/>
X
Business

Derail the Healthcare gravy-train: introduce competitive multi-sourcing

Working in the sourcing industry forces you to cut quickly through complex issues to find sensible solutions, and healthcare doesn't seem a whole lot different - despite the sheer scale of the issues and requirements. Having spent most my life in the UK, government-owned healthcare is never the way to go.
Written by Phil Fersht, Contributor on

Gravy_Train Being a relatively recent immigrant to US society, it's fascinating to observe the political games corporations and politicians play to reach their desired outcomes. 

What I find a little absurd, is how easy it is to decipher the real political motives behind all the rhetoric; especially those ridiculous commercials sponsored by insurance companies trying to protect their monopolistic positions and keep their gravy-train chugging along.

Working in the sourcing industry forces you to cut quickly through complex issues to find sensible solutions, and healthcare doesn't seem a whole lot different - despite the sheer scale of the issues and requirements.  Trust me, having spent most my life in the UK, government-owned healthcare is never the way to go.  A lot of my family work for the National Health Service (NHS), and the disorganized patient-service, layers upon layers of bureaucratic administration, waiting lists that would be unbelievably unacceptable in this country, create a very deep hole that is almost impossible from which to escape.  In fact, the NHS has been outsourcing like crazy the last few years as it tries to drive out cost and access skills it simply cannot develop itself.  It's become a gravy train for service providers and consulting firms alike - and even more of a cost-drain than many of the UK's other public services, which also pour out billions a year on back-office support.  The NHS can't even afford to employ specialist doctors in some areas because of recent budget cut-backs (something with which I have personal experience).

While this governmental cost-drain scenario is a highly undesirable outcome, so it the monopolistic outcome, which is currently plaguing the US healthcare industry.  Remember the old days of the telecom monopolies where the providers effectively set their own prices and created a whole gravy train of their own?  Remember when the airline industry only had high-cost travel options?  Even today I have to pay to watch re-runs of the Godfather on cable, despite shelling out $100 a month for their movie packages...

Back to the point of this post... how have large corporations been driving out cost, increasing transparency and competitiveness within their global sourcing models?   Not many use one service provider for all of their IT or business requirements - they create a competitive ecosystem and multi-source to competitive providers who fight for new projects and new contracts.  It keeps the suppliers on their toes, keeps prices competitive, and (should) help improve productivity as providers also compete on quality and outcome-based goals.  The key caveat is to ensure this ecosystem is managed effectively to ensure service providers are meeting quality standards, service levels etc.  A healthy ecosystem ofservice providers, eager to compete for business is creating downward pressure on prices, increased customer choice, and also a quality dimension where providers need to create more innovative customer offerings in order to differentiate themselves.

Seems to me the answer with the US health insurance providers, is to create a similar ecosystem where there are more providers in play, where they are held to certain standards, and are regulated with how they price their services.  Again, the caveat is to ensure this ecosystem is managed effectively.  If the government can help kick-start this ecosystem, them I'm all for reform.  There's nothing wrong with a government insurance alternative if it drives more competitiveness into the system, but the key is to create a competitive environment where the government only needs to step in to ensure everyone in playing by the rules. 

I'm excited to see how this will play out; breaking-down closed markets and monopolistic corporate behavior will do nothing but good for thehealthcare system that is crippling the competitiveness of US businesses today.  And if we need to train more doctors and nurses to support the millions of newly-insured, is that such a bad way to stimulate the US economy?  Seems to me that the healthcare industry is going to dominate global economies for decades to come, with the increasing cost of caring for elderly citizens, Alzheimer patients etc.  If the US can seize this reform as an opportunity to lead the world in medical research and healthcare practices, isn't this just the way to stimulate a tired economy?

Editorial standards