Diagnosis and Solutions Porter and Teisberg on Redefining Health CareHarvard Business School

Diagnosis and Solutions

The Diagnosis

Scoping the Problem:  The fundamental problem in the U.S. health care system is that the structure of health care delivery is broken. This is what all the data about rising costs and alarming quality are telling us.

Identifying the Root Causes:  And the structure of health care delivery is broken because competition is broken. The root cause of the problem is not too much competition or too little, but the wrong kind of competition.

How Reform Went Wrong:  All of the well-intended reform movements have failed because they did not address the underlying nature of competition and the value delivered by the system.


Value-Based Competition:  Healthy competition is competition to improve value for customers, or the quality of products or services relative to their price. It leads to relentless improvements in efficiency. Product quality and customer service improve. Innovation propels advances in the state of the art. Quality adjusted prices fall, and the market expands and more customer needs are met. Choice expands.  It is a far cry from what we see today in health care.

The Institute for Strategy and Competitiveness at HBS