Originally Published MDDI May 2006 News Trends Erik SwainThe United States’ economic model for healthcare emphasizes the wrong kind of competition, and the device industry can help set it right, an expert told those attending the AdvaMed annual meeting in March.

Erik Swain

May 1, 2006

1 Min Read
U.S. Healthcare Economic Model Needs Revamping to Spur Innovation

News Trends

The United States' economic model for healthcare emphasizes the wrong kind of competition, and the device industry can help set it right, an expert told those attending the AdvaMed annual meeting in March.

Elizabeth Teisberg, a business administration professor at the University of Virginia, presented ideas for shifting healthcare to a more productive kind of competition that would better reward innovation. The precepts are from her forthcoming book with Harvard Business School professor Michael Porter, Redefining Healthcare: Creating Value-Based Competition on Results.

Today's healthcare competition, she said, emphasizes shifting costs, enhancing bargaining power, and restricting services. None of these increase value for patients. Her book with Porter proposes ideas that do, she said.

The main shift that needs to occur, she said, is for all stakeholders to evaluate success based on results. That means making results public, which would allow stakeholders to quantify which treatments and procedures work the best.

Also needed is a better understanding that in healthcare, better quality does not necessarily mean higher cost or reduced efficiency. Better treatments can reduce costs by preventing costlier problems. Similarly, the current system rewards acute care but not preventive care, and that needs to change.

This means that CMS needs to encourage and support innovation that increases value. And that, she said, means not dropping reimbursement rates when outcomes improve.

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