Seema Verma has helped shape the US healthcare system from as many vantage points as almost any leader. Over the course of her career spanning entrepreneurship, public health, government, and healthcare technology, Verma has worked to advance healthcare policy and modernize care delivery. In 2017, Verma became administrator of the US Centers for Medicare & Medicaid Services. Today, as executive vice president and general manager of Oracle Health and Life Sciences, she focuses on how to use technology, especially the unprecedented power of artificial intelligence, to help solve healthcare’s most difficult challenges.
As America marks its 250th anniversary, McKinsey is sitting down with public, private, and social sector leaders to explore the ideas and opportunities that will shape the country’s next chapter. In this interview, McKinsey Partner Jeet Guram talks with Verma about the leadership lessons she took from public service, the balance between federal leadership and state innovation, the importance of public–private collaboration, and why she believes AI can help transform healthcare and accelerate the shift to value-based care. This interview has been edited for length and clarity.
Jeet Guram: I’m especially excited about this conversation, having seen firsthand your work at the Centers for Medicare & Medicaid Services [CMS], the agency that you helmed two administrations ago now. What learnings did you take away from leading CMS?
Seema Verma: I look back on my time at CMS, and it was very hard work. Sometimes I think about it as boot camp—you’re working very, very hard, but when you come out of that experience, you’re a lean, mean, fighting machine. At CMS, you are literally addressing every major healthcare issue and problem—from the big problems like drug pricing, access, and quality to small problems like a code for a particular service. I felt like there was no better perch from which to understand healthcare.
It was an incredible opportunity to serve my country. It’s important that at some point in our lives we give back, and it was such an honor and a privilege to serve in that capacity and to take what I had learned and use it for the good of the entire country.
Jeet Guram: What are your reflections on working in state government versus the federal government in terms of how you could drive change at each level?
Seema Verma: That state experience definitely impacted how I led and what I did in the federal government. At the state level, first of all, there’s a balanced budget [requirement]. The federal government doesn’t have that type of constraint. On the other hand, state government is smaller, so getting something done is a lot easier. You go downtown and talk to the hospital leader and somebody in the state legislature. In some ways, states are more nimble in their ability to implement and actually be the laboratories of innovation. Whereas in the federal government, it’s a lot harder to move.
I came into government thinking that states needed more flexibility and that the federal government should stay out of the way. And after four years, I felt exactly the same way: States need to have more flexibility because they’re ultimately closer to the citizens that they serve.
Jeet Guram: It’s a great point and related to our celebration of the 250th anniversary of our founding. Our founders set up a purposefully federalist model. And in healthcare, we’ve seen the benefits, with states able to test different approaches and tailor policy according to what their citizens want and prefer.
Seema Verma: That’s right. So if we think about a state like Alaska, its challenges with delivering healthcare are different from, let’s say, New York, not just in terms of demographics but also physical constraints. Alaska was actually more advanced in terms of telehealth than other parts of the country.
But there are also times when having different laws in different states is not helpful. For example, I think about AI, where there’s more legislative activity on the state level. And now that I’m driving a company that’s building software solutions at scale, the question becomes: How do we bring a product to market that is compliant with all these different policies? And that increases the cost of bringing a great solution to the market.
So there are times when it’s helpful to have a one-size-fits-all approach, but you also need state flexibility. We’ve got to be able to experiment, and that’s how we’ll create great ideas that can then be done on a national level.
Jeet Guram: What are the biggest misconceptions about driving change in the public sector?
Seema Verma: I remember when I left government, some people would tell me that the private sector is more operational, as if government was more theoretical. But government is both. There is theory in the policies, but behind the scenes, there’s a lot of operations to run the government.
The other thing I would say is that we sometimes think that innovation only comes from the private sector. But during our time in government, we were able to drive innovation in ways that the private sector hadn’t been thinking about—for example, payment policy and reducing the burden for providers. We were the ones that came up with the policy. Then the provider community said, “No, we don’t like that. It’s not exactly right.” So we worked together, and we were able to create a much better policy. But innovation can come from government, and there is an opportunity for government to lead and drive change that sometimes the private sector can’t do.
Jeet Guram: I’d be interested to discuss how you see the public and private sectors interacting.
Seema Verma: Healthcare is a heavily regulated industry. Government and private healthcare intersect widely, so they have to work together. When I was in government, I would think about it in terms of lead, follow, or get out of the way. There are things that only government can do, largely because of funding. They have deep pockets and can incentivize the market. That’s a very critical role. But often, government will overregulate, creating too many laws and rules, which can thwart innovation.
So the best is a balance between the two. Government sets the policies, but it’s really the private sector that brings those policies to life. It is the private sector that’s on the front lines, that’s interpreting and living those policies. So any time government’s developing something, it’s super important to have that collaboration and that communication, because that’s when you’ll get the best policy and the best buy-in to make it successful.
Jeet Guram: How did your leadership style evolve over the chapters of your career?
Seema Verma: When I came into CMS, I had had a lot of policy expertise. I had been running a small business that was helping state governments and private sector companies around healthcare policy issues and government-related policy. But I still wasn’t ready to take on the CMS role. And so that came with a lot of learnings, and the biggest transformation for me was around leadership. In prior roles, I was used to being much more hands-on, the subject matter expert, figuring out the ideas, writing the papers. And then I moved to a leadership role, and the job changed. It wasn’t my job anymore to do that work. Rather, it was now my job to organize the entire agency, to define the mission and the vision, to be a leader, to get everybody aligned on that mission, and to deliver and execute around that vision. So the skills really changed. It’s the difference between leadership at scale versus leadership at a much smaller level.
It was also a great opportunity to learn from other leaders around you, whether it’s the president himself, senators, the vice president, or people who are leaders in healthcare, a CEO of a company, or a leading researcher. It was great to tap into the private sector where you had these experts, and they came to you with good ideas that were fully baked that we could put our arms around and say, “Yes, we’re going to do that.” I think about our work around $35 insulin. That actually came from Eli Lilly. They had spent a lot of time developing it, and we were able to implement something that had a big impact and ended up being legislated.
The other element in government that is very different is the media and public attention. If you make a mistake in the private sector, you weren’t necessarily on camera. You didn’t have an audience, you didn’t have people that were going to leak to the media. But in public service, you absolutely do. So yes, it was challenging, but I learned a lot from that. You learned a lot about how to express emotion and how to be more levelheaded.
Jeet Guram: Moving to your next chapter at Oracle Health, leading a global technology company, how has that shaped your perceptions of the healthcare industry? And what do you now see as opportunities to transform the healthcare industry leveraging technology?
Seema Verma: So even when I was in government, we thought about what would really move the needle. And if you look back at the history of the world and what has actually created massive change, government has obviously done that. But if we think about the other factor that’s truly moved the needle, it is technology. So even when I was in office, I put a lot of time into how to encourage innovation. How do we ensure that the United States continues to lead in healthcare innovation? But it’s much harder to get things done in government.
In the private sector, you can move a little bit faster. It’s nimble, so it’s a little bit easier to get things done. And in terms of the technology opportunity for the private healthcare sector, we are at a critical time in the history of technology now that we have artificial intelligence. There’s an incredible opportunity to solve some very long-standing problems in healthcare. So now, in terms of making change in healthcare and solving problems, I think this time it’s going to be technology in the private sector.
Jeet Guram: I’d love to hear more about how AI can transform care delivery and the patient experience—and how we can use AI to empower patients to be at the center of the healthcare system.
Seema Verma: I couldn’t be more enthusiastic. After some 30 years of a healthcare career, I kept thinking, “We’re at the local level, but if I get to the state level, we can solve some of the problems. And then if I get to the federal level, we can solve some of the problems.” But the reality is that, having been at all three, I could see that the actual change was very small or maybe nonexistent.
The great news is that advances in medicine have enabled people to live longer and to live longer while healthy. We’ve seen incredible innovation with medications, whether it’s GLPs, or new Alzheimer’s drugs, or statins. But that’s also putting a lot of stress on the healthcare system, because suddenly, there’s more demand for services, and we don’t have the workforce to support it.
And if we think about the 50 years of healthcare legislation and all the things that we’ve improved from a government standpoint, you’ll find that we continue to see our costs go up. It’s becoming unaffordable for the government, for employers, and for patients. You’re seeing increasing frustration in the system for doctors in terms of the amount of burden and complexity of what they’re dealing with.
We also know that we have uneven quality. From a public-health perspective, the United States ranks lower than many industrialized countries. And we spend the most on healthcare. So our return on investment really hasn’t been that great.
And that’s why I’m so excited about AI, because AI really has the capacity to solve some of these long-standing challenges. Not all of these problems, but many of them share one thing in common—that’s data. We don’t have enough data, so we don’t have access to a patient’s entire medical history when we need it, or we don’t always know how to connect eligible patients to clinical trials that could help them. And sometimes it’s too much data, and we can’t make sense of it, because we don’t have the analytical tools to sift through it all fast enough to use it effectively.
So it’s too much, too little, or it’s not the right data at the right time. This is where AI will help—by being able to take the massive volume of data that we generate in healthcare and make sense of it. I think a lot of the dysfunction in healthcare comes from outdated processes, which is due to not really having data liquidity. The data hasn’t been moving very well.
Just by putting AI in the hands of patients, providers, payers, and pharma companies, we’re going to create efficiencies like we haven’t seen before. With better AI, we will be able to develop new cures and new treatments. As I think about many of the challenges that we’ve dealt with, whether it was rural health or program integrity with waste, fraud, and abuse, a lot of them can be addressed and even solved with AI. I think we’re about to usher in a new era of healthcare.
Jeet Guram: We’re also seeing technology unlock new opportunities in value-based care. How do you see the government advancing a system where we really pay for and reward value, and how can the private sector and technology unlock value-based care delivery and operations?
Seema Verma: As CMS administrator, when I was thinking about solutions to the big challenges facing our healthcare system, there were two main buckets of ideas. One was technology and innovation, and the second was value-based care. Even though we’ve struggled to implement value-based care at scale, the concept that we should be paying providers to keep patients healthy is spot-on. But that is not how financial incentives work in our system. The financial incentives actually reward the system when somebody is sicker—when patients spend more time in the hospital and receive more expensive services. Value-based care is all about changing the financial incentives.
I think the challenge for value-based care has been that we like the concept, we set up these financial incentives, but we didn’t really give providers the tools to do the work. For example, if we give providers data on their patients six months after something happens, that’s too long. You can’t expect a provider to do anything around value-based care when they don’t even have the information about what’s going on with their patient in real time or close to it.
AI allows us to identify patients most at risk of becoming sick, so we can recommend interventions to reduce that risk and hopefully keep them out of high-cost care settings. We can use home monitoring and wearable device technology to be able to track patients when they’re outside the healthcare setting. So I hope that we’re not discouraged by the fact that it’s been a slow movement toward value-based care. With AI, there’s an incredible opportunity to actually speed up the adoption of value-based care because we have better tools.
Jeet Guram: Outside of how technology can equip providers to better deliver care and move to a value-based system, I’d like to talk about the patient side of the equation. How can we better empower and equip the patient to play a proactive role in their care journey?
Seema Verma: Patients want to be healthy. They want more information to understand their health and to be more engaged. However, people from all walks of life have the same experience with healthcare and say it doesn’t function well. And, of course, every provider and every health system says they’re committed to patient-centered care.
But the reality is that the day-to-day for a patient can be very difficult. It’s hard to get appointments. Even if you get a doctor’s appointment, it’s tough to understand your financial responsibilities or what your insurance company will cover. After a lot of changes, we now have a little bit more data on pricing, but what about quality? We don’t always have the transparency.
But again, this is an opportunity for AI. AI can bring all that information on quality and pricing together. What does your plan pay for? What appointment is available from which providers? So there’s this opportunity to really empower patients in a way that we’ve never done before.
Jeet Guram: As we look to America’s next chapter, what are you most excited and optimistic about?
Seema Verma: I was really excited about the 250th birthday of America. As I’ve reflected on the country and where we are, I can say that I am proud to be American. I am a first-generation American, so I had the perspective of what life was for my family and for my parents, who lived in a different country in a different time. And I can also see some of my cousins who are my peers living in other countries and what their experience is. And I couldn’t be more grateful.
This really is the land of opportunity. And I do believe that success is there if you are willing to work for it. Nothing comes easy. There’s no magic formula. But if you work hard, there is plenty of opportunity here. I know that people have challenges or criticisms for the country on both sides, but at the end of the day, to me, this is the only place in the world where that opportunity does exist. And I’ve seen that in my own family and with my own experience.
