Experts Convene to Discuss Consumer-Driven Health Care

Social Enterprise Newsletter, Spring 2000

A November conference at HBS organized by Professor Regina Herzlinger brought together experts on consumer-driven health care for a two-day exchange of perspectives on the current movement toward giving U.S. consumers more power over decisions related to health care. Participants included: nearly 200 providers of health-care services, technology, and information; government professionals; and insurance executives. Those who advocate consumer-driven health care - including conference chair Herzlinger - believe that shifting control of health-care purchasing decisions from third parties to individual consumers via defined contribution health care by employers will result in a more cost-effective and efficient system.

Participants submitted papers that were read in advance of the conference. Edited by Herzlinger, some of these papers will be published later this year in a book titled Consumer-Driven Health Care (Jossey-Bass). Each submitted paper addressed one of four topics: different models of consumer-driven health care, the role of consumer-driven health care in supporting innovative solutions to chronic problems in the industry, the new breed of consumer information and support intermediaries, and the role of government in ensuring that the interests of vulnerable or disenfranchised consumers are protected. Encyclopedic in scope and authoritative in substance, the papers represent the sole major work on the subject to date.

"The conference provided a wonderful kickoff for the consumer-driven health care movement."

Herzlinger is a noted authority in the fields of management control and health care. Her latest book, Market-Driven Health Care, won the 1998 Book of the Year Award from the American College of Healthcare Executives. Herzlinger opened the conference by reporting on the forces driving the push for consumer-driven health care: dissatisfied employees, rapidly rising health-care costs, and the likely loss of existing ERISA protection against lawsuits for pain and suffering from medical events.

The conference's agenda alternated between small breakout sessions that brought together participants from different industry areas and large group discussions where all attendees could compare notes. The breakout sessions were facilitated by HBS alumni who had been students in Herzlinger's health care course. HBS Professors Gary Pisano and Richard Bohmer also contributed papers.

Participants began the first morning of the conference by discussing the current status of consumer empowerment, followed by a look at possible models for the future. While the consumer-driven health care movement embraces a number of approaches, the various options have some key features in common. Consumers would be able to choose their own health-care plans, typically using tax-advantaged funds supplied by their employees; have substantial choice among health-care plans; and have increased information about the plans and their providers.

Herzlinger notes, "The conference provided a wonderful kick-off for the consumer-driven health care movement. The movement gained depth and momentum from the distinguished conference participants, each of whom approached the subject from [his or her] unique perspective." Many articles on consumer-driven health care followed the conference, including a front-page Wall Street Journal story, "Medical Vouchers - Health-Benefits Trend: Give Workers Money, Let Them Buy a Plan," written by a journalist who attended the conference.