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World Innovation Forum – Rethinking Healthcare Delivery with Michael Porter

When I was at the WIF, this was a tremendous lecture and extremely relevant.


World Innovation Forum – Rethinking Healthcare Delivery with Michael Porter
Posted by Bernie Gracy on June 08, 2010 in Events, Innovation, World Innovation Forum

Michael Porter at World Innovation Forum 2010

Michael Porter, the dean of Corporate Strategy, is focused on Healthcare. Healthcare has had breathtaking innovations in science but not in the service delivery of care. The problem in healthcare is in management and serving patients

The problem in healthcare is the number of people who are chronically uninsured. But the core issue is not coverage – its delivery and the patient outcomes we can achieve with the money we spend. We must think in terms of value – but in healthcare this has not been a driving force. The fundamental challenege is that we must change the equation or we will go bankrupt. We don’t want to ration care – but we must improve the value equation. We will do this by fundamentally changing health care delivery.

The basic structure of healthcare delivery has been left constant and is 100 years out of date. It is an organizational model that businesses left decades ago. The structure no longer makes sense because it is not organized around value. Healthcare reform was all about insurance – not about the transformation in delivery. Moreover, we have created the wrong type of competition – competition in shifting cost vs. competition in creating value. We are not driving the fundamental goal which is creating value for the patient. If we maximize value – everyone can win.

Are these the right healthcare goals – Access? Convenience? Every possible service that a person might need? Cost containment? We have had the wrong goals. We need to focus on outcomes but what are the right metrics on outcomes? You can’t manage what you can’t measure. What is value in health care? It’s measuring health care outcomes divided by the cost of delivering those outcomes.

The most fundamental change is to organize care delivery around the patient. This was the lessons learned years ago by commercial entities to be organized around the customer. Health care is organized around tools and specialties – reminiscent of companies who are organized by functional organizations. The patient is a ping pong ball – bouncing between skilled staff in a sequential process in which there are inherent substantial delays, administration, scheduling, paperwork, and complexity. Moreover the specialists patients are being referred to may not have the focus on the patients need. If you have a migraine, should you see a neurologist that specializes in strokes. Yes, you need to see a neurologist – but can neurologists play every position on the field?

Many companies are moving to onsite clinics and Michael Porter recognized Pitney Bowes as an early leader in changing the employee culture around managing their health. From healthy cafeteria menus, passing out pedometers, information, education, and most importantly onsite access to services, Pitney Bowes is a leader in improving employee outcomes while managing cost. Pitney Bowes is creating value in employee health outcomes!

If we are going to transform healthcare we need to change the way we pay for it. We need to move from fee for service from each “species of doctor” and the hospital to bundled payments. You pay one price with a “warranty” on any issues associated with the services provided.


Written by David Frederick

June 22, 2010 at 11:18 PM

3 Responses

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