First published in December, 2012.
Still relevant in August 2018.
Last week I attended the Forbes Healthcare Summit in New York City. Over 200 healthcare leaders converged on Lincoln Center to discuss and forecast the future of healthcare in the U.S. The heady atmosphere of the conference will provide material for a number of blogs. In this blog I would like to focus on two different visions for the future that emerged in the conference. The first vision is an extension of our current trajectory in which space-age technology yields dramatic, but expensive, health outcomes. The second vision is one in which common-sense medicine produces low-cost very good health over a large segment of the population, but is not necessarily designed to accommodate specialized high-technology procedures.
Gov. Rick Perry of Texas championed the high-technology vision. Perry outlined how certain policies in Texas, such as tort reform and no income tax, attracted high-end medical specialists to the state. This set the state up as a destination for medical tourism that attracted very sick patients from all over the U.S. and wealthy patients from all over the world. This provided the state with a healthy income. When asked whether this process should be implemented nationally, he claimed that the federal government was not able to deliver on a vision like this. It was clear, however, that implementation at the national level would degrade Texas’ competitive advantage over the other states. When asked about non-specialized medicine and primary care in Texas, Perry was candid that many Texans were not receiving adequate primary healthcare. He gave as an example the population along the Rio Grande that had to travel several hours to access prenatal care. He mentioned that Texas was looking into some loan forgiveness for Texas medical students who were willing to spend five years in rural settings, but clearly, when he talked about this, the sparkle was missing from his eyes.
Bradford Berk, CEO of the University of Rochester Medical Center, and David Klein, CEO of The Lifetime Healthcare Companies, a healthcare funder in the Rochester area, championed the second vision. They described a collaborative system that focused on providing low-cost high-quality healthcare at a community level. This system emerged as a cooperative arrangement between large local employers, such as Kodak and Xerox, and a first-rate medical school at the University of Rochester. Of course, Kodak and Xerox are shadows of their former selves in Rochester, but the system they helped create still exists. The key observation was that, contrary to traditional economic theory, increased healthcare supply increases costs. This cynical view is that medical entrepreneurs increase the number of hospital beds, and then prescribe to fill the beds. The Rochester team decided to right-size the supply of healthcare in the community and to focus on outcomes. This was possible because of the economic motivations of the community businesses who were funding the healthcare and the cooperation of the medical school that drove the vision through its training and hiring policies. The Rochester community succeeded in its goal of providing low-cost high-quality healthcare. Of course, if an upstate New York resident needs a very exotic procedure, he or she may need to fly to Texas.
It is clear that the U.S. cannot continue its current course in which healthcare costs are more than 17% of GDP and outcomes are significantly behind the rest of the world. It is also clear that Americans are an optimistic people with a firm belief in the idea of progress, which manifests itself in technological and business innovation. The two visions for healthcare that were presented at the Forbes Healthcare Summit are almost caricatures, however. There is opportunity for creative individuals and institutions. Technology has not been applied evenly in healthcare. While the U.S. can be proud of its innovations in high-technology procedures, its adoption of information technology is not even at the level of the pizza industry. Both visions emerged as a result of economic incentives, one to increase revenue, as was the case in Texas, and one to reduce costs, as was the case in upstate New York. The question now is how do we shift the incentives to create the proper mix of outcomes, cost, and risk?
Roger D. Jones; Santa Fe, New Mexico; December, 2012