Harvard Business School Panelists Examine Health Care Flaws

HBS Perspectives on Healthcare as a Management Challenge
Kathy K. Wang

The Harvard Business School Health Care Initiative presents a speaker panel titled "Perspectives on Healthcare as a Management Challenge." Speakers at the event included Dr. David Cutler, Otto Eckstein Professor of Applied Economics, Dr. Atul Gawande of Brigham and Women's Hospital and the Harvard School of Public Health, and Dr. Rafaella Sadun, Assistant Professor of Business Administration at HBS. The event took place yesterday at Spangler Auditorium.

The management of the health care system is failing to direct resources efficiently, leading to higher mortality rates and lower revenue, panelists at the Harvard Business School said yesterday.

In a room filled to capacity with doctors, business owners, and students at the Spangler Auditorium, the three panelists explored the business of medicine.

David M. Cutler ’87, a professor at the College who specializes in health care economics, began the discussion by speaking about why a patient could get lost in the health care system.

"When polled, patients think the technical capacity of health care is superb. However, they believe the service quality is awful," Cutler said. "Demand for doctors exceeds supply, so quality can remain low."

Although the population in the United States has grown rapidly, the number of doctors has stayed relatively stagnant since the early ’80s.

Cutler added that waste and inefficiency also play a key role in people’s perception of poor service.

"The United States spends close to $1 trillion on health care that goes to failed interventions, essentially wasted," Cutler said.

Atul Gawande, bestselling author and an associate professor at the Medical School, highlighted advances made due to his hallmark "checklist" system, which recommends implementing simple detailed checklists in order to improve outcomes.

He highlighted the three main steps of his program, which has been adopted by the health care system of the Department of Veterans Affairs.

"The three steps are the ability to recognize failure, devise solutions that can be deployed to fix these failures, and create a portfolio that reduces costs," Gawande said. "Using these steps, the VA system was able to reduce mortality by 18 percent."

Gawande also advocated improving the analysis of health care service data. He explained, for instance, that trying to calculate how many CT scans are performed within a given state is almost impossible because information is so scattered and non-standardized.

Closing out the discussion, Raffaella Sadun, an assistant professor at the Business School, revealed results from a recent study that analyzed the correlation between management performance and the quality of health care in a total of 19 countries.

Using MBA students to interview hospital executives, the results revealed a very strong relationship between health care quality and management. Hospitals with higher scores had lower levels of mortality rates as well as higher profits.

The panel was sponsored by the Harvard Business School’s Healthcare Initiative.

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