The Miracle Cure: Health Care Innovation

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The Miracle Cure: Health Care Innovation

With all the talk in the news today about "fixing" the health care system, few if any specific practical ideas have been proposed.  Everything is expressed in platitudes and generalities.  Yet, in order to really fix health care, the quality, accessibility, and affordability of medical care will need to be vastly improved.  In addition, the relationships among employers, employees, and the health care system will have to change to reflect the new global economy. 

Some important observations and proposals are made in a new book called The Innovator's Prescription: A Disruptive Solution for Health Care1by Clayton M. Christensen, Jerome H. Grossman, M.D., and Jason Hwang, M.D.  Christensen wrote the ground-breaking book The Innovator's Dilemma,2 in which he described the effect of disruptive innovations on industry after industry. 

The greatest innovations, he observed, do not come out of steady research and development by established companies.  They come from start-ups who innovate on the cheap — usually in a way that big companies feel they can ignore as irrelevant.  By the time the new solution is replacing the established product, it's too late, and the larger company's business has already been disrupted by innovation. 

In his new book, Christensen applies the same principles to health care.  The fact is the U.S. health care system is broken.  The cost of medical care more than doubled between 1970 and 2007, rising from 7 to 16 percent of GDP.  Ordinary people simply can't afford good health care.  In fact, neither can the U.S. government.  Medicare threatens to eclipse all spending in the budget except for defense.  The burden of health care costs on corporations in the U.S. makes them globally less competitive.  They have to add the cost of health care into the price of their products, which makes them more expensive than foreign offerings. 

Moreover, city, state, and county governments have obligations to pay health care for their employees that effectively put them all in the red and force them to cut funding for important infrastructure and education needs. 

The central problem with the U.S. health care system is that it is a model based on private companies being paid to supply products and services rather than solutions.  Today, if a health care company wants to make more money, it simply supplies more services to its customers — that is, the patients.  If a hospital system, for example, sees that it needs more profit on the bottom line, it can simply order more expensive tests, such as MRIs at about $800 each...

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