Regina E. Herzlinger

Consumer-driven health care.

Switzerland’s consumer-driven health care system achieves universal insurance and high quality of care at significantly lower costs than the employerbased US system and without the constrained resources that can characterize government-controlled systems. Unlike other systems in which the choice and most of the funding for health insurance is provided by third parties, such as employers and governments, in the Swiss system, individuals are required to purchase their own health insurance. The positive results achieved by the Swiss system may be attributed to its consumer control, price transparency of the insurance plans, risk adjustment of insurers, and solidarity. However, the constraints the Swiss system places on hospitals and physicians and the paucity of provider quality information may unduly limit its impact. The Swiss health care system holds important lessons, including evidence about its feasibility and equity, for the United States, which is now embarking on its own consumer-driven health care system.

Specialization and Its Discontents The Pernicious Impact of Regulations Against Specialization and Physician Ownership on the US Healthcare System

Ken Iverson, a technology entrepreneur, almost single-handedly revived the moribund US steel industry. His success contains important lessons for health care. Nucor, the steel-focused factory Iverson managed, differed from the everything-for-everybody steel behemoths of yore, like Bethlehem Steel, with its specialty steel products and relatively small mini-mills, as did his egalitarian, productivity-based management practices. Nucor paid its nonunionized workers like owners, primarily with productivity-based incentives. In contrast, Bethlehem Steel’s unionized workforce was paid wages, largely regardless of their productivity. The results of this revolution in focus and incentives? Nucor required 1 man-hour per ton of steel and Bethlehem 2.7; Nucor’s workers earned

US Economic Revolution

60 000 (

Pricing Public Sector Services: The Tuition Gap

40 000 from bonuses), and Bethlehem’s

Health Care Delivery Innovations That Integrate Care? Yes!: But Integrating What?

50 000; and Nucor was highly profitable, earning

Achieving Universal Coverage Without Turning to a Single Payer: Lessons From 3 Other Countries

100 million in recessionary 2002, whereas Bethlehem lost

Focus on Quality: An Opportunity to Execute Health Care Reform

2 billion.1 Nucor did good for its customers, employees, and the US economy, and it did well for its shareholders, including Ken Iverson, currently hailed as the second Andrew Carnegie of the industry. Sadly, were Iverson a cardiologist or cardiac surgeon, he could not create the “do good–do well” healthcare-focused factory equivalent of Nucor.2 Rival everything-for-everybody hospitals would allege that he was robbing them of their most profitable business, leaving them with the money-losing dregs, while federal government regulations would inhibit doctors’ ownership stakes.3 The combination of negative press and legislative prohibitions creates daunting obstacles for productivity-minded entrepreneurial physicians. For example, MedCath, a partially physician-owned heart hospital firm, spends up to

Market-Based Solutions to Antitrust Threats — The Rejection of the Partners Settlement

200 000 to counter hospital complaints per project per year.4 Not surprisingly, relatively few focused healthcare facilities exist. A 2003 study found only 92 specialized hospitals, fewer than 2% of the market, and, more importantly, other physician-owned facilities that integrate care are sparse.5 These results are unfortunate: Specialized healthcare facilities, partially owned by entrepreneurial physicians, represent the best …

Shifting toward Defined Contributions — Predicting the Effects

The revival of the economy in the US holds 2 powerful lessons for its healthcare system: know your customers and focus on their needs. Widespread inefficiency and inconvenience characterise the current healthcare system because it has failed to heed these lessons so far. Making the necessary changes will require substantial modifications by both government and healthcare providers. But, in the end, the result will reshape the future of healthcare.

Finding "truth" in managed care.

The large gap between the tuition charged by public colleges and universities and private ones is likely to cause severe disruptions to the private sector institutions of higher education. If it continues, private sector institutions may once again become bastions for students who can afford their services, rather than for those who merit them, and these institutions will diminish in size and diversity as well. Public sector institutions will become relatively stronger - not solely for reasons of effectiveness, efficiency, or equity - but because of the competitive advantage that the tuition gap affords them. This paper explores the feasibility and desirability of the three methods of correcting this problem, using real cost and demand data from the University of Massachusetts for illustrative purposes. It concludes the subsidization of students (rather than institutions) and raising public sector tuitions are two possible alternatives to the present “tuition gap.”