Enterprising Developments

Strong Medicine for a Broken Health Care Delivery System

Joe McKendrick
Insurance Experts' Forum, June 10, 2010

Everyone would agree—our health care system is broken. It is overburdened, both over and under-utilized, and far more costly than it should be.

At the root of the problem is a titanic struggle for cost-containment between insurers and providers. As a result of this emphasis, more innovative solutions are not coming to the fore. In addition, as any payer can testify, cost-containment has been an abysmal failure.

Dr. Michael Porter of Harvard University, considered the leading authority on competitiveness, says there is a way out of this mess. Speaking at this week’s World Innovation Forum being held in New York City, he points out innovation in the science side of medicine has been astounding, but there has been little innovation on the organizational and business side. “The problem in health care is actually management ... how do we rethink about what we do?” he asks.

Porter made two key recommendations. First, he recommends a more integrated and holistic approach to the delivery of care. “Our current delivery structure is a hundred years out of date,” he says. That's because patients deal with different specialists and organizations at every level—health care delivery is essentially siloed. There needs to be more of an integrated team addressing problems. There needs to be attention throughout the lifetime of the patient—not just when he or she needs a procedure.

Second, there needs to be a greater emphasis on measurement of outcomes. Not just whether a particular surgery was successful, but the outcomes on patients' overall health and productivity. There are only a few areas, such as kidney transplants, which require documentation to federal agencies—in which outcomes are measured. Interestingly, when outcomes are measured and documented, costs drop as well. There was a dramatic drop in the costs of kidney transplants, as well as positive outcomes to these procedures since recordkeeping began in the 1980s, he pointed out. “Quality means lower cost,” he says.

As Porter demonstrated, it's time for more innovation across this dysfunctional industry, and less time spent locking horns over cost cutting.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (1)

This gives me a chance to recommend my cousin's book "The Innvovator's Prescription" by Clayton Christensen who also teaches at Harvard.

I suspect that measurement of outcomes would occur somewhat naturally the more we can give people choices. I wonder if end of life care that has marginal expectations of extending life or its quality could be an area of choice. If I were in this stage, I would like the choice of foregoing care with marginal expectations and save the money for either care with better expectations or as a legacy to my family or charity. The latter would bring concepts from lifeinsurance into health care and could be a win-win for costs and benefits.

Posted by: CHRIS K | June 15, 2010 3:10 PM

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