If physicians led reform ...

September 30, 2009 

— Health-care reform has clear objectives -- affordability, access and quality -- that unfortunately interact in complex and unpredictable ways. We know, for instance, that free care is used more than care that is paid for by a patient, but that cost-sharing reduces effective as well as ineffective care.

Two broad approaches stand out to Gordian knots like this. The more current one is top-down system change driven by governments and regulators, aimed at cutting through the complexity in fell swoops. The more subtle one is innovation "at the coal-face" driven by practitioners, teasing out individual strands of that knot until the paradoxes are resolved.

Yet innovations that originate at the bottom of the pyramid are more likely to persist, because they reflect a customer focus and an attention to the attributes of service that matter to a consumer. Even better, inventions that come from users themselves have a long pedigree in other industries outside of medicine.

One example I use in class is the Minute Clinic chain of retail clinics. One of the founders of this most significant of recent organizational innovations in health care was a physician user who saw a shortcoming in the current "technology" for addressing simple primary care problems. A decade later, his widely dispersed business model innovation has been adopted by two dozen chains and is in operation in literally hundreds of outlets.

The nature of how medicine is practiced "at the coal-face" by generalist physicians makes innovations in this area particularly important. Consider the well-known cost difference in lives saved with effective cholesterol and blood pressure control by a local doctor compared with those saved with emergency heart operations.

In North Carolina we have another valuable, home-grown example. In his primary care field, Dr. Brian Forrest of Apex has invented a coherent new way of doing good and doing well. The net effect of the changes in his business model is that better access and more affordable and higher quality of care are simultaneously achieved.

The most obvious change in his general practice is the decision not to bill insurance payors. Patients pay out of pocket and can self-file claims. A smaller, more flexible, cross-trained team yields practice overhead of about half of normal levels. Correspondingly low and flat rates compare favorably to co-pays, self-pay charges elsewhere for uninsured patients or retail clinic prices.

Also, Dr. Forrest sees two patients per hour, his nurse practitioner about 10 throughout the day. Slower visits mean more time to understand health needs, more time to plan, monitor and motivate treatments. Result? Better control of hypertension, cholesterol and blood sugar.

Successful business model innovation doesn't just eliminate and reduce features with low value to customers. Creating new features and enhancing existing ones valued by customers are vital. Access to discounted specialty physicians through referral by Forrest is one of these new features. Transparent prices -- itemized on a sign in the waiting room -- ensure that the less affluent patients can plan ahead. Chronic disease management is facilitated with access cards. Low monthly subscription fees and a discounted per-visit fee allow basic lab fees to be waived and permit unlimited office visits.

This particular innovation faces some obstacles. Allowing preferential access to such higher tiers of care might be thought to violate ethical or social norms. But Ezekiel Emanuel, the physician brother of the White House chief of staff, has argued that resources are scarce and that one cannot expect a government provider to do all that is desired, affordable or offered. An innovation that allows individual freedom to choose such access options seems consistent with justice.

Strategic innovation has the potential to change the dynamics of health-care delivery and leave patients and providers better off. These examples of physician-led innovation are just a few of many that will be tried. Each will be tested at the coal-face; some will succeed and others will fail. Physicians, as a profession, can and should take the lead on innovation in the financing, organization and delivery of health care.

Marco D. Huesch teaches health-care strategy at Duke University's Fuqua School of Business.

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