What Can Healthcare Learn From Other Industries? | Big Think

What Can Healthcare Learn From Other Industries?

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David Cutler details the three common features of today’s successful industries, and explains why healthcare falls short on each of them.

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David Cutler:

David Cutler served at Harvard University as an Assistant Professor of Economics from 1991 to 1995, was named John L. Loeb Associate Professor of Social Sciences in 1995, and received tenure in 1997. He is currently the Otto Eckstein Professor of Applied Economics in the department of economics and Kennedy School of Government and recently completed a five-year term as associate dean of the Faculty of Arts and Sciences for Social Sciences.

Professor Cutler served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was senior health care advisor to Barack Obama's Presidential campaign. Professor Cutler also advised the Presidential campaign of Bill Bradley. Among other affiliations, Professor Cutler has held positions with the National Institutes of Health and the National Academy of Sciences. Currently, Professor Cutler is a Research Associate at the National Bureau of Economic Research and a member of the Institute of Medicine.

Professor Cutler is the author of Your Money Or Your Life: Strong Medicine for America's Health Care System, published by Oxford University Press. This book, and Professor Cutler's ideas, were the subject of a feature article in the New York Times Magazine, "The Quality Cure", by Roger Lowenstein. Cutler was recently named one of the 30 people who could have a powerful impact on healthcare by Modern Healthcare magazine and one of the 50 most influential men aged 45 and younger by Details magazine.

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TRANSCRIPT:

Question: What can healthcare learn from other industries?

David Cutler: Healthcare is the most information-intensive industry in the economy, and it uses information technology the least of any industry in the economy. So if you think about where do we need information the most, it’s going to be healthcare—you need to know what’s going on with the patient, what they’re allergic to, what kinds of issues they have, what treatment options. And yet, we still do things by paper and pencil, storing things in huge stacks where you can’t retrieve them and they’re not there when you need them.Health care is amongst the lowest productivity industries in the economy. If you look at the well performing industries, they tend to have three features—the productive industries tend to have three features. First, they use information technology a lot. They know who’s doing what, why they’re doing it, how rapidly they’re doing it, what the outcome is, how to improve it. They’re always thinking about that, they use information technology a lot; in healthcare we don’t.

Second, they have compensation arrangements that are tied to improving value. When employees create value they get paid more, when they do things that don’t create value then don’t get paid as much. In healthcare you get paid for doing things for volume but not for value.

And third, is they decentralize it so that changes are made by workers—workers have authority. The famous Toyota model, any worker can stop the production line. Why? Because he or she has the right information and the right incentives to make sure that the cars are coming out with the quality that they need to.

In healthcare, the frontline workers are so busy just getting by, that they don’t have the opportunity to do better. If you take those nurses who are spending a third of their time documenting things, and say, well, couldn’t we do better, they’d say yes, but I just don’t have the time to figure it out—I’m so rushed I can’t figure it out.

Healthcare has got to get better, it’s got to get better in the information end, where we’ve made a good start with the recent American Recovery and Reinvestment Act—which is spending thirty billion dollars on health IT; compensation changes which need to follow that—hopefully, in the healthcare legislation that comes this fall—will say we pay more for value and not just for volume, and organizational changes freeing up organizations and helping them learn from each other so that they say, ‘Hey! You know what? I really can make this a high performing enterprise; this doesn’t have to be an enterprise that’s got low productivity. We’re going to need all of those—they all have to happen over the next decade or else we’ll find ourselves in the same situation in a decade from now as we are now

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