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Former GE CEO Jeff Immelt: To Combat Costs, CEOs Should Run Health Care Like a Business

April 4, 2019, 12:05 AM UTC

Every company is a health care company, at least in the United States, where health spending accounts for 18% of U.S. gross domestic product.

So it behooves corporate leaders to start running their employee health benefits like a business, argues Jeff Immelt.

The former GE CEO—now a board member of Collective Health, venture partner at NEA, and chairman of Athenahealth—appeared at Fortune’s Brainstorm Health conference in San Diego on Wednesday to argue that corporate chieftains could do more to address the health industry’s spiraling costs, even if they’re not formally in the health business to begin with.

“One of the failures of the U.S. healthcare system is that employers haven’t been very good purchasers of healthcare,” Immelt said. Run that effort like a business, and “that will be a catalyst…for how world change gets made.”

The former CEO said it took the 2008 global financial crisis for him to really scrutinize how much GE was spending on health care costs. It had grown 7% over more than two decades. “If a relatively big company only does that well as a purchaser, there’s something that’s fundamentally broken,” he said. “You can move the needle, but you have to be willing to take the risk. And it has to start with the CEO.”

That could include changing the company’s benefits, boosting awareness, negotiating, or just looking at the incredible spread of costs between individuals in different cities. Some therapies in the U.S. health system “have been transformed in the last 25 years,” Immelt said. Yet “we still spend $0.25 of the dollar on administrative costs.”

Cure cancer? Without question, he added—but perhaps we should solve the cost of inefficiencies of using the century-old X-ray machine first. “That’s where people get lost in healthcare—applying the tools to the most fundamental cases that are really going to make a difference,” he said.

Technology can certainly help, and artificial intelligence is promising. But “you need a brain and a body” to make A.I. successful—to make health data more transparent, to make it faster for a computer to dissect a bill, Immelt said.

Which means change starts in the corner office.

“If every CEO in the country would stand down for, like, two days and actually have their benefits people talk about how the benefits actually happen, how contracting actually happens,” what employees really feel, and so forth? Well, that would completely change the health care industry, Immelt said.

“We’re almost never too late,” he said, “because there are so many things that need to be fixed.”

For more coverage of Fortune’s Brainstorm Health conference, click here. For news delivered daily to your inbox, subscribe to Fortune’s Brainstorm Health Daily newsletter.