Massachusetts Needs Health Care System Based On 'Real Market Forces,' According To Op-Ed

"Real markets, like those for computers or cars, feature many competitors who offer differentiated products and consumers who search for the best value," Regina Herzlinger, a business administration professor at Harvard Business School, writes in a Boston Globe opinion piece. She adds, "Innovators easily enter the market. Consumers separate the good from the bad with readily available information about quality and prices." According to Herzlinger, "These conditions are absent in the Massachusetts health care market."

She writes, "Boston hospitals form an oligopoly, dominated by an almost monopolist Partners Healthcare, ... many employers offer a choice of one [health insurance policy] -- or a choice of firms with virtually identical policies," and "there's no way to learn about histories and prices of potential surgeons." Herzlinger continues, "In the long run, the appropriate role for governments in controlling health care costs is to use their existing powers to correct these problems through vigorous prosecution of antitrust and the provision of relevant information."

According to Herzlinger, "There is a more immediate solution, however." She writes, "Insurers could require integrated hospital systems to give fixed price bids for providing all the care needed for specific chronic diseases or disabilities" and the insurers "would offer these bids to consumers." Hospitals could create competitive chronic disease management teams and "transparency about the quality of care for a disease or a disability could be more easily attained from these focused teams eager to demonstrate the competitive excellence of their care," she adds.

"Because these teams would effectively and efficiently treat those with chronic illnesses, which normally account for at least 75% of health care costs, this would give the commonwealth a shot at finally controlling expenses while improving quality -- a potent combination," Herzlinger writes (Herzlinger, Boston Globe, 2/18).


Reprinted with kind permission from kaisernetwork. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at kaisernetwork/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork, a free service of The Henry J. Kaiser Family Foundation.

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