Future States, but not including Massachusetts

I was invited to speak at a National Academy of Engineering symposium today entitled "Health care as an adaptive enterprise, an engineering challenge." My fellow panelists were Christopher Meyer, Chief Executive of Monitor Networks; William B. Rouse, Executive Director of the Tennenbaum Institute at Georgia Tech; W. Mark Saltzman, Chair of the Department of Biomedical Engineering at Yale University; and Jerome H. Grossman, Director of the Harvard Health Care Delivery Project. The proceedings will be published by the NAE in a few months.

It is always helpful to leave the confines of Massachusetts to catch up on innovations in health care. Yes, I did mean to say it that way. You have to cross the state line to get a sense of what is happening or at least being considered in other jurisdictions.

To give Massachusetts credit, it did pass major legislation to help expand access to health insurance to its citizens. But there things stopped, without addressing a lot of underlying questions or preparing for structural changes in the industry. We create a Quality and Cost Council as part of the access reform bill, but treat it as an afterthought, with little authority and budget. We let protectionist groups stifle innovative, low-cost ways of delivering health care. We bumble away on the relatively simple issue of transparency of clinical results.

Oh, there is always a stated reason. We can't have minute clinics here because their patient records will not be electronically connected to doctors' offices (as if most doctors offices are connected to hospital information systems.) We can't enforce transparency because there are no single definitions of the rate of central line infections or hospital mortality (although, really folks, they are close enough.) And we don't have a strong quality and cost council because . . . gee, why? (Who could have an interest in slowing down government review of these items?)

Meanwhile, in the rest of the country, people are exploring interesting paths to disrupt the high cost-low efficiency-low quality health care delivery system in an effort to move from a cottage industry to something more worthy of the 21st Century. I'll leave the descriptions of these to the papers. Some will work. Some will not. What's interesting is that the people behind them are not targeting Massachusetts as a state to explore. The reason is clear. The entrenchment of our providers, insurers, and others makes it exceptionally difficult to introduce new service delivery models here.

Instead, the scenario for Massachusetts is surely one of further industry concentration, certainly on the provider side and perhaps on the payer side as well. The weaker hospitals and physician groups will continue to seek affiliation with the prospective winners (and, yes, of course I'd like BIDMC to be in that latter category) in order to get better reimbursements. The disruptive forces that would otherwise force all participants -- but especially the market leaders -- to think hard about quality, safety, and cost efficiency will be missing.

At some point, because of ongoing cost increases, there will be a public call for a return to rate-setting by the state, but it will come too late. The people of the state will already be paying a hidden tax for the reluctance of its officials and the silence of the business community to encourage a more vibrant market. With the return of price regulation, the rates set in this quasi-utility environment will ensure full cost recovery for the inefficiencies that will have been built into the system. As a former regulator, I am quite confident of this point: Price regulation is a highly ineffective mechanism for promoting innovation and efficiency.

Instead of preserving market power and then counting on price regulation as the final safeguard, why not allow lots of ideas to enter this state and see where they take us? Yes, take some risks. As Mr. Meyer pointed out at the NAE, and as you will read in his paper, history proves that the future belongs to the risk-takers. If you stand by and adopt a strategy whose main aim is to mitigate risk, you will be left behind.

In which state do we want to find ourselves ten years from now?