Wednesday, August 19, 2009

How to deal with the public option

Richard Thaler, in Sunday's New York Times business section, offers a cogent description of the issues surrounding the public option for health insurance. Read the article here.

His conclusion:

ALL of this leads me to conclude that if we impose sensible rules on the public option, it will neither save nor destroy the health care system because it will simply not get much market share. And if we do not impose those rules, the public option will hurt rather than help.

So here’s some free advice to members of Congress: While you are enjoying your August recess and town hall meetings, instead of arguing about whether to have a public option, argue about the ground rules.

To the Republicans, I say this: If you can get real assurances that the public option has to break even, and that it will get no special deals from suppliers, let the Democrats have it but ask for concessions on tort reform in return. (That could actually save some money.) The resulting public plan will be too small to notice.

To the Democrats, I say this: If you want competition in health care, you won’t get it if the public option can make deals its competitors can’t. So either give the Republicans hard assurances that the public option would have to break even and not get special treatment, or, better yet, just give it up to ensure that some useful health care reform is passed. A public option is neither necessary nor sufficient for achieving the real goals of reform, and those goals are too important to risk losing the war.


Anonymous said...

Yeah, and today's Washington Post headline says "Debate's Path Caught Obama by Surprise - public option wasn't intended as major focus."
GAAHHH. And Rahm Emmanuel was supposed to be so well-connected with Congress. These guys are starting to look like babes in the woods. They wouldn't even survive a hospital medical executive committee meeting! (:

nl, aka nonlocal

Paul Levy said...

Not intended as a major focus?! What were all those speeches and press conferences about, where the importance of this was stressed over and over.

Paul Levy said...

Here's the article: Last paragraph:

"As a candidate, Obama always said the challenge in enacting health care reform was not a lack of blueprints for overhauling the system but the political will to get the job done. But the lack of a blueprint he is willing to embrace has become a growing problem for the president. He has expressed his determination to enact a bill this year, and the odds still favor that, given Democratic majorities in the Congress. Now the question is what he really believes must be included to qualify as real reform."

Lymie said...

This is a ridiculous argument. It is impossible to argue with people who choose their own facts.

Tort reform costs very little and is a bogeyman used to scare. Texas has tort reform and still has very expensive care.

Are you suggesting that the hospitals and insurance companies don't make deals right now with suppliers?

As long as the insurance companies have to cover all comers, can't set lifetime benefit limits, can't drop you when you get sick, the public plan will be fine. BECAUSE 30 percent of the costs won't be going to the obscene salaries of CEO's and the profits of share holders.

At least be honest, Paul, there is nothing "cogent" in the article. Really, comparing health care to the USPS? This is a B-school professor explaining health care. Shall we get some MD's to run FedEx?

Paul Levy said...

Didn't the President also compare the public plan to the USPS?

Anyway, I liked the article. And it was nice to see someone try to address the merits without an overwhelming ideological tilt one way or the other.

Engineer on Medicare said...

The propositions in the article gaurantee failure, so what is the point?

Give the public and private options the same rules and let them all negotiate terms; even to the point of requiring that "best price" terms given to either the public or any other insurance provider be available to all other qualified insurance providers.

The public plan could negotiate or run a "reverse auction" to establish prices for the capacity required in a given market, and the plan would offer the same payment to any other providers in the market.

Then the health care providers could concentrate on efficiently providing the best possible quality of care for the money. Competition between providers would be based on quality and service.

I'm have no real knowledge of the health care industry, except as a customer. However, I learned from a long career in the weapons development side of the defense industry that real competition is essential to getting the best value for any product or service. Furthermore, it's not a negotiation unless at least one and preferably both of the parties have a realistic option of walking away from the table.

Achieving real efficiencies in the health care system will have to be driven by conditions that require decisions makers to make changes to survive. That will not occur if the objective of health care legislation is to protect the interests of existing stakeholders. Destruction is an essential element of the reconstruction process.

Anonymous said...

Actually, Paul, the link you gave in the Post is not the same article to which I referred. I noticed this because the last paragraph in my print copy was not the same as the last paragraph you mentioned. They are 2 separate articles, although it takes nothing away from your point. Here is the article under the headline I cited:
Or, if that doesn't work, just go to and look for my headline under "most read" at the right.


Anonymous said...

On the general topic of health reform, I ran across a website from the New England Journal of Medicine:

It contains some informative stuff. Disclosure: they are thought to be a somewhat left-leaning publication politically. I have not particularly noticed this.

nonlocal MD

Jerry said...

Madd props to Lymie and EonM for cutting to the nut. The linked article is just crazy talk.

it was nice to see someone try to address the merits without an overwhelming ideological tilt one way or the other.

Paul, I think you're clutching pearls on this one - "I don't care what we talk about, just as long as we use nice words. Let's not be so ideological."

Sorry, man, but it's literally do or die this time around.

My opinion, of course ;^)

Jerry said...

Disclosure: they are thought to be a somewhat left-leaning publication politically. I have not particularly noticed this.

Wha? "somewhat left-leaning politically?"

What does that statement even mean?

And what's the difference between "somewhat" and other qualifiers, like "more so" or "extremely" or "without question" or "potentially," etc?

And, since you "have not particularly noticed this," the point of even making the statement is...? Because it adds to the discussion...what, exactly?

I'm much more interested in hearing what you think about the actual content at the NE Journal's site.

The "somewhat left leaning" thing is just weird.

e-Patient Dave said...

Here's an honest question. Be gentle with me; I am the opposite of an expert in this area:

What would be wrong or non-viable about just letting anyone enroll in Medicare? Or letting anyone join the health insurance program that I've heard Federal employees get?


Separately, as I read the article I happened to have the same reaction as Paul: "Oh my gosh, somebody discussing the merits of the proposals, without an ideological flamethrower!" What a relief.

(Nonlocal, don't shorten yourself to nl. It confuses me.)

Paul Levy said...


If you think about it, that in essence is what the public plan would be. It is basically a logistical question as to whether you want to organize things that way or under a new separate organizational structure. You would have to decide if you wanted to design the more broad based public plan to be the same as Medicare or the gov't employees plan, i.e., in terms of premiums and allowed benefits.

I am guessing that the proposals for a public plan have not been presented in that way because then it would be clear that it would enjoy huge commercial advantages over the private insurers' plans, leading to a influx of people to it. I am guessing, too, that the cost implications would be huge. Remember, people are already concerned with the prospect of Medicare running out of money in the coming decades, since the premiums collected are not actuarially tied to the expected level of medical services delivered. I'd bet, too, that the public employees' plan has huge government subsidies. If you expanded its scope, you'd have to figure out how to pay those, too.

The fact that neither the Administration nor many in Congress, among those who advocate a public plan, have proposed this makes me think that they fear it would be a huge budget buster.

e-Patient Dave said...

> people are already concerned with the prospect
> of Medicare running out of money

And that's where it's important to mandate that any government solution be breakeven, aka deficit-neutral, eh?

Now it gets interesting: somebody somewhere (initials=Orszag?) knows the total per capita cost of Medicare, which would tell us what the breakeven premium would be. Yes? No?

Anonymous said...

Dave and Paul;

Here is an interesting example of why Medicare is breaking us, and why one can't just have a Medicare-for-all solution, simple though it might seem. (It has to do with the proliferation of for-profit hospices once Medicare decided to pay for it). It seems that the endless private business game of "fleece the government" is alive and well - and successful.

And BTW Dave, I was just wondering why you had disappeared from the comment scene, welcome back! nl wasn't working for me either, sorry. I'll go back to nonlocal.


e-Patient Dave said...


I don't know what to say about the hospice-for-profit situation. My head spins. Why aren't the "keep government small" political forces swarming all over stuff like this? (That's a cousin of asking why the insurance industry doesn't beat the bushes to stamp out upcoding ... I feel like Tevye, "asking questions that would cross a rabbi's eyes.")

So, to continue my education: is that all it is? If for-profits were somehow not allowed to milk the government, and if the public-option version of Medicare were required to break even (not be subsidized), could it be viable?

(I'm not presuming anything's simple - I'm just probing.)

Anonymous said...


My view, which Paul is no doubt tired of hearing since I keep repeating it, is that the govmint went about health care reform backwards. They should have addressed the known chaos in the health care delivery system first. It would have been hard as h___ and politically unrewarding, but it would have generated a sustainable system. Then this system could be built upon by insurance reform, because it would be clear that insurance reform wouldn't break the bank.
But being politicians, they went for what they thought was the most politically popular - reform of the admittedly unfair insurance system. Unfortunately, they completely misunderestimated (to use a Bushism haha) the ability of the scaremongers to distort the discussion, so we are about to lose the entire game in the first inning. I am so angry I am ready to tear my hair out - not only as a physician, but as a patient and a citizen. We won't see anybody try to touch this again for a decade - as predicted by some even before the election. God help us all.


Barry Carol said...

First, I would like to provide some numbers regarding health insurance costs. According to the Kaiser Family Foundation, the average premium nationwide for family coverage is about $13K per year and a bit over $5K for single coverage. The average self-insured large corporate plan spends something over $4K per member (not per employee) per year. Companies with older workforces spend more and those with younger workers like Starbucks and Whole Foods spend less. Medicare spends about $10K per person per year which ranges widely across the country from a high of over $16K per person in Miami to under $6K in some rural counties in the Midwest. The Federal Employees Health Benefit Plan is basically a cost plus contract where insurers are paid for medical claims plus an administrative fee. Taxpayers pay approximately 75% of the premium cost for the federal workers while the workers themselves pay the other 25%.

Regarding the public option, I oppose it for two reasons. First, if it is forced to compete on a true level playing field, it probably will not win much market share as the article points out. If that’s the case, why bother? More importantly, I simply don’t trust the government to ensure true level playing field competition over the long term even if it starts out that way. The level of vitriol in Congress towards insurers combined with the desire for a single payer system among the liberal wing of the Democratic Party suggests a strong likelihood that the rules of the game would change later. Remember that Medicare originally paid doctors their usual and customary rates and paid hospitals on a cost plus basis. Now we have dictated prices which pay quite well for some procedures but poorly for many others and below actual costs overall. I support most of the other proposed reforms, but the public option should be dropped.

Anonymous said...


I noted your comment regarding not being fond of Porter and Teisburg's book, but am more comfortable asking you this question in the backwater of an old post, where no one is paying attention. (:

I agree their ideas for medical condition-centered competition seem cumbersome. I also recognize that the Atlantic article is, in large part, a fantasy ideal unlikely to ever be realized.
My question to you is, if you could design a health care system from scratch, how would you structure it? You refer to the medical arms race in Boston, which is repeated (perhaps to a lesser degree) in many other cities. Even if competition were based on quality and transparency as you describe, there would still be a lot of duplication of services in a place like Boston, and the problem of perverse incentives with fee for service would remain. Do you think all the tertiary care hospitals in Boston should still compete in all service lines? If not, how would you structure it? Would you be willing to have BIDMC go down if it couldn't compete on a level playing field? How would you deal with the perverse physician payment incentives? In short, what does your ideal health care system look like, from the providers', patients' and payors' perspectives? (in 10 pages or less - haha!)
(ps I need to research the Netherlands further, if that is going to be your answer. My reservation is that is a much smaller and more homogeneous country which may not apply to us)


e-Patient Dave said...

> it probably will not win much market share
> as the article points out. If that’s the case, why bother?

Honest request - somebody please help me with this:

In my view one of the (if not the) top issues in health reform is the travesty of all the people in the US who can't get health insurance and thus can't get health care. As I understand it a (if not the) central goal of the public option is so that ANYONE can buy in, especially if they can't get coverage elsewhere.

I personally experienced that issue about ten years ago in New Hampshire when the disgusting, reprehensible SOBs up there wanted to charge me (as an individual) $1200 a MONTH - me, with no history of anything - because in that state the people who don't have coverage tend to be the very sick. So even though I wasn't, tough.

This is DISGUSTING. A total dysfunction, 100% administered by the for-profit companies, in N.H.'s classic "minimal tax, minimal regulation" environment. $1200/month for a healthy individual!

And now comes the proposal, for people in such a situation, to let them buy into a Federal plan. And I hear over and over, in the article and in Barry's comment (Hi Barry! long time), "not many people will use it, so why bother?"

Honestly, I felt so much that I had my back to the wall that this question evokes this reply: Most people don't call the police, so why bother? Most people never call the fire department, so why bother?

Honest question: have we really gotten so wrapped around the axle with policy issues that we've taken our eye off human suffering?

Barry Carol said...

E-Patient Dave,

When you tried to access health insurance in NH, you were in a market where insurance is subject to underwriting. Massachusetts, by contrast, uses modified community rating which means they have to take all comers and can only vary rates by a maximum of a 2 to 1 band based on age, geography and, perhaps, occupation. Only four other states currently use community rating – ME, VT, NY and NJ, along with MA. One of the key reforms currently contemplated would move the entire market nationwide to community rating and guaranteed issue with rate variance limited to a 2 to 1 band based on age and geographic location. Guaranteed issue, of course, needs to be coupled with mandatory participation (with likely exceptions for financial hardship). Without mandatory participation, people could just wait until they are sick before buying insurance knowing that insurers have to take them. That would not be a viable or sustainable model obviously. With community rating, guaranteed issue, and a health insurance exchange that would allow people to easily compare policies and prices among competitors, there shouldn’t be a need for a public option because you can’t be turned down. The health insurance market needs appropriate regulatory reform; it doesn’t need a public insurance option. That’s just my opinion, of course.

Even if people were allowed to buy into the FEHBP, it probably would not be cheap as the median age of the federal workforce is, I believe, fairly high. Buying into Medicare would be prohibitively expensive as it currently serves only the elderly who consume, on average, about 2.5 times as much healthcare services as the under 65 population. As an aside, it may interest you to know that people who purchase COBRA coverage following a layoff are most likely to need it. The large insurers tell me that the medical cost ratio on their COBRA business averages 150-200 percent of premiums collected.

Paul Levy said...

Dear nonlocal,

Not to hedge your question, but I think the best changes that are made are those that are incremental because we just don't understand the ramifications of changes we might make. As you suggest, while it might be an interesting exercise, a la the Atlantic article, to think about a wholesale change in things, that will not happen.

To answer your question, I wouldn't presume to offer an overall design. I don't even know how to fix the many issues that I have written about over the last 3 years here, except by applying consistent and thoughtful pressure on the body politic and the industry and hope that that public and public officials and the industry itself will respond in a way that is helpful directionally. And, for the day to day, try to set an example in our own hospital about how to do things better, safer, and more efficiently.

e-Patient Dave said...


I haven't seen many comments from you recently (I only got re-engaged here when Paul added email subscriptions!) so perhaps I've missed something. Having said that:

Are you switching :) from "why bother with a public option" to a recommendation that we go to community rating?

btw, when I talk with ordinary non-health-geek citizens, I find that "underwriting" is one of the most egregious euphemisms in this whole nasty (and yes, dysfunctional) industry. Every I talk to has heard the term, but hardly anyone realizes it means "discriminatory pricing."

Re mandatory participation: understood and agreed. (Non-expert that I am, I still saw that one a mile away.)

=== btw, in the public discourse about the state of Mass's experiment (as some call it), I see an awful lot of naivete. People carp and howl about the state of things right now, including the shortage of primaries. Well, anyone who's studied system dynamics (e.g. Peter Senge's work, which Paul has cited) knows you can't evaluate a big change in the system until the system's had a chance to reach its new equilibrium.

I wouldn't mind naivete if it didn't spew from the mouths of some people who quite aggressively claim to be authorities on what we should do! :)

(I don't have any particular parties in mind; I don't have time to follow the debate at length. That's why I try to limit myself to my personal experience and cases where I see obvious baloney being sold.)

Anonymous said...


I am very much afraid that we no longer have time for incrementalism, not with the IOM findings on medical errors and with my own insurance premium rising at the clip of 22% in one shot. We should have been practicing incrementalism over the last 25 years.
Notwithstanding Dave's cogent comment ( "you can't evaluate a big change in the system until the system's had a chance to reach its new equilibrium"), to evaluate each and every incremental change would take decades - and decades we assuredly do not have.
That said, I agree - all you can do is use your growing stature to advocate for quality, and me to use my big mouth on various forums to advocate for same.
'Nuff said on this subject.


Barry Carol said...

e-Patient Dave,

I’m not switching to community rating. I’ve always supported it, and I live in a community rated state (NJ). For the record, while I oppose the public insurance option, I also support the following other reforms: (1) guaranteed issue coupled with mandatory participation; (2) subsidies to help lower income people purchase health insurance; (3) health insurance exchanges; (4) taxation of employer provided health insurance; (5) comparative effectiveness and cost-effectiveness research which should be incorporated into coverage and payment policy; (7) development and deployment of interoperable electronic medical records; (8) tort reform; (9) palliative care and end of life counseling; and (10) my long time favorite, robust price and quality transparency tools that would be available to both patients and referring doctors.

In the interest of full disclosure, I’m a married 63 year old securities analyst for a large corporate pension fund. My responsibilities include covering the managed care insurers and the drug retailers. While I am obviously not a doctor, I’ve had lots of experience as a patient which was the catalyst for my interest in healthcare and health insurance issues in the first place. I hope that helps you and others understand my perspective.

e-Patient Dave said...

Great to (more deeply) meet you, Barry! Thanks for the background. We should have coffee someday.

So, to further expose my ignorance, let me ask why MA gets so much attention for its community rating approach, when other states already have it? Is MA the only one that has mandatory participation?

(btw, one thing I love about the community on this blog is that it's possible to ask and learn, without being subjected to food-flinging flamefests as so often happens on, for instance, The Health Care Blog. It was such a hoot - a week or two back, a flamer on THCB demanded that the editors bar any further posts by Matthew Holt - who, unfortunately, IS the owner. There's no flamer like a well-informed flamer!)

Anonymous said...


Oh, you mean it's food that they fling? I wondered what that stuff was. (:


Barry Carol said...

e-Patient Dave,

I’m sure there are numerous others who read this blog that are far more qualified to comment on the Massachusetts health insurance reform effort than I am, including some who were / are intimately involved formulating policy. With that caveat, I’ll offer the following comment:

The reason, I think, that there is so much interest in MA is because the state legislature passed and then Governor Romney signed health insurance reform legislation intended to significantly reduce the number of uninsured citizens in the state. So, the national interest in the MA effort is not related to community rating per se but to the whole strategy and effort and what it can teach us in creating federal health reform legislation.

MA has been quite successful in reducing the number of uninsured from what was already a comparatively low number as a percentage of its population. It is the only one of the community rated states that has mandatory participation with exemptions for financial hardship. The weakness in the MA approach is that it really didn’t attempt to deal with the medical cost issue. The reason for that, I think, is that to do so requires taking on powerful interests including doctors, hospitals, drug and device manufacturers, insurers, trial lawyers and patients. What frustrates me is that everyone claims to be in favor of reforming the system but nobody wants to give up anything in money and / or power in the short term in exchange for a more affordable and sustainable healthcare system in the long term. They all want to solve the problem at someone else’s expense.

For my part, as a patient, I am willing to give up the tax preference afforded to employer provided health insurance even though it would cost my family at least $4,000 per year and perhaps more in higher federal income and payroll taxes as well as NJ state income taxes. I challenge all the other stakeholder groups to answer my longstanding question – what’s your contribution?

Engineer on Medicare said...

Engineers sometimes use a system development process that works as follows:
1. Identify requirements or objectives.
2. Create a design based on the requirements.
3. Analyze that design, comparing performance, cost, and fulfillment of requirements against existing or other models.
4. Select the design or continue to iterate the design until the objective is accomplished.

If I were designing a health care system, I would define the requirements (cost is treated as a requirement) and objectives for the system, analyze the existing US system, maybe the Dutch and/or Swiss systems, maybe another system, and a conceptual full "public" system applied to the US.

Then I would create a design for a US health care system that provides the best balance of cost, performance, and quality; and make a plan for the transition, not exceeding 10 years.

There are no sacred cows or preservation of anyone's sandbox or rice bowl. Worrying about whose ox is gored is not a consideration in any of the plans. There are no preconditions about public or private funding, tax policy, or political principles that might get trampled. Hew with the sharp axe of objective analysis and let the chips fall where they may.

The transition period is designed to allow social and economic factors to adjust to the new paradigm.

Then apply any of the appropriate metaphors such as "Fish or cut bait" or the one commonly associated with a universal bodily function.

e-Patient Dave said...

Barry, I think your view and mine have a lot in common on this. Regarding nobody wanting to give anything up, in February I got that feeling while reading Daschiel's book, and nothing I've seen since then has convinced me otherwise.

Back then I wrote a post "A Thousand Points of Pain," which IBM picked up for their Smarter Planet blog, including a business-oriented prolog. If you have nothing better to do today, it's here.

Thinking about this during my drive today, I got the image of heavy furniture that's been pushed up against the door, blocking the exits. The thing is, the system is bound to collapse, because so many people and employers are already being priced out of the system - and the leviathans don't have the slightest idea how to adjust their cost structure to match a market that can no longer bear the tariff.

I think it's going to be ugly for a while, with real human suffering; the recent spectacle of the Remote Access Medical clinic at the LA Forum is just a hint, a foretelling.

And that will create a large market for services that are "good enough to get by," off the rid, which (if time proves me right, ha) will lead to the growth of genuine Christensen-style innovations, barely good enough at first, but growing in classic disruptive style.

There's no other way out.

Okay, I'm violating Paul's length guidelines. I should go write my own post. :)

e-Patient Dave said...

Sorry, when I said "off the rid" I meant "off the grid."

Anonymous said...

Yeah, exactly whom were you talking about with that "length" limit, Paul? I am definitely among the guilty. (:
To keep this short, I very much like Engineer on Medicare's analysis. I just wish to heck it could really work that way.

nonlocal MD

Anonymous said...


You might be interested in this link via the Happy Hospitalist. It's a bit confusing to follow, but Cortese is the chief of the Mayo Clinic, and it's quoting a Washington Post article which quotes him (see embedded blue link "health system reform.") At least one stakeholder is speaking up, but I doubt the rest are listening.


Barry Carol said...


Thanks for the link. I agree that rapidly rising healthcare costs are bankrupting us and we need to get our collective arms around them. I also agree that doctors’ decisions to prescribe drugs, order tests, admit patients to the hospital, consult with patients and perform procedures themselves drive virtually all healthcare spending. Moreover, the fee for service payment model rewards volume rather than value and quality. Unfortunately, as Princeton’s Paul Starr eloquently describes in his 1982 Pulitzer Prize winning book, “The Social Transformation of American Medicine,” doctors have a decades long history of fighting and thwarting reform at every turn. Anything that threatens their autonomy, their power or their income is anathema to them. Yet, it’s hard to see how we can get from here to there (a reformed, value based and sustainable system) without their cooperation.

Personally, I would love to see tort reform that gives doctors a robust safe harbor from lawsuits based on a failure to diagnose a disease or condition if they followed evidence based protocols. I would also like to see medical disputes resolved by special health courts instead of juries. Beyond that, if it were up to me, I would group doctors and hospitals into tiers based on a combination of quality and cost-effectiveness like we do now for drugs. Patients would pay higher co-pays sufficient to get their attention if they want to use providers outside the preferred tiers. It’s conceivable, however, that every hospital in Miami, NYC, Boston, LA, etc. might find itself in the high co-pay tier(s). Maybe that would create some countervailing pressure against excess utilization driven by doctors’ decisions that are part money driven, part due to defensive medicine, and part due to unreasonable patient demands and expectations.

That all said I’m not a doctor. You are. I would be interested in your perspective.

Anonymous said...

....and off-topic sort of, see this, regarding disclosure of medical errors:

When I was participating in these error analyses, the doctors' part in the error was analyzed and acted upon separately from that of the hospital, due to malpractice concerns, dr's not wanting to subject themselves to non-doc review, etc. Now just think if the episode were disclosed, analyzed and fixed as a whole, because the malpractice risk was shared between the doc and the hospital.
Paul's recent experience with the wrong site surgery comes to mind as an example.


Paul Levy said...

It is crazy to separate the doctor's performance from the hospital's in these situations. There are often contributing factors due to systemic problems in the hospital. When we do a root cause analysis, we also ask "why?" five times: The initial view of what went wrong is usually incomplete, requiring a deeper examination of all contributing causes. We also involve both MDs and non-MDs in the review for exactly that reason.

And, BTW, this is in an environment in MA where hospitals are essentially exempt from liability ($20K statutory limit), and so where the MDs are always the ones being sued. Notwithstanding that, we stick together to get a thorough view of what really went wrong. We have no interest in letting our MDs hang out to dry: The goal is to find out what went wrong and fix it so it won't happen again.

e-Patient Dave said...

Barry (and Nonlocal),

Are you specifically familiar with Christensen's analysis in *Innovator's Prescription*?

I'm pretty intrigued by how he (and co-author Jason Hwang) set aside the entanglements and look at the underlying tides and ecosystem.

I've been thinking of writing about it. If y'all already know it pretty well it'll deprioritize it, but if not, I'll bump it up.

(btw, I don't mean "have y'all heard about it" because most of what I've read ABOUT it isn't nearly as compelling as the real stuff.)

Barry Carol said...


No, I'm not familiar with Christensen's analysis in "innovator's Prescription."

Ralf Lippold said...

Hi all,

After Ted Kennedy's death a roar goes around the internet about the "downturn of healthcare".

I wonder why we often are seeking for the big guys to fix the problems we have co-created in the past (not even being aware of it).

Peter Block a well-known process consultant has these wonderful lines:

"Stewardship is the choice for service.
We serve best through partnership, rather than patriarchy.
Dependency is the antithesis of stewardship and so
empowerment becomes essential..."
(taken from his book "Stewardship")

What is your first step out of the mud of healthcare complexity?

Perhaps not the intuitive and easy to think about one. There is
definitely one step for each of us. We can overcome the crisis
(that is BTW everywhere more or less the same, the systemic
patterns are similar!).



Anonymous said...


No, I am not familiar with Christensen. I am still reading Peter Senge's book which you and Paul recommended; can't keep up! (:
I would be interested in your writing about it.

and ps: "y'all"??!! I thought that was for us southerners. My family was from RI, but I do find "y'all" a convenient plural for "you."


Anonymous said...


(warning, this is long)

I believe there are 2 reasons why docs will never lead a true health care(not insurance) reform effort: 1) fear and 2) inability to apply systems thinking.
First, the fear. Much of it is expressed as anger, but fear is the root cause. Like anyone else with a job, they fear that true reform will drastically reduce their income either by fiat (further price controls) or by elimination of the need for so many of them (specialists, of course). In addition, they fear that any redesign will penalize them while others in the system (hospitals, insurance companies, patients, lawyers, suppliers) continue to benefit – the fairness issue. Most see themselves as helpless victims of a chaotic system out of their control. Respect for their training, talents and effort has eroded and they are basically regarded like the thoroughbred racehorses in a wealthy stable owned by others. This fear prevents them from analyzing the situation rationally; as Peter Senge’s book says, they are reacting to events, not analyzing problems in the systemic structure.
Second, the lack of organizational thinking. We have talked about how physicians are not trained as team players, so I don’t need to elaborate on that. This has two consequences, however: a) they are unable to form effective organizations to lead any effort such as reform, and b) they are largely unable, on their own, to form effective organizations to improve OVERALL quality and efficiency in delivering medical care. There are a few exceptions widely cited, such as the Mayo or Intermountain. All these exceptions have one commonality absent in other hospital systems – the physicians ARE, and FEEL, part of the overall organization. In regular hospitals they see themselves as separate agents, not really aligned with the hospital’s goals. In their offices they are even more isolated. How is a health care “system” organized like this going to achieve goals which require intense teamwork?

For those reasons, I repeat my tiresome assertion that physicians and hospitals (and all the myriad outpatient care providers) are going to have to have a shotgun marriage, receive bundled payments, and assume continual responsibility for the patients under their care, together. Only then will they all have the same incentives to streamline care and, above all, improve quality. Paul would immediately label this “capitation” but I think we are falling prey to another of Senge’s theories, that of allowing our pre-existing mental models (“deeply ingrained assumptions, generalizations……that influence how we understand the world and how we take action”, p. 8) to constrain how we think about this issue. It’s time for new ideas.
And that is my long-winded perspective. (:


e-Patient Dave said...

nonlocal & Barry,

I'm tickled pink to be able to introduce a new idea into a conversation with you, whether or not you eventually agree. :) (Gadzooks, people enjoying discourse even if there's disagreement?? Ice skates in Hades!)

Being a high tech industry guy, I've been aware for some years of Christensen's groundbreaking (really, no kidding) research into how and why some technological changes take root and others don't. He started by tapping a vast database of the evolution of the disk drive industry, which he chose because a biologist friend said "We study fruit flies because they evolve rapidly. You should pick a technology that evolves rapidly." Plus, the disk drive industry happened to have a ton of well organized data.

That model, in the 1990s, has been built out and refined in many industries and, it's said, has been used to model the development of nations' economies. I myself saw my own industry (typesetting machines!) disrupted out of existence, when desktop publishing came along.

When I first started speaking at healthcare conferences (Connected Health, Boston, Oct 08) I ended my Q&A with a passing (naive) observation that the industry's intractibility made me wonder if it wasn't ripe for disruptive innovation.

Imagine how tickled I was this year to learn he'd spent a full decade working on healthcare, and his book was out.

My first post about it, explaining the concept, was in June. Then I got to hear him talk and wrote a follow-up, quoting him: "The general hospital is not a sustainable business model."

Mind you, this is a guy with some serious chops. I later got to have lunch with co-author (some say the primary author) Hwang and explore some of the ideas, which have further evolved since publication. I've not had time to write more about the (to me) radical but energizing new thinking that emerged, but I hope to do so.

And mind you too, there's not an ounce of politics in their writing: Clay's a b-school guy who spent ten years writing a book about a vastly complex industry, which he says is the most difficult thing he's ever studied "by a full order of magnitude," and did it in tight collaboration with Harvard Medical School docs as a reality check about how things really work.

You know I don't claim to know everything. But, as the systems dynamics people say, when a system inexorably stays the same or trends in a direction no matter what you try, sure as you're born there are structural forces keeping it that way that haven't been noticed yet. That's what Christensen and Hwang talk about.

Anonymous said...


I hasten to clarify that my perspective is that of a private practitioner. The academic world is another one entirely; no doubt afflicted with tunnel vision and arrogance more than fear.... (:


Ah, yes; I now remember Christensen's general hospital remark. Looking forward to hearing more!