Think of your hospital as a startup: Mark Cuban’s plan to fix inpatient care
Give celebrity entrepreneur Mark Cuban credit for thinking outside the box. He founded Cost Plus Drugs with a goal of lowering generic drug prices by eliminating pharmacy benefit managers and using a cost-plus pricing strategy. He believes he also could bring greater efficiency, transparency and outcomes to owning a hospital.
“You’ve got to be able to get down like any other startup,” he said during a recent interview on the Healthcare Bridge podcast. “You’ve got to think of your hospital as a startup and your first doctors as your first employees or your partners.”
If he owned a hospital, he said he would operate it as any other business startup, focusing on key personnel and essential technologies instead of expensive infrastructure and administrative layers.
“It is the same with Cost Plus Drugs,” he said. “Our margins are only 15%, but I know that the key element for me is how I build trust, and the way to build trust is by having a set margin. If I did buy a hospital, I would get rid of all the ancillaries and market it much like we do Cost Plus Drugs and pay my doctors more. We don’t have many employees, but we pay them well.”
In an industry in which pinning down the cost of services traditionally has been difficult, Cuban believes improved transparency would create a competitive advantage.
“I would put out there and market, `look, here’s what we pay our doctors,'” he said. “`Here’s our overhead, down to the penny, so that you can see what it costs. And here’s what we get reimbursed by Medicare, and we’ll charge you the same, and we’ll grow.'”
Scale, not long-term sustainability, often drives expansion.
“I think part of the challenge is how most CEOs are rewarded,” Cuban said. “Hospital CEOs are rewarded by revenues and scale, and so they default to more buildings. If this 100-bed hospital is not my final destination, I want to be the 60-hospital, six-zillion beds, because that’s where I’m making $10 million a year.”
Artificial intelligence would play a critical role in boosting efficiency and profitability. He cited the example of a client who recently acquired a 250-bed private hospital with 3,000 contracts that had gone bankrupt.
“Imagine, all those processes associated with all those contracts could be automated with AI agents, because there’s nobody verifying all the financial information associated with transactions from each one of those contracts,” he said. “No chance you can’t hire enough people to do that. That’s what agentic AI is really going to do for hospitals’ and clinics’ and practices’ low-hanging fruit.”