Leadership

Medicine Is Not Manufacturing

Article · October 18, 2017

It is widely recognized that the continuous increase in U.S. health care costs is unsustainable, even as some Americans remain uninsured and cannot access care. Recently, with encouragement from the Center for Medicare and Medication Innovation, many are honing in on a new, characteristically American solution — namely, that private enterprise should take over medicine and “transform” it. The idea is that private corporations, driven by the prospect of profit, will compete in the marketplace to attract customers, improve quality, and reduce costs while employing the latest business-management techniques.

As a clinician who has cared for patients for more than 25 years, I am skeptical about this approach. My skepticism does not stem from nostalgia; rather, it reflects my concern about inadequate analysis and possible unintended consequences.

A Brief History of Medicine, from Ancient Times to 1965

The practice of medicine — caring for the sick and injured — is probably as old as humanity. The earliest records suggest that ancient practitioners were what today we would call professionals: individuals of great learning who adhered to high ethical standards, with a focus on patient welfare — perhaps because they understood that they were privy to their patient’s most intimate secrets at a time when these people were especially vulnerable.

The most familiar of these standards is the so-called Hippocratic oath. Perhaps the earliest healers understood that a high moral code was necessary to induce trust, which was in turn critical for the best outcome. Also, they were surely aware of the heavy responsibility that they bore, with even a small mistake having potentially devastating consequences. I believe that this high moral code is the reason that, for thousands of years, physicians have been respected and allowed autonomy in their practice. Even as Western medicine has become more scientific over the centuries, the central role of the physician-patient relationship, with the interest of the patient being paramount, has remained the same — until recently.

From 1965 to Today: Unprecedented Change

Over the last 50 years, medicine has totally transformed. Medical knowledge is advancing at an exponential rate, and new techniques for diagnosis and treatment are continually being invented and improved. No longer can an individual physician master all or even most of the available information. As a result of these advances, many illnesses that would have been fatal 50 years ago have become chronic, with patients now requiring treatment for years or even for life. Thus, physicians now must work closely and continuously with one another and with other health care personnel, including mid-level providers, technicians, physical therapists, and so on.

The other important consequence of this vast expansion of medicine is cost. Modern diagnostic techniques, procedures, drugs, and devices are as expensive as they are effective. Nowhere is this more true than in the United States, where our leaders believe in the free market and shun price controls. And the rate of cost growth is unsustainable.

Diagnosis and Treatment (or, Problem and Solution)

Health economists have decided that doctors and patients have caused outsized cost growth by providing and demanding, respectively, wasteful expensive medical services. Years ago, Dr. John Wennberg demonstrated that the utilization of medical services was much higher in some areas of the country than in others, despite comparable populations and health outcomes, which the policy community assumes to be waste. Moreover, policymakers have concluded that fee-for-service has encouraged doctors to provide “volume” instead of “value” (even though fee-for-service is regularly used in both high- and low-cost areas), with third-party insurance insulating patients from costs that would otherwise discipline demand.

In response, our leaders decided that the solution was to revolutionize care delivery and reimbursement systems. At the end of the 20th century, medicine throughout the OECD (Organisation for Economic Co-operation and Development) was still primarily a cottage industry. The U.S. will now use corporations and modern management techniques to bring medicine in line with the rest of American industry, reducing cost by “producing” health on a mass scale. Management will identify valuable care and will organize doctors and other health care personnel to provide this care efficiently by setting performance goals, handing out bonuses and penalties, naming and shaming slackers, and encouraging everyone to compete to meet corporate goals. Doctors still “grieving their loss of autonomy” who don’t get with the program are fired. For-profit Accountable Care Organizations (ACOs) will be so efficient that there will be money left over for robust executive compensation and maximum shareholder value. The key metric under this model is return on investment.

To achieve these goals, executives manage their organizations with the use of elaborate electronic systems that meticulously measure what everyone does, and how quickly they do it, in order to collect Big Data, which in turn is expected to generate Big Insight. Economists predict that vigorous price competition among ACOs will finally bend the cost curve (although consolidating is easier, more profitable, more common, and less likely to reduce cost growth). Consumers will play a key role by switching providers whenever they find care at a lower price, just as they do when purchasing groceries.

Why Medicine Is Not Manufacturing

Nevertheless, the principles of for-profit business are different from those of medicine. Business generally looks to what consumers want, not what is best for them. The idea is to produce what consumers like, or to persuade them to like what is produced. Instead of “first, do no harm,” a central catch phrase of business is caveat emptor (“let the buyer beware”). Businesses are comfortable promoting products that harm consumers as long as the products are legal (e.g., cigarettes, junk food, etc.), and they do not have a fiduciary duty to their customers. In fairness, ACOs believe they know better than their customers what is best for them, and align the incentives of physicians with the goals of the organization rather than the patient. Of course, if there is a problem, physicians are still personally responsible, whereas executives are protected by limited liability. For-profit businesses succeed by promoting their most profitable services to the most profitable consumers, whereas nonprofit hospitals are expected to serve their communities. And, in the 21st century, business routinely takes money out of an enterprise to distribute to shareholders, rather than reinvesting it.

Whereas a key to business success historically has been standardization, Wennberg demonstrated that American medical practice is characterized by considerable variation. To my knowledge, no one has carefully investigated the reason for this variation beyond observing that it is greatest in areas of significant scientific uncertainty. Analysts frequently assume that this variation is simply a function of physician greed, patient fecklessness, and opportunity — that is, doctors provide unnecessary services in some geographic areas because they can, because they have monopolies, because insurance policies are too generous when patients demand such services, or because of some other reason — but the only factor ever actually identified is that there are more services in areas with more doctors.

Business leaders prize continuous change and innovation, especially disruptive change, to stay ahead of the competition. In medicine, especially when evidence for new approaches can be thin and when anxious patients value predictability and reliability, the value of continuous change is more ambiguous.

Unintended Consequences

Electronic health records (EHRs), which all physicians who participate in Medicare are required to use, illustrate the difference between business and medicine. Vendors design EHRs for managers, not for physicians or their patients. These records measure everything that providers do and assess the associated results: a fundamental tenet of management is that you cannot manage what you cannot measure. However, some of the things that are most important to a sick patient — time, empathy, compassion, continuity of care — cannot be easily measured, and therefore do not count. Moreover, what physicians truly want (and what patients expect) is a completely interoperable record that includes all of the available information about each patient. And, as we know, EHRs are an important cause of rising physician burnout, now believed to affect almost half of American doctors.

More subtly, but even more importantly, the for-profit business mindset is changing the mission of medicine. It is becoming clear that the way to save money in medicine is to focus on the sickest patients — for example, by providing social support such as housing and transportation as well as close medical supervision. However, the way to make money in an ACO is to focus on population health — that is, to “maintain the health” of healthy consumers — because there are more of them, the cost is low, and the outcomes are excellent. But we now know that the health of any population is primarily a function of the social determinants of health played out over years. No ACO, however large, can control these factors. Medicine plays only a small role in true population health.

The Upshot

Certainly, medicine can learn from other disciplines such as business. However, it is possible that some functions do not work as well in an explicitly for-profit setting, at least in this country: consider, for example, for-profit universities, private prisons, for-profit nursing home chains, for-profit hospices, and even ambulance services. Indeed, in a New Yorker article profiling McAllen, Texas (the city that once had the highest health costs in the country), a cardiologist told Atul Gawande that “We took a wrong turn when doctors stopped being doctors and became businessmen.”

Yes, there are business aspects to medicine. But to treat medicine as just another business is to deny its soul, the essential element that has given patients comfort and relief for thousands of years and does so even today.

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