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Atl Econ J (2007) 35:491501
DOI 10.1007/s11293-007-9091-9
Redefining Health Care: Creating Value-Based Competition on Results
Michael E. Porter and Elizabeth Olmsted Teisberg, Boston, MA, Harvard Business School Press, 2006, pp. 506
Erwin A. Blackstone & Joseph P. Fuhr Jr.
Published online: 23 November 2007 # International Atlantic Economic Society 2007
Keywords Health care system . Access . Quality information . Outcome measures
JEL Classification I11 . I18 . L84
Introduction
The United States health care system has more competition than any other in the world. However, the system is performing poorly; costs are the highest in the world and growing rapidly. In 2007 health care expenditures account for approximately 16% of gross domestic product, a far higher share than for any other country. There have been many suggestions for improving healthcare performance ranging from a single payer system to increased competition.
Michael Porter and Elizabeth Olmsted Teisberg in Redefining Health Care argue that the major flaw in the system is that it does not create value for the patient which they define as health outcome per dollar spent. They suggest that shifting the delivery of services to those who are more efficient, have better outcomes, and lower prices can solve many of our health care problems. Access, quality information, and outcome measures are major issues. Mandatory outcome measurements and reporting of results are the first step in reforming the health care system (Porter 2006, p. 7).
Porter and Teisberg argue that the culprit is the archaic system under which health care operates. Changing this system is necessary for controlling cost, increasing
E. A. Blackstone
Temple University, Philadelphia, PA, USA
J. P. Fuhr Jr. (*)
Widener University, Chester, PA, USA e-mail: [email protected]
J. P. Fuhr Jr.
Thomas Jefferson University, Philadelphia, PA, USA
492 E.A. Blackstone, J.P. Fuhr
quality, improving access, and making the populous more healthy. The medical system needs to be proactive and not reactive with prevention and disease management the major keys to revamping the system. It needs to create value for the consumer.
Present System
Under the present system each part of the health care network has a tendency to take an adversarial position and not a cooperative one. Instead of creating value for the customer through cooperation, each component pursues its own...