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Moneyball is coming to healthcare.  At last.

It is no secret — at least among those who are willing to be honest about our industry’s failings — that healthcare is Moneyball Book Photodecades behind other business sectors, especially when it comes to using analytics to predict future needs and estimate costs.

This was the theme of Karyn Hede’s fine article in HHN Magazine earlier this month.

“Moneyball: The Art of Winning An Unfair Game” is Michael Lewis’ wonderful read on baseball’s use of analytics in the remaking of a small market team with limited financial resources that lost it star players to expensive free agent contracts. 

We are talking about the Oakland Athletics in 2002.  They went from being a formidable team to the doormat of the American League West.  Enter Wilson Lamar Beane, aka Billy Beane.  Beane, a former player who never lived up to his star billing as a General Manager charged with fielding a competitive team, and with little money to land big-name talent, was forced to look for a different (read: low cost) way to build a viable team. 

Billy_Beane_1989When he started his Moneyball journey, Beane faced a resistant baseball organization that was trapped in the old way of scouting, selecting, and developing players. His management team was filled with scouts and player development personnel who were locked in to a “this is the way it has always been” mentality.  During a meeting in Detroit with the Detroit Tigers GM/President Dave Dombrowski to work a trade, Beane noticed there was a frumpy looking “college kid” who had an amazing lock on players and their performance statistics.  Dombrowski seemed to listen to him.  Later, when Beane made the trade, he told Dombrowski that he had to throw in the Harvard educated analytics kid with the deal.  Done.

That brought the college kid statistician, Paul DePodesta , to Oakland where, with his mastery of stats and algorithms, Paul DePodestathey put together an exciting winning season that took them deep into the playoffs.  Here are a couple of things that you need to know:

  • This new Oakland team had few big name stars.  Many baseball know-it-alls thought they were the laughing-stock of the American League West
  • The Manager, Art Howe, was not a believer in this analytical approach
  • This new team actually won more games in the regular season than the previous Athletics team that was loaded with talent and high-dollar contracts
  • This Sabermetrics team set a Major League Baseball record for the number of consecutive wins, 20
  • It was a magical year for Oakland, baseball, and the idea that data-based decisions could  outperform baseball’s old, established ways

To say that Beane initially experienced pushback from the traditionalists on his staff, including his field manager, would be an understatement.  He had to get rid of some of the conservative believers who were unwilling to give a new way of thinking a chance.

Bill James, considered the father of analytics in baseball —  Sabermetrics — once said, “if you challenge the conventional wisdom, you will find ways to do things much better than they are currently done.”  For the record, Sabermetrics is the empirical analysis of baseball, especially baseball statistics that measure in-game activity. The term, coined by James,  is derived from the acronym SABR, which stands for the Society for American Baseball Research.

Baseball then, and healthcare now, have something in common.  We have a lot of people in decision-making roles who cling to the traditional way of looking at problems and are reluctant to change their approach, leaders of this is the way it has always been.

Well, all ye traditionalists, please note this surprising development:  Eric Topal, MD, director of San Diego Scripps Translational Science Institute,  recently hired the aforementioned SABR guru, Mr. DePodesta, to apply his mastery of data research and analysis to transform the Institute. 

This could be significant.

“In disciplines as disparate as baseball, financial services, trucking and retail, people are realizing the power of data to make better (if not conventional) decisions,” Mr. DePodesta told Ms. Hede for the HHN article.

“Medicine is just beginning to explore this opportunity, but it faces many of the same barriers that existed in those other sectors, including baseball — deeply held traditions, monolithic organizational and operational structures and a psychological resistance to change.”

So if you are entering healthcare, if you enjoy the magic of math, research and developing algorithms to make sense of the fire hydrant of information, this is one of the, if not THE, hottest jobs in healthcare. 

For those of you with these passions and skills and who are understandably turned off by the flexible ethical standards of Wall Street, you need to give healthcare a hard look.

Moneyball’s DePodesta believes healthcare is ripe for change.