Customer Reviews

Who Killed Health Care?: America's $2 Trillion Medical Problem - and the Consumer-Driven Cure

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According to information released by the Centers for Disease Control and Prevention on June 24, 2007, about 43.6 million people in the United States, or 14.8 percent of the population, had no health insurance in 2006. The finding, based on a survey of 100,000 people, is lower than previous federal estimates of 46 million. The estimate is based on those who did not have insurance at the time of the interview. About 54.5 million people in the country, or 18.6 percent of the population, had no insurance for at least part of 2006. Whatever the exact numbers, there is obviously a very serious problem with health care provision in the U.S. In fact, dozens.

In her previously published book, Consumer-Driven Health Care, Regina Herzlinger explains that consumer-driven health care is "fundamentally about empowering health care consumers - all of us - with control, choice, and information." Such control will "reward innovative insurers and providers for creating the higher-quality, lower-cost services we want and deserve." What would be the role of government? She asserts that "government will protect us with financial assistance and oversight, not micromanagement." The material in this substantial volume is organized within five Parts. Herzlinger wrote the first, "Why We Need Consumer-Driven Health Care," then edited the contributions by others that comprise Parts Two-Five. She also wrote Chapter 78, "A Health Care SEC: The Truth, the Whole Truth, and Nothing But the Truth." For most of us who are not health care professionals, this volume provides about as much information as we could possibly need, much less process. I especially appreciate the fact that Herzlinger and her associate contributors make a conscious effort to avoid jargon, vague theories, oblique hypotheses, etc. They obviously believe that major health care issues are too important to be packaged as flimflam, swamp gas, and flapdoodle. Hence their rigorous focus on explaining (from a variety of perspectives) why consumer-driven health care is needed, and, how to establish and then sustain it.

In this volume, Herzlinger focuses her attention on what she describes as "America's $2 trillion medical problem" (about the current size of the economy in China) and explains why consumer-driven initiatives offer a "cure." More specifically, she exposes "the iron triangle" of third parties (i.e. Congress, health insurers, and hospital administrators) that have opposed consumer-driven health care and thereby subordinated, if not totally ignored the welfare of patients as well as their personal physicians (if they have any). These third-parties are the ones who have "killed" health care for tens of millions of uninsured or under-insured people who, Herzlinger insists, have been deprived of power, information, and choice. She is a passionate and well-informed advocate of nothing less than major, extensive, and comprehensive health care reform.

"Four armies are battling to gain control [of health care]: the health insurers, hospitals, government, and doctors. Yet you and I, the people who use the health care system and who pay for all of it, are not even combatants. And the doctors, the group whose interests are most closely aligned with our welfare, are losing the war." What to do? Herzlinger's convincing, indeed compelling and eloquent response to that question is best revealed within her narrative. However, for present purposes, here are a few key recommendations:

1. Consumers must take back the money their employers and government now take from their salaries and taxes to buy health insurance on their behalf so they can make their own purchase decisions.

2. Physicians must be empowered to design better, cheaper health care.

3. The destitute must be subsidized by "the rest of us" so that can purchase health insurance "like everybody else."

4. The federal government must help subsidize the destitute, provide transparency (a key factor for all consumers, actually), and prosecute fraud and abuse.

In Parts 1 and 2, Herzlinger explains who is killing health care and how they are doing it. She identifies both "villains" and "heroes." In Part 3, she "lays out the principles as well as the specifics of consumer-driven health care - what it is, why it will work, what it offers to all of us - and analyzes the lessons from consumer-driven systems like Switzerland's." Then in Part 4, Herzlinger provides a step-by-step plan "of the carrots, the sticks, and the laws that will make this consumer-driven system happen."

Many of those who read this brief commentary of mine may ask "So what?" Perhaps they are satisfied with their current health care coverage. It is possible but unlikely that many (if any) of those who are destitute - who have no health care insurance coverage whatsoever - check out reviews of books, much less purchase and then read them. The fact is, those who are satisfied with their current health insurance coverage are probably paying too much for their share of its total cost. And a separate but related fact is that their employer is also paying too much for its share of the health care coverage that it is required by law to provide to its full-time employees.

Herzlinger has a crystal clear vision of what health care should be and do but she is also a pragmatist. She fully understands that unless and until, in a democratic capitalistic society such as the U.S., incentives and rewards are changed, there can be no reform of the current health care system. It is wholly understandable that "the iron triangle" of third parties (i.e. Congress, health insurers, and hospital administrators) oppose consumer-driven heath care, especially given the fact that about $2 trillion is involved and would be at risk if (huge "if") patients were entrusted with the power to decide how that money would be spent.

My concerns, frankly, are these: How many people will read this review and others, then purchase and read Herzlinger's book? Then what (if anything) will they do? All change initiatives inevitably encounter what James O'Toole has aptly characterized as "the ideology of comfort and the tyranny of custom." The power and resources of those who defend the status quo of "the iron triangle" must not be underestimated. All by herself, Regina Herzlinger cannot reform the current health care system. Who will join her in doing everything humanly possible to make consumer-driven health care a reality? If you think you wish to enlist in this "war" and help win it, I suggest you read and then re-read Pages 254-258, then contact your representatives in the House and Senate and insist - not request - that they read this book or at least have a staff member do so. Will that do any good? I have no idea. But I do know that by remaining silent and compliant, we empower "the iron triangle" rather than ourselves.

Herzlinger begins by telling us that she was spurred to write this book after a tax exempt hospital chain (Sioux Valley Hospitals and Health Systems) testified before Congress of the "need" to limit competition from specialty hospitals - "would undermine it's ability to provide care to the uninsured." Unfortunately, the effort was successful in achieving a moratorium, even though the system only provided $5 million (at overstated prices) prior to the moratorium, and then cut that to $3 million afterwards. (A 2004 congressional comparison of non-profits and for-profits concluded that non-profits, on average, provided only 0.6% greater uncompensated care.)

Since 2000, health insurance premiums have risen 73%, vs. inflation and wages increasing 15%. Herzlinger blames:

1) hospital consolidations (# dropped 20% from 1970-2005) - usually without cost rationalization of duplicated costs, aimed simply at reducing the number of competitors. In addition, hospitals have attempted to further reduce competition by buying physician practices.

2)Bureaucratic HMOs and insurance companies, along with their high-priced CEOs.

3)Government: States sometimes limit the number of insurers and the variation in their offerings; meanwhile, the federal government meddles by providing incentives for certain treatment modes

Herzlinger's Recommendations:

1)Provide tax-free grants, adjusted to reflect an individuals' health status (eg. a 55-year-old male with diabetes would be given the average cost of treating such an individual). The individual would be free to save whatever was not spent - would not need to be spent in that year, though could only be spent on health care. Individuals would have to sign up with a provider for a 5-year period - thus allowing providers an incentive for preventive and/or front-end investments such as a transplant. (Providers would be given an "out" for non-compliant patients, and patients likewise for totally non-responsive providers.)

2)Require audited price and outcome data to be published. (This would quickly bring about an increase in smaller, focused-care medical facilities and a major impact - the top five major diseases account for 49% of all costs.)

3)Require the establishment and use of an integrated computer medical record system. (This would reduce duplicated tests and prescription errors due to poor handwriting, as well as catch inappropriate prescriptions.)

The potential "fly in the ointment" here is that Herzlinger's approach to severity adjustment would effectively discriminate between sicker and less-sick patients. In her defense, she offers several examples where this has been tried. Hopefully she is correct - if not, the approach may instead need to be based on measures of compliance with standards of care established by experts (though disliked by Herzlinger).

Twenty years ago on a cold November night, I was one of two nurses called into the operating room were the team preformed a c-section and delivered a healthy baby boy. While waiting for the mother to recover, I picked up a copy of JAMA in the doctors lounge, there I found an article authored by some PHD entitled: Stop the Charade. It was the authors contention if we made all the non-profit charter hospitals in the country for profit the government would save enough money (eliminating the tax subsidies) to buy every American health care insurance.
Twenty years later author Regina Herzlinger MD PHD echoes this same strategy combined with other comprehensive solutions for curing the health care debacle infecting our nation. In her book: Who Killed Health Care. Dr Herzlinger identifies the culpable players who have brought havoc upon us; government bureaucrats that exorcise legislative powers to manipulate markets, technocrats who employ statistics to homogenize variables into one size fits all diagnoses, and industry lobbyists, special interest peddlers who know how to oil the system with campaign contributions.
Dr. Herzlinger provides a compelling argument in favor of consumer driven health care. She has cut through the complexity of this out of control industry identifying the problems and offering competent solutions to put healthcare back in the hands of consumers, physicians and health care professionals.
Meet Jack Morgan and follow his tragic demise. Learn how our bloated bureaucratic health care system failed him, and how his needless death could have been avoided. Learn how consumer driven health care could have enhanced his quality of life and saved him. Dr. Herzlinger demonstrates how this clandestine industry operates, how knowledge is power in the hands of the few; and a lack of transparency keeps consumers in the fog inhibiting their ability to make informed decisions regarding their own health care. She provides compelling analogies; consumer driven industries not so different from health care that thrive in a free market.
Learn why we dump our hard earned dollars into employer health care plans without question, or benefit of choice. Learn how everyone can benefit in a transparent marketplace, how competition enhances insurance company performance, while simultaneously driving down costs associated with delivery; spurring innovation while simultaneously improving the quality of health care. Learn how transparency growths technology, how risk adjusted insurance plans for specific illnesses aimed at prevention are part of solution.
Consumer driven health care is capitalism at it's finest; encouraging healthy competition between insurance companies, hospitals, and physician groups all vying for our health care dollars. It is this competition in a free market that will resuscitate the health care industry, add value, and drive down cost.

This is definitely a book that gives you insight around Consumer-driven healthcare. But my only issue is that it doesnt flow well. A lot of times the same point was said over and over again. The Chapters and sub-sections dont really bridge well together... sometimes it just reads like a dramatic keynote speech.

Overall, I recommend the book- the concepts and issues in it are worth knowing about. But dont read it very closely- you'll get bored. Wish it was edited by a professional writer.

I've been thinking about publishing a book on health intelligence, and borrowed this from a colleague.

My contribution will be the image I created while thinking about what the book should look like--the inner square was co-created with another person.

This book can be summarized with three words: *corruption* killed health; *transparency* can heal us; and only we, the *patients* (or victims) can come together to demand resolution.

In the comment, where Amazon does allow URLs, I am pointing to a PriceWaterhouseCoopers report online, which documents 50% of all health costs as waste.

The author ends with very specific recommendations that are excellent as far as they go, but that ignore the 80% of solutions that are outside the existing hospital-pharmaceutical complex. The Japanese have started weighing and measuring their population--a population's health and vitality is the single greatest contributor to national power and prosperity, ergo, we need a "360" approach to national health, and I try to depict that in the image above.

See also:
The Blue Death: Disease, Disaster, and the Water We Drink
Fast Food Nation
The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead
Pandora's Poison: Chlorine, Health, and a New Environmental Strategy
Betrayal of Trust: The Collapse of Global Public Health
The Health of Nations: Infectious Disease, Environmental Change, and Their Effects on National Security and Development
Diet for a Small Planet (20th Anniversary Edition)
Human Scale
Collective Intelligence: Creating a Prosperous World at Peace

In the US, we spend about 16% of our GDP on healthcare which is by far the greatest percentage. With that amount of money, we would expect to have the healthiest population and the most satisfied consumers of healthcare. Far from it! Our outcomes as judged by mortality and morbidity are comparable with Chile and Greece and far worse than most industrialized nations. Any book that brings these dismal statistics to the public's attention has done great service. The first 150 pages of this book is dedicated to criticizing different aspects of the current US healthcare system. In the final 100 pages, Dr. Herzlinger offers her solutions. Criticizing our current system is like shooting fish in a barrel. I was very excited to read this book. As a proponent of free markets, Dr. Herzlinger's "Consumer-Driven Cure" appealed to me greatly. As a physician, however, I had my doubts about the feasibility of her plans, but I was hoping she would address some of my concerns.

Her ideas of getting employers out of the business of buying health insurance is fantastic. Employers do not buy our cars and refrigerators, so why do we rely on them to purchase our healthcare? Her points about getting consumers more involved with healthcare decisions are also valid. Unfortunately, Dr. Herzlinger fails to communicate some of her ideas clearly. Throughout the book she uses a fictionalized character, Jack Morgan, to illustrate her points. Jack, who is an amalgam of many patients, apparently died while waiting to have a kidney transplant because his HMO was not responsive to his needs. His HMO's interests were not aligned with his interests. Later in the book, she makes the argument that in a consumer driven system this would not happen because Jack would have a multiyear contract with his providers and the providers would actually benefit from improving his long term healthcare and thus offer him a kidney transplant quickly (how could she predict that is what would happen?). The presumption being that if he became healthy then he would utilize the system less. I was astonished as I was reading her arguments. Very similar arguments were used to tout HMOs which the author tears apart early in her book. She fails to see the irony of her ideal system. Furthermore she argues that under hers system focused factories would evolve. This point contradicts her other arguments. Focused factories (ie: one that would specialize in non-surgical treatment of kidney disease) may not want Jack to have a kidney transplant since that would make them lose him as a customer.

Perhaps the author's greatest error in writing this book is laying out in detail what the world would look like under her plan. That would be analogous to if a centrally planned economy (ie; USSR) predicted what industries would flourish or how many cars would be manufactured if they embraced capitalism. You could not predict those details. Markets are complex and we would have to wait to see how consumers would vote with their money. Some of her other arguments are disingenuous. She cherry picks statistics to strengthen her points without complete analysis. For example, regarding employees managing their own retirement accounts, she states: "During one of the worst markets for stocks since the Great Depression, from 1999 to 2005, average account balances increased by 50 percent..." Individuals' retirement plans on average trail market indices like the S&P 500 because of mutual fund expenses. Furthermore the period she examines was hardly a bad period as measured by market returns. She also touts Switzerland's consumer-driven healthcare system (she does say that it has its faults though) and tries to impress us by comparing its health outcomes to US's. It is easy to beat the US healthcare system so just because the Swiss beat us that does not make their system so great. Interestingly enough the Swiss system is the second most expensive system in the world. They spend 11.4% of their GDP on heathcare with roughly the same outcomes as Australia which spends 8.8% of their GDP.

I greatly admire Dr. Herzlinger's attempts to improve our system which as she points out affects not only our health but also our industries' competitiveness. Some of her ideas are brilliant, but I think she needs to work on improving communicating them.

Regina Herzlinger's latest book on health care reforms provides a concise and captivating summary of major problems plaguing American health care industry, and suggests specific solutions. At the cost being provocative, and with a suggestive title, she has clearly identified the chief villains in the big hospitals, insurance companies, government, and surprisingly academia. Evident from her background in business management education, her treatment for health care illness is more systemic, policy-oriented, and free market driven (though she does provide an extensive list of references including bio-medical publications). Some of her observations and conclusions could be controversial, but overall the book does provide a convincing argument for the reforming this important US sector where despite the two trillion dollar expenditure per year, average American health trails behind every first world country. Despite spending 20% of GDP of the largest economy, the main indicators of national health such as infant mortality rate and average life span for US is now in the league of some smaller developing countries. This multi-faceted attack on the current health care industry is becoming more common and this book is yet another salvo, presented rather dramatically through the untimely death of a (fictional) person awaiting a kidney transplant while under managed care.

The most striking omission from her book is the failure to identify the main reason for increasing costs. She cites advancements in American retail industry and pays glowing tributes to Walmart and Target for providing better selection with lower price and higher quality. That became possible because the American retail industry was allowed to buy the best product from the least cost manufacturer. In short, globalization helped and government did not create any artificial constraint. The American health-care prices can come down if there is more supply on the provider side, but for the past several years the number of physicians is artificially controlled (including medical college admissions and access to physicians licensed outside a state or country). She talks about cost-effectiveness of off-shore hospitals but she should take a position on a reform where the free market and not some cabal, driven by preserving the life-style of their future peers, decides the supply of medical providers in the US. Since physicians are rightly key to any health care reform (and they do run most of the big hospitals etc.), an increased number and better competition would help each and every aspect of Ms. Herzlinger's reform manifesto.

The more interesting aspect of the book deals with possible solutions for liberating US health care from the current cesspool of waste, malaise, and neglect. As a lead promoter for consumer directed health care (CDHC) initiative, Ms. Herzlinger provides a decent coverage of the main CDHC tenets developed over past several years as a respected Harvard academic. She analyzes the success of SEC in regulating corporate affairs and stock market and argues for a similar regulatory agency type restricted role for government instead of being a payer, insurer, and in some cases practitioner (by legislating government specified medical guidelines for specific treatments). She vociferously criticizes complex and unfair laws enacted by government under the influence of big hospitals and insurance companies for criminally preferential treatment of some health care segments. She is against managed care, although she treats the pre 1993 Kaiser with admiration for their preventive and holistic approach (when they still had their "soul"). She prescribes formal generation and availability of impartial data on performance of medical providers (doctors and hospitals) so that informed decisions can be made by consumers. The consumers should be able to buy the right insurance and benefit from a competitive environment and then be able to select the right provider (who would innovate because of competition and offer higher services at lower prices). She prefers focused health care factories (treating for example diabetes and related diseases) instead of giant monolithic hospitals which could be inefficient but have monopolized specialized and secondary care. She would rather have consumers control automated health records for maximizing their bargaining power. In the process of championing her ideas, she takes jibes at some specific notions such as evidence based medicine and disease management. This seems rather odd as both of these could be useful in her reformed health-care world!

Overall, this book is a must read for all policy makers, legislative branch of the government, and medical entrepreneurs. The hospital administrators and insurance companies should consider it as a "writing on the wall" and start preparing for a more competitive era. The health care entrepreneurs (currently, a rare breed) can benefit most by creating appropriate organizational, management, and information technology innovations to bring this last bastion of lingering inefficiency, spiraling costs, abysmal customer care, and general lack of transparency into 21st century, at par with other industries.

At the core of this book is a interesting idea. Imagine that you could buy health insurance like you do car insurance. Health insurance companies would compete for your business the way that Geico, Allstate, Progressive, and State Farm do. You could put together a health insurance plan that meets your needs rather than getting one prescribed by the insurer or government. Providers (doctors and hospitals) would vie for your business as well. This market/consumer-driven system, based on competition, would reduce costs and give consumers what they want.

That's the idea. Unfortunately, the book bases this concept on inaccuracies, misleading information, and contradictions. For example, in chapter 6, the author contends that the academic community thwarts efforts to create a consumer-driven health care system, in part because they are wed to the idea of a single-payer system. The problem is that author makes a blanket accusation about a nebulous, undefined group; i.e. they're the problem, whoever they are. As an example of this great academic conspiracy, the author specifically names two physicians who have served as editors of the New England Journal of Medicine and who openly support a single payer system. The author (to her credit) then goes on to acknowledges that one of these physicians gave her previous book a negative review. Other than these two physicians, all we know is that the academic community, whatever that is and whoever they are, are all against market-driven health care.

The author believes that a key to a market/consumer-driven system is doctors exercising their independent judgment. She opposes system approaches and cites an Institute of Medicine official who calls for medical school education that emphasizes teamwork and systems of care as the bane of good medical practice. She fails to point out that the emphasis on systems approaches comes from studies indicating that adverse clinical outcomes have arisen due to the lack of coordinated care. Then, a few pages later she contradicts herself noting that consumer-driven care will work because clinicians will work as a team to treat patients!

What I find most interesting is that the author assumes that, because they are for-profit entities, health insurance companies support this concept. Health insurance companies make money in two ways. First, through administrative charges, which account for every 15 to 20 cents for every dollar spent on health care. This compares to nonprofit entities, such as Medicare, which has administrative costs of 6 to 8%. Second, through prospective payment (which the author does not specifically address anywhere in this book), insurers set the rates which they will reimburse providers. Under the author's consumer-driven approach, insurers will have to compete - really compete, meaning that they will have to reduce their administrative costs, rates and ultimately profits. Moreover, since providers will be setting their rates - in a competitive manner - insurance companies will never know exactly what they will have to pay. If insurance companies balked at "Obama Care" imagine how they would react to this plan.

Bottom line: interesting idea - poorly executed.

One of the major problems facing America right now is the health care system as it currently exists. I felt that a bit of reading was in order to start to educate myself on the various views and proposed solutions. Regina Herzlinger takes the position that consumer-driven health care is the best solution in her book Who Killed Health Care?: America's $2 Trillion Medical Problem - and the Consumer-Driven Cure. While I think she makes some strong arguments (and while I think this is one of the better solutions), I think she's somewhat naive on a couple of points.

Contents:
Part 1 - Who Killed Health Care?: The Day Health Care Died
Part 2 - Death By A Thousand Cuts: Killer Number 1 - The Health Insurers; Killer Number 2 - The General Hospitals; Killer Number 3 - The Employers; Killer Number 4 - The U.S. Congress; Killer Number 5 - The Academics
Part 3 - The Right Medicine - Consumer-Driven Health Care: How It Works; Consumer-Driven Benefits - Lessons From Other Countries and Industries
Part 4 - How To Make It Happen - The Carrots, The Sticks, The Laws: The Carrots; The Sticks; A Bold New Consumer-Driven Health Care System
Notes; Index

Herzlinger uses the metaphor of a dead patient to explain the parts of the US Health Care system that "killed" him. "Jack Morgan" needed a kidney transplant, and had a donor (his daughter) all lined up. But all the "killers" conspired to contribute to his death. Insurers did so by delaying authorization for coverage of the procedure to increase their profit. Hospitals did so by hiding their prices, and then charging him the highest rates if he had the procedure without insurance coverage. Employers did so by restricting coverage choices to lower their costs of insuring their employees, even though they're using *your* money to buy the coverage. Congress contributed to Jack's death by thinking it knew better on how to spend money on his care than Jack did. Therefore, money only went in the direction Congress dictated. And finally, the academics played their part by dictating "smart policy" for heath care professionals, even though they had never been on the front-lines practicing medicine. Health care can't always be reduced to spreadsheets and cookie cutter processes.

Ms. Herzlinger advances the solution as consumer-driven health care. Competition and transparency in pricing would force prices down, saving large amounts of money. Spending choices would be put into the hands of consumers, allowing them to make choices based on their needs, not the needs of groups that employ or insure them. Laws should be changed to allow for smaller specialty practices to exist to focus on particular health concerns, such as heart disease or kidney issues. In short, medicine should be operated more like other businesses where pricing is known, competition rules, and innovation and entrepreneurism is permitted and encouraged.

I personally feel this is a much better option than many others I've seen proposed. But even with that, I think that Herzlinger doesn't take into account the propensity for corporate greed. While less government regulation would be good, many regulations came about to address fraud. And no matter how you structure the changes to health care, there will ALWAYS be some group that will look for ways to get as much as possible while supplying as little as they can. Add in kickbacks and other "creative accounting", and you have an area ripe for abuse. So while many of the things that Herzlinger proposes make sense, none of them can be complete answers in themselves.

Even with my caveats, I think Who Killed Health Care is a very good read in order to increase your understanding of the current environment and possible solutions to our health care crisis.

I have read your book and have gained a whole perspective on health care. I myself have been caught in the maze of being uninsured, under insured, on medicaid in my lifetime. I raised (still contributing) 3 daughters 2 of which have chronic medical conditions. My son passed away at 6 and half years of age from the same illness that has kept us in the maze!

For the longest time I believed in the concept of "Universal Health care." People in crisis will grab hold of whatever they can. Too many times we see people make job choices not based on talent, ability or a desire to improve themselves based on an insurance plan. I know this all too well! It saddens me that we are bound in this country to the current situation based on financial fear! I am increasingly becoming of a different mindset. I believe more now than ever that choice, and the opportunity to benefit from those choices need to be the driving force in the development of a consumer driven health care system.

I have had the opportunity to talk to many people coming from many different perspectives on this issue. It is troubling and there are solutions. I was amazed at how much we are all in the dark. Your book sheds a much needed light on the situation. I referred as many people as I could toward your work.

I quote you, ""Insurance costs are so high that we have over 46 million people who go without it, which is a shameful scar on the richest country in the world...to add insult to injury, we receive far too little health care for all this money." We agree, I agree, It is a unjust, unfair and it is time to do something about it!

The concept that the uninsured are actually charged a higher rate needs to be focused on as well, and as I continue on this crusade to educate, empower and advocate for the uninsured, I will continue to educate myself.

We need to end the disparity found in our medical system, and there is no need for any more people like you reference in your book, (J, Morgan).

I highly recommend this book!