U.S. health care has been in crisis since Nixon–but two economists may have found a way to radically disrupt it
In 1977, the Sex Pistols released their first and only studio album. Raw, rude, and a rejection of everything rock ‘n’ roll, Never Mind the Bollocks became the battle cry of U.K. Punk. With a legacy that loud, one album was enough.
It was a completely different operating philosophy that undermined the integrity of the culture in which it was introduced. It delivered an innovation shock and sparked network effects long before that concept was conceptualized. Nothing was sacred. You could lose yourself in a reactionary had-it-up-to-here fury while also fully savoring the novelty of the moment as a cathartic split from convention. Punk was completely different wattage.
We are now in the 54th year of the official U.S. healthcare “crisis.” In 1969, President Richard Nixon proclaimed, “We face a massive crisis in this area.” Without prompt administrative and legislative action, he added at a special press briefing, “We will have a breakdown in our medical care system.”
Failure over time
U.S. health care is an unfixable economic system, at least in its current configuration. For more than two generations, ballooning health care costs have been a source of concern, confusion, and a sense of impending catastrophe.
In a perpetual “crisis,” structural stalemate and organized irresponsibility come together to form a massive flywheel. Managed by expert knowledge of the past, trapped by technical debt, and led with obsolete narratives and narrow framings, the “mother of all markets” keeps spinning around itself as an infinitely recursive problem.
Rather than aiming for a new approach, health care leaders perform similar roles with exaggerated gestures and performative waves to “patient centricity.”
The next generation of health care leaders must creatively explore new concepts, quickly assemble and sell the intellectual viewpoint, and then build an entirely new industry ecosystem. In other words, tear it down and start over. Chop the knot. Sweep the old concepts out of the saddle. Organize markets to interoperate within the context of new economic systems.
Conventional strategy plays the player. Strategy at a systems level plays the board
In their new book, We’ve Got You Covered: Rebooting American Health Care, economists Liran Einav of Stanford and Amy Finkelstein of MIT detailed an approach that could potentially transform the multi-dimensional dysfunctionality that is the U.S. healthcare system.
“Few of us need convincing that the American [way of healthcare] needs reform. But many of the existing proposals focus on expanding one relatively successful piece of the system or building in piecemeal additions,” they explain. Nearly all of these proposals miss the bigger point, according to the two economists. They believe it’s time to stop putting Band-Aids on a system they diagnose as “incoherent, uncoordinated, inefficient, and unplanned.”
As Einav and Finkelstein argue, our health care system was never deliberately designed but rather pieced together over decades to deal with issues and themes as they became politically relevant.
“The result is a sprawling yet arbitrary and inadequate mess. It has left 30 million Americans without formal insurance. Many of the rest live in constant danger of losing their coverage if they lose their job, give birth, get older, get healthier, get richer, or move,” the authors add.
The competitive mindset needs a big rethink
Unleashing exponential growth in the largest and most lucrative market on Earth starts by leapfrogging complexity. And if you buy into the logic that it’s not just one market that determines health care’s value but an infinite flow of them, then a strategic advantage goes to leaders with the skills to harness a number of interconnected markets and manage them as a new ecosystem.
Fragmentation is a design problem: There are islands of relevant features everywhere from too many vendors wandering on the edges, pushing point solutions to small problems. The challenge is pulling it all together in a way that gives birth to a whole system that generates value. The new data that flows from this new system, and then refined into specialized cognition, would, in turn, generate new business value, support the population’s health, and guarantee performance.
For example, tech giants are in a race to bring recent advances in artificial intelligence to health care. But digital transformation plays a supporting role in this story, not a lead one. Technology is a means to dissolve boundaries, enable new positioning, remove friction, and re-configure entire business systems, practically overnight.
Imagine a combination of markets: Google (the $300 billion technology services market), Dexcom (the $17 billion continuous glucose monitoring market), Eli Lilly and Company (the $100 billion GLP-1 drug market), and BASF (the $23 billion personalized nutrition market). It would create a system advantage for Google to beat, say, Microsoft acting alone as a technical input.
Strategic competition is an enduring condition, something to be managed, not a problem to be solved. And the skill to make that happen depends on the core principles of constructive, collaborative, creative, and results-oriented leadership. In other words, the real battle is about producing outcomes, not inputs.
“We wrote this book because, after studying U.S. health policies for almost two decades, Amy and I realized that we have something to say about the big picture,” says Einav. “And because we are outside of the political world, we think we have a fresh perspective and can maybe move the conversation in the right direction.”
It’s the kind of creative destruction the Sex Pistols would appreciate.
John G. Singer is the executive director of Blue Spoon Consulting. Blue Spoon specializes in strategy and innovation at a system level.
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