Scoping the Problem Porter and Teisberg on Redefining Health CareHarvard Business School

Scoping the Problem

Scoping the Problem | Identifying the Root Causes | How Reform Went Wrong | Value–Based Competition

The U.S. health care system is on a dangerous path, with a toxic combination of high costs, uneven quality, frequent errors, and limited access to care. Redefining Health Care presents a wide array of indicators that document the range of problems confronting the system. The many disparate kinds of evidence, taken together, lead to the same overwhelming conclusion: the system is broken, and the magnitude of the problem is staggering.

A selection of topics documented and discussed in the book:

  • Per capita health care cost in the United States surpasses that of most other developed countries. Despite this, U.S. costs are rising at comparable rates... and U.S. consumers do not see the payoff. Quite the contrary: U.S. consumers report higher dissatisfaction with their health care system than do consumers in other developed nations.

  • Although U.S. costs are high, they have not enabled greater access to medical care in the United States than elsewhere. There were 45.8 million Americans without health care coverage in 2004, up from 39.8 million in 2000. Although hospitals provide free care for the uninsured, that approach to enabling access to care is far from ideal. Access to primary care, rather than just emergency treatment, is essential to providing care of good quality.

  • Higher expenditures on U.S. health care do not result in longer life expectancy for Americans than for citizens of other developed countries, or more years of good health. Moreover, in a thirteen-country study of health care indicators, the U.S. rank averaged twelfth, with the worst ranking on years of life lost from preventable medical conditions before age 70.

  • The Institute of Medicine’s extensive study of health care quality found that there is not a gap, but a chasm, between the quality of care that Americans should receive and the quality of care that most actually do receive. Undertreatment, not just overtreatment, is pervasive. The best American health care is world-class, but the average quality leaves much to be desired. A recent RAND study of thirty types of preventive, acute, and chronic care in twelve metropolitan areas found that Americans receive, on average, only about 55 percent of the care that is suggested by established medical standards.

  • Medical errors occur at an unacceptable rate and are a leading cause of death in the United States. The Institute of Medicine reported the annual number of deaths in hospitals from medical treatment errors to be between 44,000 and 98,000 in 1999. A 2004 study by HealthGrades estimated that 195,000 people die each year in U.S. hospitals because of preventable treatment errors. Other estimates range as high as 225,000 to 284,000 deaths per year.

  • Quality varies markedly across regions and among providers. Dartmouth research on Medicare found not only that there were very different practice standards in different regions, but also that there was no basis in medical theory or medical evidence for these variations. Substantial differences in per capita spending among states are present across the board—in Medicare, Medicaid, and private health care spending. But higher cost is not correlated with higher quality. Regions with higher spending do not have more access, better outcomes, higher satisfaction, reduced mortality, or improved access to care.

  • The diffusion of medical knowledge is slow. It takes, on average, seventeen years for the results of clinical trials to become standard clinical practice. That huge delay—much longer than in most industries—contributes to low and uneven quality.

  • The expense of malpractice premiums and lawsuits distorts care and costs. Professional liability premiums are growing at an unprecedented rate, with U.S. doctors spending more than $6 billion per year on malpractice premiums in addition to the billions of dollars spent each year by hospitals and nursing homes. More important than the cost of premiums may well be the threat of malpractice suits, which causes doctors to practice “defensive” medicine in the form of unnecessary tests, overdiagnosis, and redundant or unnecessary treatment.

  • Administrative costs are extraordinarily high and rising. The estimated health care expenditures spent on administration are a staggering 25 percent of hospital spending and are estimated to be over 30 percent of all health care spending.

The Institute for Strategy and Competitiveness at HBS