Health Care's Godmother

Review of: "Who Killed Health Care?: America's $2 Trillion Medical Problem -- and the Consumer-Driven Cure" by Regina Herzlinger

Try to imagine health care as a police lineup, with the patient behind the one-way mirror, trying to pick out the suspect. The lineup includes big hospitals, employers, big insurance companies, health care academics and government. When asked which of the suspects killed health care, the patient points to all of them.

That is a good metaphor for what Regina Herzlinger does in her new book, Who Killed Health Care? The Harvard Business School Professor who is often described as the godmother of consumer-driven health care takes no prisoners in this tour-de-force of how our health care system became an unadulterated mess. In the end, Herzlinger will probably have few allies left among those who have a vested interest in the current system. Yet, should her vision become the one that guides health care reform, everyone who is a health care consumer will owe her a debt of gratitude.

Herzlinger was an early critic of "managed care," the theory that gave us insurance companies like health maintenance organizations (HMOs), which act as gatekeepers for patients' use of medical care. While many people think that HMOs are the result of private sector insurance, Who Killed Health Care? points out that they actually came to prominence due to the HMO Act of 1973. With an economy facing rising health care costs in the early 1970s, President Richard Nixon turned to HMOs to hold costs down. His HMO Act required employers who offered insurance to offer at least one managed care product. It also offered subsidies to companies that opened HMOs.

Employers liked managed care because, initially, HMOs seemed to control health insurance costs. They liked managed care so much that they narrowed the insurance choices of employees to the point that by 2005 almost all employers were offering only one type of insurance plan. Big insurers liked managed care because it meant that they would make money by not paying for medical care. Academics (most notably, systems analyst Alain Enthoven) loved managed care too. They touted the example of Kaiser Permanente as how health care should be managed. But what was best about managed care from their perspective was that it put academics at the forefront of evaluating medical treatment. Academics became dedicated to techniques such as disease management that put them in the powerful position of telling doctors how to treat patients.

Indeed, the only ones to not make out on managed care were patients and doctors. Patients loathed the restrictive nature of HMOs, to the point that eventually HMOs were replaced by managed care organizations like Preferred Provider Organizations that put fewer restrictions on patient access and choice. Under managed care, doctors are pressured to conform to managed care organizations' disease management advice. Academics frequently complain of doctors' low compliance with such advice. However, it may be that the doctors, and not the academics, know what they are doing. As Herzlinger notes, "There is no accepted evidence of the cost effectiveness of disease management." In the end, we are left us with a system of paying for Medical Care that offers few insurance choices for consumers and tries to second-guess decisions best left to patients and doctors.

The suspects are still at it. For example, big hospitals are trying to regulate specialty hospitals out of business. "The hospital industry," notes Herzlinger, "sensing correctly that this is an innovation that could really do it in, has gone to all-out war against the specialty sector." The hospital industry convinced Congress to include an 18-month ban on the opening of new specialty hospitals as part of the 2003 Medicare prescription drug bill. The true loser in this fight is the health-care consumer, as specialty hospitals often give better treatment for lower cost than traditional hospitals. Also well worth mentioning is Herzlinger's case study of how badly government has, through Medicare, mismanaged the treatment of kidney disease. It is a frightening glimpse at what a single-payer system would look like in the U.S.

Herzlinger concludes her book by outlining a compelling plan so that we can achieve the health care system that we deserve. First, we should put the tax treatment of health insurance on an equal footing so that those who do not receive their insurance through an employer also get a tax break. Second, we need to deregulate so that entrepreneurialism can flourish in the health care sector -- laws that hinder physician ownership of medical facilities are one such example. Government's role should be very limited, only helping to pay for the insurance of people who cannot afford it, and regulating health care information, much like the Securities and Exchange Commission does with financial markets. The only one of Herzlinger's suggestion that would likely prove counterproductive is her call for an individual mandate to require everyone to purchase health insurance. This is already proving problematic in Massachusetts, leading to even more government involvement in health care.

Otherwise, Who Killed Health Care? is a book that all of those who favor more freedom in our health care system should pick up. As Herzlinger notes, the importance of transforming our health care system into one run by free markets can't be overstated:

"A system controlled by the insurance companies or hospitals or government will kill us financially and medically -- it will ruin our economy, deny us the health care services we need, and undermine the importance of genomic research that can fundamentally improve the practice of medicine and control its costs."

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Yet more cutbacks for already-overstretched NHS maternity wards

Almost one in three maternity units in England could close because of expected cuts in doctors' working hours, the Conservative Party claims. Figures released yesterday suggest that 50 out of 176 consultant-led maternity units across the country are under threat of being downgraded or closed if guidance being used in some NHS trusts is applied nationally. Patricia Hewitt, the Health Secretary, has admitted that the number of units staffed by doctors could be cut under European rules to limit the hours doctors spend on wards.

The European Working Time Directive is set to reduce the number of hours doctors spend on wards to 48 hours a week by August 2009. The changes could lead to a reduced number of consultant-led maternity units because of a lack of staff.

Maternity units in Manchester, Teesside and other parts of the country have already been earmarked for radical overhauls, and more home births and deliveries in local units staffed by midwives are expected as a result. But the plans are proving hugely unpopular, even though they have been promoted as being in the interests of patients and NHS staff. They could mean that mothers and babies at risk of complications during delivery will have to travel farther to receive specialist care rather than transferring to the nearest hospital.

The Conservatives' estimates are based on a report issued in February by Sheila Shribman, the Government's maternity supervisor, which explained cuts to services in West Yorkshire. Two units at the Calderdale and Huddersfield NHS Foundation Trust each catered for about 2,500 births a year but, on their own, neither was big enough to justify the spend needed to retain specialist skills, she said. The average consultant-led unit currently delivers an estimated 1,800 babies a year.

The Tories suggest that if other trusts across England took Ms Shribman's recommendations as a guide, up to one in three units would close. Other guidance being circulated by NHS organisations in the East of England in turn suggests that maternity units need to deliver at least 3,000 or even 4,000 births a year to be viable.

The Tories called on the Government to delay the implementation of the European Working Time Directive in order to forestall cuts. Addressing the annual conference of the Royal College of Midwives in Brighton, Ms Hewitt said that recommendations for the potential closure of services in Manchester, for example, were "quite difficult and unpopular" but were good for babies and mothers.

Ms Shribman said yesterday that every major city and most rural communities in the country would have to consider the future of local maternity services in the light of the Working Time Directive. But she denied that there was a "one size fits all" figure for the number of births a unit had that could be applied to justify closures across England.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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