[Paleopsych] NYT: (Andrew Grove) From Intel to Health Care and Beyond

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Sat Jul 30 15:25:58 UTC 2005

>From Intel to Health Care and Beyond 
[Grove's "Efficiency in the Health Care Industries: A View From the Outside" 
appended. A great article indeed!]

    IN case you missed it, Andrew S. Grove has an article in this week's
    issue of the Journal of the American Medical Association. In his 68
    years, Mr. Grove has written six books, including a management
    classic, "Only the Paranoid Survive"; a beautifully rendered memoir,
    "Swimming Across"; and a new book, published last month, composed of
    case studies that he uses in the class he teaches with Robert A.
    Burgelman, a Stanford University professor, entitled "Strategic
    Dynamics: Concepts and Cases." But it's not every day that he makes an
    appearance in an eminent medical journal like JAMA.

    The article, "Efficiency in the Health Care Industries," was labeled
    commentary, but it was more akin to a jeremiad. Mr. Grove took dead
    aim at the lack of efficiency in health care - the amount of time it
    takes a research lab to turn an idea into a working drug, for
    instance; and the extent to which medicine lags behind other
    industries in using technology to store and retrieve data, to the
    detriment of doctors and patients. He compared it unfavorably to an
    industry he knows rather intimately, microchips, which has turned
    efficiency into an art, thanks in no small part to Mr. Grove.

    The article signaled that Mr. Grove's obsession with the problems in
    the health care industry, problems he first explored in a 1996 Fortune
    magazine article about his battle with prostate cancer, has not waned.
    It signaled something else as well: Mr. Grove has been keeping plenty
    busy in retirement.

    Did you know that Mr. Grove, one of Silicon Valley's most iconic and
    influential figures, has retired from [3]Intel? Well, O.K., retirement
    may be a bit strong: he still has a desk at Intel, where he describes
    his current role as "internal agitator." (His official title is senior
    adviser to executive management.) But on May 18, at Intel's annual
    meeting, Mr. Grove resigned as chairman of the board. For the first
    time since 1979, when he was named its president, Intel's fortunes are
    not Mr. Grove's responsibility. Although the meeting was, in part, a
    public retirement party for Mr. Grove, the news garnered surprisingly
    little attention in the East Coast business media.

    ONE of the great joys of being a business journalist over the last
    quarter century has been the chance to listen to Andy Grove. As
    president, chief executive and finally chairman of Intel, he would
    periodically make the rounds of the business magazines and the
    business sections of the big newspapers, where he would sit in a
    conference room and take questions from the reporters and editors.
    Yes, of course, he gave us the Intel spin. But unlike most C.E.O.'s,
    programmed like robots to stay on message, Mr. Grove was willing to
    share his thoughts on all manner of things.

    With his wide-ranging intellect and his engagement with the world, he
    broadened our understanding of technology, strategy, the fall of
    communism (he escaped from communist Hungary at the age of 20), and
    dozens of other topics.

    I last sat in on one of his jam sessions maybe three years ago, and
    I've missed them. So a few weeks ago, I decided to bring the mountain
    to Mohammed. I went to visit him in Silicon Valley, to see what he was
    up to (audio excerpts of my interview with Mr. Grove are at

    It turns out that he's up to quite a bit. "My mind is spinning as fast
    as it did then," he said, comparing his new life to his old in his
    mellifluous Hungarian accent. "But I'm not in meetings all day. I have
    the ability to pick and choose what I do, which I never had in my
    life. The penalty is that I deal with issues that are mammoth."

    We met at the office of his foundation, which, among other things, is
    financing stem cell research ("We are helping to keep U.S. stem cell
    programs limping along," he said), and trying to develop programs that
    will help people who are not college-bound acquire vocational skills
    to allow them to earn a decent living.

    He talked about his quest to find what he called "the Rosetta code"
    for the health care industry. By that he means the development of
    software "that takes incompatible systems and translates them into
    each other, so that one system can automatically read the other." He
    thinks there are few things more important for patients than to have
    any doctor, anywhere, be able to access their medical records, but
    because the industry is so fragmented, with so many records still in
    paper form, that is currently impossible.

    At Intel, most of his time is spent with a new health care group,
    where he pushes and prods and argues with its members as they try to
    figure out how to bring this laggard industry into the technological
    age - and with any luck, make some money for Intel in the process.

    We talked a bit about the central ideas in his new book, which
    examines what happens when a particular business environment suddenly
    changes and industries collide, as when, for instance, digital
    technology turned the music industry upside down. Mr. Grove, not
    surprisingly, had mainly contempt for the music industry's early
    efforts to keep the digital wave from coming to shore.

    "If the new technology is compelling enough," he said, "it will win
    out. When the railroads came, Wells Fargo was in trouble. When the
    printing press came along, the monks didn't stay around very long."
    Music, telephony, media: they've all faced the same disruptions, and
    in Mr. Grove's view they are all going to have to adapt - or else.

    At the annual meeting last May, he laughingly described the line
    "Technology will always win" as "Grove's Law."

    Then he moved to the subject of his latest obsession: globalization.
    Will it surprise you to know that this refugee from Hungary, whose
    company derives 70 percent of its revenue from places other than the
    United States, is a bear on the potential consequences of
    globalization on this country? He is.

    "I don't think there is a good outcome," he said. "I looked up a quote
    for you. 'If you don't believe that [globalization] changes the
    average wages in America, you believe in the tooth fairy.' Do you know
    who said that? Paul Samuelson, age 90."

    Although mainstream economic thought holds that America's history of
    creativity and entrepreneurialism will allow it to adapt to the rise
    of such emerging economies as India and China, Mr. Grove thinks that
    is so much wishful thinking. In his view, globalization will not only
    finish off what's left of American manufacturing, but will turn
    so-called knowledge workers, which was supposed to be America's
    competitive advantage, into just another global commodity.

    "There is an increasing trend towards lathroscopic surgery being done
    with robots," he said by way of example. "Once you are doing it with
    robotics, why do you have to be there?" The procedure might just as
    well be done from India. Or China.

    What particularly bugs Mr. Grove is that he can't see a way that this
    country can find the equivalent of a disruptive technology that will
    allow it to retain is current place atop the economic heap. He's
    always been someone who liked to generate big, gnarly solutions that
    may take years to work through, and though it may seem a tad grandiose
    on his part to think that he should be able to devise a way to solve
    America's globalization problem, it is also part of what makes him
    such an appealing character.

    "I think Intel and me and the JAMA article can move health care a few
    pebbles forward," he said. "This last one, I will be happy just to
    have some people talking about it, and legitimize it. There are no
    clear answers."

    Toward the end of the interview I asked him whether he liked his new
    life. "I love it," he said. "I was very ready for it. I have liked all
    phases of my career. I liked the technological side. I liked
    management. I liked discovering strategy." He likes being able to read
    history now, something he rarely had time for in his previous life. He
    likes not having to worry about every minute twist and turn in the
    technology industry, and how it might effect Intel.

    Did that last annual meeting have any special meaning? I wondered.
    "Nothing emotional happened that day," he replied. But, he added, he
    has been having dreams lately about Intel. "It is as if I'm reliving
    an event that happened when I was operations manager 25 years ago. It
    is not speeches, not limelight, just factory visits and arguments,
    which didn't really happen. I didn't used to have these dreams. So I
    have a lot of feelings.

    "I see a lot of Intel retirees," he added. "They keep company with
    each other. There is some nostalgia. I don't know if it is for the
    Intel of those days, or my younger self.

    "But not on May 18," he said. "That was just a nice event."


Efficiency in the Health Care Industries: A View From the Outside
Andrew S. Grove, PhD
JAMA. 2005;294:490-492.
Vol. 294 No. 4, July 27, 2005

The health science/health care industry and the microchip industry are similar 
in some important ways: both are populated by extremely dedicated and 
well-trained individuals, both are based on science, and both are striving to 
put to use the result of this science. But there is a major difference between 
them, with a wide disparity in the efficiency with which results are developed 
and then turned into widely available products and services.

To be sure, there are additional fundamental differences between the 2 
industries. One industry deals with the well-defined world of silicon, the 
other with living human beings. Humans are incredibly complex biological 
systems, and working with them has to be subject to safety, legal, and ethical 
concerns. Nevertheless, it is helpful to mine this comparison for every measure 
of learning that can be found.

First, there are important differences between health care and microchip 
industries in terms of research efficiency. This year marks the 40th 
anniversary of a construct widely known as Moore's Law, which predicts that the 
number of transistors that can be practically included on a microchip doubles 
every year. This law has been a guiding metric of the rate of technology 
development.1 According to this metric, the microchip industry has reached a 
state in which microchips containing many millions of transistors are shipped 
to the worldwide electronics industry in quantities that are measured in the 
billions per month.

By contrast, a Fortune magazine article suggested that the rate of progress in 
the "war on cancer" during the same 40 years was slow.2 The dominant cause for 
this discrepancy appears to lie in the disparate rates of knowledge turns 
between the 2 industries. Knowledge turns are indicators of the time it takes 
for an experiment to proceed from hypothesis to results and then lead to a new 
hypothesis and a new result.

The importance of rapid knowledge turns is widely recognized in the microchip 
industry. Techniques for early evaluation are designed and implemented 
throughout the development process. For example, simple electronic structures, 
called test chips, are incorporated alongside every complex experiment. The 
test chips are monitored as an experiment progresses. If they show negative 
results, the experiment is stopped, the information is recorded, and a new 
experiment is started.

This concept is also well known in the health sciences. It is embodied in the 
practice of futility studies, which are designed to eliminate drugs without 
promise. A recent example of the use of futility studies for this purpose is 
the exercise of narrowing the list of putative neuroprotective agents before 
launching a major randomized clinical trial.3

The difference is this: whereas the surrogate "end point" in the case of 
microchip development--the test chip failure--is well defined, its equivalent 
in the health sciences is usually not. Most clinical trials fall back on an end 
point that compares the extent by which a new drug or therapy extends life as 
compared with the current standard treatment. Reaching this end point usually 
takes a long time; thus, knowledge turns are slow. In many instances, a 
scientist's career can continue only through 2 or 3 such turns. The result is 
wide-scale experimentation with animal models of dubious relevance, whose merit 
principally lies in their short lifespan. If reliable biomarkers existed that 
track the progression of disease, their impact on knowledge turns and 
consequently on the speed of development of treatments and drugs could be 

Even though such biomarkers could have a profound effect on medical research 
efficiency, biomarker development efforts seem far too low. Although precise 
numbers are difficult to come by, in my estimation, in the microchip industry, 
research into development, test, and evaluation methods represents about 10% of 
total research and development budgets. This 10% is taken off the top, 
resulting in less actual product development than the engineers, marketers, or 
business managers would like. But an understanding that this approach will lead 
to more rapid knowledge turns protects this allocation from the insatiable 
appetite of the business. The National Institutes of Health (NIH) budget is 
about $28 billion a year.4 It seems unlikely that anywhere near 10%--$2.8 
billion--is spent on biomarker development.

A second difference between the microchip and health science industries is the 
rate at which hard-fought scientific results are "brought to market"--produced 
in volume in the case of microchips or translated into clinical use in the case 
of medicine. A key factor in accelerating the movement of discoveries from the 
research laboratory to marketplace (or from bench to bedside) is the nature of 
the facilities in which translational work is performed. The world of business 
has many stories of failures of organizational designs that impede technology 
transfer. The classical research laboratory, isolated and protected from the 
chaos and business-driven urgencies of production units, often led to 
disappointing results. For example, when Intel started, the leadership resolved 
to operate without the traditional separation of development from production, 
which worked remarkably well for quite some time. Developers had to compete for 
resources with the business-driven needs of production, but their efforts were 
more than compensated by the ease with which new technology, developed on the 
production line, could be made production worthy.

Today, an evolution of this resource-sharing principle continues in the 
microchip industry. Dedicated developmental factory units are designed from the 
ground up with the aim of eventually turning them into production units. They 
are overbuilt for the needs of development, but once development is completed, 
the facility is filled with equipment and people and transformed into a 
production unit in a matter of months. Although overbuilding for the 
development phase costs more initially, the savings in efficiency of moving 
products to production more than make up for this initial outlay. Medical 
facilities are designed for a variety of purposes, ranging from outpatient 
clinics to surgical centers, from general hospitals to tertiary hospitals. 
There is room for a translational hospital designed from the ground up with the 
mission of speeding new developments toward usage in general hospitals. These 
hospitals would be flexible, equipped for capability of extra monitoring, ready 
to deal with emergencies--all extra costs but likely to be made up by the 
resulting increase in translational efficiency. Some examples exist, such as 
the NIH Clinical Center. Some cancer centers have adopted changes in hospital 
design that are steps in this direction. However, much more needs to be done 
before these designs are evaluated and an optimal approach is adopted and 
proliferated throughout the health care industry.

When it comes to operational efficiency, nothing illustrates the chasm between 
the 2 industries better than a comparison of the rate of implementation of 
electronic medical records with the rate of growth of electronic commerce 
(e-commerce). Common estimates suggest that no more than 15% to 20% of US 
medical institutions use any form of electronic records systems.5 By contrast, 
during the last 10 years, more than $20 trillion worth of goods and services 
have been bought and sold over the Internet (A. Bartels, written communication, 
June 2005).

e-Commerce started in the era of mainframe computers. It required specialized 
software, created and owned by the participants (so-called proprietary 
software). To link buyer with seller, each had to have the same software. The 
software was expensive and difficult to modify and maintain. Consequently, the 
use of e-commerce was limited to a few large companies.

The Internet changed all that. Computing became standardized, driven by the 
volumes of substantially identical personal computers; interconnection 
standards were defined and implemented everywhere. A virtuous cycle evolved: 
standards begot large numbers of users, and the increasing numbers of users 
reinforced the standards. It was easy to become part of an electronic 
marketplace because it no longer required the installation of proprietary 
software and equipment.

The early results were pedestrian: orders taken by telephone, manual data entry 
and reentry, and the use of faxes were reduced. But the benefits were 
spectacular. Costs and error rates plunged. Small- and medium-sized companies 
rushed to join the electronic marketplace, necessitating the development of a 
standardized software code that would translate information from one company's 
system to that of another, the computing version of the Rosetta stone.

Although the computer industry is fairly fragmented,6 the health care industry 
is even more so. Like the computer industry, health care is a largely 
horizontally organized industry, with the horizontal layers representing 
patients, payers, physicians, and hospitals, as well as pharmaceutical and 
medical device companies. Standard ways of interconnecting all these 
constituencies are crucial. The good news is that the desire to increase 
internal productivity has led to at least partial deployment of information 
technology within the companies of many of the participants. Further good news 
is that the physical means of interconnecting the many participants already 
exists in the form of the Internet.

The bad news is that with the exception of a few, large, vertically integrated 
health care organizations, in which participants from several layers are 
contained in 1 organization (as is the case with the Veterans Affairs 
Administration and Kaiser Permanente), the benefits of electronic information 
exchange are not necessarily realized by the participants in proportion to 
their own investment.7 The industry faces what is called in game theory the 
"prisoners' dilemma" all members have to act for any one member to enjoy the 
benefit of action.

Such collective action often requires external stimulus. The year 2000 problem 
(ie, "Y2K") was an example of such a stimulus, causing the near-simultaneous 
upgrade of the worldwide computing and communications infrastructure. Although 
its ostensible benefit was the avoidance of a digital calamity at the turn of 
the century, its greatest benefit was in readying thousands of commercial 
organizations for the age of the Internet and e-commerce.

Even though the task facing the health care industry in developing and 
deploying the crucial "Rosetta code" is much smaller than the task of getting 
ready for 2000 was, external impetus is still needed to catalyze serious 
action. The National Health Information Infrastructure Initiative8 demonstrates 
some desire to encourage progress along these lines.

However, what is needed to cause the industry to act is customer demand. The 
largest customer--approaching half of total health care spending9--is the 
Medicare system. It seems that the entire health care industry would benefit if 
Medicare mandated the adoption of a Rosetta code for the health care industry 
before institutions were granted permission to participate in Medicare 

There are signs that individual consumers may be taking matters into their own 
hands. The proliferation of companies providing personal health record 
services10 is an indication of such a movement. This phenomenon has all the 
makings of becoming a disruptive technology.11 Disruptive technologies, usually 
initiated by small businesses that are new to the industry in question, can 
force widespread defensive actions by the much larger industry incumbents. In 
this case, inadequate response by the incumbents could lead to some of the 
emerging providers of personal health record services becoming the owners of 
the customer relationship--a development of considerable strategic significance 
to all such businesses.

The health care industry in the United States represents 15% of the gross 
domestic product,12 and bearing its cost is a heavy burden on corporations and 
individuals alike. The mandate for increasing its efficiency--in research, 
translation, and operations--is clear. History shows that whatever technology 
can do, it will do.

If not here, where? If not now, when?


Corresponding Author: Andrew S. Grove, PhD, Intel Corporation, 2200 Mission 
College Blvd, Santa Clara, CA 95054 (Andy.Grove at intel.com).

Financial Disclosures: Intel Corporation manufactures microprocessors and other 
types of microchips that can be used in health care information technology.

Author Affiliation: Dr Grove is former chairman of the board of Intel 
Corporation, Santa Clara, Calif.


1. Moore G. Cramming more components onto integrated circuits. Electronics 
Magazine. April 19, 1965:114-117.

2. Leaf C. The war on cancer. Fortune. March 2004:76-96.

3. Elm JJ, Goetz CG, Ravina B, et al. A responsive outcome for Parkinson's 
disease neuroprotection futility studies. Ann Neurol. 2005;57:197-203.

4. American Association for the Advancement of Science. NIH "soft landing" 
turns hard in 2005: R&D funding update on R&D in the FY 2005 NIH budget. 
Available at: http://www.aaas.org/spp/rd/nih05p.htm. February 20, 2004. 
Accessed June 20, 2005.

5. Manhattan Research. Taking the Pulse v 5.0: Physician and Emerging 
Information Technologies. New York, NY: Manhattan Research; April 12, 2005. 
Available at: http://www.manhattanresearch.com/thepulse2005.htm. Accessed June 
20, 2005.

6. Grove AS. Only the Paranoid Survive. New York, NY: Doubleday; 1996:42.

7. Pearl R, Meza P, Burgelman RA. Better Medicine Through Information 
Technology. Stanford, Calif: Stanford Graduate School of Business; 2004. Case 
study SM136.

8. Stead WW, Kelly BJ, Kolodner RM. Achievable steps toward building a national 
health information infrastructure in the United States. J Am Inform Assoc. 
2005;12:113-120. ISI

9. Cowan C, Catlin A, Smith C, Sensenig A. National health expenditures, 2002. 
Health Care Financ Rev. 2004;25:143-166.

10. Markle Foundation. The Personal Health Working Group final report. 
Connecting for health: a public-private collaboration [appendix 2]. New York, 
NY: Markle Foundation; July 2003. Available at: 
http://www.connectingforhealth.org/resources/final_phwg_report1.pdf. Accessed 
June 20, 2005.

11. Christensen CM. The Innovator's Dilemma: When New Technologies Cause Great 
Firms to Fail. Boston, Mass: Harvard Business School Press; 1997.

12. 2004 CMS Statistics . Baltimore, Md: US Dept of Health and Human Services, 
Centers for Medicare & Medicaid Services, Office of Research, Development and 
Information; 2004. CMS Pub No. 03455. Available at: 
http://www.cms.hhs.gov/researchers/pubs/CMSstatistics/2004CMSstat.pdf. Accessed 
June 20, 2005.

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