Fixing Healthcare, One Bottleneck at a Time feat. Professor Tolga Tezcan

[00:00]Maya Pomroy: Welcome to Owl Have You Know, a podcast from Rice Business. This episode is part of our Up Next Series, where faculty, researchers, and alumni weigh in on the trends currently shaping the world of business.

On this episode of Owl Have You Know, we dive deep into the innovative world of designing, managing, and optimizing an industry impacting all of us.

Rice Business Professor Tolga Tezcan has poured his life's work into researching healthcare systems around the globe. Originally from Turkey, Dr. Tezcan has served on faculties at London Business School, the University of Illinois, and the University of Rochester, before making his way to Rice, where he was given an opportunity he simply couldn't pass up.

We talk about his latest research, the biggest barriers for adopting operational efficiencies in healthcare, the greatest opportunities he sees for innovation, and how the Houston Medical Center is leading the way to the future.

Hello, everyone! I'm your host, Maya Pomroy. Our guest today is Professor Tolga Tezcan, professor of operations management, who teaches courses in business analytics, data mining, and of course, ops management. Your current research explores really fascinating things, including innovative ways of designing and managing healthcare delivery systems. Really looking forward to talking about that and its efficiencies and inefficiencies and bottlenecks and all of those things that are crucial to economics, really. Thank you so much for joining us today.

[01:32]Tolga Tezcan: Thanks for having me, Maya. Glad to be here.

[01:35]Maya Pomroy: So, for somebody that doesn't understand operations management, could you please describe what the study of operations management is for those that really don't know?

[01:44]Tolga Tezcan: Excellent. For those of you who are really interested, I think they should take my operations course.

[01:48]Maya Pomroy: Agree.

[01:48]Tolga Tezcan: Or they should take them. I mean, it's very difficult to summarize in two minutes. But that's a great question. So, I've been teaching in business school since 2010, so it's been a while. And I've been teaching operations, primarily operations. Although, I teach some business analytics as well. And it took a while for me to answer that question because nobody asked that question to a marketing professor or a finance professor or an accounting professor. That question is never asked.

[02:13]Maya Pomroy: It’s a clear cut.

[02:14]Tolga Tezcan: It's always like, what is operations or OB, you know? It's always us. So, it took me a while. And the shortest answer I could tell you is, think about a business from a strategic point of view. Let's look at the macro level. What they do can be answered in three questions. Who? Who are their customers? What? What do they sell? Again, from a differentiated marketing, from a competitive advantage point of view. And finally, how do they do it? And who and what, you know, this is marketing, will be, and all that. Or technology, even, sometimes, if you talk to…think about more technology companies. And how-question is what operations answers, predominantly.

For example, I always give this example to students in class. How do you think Walmart became Walmart but not some other company? And most people say, “Well, you know, Walmart is so big, they have the upper hand in negotiations.”

[03:04]Maya Pomroy: Not at the beginning.

[03:06]Tolga Tezcan: Exactly. Do you know where Walmart started from? It was in a small town in Arkansas, with a single store. And we go into what their operations enable them and increase their profit margins, which allow them to grow.

[03:20]Maya Pomroy: The innovation.

[03:21]Tolga Tezcan: The innovation. But that was all about… I mean, Walmart doesn't sell innovative products. It doesn't serve to a customer base that never went to a supermarket before. I mean, they specialize in certain things, but again, everybody could have sold them. They didn't innovate that. What they innovated was they changed the question: how you would take these items to their stores. And I mean, same thing with Amazon when it started. Again, the way they did it was, by selling all these books online, they managed their inventory a lot better than anybody could. So, that was their innovation.

[03:57]Maya Pomroy: It was the efficiency.

[03:58]Tolga Tezcan: Again, it wasn't that, you know, nobody could sell those books. Those books you can buy from anywhere from all the publishers and sell it yourself, but they found a way to do it in a different way. So, again, whenever I teach the operations course, towards the end, when I'm finishing the course, I say, “Look, if you don't remember anything from this course five years down the road, operations answers the ‘how’ question for a business strategy policy.” That's how I would describe it.

[04:21]Maya Pomroy: It's also fascinating because operations, if you don't have that down, doesn't matter how great you are, you're going to fail.

[04:29]Tolga Tezcan: Again, these questions are interrelated. So, you can have the best answers and who to what, but as long as you don't have the how question figured out, obviously, you're not going to be able to deliver it. So, in a way, operations delivers your competitive target in the market.

[04:48]Maya Pomroy: So, let's back up a little bit. Growing up in Turkey, what got you fascinated in this specific part of the economy and business and the industry?

[04:57]Tolga Tezcan: In terms of research or operations in general?

[05:00]Maya Pomroy: Both.

[05:01]Tolga Tezcan: Let me start with operations. It's funny how I ended up in operations, actually. So, in Turkey, nobody goes to business school for undergrad. It's just, it's not within our genes. For MBA, it's becoming more and more popular since I left, but undergrad was something else. So, the nearest thing I could study to business was industrial engineering, which is exactly what operations do.

[05:25]Maya Pomroy: And you have a Ph.D. in that as well.

[05:27]Tolga Tezcan: So, I continued doing industrial engineering. And then, I mean, obviously, as you grow, you learn new things. And I got into different things after that. And in terms of health care, my primary motivation was I figured out they needed help in that industry more than any other industry, because if you're talking about supply chain, if you're talking about gig economy, there are big companies with big pockets that can finance these research.

[05:54]Maya Pomroy: When did you figure that out? When did you figure out that it was health care?

[05:58]Tolga Tezcan: This was back in 2010, early 2010s. I was at University of Rochester at the time, and the medical school was right across the street.

[06:05]Maya Pomroy: Convenient. Just like with Rice, the medical center's right across the street.

[06:09]Tolga Tezcan: Exactly. And there, we also had health care programs where we used to teach people from all kinds of roles in the medical school, from the hospital, basically. And talking to them, I figured, look, you know, there's a lot going on here. The first interesting question that I came across was, I was teaching an EMBA class just like that you took, the one that you took within our program. Medical doctor from the emergency room was taking that course. Came to me and pretty much said what I was teaching is useless in the emergency department.

[06:44]Maya Pomroy: How did that feel?

[06:46]Tolga Tezcan: “Oh, really?” And the specific thing I was teaching was very basic capacity calculations where, in order to find the capacity of a resource or a doctor or a bed in the emergency room-

[06:58]Maya Pomroy: Equation.

[06:58]Tolga Tezcan: … all you need to figure out is how long it takes to process a job, a patient, whatever it is. And she was like, “Look, the way we work, we typically take care of five, six patients at the same time. We're just walking around in the bays.” If you've ever been to an emergency department, they have these bays inside where they have beds. “And then while I'm walking to one patient, I get a call from about the other patient because I probably asked for an x-ray or asked for a consultation with a specialist. And then I go back to my desk, I enter my notes about another patient. So, you're telling me to figure out how long it takes to take care of a single patient. I don't know. And I don't think you can figure that out easily.”

[07:39]Maya Pomroy: Well, it also depends on the patient and depends on their level of, you know, need.

[07:44]Tolga Tezcan: And even that, I mean, I think the complexity here is, unlike many other operations, for example, let's say you're checking out at a supermarket, what happens is, as soon as the cashier starts scanning your items, I know when your service started. And you pay and walk away from that, I know when your service ended in terms of the cashier. In the emergency room, you never know. You know, the cashier talking to you goes back to another checkout, talks to another customer, comes back. For example, they're walking. Whose service time that is? Like, how do we take that into account? Then, gets a call about another item. So, it's so complicated. It's very difficult to figure out how much time goes into a specific page.

[08:22]Maya Pomroy: Yeah, lots of variables, for sure.

[08:23]Tolga Tezcan: Lots of things to figure out. So, even the basic theory fails. And that's how it started. I spent about, I don't know how much in total, but it took me about six months to shadow every single relevant decision-maker in the emergency department. I saw a lot of gruesome things that reminded me one more time why I didn't go to medical school. But it was eye-opening. Let's just put it that way.

[08:46]Maya Pomroy: And is that what made you recognize that this is a really significant need that you could, you know, sort of, change the direction of healthcare?

[08:54]Tolga Tezcan: I think, I mean, I started with very humble beginnings as in, okay, let's say, I was, like, okay, how do we fix emergency departments?

[09:01]Maya Pomroy: Yeah. Because nobody wants to go to the emergency department.

[09:05]Tolga Tezcan: Exactly.

[09:05]Maya Pomroy: That's the last place you want to go.

[09:07]Tolga Tezcan: Exactly.

[09:07]Maya Pomroy: Because you know you could be there for 15,000 hours, you know.

[09:10]Tolga Tezcan: Unfortunately.

[09:10]Maya Pomroy: I mean, that's why it's just very inefficient.

[09:14]Tolga Tezcan: Exactly. And what happened was I worked with them for a few years. And there's a lot of research on improving the efficiencies in the emergency department in terms of reducing the time you spend there, spent waiting, spent being treated.

And we would implement a lot of these things. And I was working… because it's a medical school, as well, they were very research-oriented. So, they would implement a lot of ideas. They would look at other emergency departments to come up with new ideas. And a lot of things that I would say, you know, I would recommend, like, why don't we do this? It's, like, the hospital will never agree to do that.

And I’ll give you one example. I mean, emergency departments, once you get in, actually, it's… although it looks very complicated, there are very simple reasons why you spend that much time. One of the main reasons why people spend a lot of time in the emergency department is because there are not enough beds. And the reason why there aren’t enough beds is the emergency department, the main goal of the emergency department is not to treat you—it's to stabilize you. Or, you know, if it's minor, say, “Look, it's okay. You can go home.”

So, once they stabilize you, if, you know, your condition is serious, you have to be admitted to the hospital. So, basically, they take you upstairs from the emergency room. Usually, emergency rooms are on the ground floor. And what happens is a lot of patients get stuck in that process. So, you're in the emergency room, they took care of you, they said, “Admit this patient,” they signed the papers, and you spent, let's say, 12 hours in an emergency room bed for them to take you upstairs. And obviously, when you take that bed, they can't put a new patient there. And then it backs up everybody else.

[10:46]Maya Pomroy: The bottleneck.

[10:47]Tolga Tezcan: That's one of the points. Who's the bottleneck? I mean, even that is not clear, right? I mean, there's a bigger problem. It's not just you go to the emergency room, fix it, everything will be fine. It's not the inefficiency in the emergency department. It's inefficiency in the system. And from there on, I start looking at bigger and bigger questions, which took me to my research as in today.

[11:07]Maya Pomroy: So, tell me about your research. What were the bigger questions? This is exciting. Because I know… I want to know how it's all going to be fixed and magnificent and, you know, like, this is really… I mean, because healthcare is just… it's crucial and it's really integral for all parts of your society, not only the economy, but for a healthy society and for everything else. And in order to be, you know, the leader of the free world, you need a healthy society. So, yes, I'm very excited to hear about your research.

[11:34]Tolga Tezcan: Absolutely. I mean, first of all, this is one of these things where there's not going to be a clear cut solution because there are a lot of political issues and, obviously, people from different parts of society have different opinions about different things. So, there's never going to be everything.

[11:48]Maya Pomroy: And lobbies and things like that.

[11:50]Tolga Tezcan: Not even lobbies, I mean, just political, some philosophical questions. For example, Medicare, right? Medicare is something that we provide, basically we, more or less, working people finance elderly so they get free health, almost free health care in the U.S. That's not cheap. And is that something we should provide, or is it something we should ask people to save just like they do for their retirement? So, there are a lot of philosophical questions in there.

[12:16]Maya Pomroy: Like, universal healthcare. I was reading an interview with you where you said, “I don't understand why people don't like… when people are against universal healthcare, though, it doesn't make any sort of logical sense.”

[12:26]Tolga Tezcan: I mean, as I said, there are many, many different moving components, moving parts into it. Let me try to demonstrate the problem first. Is there anybody who doesn't believe we have the best medical schools, best technology, best education in the world? If not the best, probably top three, for sure.

[12:45]Maya Pomroy: Of course.

[12:45]Tolga Tezcan: Yet, overall, what we produce from that system is not even top 10. In OECD countries, we're in the bottom in a lot of quality measures. Definitely, not in cost. In terms of cost, we are… I don't remember the exact number, but we are quite high from the second country, second worst country, performing quite worse. So, how do you come up with the best components but the worst outcome? Not the worst, but pretty much.

[13:10]Maya Pomroy: No, not a good one. You're at the bottom.

[13:13]Tolga Tezcan: So, that actually answers your question. So, it's not that, you know, we don't have a system that doesn't have the potential. It's like, you spend all the money. I’ll give you… I don't know if you follow sports, just imagine you run an NBA team. You hire the best players in every position, but you can't even make the playoffs.

Another example I would give you is you buy… I mean, I guess this is easier to, kind of, demonstrate. You know, you go to Central Market, you buy the best ingredients, but unless you have the right recipe, the, whatever you cook, obviously, will not taste the way…

[13:47]Maya Pomroy: Well, there's user error. I'm a horrible cook, so there's a lot of user errors. Well, you can have the best ingredients and the right recipe and still have a mess and it tastes horrible.

[13:57]Tolga Tezcan: I guess what happened is, over time, because the way the economy and, you know, the structure of the U.S. economy, we did not get the right recipe. And more… again, for those of you who thought about these issues, you can think about project management. So, the project here is every person is a project in terms of their health, managing their health. Yet, we don't have a project manager. So, everybody takes care of one part of the project, but they never coordinate, really. There's no coordination. It's expected from the patient to, kind of, coordinate the care. But imagine, I mean, I'll give you another example. The warranty on my car just expired and I was looking into extending the warranty. And when you look at the warranty terms, they're, like, thousand exceptions. It's impossible for me to figure out, even for a car, to understand, you know, what it includes and what it excludes, let alone something that involves health.

So, my research, in general, what I try to answer is, okay, we have this best system. How do we coordinate it better? How do we make sure they're connected better? And usually, you do that, at least, I mean, from a business point of view, looking at it as a business, it's with financial incentives. So, I'd seek, I’d try to figure out the best incentives to give so that everybody acts like they're doing the best for the patient.

[15:25]Maya Pomroy: So, what are those incentives?

[15:27]Tolga Tezcan: Many. I mean, it's not me who came up with the idea. I mean, actually, it’s CMS, Center for Medicare and Medicaid, who runs Medicare and manages most of Medicaid, at least the federal side. They come up with these programs, and that's where the ideas came from. For example, one of the things we figured out with the emergency departments, the reason why you wait so much is, as I said, among the other things, hospitals weren't investing to reduce waiting times. And the reason for that is, if you operate at 100% utilization, obviously, you're going to take care of the… you're going to produce the most from your resources, but obviously, that's going to cause a lot of people waiting. Just imagine you're driving during rush hour.

Why don't we pay them to reduce waiting time? That was our idea. So, let's say we're in Houston. We have four trauma centers. We look at their average wait times during the busiest time, let's say on Mondays from 9:00 to 2:00 p.m. And then we rank the hospital, and whoever manages to reduce the wait times beyond the average performance in Houston, we'll reward them. And whoever manages worse than the average, we're going to penalize them. And it could be a zero sum game. You know, we could just cut off some of the payments they get and then make those hospitals responsible for waiting time or invest that money to reduce wait times. And eventually, you can analyze the system in different ways and show that, yes, now they have the incentive to reduce wait times.

[16:50]Maya Pomroy: So, the health care sector has generally lagged behind in adopting operations, innovations, you know, seen in other industries. Why?

[17:02]Tolga Tezcan: Multiple reasons. The primary reason was lack of sufficient data, because if you look at history… I mean, if you talk to anybody in healthcare, you would hear stories like, “Oh, you know, 20 years ago, we did everything handwritten, like, all the, very important details.” Manufacturing has moved a lot faster, had moved a lot faster, primarily because of competition from overseas, especially coming from car manufacturers, from Japan. U.S. healthcare was very slow. And again, I mean, I'm not going to go into a political discussion, but that's one of the best things that Obamacare did. One of the, again, there's a history behind it, but Obamacare was the legislation that forced it. It basically said, unless you implement an electronic medical record system, which is computerized data records…

[17:52]Maya Pomroy: Which we all have now. You can get it on your phone and you can get it on MyChart and you can see your entire family. And it's fabulous.

[17:58]Tolga Tezcan: And unfortunately, they had to twist hospitals’ arm, in a way, to implement those systems. And now, we have the data.

[18:05]Maya Pomroy: Why? Is it just because of change? I mean, you would think that it would be more streamlined and more, you know, all of the things that…

[18:10]Tolga Tezcan: I mean, the status quo, because there's no competition, there's no reason why you would do it.

[18:16]Maya Pomroy: No incentive.

[18:16]Tolga Tezcan: No incentive. Business as usual. Why would you? And another thing with hospitals and healthcare systems, usually, because… I mean, again, looking at the big picture, there's no direct competition. How many times did you pick a doctor because of the price and quality, even?

[18:32]Maya Pomroy: Right.

[18:33]Tolga Tezcan: If… I mean, the only thing we do, really, if it's a really significant surgery or something, we ask around friends this and that. But even that is limited because your insurance might not cover. So, there's zero competition, pretty much.

And one of these things we try to do with the incentives is create this competition one way or another, you know, at least in a sensible way. But anyway, that was reason one. And reason two is, because it's a very technical field, most of the upper management, C-levels and all that, come from medical backgrounds rather than business. And it's a taboo to talk about healthcare as a business. Again, I'm not holding it against them, but if you compare it to any other industry, even tech, for example, look at Google. One of the first things Google did, as soon as they managed, they figured out, you know, they're going to grow, they actually hired a CEO that had nothing to do with tech, doesn't come from a tech background. And they managed to grow the company to the levels. Now, I've never seen it in any hospital system, any healthcare system. It's always… and I'm deleting it because medical care or medical needs usually take the lead. I'm not saying it's a bad thing or a worse thing, but in terms of business, not playing as much of a bigger role.

[19:51]Maya Pomroy: Well, maybe that’s why my EMBA class had so many MDs in it, because a lot of MDs go back and they get their business degree, because they recognize that need and that you really need to have that background and that understanding in order to not only be a good doctor, but in order for your business to thrive.

[20:08]Tolga Tezcan: I mean, it's another thing that's changing. But at least back in the day, they had almost zero business education, even basic corporate accounts. Like, I don't think they've ever seen finding present values and future values in medical school, even that, which, you know, it's like business 99 to understand the very basics.

[20:25]Maya Pomroy: So, what do you think are the greatest opportunities for innovation in the healthcare delivery system over the next five to ten years? Because we have gone digital, right? And now you've got AI. I'd love to hear your thoughts on how you think AI is going to propel us forward into the next, you know, generation and generations ahead. And especially, being in Houston, because it is, you know, Rice is one of the best business schools in the country. And, you know, the Houston Medical Center is where everybody from around the globe comes. So, what do you see the future holding for this specific kind of work and efficiency?

[21:06]Tolga Tezcan: I mean, talking about AI, absolutely, it's changing certain things. When you talk about healthcare, there are many different aspects to talk about. And when I think about AI, it's not the business side that's going to change first. It's going to change the medical delivery side of it, just like any other business. For us, for example, it makes a lot of things a lot easier to do — writing an email, sometimes checking the… or editing a document and so on and so forth. And just like that, I think the first step would be, when you're making medical decisions, it will increase the… I shouldn't say accuracy, but it will increase, at least, the efficiency of doctors making that decision because now you have a second opinion right there at your fingertips.

I think that's what's going to change first. I'm not sure how big of a role it's going to play in terms of increasing efficiency overall in the system because I think we have… our problem’s not as complicated as…

[21:59]Maya Pomroy: Curing cancer?

[22:00]Tolga Tezcan: Exactly, exactly. I guess that's the best way to put it. In terms of the problems we have in the healthcare system, they, I mean, you don't really need an AI. You just need a bunch of people come together and, kind of, “We should all arrive at an agreement about what we should do with it.”

[22:14]Maya Pomroy: Do you see that happening in the next five to ten years?

[22:19]Tolga Tezcan: We're getting there. I mean, at the end of the day, I'm a scientist, right? My role, I believe, is to provide scientific evidence that there's a better way of doing things. And eventually, people seeing that there's enough scientific evidence that we should change things. Is it going to happen anytime soon? I don't know what's going to happen. Either we're going to get smarter about doing things or the finances will force us. For example, it's not clear if Medicare will survive the financial pressures that it has. But what people don't understand is, the way we run Medicare is the way we run Medicare. We can change the way we run it. It's going to come to a point, if we don't change it, that its financial burden will be so much people will refuse to pay that kind of money. And then you will have to change the system. And I think, at that point, it will force everybody to rethink the way we run the health care systems here.

[23:09]Maya Pomroy: And, you know, prices are just astronomical. Even just getting, like, a filling filled in your child's tooth, you, kind of, look at these insurance bills and you're like, “What on earth is going on?” And is that part of competition as well? I mean, I'm assuming that it is.

[23:28]Tolga Tezcan: Absolutely, absolutely. I’ll give you an example from our recent research. So, this is one of the things that, it's been around for a while, but it just become more competitive recently and start making more sense. There are many reasons why, but it's called Medicare Advantage. So, when you become a Medicare beneficiary eligible, you can actually, instead of taking the government plan, which pays for fees, and whenever you go to a doctor, which pays the bills, you can actually sign up for an insurance policy just like you do with your employer. And any insurance company, within certain limits, can offer insurance policies within this market. And that creates that competition because if I'm an insurance company that find a more efficient way to treat these patients, obviously, and there's a fixed payment for each patient, I'm going to generate positive margins.

[24:17]Maya Pomroy: You need more patients. That's a way to do it.

[24:20]Tolga Tezcan: I'll attract more patients. So, we are finding things that's going to help. I mean, it's going to play… one of the things that's one of the reasons why I said universal care, why don't we extend it to everybody? Why do we have employer-sponsored insurance? Makes no sense to me. Because it makes sense to pull the risks in a bigger pool than just an employer. Why don't we pull those risks, give people options, and they choose things that they think…

[24:45]Maya Pomroy: A national healthcare.

[24:46]Tolga Tezcan: At least statewide, even citywide, I would make more sense than these silos.

[24:52]Maya Pomroy: Countywide. Well, we have something countywide, right? Harris County Health System.

[24:58]Tolga Tezcan: That's Medicaid. That's related to Medicaid, for lower income. The same thing, a lot of states have similar system for their Medicaid beneficiary. So, why don't we do that? And that way, you know, you force people, you force companies to compete with each other. The problem with prices in hospitals is they're priced as if a sheikh will walk in and pay those prices. So, that's how real they are, you know.

[25:23]Maya Pomroy: It's crazy.

[25:24]Tolga Tezcan: And then, I mean, next time you get a bill, look at what the insurance paid. It's probably a fraction of…[crosstalk 25:30].

[25:29]Maya Pomroy: Oh, I do. I look at every single one.

[25:33]Tolga Tezcan: I mean, it makes no sense to me anymore, so I don't, but…

[25:36]Maya Pomroy: Well, and imagine having a baby, because I've had two, and I was on two different insurance plans, and I put them side by side and looked, and, you know, one bill was a couple hundred bucks to have one… you know, same kind of birth, you know, a couple hundred bucks. The next one was, like, thousands of dollars. And I was like, “I didn't get anything extra, you know?” I was actually out earlier out of the hospital.

[25:58]Tolga Tezcan: I mean, again, that's unfortunately the result of siloed insurance and siloed payment systems and all that. And we see that all over. I mean, because the prices are so opaque and insurance companies… I mean, if you look at, actually, the contracts between insurance companies and healthcare providers, it's hundreds of pages with all the exceptions. How do you sit down and negotiate these prices for all the possible conditions your beneficiaries will meet? All the possible fees? It's impossible. So, expecting this at the micro level, as I said, to be very efficient, it’s just dreaming.

[26:32]Maya Pomroy: And also thinking about the micro level in terms of patient care, improving the compassionate experience for patients. Because these are people, right? These are human beings that live in the greatest country in the world that can't afford health care. And it's just mind-boggling to me that… when you start thinking about the people that it affects, the children and the parents and the, you know, grandpa and everybody else, you know, I think that, sometimes, we miss the forest through the trees, right?

[27:00]Tolga Tezcan: We do and we don't. It depends. I mean, you want to live in a capitalist country and then talk about compassionate care, they just don't agree with each other as much as you think you would, because then we start talking about compassionate care in a car mechanic. Then we talk about compassionate care in whatever you can imagine.

[27:17]Maya Pomroy: But a car mechanic isn't a person.

[27:20]Tolga Tezcan: No. Again, you can… again, it's all about competition, right? If that's what you're looking for, you'll find a car mechanic or a hairdresser or whatever will give you that treatment in healthcare because the prices are not what you pay or do not choose, you don't get to choose, that makes it very difficult.

But good news is there are also initiatives that are taking that into account. Right now, there's a big scheme, a big program going on, called Value-Based Purchasing, again, from Medicare. And the good news is a lot of private insurance also adopt these initiatives from Medicare. One component of it is it rewards hospitals based on patient surveys. And patient surveys have questions such as, you know, they've taken good care of me. They were respectful and all that. I've gotten one of those questionnaires recently because I had a CT scan done. And it was pretty comprehensive. So, it is moving there. At least, we're finding ways to accommodate that into the system.

And I'll give you an example, just to give you an idea how bad it was before these initiatives. Back in the day, this is about 20 years ago, a hospital, let's say, God forbid, you had a surgery in a hospital, so the hospital gets paid for Medicare from insurance. And private insurance, obviously, depends on how they apply, but let's talk about Medicare. And let's say they made a mistake, whatever it was. And within 20 days, you got readmitted to the hospital. And it was all their mistake. And you spend another 10 days in the hospital. Guess what? The hospital got paid again for the readmission. It was that bad. Now, they're penalized. Now, there's a system that penalizes them if their readmission rates are more than what it should be. So, things are moving in the right direction, in a lot of ways. But I think, again, it's going to take a while because this is a very different industry and there are a lot of things we need to figure out. I'm hopeful in that regard.

[29:13]Maya Pomroy: I am, too, because as you age, you really want to move in the direction where it will be, you know, you won't be a burden for your children and that the healthcare system will take care of you. And that's what we want, is to continue to move forward. What are some of the things that you're working on? Can you share some of additional research that you're working on with us?

[29:35]Tolga Tezcan: Of course. I mean, actually, this is very related to what you just said. From a personal point of view, when people ask advice, you know, you're working with healthcare, what would you recommend? I usually say, “Don't get sick,” as a joke.

[29:49]Maya Pomroy: No pressure. Don't get sick.

[29:51]Tolga Tezcan: Find a good family physician. That changes everything. And if you can afford it, there's something called concierge medicine, where they only admit a limited number of patients and they take care of all…

[30:01]Maya Pomroy: And you get their cell phone number and you can harass them at 3:00 in the morning.

[30:06]Tolga Tezcan: Exactly. I think it's called executive medicine as well. I don't… it goes by different names, but it came out first as concierge medicine. If you can afford it, it's a great thing, especially if you know nothing about healthcare and the healthcare system in the U.S. Because there are a lot of things you can only learn by going to medical school and, you know, spending some time in the system and, obviously, your GP would know a lot more. And that's what we are researching now — how should you pay your GP, in general, so that they actually not only take care of you when you need to see your GP, but in general, how do you incentivize them to coordinate everything else you need in the system? Because right now, the way they get paid predominantly is they only get paid when you visit them. But obviously, you want your GP to call you, to call your specialist when you have a surgery, to call the hospital after you get discharged to make sure you get your follow-up care. And these things are very difficult to track. I can't… you can't pay somebody just because they made a call for five minutes. 

How much will they really pay them?

And we're trying to figure out how to pay the GP looking at the patient outcomes. So, if you're a good GP, your patients shouldn't even go to the emergency room that much. Or when they get released from the hospital, they shouldn't be readmitted, and so on and so forth, as much as, you know, somebody who's not doing that right. So, we're trying to figure out how to pay the GPs in a fair way.

And then this has to accommodate, also, the fact that every region has different patients, different socioeconomic backgrounds, different political backgrounds, everything that affects GP care. For example, if you drive 100 miles outside Houston, your GP will probably be dealing with a lot more patients than if you're right in Houston. How do you take that into account? So, that way, we are researching now, and we're actually trying to get all the data that, all the GP care data from Texas. There's a very nice database UTH keeps, trying to figure out, by looking at what happened in the past, what can we change and improve the system from a GP point of view? That's one of the things we're doing.

[32:10]Maya Pomroy: So, tell me about some of your students and what you enjoy the most about teaching.

[32:15]Tolga Tezcan: It's a very diverse student body, obviously. We get people with very strong backgrounds in operations, and we get people who have nothing, who have never, ever seen or think about operations. I want to believe that my course is an eye-opening experience for everybody, seeing the strategic role operations play.

And I love the conversations I have. I mean, multiple times, I have conversations with people who come from operations, and telling me, “Oh, I've never thought about these issues this way,” or people come in with no background and saying, “Oh, you know, I've never thought this was, you know, something that plays such an important role.”

It's a challenge because a lot of things in operations change, just like anything else. For example, revenue management became a huge part of operations, so we're trying to incorporate some of that. Gig economy became a huge part of economy and their operations are quite different. It's always keeping you on your toes. I mean, it's both keeping these conversations relevant, the theory relevant, and applying in different settings. I think that's what I enjoy about it. I mean, I learn every year when I read, you know, go over my slides and refresh what I include in the course.

[33:23]Maya Pomroy: So, you've taught at a couple of different places and a couple of different countries. What do you like the most about being at Rice, other than being right by the medical center, which is a given?

[33:32]Tolga Tezcan: No, that's a great opportunity for myself, for being able to find people that I can talk about my research, who actually do that on a daily basis. Within a year or two after I joined, I got a bunch of calls from friends’ friends or, you know, people that I know indirectly. Their kids were about to go to college and they called me about Rice. And unfortunately, I mean, I don't interact with anybody.

[33:55]Maya Pomroy: “Can you write a letter?” Like, was that the way the conversation went?

[33:59]Tolga Tezcan: No, it was mostly like, you know, “What is it like there? What's the student life?” I said, “Unfortunately, I don't teach undergrads and I don't interact with them much. I wish I did more.” But from what I see, compared to other schools, I mean, they take care of their students here in every possible aspect. And I can see how, being a smaller business school, especially compared to London Business School, it's very personal in that regard. So, they really make sure, you know, they try to help you as much as they could. And they try really hard. And even for faculty, I feel that. Being in a smaller business school, you get a more personal touch in that regard.

[34:38]Maya Pomroy: It's a very tight-knit community.

[34:41]Tolga Tezcan: Indeed.

[34:41]Maya Pomroy: And, you know, you can talk to your professors and they have time for you, even, you know, when they're busy. And that's one of the things that really drew me to Rice, was it wasn't, you know, a big, like the other Texas business schools, it really has a personal, intimate feel. And it is growing, you know. We have an undergraduate program now. That is fantastic, so more people get to have that experience. But it's just something, it's a magic, a little bit of magic. Because I've been to a couple of other business schools, I went somewhere else for undergrad, and it wasn't really like Rice.

[35:13]Tolga Tezcan: I mean, I've been around for a while. I've been around a different school. I can easily… I mean, I can confidently say that that really differentiates here, that, you know, whatever you need, they try to do their best to help you. And I'm very proud of being part of Rice, as well, in general. I mean, it's… you know, I feel lucky to have a job that I have. They are very open about supporting people's research.

[35:34]Maya Pomroy: Well, we're very, very lucky to have you as part of Rice Business.

[35:38]Tolga Tezcan: Thank you.

[35:40]Maya Pomroy: And it has really been a pleasure. Really appreciate your time to sit down and chat with me about what you have done and continue to do for Rice Business. And it's been such a pleasure, Professor. Thank you so much.

[35:51]Tolga Tezcan: Thank you, Maya. Thanks for having me.

[35:54]Maya Pomroy: Thanks for listening. This has been Owl Have You Know, a production of Rice Business. You can find more information about our guests, hosts, and announcements on our website, business.rice.edu. Please subscribe and leave a rating wherever you find your favorite podcasts. We'd love to hear what you think.

The hosts of Owl Have You Know are myself, Maya Pomroy, and Brian Jackson.