Customer Reviews

Market-driven Health Care: Who Wins, Who Loses In The Transformation Of America's Largest Service Industry

5 star:		(2)
4 star:		(3)
3 star:		(2)
2 star:		(4)
1 star:		(2)

 

 

No one will accuse Ms. Herzlinger of being a great writer, but her conversational style is easy to read and she does have some good ideas for how the healthcare industry should be. Ideas that still haven't been implemented even now, 8 years after it was written. She does make a fairly convincing argument for how focused factories could reduce costs. In addition, suggestions that everybody should have health insurance, that healthcare providers should not be insulated from market forces, that consumers are the ones with the real power to stop the soaring healthcare costs, and that they'll only curtail spending when given incentive to do so are good points that can't be made often enough. Points that seem even more relevant today given the continued increase in healthcare costs, the inability of the HMO system to manage them, and the spiraling problem the growing uninsured population is creating (the more uninsured people there are, the more insurance costs, which increases the number of uninsured, etc.). She has good ideas, I think it's time people listened. It's of vital importance that the healthcare system incorporate what's great about America, what has made America a leader in every other industry: innovation and sensibly regulated free markets. Ms. Herzlinger gives us a good way to get it done.

I also have to ask if some of the other reviewers actually read the book. The author gives a pretty good analysis of how focused factories would reduce costs, using that 20% of the people produce 80% of the costs as a cornerstone of her argument. Also, she cites physicians' inability to deal with market forces as a cause of the problem and gives suggestions for how to deal with it.

The author accurately identifies a subpopulation of patients who are middle class,time constrained, and annoyed with the difficulty of obtaining quick evaluation and therapy for a variety of health problems of varying complexity. After examining a number of systems for health care delivery, she gives the nod to highly specialized and focused units such as the Shouldice Clinic for hernia surgery in Canada. There are several problems with the soultions she proposes: 1) Goverment regulatory agencies and third party payers currently refuse to pay multiple consultants for seeing a patient on the same day. 2)Patients with complex multisystem problems may be ill served in such a focused system- eg. the patient who has congestive heart failure and a hernia. 3)There would monumental problems with education of medical students and residents in such a system. While this is a secondary consideration in a market driven system in which there is a physician surplus, if we fail to adequately educate physicians for future generations the law of supply and demand will ultimately come back to haunt us.

There's hope. Finally, a clear thinker presents a viable case for something other than a purely political solution to the continuing health care cost crisis. Herzlinger is anything but pithy. However, buried in the laborious presentation of her case is a blueprint for the only real solution to this critical problem (i.e., a serious dose of personal responsibility for the cost of health care by those who create the demand). This book is worth reading.

Any health care analysis is going to be wide ranging and possibly a little rambling. This book is no exception.

Regina's book makes a good case for individual responsibility for health care purchases, though that may be a difficult and extended transformation.

A more important point for me was applying the "Focussed Factory" concept to health care delivery. This is such an ideal approach for chronic disease management or popular surgical procedures. Regina sites statistics and actual patient outcomes to effectively make her argument.

The "Focussed Factory" is something we can implement right now. That may be the core value of this book.

Herzlinger is a card-carrying member of the club that believes that markets can cure all social ills, and like all members of this club, she plays fast and loose with reality. For instance, she tries to present the vision market as an exemplar of how market forces can work in healthcare. Vision is one of the few areas of medicine where patients can appraise the value of the service, the quality of the provider, and make decisions about how much they are willing to pay. That is simply not the case when a patient is really sick with heart failure, and needs multiple medications, multiple doctors, and is probably going to be hospitalized repeatedly.

In trying to argue that all aspects of medicine can follow market rules the way vision services do, Herzlinger conveniently ignores one critical fact: there is no true market in the healthcare industry, and there can't be. Kenneth J. Arrow, Nobel Prize winning economist pointed this out 30 years ago, and his observations are still true today. Providers (doctors and hospitals, and increasingly the drug and device industries) drive demand for their services. They are the ones who decide what patients need. The notion that patients can have suffient information to be able to determine what they need is probably only true for the 80 percent of people who consume 20 percent of healthcare costs. The 20 percent who eat up 80 percent of costs are sick with multiple conditions. Imagine your grandmother is in the hospital, sick with diabetes, and pneumonia, scared, having a hard time breathing, and she's supposed to sort through whether or not she should pay the $600 to call in the pulmonologist? The patients with chronic, multiple, debilitating disorders actually need the exerpertise of medical professionals.

Her focused factories have come to pass: they are called specialty, or even super-specialty, hospitals, which focus on one procedure, or one category of specialty. There are cardiac hospitals, for instance, that only perform by-pass surgery, cardiac catheterization,angioplasty, and stenting. Are they good at what they do? Sure, because they focus on a narrow range of procedures, they only take insured patients, and they don't take anybody with comorbidities. Of course, the really expensive patients tend to have comorbidies. The effect of the specialty hospitals on local healthcare markets? They do not bring down costs, they simply drain profit from full-spectrum community hospitals, which still have to care for all those patients with pneumonia and who don't have health insurance.

The imbalance of information between physician and patient is simply insurmoutable, and without that kind of balance, markets don't work very well.

Regina Herzlinger's "focused factories" of tomorrow are the "centers of excellence" of the 1980s. Both concepts are fine for metropolitan areas but ignore several important facts: 1. 80% of health care resources are consumed by 20% of the population, the elderly and very young; 2. There are about millions of people who neither live in areas large enough to support such "factories" and lack the financial means to travel to them. 3. Consumers are concerned largely with price and convenience, and secondarily with outcome. They have no basis by which to compare technologies (such as mammogram machines, as she suggests). 4. Patients aren't paying the bills. Consumerism isn't a panacea. Patients have no idea what health care truly costs, equating cost with price. Physicians haven't been much help either, since they lack sound business sense and have been shielded from market sources for decades. The "solutions" at the end of the book appear to have been pasted together to meet a deadline instead of being carefully constructed with adequate supporting arguments. It is reminiscent of the cartoon of two scientists next to a blackboard covered with equations, one of which is "and then a miracle occurs." Finally, Herzlinger made the same mistake as Hillary Clinton. Physicians are not about to accept changes in their system made without their input. Ultimately, they still deliver the product and, unless one can figure out how to construct a health care system sans physicians, one must include them in any talk of reform. David A. Rivera, MD drivera462@aol.com

There's a good idea or two in here. You won't have any problem at all finding out which one - there are only two in the book. These are: 1. Health care will become more of a consumerist industry 2. Focused factories are excellent vehicles for delivering care These are pretty damn sensible ideas. Policy wonks, though, already know this. And others, frankly, should not read this book, since it is (somewhat) careless in its factual delineation of how the HC market operates. If you can, track down some of RH's shorter papers. They're pretty durn good.

Ms. Herzlinger accurately points out that when consumers pay for their own health care price goes down and quality goes up. She may have missed the same pheonomenon when Lasik surgery stopped being covered by health insurance. It used to cost $10,000 per eye and it now costs about $2,000 per eye and the service is better.

So the real question is: how to make this happen in today's poltical climate? With the entrenched interests of doctors who don't want competition, drug companies and politicians, it has been almost impossible to change anything. The book is very light on this subject, devoting only the last two chapters and not having many actionable solutions.

So which company is best capable of providing service is interesting but not really very relevant to the overall problem. Perhaps a focused factory to perfom knee replacements would be very successful. It would probably make it's patients happy, which is a good thing. However, it is very unlikely to lower overall costs and might just cause more knee replacements to take place because the outcomes improve.

The problem of the "uninsured" is a totally different problem. It is largely a welfare issue because people want/need to consume a product that they cannot afford to pay for. It is entirely seperate fromt the cost issue other than it can affect the demand for services and RH treats it that way.

Overall, I got the feeling that the book was a written version of RH's Harvard lectures. They don't translate well. Lots of stories and not much data. (She does teach at Harvard!)

Recommended reading for any healthcare professional or related work however like any book written on a topic relating to a point in time, things change and some of that has for the subject matter in this book. Well written and informative..

Finally, someone has produced a well-researched and articulate portrait of the largest, and most flawed, industry in America. Herzlinger emphatically proves that the plague in American health care is simple: consumers have been robbed of the power to control the market; a conclusion that has been dictated by common sense since Adam Smith's Wealth of Nations but which has not been delivered in one concise package until now. "Policy Wonks" and Bean Counters beware: Herzlinger proves that a free and open consumer-oriented market, and not volumes of stipulations and regulations, will propel the helath care industry to the apex of efficiency