Harvard, Herzlinger - Eight Things I Learned at Harvard Business School (But Mostly After)

In 1976 I attended an 8 week post-graduate course at Harvard Business School on “Health Systems Management.” Each quarter, I receive The HBS Alumni Bulletin. It chronicles alumni exploits.

The September issue contains two health-related articles:

1) “In Africa, Porter Sees Lessons for Health Care.” Professor Michael Porter is HBS’s guru on competition as the best way to contain cost and improve quality.

2) “Customizing Health Care.” This is an interview with Mara Aspinall of Genzyme Corporation, and Dana-Farber. She believes “personalized” drugs, based on a person’s genome, are the future.

Here’s what I’ve learned from that 1976 course and since.

1) Imminent health reform isn’t inevitable. The 1976 course was based on the notion national health reform was inevitable. It was not and is not. U.S. health reform will always be incremental, evolutionary, and in flux. As a nation, we distrust government, as evidenced by the current 100/1 public sentiment against the bail-out plan.

2) You can’t achieve reform without having hospital executives and practicing physicians participate – In the 1976 course, of 60 students, not one, with the exception of me, was a hospital CEO or practicing physician. Hillary Clinton repeated this mistake with her 1200 person reform task force in 1993.

3) The business culture doesn’t understand the medical culture. Business thinks the key to reform is getting doctors to fold into and believe in a corporate culture in which doctors are “managed.” The failure of managed care is a testament to the failure of this belief.

4) Hospitals can’t do everything well or even competently - Regina Herzlinger, a HBS professor, argued then, as now, that hospitals can’t be everything to everybody in the highly specialized and entrepreneurial U.S. economy. This may be so, but in many towns, hospitals are the only ones with enough structure, scale, brand recognition, and capital to serve the visible center of care. Hospitals are often the only game in town.

5) Consumer-driven care will be the future - In theory, I agree consumers can make intelligent health care decisions and can learn from their mistakes. But in the real world, government promises trump or neutralize market potentials. Health care is too emotional and political an issue to be left solely to markets, as shown by slow HSA and high deductible plan growth.


6) Customized drug therapy will not soon impact clinical medicine – Genzyme, Inc., is growing fast because of bio-engineered drugs to treat cancer and other diseases based on the patient’s DNA and tumor DNA, but presently the field is too complicated and the drugs too expensive and doctors have too much on their plate to prescribe or test these new drugs.

7) That hospitals will split into centralized “focused factories,” each with expertise to treat a specific disease, remains a dream - But it may be a dream with legs. The Minnesota Commissioner of health has signed off on a bill to take place in 2010 that will provide seven sets of health-related services into “baskets of care” = primary care, preventive services, coronary artery and heart disease, diabetes, asthma, depression. Physicians may set a price for each basket.

8) Whatever goes around comes around - Here I refer to re-empowerment of primary care in the form of medical homes, a national movement gathering steam and centered around payment reforms that will reward primary care clinicians at an estimated rate of $50 per month per patient for offering coordinated, comprehensive, best-practice based care. Consumers, physicians, and payers alike embrace the idea of a personal physician for every patient.


To conclude,

What you learn at business school isn’t always in medicine the rule. Business people may say reform is surely inevitable, but experience shows that argument is easily refutable. Hospital CEOs and MDs have to be at the table. Otherwise reform will remain strictly a fable. “Managing” physicians may seem easy and logical, if you’re corporate-minded and pedagogical. But the medical culture is often indigestible to the corporate vulture. Never underestimate the community hospital’s power, though to overall for competence for every task hospitals may be inhospitable. Business may maintain centralized hospitals should be split into decentralized centers of expertise, but hospitals and other special interests will retain the profitable status quo with ease. Business may depend on consumer-driven care to turn health care upside down, but vested interests still know where the critical data is to be lost and found. You might think the future resides in the medical genome, but right now the action is found in the medical home. Suddenly what goes around has come around. Patients, doctors, and business payers agree primary care doctors acting as personal physicians offer the least costly and most efficient care. Welcome back, Marcus Wellby.