What Might Consumer Driven Care Hold for the Future?

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The version of consumer driven health care that is offered today is a distant cousin of the idea that sprang from one of its creators. Nearly three decades ago, Regina Herzlinger at the Harvard Business School first suggested this radical notion. Instead of her boss spending 10 to 15 thousand dollars to buy health insurance for her, he would give the money to her and she would buy exactly what she needed.

CUT: So I do the shopping. Once we all do the shopping, the insurance company will develop products segmeneted for the market. It's like anything else. Some people like NPR and some MTV. So different strokes for different folks and all these folks will make sure they get good value for the money.

The ripple effects, as Herzlinger’s vision plays out, would transform hospitals and doctors. In an effort to win their share of customer dollars, they would do for health care what Walmart has done for retailing and Dell has done for computers. Services would be organized around the needs of patients, not the specialties of physicians -- in sharp contrast, Herlinger says, to how things work today.

CUT: they don't give us what we need, and they don't package the care in the way we want it. if I had aids, go to different providers, and left to myself. in cd systems, it will be bundled for our convenience not theirs.

The result, Herzlinger argues, would be a surge in productivity, with enough cost savings to achieve the Holy Grail of health care – universal coverage.

But indvidual consumer preference could take the health care system in some unexpected directions.

CUT: it might not be necessarily be cheaper.

Barbara Kahn is a professor of marketing at the Wharton School and has written extensively on the intersection of health care and the marketplace.

CUT: It might just cater more to what consumers want in health care.

Kahn believes that some people would shop mainly on the basis of price, but she says no one should underestimate the ability of providers to adapt. A good example can be found in the marketing of cosmetic dentistry.

AD CUT "Your smile looks wonderful right now. Here we go 1-2-3.// look how straight they are."

That’s a Smile makeover video from the American Academy of Cosmetic Dentistry. Kahn says in a consumer driven world, she would expect that providers would emulate the dental industry and become very good at talking about their services in ways that connect with peoples’ lives.

CUT: as dentistry became more consumer focused, spending went up. dentist started looking at what consumers valued whiter teeth. things that didn't necessarily have survival benefits, but quality of life benefits.

Kahn thinks this sort of marketing could be very successful. She notes another dimension of consumerism and health care. She says the use of many new treatments needs to be initiated by the patient. Advertisers, she says, have increasingly played a role in educating consumers.

CUT: identifying the symptoms and tell the patient to go ask their doctor. things that they used to live with in silence. that could be positive unless they get treatment for things they don't really need.

The entire discussion of consumer driven care is permeated by a debate over who decides what is needed. Or put another way, who is in the driver's seat. Medical decisions can be so emotional and so complex, even the most ardent supporters of the consumer model think most people would need a navigator – someone to offer guidance.

Some skeptics of consumerism say, that navigator would be who it is today, a physician. And no amount of consumer preference is likely to change that balance of power.

Dr. Elliot Fisher at Dartmouth has studied hospitals and physician practices across the country.

CUT: Physicians are likely to stay busy. They have much more control over their schedule than patients do. So what is likely to happen through consumer directed health care is that those who in these consumer directed plans will see their doctors less often. But the physicians who need to maintain their incomes will stay busy by seeing seriously ill patients who they will see more frequently as a consequence of not having those other patients in their office. Unless consumer directed plans somehow persuades physicians that they can forego a day's worth of income, it will have no overall impact on health care costs.

Without those savings, the broader benefits of consumer driven care evaporate.

The stakes are high in this debate. The supporters of consumer directed care infuse their movement with a kind of end game significance. As they se it, greater consumer choice in health care is the last best hope of the market system.

Regina Herzlinger at the Harvard Business School says it is a matter of economic and political reality.

CUT: a consumer driven market system is perferable. if that doesn't work, we are between a rock and a hard place. We've got to go someplace and we would go to a single payer system. Although in this country, that would not be the preference of most people.

But health care has qualities that confound even the purest market advocates. Sooner or later, everyone needs it, and in America, with very few exceptions, anyone in need of care who shows up at a hospital will get it.

Herzlinger’s solution to this is not born of the free market. She thinks the nation ought to pass two laws. One would give favorable tax treatment to all health insurance dollars. The other would make health insurance mandatory for everyone.

Which raises the question, if Americans want to treat health care like other consumer goods and services, do they want to be ordered to buy it?

For NHPR, I’m Jon Greenberg.