Category: Health Sector

A Student’s Account of the India Field Seminar

October 21st, 2011 in Graduate Students, Health Sector, School, Social Impact, Students

HSMP India Seminar 2

Deedar Samant, a 2011 alumnus of the Health Sector Management program at the School of Management, shares his experience attending the India Field Seminar as a second-year MBA student.

Earlier this year, 20 students from Boston University School of Management, accompanied by two faculty members, visited three of India’s biggest and most rapidly developing cities: Delhi, Mumbai and Bangalore. Our journey began in the wintry, cold-gripped capital city of Delhi.  For four days we absorbed information and sights in this city rich with historic significance and landmarks, from the Mughals to India’s independence struggle with the British Raj.

Our visit to All India Institute of Medical Sciences (AIIMS) was particularly interesting. Enjoying the good fortune of being located in the nation’s capital, AIIMS is backed by a surprisingly huge budget for a government hospital, which enables it to provide the populous with state-of-the-art services ranging from preventive to the best diagnostic and surgical services offered anywhere in the world. It was fascinating to observe the workings of the emergency department, which looked extremely busy even though the administrator accompanying us assured us that it was a relatively “light” day.

“India is a fascinating country with marked differences in languages, cultural practices, health care needs, and provisions and access to these services.”

Next, our encounters with two individuals on the opposite side of the battle, developing over drug patent protection rights, introduced us to the world of generic medicines and the economic and cultural issues linked with the struggle.

Next on our travel map was the city of Mumbai (formerly Bombay), undoubtedly the economic, fashion, entertainment, and street-food capital of India. To describe Mumbai in a single sentence, it is the perfect blend of New York and Los Angeles with an abundant cultural diversity. Our meeting with the head of the preventive medicine department of one of the largest government hospitals in Mumbai, and subsequent visit to the Dharavi urban health center, were wonderful experiences. The center (part of the government hospital system) provides absolute free preventive and medical services to the slum of Dharavi, with a population of more than a million.

“A visit to generic drug manufacturing firms strengthened our understanding of the market strategies applied by these companies in battling the multinational corporations in the highly lucrative Indian pharmaceutical market.”

A visit to the generic drug manufacturing firms of Glenmark and Cipla strengthened our understanding of the market strategies applied by these firms in battling the multinational corporations in the highly lucrative Indian pharmaceutical market.

Our last stop on the seminar brought us to the technology capital of India, Bangalore. A visit to Narayana Hrudayalaya (a cardiac care center) and an encounter with its founder, Dr Devi Shetty, was very rewarding. Our conversation with Dr Shetty made us realize the clarity and dedication of his vision in bringing quality medical services to the low income population at a fraction of the cost incurred by providers in the western world. The level of operating efficiency and progress achieved through simple, effective, evidence-based medical practices, prompted some of our team members to ask Dr Shetty for internships at his institute to discover more details on the organizations operating strategies and expansion initiatives.

“Indians have definitely broken the first set of codes unlocking the doors into the world of quality health care to the masses at highly affordable prices and will be a great resource of lessons-learned for the health care institutions in the US. “

India is a fascinating country with marked differences in languages, cultural practices, health care needs, and provisions and access to these services. The pace of development and ideation is tremendous but the infrastructure needed to sustain these processes is not keeping pace. There is a sincere effort on part of the government, and national as well as international private parties, to develop the infrastructure to ensure rapid and organized progress of the health care system. However, one fact prominently stands out: Indians have definitely broken the first set of codes unlocking the doors into the world of quality health care to the masses at highly affordable prices and will be a great resource of lessons-learned for the health care institutions here in the United States.

The Health Sector Management Program goes to India

August 30th, 2011 in Health Sector, School

Each year, 20 MBA students from Boston University go to India to learn about the rapidly changing global forces of the health sector as they intersect with the dynamics of an emerging country. Following a series of meetings in Boston, students travel through India for two weeks visiting Delhi, Mumbai, and Bangalore. The field study program includes visits to government agencies, hospitals, pharmaceutical companies, health sector start-up companies, health centers, research laboratories, and academic research settings.

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Boston University’s India Field Seminar.

Each year a group of MBA and other graduate students travel to India to gain a deeper understanding of issues and solutions facing global health care. In this video, Professor Mark Allan, faculty director of BU’s Health Sector Management Program, and recent alumni discuss the trip.

The Indian Field Seminar is designed to help students:

  • Examine the emerging global market in the health sector.
  • Understand the complex interacting dynamics of economic development, international competition, government policy, and entrepreneurial initiative in a key emerging country.
  • Evaluate more efficient and effective development and delivery models created in an environment of limited resources.
    Identify business opportunities in the health sector presented by rapid development in India and other emerging countries.
  • Analyze and compare business strategies that seek to align business goals with societal aims, emerging markets, and revenue streams.
  • Explore and evaluate the use of strategic alliances, public-private partnerships, and multiple financing mechanisms to support new venture development.

See A Student’s Account of the Indian Field Seminar.

More about the Health Sector Management Program at Boston University

New Research Uncovers Crucial Role of Public-Sector Research in Drug Discovery

July 27th, 2011 in Digital Technology Sector, Entrepreneurship, Faculty, Health Sector, Social Impact, Strategy & Innovation

Ashley Stevens

Ashley Stevens

New work from Boston University School of Management’s Ashley J. Stevens, D.Phil, co-authored by colleagues from across the University and the National Institutes of Health, has illuminated how public-sector research has had a more profound effect on improving public health than previously realized, most notably in the realm of drug discovery.
Stevens is a lecturer and Senior Research Associate at the School’s Institute for Technology Entrepreneurship and Commercialization (ITEC), as well as Special Assistant to the Vice President for Research at Boston University.

His article “The Role of Public-Sector Research in the Discovery of Drugs and Vaccines”* appeared recently in The New England Journal of Medicine and was co-authored by Jonathan J. Jensen (Boston University School of Management alumnus), Katrine Wyller (previous School of Management Technology Transfer Fellow), Patrick C. Kilgore,  Sabarni Chatterjee, and Mark L. Rohrbaugh (National Institutes of Health).

153 new FDA-approved drugs, vaccines, or indications for existing drugs were discovered by PSRIs (four of which can be credited to current or former Boston University researchers).

Bayh-Dole and the Federal Technology Transfer Act

Stevens and his colleagues traced the impact on public health of two U.S. laws: the Bayh–Dole Act of 1980, allowing universities, nonprofit research institutes, and teaching hospitals to own the intellectual property resulting from federally funded research and  license it according to terms of their choosing; and the Stevenson–Wydler Technology Innovation Act as amended by the Federal Technology Transfer Act of 1986, extending the same authority to federal laboratories.

These acts enabled studies conducted at public-sector research institutes (PSRIs)–universities, research hospitals, nonprofit research institutes, and federal laboratories–in the United States to be freely published in the scientific literature, and also converted into intellectual property and transferred, through license agreements, to the private sector, enabling its commercialization and public use.

New Discoveries about Drug Discovery

The authors, exploring the impact of these acts three decades on, found that 153 new FDA-approved drugs, vaccines, or indications for existing drugs were discovered through studies carried out by PSRIs (four of which can be credited to current or former Boston University researchers).

They also found that PSRIs tend to discover drugs that have a disproportionately important clinical impact. “Slightly over half of these drugs were for the treatment or prevention of cancer or infectious diseases,” Stevens explains. “Furthermore, drugs discovered by PSRI’s received Priority Review by the FDA at twice the rate as for all FDA drug approvals, indicating that PSRI discovered drugs were expected to have a disproportionately high therapeutic impact.”

“Slightly over half of these drugs were for the treatment or prevention of cancer or infectious diseases; Drugs discovered by PSRI’s received Priority Review by the FDA at twice the rate as for all FDA drug approvals.”

As he and his colleagues write, “Our data show that PSRIs have contributed to the discovery of 9.3 to 21.2% of all drugs involved in new-drug applications approved during the period from 1990 through 2007.”

The paper has had broad influence since its publication, being  widely cited in the media and heavily quoted by policy makers in Washington noting the significant economic spillover from federal investments in basic science.  Recently, Francis Collins, director of the National Institutes of Health, cited the study in his explanation of the NIH’s proposed 2012/13 budget.

Ultimately, Stevens comments, “we believe that our study supports the concept that the emergence of biotechnology in the mid-1970s, combined with policy changes implemented in the early 1980s regarding the ownership and management of the intellectual property of PSRIs, allowed–and will continue to allow–these institutions to play an important role in the downstream, applied phase of drug  discovery.”

*“The Role of Public-Sector Research in the Discovery of Drugs and Vaccines,” Ashley J. Stevens, D.Phil., Jonathan J. Jensen, M.B.A., Katrine Wyller, M.B.E., Patrick C. Kilgore, B.S., Sabarni Chatterjee, M.B.A., Ph.D., and Mark L. Rohrbaugh, Ph.D., J.D., The New England Journal of Medicine, February 20, 2010.

Health Sector MBA Ranked #11 in Nation by US News

July 27th, 2011 in Health Sector

The School of Management’s Health Sector Management (HSM) program rose to 11th overall in the 2012 business school rankings released by U.S. News & World Report, an improvement of six positions from the most recent healthcare management ranking published in 2007, based on peer perceptions of the program.

This reflects the efforts of a superb group of teacher/scholars who, over the past five years, have redesigned our curriculum to reflect the broader spectrum of the health sector. Perhaps most gratifying are the gains in incoming GPAs and GMAT scores, and the starting salaries of our graduates.”

–Mark Allan, Faculty Director, Health Sector Management Program

Learn more about the Health Sector Management Program from our multimedia library:

Health Sector Management Degrees.

Mark Allan Faculty Director, Health Sector Management Programs, and Executive-in-Residence in the Business Policy and Law Department discusses the School’s degree options in Health Sector Management.

The Health Sector MBA Curriculum.

Associate Professor of Marketing Roberta Clarke provides an incisive overview of the Health Sector Management MBA curriculum, it’s hands-on training and real-world value.

Patrick Gallagher MPH ’10, MBA HSM ’11.

Patrick Gallagher (MPH ’10, MBA HSM ’11) has always been interested in healthcare entrepreneurship and international development. Soon after arriving at the Boston University School of Management, he met a professor working on a business plan to provide needed medical devices throughout the developing world. Patrick not only helped write the plan, but also helped pitch the plan to a financial group to secure funding.

A Great Option for Doctors with Leadership Goals.

In this video, Sohini Stone (MD/MBA ’08) discusses the convenience and the professional value of the dual degree in medicine and business offered jointly by the School of Medicine and the School of Management here at Boston University.

Record Growth Makes Health Sector Management Program Inside Healthcare’s New Cover Story

Atul Gawande Delivers Keynote at BU Health Sector Lecture Series

October 27th, 2010 in Health Sector, School, SMG Hot Topics

“The Checklist Effect: Using Management Tools to Transform Healthcare Practice”

On April 14, 2010, the noted surgeon and author Atul Gawande delivered the keynote speech at BU’s Health Sector Lecture Series, drawing approximately 300 students and faculty from across the University.

His talk addressed applying process innovation to one of medicine’s most crucial current issue’s: preventable medical errors. His solution: "The Checklist Effect," a simple but powerful tool to improve outcomes.  Gawande also explored how management tools have been imported into clinical practice and examined how incentives play a critical role in enhancing or discouraging this transformation. A panel discussion followed Gawande’s talk featuring Ravin Davidoff, chief medical officer at the Boston Medical Center, and Janet Porter, chief operating officer at Dana-Farber Cancer Institute.

The event was capped by a networking reception.

Watch Gawande discuss his most recent book, The Checklist Manifesto, on The Daily Show with Jon Stewart:



The “Health Sector Consulting” Course: Enhancing Student Learning Through Hands-On Projects

October 27th, 2010 in Graduate Students, Health Sector, SMG Hot Topics, Students

From Inside Healthcare, September 2010

Health Sector Management Program (HSM) is designed to prepare students for the rigorous and often challenging world of consulting. As the world shifts toward a more translational and accountable environment, new companies will require fundamental market analysis and advice. Even the larger, currently existing organizations need to evolve or risk being left behind. This holds true for both pharmaceutical organizations and hospitals.

Bio-pharma, academic medical centers, clinical diagnostics companies, and local as well as national companies are all represented in the diversity of the projects that the students pursue.

This course was developed by and is taught by Professor Bobbi Clarke, drawing on her deep knowledge of the field. Keith Aspinall has recently joined the Health Sector Management Program to provide a second version of the course to expand student opportunities.

A Truly Out-Of-Class Experience

Bio-pharma, academic medical centers, clinical diagnostics companies, and local as well as national companies are all represented in the diversity of the projects that the students pursue. This type of learning experience draws on the breadth of classroom education but extends beyond traditional course work to apply and further develop skills in a real-world setting.

The Health Sector Consulting course is a truly out-of-class experience. Students meet as a class only four times throughout the semester. The rest of the time is spent working on a live consulting project. Individual team meetings with the professor provide the groups with guidance along the way:

  • The first meeting is the kick-off to discuss the consulting rules of thumb and organize into teams.
  • At the second meeting, students receive background materials on their companies and projects. They are charged to define the primary objectives. How can they help this company?
  • The third meeting, midway through the projects, brings all of the participants back together to have a group learning session. They discuss the challenges each team faced and also share their best practices.
  • At the fourth meeting, the students will fulfill their final class deliverable, giving a presentation of their findings and recommendations to the companies.

Combining Core MBA Principles with Learning from HSM Classes

The projects challenge the students to take an ambiguous scenario and apply analytical and interpersonal skills alike to obtain information and get results in the face of adversity. They tackle questions about the marketing, financial, and operational sides of the organization.

The projects challenge the students to take an ambiguous scenario and apply analytical and interpersonal skills alike to obtain information and get results in the face of adversity.

Some groups focus on external factors of an organization through competitive analysis to determine threats to the business. Others look inward to restructure or enhance the operations. They apply not only their core MBA principles but the background gained from their other HSM classes.

Having completed a full consulting engagement from this course, the students have the confidence to proceed into the world with personal knowledge of the steps necessary to gather information, synthesize data, and present findings.

Students Work with Life Sciences Technology Companies in “Bench to Bedside” Course

October 27th, 2010 in Health Sector, SMG Hot Topics, Students

The “Bench to Bedside” Course

As the bio-pharma industry shifts from simply producing drugs for prescription to using monitoring devices and sophisticated diagnostics, many new technologies are being hatched in research incubators across the nation. These ideas lead to promising early stage companies. As these companies pursue the path toward funding and ultimately production, they must overcome many hurdles and achieve many milestones.

Turning Challenges Faced by Early Stage Companies into Learning Experiences

The course fosters rich interaction between students and the founders and leaders of these early stage companies.

“Bench to Bedside” is a Boston University Health Sector Management Program course created by professor Ashley Stevens. The class takes the challenges faced by these early stage companies and transforms them into rich learning experiences for students.

This year, Boston University is thrilled to have Professor Rana Gupta join the faculty to teach this course as an executive in residence. Professor Gupta has proven business roots in the bio-pharmaceutical and devices industry. As the CEO of HistorX, he brings his expertise in building, managing, and growing a successful company. For this course, he has gathered a diverse array of early stage life sciences companies that have developed new technologies and are ready to move to the next step. “Live” projects are assigned to the students, giving them the chance to apply their learning in a real business setting.

“The goal of this class is for students to be able to say, with their heads held high and proud, that they have actually helped develop a solid strategy for an early stage company.” –Professor Rana Gupta

The course fosters rich interaction between students and the founders and leaders of these early stage companies; students directly consult with them on the challenges these fledgling organizations face. “Bench to Bedside” provides a highly challenging but stimulating real world environment, linking deliverables to the actual decisions that the companies make.

Throughout the course, students must perform technology assessment, determine the value of the technology, and judge the size of the potential market. They learn how to make a strong business case as they touch on topics such as growth strategy, financing options, competitive analysis, and commercialization strategy. They make recommendations to the firm on the nature of the venture, how to leverage their intellectual property position, and how to market to their customer base.  “The goal of this class is for students to be able to say, with their heads held high and proud, that they have actually helped develop a solid strategy for an early stage company,” said professor Gupta. “The students’ work during the semester will provide high value to the companies.”

Synthesizing the Strengths of Each Team Member’s Different Background

MBA students, medical students, law students, and biomedical engineers all work together in interdisciplinary teams.

The student profile of this course is a testament to the diversity that the current bio-pharma industry boasts. MBA students, medical students, law students, and biomedical engineers all work together in interdisciplinary teams, synthesizing the strengths of each team member’s different background. “Bench to Bedside” is truly unique because it creates teams mirroring the cross-section of individuals with whom these students would actually collaborate when starting an organization.  The course’s ultimate purpose: to provide students the real-world skills they will need to become tomorrow’s entrepreneurial-minded leaders of the bio-pharma and device industries.

Sohini Stone, Health Sector MBA/MD ’08

October 19th, 2010 in Health Sector, SMG Hot Topics

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Sohini Stone, Health Sector MBA/MD ’08 on BU’s Dual-Degree Option

Record Growth Makes Health Sector Management Program Inside Healthcare’s New Cover Story

October 14th, 2010 in Health Sector, School

From Inside Healthcare, September 2010

From Inside Healthcare, September 2010

If you want to know “what’s being taught to the next generation of physician leaders,” the magazine Inside Healthcare will point you to Boston University.

For their September 2010 cover story, “Practical Assignment,” they write, “Hearing that enrollment at the Health Sector Management Program [HSM] at Boston University’s School of Management has tripled in the last five years, we wanted to know why. More importantly, we wanted to know what topics are being emphasized during this chaotic time for health care.”

The magazine goes on to interview Mark Allan, faculty director of the HSM program, about what distinguishes the School of Management’s health sector curriculum, why it has become a model in the education industry, and how it equips tomorrow’s game-changers to navigate crucial health care challenges across the globe:

“Hearing that enrollment at the Health Sector Management Program at Boston University’s School of Management has tripled in the last five years, we wanted to know why.”

“Allan believes an MBA in health sector management better meets the needs of today’s managers and leaders. ‘Business models, the flow of funds, and the self-interests of parties all have a dominant role in how services are structured and delivered,’ said Allan. ‘We want our program participants to develop both the capacity to be highly effective managers in action and to understand the underlying business issues…The entire sector is represented in the classroom.  When there’s interaction around issues and trends, the…class itself represents the whole health world,’ he said.”

Besides covering the HSM curriculum’s comprehensive approach to the business realities structuring today’s health sector initiatives, the article lauds other program fundamentals: its focus on health IT, change management, and business model creation; the flexibility provided by such options as the dual degree MD/MBA and the Professional Evening MBA health sector offering; and especially the attention paid to global health challenges.

“The entire sector is represented in the classroom. When there’s interaction around issues and trends, the student class itself represents the whole health world.”

“The US is already being shown up by countries like India when it comes to high-volume, high-quality specialty care,” Inside Healthcare reports. “Allan said that’s why he has a passionate interest in global health that has become part of the MBA program….He [also] anticipates the next trend [in the US] will be a move toward cost benefit analysis. ‘This is widely used in the UK but has been a third-rail issue in the US….We would like people getting an education here to understand the implications of these trends—elements that are not a direct force in this country yet but…are likely to emerge over time. We want our students to recognize these shifts as opportunities.’”

Read the full article: “Practical Assignment,” by Jill Rose, Inside Healthcare, September 2010: 14-16.

Policy Expert Stephen Davidson on “Round 1.5: Maximizing the Benefits of Health Care Reform”

August 4th, 2010 in Faculty, Health Sector, Markets, Public Policy & Law

A Widely Cited Scholar Who Recently Released New Book on Health Care Reform


Professor Stephen DavidsonStephen Davidson, Boston University School of Management Professor of Markets, Public Policy, and Law, and author of the recently-released book Still Broken: Understanding the U.S. Health Care System, has published a new commentary for the Huffington Post, on “Round 1.5: Maximizing the Benefits of Health Care Reform.”  He writes,

The imperfect health care reform law President Obama signed in March was no one’s first choice. Recognizing the progress in its provisions, however, some have called it Round 1 on the road to a more perfect system. And while it focused primarily on expanding access to coverage, they expect the primary focus of Round 2 to be on keeping costs under control. But since Congress will not want to take up that challenge soon, the current implementation phase, Round 1.5, demands our attention.

“While the accomplishments in the law are substantial, the actual benefits will depend on implementation. The challenge is particularly great because the underlying reform strategy is relatively weak.” 

–Professor Stephen Davidson

Make no mistake: whatever its limitations, the new law was not only a huge legislative accomplishment, but also a big step forward for both individual Americans and the health care system as a whole….As a result, more than 30 million additional Americans will gain access to comprehensive health care coverage….

Nonetheless, while the accomplishments in the law itself are substantial, the actual benefits will depend on implementation. Moreover, the challenge is particularly great because the underlying reform strategy is relatively weak. Here is why: To accomplish the main goals of reform — increasing coverage, containing expenditures, making quality of care more reliable, and restoring the deteriorating delivery system — competing private insurers have only three ways to differentiate themselves in order to attract customers, and two of them reduce the value of the insurance.

Read more on the Huffington Post


Davidson in BU Today on How to Fix Health Care: the Sequel

Even with all the good [the new law] does, few serious students of the health-care system would have chosen this approach, which is to rely on competing private insurers to accomplish the goals of reform. No insurer can do much more than limit who can buy its policies and limit what those policies cover or how much the insured person pays out of pocket when he uses services. With the new law, Congress constrained insurers’ ability to decide who and what they’re going to cover, so they don’t have a lot of wiggle room to keep costs down.

Read more in the interview, “How to Fix Health Care: the Sequel,” by Rich Barlow, BU Today, April 27, 2010

Davidson in the Huffington Post on What Makes Him Angry

I’m trying to figure out what’s wrong with me. My new senator, Scott Brown, and his Republican colleagues are telling us that “the American people are angry” about the new health care reform legislation. But even though I am an American born and bred, I’m not angry, and I am trying to figure out what’s wrong with me.

….[But] I do know one thing that will make me angry. And that is that now that they have passed this historic legislation we so badly need — even though more work remains to be done — I will be angry if the Democrats fail to defend with conviction and enthusiasm their historic achievement. And anyone who doubts the magnitude of the accomplishment should recall that although efforts to reform the health care system have been made regularly from the 1930s onward, before now only Lyndon Johnson has ever been able to get the two houses to vote on a bill. The result of his effort was Medicare. It has taken a long time to take this next step. Surely the bill’s Congressional supporters, all of whom are Democrats, can persuade their constituents that they did the right thing!

Read full blog post, “What’s Wrong With Me?” By Stephen M. Davidson, Huffington Post, March 23, 2010.

Davidson in the Huffington Post on “The Final Push”:

Policy analysts are focusing now on the cost to the health care system and the nation of doing nothing (see the New York Times’ Week in Review section, 2.28.10). But many of the 535 men and women whose votes will determine the outcome on health care reform — especially those whose votes are uncertain as of now — will concentrate on the political cost to them.

In that calculus, they will weigh 2 main dimensions: the politics in their districts or states and the persuasiveness of party leaders in the House and Senate…[If] the House doesn’t pass the Senate bill and then the two pass an adjustment using reconciliation, it will be many years before anyone will tackle comprehensive reform again. So, as the policy analysts quoted in the Times made clear, the stakes are high. If we do nothing, the system will continue to deteriorate and our ability to access it and benefit from it, whether or not we are insured, will decline.

A third force, if mobilized effectively, has the potential to turn the tide in favor of reform. That is the public’s dissatisfaction with the current system….So, we need a concerted campaign. What will engage the public? Here are three ideas:

  • first, emphasize the degree to which their present good coverage is at risk;
  • second, detail the horrific behavior of private insurers under the current system;
  • and third, show them that the delivery system itself is losing its ability to put patients first because of the degree to which it is dominated by the rules of private insurers.

All three points are captured dramatically in the heart-wrenching insurance nightmare of a retired New York Times reporter and editor. After saying it is “far easier to deal with my disease than with my insurers,” Janet Battaile described in detail her encounters with United Healthcare, one of the nation’s largest and most profitable. She had trouble even getting to talk with a person and then was told by more than one that someone else was the person to help, transferring her to another who turned out to be even less helpful….The author closes with a counterpoint: what happened when she and her husband encountered two other large bureaucracies. Signing up for Social Security took 15 minutes, and her checks come “like clockwork.” He signed up for Medicare. “Same experience. No problems, no complaints. This is your government at work. Some bureaucrats know how to get it right.”

See full post, “The Final Push,” by Stephen M. Davidson, Huffington Post, March 3, 2010.

Davidson in Politico on Health Policy Summit:

Thursday’s health policy summit confirmed, as many have pointed out, that wide “philosophical differences” divide Republicans and Democrats. Implicitly, these statements suggest: first, that both sides agree the health system is broken; second, they differ only on the means for fixing it, especially whether or not to rely on government or the market; and third, that either approach would get us to where we want to be.

Indeed, Republicans do say the health system has problems, but they don’t spend much time defining them beyond arguing that if we can only keep costs down, the market will take care of the rest.

But this line of thinking is fatally flawed because the market cannot keep medical care spending down to acceptable levels and it certainly cannot guarantee coverage to everyone. Here is why:

The key is challenge is whether insurers can keep down prices so that coverage is affordable, and everyone can buy it. Insurers have only two levers to work with: They can limit who buys their coverage and, indeed, have been good at excluding high-cost people with pre-existing conditions. They can also limit what is covered or the terms of coverage. In practice, their main tool has been to increase out-of-pocket costs to discourage people who need services from using them, thus keeping down their outlays on care. These two strategies have done much to cause the problems we are trying to solve, including creating the 25 million “underinsured” Americans who value insurance enough to buy it, but cannot use the services they need because of the high out-of-pocket costs.

So, to contain spending on medical care so that everyone can buy coverage, government must take a large role. But that role can take many forms as demonstrated by the variety of arrangements used by other countries to guarantee coverage to all their citizens and to keep costs down. Some governments collect the money and pay providers of care; others rely on private insurers to collect payments. Some rely on private doctors and private hospitals; others own the hospitals.

Whichever path they take, there are at least two common elements. All require by law that everyone has comprehensive coverage for needed services. And where they use private insurers, those organizations are not-for-profit. Otherwise, there is much variety.

So, if we want to solve the main problems, government must play a large role. Private insurers can compete – but not for profits and not by varying the price of their coverage. Instead, they can compete on the quality of their service and on the outcomes their care produces.

Although other systems have problems, too, they cover everyone and spend much less than we do. They also produce more reliable quality of care, higher rates of cost-effective preventive services, much better health outcomes, and much more satisfied citizens.

The main philosophical issue is whether everyone should be covered. If they agree on that goal, then, Democrats and Republicans must also agree government must be involved. Period.

See post online at Politico’s The Arena, February 27-March 1, 2010.

In the Huffington Post on Insurers v. Hospitals: Another Reason We Need Reform

The New York Times ran a story last week about negotiations between a health insurer and hospital group that deserves comment.…[They] reported on a dispute between one of the largest insurers, UnitedHealthcare, and a consortium of 5 New York hospitals, Continuum Health Partners….What attracted attention was [that the] insurer was insisting that the hospitals inform it within 24 hours after a patient is hospitalized….[During] the negotiations, UnitedHealthcare upped the ante still more by taking the additional step of sending letters to “tens of thousands of patients, warning that they could be cut off from coverage at Continuum hospitals and affiliated doctors, and advising them to start shopping for new ones.”

Now, it is reasonable for insurers to want to keep down their spending and to be concerned about the quality of care they pay for. But given what we know about how the health system operates, it is hard to believe that UnitedHealthcare’s primary concern was really to improve quality and cut costs….If UnitedHealthcare were really serious about improving health care, it would try to engage the hospitals and their doctors in a process of changing the way they deliver care. Inviting a partnership, together they would work to figure out what needs to be fixed in a particular institution, set priorities, decide on specific actions to be taken, and implement them. In the process, they would set measurable goals and agree to share the gains if, by meeting those shared goals, the insurer were able to reduce its payouts. Moreover, the focus would be not just on what goes on inside the hospital, but on the entire continuum of care. They would encourage early use of primary care so as to avoid more costly services and hospitalization; and they would develop coordinated after-care so that patients with chronic conditions could both avoid being rehospitalized and manage their ongoing condition.

Read the full post, Insurers v. Hospitals: Another Reason We Need Reform, by Stephen M. Davidson, the Huffington Post, February  1, 2010.

In the New York Times on Health Reform, After Massachusetts:

To the Editor:

One of the biggest lessons from the president’s first year is that he must speak to the people more than he has.

Case in point: People are angry about the health care bills. But from answers to detailed survey questions, it is apparent that they don’t know what is in the bills.

So their anger reflects not a reaction to facts, but disgust with both the “sausage making” aspect of the legislative process, which has played out relentlessly on cable news programs, and the determined Republican opposition to the bill.

To the extent opponents give reasons beyond vague generalizations about the government’s taking over medical care or “death panels” or socialized medicine, many of their statements are false.

Only activated public opinion — based on reality, not fantasy and prejudice — can overcome the money and influence of special interests. And the president, whose communication skills are beyond doubt, is in the best position to stimulate that public opinion.

We are in danger of losing health reform again even with the historic accomplishment of bills having passed both houses of Congress.

Stephen M. Davidson
Boston, Jan. 21, 2010

The writer, a professor at the Boston University School of Management, is the author of the coming book “Still Broken: Understanding the U.S. Health Care System.”

See this letter online at the New York Times.

For Reuters on The Elements of Effective Reform:

Unfortunately, the [healthcare] reform proposals being discussed in the Congress are unlikely to [be truly effective].  Instead, to get there we need all of the following key provisions:

  • Everyone must have comprehensive health insurance. Indeed, there is no good justification for any other outcome.
  • Further, universal coverage is the single most important step needed to arrest the deterioration of the healthcare delivery subsystem. Providers will be able to count on a reliable source of income no matter where they locate and, therefore, to open offices anywhere that does not have enough providers to meet residents’ needs.
  • Everyone needs access to a personal primary care physician and, through him or her, early access to needed care.
  • All needed services must be covered; and providers should know that, if they exercise their best clinical judgment, they will be reasonably compensated for their work.
  • To improve quality, opportunities must be maximized to take advantage of information technology and to build teams and coordinated care; and system-generated obstacles to good quality care must be eliminated.
  • Costs – from insurance premiums and utilization, including patients’ out-of-pocket costs – must be kept under control. High out-of-pocket costs discourage individuals from seeking needed care. And high total expenditures will force insurers to cut back covered services and will make insurance too expensive for many to afford.

In Huffington Post on The Limitations and Dangers of Relying on Competition among Insurers:

Reliance on competition among private insurers is fundamentally a weak approach to health care reform. (The reason is that to keep prices low, insurers have only two levers to pull: they can refuse to insure people at high risk for using services, and they can change the conditions of insurance. Usually that means refusing to cover certain services or charging high out-of-pocket amounts. It could also mean paying providers by other means than fee-for-service, but they tend not to do that.) …[But] if competition among insurers is the approach to be used, it is critically important that [certain] provisions be in the bill presented to the President for his signature. They include the following:

  • Guaranteed issue, which would keep insurers from denying coverage to people with pre-existing conditions and other characteristics, like age, which increase the chances they will need services (and, thus, cost insurers money);
  • Guaranteed renewal, which prohibits insurers from refusing to renew a policy for a subscriber as it expires; and
  • Low or no cost-sharing when people use services, so that out-of-pocket costs do not make needed care unaffordable, as it is now for many insured Americans….

Even if the reform legislation that passes would cover all Americans, a critically important goal, unless the law also contains these provisions, many people will be shocked when they actually go to use medical care. They will understandably be angry if the coverage they are forced to buy is so limited that they still cannot afford the services they need. And they will get scant satisfaction if disappointed constituents make lawmakers pay a price at the polls in the next election.

Read more from “The Devil is in the Details,” Huffington Post, September 9, 2009.

Paying for Reform by Creating a Federal Health Insurance Fund

The key to successful reform, Davidson argues, is to create a Federal Health Insurance Fund.  He writes,

Here is the idea: Require that everyone contribute an income-related amount (that is, more for higher-income people than for others) to a dedicated pool of funds for paying insurers and health plans. Then issue vouchers which entitle everyone to choose a health plan or insurance policy.

Before dismissing this idea for the cardinal sin of raising taxes, consider these facts: If everyone is covered, per capita costs will be much lower than currently because everyone will be in the risk pool, including millions who will need few or even no services. Also, the currently uninsured who now rely on expensive hospital emergency departments could select community-based primary care physicians. And the vast sums now spent on administrative functions — by insurers to keep from spending money on care and by providers to cope with the vast variations in coverage — would no longer be needed.

Furthermore, for people who are currently insured, this “tax” will not only be lower but will substitute for the premiums they pay now.

Read more from Paying for Health Care Reform: Part 1, Huffington Post, August 12, 2009.

In the Huffington Post on How the HIF Should Be Used:

The Fund’s managers would estimate the next year’s needs and set rates to create a pool large enough to cover them. Individuals would receive vouchers with which to choose a health plan that meets federal standards for covered services, appropriate numbers and types of providers, and fiscal and managerial capacity. Private insurers, which would continue to play a large role, would be paid risk-adjusted amounts so that those that happened to attract large numbers of high-risk people would not be disadvantaged by their success. That is, the HIF would pay the plans more for older people and those with pre-existing conditions than for healthy 25-year-olds. Another benefit of this proposal is that those who like the coverage they have now would be able to select the firm that provides it. Importantly, individuals would choose a plan based not on price but on the particular providers who are included and the quality of the plan’s service.

Read more from Paying for Health Care Reform: Part 2, Huffington Post, August 13, 2009.

In the Huffington Post on the Insurance Industry’s “True Colors”:

The release of the PriceWaterhouseCoopers report reveals the insurance industry’s true colors for all to see. Everyone who has followed events closely saw insurers publicly supporting reform (“We want to work with you, Mr. President.”). The pros knew that, at the same time, their lobbyists have been working hard to strip the proposals, especially the Senate Finance Committee’s version, of provisions that would guarantee robust coverage and might actually keep expenditures under control.

Not content with the prospect of huge new profits from the addition of millions of currently uninsured to their rolls, greedy insurers have worked hard to strip “most of the serious proposals … to curb costs” from the bills under consideration. (New York Times, “Lobbyists Fight Last Big Plans to Cut Health Care Costs,” October 11, 2009) Unless Congress rebels against this duplicity, unhappy voters will discover — when they need care — the limitations of the new coverage they must buy. The result is likely to be profoundly disappointing to everyone but the insurers….

The silver lining from this cloud of duplicity may be that insurers have destroyed any lingering justification for trying to please them in exchange for their public support of reform. If our Representatives and Senators are as angry as they should be for having been played for fools, they could wind up passing a much stronger bill — one that would provide good coverage to more people at relatively modest cost….

The bottom line is that the insurers have demonstrated that there is no reason any more to cultivate their support. That being the case, Congress has a new chance to do the job right.

See more from “By Revealing Their True Colors, Insurers Eliminate Any Reason to Compromise With Them,” by Stephen M. Davidson, Huffington Post, October 19, 2009.

In the New York Times on the Public Option

On October 20, 2009, the New York Times publishes the following letter from Davidson, warning that if Congress does not adopt a public option in its health care reform initiative, “We will be creating a whole new generation of underinsured.”  He writes,

The Public Option, and Other Choices

To the Editor:

I agree with your editorial that Congress should adopt a public option as part of its health care reform bill. It is the only way that those who do not have access to good, affordable insurance through their employers will be able to get decent coverage. Without it, the most popular private plans for this group of Americans are likely to be those with the highest out-of-pocket expenses, because those will be the plans they can afford.

In the Senate Finance Committee’s bill, that is the bronze plan, which requires that insurers cover only 65 percent of medical bills, leaving a whopping 35 percent to the patient. Many will forgo beneficial services because they will not be able to afford the out-of-pocket costs. Those who get really sick and need hospitalization or surgery will be in debt for years.

We will be creating a whole new generation of underinsured. The public option will give them a reasonable chance at affordable coverage that actually protects them.

Stephen M. Davidson

The writer, a professor at the Boston University School of Management, has written a forthcoming book about health care reform.

See letter online