What Health Care Needs: Real Consumers and Dynamic Competition

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Insider-designed processes inevitably become unresponsive.

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There's a growing awareness that the current practice of medicine, particularly in hospitals, is inconsistent and poorly regulated. Unfortunately, the most common solution -- to improve efficiency through better central planning -- isn't working. Last week, a New England Journal of Medicine study that showed no impact on hospital-acquired infection rates from a Medicare program to penalize poor performers was the latest blow to administered process solutions in addressing health care's myriad issues of quality, cost, and efficiency. 

This month's Health Affairs features a study showing that comparative effectiveness studies usually fail to influence clinical practice. In September, an analysis in The New York Times found that hospitals using electronic records had higher charges per patient. In June, Medpac's report to Congress noted that "recent Medicare demonstrations on care coordination and disease management models have not shown systematic improvements in beneficiary outcomes or reductions in Medicare spending." For all the promise of administered reform, nothing's working.

Dr. Marty Makary's new book Unaccountable offers an insider account of a broad range of hospital failings. From unqualified or impaired doctors to inexpert hospitals to pervasive medical mistakes, Makary's book presents a horror show litany of how care at even the finest institutions can be truly dangerous to patients. 

But Makary's most important point is that everyone inside hospitals and their regulators already knows all this, and that there's little they can do about it. The insider-dominated mechanisms intended to discipline incompetence are inevitably compromised by conflict of interest. Makary's perspective is a particularly important corrective to the current fad for administered efficiency that dominates reform debates.

There is no chicken parm best practice. There is only The Cheesecake Factory's approach today to attract customers in a very competitive landscape.

A thoughtful example of this fad is Dr. Atul Gawande's widely-discussed August New Yorker article "Big Med," in which he contrasts the efficiency, cost consciousness, and service at The Cheesecake Factory with the traditional practice of hospital medicine. Despite its 308-item dinner menu, the chain is able to achieve a level of consistency and quality in its food and service that he attributes to its well-organized and easily repeatable processes. 

Gawande concludes that the advantage of The Cheesecake Factory is size: "It gives them buying power, lets them centralize common functions, and allows them to adopt and diffuse innovations faster ..." If they can succeed in overcoming entrenched professional resistance, Gawande believes, "(t)he new health-care chains ... (will) create Cheesecake Factories for health care," utilizing "large-scale, production-line medicine."

This conviction that process efficiency itself can transform care underlies many recent health reform initiatives. Electronic health records. Medicare's pay-for performance. Bonuses for high patient service scores. Penalties for high readmission rates. Metrics-based "patient-centered" best practices. And on the surface, Gawande and Makary are raising similar concerns: The current disorganized approach to regulating performance and measuring results is at best unreliable and at worst dangerous.

Efficiency in a vacuum won't solve health care's problems, though. Yes, Gawande is probably right: large hospital chains imposing rigorous processes on craft medicine may well drive significant improvements in quality and safety -- in the near-term. But, ultimately, it's just another form of expert-driven reform. 

By contrast, Makary's proposal for complete transparency -- from hospital disclosure of its treatment experience for all conditions to doctors sharing notes with patients to videotaping all procedures for patient review -- is revolutionary: a transformation of the very dynamics of healthcare as an industry.

Why? To the people running The Cheesecake Factory, the two most important words aren't "process efficiency;" they're "Olive Garden." The Cheesecake Factory's process for cooking and serving Chicken Parmesan, and the 307 other dishes on its menu, doesn't exist in a vacuum where experts can design the single best recipe. There is no chicken parm best practice. There is only Cheesecake Factory's approach today to attract customers in a very competitive landscape.

Crucially, Cheesecake Factory's chicken parm process benefits from a constant feedback loop. Each restaurant knows exactly how many chicken parm's are ordered today compared to yesterday. And compared to the other dishes on the menu. And how Olive Garden and the myriad of other competitors are doing with their chicken parms. If Olive Garden ups the cheese quotient in its parm, Cheesecake Factory must respond, perhaps by producing a chicken parm that's saucier or sweeter or more chicken-y or a better deal.

The efficiency of a business process depends on its responsiveness to competitive pressures -- on its flexibility. Efficiency isn't an answer; it's a question, a dynamic. 

What we learn from serving chicken parmesan, and from any other business activity, is that the search to find the single right way is secondary to the real goal, which is to be responsive to never-ending consumer feedback and competitive initiative. But in health care, efficiency means looking for -- and implementing -- the best practice; that translates into rigidity, not flexibility.

But, of course, health care is essentially different from food service, right? There may be no one right way to make a chicken parm, but surely there is a single right way to perform a bypass or hip replacement. Even if you believe a single state-of-the-art process for each medical procedure exists and can be replicated in scale, how does it improve over time? After all, every flawed procedure was at one time considered by someone to be a best practice.

Health care has many incredibly smart and dedicated insiders looking to build better ways of doing things. And it always has. What's been missing is the competitive need to attract customers -- and the feedback loop that customers provide. And no CMS survey of customer satisfaction can substitute; hospitals just play to the test.

That's what makes Unaccountable so important. Makary doesn't oppose "efficiency;" he just understands that insider-designed processes inevitably become rigid and unresponsive. So he invents and empowers something new for health care -- real consumers. Makary's transparency would spark the rise of the ZAGATs and Trip Advisors of health care, of the informed and the angry consumer, and of the embarrassed and responsive providers. It's our only real hope of getting our hospitals to perform and innovate as effectively as The Cheesecake Factory.

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David Goldhill is the president and chief executive officer of the cable-television network GSN, and the author of Catastrophic Care: Why Everything We Think We Know About Health Care Is Wrong.

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