Health is an R&D Problem

Our health care system is notoriously inefficient.  Spending is too high, while quality is too low. Some patients undergo expensive treatments that provide little or no benefit. At the same time, other patients don’t receive some inexpensive treatments that could materially improve their health.

When I was CFO of a medical software start-up back in 2000, we diagnosed this problem quite simply: actual medical practice falls far short of best practices. Good treatment regimes are often well-known, yet are overlooked by a large fraction of practicing physicians. (The classic example at the time was that doctors were substantially under-prescribing beta blockers, which can help many patients after a heart attack; I would welcome comments about whether that’s still true.)

The implied treatment for our health care system is also simple: find ways to get patients, physicians, and other providers to adopt best practices. We were focused on information technology as one potential way to do this, but many others have also gotten attention, including:

  • Changing provider payments to reward healthy outcomes rather than just paying more for more procedures;
  • Changing patients incentives to encourage more efficient decisions about what services to use;
  • Investing in comparative effectiveness –i.e., study what works and what doesn’t — and sharing that information (and, perhaps, using it as a basis for payment rates);
  • Encouraging preventative care that may avoid future illnesses.

Done right, each of these approaches could undoubtedly increase the value we get from our health system. Unfortunately, that potential has sometimes been oversold, with advocates arguing that policies to implement such “silver bullets” would dramatically reduce the cost of health care.

My view is more cautious. We know that there are substantial — some would say embarrassing — inefficiencies in the system.  And we have reason to believe that various steps — greater adoption of health IT, comparative effectiveness, better incentives for providers and patients, etc. — might be able to reduce those inefficiencies. But we don’t know whether actual policy actions, with all their warts and blemishes, can actually tap into that potential and, if so, to what degree.

Policy should therefore focus on figuring out which policy interventions might work and learning how to calibrate them for maximum benefit.  In short, policymakers should view health spending as an R&D problem. The goal is not to select the optimal policy once-and-for-all, but to set us on a path where we will learn what we need to know to make fundamental reforms down the road.

P.S. The Congressional Budget Office discusses this argument in the letter than I keep referencing (e.g., here and here):

[M]any of the specific changes that might ultimately prove most important [for reducing health spending] cannot be foreseen today and could be developed only over time through experimentation and learning. Modest versions of such efforts — which would have the desirable effect of allowing policymakers to gauge their impact — would probably yield only modest results in the short term.

2 thoughts on “Health is an R&D Problem”

  1. Hello, I found you though my son in law Jon Shayne here in Nashville.
    I have watched the decline in quality and the increase in cost for 54 years. It is tragic to see a once decent profession decline into greed and sleeze. You are on target with what you say but the change can only really come from within medicine. I know I have a simplified version of what would make some corrections but here are some for you to consider:
    1. Use the medicare data to close bad hospitals (give them a year notice) from Medicare reimbursements.
    2. Do not reimburse surgeons or hospitals who have unacceptable mortality, complication or infection rates for specific procedures.(Medicare funsa.
    3. Pour funds into rebuilding primary care ( similar to military med school payments , to avoid debts and need to specialize.
    4. Offer salaries comparable to surgeons’ incomes to primary care physicians- this through Medicare for those who would choose to do this.
    The demise of primary care and the accessibility of the public directly into specialty care is the root of much excessive use. At first contact, most problems are psychosocial and not yet medical or physical in origin. Specialists ignore this fact and proceed to procedures, generating huge amounts of false positives that generate more procedures. Much of this could be avoided with strong primary , well paid, care.
    5. Mandate each hospital to post on a bill board all of the procedures done in the past year, the mortality rate, the infection rate and the complication rate. The public has no way of knowing a bad from a good hospital. It is the reason that competition has failed to drive up quality and drive down costs.

    check out my blog at

    Clifton Meador, MD

  2. Hi Clifton — Thanks for commenting. The issue of measuring and reporting quality — as measured by outcomes — strikes me as particularly important. There are challenges of course — you don’t want to discourage doctors from treating particularly sick or risky patients — but presumably some method of risk adjustment can eventually control for that.

    The link to your blog didn’t work for me, but the following seemed to work:

    (I’m sure you’ve heard enough jokes about “doctor stalking …).

    As I am sure you know, you have a multi-talented son-in-law :).


Comments are closed.