Managing Risk in Healthcare: Lessons from a Former Wall Street Trade
Healthcare actuaries are like Wall Street’s “quants”.
I was a Wall Street bond trader for 6 years before I pivoted to a career in medicine.
I’ve been a practicing psychiatrist since 2013. I live in Montana.
My time navigating stormy financial markets taught me how to manage risk and appreciate the complexities of money flows.
In the 90’s, I witnessed the rise of Wall Street “quants” who included MIT physicists turned financial modeling wizards.
Jim Simons, the founder of Renaissance Technologies, was the brightest example of this group. My friend Ted Merz, CFA wrote a great post about Simons soon after his passing.
I predict that the role of actuaries will similarly grow in importance over the next 10 years in healthcare.
Actuaries are the “quants” of healthcare.
Value-based care (VBC) is here to stay. Over time, the aggregate value of VBC contracts will dwarf those of fee-for-service contracts.
Doctors have to partner with actuaries to make sense of increasingly complex healthcare finances.
If we believe that our own teams deliver great care, we will want to take on more risk to capture some of the value we create. Actuaries are our friends here.
I never thought that my time on the trading floor would prepare me to run a healthcare organization.
I’m grateful for what the financial markets taught me.
Photo Credit: Jack Bell Photography
