From The Hill
Most discussions about the state of the U.S. healthcare system start with the problem of unsustainable cost growth. One reason costs have been rising is that we (as a society and as consumers) find enormous value in health improvements and are willing to pay for them. The real question is how to identify value vs. waste in healthcare so we can increase efficiency to bring costs down.
Over the years, we’ve seen many attempts to revamp the healthcare system, but they have been insufficient to be transformative. A good example is the HMO model in the 80s and 90s, which was notorious for restricting access to care. During the healthcare reform debate, voters balked at the U.S. government coming anywhere near restraining spending on healthcare.
Historically, versions of this model have made an impact on the hospital side. Medicare pays hospitals a lump sum tied to a patient’s diagnosis. If a patient is admitted with pneumonia, the hospital is paid a set amount of money for that patient’s care. Following this change, the average length of a Medicare patient’s hospital stay decreased substantially without any evidence of harm.
Read full post at The Hill.
Joseph Doyle is the Erwin H. Schell Professor of Management and a Professor of Applied Economics at the MIT Sloan School of Management. He also is co-chair of the MIT Sloan Initiative for Health Systems Innovation (HSI).