Herzlinger -The Health Insurers Are Killing Care

From Who Killed Health Care?America's $2 Trillion Medical Problem -- And the Consumer-Drive Cure (Regina Herzlinger, McGraw Hill, 2007)

Juno Beach, Florida --In her 304 page book, backed by 634 references, Regina Herzlinger, Harvard Businness School Professor, Senior Fellow at the Manhattan Institute, and Godmother of Consumer-Driven Health Care, asserts third parties are killing the system. They're killing it, she maintains, by bringing about too high costs, getting between doctors and their patients, acting in their own self-interests rather than those of health consumers, and showing a lust for empire building.

In her chapter on "The Health Insurers" she surprises me by focsing on the woes of Kaiser Permanente. This took me a little off guard because I have always thought of Kaiser as a progressive organization who could do no wrong. I have admired their Archimedes Project, their reduction of heart attack and stroke mortality, and their ambitious EMR project. Thirty years ago, when I was a student of Regina Herzlinger at a Harvard Business school advanced management course, Regina admired Kaiser.

Why the shift? Well, it isn't a complete shift, but she is critical of Kaiser's failed renal transplant program. In this program, she says Kaiser drifted away form its usual culture of scrupulously providing prepaid care. It was too intent on growing its system and left out its usual attention to details. It also learned too much "vertical integration" can be a bad thing. You can't be everything to everybody and do everything well. Some things are better off being outsourced. In her analysis of Kaiser, she carefully lays out the history of Kaiser -- its founding, growth, reaction to adversity, and declines. She says Kaiser strayed from its mission in the mid-1990s when it decided to adopt its culture to that of other HMOs - growth for growth's sake -- and instituted its fated and failed renal transplant program

She concludes:

At one time, the fabled HMO Kaiser exhibited a corporate culture that enabled it to offer high quality care at a reasonable price, and Kaiser still does a good job for many of its patients. But when Kaisers managers decided to grow the organization, they wore down the foundation of this culture and lost a fortune in the process.

In all human activities, God is in the details, especially wlhen it comes to care of seriously ill people. The management of the Kaiser HMO allegedly neglected these thousands of details in its kidney tranplantation program; it reportedly understaffed the program; fired orginal employees who complained about its quality progam and provided little suppor for those who remained. In 2006, after more than a hundred of patients awaiting kidney transplant died, Kaiser performed one mericual act; it closed the program.

There is more to "The Health Insurers" chapter than Kaiser. Herzlinger comments on the fallacies of "Just-Say-No" policies, the unnecessarily high administrative costs, the use and abuse of doctors, the neglect of the needs of health care consumers, and other misguided policies.