Regina Herzlinger is an expert in management control and health care. She teaches at the Harvard Business School, was the first tenured female faculty member at the school and was considered one of the top health care thinkers in 1999 by Managed Healthcare.

Prof. Herzlinger believes that the delivery of health care is ripe for consumer driven reform. She thinks third party purchase of health insurance by employers and government will yield to direct purchase of health insurance by users. Also, the integrated delivery of health care will give way to “focused factories” that offer cost effective care for particular diseases and hospitals will only be used sparingly for difficult procedures.

However, before any reform occurs, consumers need to be informed about treatment and the cost and quality of service providers. When consumers purchase a car, they can read Consumer Report to determine the cost, quality and reliability of any new or used car. For health care, little information is available to empower consumers. They need a report card on all providers and services to make informed decisions.

Today, the health care system is organized to meet the needs of providers rather than consumers. The providers try to do everything for everyone and consumers have to be patient in the process. It’s very time consuming, costly, inefficient and not consumer driven.

Contrast that to a focus on managing the disease through an integrated health care system as she suggests. The service would be focused on a disease and deliver high quality care because the provider would cover all aspects of the disease in one location.

In her book, Professor Herzlinger uses Toronto’s Shouldice Hospital as an example. It performs just one procedure - hernia operations - but through sheer focus on one procedure, it appears to perform them better than anyone else. At Shouldice, a hernia operation takes half the time and costs as at the average hospital. What’s more, it fails only 1 percent of the time, compared to 10 to 15 percent failure rate elsewhere. Another example she cites is the cataract facility that offers only cataract-removal operations at lower costs.

Insurance companies also need a long-term commitment with clients. Prof. Herzlinger recommends that all policies should be for at least 10 years so insurers will have a vested interest in the consumer’s health. Long-term prevention should be the focus rather than short-term coverage and the consumer should be given more attractive insurance rates as incentives to remain healthy.

With the increased cost of health insurance employers want to get out of the insurance business. They prefer to let their employees pick the health insurance and benefit options that meet their needs. Many are switching from defined benefits to defined contributions for health plans for employees. That will allow employees to buy their own health care coverage with money supplied by employers.

In terms of the health care system in Vermont, Prof. Herzlinger supports trusting people. She believes that given sufficient information they can make rational decisions. Consumers should be allowed to select the coverage they need and not be required to carry mandated coverage. For example, a woman past childbearing years should be able to select insurance for long term care instead of maternity care.

Market data shows that many uninsured people choose not to buy insurance because of the high costs. So employers and private policyholders pay more to cover the care of the uninsured. Also, low-income people rely solely on government insurance for coverage. Prof. Herzlinger proposes government vouchers for a basic coverage insurance policy for low-income people to get them into the insurance pool. In California, a single mother with two children can purchase such a policy for $40 a month.

The current state health insurance policy of community rating that treats everyone equal is devastating to the free market. It restricts competition and rewards unhealthy life styles. Risk pools would help those with pre-existing conditions and high medical costs. Healthy insurers would still subsidize the cost of such policies but would be motivated to manage their own care with cost effective treatment.

Prof. Herzlinger introduced a new perspective to health care reform. The key to this health care reform is consumer control that puts them in charge of lifestyle, preventive care and provider selection their willing to pay for.

While in Vermont, Prof. Herzlinger appeared on the Mark Johnson show, testified before the Senate and House Health Committees, taped a TV segment with Jim Douglas on GOP-TV and addressed 60 legislators and private sector people at an American Legislative Exchange Counsel dinner in Stowe.

Thank you for your calls and notes. I can be reached at 658-3975 (home) and via e-mail

Rep. Frank Mazur
South Burlington