U.S. Health Care System Needs To Invite Innovation

Armen Hareyan's picture

"In almost every sector of our economy, brilliant, effective innovatorshave forced sluggish U.S. industries to become more productive," butthe absence of entrepreneurs in the health care service sector "hasenabled the status quo providers to get fat and sloppy," ReginaHerzlinger, a Harvard Business School professor, writes in a Wall Street Journalopinion piece. According to Herzlinger, "Entrepreneurs avoid healthcare delivery because status quo providers, abetted by legislators andinsurance companies, have made it virtually impossible for them tosucceed," according to Herzlinger.


She continues, "Unlike any otherU.S. industry, consumers do not set prices, yet they provide all themoney through taxes for government programs and foregone salaries foremployer-provided benefits. A third party ... not only sets the pricesbut goes so far as to specify procedures and even the kinds of patientsto be covered."

Herzlinger adds, "Non-market based payment isbut one of many barriers to innovation that plague the health careindustry." The U.S. should "take back" the "$2.2 trillion from theentrepreneur-suppressing status quo and allow consumers to reward thoseentrepreneurs who lower costs by improving health," Herzlinger writes.

According to Herzlinger, innovation is needed more in health care thanin any other sector of the U.S. economy, but "its many regulationshandcuff entrepreneurs." She adds, "A consumer-driven health caresystem will unlock these shackles to bring about a much-neededentrepreneurial revolution" (Herzlinger, Wall Street Journal, 7/19).

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