Physician, Disrupt Thyself

strategy+business, September 19, 2018

by Theodore Kinni

If I were a senior executive in healthcare, it would scare the hell out of me to learn that Amazon founder Jeff Bezos, Warren Buffett of Berkshire Hathaway fame, and JPMorgan Chase CEO Jamie Dimon formed an independent company “free from profit-making incentives and constraints” to provide “simplified, high-quality and transparent healthcare at a reasonable cost” to a million or so of their U.S. employees. The fact that the CEOs chose surgeon and author Atul Gawande — an outspoken critic of the healthcare industry’s practices — to lead it wouldn’t settle my nerves. The news might even be jarring enough to induce me to read Vijay Govindarajan and Ravi Ramamurti’s Reverse Innovation in Health Care. Although that might prove cold comfort indeed.

“The real reason the health-care debate hasn’t gotten anywhere is that would-be reformers are debating about the wrong things,” declare Govindarajan, Coxe Distinguished Professor of Management at Dartmouth College’s Tuck School of Business, and Ramamurti, University Distinguished Professor of International Business and Strategy at Northeastern University. “It’s not about who pays for what. Skyrocketing health insurance premiums are just a symptom of the underlying problem. The problem with American health care is that it costs too much, the quality is uneven, and too many people can’t get the care they need.”

The professors thus blame providers for the fact that the U.S. healthcare system is by far the most expensive in the world while its supposed beneficiaries rank 37th globally in average life expectancy. Healthcare delivery is the problem, they argue.

As we quibble about everything healthcare-related in the U.S., I could quibble with Govindarajan and Ramamurti about whether providers or payors or patients or the fee-for-service, free-market healthcare system itself is to blame for this mess. Clearly, the costs of the U.S. healthcare system have been rising far above the rate of inflation. And given the fact that my very healthy family’s health insurance is its biggest annual outlay, I, for one, would welcome relief from any quarter. 

Reverse Innovation in Health Care argues that the quarter that the relief is going to come from is…India, which ranks 104th in life expectancy. On the surface, this seems so outlandish that the authors had to include an appendix of questions and answers titled “India? Really?” After they spend an entire book making their case, they had to make it again! ...read the rest here