Monday, November 19, 2007

At the Aspen Health Forum: Dealing with Dysfunctionality, Perverse Incentives, and Vested Interests

As I posted last month, I had the good fortune to be able to attend the Aspen Health Forum last month, and got to hear some presentations that were remarkably frank about some of the issues facing health care today.

Just before I had to run to try to catch a plane, I attended the session entitled "Health, Humanity and Politics: Prospects for Reform." Again, I found that the speakers were remarkably frank in addressing some of the issues that we discuss on Health Care Renewal. However, many of the comments went by too fast for me to take accurate notes. The Aspen Institute just released video and audio from most of the Forum sessions. So I was able to transcribe some of the relevant thoughts.

Mark Ganz, President and CEO of the Regence Group, a Blue Cross- Blue Shield affiliated health insurance company based in Oregon, describing a typical anecdote representative of the fundamental dysfunctionality of the current system:

We had to accept that we were not in control. The system was in control.

Ganz on fundamental dysfunctionality:

[A system characterized by] economic rules that didn't make sense and a culture that in a great way perpetuated these rules.

People were trapped in processes that they could not defend, much less understand.

Elizabeth Teisberg, co-author of Redefining Health Care, Associate Professor of Business Administration at the University of Virginia Darden Graduate School of Business, on dysfunctionality and perverse incentives:

You can't change incentives in a system that is fundamentally dysfunctional... unless you address the underlying problem. We need systems that are patient-centric and results-driven.

Ganz on the role of industry:

Industry players focus their attention on each other, not on the people they are supposed to serve.

An audience member on the role of pharmaceutical and device companies, and perverse incentives:

The manufacturers of drugs and devices - these are really the companies that have the power.... They really ... put up barriers to a lot of the reform efforts.... The way that they profit is through the inefficiencies of the system, and if you make the system more efficient, it really squeezes their profits. How do you get these companies on board, to be part of the solution not part of the problem?

Ganz on how those with vested interests will resist positive change:

To be sure, there are powerful economic forces invested in this current culture. It would be foolish and naive to think they won't resist change. Even so, our ability to effectively incentivize those with deep economic interests in the status quo to a new way of thinking about control will be essential to the long-term success of any reform effort. We found that the greatest impediment to process is fear, fear of the unknown, and fear up giving up the only way people have known.

There you have it.

  • The system is dysfunctional.
  • Incentives are perverse.
  • Powerful organizations serve their own interests, even if that undermines the core values of health care professionals.
  • People who are currently making a lot of money from the system will resist change.
  • The only way to get them on board is to change their incentives.

Sounds like a start. But heed Mr Ganz's warning. The people who currently make a lot of money from the current system will resist change until their incentives change.

Note: Ganz's written talk is here.

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