Clay Christensen, Jeffrey Flier and Vineeta Vijayaraghavan on How to Make Health Care More Cost Effective

Clay Christensen, Jeffrey Flier and Vineeta Vijaraghavan argue in their Wall Street Journal op-ed “The Coming Failure of Accountable Care” a few days ago that Obamacare’s “accountable care organizations” will have trouble changing doctors’ behavior in the dramatic ways envisioned. They will have even more trouble changing patients’ behavior, since accountable care organizations provide few incentives for patients to change their behavior.  

In the debates over health care reform, advocates of Obamacare have made a great deal of the lower per-patient costs of medical care in other advanced countries. Those lower per-patient costs of medical care in other advanced countries have a lot to do with lower pay for doctors and other medical-care providers. If something on the Obamacare model  succeeds in lowering medical costs significantly, I suspect it will be because it forces down doctors’ pay, as government budget constraints lead to tighter and tighter price controls.

Clay, Jeffrey and Vineeta’s list of recommendations would instead use market liberalization to lower the amount paid for medical services. Here is their prescription:  

• Consider opportunities to shift more care to less-expensive venues, including, for example, “Minute Clinics” where nurse practitioners can deliver excellent care and do limited prescribing. New technology has made sophisticated care possible at various sites other than acute-care, high-overhead hospitals.

• Consider regulatory and payment changes that will enable doctors and all medical providers to do everything that their license allows them to do, rather than passing on patients to more highly trained and expensive specialists.

• Going beyond current licensing, consider changing many anticompetitive regulations and licensure statutes that practitioners have used to protect their guilds. An example can be found in states like California that have revised statutes to enable highly trained nurses to substitute for anesthesiologists to administer anesthesia for some types of procedures.

• Make fuller use of technology to enable more scalable and customized ways to manage patient populations. These include home care with patient self-monitoring of blood pressure and other indexes, and far more widespread use of “telehealth,” where, for example, photos of a skin condition could be uploaded to a physician. Some leading U.S. hospitals have created such outreach tools that let them deliver care to Europe. Yet they can’t offer this same benefit in adjacent states because of U.S. regulation.

Free market advocates have been calling for such approaches for some time. Doctors have understandably lobbied for a continuation of market restrictions that boost their pay. Now that doctors face reduced pay under budget pressures created by Obamacare as well, such market liberalization in medical care may begin to seem like the lesser of two evils for doctors. And it could be a great boon to the rest of us.

For the record, here is my position on health care reform, quoted from my post “Evan Soltas on Medical Reform Federalism–in Canada”

Let’s abolish the tax exemption for employer-provided health insurance, with all of the money that would have been spent on this tax exemption going instead to block grants for each state to use for its own plan to provide universal access to medical care for its residents.

This recommendation is based on what I said in my first post about health care, “Health Economics”:

I am slow to post about health care because I don’t know the answers. But then I don’t think anyone knows the answers. There are many excellent ideas for trying to improve health care, but we just don’t know how different changes will work in practice at the level of entire health care systems.

The more the Washington encourages a diversity of approaches to health care, the more we will learn about what works. On the other hand, the more Washington does to force health care policy into the same mold in each state, the more likely it is that we will only learn one thing at the systems-level: that the first try in the one-size-fits-all approach doesn’t work very well.