:16:18.840 is uh. The reason that they're there is for patients. 0:16:19.360 --> 0:16:22.120 And I think once you're centered around that, it begins 0:16:22.160 --> 0:16:26.400 to change of the attitude that people have in the 0:16:26.560 --> 0:16:30.160 empathy which they exhibit. My one of my first summer 0:16:30.240 --> 0:16:33.280 jobs was at UNC Hospitals in Chapel Hill, working with 0:16:33.320 --> 0:16:35.840 the department that looked into quality. It was clear that 0:16:36.040 --> 0:16:38.600 was becoming the rage in healthcare policy, doing better at 0:16:38.640 --> 0:16:41.400 measuring the quality of care, looking at how patients were 0:16:41.400 --> 0:16:43.960 fearing and how they felt. Where do things stand now 0:16:43.960 --> 0:16:46.120 when you begin to assess the efficacy of treatment? Are 0:16:46.160 --> 0:16:49.080 we are we doing a better job of ensuring that 0:16:49.080 --> 0:16:51.800 the treatment is a quality treatment and that patients are 0:16:51.840 --> 0:16:53.880 doing better as a result. Yeah. We want people to 0:16:53.960 --> 0:16:57.680 come in the hospital to be safe, uh, free from 0:16:57.840 --> 0:17:00.720 errors and mistakes, and I think we're question that we 0:17:00.800 --> 0:17:04.840 are having a much more high reliability UH for our organization. 0:17:05.200 --> 0:17:08.479 The quality has improved, UH, and it is improved with 0:17:08.600 --> 0:17:11.040 measurement UH. And one of the things that I think 0:17:11.119 --> 0:17:16.680 is so important is the transparency that goes with measuring quality. 0:17:17.119 --> 0:17:21.040 The transparency has to be both internal, uh two members 0:17:21.080 --> 0:17:23.680 of the healthcare team, and it has to be external 0:17:23.720 --> 0:17:27.640 to the community. And we've attempted to do that over time. 0:17:27.720 --> 0:17:30.000 But if you look at quality, quality really falls into 0:17:30.080 --> 0:17:35.200 three categories. Uh. It's the clinical quality, which we are 0:17:35.240 --> 0:17:39.040 measuring like crazy. But until recently, we did not consider 0:17:39.080 --> 0:17:43.440 the physical nor the emotional quality that went with the hospitalization. 0:17:43.880 --> 0:17:46.960 And now we're much better at that um and measure it, 0:17:47.680 --> 0:17:52.080 report it, share it both internally and externally, and right 0:17:52.119 --> 0:17:54.560 down to individually. David, this is what you and I 0:17:54.600 --> 0:17:56.359 love to do, and this is what our team puts 0:17:56.400 --> 0:18:01.000 together every day. Alan Krueger yesterday a prince and I 0:18:01.040 --> 0:18:03.880 believe you have Dr Cosgrow with you in Washington from 0:18:03.880 --> 0:18:06.040 the Cleveland Clinic, a Dr Toby Cosco, the CEO of 0:18:06.080 --> 0:18:08.080 the Cleveland Clinic. And I'm still thinking about many of 0:18:08.080 --> 0:18:11.080 the statistics that Dr Krueger brought up yesterday on the show, 0:18:11.119 --> 0:18:13.800 among them that nearly half of prime age men, men 0:18:13.840 --> 0:18:16.480 between the ages of twenty five and fifty four who 0:18:16.480 --> 0:18:18.920 aren't in the labor force, take pain medication on a 0:18:19.000 --> 0:18:21.080 daily basis. Two thirds of those men are about two 0:18:21.119 --> 0:18:24.440 million of them take prescription pain medication on a daily basis, 0:18:24.440 --> 0:18:26.879 and brings some economics to what is a crisis in 0:18:26.920 --> 0:18:29.359 this country, the opioid crisis. Dr Toby Cosco has been 0:18:29.359 --> 0:18:32.280 thinking about and speaking out about this as well. Give 0:18:32.359 --> 0:18:33.920 us the lay of the land that we talk about 0:18:33.920 --> 0:18:36.800 it as a crisis. What constitutes that particular crisis? How 0:18:36.800 --> 0:18:38.840 bad are things as you see them? Well, I think 0:18:39.040 --> 0:18:41.600 if you look at it just in terms of deaths UH, 0:18:41.640 --> 0:18:44.359 this year there will be sixty two thousand deaths UH 0:18:44.720 --> 0:18:49.240 from overdoses. UH. That compares of what went on in 0:18:49.359 --> 0:18:51.720 Vietnam and then the total Vietnam War there are fifty 0:18:51.760 --> 0:18:54.760 eight thousand deaths UH. They expected to go to ninety 0:18:54.800 --> 0:18:58.760 thousand deaths over the next three years, which is UH 0:18:59.280 --> 0:19:02.840 doesn't begin to talk about the number of overdoses that 0:19:02.880 --> 0:19:05.480 there are. Just in Caihua County, we saw over seven 0:19:05.520 --> 0:19:12.000 thousand overdoses come into hospitals uh uh in the last year. UH. 0:19:12.040 --> 0:19:16.760 And that doesn't count the financial uh cost of maintaining this, 0:19:16.960 --> 0:19:22.159 nor the social or emotional costs of looking after these patients. 0:19:22.200 --> 0:19:25.879 It's really ah escalating at a very fast pace. How 0:19:25.920 --> 0:19:27.280 did we get here? And we don't need to to 0:19:27.359 --> 0:19:29.400 assign culpability if if you don't want to do that, 0:19:29.480 --> 0:19:31.440 but this is certainly something that has, as you say, 0:19:31.480 --> 0:19:33.480 taken off. How do we get to this point where 0:19:33.520 --> 0:19:35.280 so many people in the US are taking these kinds 0:19:35.320 --> 0:19:37.960 of drugs. Well, first of all, you know, we have 0:19:38.200 --> 0:19:42.399 had a try to maintain people without pain. Uh. And 0:19:42.560 --> 0:19:45.679 I think that you have to say that inadvertently the 0:19:45.960 --> 0:19:49.680 medical profession was responsible for a lot of this. We 0:19:49.760 --> 0:19:54.400 had gave out pain medication, and people did not realize 0:19:54.400 --> 0:19:57.600 the addictive nature of a lot of the new pain medications. 0:19:57.600 --> 0:20:01.600 Octic coding, for example, is UH was touted as not 0:20:01.680 --> 0:20:06.920 being as addictive as UH codeine was UH, and so 0:20:07.440 --> 0:20:10.360 it was prescribed widely. And then on top of that, 0:20:10.880 --> 0:20:14.879 pain became one of the new vital signs, and people 0:20:15.040 --> 0:20:20.359 trying to contain people's pain by medicating them uh. And 0:20:20.400 --> 0:20:23.400 then the government began to reimburse us on the basis 0:20:23.400 --> 0:20:27.320 of how well we looked after people's pain. All these 0:20:27.359 --> 0:20:32.439 things began to suggest that physicians should give more and 0:20:32.520 --> 0:20:36.840 more pain medications, which they did. Um. And Uh. It 0:20:36.920 --> 0:20:40.520 turns out right now that of heroin attics started with 0:20:40.600 --> 0:20:44.040 some sort of perscrission drug. Uh. And then on top 0:20:44.080 --> 0:20:48.240 of that, Uh, we have seen uh an influx of 0:20:48.440 --> 0:20:55.639 new medications um. Uh they have seen um coming in 0:20:55.680 --> 0:21:00.720 from China. Now, Uh, what you have have begin to 0:21:00.840 --> 0:21:03.760 drugs that begin to be a hundred times more potent 0:21:04.560 --> 0:21:09.320 than morphine. Uh, and they're now being laced into the drugs, 0:21:09.560 --> 0:21:12.320 and so you may get a drug that has been 0:21:12.400 --> 0:21:15.920 laced uh and invertly way overdose from that. It goes 0:21:15.960 --> 0:21:18.240 back to the conversation we're having before the breaking part. 0:21:18.640 --> 0:21:21.000 We're talking about measuring quality. There's certainly been efforts to 0:21:21.000 --> 0:21:23.840 measure pain as well. Is is the measuring of pain 0:21:23.840 --> 0:21:26.240 is subjective thing. I know we've counted on patients to 0:21:26.320 --> 0:21:29.840 rate with the smiley face to the wincing cartoon face, 0:21:29.920 --> 0:21:32.760 how they're they're feeling at this point, Uh, is that 0:21:32.800 --> 0:21:34.840 still a problem measuring how much pain the patient is 0:21:34.840 --> 0:21:36.760 in and when the patient needs to take the kind 0:21:36.760 --> 0:21:38.960 of medications that we're talking about, No question about it. 0:21:38.960 --> 0:21:42.480 It is a subjective measurement and various. If I remember 0:21:42.480 --> 0:21:46.919