Why is healthcare spending so out of hand? One reason given, time after time, in study after study, is innovation in medical technology. The healthcare industry’s efforts to improve medical technology come at a steep expense to the public—accounting for up to half of healthcare spending growth since 1960.
This high cost of innovation is a product of healthcare business models and innovation efforts being misaligned with the true nature of the health problem facing the United States. Decades ago, acute conditions dominated healthcare spending and innovation efforts, but as we’ve improved in addressing acute conditions, managing chronic conditions has become the new goalpost upon which we need to make progress, as 86% of annual healthcare spending can be attributed to those suffering from a chronic condition.
To recenter innovation efforts around affordability and the chronic disease epidemic, innovators in the healthcare industry should take a page out of Henry Ford’s playbook.
The Ford Model T was the first automobile to be sold at a price accessible to what Henry Ford, founder of Ford Motor Company, referred to as the “great multitude”. Ford was able to make what were racing machines for rich hobbyists, accessible to mainstream markets by innovating in a manner that prioritized affordability and reliability. Legend has it, Ford once proclaimed that “if I had asked people what they wanted, they would have said faster horses,” which is a testament not only to the economic inaccessibility of the automobiles of the times, but the counter-intuitive nature of Ford’s vision.
So how did Henry Ford change the face of the “horseless carriage” industry and shift the definition of progress from speed and luxury to reliability, practicality, and affordability, and in so doing make the automobile affordable to the middle class?
Shifting priorities: When “good enough” is best
Just as many efforts in healthcare currently center around leveraging top of the line technologies that perform better along the lines of speed, accuracy, or resolution, early car makers were focused on making cars faster and more luxurious—all at the expense of accessibility and cost. Henry Ford, however, envisioned mobilizing the middle class with his automobiles, and saw clearly the everyday workarounds people performed without such capabilities. To make his vision a reality, Ford had to develop new priorities for his company, different from the competitors of the time. This meant that Ford had to settle for “good enough” in some respects where the Rolls Royces would argue that they had to be best in class. Ford did so to contain costs and keep the Model T practical, simple, and affordable.
Understandably, skeptics might point out that settling for a less luxurious car isn’t the same as settling in healthcare, and they’d be right. But the takeaway is this: in order to reduce healthcare costs, bold leaders must establish new priorities for their organizations that are centered around managing and preventing chronic conditions to promote overall patient well-being. In order to make this shift healthcare leaders will have to take stock of their current priorities to make some trade-offs. But trade-offs aren’t necessarily bad.
For example, in the case of patients with debilitating illness nearing end of life, advanced surgery to fight a disease can improve the status of the disease within the patient. But, as highlighted in Atul Gawande’s Being Mortal, in some cases this option (to do more) can cause greater overall debility and result in poorer patient well-being holistically. If the priority is on fighting disease, then it is obvious the surgery should proceed. But if the priority is protecting overall patient well-being, trade-offs relevant to the patient become more apparent. In this case, a shift in priorities brought to light a trade-off in which doing less is best.
Integrating to get everyone on the same page
Shifting the priorities of a whole organization, and as a result the organization’s business model to reflect those priorities, is no easy task. This is even more imposing when other players in the supply chain do not align with those same priorities.
Henry Ford was best able to assert control over the costs of producing the Model T by owning the whole supply chain for his automobiles. Ford ran the coal and iron ore mines, a railroad, freighters, blast furnaces, and glassworks that supplied his vehicles with parts. By doing this, he was able to better dictate the aspects of quality and costs of the vehicle, and ensure the whole of the supply chain was aligned with the priority of delivering a simple, affordable, and reliable automobile to the the middle class.
Healthcare leaders looking to adjust their priorities to reflect the prevailing issue of the times can start by attempting to gain influence over as much of their supply chain as possible. This, of course, is easier said than done in healthcare given the fragmented nature of the industry. The good news is we’ve seen it done, with companies like Kaiser Permanente and Geisinger Health effectively integrating a significant share of their supply chains. This may also look like payer-provider partnerships similar to Innovation Health, a partnership and alignment in shared goals between Aetna and Inova Health. Unlike companies that concern themselves with only insurance or just patient care, vertically integrated organizations are better equipped to get all moving parts relevant to care coordinated and aligned with the same priorities.
A lasting legacy
The story of Henry Ford’s efforts in the car industry is exemplary of what it takes for a company to stay true to a vision and laser-focus on the right priorities to make the vision a reality. Even today, Ford’s legacy holds true. Most cars have remained affordable for the average American adult since the turn of the 20th century, despite each successive generation making improvements in safety and technology.
If we are to make innovation work for us, rather than against us in healthcare, we need healthcare organizations to integrate in order to realign all stakeholders with new priorities—ones that promote the long-term, behavior-focused, and relationship-based nature of chronic care. Until our healthcare system is aligned in this view, it will remain fragmented, costly, and ultimately reach further out of touch with the prevailing needs of the public.
For more, see:
How Disruption Can Finally Revolutionize Healthcare