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Kellogg School Corner | A ‘code red’ on US health care

Kellogg School Corner | A ‘code red’ on US health care
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First Published: Sun, Mar 23 2008. 11 55 PM IST
Updated: Sun, Mar 23 2008. 11 55 PM IST
In medical parlance, a “code red” is declared when someone is in critical condition. Death is not imminent, but it might be if proper treatment is not obtained soon.
It is an apt metaphor for today’s US health care system, which resembles an ailing patient more closely than the system personified by television’s stalwart Marcus Welby, MD, of old, according to David Dranove, the Walter McNerney distinguished professor of health industry management.
It is also the title of Dranove’s new book, in which the Kellogg professor diagnoses the root causes of the health care system’s failings, examines the many attempted cures and offers some prescriptions for recovery.
The book, Code Red: An Economist Explains How to Revive the Healthcare System without Destroying It, has been garnering praise for its thorough and pragmatic take on the health care crisis.
“The best explanation of how we got into this mess that I have ever read,” said health care expert Regina Hertzlinger, a professor at the Harvard Business School. “Policymakers, professionals and students need to hear this message,” added Lawton Robert Burns, editor of The Business of Healthcare Innovation.
In his book, Dranove discusses the underlying flaws in the American health care system. These include inadequate systems for exchanging information, incentives that work against cost efficiency, and insurance markets rife with dysfunction. Dranove dissects each in detail.
He then traces the many attempts that have been made to “fix” the system. These have included efforts to encourage health care consumerism; attempts to improve and rank the quality of health care providers; and steps to expand insurance coverage and access to health care.
But none of these well-intentioned initiatives has enabled the US to achieve the three main health care goals of access, efficiency and quality, Dranove says. He argues that systemic, market-based reforms are needed to pave the way to that ideal.
The most important first step, he suggests, is to improve the state of health information technology. “The type of information that is available to make medical decisions would be an embarrassment to managers in any othersector of the economy,” Dranove observes.
He notes that many providers still rely on handwritten paper records and that providers cannot share clinical data. “The result is that too many people make too many important medical decisions in an information vacuum,” Dranove writes. “It is a sorry state of affairs that has exacted a heavy toll.”
Beyond that, Dranove offers a host of recommendations that he says will go a long way towards reviving the US health care system. These include improving incentives for consumer-directed health care plans; setting rational prices for health care; measuring and rewarding top-quality providers; rethinking health care industry regulations; and covering the uninsured while maintaining competition.
The book arrives just as health care takes centre stage during the 2008 presidential campaign, which Dranove has been observing closely.
While not endorsing any candidate’s plan, Dranove notes that each has been talking about the importance of measuring and improving health care quality.
Dranove speaks favourably of Democratic Senator Barack Obama’s plan to offer a new national health care plan with guaranteed eligibility and comprehensive benefits, noting that it preserves the free market while encouraging more people to buy insurance. He is leery of Democratic Sen. Hillary Clinton’s plan to require all Americans to carry health insurance, and to offer a federal alternative to market-based insurance.
Sen. John McCain, the Republican nominee, is emphasizing cost containment, Dranove says, but is “pretty vague” about how he will reduce costs. Dranove approves of McCain’s desire to reform payment systems to encourage prevention and care coordination and to improve health information technology.
“If McCain does nothing else but push harder in these directions, he will at least abide by the familiar medical dictum, ‘First, do no harm’,” Dranove says. “That might not be half bad.”
Dranove has been discussing the merits of the candidates’ health care proposals on his blog (insight.kellogg.northwestern.edu/index.php/CodeRed), which shares the name of his book. Co-authored with Cornell University professor William White, the blog takes the form of a conversation between the two health care experts, and allows readers to comment on the debate.
“There is a lot at stake in the upcoming years,” Dranove says on his blog. “We hope that this free exchange of ideas can help bring about positive change in our health care system.”
Rebecca Lindell is a staff writer at Northwestern University’s Kellogg School of Management.
Send your comments to kelloggscorner@livemint.com
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First Published: Sun, Mar 23 2008. 11 55 PM IST