OP-ED

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.

Livongo’s Post Ad Banner 728*90

Categories: OP-ED

Tagged as: , , ,

23
Leave a Reply

23 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
20 Comment authors
LighthouseRTOAl Kennedyfamily car stickersRakesh Sethi Recent comment authors
newest oldest most voted
Lighthouse
Guest
Lighthouse

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… Read more »

RTO
Guest
RTO

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… Read more »

Al Kennedy
Guest

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…

family car stickers
Guest

Time can change most of things ,but not all of things.

Rakesh Sethi
Guest

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… Read more »

DeterminedMD
Guest
DeterminedMD

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… Read more »

MelanieG, MD
Guest
MelanieG, MD

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… Read more »

Merle Bushkin
Guest

I empathize with your frustration but your solution — with which I disagree — is totally impractical and will never happen.

Gary Lampman
Guest
Gary Lampman

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… Read more »

R. Phillip Melch, MD
Guest
R. Phillip Melch, MD

What a wacko academic.

Gary Levin
Guest

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… Read more »

Craig "Quack" Vickstrom, M.D.
Guest
Craig "Quack" Vickstrom, M.D.

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.

Margalit Gur-Arie
Guest

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… Read more »

BobbyG
Guest

“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.

Thomas A. Coss, RN
Guest

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… Read more »