If I Ruled the World

If you study previous attempts to reform healthcare delivery through the private sector, there is one common thread. These attempts all failed because of an absence of proper management information systems. We need integrated electronic health records. And not just to improve medical decision making. We need EHR that can be used for management decision making – for contracting, measuring costs, measuring and rewarding quality; I could go on and on. We are trying to solve management problems in a $2 trillion industry using management information systems that would be an embarrassment in nearly any other sector of the economy.

Of course, the industry has been pushing EHR for decades and there are places where EHR is really first rate. Kaiser is a great example but also a special case because of its thorough vertical integration and long history. And even Kaiser has been unable to replicate itself outside of its core markets. The sad fact is that most providers have little incentive to adopt EHR, and even when they do, they have little incentive to be compatible with other providers. Unfortunately, the network externalities benefit purchasers and consumers a lot more than they benefit providers, so don’t expect the compatibility problem to solve itself.

My proposal is simple. Assemble a panel consisting of medical professionals, managers, and insurers. “Lock them in a room” for 72 hours and tell them to choose from among the many fine existing EHR systems. Tell them they can combine the best features of each if they wish. Once we have settled on an EHR system, give every provider one year to adopt it. If they refuse, deny them Medicare and Medicaid payments. Combine the stick with a carrot – subsidies to providers who have limited financial resources. I believe the total one-time subsidies would be less than $50 billion, a drop in the bucket compared with the size of the system.

And then let the system work. We will see new organization forms emerge, not based on the dictates of Washington, but the workings of the market. We will see rewards for quality and efficiency, again driven by market forces. Waste will be cut out because that is how markets normally work, provided you can find the waste in the first place. EHR will make that happen. If Mark Duggan and his task force colleagues are correct, the current system has hundreds of billions of dollars of waste. I think it is realistic to expect savings of this magnitude. And with proper outcomes measurement (something that EHR will make possible), we should see quality go up.

The only other change I would make would be to greatly expand the presence of managed care in Medicare and Medicaid so that private sector doesn’t reap all the benefits of EHR.

That’s it; my whole proposal. Yet I believe it far reaching. The resulting efficiencies will translate into huge savings for government payers, freeing up existing resources to provide vouchers for the poor so we can expand coverage to the uninsured without expanding Medicaid. (I suppose I would endorse some minimally regulated exchange as a way for individuals to use their vouchers.)

Is it a leap of faith to believe that effective management combined with market forces can save the health care system? Of course it is. But no more so than the leap we take every day when we wake up in a capitalist society and buy our bread and our clothing. In these and most other markets, sellers and purchasers are empowered by information and motivated by the free market; consumers seem to like the results. It is time for healthcare markets to catch up to the rest of the business world.

This blog is dedicated to my brother Joel, who has inspired me more than he knows.  His journey into the undiscovered country will soon begin.  May he go in peace.

David Dranove, PhD, is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University’s Kellogg Graduate School of Management, where he is also Professor of Management and Strategy and Director of the Health Enterprise Management Program. He has published over 80 research articles and book chapters and written five books, including “The Economic Evolution of American Healthcare and Code Red”. He has a Ph.D. in Economics from Stanford University.

Categories: Uncategorized

Tagged as: , , ,

23 replies »

  1. Any software should be leased ,as Software as Service( Saas ), like Napster … All you can eat , per month software service … So if the service does not keep up ,you can switch to alternative providers . Encourgaes competition,no expensive outlay upfront ,no lock in .
    Aren’t we all meant to be utilising the ‘Cloud’ nowadays.
    Maybe the IT industry think docs are so unsophisticated in their purchasing to be sold enterprise software duds ,that no other industry would accept.
    I wonder how many owners of these IT suppliers/ crony capitalists ,are Campaign Donors to the Democrats ,overtly or covertly . Maybe some investigative journalism ,to shine the spotlight on this ,instead of ‘dodgy/stodgy’ docs .

  2. The government built a highway system that connected industry in the united states. It was not the factories at the end of the roads but the roads themselves that were built. Now the highway system that is needed is electronic, not the software but a set of common standards on which the software needs to built. I would take it a step further though and include a medical payment system that includes the insurance industry and the medical service industry.
    Imagine a world where there is no float in the system and 23% of expenses comes off of the provider side in reduced administration costs. The technology already exists and is readily available. The provider would be paid by the insurance company before the patient leaves the office, the patient and provider would know the exact patient liability and could come to terms on it at the point of service. Insurance cards that look and function like a credit card. On top of that the patient would function as the key to their medical history, readily available upon their authorization.
    Reform does not always mean reinvention, nor does government have to take over in order to implement change.

  3. Interesting Blog, even though this was not what i was looking for (I am in search of clinics like this one> http://www.ccsviclinic.ca/ )… I certainly plan on visiting again! By the way, if anyone knows of a good clinic that does CCSVI Screenings? BTW..thanks a lot and i will bookmark your article: If I Ruled the World…

  4. Originally being from an IT industry, I can say that the intent is well placed & idea has its merit but execution of such magnitude will not succeed. It was almost impossible for me to implement IT standards across one Global company and here we are expecting 100’s of company implementing one standard. A fine dream!
    I think we need do fixing on the FRONT END. To fix our broken health care system, first we need shift our health attitudes. Our health attitudes must shift to take on personal responsibility of managing our health just as we manage our financial health. How we approach our health has to change? Take the following approach:
    Take personal responsibility- you are your first health coach.
    Practice preventive care with right diet & life style meant for your unique body-mind.
    If you are healthy you don’t need medicine. However to stay healthy, if you choose NOT to change your unhealthy diet and life style then you have NO use for medicine.
    Don’t make the problem worse by waiting and try to find a magic pill. There is none. Preventive care is the magic pill.
    Unless we change our Health Attitudes, any changes we make to the health care system will not work. Let me explain.
    Let us suppose we offer the following health care options under the health care insurance plan:
    Alternative medicine- Natural preventive health care, for example Ayurveda, Acupuncture, Yoga, Meditation etc.
    Integrative approach- Alternative combined with current medical model.
    Traditional medicine- current medical model
    Without changing our health attitudes, we will continue to live as we live today and after becoming sick expect the medical system to “fix” us. This means we will continue to use the last option#3. Perhaps it is too late to use preventive options 1 or 2. Note the costs are significantly less when we use options 1 & 2.
    So it seems, even if we offer preventive care options under health insurance, people will not use it till we educate them to shift their health attitudes. So we need to do both: offer all 3 options under the health insurance plans and also change our health attitudes.
    Let us also clarify on what is preventive care?
    Most of us think that having regular physicals, mammograms, & other check-ups is a preventive care. THIS IS ABSOLUTELY WRONG. These are just screening tools to see, if our preventive care practice is working or not. Preventive care is a step before this step.
    Preventive care is selecting right foods, life style, exercising according to our unique body-mind type. We are all unique and one size does not fit all. So we must discover what foods & type of life style is more suitable for us. If we think of food as medicine, we perhaps will not need any other medicine.

  5. And what happens WHEN something false or recklessly entered in haste or retaliation is in this record? Believe me when I say this, once a diagnosis is documented, it takes an act of god to get it stricken if the diagnosis was in error. Or, mistakes in switched records? “I don’t have HIV, and didn’t know there was another patient seen at the pathology lab that day of the test who had the same first and last name, but different middle name, yet a clerk put in my file!?”
    And yet, if it is on the screen, it is the gospel.
    Thus, the legacy of EHR. But hey, a one system record will save the world, at least the company’s wallets!
    And isn’t that what is being advocated here, which company gets the contract for America? Again, forcing a business model down the throats of all, irregardless of the consequences. Now there is foresight!

  6. You have been seduced by the dreams of HIT and EMR.
    Salesmena nd shills have sold this country’s Congress a pig in a poke. The best of the lost of the CPOEs is still not fit for purpose. Patients are dying due to neglect. The CPOE devices are diseases.
    Best advice: Take the Medicare penalty and do not buy these unapproved medical devices. You will be ahead and your patients will thank you. All they want is email contact with you. You do not need to spend $ thousands to have your practice disrupted.
    Next best advice: report the adverse events and care toxicity from EMR to the FDA.

  7. Why is it that established business models conspire with new business desires? EHR needs incentives to adopt programs. Don’t you mean substancial Taxpayer dollars (bribes) to extort the cooperation of the Health Care Facilities, In a effort to secure multi-billion’s of dollars in future returns?
    As it is, you want a all ready strapped Federal Government to supply all of you with Taxpayer seed money to jump start your vision at the expense of the patient,member,citizen.This is Not in any particular order but a true statement none the less.
    You all have alot of gull to exclude these very people that are being exploited and manipulated to serve your incessant drive to screw them. These very people who’s elected officals have abandoned constituants for the promise of funding and Graft!The Deserve to have a seat at the table to present their concerns on EHR’s. The truth is the EHR will not save them money nor will it make medical access any easier for them.
    The Patient /Consumer/subscriber shall again get nothing in return for your lavish life styles.
    I would say your priorities are misguided.Hospitals have failed patients miserably on Hospital Acquired Infections and Medical Errors! If our hospitals are becoming a vechicles of rapid infestations of biological warfare and medical errors; which maims,dismembers and leads to preventable deaths. Then we need to address these issues First. The truth is we don’t no how extensive the problems are until all Fascilities are mandated to publicly post all their Medical error and Infection Rates!!!

  8. I hope your brother makes it to the undiscovered place. Not sure what that connects to in eEHR but perhaps that is an example of how disconnected EHR is with making medicine cheaper, more organized and have better outcomes. Drs do not want money from CMS, they just want to be left alone to care for patients. In the last 20 years all attempts to reign in cost have failed, largely due to increasing bureaucracy and better technology. Bureacrats would do better to invest in the “front end” of patient access to care that is already available. Yes, patients do like convenience. It is a big inducement for consumers in all business. How about not calling patients or consumers? Perhaps “Guest” is much better. I notice the other day at Target I was called “A guest”. Hmmm amazing!

  9. Indeed. The “capitalists” on this board are anything but. They are a bunch of fascists is what they are. The software companies couldn’t develop EMRs that we wanted to use. Solution: don’t improve your products so people will want to buy them, go to the Clinton administration and get a government mandate. “Free Enterprise” “Capitalism” Yeah, right. Then along comes President Owebama, who is Clinton on steroids (but not the right kind of steroids.. ). Sad, really. When we elected Owebama, we traded one fasist (Bush) for another. It’s all about privatized profits and socialized risks. Lovely. See Naomi Klein.

  10. It is always amazing to see how free market advocates only desire a free market for some, but not others.
    Insurers and large health systems should all operate in a free market while technology manufacturers should operate under a government mandate of uniformity and physicians should get out of the market altogether and become employees of large systems.
    We don’t want fragmented technologies and fragmented “mom and pop” medicine and not even fragmented small insurers. We need a handful of big players (the “too big to fail” type) in every discipline so it becomes so much easier to fix prices and affect policy.
    Works every time…..

  11. “If you had to go out and find an industry with the most information available to it with which to make decisions, you would quickly find yourself on Wall Street.”
    “Information is overrated.”
    – Nassim Nicholas Taleb, the “Fooled by Randomness” guy.
    “Experience is that which you get just AFTER you really needed it.”
    – my old radiation lab mentor, Dr. Dillard.

  12. If you had to go out and find an industry with the most information available to it with which to make decisions, you would quickly find yourself on Wall Street. The amount of transaction information on stocks, bonds, options and a multitude of other instruments is amazing and unequaled by any other industry, still despite all the data and econometric models, they managed to “blow the call” in regard to the current financial crisis. Data did not inform, unfortunately experience does.
    I’m fortunately old enough to have heard your assessment about the coming golden age of ubiquitous clinical information beginning in the 1980’s, and I’m still waiting.
    Having been and invested where you currently are, I’m folding back on empiric medicine of an experienced and ethical provider working under economic conditions that do not coerce him or her into actions they might not otherwise pursue.
    The future of healthcare will look a great deal more like the 50’s than this past decade, and we will be far better of for it.

  13. I would love to have an EHR that works everywhere in the hospital. Nothing works well in the OR. That said.
    1) Hospitals compete with each other. We have two networks in my area. Neither one will share information with the other willingly.
    2)Incentive matter. Hospitals will most likely use EHRs to make as much money as possible. If you can effect large savings through efficiencies with EHRs, you could also offer lower costs to patients, especially if it means more market share. Especially if your competition does not have an EHR. If everyone has one, that edge is lost and we are back to where we are now.

  14. Yep, this is really astoundingly naive.
    The following things are the underlying myths:
    -quality of care is entirely measurable. We have some surrogate parameters such as low BP, low HbA1c, diabetic eye exam frequency etc., but those measure just very limited aspects of care (yes, those are important, and they should be measured).
    -quality of care is a clear concept. Is a doc who has, say 95% normotensive patients instead of the average, say 75%, better if that doc has 20% higher costs in terms of visits and medications, and makes seniors orthostatic so that they more frequently fall and brake their hips? It’s all not that easy as in the airline industry where it is just passenger mile, price, customer satisfaction and on time performance.
    -and even if all the above was true, many patients may not care. Some may still move towards the docs doing more testing, others may like the local facility with good parking instead of the higher graded docs 10 miles away in their worn down facility.

  15. Interesting article. I do think health care records should be much more flexible for providers to find information about their patients, but still protect the patients confidentiality. A critical issue is the blank slate providers have to work with when a new patient shows up. If they had access to medical records, they could immediately know more about the patient, including allergies, illnesses, addictions, health history, etc. These are critical pieces of information when treating a new patient, especially in an emergency. I do not support nationalised medicine, but do however thing EMR/EHR are critical.

  16. You don’t need to mandate a common software system. Not only is this impractical, it will not be flexible enough to meet the needs of all practitioners.
    The key is to mandate data standards and interoperability standards. This will allow anyone to import and export standard health data with no loss of meaning. Everyone can use whatever software application best meets their needs and share data with everyone. This will truly lead to a diverse, flexible and efficient health data ecosystem to take advantage of data interoperability.

  17. Fortunately, physicians are not like bank tellers. They can’t be told to “accept the new electronic system or quit your job”. Also, can’t you just imagine the gaggle of lobbyists, representatives, and IT gurus just outside the door to that “72-hour room”. The smell of money would fill the air. Every once in a while we are all lured in by the simplicity of a “benign dictatorship” only to have our fantasy blown away by the realty. I love your fantasy, but realize that is it what it is.

  18. Although I do like your approach to moving towards a more unified EHR solution. I agree with Craig that this alone will not heal all that ails our healthcare system. I have been around long enough to remember when Medicare mandated that all claims be filed electronically. Although there were significant improvements in the way data was tracked and efficiencies were certainly gained – the Medicare system was in no way “fixed”. Healthcare is going to require multiple solutions implemented along the way, but the implementation of a new tool will not reform the system entirely.
    -Mark (@consultdoc)

  19. So, EHR is the panacea for what ails the US health care system? Please, your naivete astounds me. This is just one factor in the broken system. The only solution I can see is complete meltdown, followed by complete nationalization, concomitantly with lots of dead people. It’s sad. Really. This Rube Goldberg contraption our society has build, known as the US health care system, is a ticking time bomb. God help us all when it finally melts down and explodes.