Regina E. Herzlinger

Regina E. Herzlinger

Nancy R. McPherson Professor of Business Administration

Nancy R. McPherson Professor of Business Administration

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Regina E. Herzlinger
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Cases and Teaching Materials

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Regina E. Herzlinger is the Nancy R. McPherson Professor of Business Administration at the Harvard Business School. She was the first woman to be tenured and chaired at Harvard Business School and serve on many established and start-up corporate health care/medical technology boards. She initiated the courses in non-profit and health care at HBS and was the first faculty member to be selected by the students as their best instructor.

Regina Herzlinger has been named the "Godmother of consumer-driven health care," because of her groundbreaking scholarly articles and books on this subject. She differed from conventional views of health care consumers, who were derogatorily described as non–compliant, illiterate, or patients, as in, “you need to be patient.” Instead, she portrayed them as busy people who are eager and capable of participating in managing their health, with appropriate, relevant, and respectful support.

Professor Herzlinger's long-predicted focus on the consumer-driven health care movement has supported the explosion of ambulatory medical centers, wearables, implantable sensors, telehealth, urgent and emergent free-standing care facilities, and the intense interest in health savings and health reimbursement accounts. She anticipates future consumer-driven health plans and delivery systems focused on specific chronic diseases and disabilities. (Regina Herzlinger, Market-Driven Health Care: Who Loses in the Transformation of America's Largest Service Industry. 1997)

Professor Herzlinger’s work focuses on the research and pedagogical activities that can help to create the public and business innovations that will reshape health care systems worldwide so they are increasingly accessible, cost-controlled, and technologically enabled. Because the components of the status quo health care systems—hospitals, pharmaceutical firms, insurers, for example—are oligopolized and uncompetitive (Regina E. Herzlinger, Barak Richman & Kevin Schulman. “Maintaining Health Care Innovations After the Pandemic,” JAMA Network, February 10th, 2023; Regina E. Herzlinger. Who Killed Health Care? America’s $2 Trillion Medical Problem – and the Consumer-Driven Cure. McGraw-Hill, 2007) and the employers and governments that should act as agents for their constituents have been notably ineffective (Regina E. Herzlinger, “In the COVID Era, Why Corporate Benefits Demand CEO, CFO Leadership.” California Management Review, Forthcoming 2023), innovation must be consumer-driven (Regina E. Herzlinger. Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers. Jossey-Bass, 2004.)

Two current main tranches of Regi’s work are aimed at public policy innovation that will give consumers the two resources they buy to drive innovation – money, so they can reward innovators, and transparency, so they can tell a good innovation from a bad one. Currently, employers and government control the funds used to buy health care and health care transparency is an oxymoronic phrase. HBS research has simulated that giving consumers the funds currently spent by their employers to buy health insurance and requiring them to buy insurance that complies with current requirements, will increase after tax income by $151 billion, taxes by $124 billion, and control health care costs as consumers opt for less health insurance coverage and more income (Regina E. Herzlinger & Barak Richman. Give Employees Cash To Purchase Their Own Health Insurance. Harvard Business Review, December 09, 2020). The improvement in income is most pronounced for lower-income employees.

She has devised the components of a health care analogue to the Securities and Exchange Commission, so employees will have the information that will enable them to, finally, evaluate the quality and cost of their purchases can purchase wisely (Regina E. Herzlinger. The U.S. Needs an SEC for Its Health Care System. Bloomberg Opinion, August 20, 2020; Regina Herzlinger & Vonnie Quinn, How the Pandemic caused ‘A Lot of Consumer-Driven Innovation,’ Bloomberg TV, October 2020. She and colleague Richard Boxer recommend a transparency  solution for hospital networks that can help to alleviate the hospital bed shortage  that occurred during the peak of COVID (Regina E. Herzlinger and Richard Boxer, “Transparency As A Solution for COVID-19 Related Hospital Capacity Issues.” Health Affairs, February 18, 2022) ,which is under consideration by the US Congress.

Because success in innovation lies much more with effective implementation than with invention, Regi has also focused on a book (Innovating in Healthcare, Wiley 2024) and related field-based case studies that spell out how to create successful health care innovations and avoid failures. She has taught two popular HBS courses on the subject (Innovating in Health Care and an accompanying Field Course) that have helped to create hundreds of innovative health care firms. In addition, she created a Harvard EdX MOOC, Innovating in Healthcare, that has attracted 70,000-85.000 viewers annually since it was launched in 2015. Many of her students founded billion-dollar innovations and prominent non-profit firms and became leaders in major health corporations. Her forthcoming book Innovating in Healthcare (Wiley, 2024), contains the lessons of her courses.

Professor Herzlinger’s work is virtually unique. It is repeatedly attacked by academics, in and out of Harvard University, and the status quo stakeholders who prefer a system controlled by the government to one driven by consumers, but abetted by the government. Some of them confuse universal health insurance coverage, which she supports, with complete governmental provision of health care. Although her early critiques of holy health care grails -- such as nonprofit hospitals (once depicted as saintly but now widely recognized as greedy as businesses); transparency (consumers were “illiterate”); ACOs (Accountable Care Organizations – integrated health care providers that were to fly in the face of the miserable results achieved in integrations elsewhere in the economy and to provide everything for everybody) – proved accurate.

Professor Herzlinger’s work received this remarkable degree of criticism, likely because she is not only consumer-oriented, but also a woman. But, unlike her colleagues, the public is highly interested in her point of view. Three of her books have been best sellers in their fields and her LinkedIn posts regularly have tens of thousands of views.

She also occasionally likes to have some fun with her writing as in, Love in the Office is Wonderful. Except for CEOs. Working Knowledge, Harvard Business School. February 20, 2020 where she discusses how finding love among your colleagues can be a wonderful thing, and not inevitably career ending. Unless, of course, you are the CEO.

Prof. Herzlinger is a successful medical technology entrepreneur with her husband, an MIT Ph.D. Physicist. Their devices, which they design and manufacture in the U.S., have saved hundreds of thousands of lives. They are working on new ideas and have formed a charity to promulgate education in healthcare innovation.

Featured Work
Transparency As A Solution For COVID-19-Related Hospital Capacity Issues

In the initial phases of the COVID-19 pandemic, many US hospitals could not provide an adequate supply of beds to meet demand. Solving the problem of hospital bed capacity is of great importance in the “new normal,” which requires recognizing that SARS-CoV-2 is but one of several circulating respiratory viruses and there will be an ongoing need for hospital-based care. The burgeoning Omicron variant is already overwhelming US hospitals because of high rates of hospitalization. When looked at globally, the US has relatively low numbers of hospital beds—only 2.8 beds per thousand people compared to 8.0 beds per thousand people in Germany.

Innovating in Healthcare: Creating Breakthrough Services, Products, and Business Models

Innovating in Healthcare offers effective approaches for designing, reworking, and implementing innovative healthcare services, products, and business models. It will help anyone working in healthcare service or product development, from hospitals to startups, to question the status quo in healthcare and implement new solutions that lower costs while increasing both quality and access.

Globally, healthcare faces a threefold crisis of unsustainable economics, erratic quality, and unequal access. Just in the U.S., healthcare accounted for 18% of the 2017 GDP and will likely reach nearly 20% by 2025, while hospital-induced deaths have skyrocketed, and tens of millions of people remain uninsured. This book will focus on creating the innovations in healthcare that can meet these needs.

  • Written by the world's leading authority on healthcare innovation
  • Includes success stories in every segment of the health care sector
  • Presents and applies the Six Factors in the environment that critically affect healthcare innovation
  • Guides the reader through tailoring a business plan specifically for the new business

Designed for healthcare executives, providers, and degree students, Innovating in Healthcare is a comprehensive guide for maximizing the viability of a new healthcare product, service, or business.

Preparing Hospitals for the Next Pandemic
The Covid-19 epidemic response has shown that the U.S. is blessed with heroic physicians and other health care providers, researchers, and facilities. But it has also revealed a health care system that was woefully unprepared for the surge of pandemic patients. In the authors’ analysis, the primary blame rests on a hospital and insurance financial model geared towards providing high priced services rather than meeting all demands for care, including pandemics. Then they outline a plan for creating a hospital sector that can better respond to the population’s health needs during a time of crisis.
Give Employees Cash to Purchase Their Own Health Insurance
Employers’ and employees’ health care costs continue to skyrocket. A solution is to allow employers to give employees pre-tax cash to purchase their own health insurance. This move, enabled by a newly enacted federal rule, would put competitive pressure on insurers, driving down costs, and leave more cash in employees’ pockets.
The U.S. Needs an SEC for Its Health Care System
The U.S. health care system suffers from a lack of transparency. Employers, insurers and individual consumers pay varying prices for treatments, drugs and digital information of varying quality, without knowing whether the prices are relatively high or low, or whether they receive good value for the money. Suppose the health care system could, similar to what the SEC does for the financial sector, gather and publish relevant data on health care prices and outcomes. Then consumers could see which clinicians, hospitals, insurers and others provide the best value. The good ones would thrive, and the bad ones would have to either improve or go out of business.
Cutting the Gordian Knot of Employee Health Care
President Joe Biden’s promise to give every American access to affordable health insurance is well-intentioned, but his plan’s policy elements—a public option, a permanent expanded tax credit—require congressional approval and would expend significant political and taxpayer capital. We offer an alternative approach that could trigger substantial improvements in health care coverage, cost, and quality; that would pay for itself; and would require only executive rulemaking.
Books
Journal Articles
Cases and Teaching Materials
Presentations
Other Publications and Materials
Research Summary
Overview
Winner of the Harvard Business School outstanding teacher award and research awards from U.S. and international health care and accounting organizations: 2016 “60 of the Most Powerful People in Healthcare in 2016,” Becker’s Hospital Review, January 3, 2017 ; 2014 Alumni Achievement Award; Academy of Healthcare Executives Research Award (three times); 2008 U.S. Chamber of Commerce – Who Killed Health Care? – Books that Changed the Debate; 2008 Fellow of American College of Physician Executives; 2004 Healthcare Financial Management Association’s Board of Directors Award recipient; named by Managed Healthcare as one of the top ten thinkers; honored as the Consumers for Health Care Choices Pioneer in Health Economics.
Keywords: Innovation and Management; Insurance; Service Delivery; Service Operations; Information Technology
Consumer-Driven Health Care
Since 1999, Professor Herzlinger's work in this area has provided the major impetus for the transformation of the health care sector: first in new consumer-driven insurance products sold by established insurers such as Aetna, United and CIGNA, as well as entrepreneurial firms; and, second, in the appearance of health care focused factories. She has authored a major new book, Who Killed Health Care? (McGraw-Hill, 2007); the best-selling Market-Driven Health Care and Consumer-Driven Health Care; major journal articles; a Harvard Business School Publishing video; and a number of Wall Street Journal articles and Marketplace (NPR) editorials. Professor Herzlinger is widely quoted and interviewed on the subject.
Innovating in Health Care
Since 2001, Professor Herzlinger has written over 50 new cases and notes for this second-year MBA course on the following subjects: insurance; providers; pharmaceuticals, diagnostics, and biotechnology; medical devices sector; and health care information. She is completing the Instructors Guide for 2011 publication.
Nature of Organizations

Why do non-profit, public, and private business organizations exist? This project, begun in 2005, will became a seminar in 2007, focusing on the unique missions of these organizational forms and the resulting mechanisms for effective oversight.

Teaching
Overview
Course Requirements

Students are required to prepare a business plan, which employs the framework of this course, to explore an entrepreneurial opportunity in health care, and to evaluate their classmates' plans.

Career Focus

For students interested in careers in entrepreneurial health care management, consulting, and investing. Educational Objectives

Innovating in Health Care (IHC) helps students to create successful entrepreneurial health care ventures by enabling them to:

Identify the alignment between an entrepreneurial health care venture and the Six Forces that shape health care - structure, financing, technology, consumers, accountability, and public policy. Create a business model that responds appropriately to any misalignments. Innovating in Health Care embraces every part of the health care sector, including insurance, services, IT, medical devices, biotechnology, diagnostics, and pharmaceuticals. The course has a global focus with case studies set in Brazil, India, Spain, the U.K., and the U.S., among other countries. Content and Organization

The course is organized into four modules:

In the first, Innovating in Health Care introduces students, through case studies, to the analytic framework of the Six Factors that critically shape new health care ventures and their impact on business models for three different kinds of health care innovations: consumer-focused, technology-driven, and consolidations.

The next module uses case studies to discuss each of the Six Factors in detail.

The third module discusses case studies of firms that succeeded or floundered in response to their alignment with the Six Factors, typically with the case protagonists present.

In the last module, selected students present their business plans to the class.

As an example of the discussion of the Six Factors, one section focuses on how the financing force affects new ventures, i.e., how do innovators get paid? The answer differs from that in most other sectors of the economy because the health care industry in virtually all developed countries is typically financed by a third party, not its users. In the U.S., employers are the primary sources of payment through private health insurance companies. State and federal governments pay for most of the health care expenses for their employees, the elderly and the poor. The health care expenses in other developed countries are typically paid by governments.

The "Note on Financing" explains the overall financing of health care in the U.S. and other countries, the interest of consumers in these financing mechanisms, the different kinds of insurance plans used by employers and government, and the accountability and public policy issues they raise. It is accompanied by case studies of four health insurance firms-one is an integrator (WellPoint). The other three describe entrepreneurial firms which newly offered HMOs (THG), high-deductible insurance (Consumer-Driven Health Care: Medtronic), and vertically integrated health care in Brazil (Amil). The "Note on Health Insurance Coverage, Coding, and Payment" explains how these processes operate for various types of medical technology products and related service providers. Cases about an innovative medical technology company (ABC) and a health service integrator (MedCath) enable students to apply these principles.
Awards & Honors
Winner of the 2020–21 Bugbee-Falk Book Award from the Association of University Programs in Health Administration (AUPHA) for Innovating in Health Care (Wiley, forthcoming).
Named one of the 60 Most Powerful People in Healthcare by Becker’s Hospital Review in 2017.
Recognized as an Honorary Fellow of the American College of Healthcare Executives in 2017.
Named one of Healthcare Management International's "100 Most Influential People in Healthcare--World Edition" in the Education category in 2017.
Received the 2014 Beatrice D. Ellerin Award from the HBS Health Industry Alumni. The prestigious and competitive Ellerin award recognizes an outstanding leader in the health care industry who has made a significant contribution to shaping her or his field.
Named one of the 40 Smartest People in Healthcare by Becker’s Hospital Review in 2014.
Awarded honorary membership in the American College of Physician Executives in 2008 in recognition of her many contributions to the advancement of medical management.
Winner of the 2007 Pioneer in Health Economics Award from Consumers for Health Care Choices.
Winner of the 2000 Articles of Merit Competition of the Chartered Institute of Management Accountants (CIMA) Financial and Management Accounting Committee for "The Outsiders" (Management Accounting, June 2000).
Winner of the 1998 James A. Hamilton Book of the Year Award presented by American College of Healthcare Executives for Market-Driven Health Care (Addison-Wesley Publishing Co. Inc., 1996).
Established the George and Regi Herzlinger Award for the Development of Educational Skills Focusing on Invention, Evaluation, and Adoption of Innovation in Healthcare from the Commission on the Accreditation of Health Management Education (CAHME).
Received the Robert F. Greenhill Award for Outstanding Service to the HBS Community in 2022.
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