Code Red: Two Economists Examine the U.S. Healthcare System

June 30, 2010

New Book Introduction

Filed under: Uncategorized — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 10:22 am

Probably should start at the beginning. Here is a draft of the first page of our new book. Hope it grabs you!

Bundled Payments. Accountable Care Organizations. Medical Homes. These are the new buzzwords in medical care. They are supposed to revolutionize healthcare delivery, ushering in an era of efficient, high quality care delivery. But haven’t we been here before, with HMOs, prospective payment, and integrated delivery systems? These too were harbingers of great change but if they had succeeded, there would be no need for this book. Revolutions have come and gone yet health spending is 17 percent of our GDP while too many Americans receive substandard quality.

It would be easy for cynics to dismiss the latest innovations as passing fads, way stations on the journey to 20% spending and higher. Indeed, we have been amongst the most vocal cynics, wondering what the fuss was about prior revolutions. Partly that is because economists tend to be cynical by nature – economics is not called the “dismal science” for nothing. But we think there are two bigger reasons why we have been lifelong skeptics. First, we love history. Second, we love economics. And if one views the history of healthcare delivery through an economic lens, the picture is sobering.

So it came as a big surprise to us when we looked out at the current landscape and viewed the scene with optimism. Okay, guarded optimism – we are still economists. It is not so much that bundled payments and accountable care organizations represent fundamentally new approaches to paying for and organizing care delivery. Rather, a series of innovations, many of which were pioneered by our academic colleagues, has made it possible for healthcare payers and providers to successfully implement these strategies. Put another way, past efforts to reform delivery failed because the reformers lacked the necessary tools. The toolkit is here. It is finally time to go to work and fix the system.

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