Entrepreneurial Medicine
by John Goodman
 In a recent Wall Street Journal editorial, Harvard Business School
professor Regina Herzlinger asks, "Why are there no entrepreneurs
in health care?" Alert readers of this column already know some
of the answers.
In our fee-for-service payment system, doctors are slaves to the way
they are paid. It doesn't matter whether the payor is public or
private. It also doesn't matter whether we are in the United States or
in Canada. Doctors have no freedom to repackage and reprice their
services. More precisely, regardless of how they repackage, they
cannot reprice. So almost any innovation that raises quality or lowers
the patient's costs means less - not more - net income for the
physician.
Fortunately, there are exceptions to this generalization. There are
isolated markets here and there that are bustling and teeming with
entrepreneurial activity. These islands of health care innovation are
easy to spot. They are the places where the third-party payers are
not.
Take TelaDoc, a company that has discovered something for medicine
that lawyers, accountants, architects, engineers and other
professionals discovered almost a century ago: the telephone.
TelaDoc is headed toward its one millionth customer. If that doesn't
immediately knock your socks off, stop and consider: Almost one
million people have stepped outside the traditional health insurance
system and paid with their own money for a few simple services that
our institutionalized, bureaucratic, archaic, third-party payment
system cannot deliver. In addition to telephone consultations, TelaDoc
patients have portable electronic medical records. Also, their
prescriptions can be ordered electronically, taking advantage of
software that reduces medical errors.
Another entrepreneurial venture -- walk-in clinics in pharmacies,
supermarkets and shopping malls -- has recently discovered for
medicine something nonmedical professionals have known about for
several decades: the computer. Nurse practitioners not only enter
patient data electronically, they follow computerized protocols in
making decisions, and they can order prescriptions electronically as
well. A MinuteClinic survey of 58,000 sore throat cases found that the
nurses conformed to evidence-based treatment guidelines 99.15 percent
of the time. By contrast, the RAND Corporation found that system wide,
doctors deliver appropriate care only 55 percent of the time.
Here again, thousands of people are stepping outside the traditional
payment system to pay with their own money for services they cannot
get otherwise. Prices are posted and are about one-half what primary
care physicians charge. There is usually very little waiting, and some
clinics hand out beepers so patients can shop and browse while they
wait. RediClinic CEO, Web Golinkin, writes in The Wall Street Journal
that there are already 400 clinics and thousands more will open in the
next few years unless the defenders of the status quo get state
legislatures to stop them.
I know some will object that I am ignoring all the entrepreneurship
over the past two decades loosely associated with the term "managed care." Granted, there has been a lot of that type
of activity. But it's all on the wrong side of the market.
Big market changes are not driven by entrepreneurial buyers. They are
driven by entrepreneurial producers and sellers. More on that later.
John Goodman is president of the National Center for Policy Analysis, an
independent public policy institute and are not affiliated with
any other organization, trade association or corporation.
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