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Intermountain CEO decries 'unethical' drug price hikes, self-centered American medical industry

FILE - This Aug. 29, 2018 photo shows an arrangement of prescription Oxycodone pills in New York.
FILE - This Aug. 29, 2018 photo shows an arrangement of prescription Oxycodone pills in New York.
Mark Lennihan, Associated Press

SALT LAKE CITY — Marc Harrison sat in a meeting in Washington, D.C., this week with CEOs from hospitals throughout the United States, and came away discouraged.

"I listened to my peers around the table, and to be honest, I was disheartened. And the reason I was disheartened is because all of the conversation revolved around, 'How do we maintain ourselves? How do we maintain our prestige? How do we maintain our current economic model?'" Harrison recalls. "Not a single CEO talked about, 'How do we optimally serve the people we're meant to serve?'"

Harrison, president and CEO of Intermountain Healthcare, said such a view is narrow and self-serving, and promised Friday at Intermountain's annual report to the community that the hospital and clinic system is committed to a more selfless idea of its mission than is generally seen in the industry.

"I want to affirm for all of you that no matter what happens in health care, that Intermountain is absolutely committed to the communities we serve," Harrison told various community and civic leaders, as well as some Intermountain executives and medical providers, at a banquet at the Grand America Hotel.

"We feel very connected to the state of Utah. Utah's entrepreneurial spirit invigorates me as I think of creative ways Intermountain can serve you and your neighbors."


Harrison said the health care industry is undergoing "unprecedented" changes in financial models, as evidenced by "organizations that are scurrying to come together to have adequate scale — collective buying power — so that they remain relevant and economically viable."

Harrison believes some of those seismic shifts in the industry are rational, but not all.

"Intermountain, like all great organizations, must grow in order to stay healthy, but we have very strict guardrails around how we will grow and why we will grow, and we will not participate in irrational activity simply meant to drive the bottom line," Harrison said.

Still, he said, Intermountain is "eagerly watching opportunities to partner with new players" who recognize American health care is currently too expensive for patients and does not exhibit consistent enough quality.

Harrison briefly talked about Intermountain's monthslong organizational overhaul, which recently outsourced about 2,400 billing, scheduling, and information technology employees. Intermountain also eliminated 396 positions and created 107 new ones as part of that restructuring, and dissolved some regional administrators' positions, changing the location-based reporting structure.

"Intermountain has always been a spectacular system. We've played well together for a long time," Harrison said. "But what we noticed is there were opportunities for higher quality, more consistent quality, better access, opportunities for us to have health care be more affordable, and we recognized by playing together as a team all across the enterprise we'd be able to do that more effectively."

A report published by the Deseret News earlier this year used conversations with 15 former and current Intermountain employees, including a former executive, to describe low morale within the hospital system stemming largely from frustration with the changes made in the restructuring.

Harrison said Friday that the overhaul was "not an easy process. Transformation never is."

"What remains the constant is service to others, and that's the privilege of actually being involved in health care," he said.


Harrison decried what he sees as unsustainable and unprincipled trends in the pharmaceutical industry leading to high drug prices for consumers.

"One of the headwinds we face is, frankly, craziness from a pharma standpoint," he said. "Even as our other costs decrease through hard work, what I can tell you is that we expect a 12 to 14 percent increase in pharma costs per year.

"… Americans pay more for drugs than any other country in the world. We're seeing outrageous price increases and we're seeing shortages that are created by … a significant number of unethical generic drugmakers."

Harrison said Intermountain's recently announced not-for-profit generic drug company — Civica Rx, which is expected to launch next year — will "combat the perversions we have seen" in the pharmaceutical industry.

Civica Rx will be headquartered in Utah and is expected to debut by selling 14 generic drugs, with potentially more to come later. One third of hospitals nationwide are interested in or committed to working with Civica Rx, Harrison said.

"This stands a chance of changing the industry," he said. "This is part of our commitment to being good citizens as a not-for-profit."


Harrison said he believes easy clinic accessibility for patients seeking appointments is "a problem" at Intermountain.

"We have not fixed this. … We recognize this is a problem, and I give enormous credit to our physicians who are starting to fix this," he said.

As recently as two years ago, he said, a large majority of outpatient clinics at Intermountain operated "sort of 8 to 5."

"But 90 percent of our clinics have extended hours now, and we've seen about 325,000 visits in these different hours," Harrison said. "We recognize the current generation will simply not tolerate the kind of access we've tolerated up until now."

Harrison also talked about how convenient it is in 2018 for a person to use their smartphone to schedule appointments for everything from a haircut, to an oil change, to dinner reservations, and said "the fact that we can't yet do that in health care with great ease is crazy."

"We've committed ourselves to the digitization of our system (to) the benefit of those that we serve," he said. "We can't make people better if they can't see us."