23 Mar 2010

Harvard Business School Faculty on the Passage of U.S. Healthcare Reform Legislation


BOSTON, March 23, 2010 — In the wake of the passage of sweeping health care reform legislation by the U.S. Congress, the political battle over the bill seems destined to continue. But what do Harvard Business School faculty experts, whose research applies a management lens to health care policy and delivery, think about the bill's content? And what are the next steps for improving patient care and containing costs?

Richard M.J. Bohmer argues there should be a second national discussion about managing health care delivery.

Clayton M. Christensen prescribes disruptive innovation as a way to bring down health care costs.

Bill George calls the bill a "momentous step" in insuring the uninsured, but says hard work must begin to address cost, quality, and lifestyle.

Regina E. Herzlinger argues that the bill's price tag will hurt the U.S. economy and that its prescription will result in a government-controlled health care system.

Robert S. Huckman calls for studying the cost-effectiveness of various approaches to treatment to get a better sense of what does (and does not) create value for patients.

Richard Bohmer Photo: Tony Rinaldo

Richard Bohmer
Physician and Professor of Management Practice. Author of Designing Care: Aligning the Nature and Management of Health Care.

Adapted from the 11/23/09 HBS Working Knowledge
article titled,"Management's Role in Reforming Health Care."

Insurance reform is a necessary but not sufficient component of U.S. health care reform. We need to think very hard as well about the optimal way of caring for a particular type of patient and then how to pay for that optimal way. For me, the optimal way is the function of a science: What is possible in terms of drugs, technology, devices, information technology, and personnel; then secondarily, consider the current regulations in place and the payment models.

There is an important set of discussions to be had around how we actually organize care, with all sorts of managerial and strategic decisions to be made at a policy and national level. Yet at ground zero, lots of interesting experiments are underway, with professionals trying different ways of configuring and managing services. On that list I include experiments with disease management programs, substituting nurse practitioners for physicians in certain circumstances, the in-store clinic model for treatment of simple diseases, and experiments with IT to enable precise electronic communication between patients and doctors so that real medical discussions can be had at a distance.

At the national level we don't hear much about these innovations; yet they present an equally important set of issues. We need to make a distinction between debating how it will be paid for and what the "it" is that is paid for.

Read Richard Bohmer's full commentary here

Clayton M. Christensen Photo: Russ Campbell

Clayton M. Christensen
Robert and Jane Cizik Professor of Business Administration and author of The Innovator's Prescription?

Read his oped in Bloomberg BusinessWeek.

Bill George
Professor of Management Practice and former chair and CEO of Medtronic. Author of four best-selling books, including 7 Lessons for Leading in Crisis.

Bill George Photo: Stuart Cahill

The politicians' chatter Sunday night during the historic House vote on access to health insurance gave the impression that reform was done. Speaker Nancy Pelosi called it an extension of the Declaration of Independence, declaring, "health care is a right," not a responsibility. Republican leader John Boehner all but claimed it marked the end of free enterprise.

Wrong on all counts.

Passing this bill is a momentous step in granting health care insurance to 32 million Americans who lack access, something we can finally take pride in. But it certainly doesn't end the urgent need for health care reform. Rather, this is the end of the beginning. Now the hard work must begin in earnest.

The bill addresses only one of the four essential elements of health care. Beyond insuring the uninsured,cost, quality, and lifestyles are not addressed. Unless we focus on all four, we will continue to have a dysfunctional system with unaffordable costs.

Read Bill George's full commentary here

Regina Herzlinger

Regina E. Herzlinger
the Nancy R. McPherson Professor of Business Administration and author of Who Killed Health Care?

The United States finally has the universal health care coverage I have long advocated. Further, the legislation's subsidization of health insurance costs for employees who earn up to $88,000 can lower employers' costs.

But don't break out the champagne--the costs of this legislation, more than $900 billion, will put another nail in the coffin of the U.S. economy and open the door to a government-controlled health care system that gravely injures the sick and the entrepreneurs who could help them, along the way.

The problem? The absence of a way to control the costs that already cripple U.S. global competitiveness. As a percentage of gross domestic product, this country spends roughly 70 percent more on health care than other developed nations; yet we cannot point to commensurate superiority in value, other than in biotechnology and genomics. And these official numbers fail to include the $38 trillion in unfunded Medicare liabilities-the dubious gift we leave to our progeny.

The legislation's cost controls rely primarily on public health insurance marketplaces, labeled Exchanges, where private health insurers compete with public insurance. These initiatives don't control costs as much as shift them, through deficits, cutbacks and unfunded liabilities.

Read Regina Herzlinger's full commentary here

Robert Huckman Photo: Stuart Cahill

Robert Huckman
Associate Professor of Business Administration and Faculty Research Fellow in the health care program of the National Bureau of Economic Research.

This Patient Protection and Affordable Care Act approved by Congress and signed into law this week is indeed historic. Most notably, it promises to eventually expand coverage to an estimated 32 million uninsured Americans and takes important steps in limiting the ability of insurers to deny coverage to patients with pre-existing conditions. This legislation is by no means perfect, but the question we need to ask is whether significant reform of the American health care system can be better achieved by "passing and fixing" this bill than by "keeping and fixing" the current system. The prospects for the former strike me as better than those for the latter, but I must admit that the jury is still out.

The good news is that the bill tackles many important issues related to insurance coverage. The more sobering news is that addressing coverage issues shines a bright light on the more fundamental reform that still needs to occur--improving the process by which medical care is actually delivered to patients. There has been much discussion about the critical and remaining need to study the cost-effectiveness of various approaches to treatment to get a better sense of what does (and does not) create value for patients. Not only does cost-effectiveness need to be studied, but clinicians and patients need to begin to act on the lessons emerging from those studies. In the end, meaningful reform of the care-delivery process is difficult to legislate, as it requires education, persuasion, and behavioral change at the level of individual clinicians, administrators, and patients.

I hope that the bill passed by Congress has initiated a process that will ultimately improve the American health care system by making it not only more accessible but also more efficient and effective. That said, it is important to acknowledge that the bill is but one step along the path to more fundamental reform.

About Harvard Business School

Founded in 1908 as part of Harvard University, Harvard Business School is located on a 40-acre campus in Boston. Its faculty of more than 250 offers full-time programs leading to the MBA and PhD degrees, as well as more than 175 Executive Education programs, and Harvard Business School Online, the School’s digital learning platform. For more than a century, faculty have drawn on their research, their experience in working with organizations worldwide, and their passion for teaching, to educate leaders who make a difference in the world. The School and its curriculum attract the boldest thinkers and the most collaborative learners who will go on to shape the practice of business and entrepreneurship around the globe.