I wanted to quickly point out an excellent article in the Economist from a few weeks back, highlighting Kaiser Permanente’s approach to integrated approach to healthcare. While I find it interesting in the context of the American health insurance debate, I’m most intrigued by the element of aligning incentives. The Economist writes:
Kaiser also aligns incentives both to promote parsimony and to improve the quality, rather than merely the quantity, of the care it gives. Patients like Ms Ahlstrand use e-mail because it is free and convenient, whereas a personal visit can involve hassle and an out-of-pocket payment. Dr Slovis and other KP doctors are on fixed salaries, unlike America’s many self-employed physicians, so they have every incentive to share information with other specialists and no financial motive to order unnecessary procedures.
The history of the company is unique – founded by both an industrialist, Henry Kaiser, and a physician, Sidney Garfield. Perhaps this marriage of business and medicine is rooted in the company’s culture. The article then goes on to note that while KP has been able to align incentives correctly, it is not an easy thing to do:
The prevailing culture of health care in the country is difficult to overcome. Some American patients, used to having all the scans and consultations with exotic specialists they want, costs be damned, do not like KP’s frugal ways. By the same token, some freewheeling American doctors do not like KP’s rigid systems or fixed (albeit generous) salaries. Much the same applies in other countries: whether in politicised state-run systems or profiteering private ones, the incentives for doctors and patients are seldom as soundly aligned as they are at KP. “Most of its success is explained by culture,” says Alain Enthoven, a health economist at Stanford University, “and that is simply not easy to replicate.”
