Tag: health systems

The market for health system analysis – the most broken market of them all

You’d think I’d be accustomed by now to famous pundits selling their bad health systems analysis from their large soapboxes. The truth is, I still get annoyed. Atul Gawande’s 2009 New Yorker piece – “The Cost Conundrum” was a memorable instance. It was a beautifully written and highly influential piece of policy advocacy. I’m not exaggerating when I say “highly influential”; President Obama was clearly taken with Gawande’s findings (see this 2009 speech). And, now we know (from this StatNews piece) the genesis of Gawande’s recent selection by Amazon, Berkshire Hathaway and JPMorgan Chase to lead their new cost-cutting disruptive healthcare venture was the same 2009 article. Gawande revealed the backstory in an interview at the Aspen Ideas Festival. Evidently the article so impressed Charlie Munger, Warren Buffett’s right-hand man, that Munger sent an unsolicited check in the mail to support Gawande’s work. One thing led to another and Atul Gawande got the job. Thus, I feel it is not inappropriate to point out that Gawande’s piece was WRONG WRONG WRONG in its analytics, findings and recommendations. Atul Gawande is probably a great surgeon and he’s surely a brilliant writer. One thing he is not is a health system expert.


In the New Yorker piece Gawande laid out what was driving US health care cost growth, and what US policymakers should do to contain it. In the piece he compares how much it cost to treat Medicare patients across “local health systems”. By scrutinizing the practices of “low cost” versus “high-cost” providers, he determined that policymakers can reduce costs in the US healthcare system by spreading the practices of the “low-cost” group. Here’s the rub. Gawande was looking only at costs for Medicare patients; that is, he was looking only at the healthcare services market segment within which prices are regulated by Medicare. This leaves out what is going on with the (larger) private insurance market. There is no reason to think that insights from the Medicare segment would apply to the whole set of delivery activities at the provider or provider network level. And, in fact, once someone checked, it turned out that the Medicare patterns look very different from those of private insurance.

MedCare vs priv costs us health

If he submitted his piece in my (admittedly, not-yet-existent) course on comparative health systems, I’d make him review the readings on segmented healthcare delivery systems and do it over. Unfortunately, he submitted it to a New Yorker editor – and thousands upon thousands of smart people learned his erroneous insights. Including, evidently, the US president and Berkshire Hathaway’s Charlie Munger.


An excellent piece in the NYTimes in 2015 – “The Experts Were Wrong” [also the source of the map graphic] drew on the work of Zack Cooper and others and explained the error in Gawande’s logic. NB: The link to Cooper’s work on the NYTimes site does not work – here is a working link. The insights from this analysis suggest that, to constrain health care costs, the  US should strengthen anti-monopoly regulation and pursue (much) broader price regulation. This work merits the attention that Gawande’s piece does not.


What will UK health officials do with all that excess demand?

Ever growing numbers of drug_shortageUK citizens are turning to private, self-paid, health care in the UK.

Mark Hellowell’s excellent piece “How the NHS will die” examines the forces at work, and ponders what actions may be taken to resolve this ‘excess demand’ problem. When the problem manifested in the late 1990s, UK officials ultimately resolved it with 10 years of public expenditure increases. Few predict public expenditure increases sufficient to resolve the problem will be forthcoming this time around.

Health officials invariably pursue efficiency gains to close such gaps. Efforts to do just that in outpatient drug spending, however, appear to be rebounding with a vengeance – to eat up ever larger chunks of the healthcare budget. For much of the past year, the Department of Health has been forced to resolve widespread drug shortages with month-to-month agreements to reimburse pharmacies at prices much higher than the official NHS tariffs. The Times put the extra costs for April – November 2017 at ₤200M. Ben Goldacre and co at Oxford give a tally through December of ₤285M. And, the unpredictable reimbursement of higher-than-official prices works more as a band-aid than a solution, since the shortages don’t appear to be diminishing.

Am I being too pessimistic? Are promising developments underway that I’m missing? Silver linings to accompany the gray cloud?

Dealing with (mis)alignment between public financial management & health finance


I’ve worked on health services reforms in more than 20 developing and transition countries. I’ve learned that the soundness of the interface between health finance arrangements and public financial management structures and processes is critical to the effectiveness of service delivery. Yet, health policy practitioners in these countries are rarely very knowledgeable about this topic; and, they tend to focus on finance mechanisms ‘further down’ (e.g. provider payment; or, how funds are managed within facilities). If the expertise gap is identified, more often than not, a general public financial management expert is brought in. This rarely helps though, as sound practices and principles for managing finances in the core of the public sector frequently conflict with managing finances for service delivery. And few public financial management experts are familiar with the institutional arrangements health agencies use to ‘govern’ finance. Both in the field, and in my teaching, I have longed for a high-quality, accessible resource on this topic. And Hurray! A top-notch team (Cheryl Cashin, Danielle Bloom, Susan Sparkes, Helene Barroy, Joe Kutzin, and Sheila O’Dougherty) at the WHO has developed one: “Aligning Public Financial Management and Health Financing: Sustaining Progress Toward Universal Health Coverage”. I heartily recommend it to any and all health policy practitioners and educators.