Question: How can we reduce health care costs?
Regina Herzlinger: Health care is a hugely inefficient industry.
McKinsey analyzed the American health care system versus health care systems in other countries, and it came up with the figure that there is about half trillion dollars of, I would put it, waste, in the US health care system.
The biggest source of waste is the way we treat people with chronic diseases like diabetes, AIDS, heart disease, cancer, people who have chronic disabilities like bad backs. We treat them in a very fragmented way. We have no one organization that is responsible for everything that the person with diabetes has, everything that the person with AIDS needs. These people have tremendously complicated needs. Their diseases are multifactorial and they manifest themselves in many different ways.
What we need is a health care system that's organized around the needs of the patient for total care for their diseases, total care for their disabilities. What we have is a health care system that's organized by inputs, doctors, hospitals, nursing homes.
Each one of these inputs, each one of these providers what did they want? Well, they're human. They want to make sure that they maximize their share of their pie. Maximizing their share of the pie is not the same as doing what's best for that patient.
Recorded on: May 27, 2009.