I’ve been impressed by the VA

Posted on 22 July 2008


So, I have to admit that I’ve been really surprised by the VA hospital experience!

…which pretty well sums it up: the VA provides better than private sector care at lower cost and does it while existing within the context of a giant, ponderous bureaucracy subject to stiff cost controls and scrutiny.

This raises some questions for me. Not so much about how the VA is able to do what they do so well (it’s the people, stupid!) but about what exactly it is that the private sector is doing wrong; I suspect the list of reasons could be very long.


I don’t think it’s fair to say that it’s the people in this case. Yes, it’s true that humans make mistakes, and certainly always will (consider that even with years of education and experience and the resources of what is probably one of the best medical centers in the world, BIDMCvery bad things happen all of the time). Still, it seems clear to me that the majority of people in the industry are trying very hard to work to very tight tolerances within the limits of a complex system…which leaves the question open: what exactly is the private sector doing so wrong that, in spite of fierce competition and massive incentives to perform at the limits of human endurance, it can’t even outperform the government—and an old, lumbering sloth of a government at that?

A recent post from HBS Working Knowledge series, available gratis at http://hbswk.hbs.edu/item/5979.html, discusses the topic:

Authors: Michael E. Porter, Elizabeth O. Teisberg, and Scott Wallace

What we are doing in healthcare administration is making the united states competitive again:

“In every other aspect of their business, employers are attuned to quality and value. But health care has been treated as a commodity and cost reduction has been the dominant approach.

Employers have gone to their vendors, health plans, or third-party administrators in the case of self insured plans, and tried to bargain the maximum discounts. They have switched plans frequently in search of a better deal, which has meant that their employees needed to switch as well. They have tried to pare back covered services, thrown up barriers to expensive drugs and treatments, and recently, begun to pass more and more costs on to employees.

Yet health benefit costs have continued to go up. Most employers do not even measure the costs of poor health among their employees. If they did, however, they would discover that many of the steps they have taken to reduce benefit costs have actually made the costs of poor health even greater. For example, studies have shown that co-pays and deductibles on essential medications for chronic conditions can reduce adherence to therapy, leading to expensive hospitalizations, complications, and the like. Here, so-called consumer-driven health plans not only failed to benefit the consumer, but they hurt employers as well.

First, the best way truly to reduce health care cost is to improve its quality—better diagnoses, more timely treatment, less invasive methods, getting the right treatment to the right patient, fewer complications, and so on. Quality, defined in terms of outcomes, is the secret to success in health care.

Second, high-value care is delivered by integrated practice units including all the needed specialties that care for the patient’s medical condition over the full cycle of care, not the current model organized and paid for by specialty and discrete interventions.

Third, prevention and screening can dramatically improve value, as does ongoing disease management to prevent recurrences and setbacks.

Fourth, the only way truly to drive value is to measure patient outcomes for each medical condition, and get patients to providers who have the scale, experience, teams and facilities to achieve excellent results.”

VA does all of these things because it can. Private industry has not seen the reality of incentives to do any of these very well, so it hasn’t yet committed to any of them. VA medical centers are almost always intensely academic learning institutions, with practice modalities and service lines that are tightly integrated (both geographically and conceptually!). Preventive medicine is practiced uniformly as the patient mix doesn’t really change and patients tend to stay enrolled, and the multiplicity of oversight bodies guarantee continual monitoring of essentially everything that can be measured. Again, the VA does EVERYTHING that was mentioned in that article, and it has PAID OFF!

I’m in no way suggesting that this model must work universally; I’m simply trying to rebuff all of the comments that I’ve heard suggesting that we should just shut down the VA, privatize the care, etc!

See these articles as well:

Power by the Hour: Can Paying for Performance Redefine the way Products are sold and serviced?

Using competition to reform healthcare, by Michael E. Porter and Elizabeth Olmsted Teisberg