When Simple Isn’t Obvious

by Jay Deragon on 04/05/2010

Business leaders usual view the world as a competitive landscape. Not unlike the mindset of sports they think winning is beating the competition. They also tend to think that being competitive can get them a bigger market share and thus reduce cost per unit sold.

Clayton Christensen writes in Business Week: Health Care, The Simple Solution: Economists are wrong in asserting that competition controls costs. Most often innovation and competition drive prices up, not down, because bringing better, higher-priced products to market is more profitable.

The type of competition that brings prices down is disruptive innovation. Disruption in health care entails moving the simplest procedures now performed in expensive hospitals to outpatient clinics, retail clinics, and patients’ homes. Costs will drop as more of the tasks performed only by doctors shift to nurses and physicians’ assistants. Hoping that our hospitals and doctors will become cheap won’t make health care more affordable and accessible, but a move toward lower-cost venues and lower-cost caregivers will.

The public-private divide shows that the debate is stuck at the wrong fork in the road. Many public health systems, like Canada’s and Germany’s, are departmentalized, with separate administrators handling doctors, hospitals, drugs, insurance, and so on. Although government pays the costs, such public systems are similar to the American system, where employers pay for the services of independent insurers, hospitals, doctors’ practices, and drugs. In departmentalized structures, innovations that add costs in one silo in order to save money or improve performance in another cannot succeed because the overall system lacks a unified perspective. Independently managed hospitals have incentives to fill their beds; independent insurers have incentives to minimize reimbursement and access; and the ensuing gridlock prevents all but the most incremental of innovations.

In integrated systems—where the provider and insurer are the same entity—a single perspective enables providers to take actions in one place that will cut costs or lift performance in another.

I See Nothing?

Sargent Schulz, the German guard on Hogan’s Hero’s, used to tell the prisoners “I see nothing” so as to avoid conflicts. Today it seems as politicians and industry leaders are avoiding conflicts by not using knowledge and thus creating more conflicts. They “see nothing” which means either they don’t want to see solutions or can’t see solutions due to a lack of knowledge.

Today’s old guard of Leaders can no longer claim to “seeing nothing” because we the people “see things” they don’t and freely share what we see.  When we see stupidity in policy, actions, words and deeds we speak out one to one to millions.  Whether it be a national health care reform or local changes to old rules of business and society we now “see everything”. Seeing everything means we have an opinion and ideas on how everything ought to change.

{ 22 comments }

Reid Cromuel November 17, 2012 at 3:13 pm
???????????????????? August 22, 2011 at 2:51 am

send them a Thank You card. Let them know how essential they are to you and that it doesn’t have to be a holiday to get a card from you. In the act of writing Thank You cards, you are deflecting the unfavorable out of your thoughts and filling mind with the constructive. And most importantly, you are taking action

postal scale February 15, 2011 at 3:07 pm

I see nothing – great post! But to the big ones it doesn’t matter if we have opinions or see everything

Dvor Srbija January 9, 2011 at 4:41 pm

Thanks for the greet article – I loved reading it!

Jonelle Kimpel November 23, 2010 at 12:13 am
Dani Camcam November 8, 2010 at 1:14 pm

I’d come to go along with with you here. Which is not something I usually do! I really like reading a post that will make people think. Also, thanks for allowing me to comment!

CFM Charter April 6, 2010 at 6:12 pm
textpack April 6, 2010 at 6:55 am

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Allen Howell April 5, 2010 at 3:34 pm

Sargent Shulz was one of my favorite characters on that show.

Akash Sharma April 5, 2010 at 3:24 pm

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