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The Conference Board Review® Article
The Healthcare Crisis — Solved?
In an interview in our July/August issue, Harvard management guru Michael Porter discussed his new book, Redefining Health Care: Creating Value-Based Competition on Results — co-written with Elizabeth Teisberg of the University of Virginia's Darden School of Business — and the book's competition-based proposals for tackling America's healthcare calamity. We asked several healthcare authorities to evaluate and comment on those proposals. The original interview is available on our website.
By A.J. Vogl
Maggie Mahar:
Michael Porter is right about ruinous competition. And to lift quality, we do need to focus on results. But when he suggests that the solution is to ask healthcare providers to compete on outcomes, he ignores both the history of health care and the messy realities of a profit-driven marketplace.
The idea of concentrating on outcomes is not new. In 1988, Paul Ellwood (of HMO and Jackson Hole fame) called for "outcomes management" in his landmark Shattuck lecture. Like Porter, Ellwood envisioned a nationwide exchange of information on the long-term effects of medical care. But in a competitive market, Ellwood warned, rivals are reluctant to share information: "We are held hostage by our tendency to create information repositories independently of each other. This incompatibility in data systems, rooted in history, pride, function, and money, creates an added urgency to adopt a uniform subset of health outcomes data." The speech created ripples, and the next year, the Bush I administration created the Agency for Health Care Policy and Research (AHCPR), charging it with developing outcome measures for specific diseases and surgeries.
Yet seventeen years later, outcomes research is still in its infancy.
What happened? Rather than pooling research, as Ellwood suggested, healthcare providers continued to compete for healthcare dollars in an increasingly hostile economic environment. And that competition could become vicious — as the AHCPR discovered in 1995 when it published guidelines discouraging surgery to treat lower back pain. Back surgeons took offense and lobbied Congress so aggressively that Washington considered eliminating AHCPR. Instead, Congress slashed its budget.
To be fair, providers have many reasons to be wary of outcomes data — some good, some bad. For one, it's very difficult to make outcomes "transparent." Patients do not present neatly, one condition at a time. Over 20 percent of Medicare patients suffer from more than five chronic conditions.
Outcomes must be adjusted for co-morbidities as well as demographics and patient compliance. Yet until more patients have electronic records, detailed analysis is labor-intensive and expensive. And today, even those hospitals that use EMRs don't have compatible systems, another barrier to comparing outcomes.
Yet Porter advises, "don't wait for perfect information." Begin by judging outcomes in terms of mortality rates, and "as we get really good at one outcome — say, survival rates — we'll shift to the next, complication rates, and then we'll be competing on how fast the patient returned to work." But circulating crude data can be dangerous. When New York began reporting mortalities following heart surgery, some hospitals started to shun complicated cases. Meanwhile, when choosing hospitals, patients ignored the data.
Finally, Porter emphasizes outcomes over "process" because he envisions a world where patients travel far from home to centers of excellence. For heart transplants this makes sense. But 75 percent of personal healthcare dollars are spent on chronic illnesses like diabetes that require constant, long-term care and supervision close to home.
We need to study processes that lead to best outcomes — and create guidelines that help the majority of doctors achieve those results. In Redefining Health Care, Porter and Elizabeth Teisberg dismiss the idea of "lifting all boats." Instead, providers should vie for patients, in a market where "truly excellent providers" will be "reward[ed] with more patients."
In truth, exceptional doctors don't need — and can't handle — more patients. While Toyota can step up production of its best models, doctors cannot manufacture more hours in their day. We need to identify the processes associated with outstanding outcomes and move the entire bell curve of doctors to the right.
But how do we persuade the players in a competitive system to collaborate, pooling data on what works best? The answer, Paul Ellwood finally realized, is that we need leadership from Washington. In 2005, he wrote, "The health system will continue to be out of control until we have an institution responsible for guiding it" with "enough power to assure compliance with its policies." This means that, unlike the original AHCPR, it must be insulated from congressional lobbying. Ellwood suggested the Fed as a model.
Maggie Mahar is author of, most recently, Money-Driven Medicine: The Real Reason Healthcare Costs So Much.
Comments? Write a letter to the editor.
Return to the September/October 2006 The Conference Board Review® issue.
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