It’s Still Not What I’m Looking For

Have you ever noticed how many people there are who (a) are not medical doctors, but (b) are firmly convinced they know how medicine should be practiced, and (c) are more than willing to tell everybody else about their ideas? On rare occasions (for example, here), I have succumbed to the temptation myself.

If you find that strange, be aware that there’s another industry where the exact same thing happens: education. In both fields, the people who pay for the service and the people who receive the benefits are different entities. Perhaps for that reason, one typically finds a sea of mediocrity punctuated by islands of excellence, scattered almost randomly. Invariably, someone asks: “Why don’t we look at what’s going on in the islands of excellence and copy it everywhere else?” Why not, indeed? In education they have been trying to do this for more than a quarter of a century with no success, whatsoever.

What brings all this to mind is a New York Times article in which Alain Enthoven, Uwe Reinhardt, Harvard Business School Professor Clayton Christensen and others seem to want to try the very approach in health care that has failed so miserably in education.


I have climbed the highest mountains…
I have run through the fields…
I have scaled these city walls…
But I still haven’t found what I’m looking for.

The mentioned islands of excellence (with which I agree) are Intermountain Healthcare in Utah, the Mayo Clinic and the Geisinger Health System in Pennsylvania. But also mentioned are the Veterans Health Administration (which seems to score well only on the parameters the VA itself happens to measure [see here]), and Kaiser Permanente (which took some pretty brutal hits on 60 Minutes when California doctors accused it of killing patients and subsequently of dumping patients [here] and in Regi Herzlinger’s latest book).

But not so fast. What we really mean by “islands of excellence” are doctors practicing medicine that is lower cost and higher quality than what everyone else is doing. How do we know these models are ideal? How do we know they can be replicated everywhere else? We don’t.

As loyal readers of this blog already know, doctors are trapped in a dysfunctional payment system in which they have no ability to repackage and reprice their services the way other professionals can. The doctors in the above five systems are all employees. The only other way they can practice is as fee-for-service practitioners – alone or in groups. What they cannot do is form professional relationships with facilities and get compensated the way lawyers, stockbrokers and accountants are paid. Suppose we said to lawyers: “If you are practicing labor law or contracts law, you can form partnerships and receive bonuses each year based on each attorney’s contribution to partnership revenues; but you cannot have similar financial relationships with patent lawyers, antitrust lawyers or criminal attorneys.” Would that make sense? Of course not. Yet these are the kinds of restrictions we have imposed on every doctor in the country.

Because of the Stark Amendments, doctors and hospitals either have to be completely financially independent or their relationship has to be employer/employee. We have completely closed off the opportunity to form relationships of the type that are common in every other profession.

The only way to discover the best models in health care is to quit suppressing the market and allow competition to flourish. But how can we do that? Alert readers will recall we have already suggested how to do that here. More on the solution next week.

Comments (10)

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  1. Bruce says:

    John, here’s what you’re missing: If we had a real market, then all of these nondoctors couldn’t tell doctors what to do.

  2. Joe S. says:

    Bruce, the problem is much bigger. If we had a real market, all the health policy wonks would have to find an honest way to make a living.

  3. Larry C. says:

    You have identified the single biggest problem in health policy today. Instead of searching for ways to liberate people and free up market forceses, the health policy community is consumed with the desire to tell doctors how to practice medicine.

  4. Stephen C. says:

    What do you call it when people do the same thing over an over again and each time are disaapointed when they don’t get a different result?

  5. Dan Smith says:

    Stephen, the insanity is going to continue for at least four more years.

  6. Molly Sandvig says:

    Hi John,

    I appreciate your articles and blog and enjoyed your thoughts on this latest alert. I’d like to encourage you to take a close look at the industry I represent – physician hospitals – and consider including us as one of the very specific healthcare models that is already demonstrating that true reform is possible by, as you previously stated, “freeing the physicians, patients and entrepreneurs.” In my opinion, our industry represents the most blatant and obvious example of the fact that your theory works. It already has… Our hospitals offer higher quality, better efficiency and lower cost healthcare. Our doctors are true entrepreneurs and are finding positive ways around the system so riddled with roadblocks to true competition. Please let me know if you’d like to have a conversation about this sometime or if I can provide any further information. Thank you!

  7. Robert G. Pugach, M.D. says:

    Enthoven, Reinhardt and company have been making a fortune for more than 20 years designing the perfect healthcare delivery system and then figuring out a new one each time their idea doesn’t work. No one disagrees with the principle of preventative medicine but it won’t save any $. In urology, we know we’ll find many more prostate cancers if we start screening patients at age 40. The problem is that no one wants to adopt that standard because it will cost too much in screening and treatment for younger men.

  8. Joe Scherzer, M.D. says:

    “Century-old business models, for the general hospital and the physician’s practice, both of which are based on treating illness, not promoting wellness.”

    Yes – same old (incorrect) ploy to move us toward rationing of health care. I spent 10 years with the AAPS, some of which were spent as a board member when the group sued the Clinton Health Care Task Force. The public has no clue that ‘Obama’ (quite a figurehead, isn’t he?) is implementing this on a fast track. Will the public be surprised if the Democrats do what they tried to do in the 90’s – make private care outside of the government-run (rationed) system illegal?

    We should be shouting this from the rooftops.

  9. Chris Ewin, MD says:

    I couldn’t agree more…
    The University of Maryland president highlighted this in an editorial
    About three years ago….
    We’re seeing the graceful decline of education much like medicine…..
    It’s amazing to send lots of money to a private school to have a
    graduate student teach your children..

  10. Steve B. says:

    Hi guys,

    Just a quick question for the Docs extolling the virtues of a free market system: Would a free market healthcare system maintain the government mandated professional licensing that turns your profession into what some less candid libertarian economists might call a cartel? Seems to me that when you say “free market healthcare,” what you really mean is freedom to practice as you see fit, which I’d wager coincides strikingly with your own financial well-being… I’m with you on the free market for medical care, just skeptical that you would be willing the make the sacrifices in professional sovereignty that would necessarily require.