At first blush, it would appear that entrepreneurship is alive and well in health care. And that's true in many areas: New devices, pharmaceuticals, and surgical techniques regularly get developed and incorporated into practice. Virtually every day, there is information about a clinical study with a new way to treat sick people. Fortunes have been made from implants, surgical instruments, and artificial products. And biotechnology and medical devices are among the leading areas for venture capital funding.
But in a different sense, the health care system is starved for innovation and the entrepreneurial spirit. Medicine has innovated greatly in the therapies that are provided, but not in the way the system is organized. The situation is such that if a physician from the 1950s were magically brought back to life today, he would recognize none of the technology that a contemporary doctor uses, but he would feel quite at home in the settings in which the technology is used. Very few things in the economy are the same today as they were a half century ago, and most of those are still the same are not considered successes.
Think instead about other industries. When people want financial information, they can get it right away, day or night. Critical information is stored centrally and accessed wherever it is convenient. Purchases can be made electronically, by telephone, or in person, whichever is more convenient. Convenience and coordination are the standards for most industries - but medicine falls far short.
Look deeper and the situation becomes even more puzzling. There are examples of good care, visible like oases in the desert. The Mayo clinic in Minnesota shows that care can be coordinated. Geisinger Health System in Pennsylvania demonstrates that treatments can be systematized to improve quality. Intermountain Health Care in Utah has set up a learning health care system. In all of these settings, physicians and patients are happy. The major question is why these systems remain one-off, rather than spreading nationally.
There are two explanations for this failure of organizational innovation. The first lays the blame at the door of the government. Coordinating health care information technology requires government action, which was a decade slow in coming. Medicare payment policy favors doing more, not doing better. The federal government has recognized its failures, and is promising to do better. The stimulus bill of 2009 allocated $30 billion for health care IT, and the Affordable Care Act of 2010 allowed significant changes in the way Medicare pays for services. Thus, the landscape for a better medical system is being laid.
But that puts the ball squarely in the court of the private sector, which has not been very innovative. Will private insurers follow up on these Medicare changes to move away from volume-based payment and into value-based payment? Will hospital managers search for efficiency, or continue to manage volume? Will doctors think about care management as equally valuable as rescue of the sick? Everyone knows these changes need to occur, but change has been painfully slow.
Here, then, is the conundrum. Our best estimates suggest that medical spending is about $700 billion higher than an efficient system would generate, and the system is well on the way to imploding. At the same time, we have documented examples of good care. What we lack is the entrepreneurship needed to make the best care the norm. Will it come? I hope so - because the consequences of continuing on as we have are too awful to contemplate.
David Cutler, PhD is the Otto Eckstein Professor of Applied Economics at the Harvard Kennedy School of Government and author of Your Money or Your Life: Strong Medicine for America's Health Care System, published by Oxford University Press. Dr. Cutler served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was the senior health care advisor to the 2008 Obama Presidential campaign.
Thursday, March 3, 2011
Doctors and Patients Improving Health Care
The American public is not satisfied that the major healthcare legislation that became law last year really does anything to improve the system. A majority of Americans surveyed in three recent polls — CNN, Fox News and Rasmussen – all said the new law makes things worse and want it repealed.
Quite simply, Americans don’t want a big government – one-size fits all bureaucracy dictating the terms of health care services. Instead of reforming the system, the American public believes the new measure compounds an already broken process—a compounding that will inevitably lead to rationing.
Instead of centralizing control, Washington should consider innovations that give authority and responsibility back to patients and their doctors.
One truly interesting solution is the Heartland Institute’s Free to Choose Medicine initiative. If combined with other market-based reforms, it would significantly improve our health care system and give Americans more control over their health care, and provide lower costs all the while getting government out of the way.
How does Free to Choose Medicine work? FTCM makes an end run around the costly and time-consuming FDA reform approval process – a process that in some instances is approaching 10 years. At present, the FDA has as its goal an impossible task – ensuring the absolute safety of all new drugs brought to market. Rather than admit that 100% safety can never be accomplished the FDA has come up with an ever more rigorous and time-consuming review process.
While providing modest safety protection, the longer approval times give little comfort to a patient with a terminal condition. In fact, there are literally hundreds of cases where a drug that would ultimately prove safe and effective was denied to patients – and tragically, the patients died before getting access to the drugs.
Patients should have a right to make informed decisions along with their physician about whether they have access to promising new drugs. Free to Choose Medicine is a solution that could be quickly implemented. It relies on a two-tiered system: One is keeping the status quo for any who still believe it is useful or effective and the other an innovative waiver approval process whereby patients with either a terminal diagnosis or a chronic illness are allowed to access drugs that have been submitted to the FDA for review prior to their formal approval by the FDA.
To participate, pharmaceutical companies would have to make available all existing relevant information on the drug that is waiting for approval. Patients, in consultation with their doctors, would agree to accept that there are some risks associated with using the unapproved drug.
These patients in consultation with their doctors would keep track of their medical progress with the results submitted to a nationwide Trade-Off Evaluation Database (TED) – a database that would be open to medical practitioners nationwide.
As the results of the database develop, the FDA would be legally authorized to use the results as a way of either approving or denying the drug for public use. This process could reduce by 4-6 years the amount of time that drug approval takes.
Companies would benefit as well. Today investors and drug developers have to assume that their ROI – return on investment will be delayed by as much as decade before going forward with a particular field. Since there is no guarantee that research will ultimately result in a new drug, delay only adds to the risk factor of investors and leads to higher pricing once drugs are finally approved. FTCM rewards drug makers whose drugs are effective by giving them the earliest possible approval times.
Unlike the big government health care takeover that Congress passed last year, FTCM puts patients and doctors back in the driver’s seat when it comes to their medical needs. Patients will have access to more treatment options sooner and doctors will be able understand better understand the results of various treatments. Moreover, since companies’ research costs are lower, everyone can benefit from the reduction in drug costs.
Moreover, these results are not just theoretical. FTCM gives patients more access and hope than the current program that pushes a lucky few into the clinical trials where they still have a 50 percent chance of receiving a placebo instead of the real drug.
Ultimately, America can’t afford to have a health care system where it is acceptable to let people suffer or die needlessly due to delay in receipt of drugs while it pursues an unrealistic quest to provide 100% perfection in the drug approval process.
FTCM would empower patients by giving them the ability to decide their future. As Congress continues to explore ways to improve our health care system, they should include Free to Choose Medicine among their options.
Quite simply, Americans don’t want a big government – one-size fits all bureaucracy dictating the terms of health care services. Instead of reforming the system, the American public believes the new measure compounds an already broken process—a compounding that will inevitably lead to rationing.
Instead of centralizing control, Washington should consider innovations that give authority and responsibility back to patients and their doctors.
One truly interesting solution is the Heartland Institute’s Free to Choose Medicine initiative. If combined with other market-based reforms, it would significantly improve our health care system and give Americans more control over their health care, and provide lower costs all the while getting government out of the way.
How does Free to Choose Medicine work? FTCM makes an end run around the costly and time-consuming FDA reform approval process – a process that in some instances is approaching 10 years. At present, the FDA has as its goal an impossible task – ensuring the absolute safety of all new drugs brought to market. Rather than admit that 100% safety can never be accomplished the FDA has come up with an ever more rigorous and time-consuming review process.
While providing modest safety protection, the longer approval times give little comfort to a patient with a terminal condition. In fact, there are literally hundreds of cases where a drug that would ultimately prove safe and effective was denied to patients – and tragically, the patients died before getting access to the drugs.
Patients should have a right to make informed decisions along with their physician about whether they have access to promising new drugs. Free to Choose Medicine is a solution that could be quickly implemented. It relies on a two-tiered system: One is keeping the status quo for any who still believe it is useful or effective and the other an innovative waiver approval process whereby patients with either a terminal diagnosis or a chronic illness are allowed to access drugs that have been submitted to the FDA for review prior to their formal approval by the FDA.
To participate, pharmaceutical companies would have to make available all existing relevant information on the drug that is waiting for approval. Patients, in consultation with their doctors, would agree to accept that there are some risks associated with using the unapproved drug.
These patients in consultation with their doctors would keep track of their medical progress with the results submitted to a nationwide Trade-Off Evaluation Database (TED) – a database that would be open to medical practitioners nationwide.
As the results of the database develop, the FDA would be legally authorized to use the results as a way of either approving or denying the drug for public use. This process could reduce by 4-6 years the amount of time that drug approval takes.
Companies would benefit as well. Today investors and drug developers have to assume that their ROI – return on investment will be delayed by as much as decade before going forward with a particular field. Since there is no guarantee that research will ultimately result in a new drug, delay only adds to the risk factor of investors and leads to higher pricing once drugs are finally approved. FTCM rewards drug makers whose drugs are effective by giving them the earliest possible approval times.
Unlike the big government health care takeover that Congress passed last year, FTCM puts patients and doctors back in the driver’s seat when it comes to their medical needs. Patients will have access to more treatment options sooner and doctors will be able understand better understand the results of various treatments. Moreover, since companies’ research costs are lower, everyone can benefit from the reduction in drug costs.
Moreover, these results are not just theoretical. FTCM gives patients more access and hope than the current program that pushes a lucky few into the clinical trials where they still have a 50 percent chance of receiving a placebo instead of the real drug.
Ultimately, America can’t afford to have a health care system where it is acceptable to let people suffer or die needlessly due to delay in receipt of drugs while it pursues an unrealistic quest to provide 100% perfection in the drug approval process.
FTCM would empower patients by giving them the ability to decide their future. As Congress continues to explore ways to improve our health care system, they should include Free to Choose Medicine among their options.
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