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The Conference Board Review® Article
Can This Man Fix Our Healthcare System?
By A.J. Vogl
From appearances, it would not seem so. Michael Porter is neither a healthcare economist nor a policymaker. He is a Harvard professor whose primary field of study has been business strategy and competitiveness.
And yet here he is with the just-published Redefining Health Care: Creating Value-Based Competition on Results (Harvard Business School), which aims to present nothing less than a solution to our nation's ills with respect to health care. If Porter has not come up with The Solution, he — along with co-author Elizabeth Olmsted Teisberg — has come up with an approach that even critics will have to concede is well thought-through and comprehensive in its scope.
But perhaps the biggest surprise — actually not much of one considering Porter's background — is that the main thrust of their thinking revolves around competition. Competition? In health care? Given our current plight — a health bill that keeps rising even as we, by some measures, are getting sicker — many would argue that more competition is the last thing we need.
But that's not genuine competition, argue Porter and Teisberg in the 506 pages of their book. That's zero-based competition, where the gains of any one participant in the system — patients, doctors, hospitals, health plans, government — only come at the expense of others. And in their view: "The only way to truly reform health care is to reform the nature of competition itself."
A tall order, but for Porter almost business as usual — competition is his business. His Competitive Strategy (1980) may be the most widely known; currently in its fifty-third printing, it has been translated into seventeen languages. It was followed in 1985 by Competitive Advantage and in 1990 by The Competitive Advantage of Nations. Porter is Bishop William Lawrence University Professor at Harvard Business School, where he also leads the Institute for Strategy and Competitiveness. His co-author, an associate professor at the University of Virginia's Darden Graduate School of Business, has a background in strategy, innovation, and risk analysis; she has researched health care for more than a decade.
ATB editor A.J. Vogl interviewed Porter, 58, in his spacious office at the Institute, housed on the Harvard B-school campus.
In your book, you use various ominous phrases to describe our current healthcare system: among them, "a dangerous path," "no time to waste," and "collision course." What collision are you talking about?
The collision between our aspirations as a society and our capacity as individuals and institutions to pay for the cost of health care, given the current trajectory of the system. As you know, in virtually every state in America, this is the budget-buster. If we simply stay on the same path, given the demographic changes that lie ahead —
You're referring to our aging population?
Yes. There are basically three alternatives for dealing with health care. One is you just put more money into the system — that's what the prescription-drug benefit is, really — but that's not a real solution. Another alternative is to ration — that is, we'll just have to do with less care. Other countries do that, of course — the United Kingdom is legendary for rationing, and if you're over a certain age, too bad. The third alternative, the only real one, is to significantly change the value delivered by the system. It's quite stunning to me that in all the countless discussions of the healthcare system, this issue gets a very small piece of overall attention. Instead, the overwhelming amount of attention is directed to how much you can put in the system and how to get people insured.
Comments? Write a letter to the editor.
Return to the July/August 2006 The Conference Board Review® issue.
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