Porter and Teisberg collaborated on a book in 2006 named Redefining Healthcare which is focused on two of my favorite topics Healthcare and Competitive Strategy. Michael Porter, the man responsible for so many frameworks in competitive strategy; the five forces, value chain, cost advantage, differentiation has brought that competitive strategy analysis to healthcare. His underlying message is to create an incentive structure that shifts the locus of competition from “Who pays?” to “Who gets the most value?” Lets flesh out what the important reforms are:

Provider Strategies: Distinctiveness. In a free market companies in the same industry actively seek to be distinctive by capitalizing on their so-called “core competencies” and develop a unique expertise. Do we see that in hospitals? no. we do not.

No Restrictions to Choice: NO RESTRICTIONS! No network restrictions and approvals of referrals included. The patients can take financial responsibility by taking advantage of reasonable copays, medical savings accounts ie:HSAs, and large deductibles. No one health plan or system.

Transparent Pricing: The pricing must be made public and must be the same to everyone no matter who their employer or insurer is. Stop Price Discriminations!

Simplified Billing: A single bill for each time period for treating chronic diseases. Follow the example of consulting, aerospace, and auto-repair. This would allow for much more transparent pricing as well as decrease in administrative costs.

Accessible Info: In terms of the specific medical condition. The patient would then be able to compare specific procedures and treatments.

Nondiscriminatory Insurance Underwriting: A risk pool needs to be developed just like what has happened in car insurance. People who are individually insured need to receive the same family benefits as those who work for large corporations involved in huge insurance pools.

Fewer Lawsuits: Better information and choices => fewer stupid malpractice suits. Malpractice litigation has done little to improve the quality of medical care. It simply leads to hospitals hiding mistakes.
National List of Minimum Coverage: Just as it says.

Payer Strategies: Choice and Efficiency: Positive sum competition would lead to Payers making decisions based on what gives most value to the patient and explore choices even if they are out of the person’s geographic location.

Criticisms: MDs are extremely distrustful of Medicare and health plans and will not embrace a change in incentives. Incentive changes have been tried over and over unsuccessfully. Great in theory. Not in reality.


Last Modified May 16, 2009 @ 2:43 pm
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