In this commentary, Herzlinger bemoans the dearth of innovation in healthcare delivery. At the same time, Michael Moore is denouncing the current state of medicine and heralding the benefits or the need for socialized medicine with his "Sicko" movie. (If you would like a second opinion you may want to read the english translation of Stefan Karlsson blog.)They are out there Dr. Herzlinger (She has a PhD). They often can't get past first base...
I have presented for investors, seen presentations to investors, and am aware of some very spectacular improvements in the treatment of various diseases. The thing that has struck me as the unique feature of these presentations is the first question by potential investors is not usually about efficacy. The first question is about reimbursement rates. It's not that no one cares; it's just that no one wants to back a drug, diagnostic, or device no matter what the need if there is no payment agreement from the Government and the insurance companies.
Not only do researchers, scientists, and innovators need to know their science but they also have to know how to find, determine potential or similar reimbursement rates, and arrange for them. At a time when the current "Dot-Widget" boom is making it hard to find funding for medical advances, adding the layer of reimbursement determination is steering people away.
In chapter 6 of, Maps for Modern Magellans, I discuss the issue of new product development versus increased awareness of existing products using a study done by Woolf and Johnson*. Their study compares the value of a new drug benefits to save lives, as compared to the number of lives that would be saved by increased awareness and education. In Herzlinger's commentary, she points out that approximately 300,000 people are killed each year in American hospitals due to "medical errors." One has to wonder how many of these lives would have been saved if some of the $800 million spent to bring one new drug to market was instead spent to improve systems to prevent such errors.
There are fantastic innovators working on great solutions out there. The trouble is they do not understand the reimbursement rate system. They do not have the money to pay a consultant to explain it to them, and they need more time to develop their solutions than it takes to make a Facebook widget. It's all about priorities. Perhaps local and national organizations like BIO (Biotechnology Industry Organization) should do more to bridge this gap. Such efforts would help those who would be future members of such an organization to get going.
As a scientist, I was very dismayed after my first presentation was shot down because I did not know the potential rate. Granted I knew the number of patients who had the disease in question. I had spoken to dozens of medical practitioners about the benefits of the discovery. Everywhere I turned, there was encouragement until we hit the investors. "You'll never get a reimbursement code for this…" end of discussion.
If you make a drug where only the wealthy can afford the treatment, not only will you look bad but it is hardly worth the effort. It is expensive to make a new drug, diagnostic, or device. No one should put something in his or her body that has not been adequately tested - this all costs money. It is only possible in nations such as ours that the means even exist to fund some of these discoveries. It is sad that such a nation would rather fund new ways to distribute moronic videos and pirated music, than to create cures for life threatening diseases because we can't be sure the "payers" as Ms. Herzlinger calls them will cover the cost later on.
The innovators are out there. They are beaten down by a system that makes little or no sense in the end. They choose to stay with their day jobs because there is no reward for attacking the existing system. Until enough people band together to create a system that rewards preventative medicine, early detection, and healthy living, it will probably stay that way.
There is a bright spot to our first-world economy: The final Harry Potter book comes out on Saturday. The book is long enough, you can read it while you wait for your HMO to approve a procedure you need to stop being sick, because they do not pay to keep you healthy. If you order the last of the Potter series early you can even get a discount - try that with your healthcare provider. So you see, it's not all bad news Dr. Herzlinger.
* S. H. Woolf, MD, MPH, R. E. Johnson, PhD, "The Break-Even Point: When Medical Advances Are Less Important Than Improving the Fidelity With Which They Are Delivered", Ann. Fam. Med, Nov 2005; 3: 545 - 552
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