Hammergrin on Health Care

While looking around the Internet, I ran across a great little essay on the 800-CEO-Read Blog penned by John Hammergrin of McKesson Corporation, a 175-year-old heath care company. Since he seems to be very much of a similar mind to George C. Halvorson, I thought that sharing parts of that blog might be well received. Here is a bit from the column in which he addresses the issue of our national health care crisis from the standpoint of business and the market:

In most industries, top performing businesses excel by being the low cost producer, putting out the best product, and meeting or beating customer expectations. The market works because consumers are able to choose the services that meet their needs best. In the health care industry, costs are distorted by government interference in the market and quality differences are disguised by a lack of consumer information and choice. Moreover, while we can argue that "customer" is another word for patient, would the customer in any other market make critical decisions without concern for cost or quality and put up with the inconveniences, inefficiencies and high error rates of health care?

The lack of available and consistent information is indeed a huge stumbling block, and one that I have written about here on several occasions. While the argument does seem lucid overall, I must point out that for many in this country medical care is a last resort, mostly due to these aforementioned costs. This means waiting until a trip to the emergency room in unavoidable, at which point cost comparisons and examination of the care quality of the provider are moot.

Chronic diseases account for most of our health care expenditures and require coordinated rather than episodic care. We need to incentivize and organize providers to manage long-term illnesses better. The fear of medical malpractice suits are driving up costs by encouraging unnecessary treatment. We need sensible reform to reduce the preponderance of defensive medicine. Quality of care and outcomes need to be the new measuring sticks by which we assess, select and pay providers for their health care services. We need greater transparency to give primary care physicians and health care consumers the ability to choose the best doctors, hospitals, insurance providers and technicians, while also creating industry-wide standards for the latest in best practice.

No matter which candidate prevails in November, the popular concerns we have about health care right now are going to evolve rapidly once the next administration begins. As a business leader, I support universal access through tax incentives and individual choice (not a de facto expansion of Medicare) because I believe that having everyone in the insurance pool is fundamental to reducing costs and creating a competitive insurance market. But as Governor Schwarzenegger learned when the California Senate Health Care Panel rejected a bill mandating health care for all state residents, sweeping reform is even more difficult when economic times are tough.

And that would seem to be a major concern as we watch the news become more pessimistic each day regarding the American economy. Even so, many other factors do play an important part that is not to be overshadowed by economic insecurity. Hammergrin sums up his position in this regard as follows:

We don't need to control the health care market through mandates and cost containment legislation, we need to unleash it by giving people the ability to make better informed choices. After all, health care is the one product all consumers need, guaranteed.

SOURCE: "An essay from John Hammergren on health care reform"04/14/08
photo courtesy of brykmantra, used according to its Creative Commons license

Americans Study Netherlands Health Care Program

In the Netherlands universal healthcare is not only the standard but also involves a healthy amount of market competition. Kerry Weens, a senior U.S. Department of Health official, recently lead a delegation of Americans examining the Dutch health care system:

"We're intrigued by many of the ideas that we see, such as moving toward more market based solutions. In general I think there's a lot of consistency between the Dutch system and the US system."

John Tyler and Reinout Van Wagtendonk of Radio Netherlands report on the American delegation’s visit.

Mr. Weens was referring to a recent overhaul in the way Dutch people purchase health insurance which have made the Dutch system more competitive. Two years ago, a new law went into effect requiring every resident of the Netherlands to purchase their own health insurance, while the insurance companies were forced to embrace open market laws and offer competitive prices for their insurances. But unlike in the United States, for those who can't afford insurance, the Dutch state still chips in to cover part of the cost.

Insurance companies are required to provide coverage for anyone who applies for it, so no one can be refused due to pre-existing health problems. To help insurance companies cover some of the costs involved with selling coverage to all comers, the government has a formula in which it contributes to the cost incurred in certain cases.

So while competition has been introduced into the system, the Dutch system is not a completely market-based approach. The taxpayer still subsidizes a not insignificant percentage of care in the Netherlands. But competition helps keep overall costs down.

In Health Care Reform Now!, George Halvorson advocates finding a uniquely American path to universal coverage while learning what we can from other nations who already have their own systems of universal coverage. This sort of fact finding mission is exactly the type of research that needs to be done in order to synthesize our own uniquely American solution.

The Dutch approach also share’s Mr. Halvorson’s views on preventative care and transparency.

"We pay a lot more attention to prevention -- we have a coordinated, multidisciplinary approach. In Holland there's quite a lot of proactive action attached to that aspect of health care," said Nolene Berkhout, a nurse practitioner who served as one of the hosts of the American delegation.

A number of recent changes are meant to improve the quality of care here in the Netherlands. Doctors and hospitals are now required to publish information every year about their performance. That information is available to the public on a website, but it is still too soon to see how much effect it has on patients' choices.

SOURCE: "U.S. Officials Impressed by Dutch Healthcare System" 11/12/07
photo courtesy of Pear Biter, used under this Creative Commons license