The story was front page and above the fold in The New York Times. Six teachers in Newark are leaving the traditional school system to start a public school of their own.
If the product was something other than education, this would have been no news at all. I would guess that the vast majority of businesses in this country were started by people who walked away from an employer, convinced that they could make a better product on their own. Teachers rarely have the opportunity to do the same, however. They are usually trapped in a system that does not allow innovation or experimentation and is ordinarily hostile to entrepreneurship.
What does all this have to do with health care? A lot. Doctors are just as trapped as teachers. And that is the most important defect in the health care system.
This, of course, is not the conventional view. The received wisdom in the health policy community is that doctors have too much freedom, not too little. Witness the wide variation in medical practice patterns — from city to city and region to region — all seemingly unrelated to medical outcomes. How can anyone defend that? Certainly not me. Where I part company with so many of my colleagues is that they blame the doctors for this problem — I blame the third-party payers.
Were we to look into the matter, I’m sure we would find wide variations in the practice of teaching from school to school, district to district and state to state. Yet I still maintain the teachers are essentially trapped. This may appear to be an oxymoron, but it’s really not. Both in education and in health care, the practitioners have a great deal of freedom to waste resources. But they have virtually no freedom to profit by discovering innovative ways of lowering costs and raising quality.
Practitioners in both these fields have no ability to do what Michael Porter and Elizabeth Teisberg in Redefining Health Care say is essential: to repackage and re-price their products in customer-pleasing ways — the way that producers in just about every other market can.
Could we learn something from the teachers? Newark is not alone. There are teacher-run public schools in Boston, Detroit, Los Angeles, New York and in the state of Minnesota. In some cases, they have the backing of the teachers’ unions. In general, I am very skeptical of the ability to solve this problem by dealing with third-party payers. But if the teachers can try it, why can’t we do the same in health care?
The health care analogue to all of this is something I have proposed for Medicare. Let doctors, hospitals and anybody on the provider side of the market be encouraged to propose ways of repackaging and repricing their products. Medicare should be open to any deal, so long as:
1. The cost to the taxpayers does not go up;
2. The quality of care to the patient does not go down; and
3. The provider suggests a credible way of measuring outcomes six months or a year into the arrangement to make sure that rules 1 and 2 have not been violated.
To get us jump-started, I even propose to begin right away paying centers of excellence (that have already been studied to death) 50 cents for every dollar they are saving Medicare and then broadcast widely that Medicare welcomes more opportunities to re-contract with others.
What I imagine is a hustling, bustling cauldron of entrepreneurial activity — as provider energies are channeled into generating cost-reducing, quality-improving ideas, instead of focusing on how to maximize against Medicare’s reimbursement formulas.
Will it work? I don’t know. But I’m sure it has a better chance than the idea of D.C. bureaucrats dictating to doctors how they should practice medicine.
John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system. Dr. Goodman’s Health Policy Blog is considered among the top conservative health care blogs on the internet where pro-free enterprise, private sector solutions to health care problems are discussed by top health policy experts from all sides of the political spectrum.