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Four Major Flaws in Our Healthcare System

The following post is part of TriplePundit’s coverage of the 2011 Net Impact Conference in Portland, Oregon. To read the rest of our coverage, click here.

By: Erika Kimball, RN

Great news: health care reform is underway. While most news coverage of the issue centers on mandated insurance, partisan debates, and charges of socialism, meaningful health care reform has little to do with any of this. During the speaker panel, An Insider's Guide to Health Reform, at last month’s Net Impact conference, Alex Lowenthal of Kaiser Permanente identified four major flaws in our health care system: fragmented care, ineffective payment model, under-use of evidence-based care, and lack of interoperability.  An exploration of these flaws provides an overview of the basics and economics of American health care reform.


Our health care system has grown increasingly specialized, spawning innovation and improved survival rates for people with specific illnesses. The unintended consequence is over-use of high tech, high cost interventions with limited benefit in the absence of holistic treatment. A patient that suffered anxiety-related chest pain might visit a cardiologist for a full evaluation, a gastro-enterologist to rule out reflux, and a pulmonologist for asthma work-up, before seeing a psychologist for treatment. This leads to misallocation of scarce resources and delay of treatment.

The Annals of Family Medicine explored the consequences of fragmentation. Economically, care has become commoditized and commercialized. Practically, fragmented care is inefficient and ineffective. Holistic care is valuable, affordable care.

Payment Model

The model of billing for quantity versus quality of services creates a perverse incentive for providers. Doctors are penalized for keeping patients well, as healthy patients use less billable health care services. A 2009 New Yorker article documented the effects of this perverse incentive. Because medical interventions drive revenue, health care providers are left scrambling to attract high margin specialties and dedicating fewer resources to wellness.

Fortunately, new models such as the Accountable Care Organization and Massachusetts' global payment system are decoupling pay from treatment, paying practitioners to keep patients healthy through investment in prevention.

Evidence-Based Care

Evidence-based care models are responsible for standard treatments such as cancer screenings and vaccinations. However, most care scenarios are not standard, leading to large variations in care throughout the medical community. This begets variation in clinical and economic outcomes, creating a major inefficiency in the system.

Kaiser Permanente has kept health care affordable for their patient population by delivering evidence-based care that focuses on quality and value, maximizing health outcomes delivered per dollar spent. The organization has proven the value of preventative health care, offering a way forward from highly variable, costly treatment of advanced illness. We as tax payers and patients will benefit from advances evidence-based care.


Information is one solution to our dysfunctional health care system, as Electronic Health Record (EHR) and medical data software development promise increased value, quality and integration of care. The barrier to swift implementation is our final health care system flaw: limited interoperability.

As applications emerge on the EHR market, not all programs talk to one another. This promotes a system where different departments in the same hospital may all use distinct software that doesn't communicate internally.  Developers that focus on interoperability issues ultimately slow deployment time and stand to lose market share, yet the lack of consensus in operating rules is currently limiting the EHR market. This delays adoption of EHR, perpetuating our broken system. Effective policy establishing operating rules would immediately benefit a market that is clearly waiting for direction.

Improvements in these four major areas contribute to health outcomes and economic viability of the system.  American health care reform is about delivering better and more affordable care.  Where would you like to see reform take place?  In my next article I will explore another topic from the speaker panel: differentiating health from health coverage.

**Erika Kimball is a Registered Nurse and a Sustainable Business Professional dedicated to minimizing the environmental impacts of the health care industry.  She is the founder of the Green Team at California Pacific Medical Center and has an MBA in Sustainable Management from Presidio Graduate School.

3p Contributor

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