David Goldhill Replies to My Post “Disappointing, Dangerous, Frightening” on His Interview on Healthcare

David Goldhill, CEO of the and author of the September 2009 Atlantic titled How American Health Care Killed My Father and book titled, Catastrophic Care – How American Health Care Killed My Father — and How We Can Fix It, recently responded to my post – Malcolm Gladwell and David Goldhill Interview on Health Care – Disappointing, Dangerous, Frightening

His comments in his entirety:

• While I’m appreciative that you came to hear Malcolm and I discuss health care, you really don’t seem to understand much of what we were talking about. My work is an attempt to think about health care as an industry, and using comparisons to how other industries behave to understand why health care delivers such mixed performance — with extraordinarily high rates of error — at such high cost. My argument is a systemic one: bad industrial outcomes are a result of badly structured economic incentives; in health care most of the badly structured incentives are a result of the consumer function being assigned to giant intermediaries rather than remain with patients. So, I’m not arguing that hospitals, insurers, providers etc. are unusually corrupt, but rather that they don’t face the type of market discipline that restrains bad behavior/outcomes in other industries.
• Most critiques of my argument start from the premise that health care is so different from other industries that comparisons to what works in others are irrelevant. Your post seems to start from mis-understanding of other industries. We do have insurance covering risks other than health care. There are plenty of industries that face the high capital costs of hospitals. Most importantly, society has found ways to produce and fully distribute plenty of necessities and urgent services other than health care at declining cost and increasing quality. Really to understand my critique, you need to understand the question I’m asking: why has health care done so much worse than these other industries in price/value, service, and safety.
• Every industry is unique, and some aspects of health care demand are truly special and urgent. That’s why we recognize a special societal role — and why I favor universal health insurance. But saying that some elements of health care are unusually urgent is not the same as saying all elements are. And a crucial element of my argument which you seem to miss is that an increasing share of health care is long-term condition management, which allows for the introduction of economic mechanisms which drive efficiency and quality in everything else. Health care is very different today from when our system was founded.
• Because you don’t understand my argument, you also don’t seem to get my solution. I’m arguing that different economic arrangements will force PROVIDERS to drive down prices and to improve safety, quality and service. Like many in health care, you seem to believe that “consumer-driven” reforms require consumers to do more work — price shop, etc. That’s the OPPOSITE of what I believe — which is that proper economic incentives allow consumers to do far less work they we need to do today in navigating our absurdly complex system.
• But the fundamental difference in our perspectives is your focus is on healthcare, while mine is on societal choices. To me, our system of subsidizing all health care spending not only enables the lack of discipline behind absurd prices, erratic care, terrible service and 200,000 deaths from errors per year; it also grabs an unconscionable share of resources away from the things that really drive happiness, fairness and even health. Don’t kid yourself: no system that lacks cost discipline will ever provide properly for society’s most needy, even if it’s successful at hiding its true costs from society. To you, the system “can and must be better.” Such complacency in the face of fundamental dysfunction is what’s truly “dangerous.”

First, I’m very appreciative that as CEO and busy public figure Goldhill had time to respond. That was unexpected but certainly valuable in gaining a better understanding of his point of view. Learning to make things better means listening, interacting, and responding. We both agree that health care must be better as too many people die from preventable medical errors and missed opportunities to receive the services, safety, and high reliability and consistency found in other industries. I also agree that health care faces societal issues that are far different than when it first started. More illness has been directed at chronic conditions rather than acute disease, which the system was first built around.

It isn’t that I don’t understand. I do. I have had many family members go through our health care system. Many times I have had to intervene to avoid near-misses. Other times, less than desirable outcomes occurred. I do understand the issues.

I just don’t agree with him.

Disagreements Are Due To Different Points of View – Not Lack of Understanding

Our differences simply are a consequence of our points of view. If we both watch the sun rise and set centuries ago, he might take the view that the sun revolves around the earth and I that the earth revolves around the sun. Unlike the debate over celestial bodies, neither of us know what will ultimately occur in health care as only time will tell. Each of us can use analogies. As a CEO, Goldhill tout his business acumen and expertise. Using analogies from other industries which are more consumer focused, he believes that focus will fix health care. Will it?

Maybe. Maybe not. Let’s take an industry which has many analogies to health care, specifically around safety; that is the automotive industry.

Research has demonstrated that dying from a traffic accident is even less likely today than a decade ago. Highway deaths have fallen to the lowest level in six decades and fell 26 percent since 2005. Why is that? Is it because drivers are “better” and making “smarter” decisions than a decade ago? Did they “demand” safer cars? Unlikely in the former. There is no evidence in the latter.

Or was it because of others and not the consumer who addressed the problem? Newer road design engineering and safety barriers make the likelihood of surviving a crash more likely. Cars now have more built in safety features with anti-lock brakes, airbags, and better designed safety cages. In other words, different groups of people, those who designed the cars and those who designed the roadways were the ones who took responsibility for the safety of the driver and passengers. Sure, enforcement of safety belt use and speed limit and multiple public service announcements helped, but the bulk of better safety given a infrastructure which has not kept up with the numbers of cars on the road has been simply remarkable and a consequence of those in the industry.

So how does this industry apply to health care? Unlike Goldhill, I believe that those inside health care, much like those in the automotive industry, must resolve the issues. What might cause those inside health care to change? The pressure for change will come not from consumers, as he likes to point out, but rather the large employer groups who pay for their employees’ health insurance. Large employer groups have already had some precedence with the creation of the Leapfrog group which focuses on hospital safety and where Goldhill is a board member.

Goldhill Really Wants Employers To Get Out Of Paying for Health Care

If you look carefully at Goldhill’s argument, however, it isn’t about just making health care safer and better. We both agree on that.

What he really wants is getting private companies out of subsidizing or paying for the health care system, completely.

In his interview with Gladwell, Goldhill wants universal health insurance, which only covers catastrophic care. All of the other care, which is related to lifestyle and chronic conditions, he wants to place squarely on the shoulders of the public. This seems to be a reasonable assumption. Align economic incentives in the right way to get the desired behavior.

The question is, however, will it work?

Companies decades ago got out of retirement planning by moving from defined benefit (pension plans) to defined contribution (401k) plans with the thinking that workers (consumers) having more “skin in the game” would make the best decisions for themselves. That didn’t work so well. As a result, the government passed the 2006 Pension Protection Act, which now allowed employers to auto-enroll employees into retirement plans rather than waiting for workers to do it themselves. In other words, employers nudged their employees into the behavior they would have chosen otherwise.

Also, Goldhill offered in his discussion with Malcolm Gladwell that his health insurance plan should have a $25,000 deductible. The 2012 Employee Benefit Research Institute Retirement Confidence Survey revealed that over half (60 percent) of households had less than $25,000 in savings and investments (excluding home and pension plan).

Is Goldhill suggesting that patients empty their pensions and sell their home to cover the deductible? Probably not. However based on the evidence that workers didn’t save thoughtfully for retirement, which is in their best interest, that it is highly probable they may not fund their health care accounts well either.

Unless, lessons are learned from that experience, it is more likely that patients will get care that is worse, not better than today. Employers, however, will be paying less health care and moving that expense much the same way they did successfully when shifting retirement planning and responsibility to employees. Employers have struggled with health care costs. For CEOs, health care costs are high on their worry list. They don’t know what to do about the increasing health care costs and understandably wish to shift responsibility and costs elsewhere.

Interestingly, Goldhill failed to acknowledge any of my points. I did address his perspective of “why has health care done so much worse than these other industries in price/value, service, and safety” when I referred to Professor Clayton Christensen’s model from Harvard Business School. Dr. Christensen, ranked as the most influential management guru in 2011, as an excellent lecture titled – How Healthcare Can Become Higher in Quality, Lower in Cost, and Widely Accessible. Surely, Christensen’s point of view is worthy of Goldhill’s comment?

He Never Asks – Why is Society Obese and Health Worse in the Past Few Decades?

Taking Goldhill’s question and pivoting on it, might he ask as increasingly others are doing – “why has society gotten so obese and in bad health over the past three decades? Is it because people chose to be that way or perhaps is it something more?”  Increasingly research is suggesting that it is businesses, specifically the food industry and others, which are the cause. They have figured out how to maximize their profits at the expense of the health of the consumer.

And left the health care system holding the bag on costs. The government is left holding the bag on costs.

And now businesses wish to maximize their profits further by minimizing their contributions to health care.

If there is some optimism then it is that there are businesses and business leaders that try to do the right thing not only ensuring their organizations succeed but also to do it with purpose and meaning. Starbucks CEO Howard Schultz who refused to cut health care benefits to his employees even when Wall Street and others wanted him to do so. Whole Foods CEO John Mackey, author of Conscious Capitalism and the purpose of this movement which notes:

• “We need red blood cells to live (the same way a business needs profits to live), but the purpose of life is more than to make red blood cells (the same way the purpose of business is more than simply to generate profits).”While making money is essential for the vitality and sustainability of a business, it is not the only or even the most important reason a business exists. Conscious businesses focus on their purpose beyond profit.

Isn’t it possible both Goldhill and I want the same thing – a better, safer, and more affordable health care system? Isn’t it possible that we can understand but disagree on how to get there?

Though I respect his point of view, my analysis is that his plan, as it is currently presented, is dangerous and frightening. If we do not learn our lessons from other prior attempts in other venues, his plan will put more Americans at risk when it comes to their health if his view of the world becomes true.