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Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers

Posted on: Tuesday, 20 September 2005, 03:00 CDT

Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers. Regina E. Herzlinger (ed.). San Francisco: Jossey- Bass/A Wiley Imprint. 2004. 892 pp. $55.

Whatever else can be said for Regina Herzlinger's Consumer- Driven Health Care, it is a massive book. The tome, which weighs close to five pounds, includes 830 pages of text, more than 60 pages of contributors ' credentials, a name index, and a very detailed subject index. The book is divided into five parts, with the first being composed of Herzlinger's polemic on why we need consumerdriven health care. The remaining four parts document or support points made in the chapters of Part One; they are encyclopedic, with information about nearly any topic related directly or indirectly to consumer-driven health care. The text is a valuable reference on the subject of consumer-driven health care up to the point of its publication.

With the customary zeal reflected in her many writings, Herzlinger presents her case for consumer-driven health care in fewer than 200 pages. In a brief preface, she begins, "Consumer- driven health care is fundamentally about empowering health care consumers-all of us-with control, choice, and information" (xvii). This is a recurring theme in Part One. Declaring consumer-driven health care a revolution, she promises, "This book explains how consumerdriven health care works" (xvii). Modifiers such as "could,""should,""might," or "ought to" would be relevant in that quote.

Herzlinger launches her introduction with a personal anecdote about consumer control. It turns out to be the first of many personal tales to make the case for and exemplify points at issue. Likewise, the tone of the book is established through an almost conversational style. Throughout Part One, the editor displays a wry sense of humor, intentionally using many non-risqu double-entendre words and phrases. It is easy to imagine discussing these issues in an informal setting, or perhaps listening to the editor lecture in a course or professional meeting. In a very telling declaration she says, "I believe so strongly in consumer-driven health care that I have been writing various versions of this book for more than twenty years" (xxiii).

Herzlinger leads with the proposition that consumer-driven retirement benefits selection and 401Ks' aggregate success are good models for consumer-driven health care. However, readers may find this to be the first major point of contention. As this review was being written, the second Bush administration was pushing for partial privatization of Social security and heightening this debate. Early on, Herzlinger reinforces the two "Cs" and the "I" deemed to be essentials for employees (consumers). The first "C" is "choice" of highly differentiated (emphasis added) health plans, the second is "control" of how much they spend, and the "I" is "information" to aid in the choices. The key to success seems to be the adequate and appropriate information necessary to make smart choices.

Chapter Two, "The Frayed Safety Net," progresses through a litany of contexts and faults of the existing system. Using rhetorical questions and detailed answers, the author describes some of the changes that would occur in consumerdriven health insurance. For readers, "the devil is in the details. " The editor effectively uses anecdotal case studies to demonstrate some of the system's flaws, but readers may not always agree with the conclusions. One example suggests that the circumstances might have been the fault of an incompetent physician rather than the insurance benefits.

Having diagnosed the problems in the first two chapters, the editor prescribes in Chapter Three, "The Solution." In a few short paragraphs, Herzlinger damns the existing health insurance situation, primarily because it is not consumer driven. "The cure is as obvious as the diagnosis: we need a new health care system, one guided by consumers," she writes (p. 58). Readers may agree with the first part of her point, but may not be convinced of the second. The editor develops the chapter around "breakfast insurance," her metaphor for health insurance. This chapter must be read to appreciate its complexity and embedded humor. It concludes with a figure that details "Breakfast Insurance Pricing." What seems to be missing is a clear distinction between "needs" and "wants"; it also ignores the fact that in health care delivery, most often it is the physician who determines "breakfast" and its content, not the consumer.

The fourth chapter profiles "what works" in consumer-driven health insurance, again reinforcing information and choice. Addressing the provider side, the editor recommends not determining the prices (reimbursement) paid to providers, suggesting that providers will compete based on price, value, and quality. There is a major section on pricing health insurance and a review of early- stage consumer-driven policies. A summary table suggests quite a bit of variation among the examples.

The fifth chapter deals with health care productivity. This is roughly translated as the perceived impact of consumer-driven health insurance on the existing health care system and how it will restructure and morph to accommodate the new circumstances. An interesting section encompasses how costs will be lowered and quality raised. The unrealized results of the same promises from previous reform efforts may raise some skepticism. The arguments in favor of "focused factories" and their merits are related conceptually to the current policy debate over the proposed increase in the number of specialty hospitals.

Next follows "The Silent Revolution," which discusses the mosaic of those leading the way in consumer-driven health care. Here are examples of what is being done and what can be done in different sectors: employers' health insurance programs, information enhancements, health care services and technology "revolutionaries." Government's role in this mosaic also is denned and is quite different from the status quo.

Herzlinger's penultimate chapter in this "book within a book" is "Scare Stories, Opponents, and the Role of Government. " It just as well could have been called "The Straw Men," as the editor sets up and systematically destroys opponents, one by one. This chapter is an attempt to neutralize the arguments of those who are, or would be, detractors to consumer-driven health care. Readers will have to decide for themselves whether the "straw men" are sufficiently destroyed.

Finally, in an incredibly short (three-page) chapter, roles are assigned to make consumerdriven health care happen. Employers are "fuelers," insurers and providers are "engines," governments are "overseers," and consumers are "funders. " Succinct guidelines are listed for each.

The remainder of this enormous book consists of 73 additional chapters divided into four parts. Many of these chapters' authors participated in a 1999 conference on consumer-driven health care hosted by Herzlinger at the Harvard Business School. Each section has an introduction by the editor, followed by multiple topic- focused chapters. Herzlinger characterizes the first section, "Vision and Models," as "fleshing out" consumer-driven health care. Should readers desire more, there is a reference to a publisher's web page containing yet other supporting chapters not included in this book!

The next major section details "The New Intermediaries," with many of the pieces focusing on information, quality aspects, and researchrelated reports. This is followed by an eclectic collection of presentations purported to be consumer-driven solutions to chronic problems. One piece is by Thomas F. Frist, Jr., reporting on horizontal integration within the Hospital Corporation of America. Readers may find it difficult to knit all these pieces together.

The final section ascribes the role of government in achieving consumer-driven health care, and reviews three major roles- insurance provider, access provider, and information provider. Herzlinger contributes to this section a revised version of her earlier work regarding a securities and Exchange Commission for health care. The final chapter catalogues government's new roles in a consumer-driven health care system. Readers may well conclude that it should have been the opening chapter.

It is difficult for a book review to do justice to such a massive work with ideas from so many authors. This reviewer has chosen to focus on the editor's overall contributions rather than to the scores of supporting pieces she selected for inclusion. More than once, the reviewer reflected that the title might better have been Consumer-Driven Health Insurance, but concluded that third-party payers currently tend to drive health care.

Readers are likely to think, "Yes, but...," especially when reading some of the anecdotal cases and arguments that support the need for consumerdriven health care. There is seldom any difficulty in seeing an opposite view or alternative interpretation in the situations and arguments presented.

Twenty-eight students in an executive master of science in health administration program used this book in their health care marketing course during 2004. When queried by the reviewer\, the students-all health care professionals including physicians and nurse administrators-indicated they were not persuaded of the merits of consumer-driven health care and health insurance by the end of the term. They did, however, find it an interesting proposition, with many of its concepts worthy of further exploration.

Herzlinger may or may not be correct in all her assumptions and viewpoints, but she is certainly not in doubt. Within health care there are many, perhaps a majority, who are in doubt. As has been the case in many other initiatives in health care, if consumer- driven health care progresses incrementally, there will be numerous opportunities to examine it, and accept or reject its component concepts. It appears that the second Bush administration and congressional majority leadership may be bent on not only privatizing Social security, but also placing health insurance in consumers' hands away from employers. That will make this book indeed timely.

Herzlinger claims this book explains how consumer-driven health care works, and it does build a strong argument with documented examples. Despite adding to its already considerable size, the book might have been better balanced if consideration had been given to some arguments against the concept, not just considering them in the "straw men" context. As gleaned from this book, carried to its logical conclusion, the adoption of consumer-driven health care within the United States would lead to a near-utopian state with happiness abounding for all. Given the American history of providing large amounts of health care to economic have-nots, one wonders whether we would do so for consumers who did not choose wisely or well and found themselves in need of care not covered in their consumer-driven health insurance.

Other recent authors and researchers have not been as sanguine on the merits and benefits of a consumer-driven health care system. For purposes of debate, this book can serve as the extreme positive viewpoint against which others can measure the "whys" and "why nots" as the U.S. health care system continues its evolution.

Howard W. Houser, Ph.D.

Professor of Health Services Administration

The University of Alabama at Birmingham

Copyright Blue Cross and Blue Shield of the Rochester Area Summer 2005

Source: Inquiry - Blue Cross and Blue Shield Association

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