Can The U.S. Manage Health Reform?

As a graduate long ago of an 8 week Harvard Business School course on health system management, I receive the business school’s alumni bulletin. The September issue contains an article “RX for Change.” It describes an HBS program that brings together management teams from health care institutions to lower costs, raise quality, and focus on patients.

Managing Our Way Towards Reform

In management circles , the belief persists that the U.S. can “manage” its way out of high health costs and questionable quality. Management wisdom goes something like this: If only doctors, hospitals, patients, and other stakeholders would listen to managers, whether in the public or private sector, we could simultaneously lower costs , raise quality, and otherwise rationalize care.

Despite 30 Years of Managed Care, the Cost Growth Goes On

These are laudable goals, and I salute them. But because I’ve been down the management road many times, I am dubious. In the mid-1970s, when I attended the Harvard course, health care took about 6% of GNP and national health reform seemed imminent. Today health costs consume 17% of GNP, and, although a reform law has passed, it is festooned with over 150 new management agencies or projects that are likely to take a higher percent of GNP than if nothing was done.

Skepticism Based on Books

Perhaps I am even more skeptical because of books I’ve written on the subject, In 1988 I wrote And Who Shall Care for the Sick? In it, I expressed the sentiment that managed care would drive doctors out of the system and create a doctor shortage. In 2003, I wrote A Managed Care Memoir: A Physician's Whistle-Stop Journey in which I said managed care had largely failed. I followed in 2005 with Voices of Health Reform, in 2007 with Innovation-Driven Health Care, and in 2009 with Obama, Doctors, and Health Reform. In these volumes, I expressed skepticism that the health system could be reformed from outside the profession.

Incremental Reforms Needed

The failure to manage reform distresses me because I believe the system needs a series of incremental reforms at the grassroots – shopping for plans across state lines, limited affordable plans for the young and healthy, malpractice reform, more consumer-driven care, more health savings accounts with high-deductibles, and more choices for all patients – be they Medicare, Medicaid, or the rest of us – on how we want to spend our health care dollars.

Misguided Beliefs

So why have we failed to effectively manage health reform?

One, we have a mistaken belief we can manage everything from the top-down with large bloc decisions that can control billions of personal transactions between doctors and patients.

Two, we seem to think that remote managers are more enlightened, have more financial sense than doctors and patients, and can speak for those who deliver and receive care.

Three, we believe everything in the health care universe can be regulated and manged at the level of centralized organizations, but in reality health care is a decentralized, individualistic activity.

Four, as Regina Herzlinger, a Harvard Business School Professor, reminded us in her classic book Who Killed Health Care? there are five”killers”who hamper efforts to create and managed a truly innovative, consumer-driven health system - dysfunctional third party payers who hamper innovation, empire building general hospitals who centralize rather than decentralize care , small-minded employers who limit choice for workers to one plan, a regulatory-obsessed U.S. Congress who think they can make the rules, and academic elites who believe they know more than the rest of us.