Fixing USA Healthcare: A Management Professor’s Approach

The USA Healthcare disaster is not due to a few problems - it’s structural: too many powerful players with contrary interests, excessive time wasted managing the resultant bureaucracy, aging population, extreme pharmaceutical costs, etc. 

Like most structural problems, these aren’t going away soon.  New pharmaceuticals and the popular AI suite of solutions will have minimal effect – despite our desire to find a reprieve from this mess.

So, while we wait for Bernie Sanders to become President, is there anything we can do?

Well, there is one piece of low-hanging fruit: Primary Care.  Compared to all other developed nations, the USA spends the most on healthcare overall yet spends the least on primary care (PC).  

It is generally accepted that there are significant public health and even overall cost benefits from a stronger PC.   This logic is certainly not new.  So, why hasn’t anything happened?

The answer is hidden until you accept that healthcare actually consists of three discrete businesses: primary, secondary and tertiary care.  They have little in common – especially PC versus the other two.  To usefully exaggerate, PC is rewarded for good health while the other two are rewarded for the failure to maintain good health.   

When it comes to proper management, opposites do not attract.

Most providers contain all three businesses but with common management, strategies and culture.  This creates internal chaos and divisions between management (where’s the money?) and the two kinds of staff (some keeping patients healthy, and those who fix things if the first group fails).  Management is even more complicated and biased when you consider a huge percentage of all payments to hospitals are not for PC.

The result is under-performing Primary Care.

A solution:

We know that managing disparate activities in the same organization is inefficient – hence divestments and outsourcing.  To successfully play the PC solution, it has to be spun off from the others.  We need new, separate, providers to deliver good health, and then have our current providers only fix patients – making them healthy again.

The same applies to the payers, who should reward both types of providers based on their separate skill sets, strategies and outcomes.  No more of “we want you to make people healthy but we’ll only pay you if you fail.”