Article | Harvard Business Review | September 2011

How to Solve the Cost Crisis in Health Care

by Robert S. Kaplan and Michael E. Porter

Abstract

Existing health care costing systems have serious flaws that make it impossible to measure costs accurately at the individual patient and medical condition level. This gap has severely limited meaningful cost reduction throughout the system. The paper describes a new (for health care) approach that can accurately measure the costs incurred over the care cycle for a patient's condition. Combining this cost information along with the patient outcomes achieved reveals major opportunities for health care providers and third-party payers to transform the economics of delivering health care. We illustrate multiple ways for providers to drive costs out of the system while simultaneously improving the quality of care they deliver.

Keywords: Cost; Health Care and Treatment; Measurement and Metrics; Service Delivery; Outcome or Result; Quality; Health Industry;

Citation:

Kaplan, Robert S., and Michael E. Porter. "How to Solve the Cost Crisis in Health Care." Harvard Business Review 89, no. 9 (September 2011): 47–64.