Saturday, September 8, 2007

Herzlinger , Consumer-Driven Care - An Encounter with Regina Herzlinger and a Review of Her Book

I recently spoke to Regina Herzlinger, PhD, the first tenured woman professor at the Harvard Business School, and author of Who Killed Health Care? America’s $2 Trillion Medical Problem –And the Consumer Driven Cure (McGraw-Hill, 2007, $24.95). She suggested I review her book and offer a free book as a prize for someone describing their “worst health care experience” under the present system.

One of the joys of dealing with Regina and reviewing her book is that you know exactly where she stands. There’s no mincing around – no parsing, no qualification, no equivocation. Many of her stands come from her experiences in teaching a class to “20 or so doctors” in her class “Innovating in Health Care” at the Harvard Business School.

What She Is For

Regina is for doctors. She thinks of us as a very bright, innovative, entrepreneurial group of professionals capable of transforming the system – and making the lives of our patients better. This belief stems from her association with bright MD/MBA doctor candidates who have gone on to change the system for the better. Besides, her daughter is an endocrinologist at Joslin in Boston, and through her daughter’s experiences Regina has seen first hand how the system can hamstring doctors.

Regina is for consumers.
She thinks consumers are very smart people, and given choice and opportunity to spend their own money in their own ways, will make the right decisions for their own care and will change health care into a convenient, compassionate, competitive, and efficient system with lower prices and higher quality care. She notes such a system is compatible with universal coverage and cites the examples of Switzerland and now the Netherlands.

Regina is for innovators. She has preached the gospel on health care innovation in her books – Market-Driven Health Care, Consumer-Driven Health Care, and Who Killed Health Car?, in the Harvard Business Review – “Why Innovation in Health Care is So Hard (Mawy,2006), and in the Wall Street Journal (“Where are the Innovators in Health Care? (July 19, 2007). She says innovators will make our health care economy’s goods and services cheaper, better, and more accessible.

What She Is Against

Who Killed Health Care? is a non-holds barred attack on those forces that resist innovation in the present system. Here are a few snippets of her theme.

“The U.S. health care system is in the midst of a ferocious war. The prize is unimaginatively huge - $2 trillion, about the size of the economy of China – and the outcome will affect the health and welfare of hundreds of millions of people…The American people must win this battle. A system controlled by the insurance companies or hospitals or government will kill us financially and medically – it will ruin our economy, deny us the health care services we need, and undermine the important genomic research that can fundamentally improve the practice of medicine and control its costs. The current system is well on its way to doing all of these terrible things right now.”

I won’t go deeply into why she regards the health insurers, the general hospitals, the employers, the U.S. Congress, and the academics as the six big “killers’ of the current system. But you might be interesting in knowing she thinks of the New England Journal of Medicine as hopelessly na├»ve and misguided by publishing a “steady stream of articles purporting to the demonstrate the lack of charity of business and the efficiency of quality of nonprofit and business organizations in health care.” She says that the Journal’s analytic framework is “deficient” and that “it never met a single-payer proposal it didn’t like.” She finds its “business-bashing” regrettable and short-sighted since innovators in other economic sectors have made the U.S. economy the most productive in the world.

Who Killed Health Care? is a provocative book, a fine read, and a brilliantly articulated vision of the way things could be.


Benjamin Atkinson said...

My worst experience with the U.S. healthcare system:

No tragedy. No near-death experience. Just utter vituperation for the systematic destruction of patient autonomy.

My wife and I had our first child at home. It was a planned, physician-attended home birth. Everything went great and we believe that my wife's recovery and the first few days with our son were better at home.

For our second child we planned for a home birth, again. This time there was a hitch. Blue Cross/Blue Shield said home births were no longer covered by our health insurance policy.

We mentioned that we just did a home birth 2 years, prior. BC/BS indicated that the policy restrictions had changed. I cited meta-analyses showing home births to be as safe/risky as hospital births (the risks are different).

I finally took it up with my human resources department, and do you know what I found out? Our HR gurus had decided to exclude home birth! I knew these HR folks, personally. I also knew they didn't know anything about obstetrics.

I challenged them on the decision and they finally confessed that their benfits consultants had told them to do this.

I am incensed that a bunch of middle-management bean counters and HR lackeys can so profoundly interfere with life plans of proactive, responsible healthcare consumers.

In the end, we coughed up the $5000 and did the home birth. I suppose this is what we get when we want our health insurance to cover everything, including non-illnesses.

Thanks for listening!


Dr. Val said...

Here's my submission for worst healthcare experience:

Richard L. Reece, MD said...

Thanks, Ben. You are not the first to complain of arbitrary and unknowing interference by human resource folks.

Richard L. Reece, MD said...

Ben: Send me your address, and we'll send you a copy of Regina's book.

Bob Coli, MD said...


As usual, your insights into the evolution of physician mindsets into real trends are right on target.

Since portable, triple tax-advantaged HSA/HDHPs are still new, signed into federal law by President Bush in December, 2003, it’s not surprising that many employers and employees still don’t have a good understanding of their real short and long-term risks and benefits and tax advantages.
One way for non-polarized individuals to become better informed is to study a small collection of Internet references which they are unlikely to find on their own that accurately reflect three strong and interrelated national trends. Undoubtedly, the 14,000 members of the Physicians for a National Health Program, the mass media, Dennis Kucinich, Hillary and Bill and other supporters of the government as single payer “solution” wouldn’t be interested.

The first trend is “transparency.” The site which provides a summary of the “Four Cornerstones of Value-Driven Healthcare Competition” is located at: This is another recent federal initiative launched in 2006 by President Bush and HHS Secretary, Mark Leavitt and supported by many state governments and large employers, but virtually ignored by the traditional media.

The second trend involves creation of the first of the four cornerstones (nationwide interoperable HIT). The following sites can provide a sense of the depth and breadth of active HIT initiatives in the nation developing over the last 3-4 years.
· (390 active and 94 proposed RHIOs)
· (89 CCHIT-certified ambulatory EHRs from 81 vendors)
· (53 Internet-based PHRs)
· (A Comprehensive Guide to the Nationwide Health Information Network sponsored by InterSystems Corp. and presented by Healthcare IT News)

The third trend involves a growing group of HSA-related Web sites including:

I have been following all of these trends closely since 2003. I believe that the enemies of disruptive innovation, what Regina Herzlinger calls “the status quo providers abetted by legislators and insurance companies” and “the regulatory status quo”, will continue to try to block all three trends.

However, if they are unable to lobby and legislate their demise, market-oriented structural healthcare reform, driven by interoperable HIT, informed consumer choice, price and quality competition and properly aligned payment incentives may have a chance to replace the corrupt, employer-based, volume-driven healthcare system that, in the 1950s, the AMA considered “the lesser of two evils”.

The greater evil, then and always, is government-controlled healthcare. The only long-term solution in the United States is consumer-driven healthcare.

I hope all is well in Old Saybrook.

Bob Coli, MD

Warwick, RI ("tax-hell RI)and
Plainfield, NH ("tax-friendly NH")

Lisa Emrich said...

Sorry to be a little late to the party, but here's my story in a nutshell.

Me: 39yo single female, self-employed with private individual health insurance purchased in 2000 ($25 copays, 90/10 coinsurance, and drug coverage), satisfied with coverage until....

Oct 2005: official diagnosis of Multiple Sclerosis, prescribed expensive self-injectible medication (annual price - $21,000) covered on formulary at tier 4 level

Nov 2005: discover drug coverage limit of $1500 so insurance won't pay for med, referred to pharmaceutical assistance program administered by outside non-profit (NORD), approved for 50% award (6 months of drug while paying $100 s/h)

Note: level of award based on 2004 Income Tax forms ($32,700 AGI, $8230 Total Tax, no deductions for retirement contributions, no significant medical expenses, $2820 insurance premiums), Bank Statements (including moneys set aside for retirement), and being debt-free

April 2006: appeal to NORD for additional help by submitting 2005 Income Tax forms ($27,300 AGI, $6830 Taxes, $6500 SEP-IRA, $9000 medical expenses, $2820 insurance premiums)

May 2006: denied by NORD!! and denied by Carefirst in request to cover drug under major medical (remember this drug is included on formulary)

June-Sept 2006: extensive research for other programs and denied several times, exhaust $1500 drug coverage, paid for meds out-of-pocket, open separate business accounts and retirement accounts, DC Musicians' Union contributes $2000, Fairfax County covers $1000 for single prescription fill

Oct-Dec 2006: receive 3-months unused drug through doctor's office and lots of samples when available

Feb 2007: reapply to NORD with 2006 Income Tax forms ($19,400 AGI, $4660 Taxes, $10,000 SIMPLE-IRA, $15,500 medical expenses, $2820 insurance premiums)

March 2007: APPROVED 100% by NORD!! and diagnosed with Rheumatoid Arthritis

July 2007: exhaust $1500 drug coverage for the year, paying out-of-pocket

August 2007: receive notice of 20% raise in insurance premiums to $3380 while in 7 years the drug cap has not been adjusted, learn that open-enrollment for DC Musicians' Union group policy was in May and would cost almost $9000

So as a self-employed musician, living in the DC metro area, I am required to limit my earnings to 200% FPL in order to qualify for the assistance program to obtain the $21,000 which my private insurance will not cover although it is included on the approved formulary.

I truly hope that the enormous financial sacrifice will result in delay of disability and help to maintain quality of life.

Thank you,
Brass and Ivory Blog