by John Hammergren
It would be easy, in this long run of important presidential primaries, to be convinced that the problems we have with our health care system can only be resolved through government action and the political process. After all, presidential candidates Hillary Clinton, Barack Obama, and John McCain have each made health care reform a central issue of their campaigns. Political races are all about emphasizing stark differences between positions. But I am encouraged by how much today’s political leaders recognize that our health care crisis – despite that word “care” – is fundamentally a business problem.
California Governor Arnold Schwarzenegger is one of those politicians who understands the urgency for reform. The health care company I lead, McKesson Corporation, turned 175 years old this year. To help us celebrate that proud milestone, Governor Schwarzenegger spoke passionately and convincingly about the opportunities we have before us to bring the health care industry to another level of excellence.
I believe he’s right. Historically, every twenty years or so, we have a debate in this country about health care reform. So what’s different now? We’ve enjoyed incredible advances in medical practice and technology over the last few decades. That’s one reason why overall costs have risen but it’s also why American health care, despite the criticism currently in vogue, is the envy of the world. On the other hand, with the best of intentions, the political solutions traditionally put forward to make health care cheaper and more accessible – like artificially capping costs, regulating the services providers offer and restricting consumer choice – have had the opposite effect. Nobody who runs a business is surprised about that. What computer maker or car dealer would worry about price, access or quality if there was no competition for the customer and no reward for distinctive service?
Business leaders across the country are keenly aware of these issues. I am a member of the Coalition to Advance Healthcare Reform, a group of more than 50 companies advocating solutions to the health care crisis. In regular conversations with top executives, I hear the same concerns frequently. First, because health care costs are soaring, our employer-based health insurance system is hurting American businesses and the economy. Every product or service an American company offers is more expensive than it should be because employee health care costs are added to the mix. In a global economy, this is making it harder to compete with companies abroad. Second, business leaders, with their background in competitive markets and customer service, look at our health care system and think, “What other industry could operate like this and survive?”
In most industries, top performing businesses excel by being the low cost producer, putting out the best product, and meeting or beating customer expectations. The market works because consumers are able to choose the services that meet their needs best. In the health care industry, costs are distorted by government interference in the market and quality differences are disguised by a lack of consumer information and choice. Moreover, while we can argue that “customer” is another word for patient, would the customer in any other market make critical decisions without concern for cost or quality and put up with the inconveniences, inefficiencies and high error rates of health care?
The three remaining presidential candidates understand that effective health care reform means preserving our enviable ability to innovate while making the health care industry more market-oriented and customer friendly. The stump speech talking points about access and cost containment don’t always highlight this. But if you view the details of their proposals, a different picture emerges. Each candidate’s agenda emphasizes business fundamentals like quality, transparency, and paying for outcomes. They also understand that the current health care information technology boom is about to revolutionize the way care is delivered, reducing medical errors and administrative waste while making efficiency, informed choice, lifelong care and customer-orientation the new paradigm.
What’s more, all three candidates see the same critical areas that need our most urgent attention. Chronic diseases account for most of our health care expenditures and require coordinated rather than episodic care. We need to incentivize and organize providers to manage long-term illnesses better. The fear of medical malpractice suits are driving up costs by encouraging unnecessary treatment. We need sensible reform to reduce the preponderance of defensive medicine. Quality of care and outcomes need to be the new measuring sticks by which we assess, select and pay providers for their health care services. We need greater transparency to give primary care physicians and health care consumers the ability to choose the best doctors, hospitals, insurance providers and technicians, while also creating industry-wide standards for the latest in best practice.
No matter which candidate prevails in November, the popular concerns we have about health care right now are going to evolve rapidly once the next administration begins. As a business leader, I support universal access through tax incentives and individual choice (not a de facto expansion of Medicare) because I believe that having everyone in the insurance pool is fundamental to reducing costs and creating a competitive insurance market. But as Governor Schwarzenegger learned when the California Senate Health Care Panel rejected a bill mandating health care for all state residents, sweeping reform is even more difficult when economic times are tough.
The will for reform is real and the political process is critical in building and maintaining the health care industry we deserve. But as the candidates for president realize, the kinds of forces that make American business so competitive can make health care work better, too. Higher quality, lower costs, greater transparency, and better customer service are not contradictory goals, they’re outcomes that go together. We don’t need to control the health care market through mandates and cost containment legislation, we need to unleash it by giving people the ability to make better informed choices. After all, health care is the one product all consumers need, guaranteed.
John Hammergren is CEO of McKesson Corporation, the Fortune 18 health care services leader. McKesson serves customers at every point of health care and is helping transform the industry into a modern, efficient, and quality-driven system. McKesson has seen industry-leading performance under Hammergren’s leadership. During his tenure, the company has more than doubled its revenues and experienced a cultural and business renewal. Hammergren is an HP board member and the recipient of numerous awards for leadership. He is the author of Skin in the Game: How Putting Yourself First Today Will Revolutionize Health Care Tomorrow.