Health care reform

Just as with schools, a likely answer to addressing problems with health care lies in increased competition. A book you're likely to hear more about in the coming months that argues for just such a course of action is this one by Harvard professor Michael Porter. Porter's books on competition, such as The Competitive Advantage of Nations, are standard reading at most business schools.

A preview of his latest tome was offered up in yesterday's Wall Street Journal:

Like the president, Mr. Porter believes competition can solve much of what ails the health-care industry. No surprise there. Mr. Porter has spent his career demonstrating how the forces of competition have honed performance and provided value across a variety of industries. Why should health care be different?

But Mr. Porter believes the president is making a big mistake by focusing mostly on cost. The real problem in health care, he argues, is a lack of good information on quality and outcomes. And without that information, any effort to drive down costs through competition will backfire. People who use the president's favored Health Savings Accounts, for instance, might try to save money by avoiding cost-effective drugs or preventive treatments, while spending money on costly but ineffective procedures. "Price information without quality information just leaves us in the same mess we are in today," he says.

The focus, in Mr. Porter's view, should be on value. Yes, costs are soaring. But the scandal of today's health care is that the quality is often shoddy. How else to explain the fact that some fast-food workers are made to wear computer chips to ensure they wash their hands regularly, while surgical nurses are not? And shoddy care leads to sicker people and higher costs.

I think this is absolutely correct. With the dearth of information most patients have and the lack of competition among providers it is little wonder our health care system is in the mess it is. Interestingly, in areas of health care where patients have information and shop around rather than relying on insurance -- such as cosmetic surgery -- we don't see these problems nearly as much.