C o n s u m e r - D r i v e n   H e a l t h   C a r e
Consumer-Driven Health Care: Implications for Providers, Payers and Policy Makers.


Lindsay Young Craig
Executive Director,
Manhattan Institute
212-599-7000 Ext.315

Ashley Greer
Associate Publicist

Book Info:

Available at
ISBN: 0-7879-5258-3
928 pages
April 2004, Jossey-Bass
US $55.00

Market-Driven Healthcare: Who Wins, Who Loses in the Transformation of America's Largest Service Industry

Consumer-Driven Health Care
Implications for Providers, Payers and Policy Makers

(Jossey-Bass, April 2004)

Edited by Regina E. Herzlinger
Manhattan Institute Senior Fellow


Thomas R. Beauregard is the Practice Leader of the National Health Care Practice Leadership Team of Hewitt Associates, 45 Glover Avenue, Norwalk, CT 06850. He has over 15 years’ experience working with employers to design and execute health care strategies. Tom developed the first Internet HMO auction and led the development of Sageo (a Hewitt health and welfare outsourcing solution that drives consumerism with extensive decision support tools and advocacy services).

Paul Belien lives in Antwerp, Belgium, and is currently completing his Ph.D. Paul holds a degree in Law from Ghent University (Belgium). From 1982 to 1995 he worked as a journalist. From 1995 to 2000 he was Research Director at the Centre for the New Europe, a Brussels-based think tank.

Jeanne A. Brown was the General Counsel of the Evergreen Freedom Foundation, P.O. Box 552, Olympia, WA 98507.

Grady Clouse is a freelance consultant at P.O. Box 2554, San Francisco, CA 94126. Grady has authored a number of teaching case studies on the health care industry, focusing on innovations in software and services. He has worked in the industry in a variety of capacities, including management consulting and software development.

Robert Coburn is a Principal with Mercer Human Resource Consulting LLC, 120 East Baltimore Street, 20th Floor, Baltimore, MD 18120. He notes: “Consumer-driven health care seems likely to emerge in the United States, even though it has not been widely tested. . . . But every other strategy has failed, and this may be the only option left before the employee-sponsored health care system implodes.”

Corbette Doyle is Chief Executive Officer, AON Healthcare Alliance, 720 Cool Springs Boulevard, Suite 680, Franklin, TN 37067. Corbett’s focus is strategic leadership with respect to specific industries, in particular, health care and financial institutions. She currently sits on the boards of Definity Healthcare and Sterling Life Insurance Company.

John C. Erb is a Senior Manager with Deloitte & Touche, 200 South Biscayne Boulevard, Suite 400, Miami, FL 33131. Mr. Erb is a consultant with Deloitte & Touche specializing in employer-sponsored health benefits programs. He notes: “I have been doing research on learning in the hospital setting for a decade and found many results with significant implications for health care managers.”

James S. Garrison is the retired President and Chief Executive Officer of Washington Dental Service, Delta Dental Association, P.O. Box 75688, Seattle, WA 98125 and a member of the Delta Dental Plans Association.

William George is at Medtronic, Inc., 4900 IDS Center, 80 South 8 Street, Minneapolis, MN 55402. Bill George was Chief Executive Officer of Medtronic from 1991 to 2001, after serving as an executive at Honeywell and Litton Industries for over 20 years. He is currently Visiting Professor of Management Strategy at the International Institute of Management Development (IMD) and Ecole Polytechnique Federals de Lausanne (EPFL) in Switzerland.

John Goodman, Ph.D., is the Founder, President, and Chief Executive Officer of the National Center for Policy Analysis, 12655 North Central Expressway, Suite 720, Dallas, TX 75243. He notes, “In 1980 I did a study of the British National Health Service. Having witnessed first hand what did not work in the market for medical care I became intensely interested in what would work. The chapter I have written for Consumer-Driven Health Care reflects more than 20 years of thinking on that topic.”

Jenny M. Hamilton is Executive Policy Advisor, Governor’s Executive Policy Office, 100 Insurance Building, P.O. Box 43113, Olympia, WA 98594–3113. She notes: “I was the lead analyst in the development and implementation of the health status-based approach to risk adjustment for a large public purchaser. By getting the payment to plans right and the comparison among plans right, risk adjustment is a key instrument for influencing the health care and insurance industries to provide better care for everyone; helping to ensure that people with chronic illnesses or multiple health problems have choice and access to health care.”

Eugene Hill, III, is a General Partner of Schroder Ventures Life Sciences, 60 State Street, Suite 3650, Boston, MA 02109. Mr. Hill focuses on health care service and health care information technology investments.

Jesse S. Hixson is the Principal Economist for Health Policy at the American Medical Association, 515 State Street, Chicago, IL 60606. Jesse Hixson specializes in health system reform. His latest book, Six Questions Everyone Should Ask About Health System Reform, was published by the Galen Institute <www.GALEN.org>.

Bruno Holthoff, M.D., is a partner with McKinsey & Company, 600 Campus Drive, Florham Park, NJ 07932. He has assisted several Europharmaceutical companies, payors, providers, and governments in the areas of health care strategy and organizations.

Stephen S. Hyde is the Managing Partner of Clear Creek Resources, 60 Marland Place, Colorado Springs, CO 80906, a business advisory firm that focuses on consumer-driven health benefits design and implementation for self-funded employers and insured health plans. Mr. Hyde was founder and CEO of Peak Health Care, Inc., a publicly traded managed care company subsequently acquired by United HealthGroup. He has also served as board member or nonexecutive chairman of a wide range of health services companies.

Lisa Iezzoni, M.D., is a Professor at Harvard Medical School, Beth Israel Deaconess Medical Center, 330 Brookline Avenue, Boston, MA 02115. Dr. Iezzoni has conducted risk-adjustment research since 1984, examining its use both for quality measurement and setting capitated payments.

Charles H. Klippel is Deputy General Counsel of Aetna’s legal department, 151 Farmington Avenue, Hartford, CT 06158.

Daniel Johnson, M.D. is the past President of the American Medical Association and a practicing Radiologist. He notes, “after discovering early that patients were insulated from the cost of their care by third-party payment, I began looking for a way to link them to the cost that would reward them for using the system in a cost-effective way. Adjusting to a new financial accountability will be difficult for patients and physicians, but a better patient-physician relationship will be a just reward.”

Thomas J. Kuhlman is Principal and Health Care Strategy Issue Leader at Towers Perrin, Inc., 200 West Madison, Suite 3100, Chicago, IL 60606. He notes, “the era of consumer-driven health care is upon us. Dramatic changes are likely to occur in employer and consumer roles as well as changes in overall approach to health care delivery. Several areas of likely change are discussed in this article.”

Mark E. Litow is with Milliman USA, Inc., 15800 West Blue Mound Road, Suite 400, Brookfield, WI 53005. He notes, “in 27 years as a practicing health care actuary, I have seen technology make great strides while cost (financing) and delivery (access and quality) have come to threaten its future advancement. The best hope for preventing this nightmare appears to be a restoration of balance between these components that is navigated by consumer-driven health care.”

Brian J. Marcotte is the Vice President, Benefits and Compensation Programs, at Honeywell, P.O. Box 2245, 101 Columbia Road, Morristown, NJ 07962–2245. He notes, “managed care has created a workforce of passive health care purchasers. There are no incentives for providers and consumers to be accountable for cost and outcomes and managed care has never really, ‘managed care.’ We have learned that health care decisions cannot be imposed on consumers; they must be enabled and encouraged to drive efficiency. If health care is to be affordable for both employers and employees, we need to unleash the purchasing power of the consumer. My hope is that other employers will jump on the bandwagon to help create a consumer-driven health care market.”

Shaun Matisonn is Head of Risk Management at Discovery Health, P.O. Box 786722, Sandron, 2146, South Africa. He notes, “I am a qualified actuary who has spent the last 18 years in the development of a start-up South African consumer-driven health care company that has 15.5% of the total market covered. During the period, I have been focused on the actuarial and general management of the company as well as playing an active role on various industry boards and national health care reform debates.”

James Morrison, Jr. is President of Morrison Associates, 7353 East Tailfeather Drive, Scottsdale, AZ 85255. He notes, “I am a qualified actuary who has spent the last 8 years in the development of a startup South African consumer driven health care company that has 15.5% of the total market covered. During the period, I have been focused on the actuarial and general management of the company as well as playing an active role on various industry boards and national health care reform debates.” Jim Morrison has provided strategic business advice on legislative and regulatory issues affecting health care and employee benefits since founding Morrison Associates in 1988. He is a former administrator of the Federal Employees Health Benefits Program.

Ann Robinow is President and Chief Operating Officer of Patient Choice Healthcare, Inc., 1660 South Highway 100, St. Louis Park, MN 55416. She notes, “combining experience in insurance underwriting, capitated and fee-for-service provider networks, consulting to employers, and consumption of health care services made it clear to me that unless you ‘follow the money’ and redefine the incentives for all parties, we will be locked into our dysfunctional health care system. Knowing what drove each part of the system helped to create and implement a program with the right incentives for all stakeholders. Purchasers of health care (employers, government, and consumers) must overcome inertia and politics, and change how they buy to reward provider quality and efficient resource use.”

John Rother is the Director of Policy and Strategy for AARP, 601 East Street, N.W., Washington, DC 20049. He notes, “my consumer perspective examines the three types of decisions facing consumers—choice of plan, choice of provider, and choice of treatment. Consumer-driven care is considered suitable for long-term care, but not for prescription drugs. Necessary steps are identified if consumer-driven care is to succeed, and criteria for evaluation are suggested.”

Alvaro Salas-Chaves, M.D., is the Minister of Social Security, Costa Rica, Retired.

Leonard Schaeffer, Ph.D., is the Chairman and Chief Executive Officer of WellPoint Health Network, One WellPoint Way, Thousand Oaks, CA 91362. He notes, “Early in my career, I worked in government because I believed it was the best place to address social problems—particularly health care. My commitment to solving these problems remains, but I now believe that the private sector can innovate more quickly and can respond directly to the American customer who values choice, control, and affordability—key tenets of consumer-driven health care.”

Warner V. Slack, M.D., is a Professor at the Harvard Medical School and is President of the Center for clinical Computing at the Beth Israel Deaconess Medical Center, Boston, Massachusetts. He notes, “I have had a long-standing interest in ‘patient power’ and the use of the computer to empower patients and doctors for better health care.”

Mary Uyeda, Ph.D., is the Senior Health Analyst for Washington State Health Care Authority, 676 Woodland Square Loop, SE, Olympia, WA 98504–42701. As Director Health Information and Program Evaluation, Dr. Uyeda managed a pilot for questionnaire development, and the demonstration and the subsequent full implementation of the Agency’s Consumer Assessment of Health Plans Study (CAHPS) questionnaire and report projects. She also developed and implemented the agency agenda for using CAHPS to support health plan procurement and consumer enrollment choices for the state’s public employee health insurance program.

Vicki M. Wilson, Ph.D., is Project Director, State Planning Grant on Access to Health Insurance, Governor’s Executive Policy Office, 100 Insurance Building, P.O. Box 43113 Olympia, WA 98504–3113. She notes: “The approaches described in this chapter were designed and implemented during my tenure as policy and research lead for a large public purchaser. They embody a strong commitment to purchasing that is value-based, consumer-oriented, data-driven and rises above self-interest to influence the health care and insurance industries to change in ways that benefit all people.”

Bonnie B. Whyte is with Employers Council on the Flexible Compensation, 927 Fifteenth Street, N.W., Suite 1000, Washington, DC 20005. She observes, “flexible benefits offer employees choice. Government regulations inhibit efficient plan and participation benefits.”

About the (part three) Authors

Nancy Adler, Ph.D., is a professor of Medical Psychology in the Departments of Psychiatry and Pediatrics at the University of California, San Francisco, where she is Director of the Center for Health and Community.

Becky J. Cherney, is president of Central Florida Health Care Coalition, 4401 Vineland Road, Suite A-10, Orlando, FL 32811. She notes, “It has taken me nearly 20 years to realize that health care reform is about information and education. We simply have to build a new system using information and education with a healthy dose of common sense.”

Jon A. Chilingerian, Ph.D., former Assistant Health Commissioner at Boston City Hospital, has a Ph.D. from MIT, is a tenured professor of organizational behavior and health care management at Brandeis University and a visiting professor at INSEAD, where his focus has been quality, efficiency, and consumers in international health care management. In addition to launching the first four-year MD-MBA program in the U.S. in conjunction with Tufts Medical School, he developed the first executive education program to train European clinical leaders in health care management.

Jon Christianson, Ph.D., is the James A. Hamilton Chair in Health Policy and Management Professor at the Carlson School of Management, University of Minnesota, 321 19th Avenue South, Minneapolis, MN 55455. Dr. Christianson is an economist with extensive research and teaching experience in the financing and delivery of medical care. He has published seven books and over 100 articles in the areas of managed care, rural health care, mental health care, and care process improvement, and has collaborated with health care providers in a variety of practice settings to evaluate new treatment approaches. Dr. Christianson serves on a number of different editorial boards and scientific advisory panels, and directs the Center for the Study of Healthcare Management in the Department of Healthcare Management at the Carlson School.

Roger Feldman, Ph.D., is the Blue Cross Professor of Health Insurance, Division of Health Services Research Policy, School of Public Health, at the University of Minnesota, 420 Delaware Street, S.E., Minneapolis, MN 55455. Dr. Feldman is an economist whose research focuses on employment-based health insurance. For several years, he and his colleagues have been tracking the evolution and performance of the direct-contracting program pioneered by the Buyers Health Care Action Group in Minneapolis.

Bernard T. Ferrari, M.D., is head of the North American Corporate Finance and Strategy Practice at McKinsey & Co., 55 East 52nd Street, New York, NY 10022. He notes, “There are significant forces that will drive demand and supply of health care higher. If we don’t find new levels of productivity to deal with these forces, other needs of our society could go wanting.”

James F. Fries, M.D., is a professor of Medicine at Stanford University Medical School, 1000 Welch Rose, Suite 2003, Palo Alto, CA 94304. Dr. Fries’ academic interests center around strategies for improving long-term outcomes of chronic illness, successful aging, consumer empowerment, self management, tailored protocols directed at the improvement of health interventions, and health policies.

Lawrence N. Gelb, D.M.H., is president and CEO of CareCounsel, 68 Mitchell Boulevard, Suite 200, San Rafael, CA. He notes, “life as a clinician, then a Harvard MBA student, and later a managed care executive, drove home the fact that consumers’ needs get short shrift in health care. I founded CareCounsel in 1997 so employers could make things better.”

Katherine Harris, Ph.D., is a Full Economist in the Health Program of RAND, 1200 South Hayes Street, Arlington, VA 22202. Ms. Harris works in the health program at RAND. Her research examines health care consumers’ choice of health plan, provider, and treatments.

David A. Hines, is the president and founder of Consumer’s Medical Resources, Inc., 50 Screenhouse Road, Duxbury, MA 02332. Mr. Hines has ten years of experience as an executive in the health care industry, particularly working with patients facing serious illnesses.

Donald W. Kemper, is chairman and CEO of HealthWise, Inc., 2601 North Bogus Basin Road, Boise, ID 82702. As chairman and CEO of HealthWise and founding chairman for the Center for Information Therapy, Mr. Kemper is a passionate advocate for improving patient-physician partnerships through prescription information. He co-authored five medical self-care and health promotion handbooks that together have sold more than 22 million copies.

David Lansky, Ph.D., is president of FAACT (Foundation for Accountability), 1200 N.W. Naito Parkway, Suite 470, Portland, OR 97209. He notes, “I have worked in health outcomes research since 1980 and helped the Jackson Hole Group develop its approach to managed care accountability in the early 1990s. FACCT’s work with health care purchasers since 1996 has led me to believe that the U.S. health system will not materially change until the general public understands and demands improved quality.”

Molly Mettler, is senior vice president of HealthWise, Inc., 2601 North Bogus Basin Road, Boise, ID 82702. Ms. Mettler is the author of several articles and books on aging, medical self-care, and information therapy. She is the current Chair for the National Council on the Aging.

Arnold Milstein, M.D., is the National Health Care Thought Leader at Mercer Human Resource Consulting and Medical Director at the Pacific Business Group on Health, 3 Ebarcadero Center, Suite 1500, San Francisco, CA 94111. Dr. Milstein’s career has focused on mobilizing large employer purchasing power to improve health care performance. He co-founded the Leapfrog Group and was founding staff member of the largest health purchasers coalition in the United States.

Colleen Murphy, is president and chief operating officer of Asparity Decision Solutions, Research Triangle Park, NC 27709. Ms. Murphy is a seasoned executive with 20 years of experience building successful businesses that increase consumer access to health care and improve health care purchasing in the private and public sectors.

Steven W. Naifeh, is the president of Woodward/White, Inc., 129 First Avenue, SW, Aiken, SC 29801. Mr. Naifeh is the best-selling author of several books, including Jackson Pollock: An American Saga, which won the Pulitzer Prize and was a finalist for the National Book Award in 1990. He has been the President of Woodward/White and editor of The Best Lawyers in America since 1981. He was Chairman of Best Doctors from 1997 until 2000.

Dean Ornish, M.D., is founder and president of Preventive Medicine Research Institute and Clinical Professor of Medicine, University of California, San Francisco, 900 Bridgeway, Suite 1, Sausalito, CA 94965. He notes, “Comprehensive changes in diet and lifestyle are both medically effective and cost effective. (Consumer-driven health care) promises a new model of medicine that is more humane yet also cost effective and competent.”

Mark Pearl, M.D., is a managing member at Henderson Capital Management, 31 Amherst Road, Wellesley, MA 02482. He works with entrepreneurial health care companies and was a co-founder of CareAgents which eventually became WebMD. He also helped found a health care specific courier company. After spending some time in venture capital, Dr. Pearl now consults to a number of health care companies, helping them in their capital raising and business development. He has also started a fund that invests in hedge funds.

J.D. Power, III, is chairman of J.D. Power and Associates, 2625 Townsgate Road, Westlake Village, CA 91361. He notes, “With more than 34 years of experience in capturing, interpreting, and disseminating he voice of the customer, J.D. Power and Associates has gained invaluable insight into the key components of many “consumer-driven” industries. Best known for benchmarking quality and consumer satisfaction in the automotive industry according to the cumulative voice of millions of consumers, we see the health care industry as the battle ground for the next consumer revolution. If the industry does not aggressively seek to listen to newly empowered, more information-savvy consumers, there will be untold casualties across the broad spectrum of health care providers.”

Russell Ricci, M.D., is the General Manager of IBM Global Healthcare, 404 Wyman Street, Waltham, MA 02254. Dr. Ricci’s training in Child Psychiatry prepared him well for the evolving world of health care services. As an executive in provider organizations including VHA Enterprises and as President of New Health Ventures of Blue Cross Blue Shield Mass, a payor organization, and then as General Manager of IBM’s Global Healthcare, he has been able to drive the creation and diffusion of information technology to improve health care quality while containing cost.

Jennifer Schultz, Ph.D., is a researcher in the Economic and Outcomes Research Department of IngeniX, Inc., United HealthGroup, Eden Prairie, Minneapolis, MN 55344. Dr. Schultz is a health services researcher specializing in consumer decision-making in health care, use of health care information, and perceptions of quality differences across health plans.

Gregory White Smith, is president of Woodward/White, Inc., 129 First Avenue, S.W., Aiken, SC 29801. A Harvard Law graduate and best-selling Pulitzer Prize-winner author, Mr. Smith was diagnosed with an inoperable brain tumor in 1986 and given only months to live. “With the help of my partner, Steve Naifeh, I reversed that “death sentence’ and, in 1992, founded Best Doctors, Inc. to help others find the information they need at times of medical crisis.”

About the (part four) Authors

Laura L. Adams, is principal at Laura Adams Consulting and on the faculty of the Institute for Healthcare Improvement, 375 Longwood Avenue, Boston, MA 02215. Ms. Adams is a nationally known leader in the improvement of health care quality and service and a faculty member of the Institute for Healthcare Improvement in Boston. She is the director of the Institute’s Idealized Design of the Intensive Care Unit and was founder, president, and CEO of Decision Support Systems, a New York company specializing in Internet-based health care decision support.

John W. Adams, Jr., M.S., is president and CEO of CardioVascular Care Providers, Inc., and Global Healthcare Alliance, Inc., 1020 Holcombe Boulevard, Suite 800, Houston, TX 77030. Mr. Adams has over 24 years of diversified accomplishments in the health care industry, attaining executive level operations and business development oppositions in major academic medical center organizations, including the Methodist Hospital and Texas Children’s Hospital in Houston, Texas.

Richard Bohmer, M.D., is an assistant professor at the Harvard Business School, Boston, Massachusetts. He notes, “As a practicing physician and then a quality manager I have often been confronted by variance in quality and the challenge of improvement, especially in the context of new medical technologies. This experience led me, as a health care academic, to seek additional insight by doing the field research that was basis for article.

Roger J. Bulger, M.D., is president and chief executive officer of the Association of Academic Health Centers, 1400 Sixteenth Street, N.W., Suite 720, Washington, DC 20036. He notes, “After spending much of my energy during the past three decades in thinking about how to achieve universal coverage for health care for all Americans, I remain convinced of its importance to our society. I am glad, therefore, to be part of Dr. Herzlinger’s initiative.”

Denton A. Cooley, M.D., is president and Surgeon-in-Chief of the Texas Heart Institute, P.O. Box 20345, Houston, TX. He notes, “Since my youth, I have been cost-conscious—in part, because I grew up in the Great Depression. When health care costs, including the costs of surgical procedures, began to skyrocket, I knew that I had to do something to make procedures more affordable for patients. Package pricing was the result.”

Amy C. Edmondson, Ph.D., is an associate professor at the Harvard Business School, Boston, Massachusetts. Ms. Edmondson notes, “I have been doing research on learning in the hospital setting for a decade and found many results with significant implications for health care managers.”

Thomas F. Frist, Jr., M.D., is the chairman emeritus of Hospital Corporation of America (HCA), One Park Plaza, Nashville, TN 37203. Dr. Frist co-founded HCA in 1968 along with his father, Thomas F. Frist, Sr., M.D., and Jack C. Massey. Dr. Frist, Jr. served in various capacities at HCA over five decades, including service as its CEO, 1982–1994 and August 1997–2001.

Cynthia Gibson, M.S.W., Program Officer, Carnegie Corporation of New York, 437 Madison Avenue, New York City, New York 10022. She notes, “I am a program officer in the program area of “Strengthening U.S. Democracy,” overseeing the subprograms of ‘Strengthening the Nonprofit and Philanthropic Sector’ and ‘Youth Civic Engagement.’ Previously, I was an independent consultant, providing strategic planning, research, communications, and policy analysis services to numerous national nonprofit organizations and foundations. I am a doctoral candidate in social policy at Rutgers University.”

Jody Hofer Gittell, Ph.D., is assistant professor of Management, Heller School for Social Policy and Management, Brandeis University in Waltham, Massachusetts. She notes, “I am interested in how organizations achieve quality and efficiency outcomes in high-pressure service settings like the airline and health care industries. I am currently exploring how focus might enhance coordination among organizations that are involved in the care of a particular patient population, just as it improves coordination within organizations.”

Jessie C. Gruman, Ph.D., is the president and executive director of the Center for the Advancement of Health, 2000 Florida Avenue, N.W., Suite 210, Washington, DC She notes, “While there is growing recognition of the need for health care to increase its effective long-term management of chronic conditions, making this shift a reality requires more than merely out-sourcing disease management services. There is evidence about the changes required of health care delivery which will ensure that the growing population of patients and consumers with chronic conditions live as well and as long as they can.”

Harry Jacobson, M.D., is Vice Chancellor for Health Affairs at the Vanderbilt Universiity Medical Center, D-3300 Medical Center North, Nashville Tennessee 37232. He notes, “When I see patients either in my role as an attending physician in a teaching hospital, or when they are referred to me for consultation, I never fail to find unnecessary things done to the patient and/or important undone things.”

S. Robert Levine, M.D., is Chairman of the Board of Chancellors of the Juvenile Diabetes Research Foundation, 927 Fifth Avenue, New York, NY 10021. For over 12 years, Dr. Levine has been a volunteer leader of the world’s highest-impact (in dollars raised and advocacy effectiveness), mission-driven nonprofit organization seeking a cure for diabetes and its complications through the support of research—the Juvenile Diabetes Research Foundation (JDRF). Since its founding in 1970 by the parents of children with diabetes, JDRF has given more than $500 million to diabetes research, over $100 million in 2002 alone. Dr. Levine was Founder and Chairman of Decision Support Systems, a New York company specializing in Internet-based health care decision support.

Al Lewis, J.D., is the executive director of the Disease Management Purchasing Consortium, 57 River Road, Suite 102, Wellesley, MA 02481. He notes, “The reason I wrote my paper was that in my segment of health care, disease management, where I deal solely with implementation of programs which keep people healthier by giving them better access to care while guaranteeing reductions in cost, I am continually amazed by the number of times these programs aren’t implemented. For instance, in Medicare there is a 4:1 return to improve quality of care for the aged, but since Medicare pays 80% of the hospital bills, you need a 5:1 return to break even. Therefore, major cost savings get left undone, and more aged people and their families suffer as a result.”

Mark Levin, is the chairperson of the Board of Directors and chief executive officer of Millennium Pharmaceuticals of Cambridge, Massachusetts. Mr. Levin has dedicated a career, spanning nearly three decades, so the advancement of leading-edge science and technology to develop breakthroughs in medicine. He has been the founding chief executive officer of several biotechnology and biomedical companies, including Millennium Pharmaceuticals.

William H. Longfeld, has been the chairman and chief executive officer of C.R. Bard, Inc., 730 Central Avenue, Murray Hill, New Jersey 07974, since 1995. His experience in the health care area spans 32 years, including leadership positions in the manufacturing, distribution, and provider side of the medical technology industry. Longfield serves on the board of directors for Manor Care, Inc., West Pharmaceutical Services, Inc., Cytyc Corporation, Horizon Health Corporation, Advanced Medical Technology Association (AdvaMed), and is a Trustee for the Atlantic Health System and the Health Care Institute of New Jersey.

Stuart Lovett, M.D., is with East Bay Perinatal, 350 30th Street, Suite 205, Oakland, California 94609. Dr. Lovett is the director of Perinatal Services at the Alta bates Summit Medical Center in Berkeley, California, and serves as the chief of Service, Obstetrics and Gynecology, for Hill Physicians Medical Group of San Ramon, California. In addition, Dr. Lovett is the medical director of East Bay Perinatal Medical Associates, based in Oakland. A proponent of engaging managed care organizations in the effort to improve the delivery of care, Dr. Lovett is recognized for his efforts in developing disease management programs specifically designed to function in a managed care setting.

François Maisonrouge, is co-head of the Global Health Care-Life Sciences Group at Credit Suisse/First Boston, One Cabot Square, London E14 4Q5, England. Mr. Maisonrouge’s clients include companies in the pharmaceutical, biotechnology, and medical technology industries.

Michael L. Millenson, is the Mervin Shalowitz, MD Visiting Scholar at the Health Industry Management Program at J.L. Kellogg School of Management, Northwestern University, Chicago, Illinois. He notes, “When I wrote the book, Demanding Medical Excellence: Doctors and Accountability in the Information Age, I was both stunned by the degree to which patients had to fight in the courts for the right to even basic information about their care and inspired by the degree to which the movement to consumer-driven health care is accelerating.”

Alan O’Dell, is managing Director of the Shouldice Hospital, 7750 Bay View Avenue, Box 370, Thornhill, Ontario, Canada. Mr. O’Dell has 28 years of experience in the delivery of health care from the private sector. He notes, “As the founder’s grandson, I was actually born in Shouldice Hospital 48 years ago. Herzlinger's "focused factory health care model" has been thriving since 1945 in the form of Shouldice and the time has come for the powers that be to take note. Better health care at a lower cost. Isn't that what we all want?”

Gary Pisano, Ph.D., is the Harry E. Figgie Jr. Professor of Business Administration at the Harvard Business School, Boston, Massachusetts. His research has focused on technology strategy, the management of innovation, operational improvement in the pharmaceutical and health care industries.

James F. Rodgers, Ph.D., is the vice president, Health Policy for the American Medical Association, 525 North State Street, Chicago, IL. Dr. Rodgers is an economist who has been studying medical economics and analyzing policy proposals for over two decades. He now oversees these functions at the American Medical Association, working with AMA’s policy-making bodies.

Bernard Salick, M.D., is the chairman of the board and chief executive officer of Bentley Health Care, Inc., 8900 Wilshire Boulevard, Beverly Hills, CA 90211. Dr. Salick is a physician entrepreneur who in 1983 founded Salick Health Care, Inc. in response to his daughter’s diagnosis with cancer and pioneered a concept of a 24 hours a day, 7 days a week consumer-driven outpatient diagnostic and treatment centers for center. Salick Health Care, Inc. sale to Zeneca was completed in 1997. Dr. Salick then started Bentley Health Care, Inc. to continue to develop a series of diagnostic and treatment centers for cancer and to extend his model to other catastrophic illnesses.

Robert E. Stone, Ph.D., is an executive vice president of American Healthways, Inc., 3841 Green Hills Village Drive, Suite 300, Nashville, TN 37215–3691. He notes, “As the son and grandson of physicians, I have always been exposed to role models who reflected the best in medical care and focused their efforts first and foremost on the needs of their patients. Perhaps as important, it has contributed to the recognition that the fundamental interaction in health care is the one between patient and physician and that no model of delivery, financing, or system reform can succeed without the consent and active participation of those two parties.”

Lynn Taussig, M.D., is the president and CEO of the National Jewish Medical and Research Center, 1400 Jackson Street, Denver, CO 80206. He notes, “Prior to my assuming the presidency of National Jewish, I was chair of the Department of Pediatrics at the University of Arizona School of Medicine. I have spent my entire career in academic medicine and in the many administrative positions I have dealt with various issues of health care delivery.”

David Tinkelman, M.D., is Vice President of Health Initiatives at the National Jewish Medical and Research Center, 1400 Jackson Street, Denver, CO 80206. He notes, “In the last decade we have seen the tremendous swing from physician dominated healthcare delivery to patient empowerment. Our approach has been to bring these two forces of health care closer together into a physician directed, patient self management program.

Daryl Urquhart, is director of Marketing of the Shouldice Hospital, 7750 Bay View Avenue, Box 370, Thornhill, Ontario, Canada. Mr. Urquhart has 20 years of experience in strategic management and marketing with special focus on health care delivery. Using the Shouldice model, he has spoken internationally on service and operations management, relationship marketing, and health policy issues.

Tony L. White, is the chairman, president, and chief executive officer of Applera Corporation, 301 Merritt 7, P.O. Box 5436 Norwalk, CT 06855–5435. He notes, “As CEO of the company that will likely make the predictions of this essay come true, I live with these issues every day.”

Seth M. Yellin, is an Associate Director, UBS Warburg, 299 Park Avenue, New York, NY 10171. Mr. Yellin has worked with Dr. Bernard Salick in the development and implementation of state-of-the-art outpatient health care delivery systems since 1994. He received his undergraduate degree from Princeton University and an MBA in Health Care Management from The Wharton School. He is currently an Associate Director in the Mergers and Acquisitions group at UBS Warburg in New York.

Les Zendle, M.D., is the associate medical director of Kaiser Permanente, Southern California, 303 East Walnut Street, Pasadena, CA 91188. He notes, “Although I practiced internal and geriatric medicine for most of the 25 years I have been a physician, since 1993 I have been a physician executive in the largest nongovernmental health delivery system in the world—Kaiser Permanente.”

About the (part five) Authors

Kenneth Abramowitz, is the managing director of The Carlyle Group, 520 Madison Avenue, New York, NY 10022. He notes, “I am currently managing director of the Carlyle Group, focused on hepalth care buyouts, after having spent 23 years as a health care analyst at Sanford C. Bernstein & Co. I am a proud graduate of the Harvard Business School Class of 1976, where I had the opportunity to take Prof. Richard Rosenbloom’s course on forecasting technological innovations. During this course, I wrote a paper on the future of CT scanning imaging, thereby launching my career in health care.”

Eric Berger, is vice president of planning and public policy at the US Oncology, 16825 Northeast Drive, Suite 1300, Houston, TX 77060. Mr. Berger leads the strategic planning and public policy operations of the nation’s largest cancer treatment network. Prior to that role, Mr. Berger served as health policy analyst for the House Commerce Committee and as Virginia’s legislative and policy director for health and human resources. “These roles have provided me with an insight into the interaction between government and consumer-focused health care enterprises.”

Dean Clancy, is the executive director of the President’s Council on Bioethics, Washington, D.C. Dean Clancy advised the House Majority Lader, Rep. Dick Armey of Texas, on health policy issues from 1993 to 2001. He notes, “from 1993 to 2001, I served as health policy adviser to the Majority Leader of the U.S. House of Representatives, Dick Armey (R-TX), a leading advocate of such consumer-oriented health reforms as Medical Savings Accounts, Flexible Spending Arrangements, and refundable health-insurance tax credits.

Richard A. D’Amaro, is the president of NuTec Health Systems, 1201 West Peachtree Street, Suite 800, Atlanta, GA 30309. He notes, “I have been an active advocate of the health care system for over 25 years as an industry consultant. These experiences have caused me to passionately believe that we need a radical change to our system where the consumer rules.”

Jon R. Gabel, is Vice President, Health System Studies Health Research and Educational Trust, American Hospital Association, 325 Seventh Street, N.W., Washington, DC 20004. He notes, “I participated in the conference because it offered an opportunity to hear an exchange of ideas from industry and thought leaders about improving the performance of the health care industry. As someone who has worked at a think tank, trade associations, and the federal government, I welcomed the opportunity to hear real-world clashing of ideas.”

Carrie Gavora, is a principal consultant at The Stanton Park Group, 1946 Calvert Street, N.W., #3, Washington, DC 20009. Ms. Gavora has worked in health policy advocating market-based solutions to public policy problems in Washington, DC, for 13 years. Her career includes work as a legislative assistant to Senator Frank Murkowski (R-AK), a Professional Staff Member for health on the House of Representatives Committee on Commerce, the health care analyst at the Heritage Foundation, and as a private consultant for health care companies.

Regina E. Herzlinger, D.B.A., is the Nancy P. McPherson Professor of Business Administration at the Harvard Business School, Boston, Massachusetts. She notes, “I have been advocating consumer-driven health care for 30 years. I am glad that it is finally happening, so I can finally stop writing about it!”

Karen Ignagni, is the President and Chief Executive Officer of American Association of Health Plans, 1129 20th Street, N.W., Suite 600, Washington, DC 20036. She notes: “I’m convinced that the health care regulatory structure is no longer doing the job it was originally intended to do. Goals are unclear, procedures are opaque, inconsistent, contradictory, duplicative, and costly. We need a public dialogue about how to initiate regulatory reform that will make the system more transparent, consistent, effective, and cost effective.”

Constance G. Jackson, is an Atlantic Fellow in Public Policy at the Institute of Community Health Sciences—Queen Mary, University of London, 326 William Goodenough House, Mecklenburgh Square, London WC1N 2AN, United Kingdom. Ms. Jackson, who has more than 10 years’ experience in administration and policy development for health service delivery targeted to the needs of poor and medically underserved communities, is currently assessing the impact of universal health coverage in the United Kingdon on health outcomes for poor and minority residents.

Daniel Johnson, M.D., is former president of the American Medical Association. He is a Visiting Fellow in Health Policy at the Heritage Foundation. Dr. Johnson notes, “After discovering early that patients were insulated from the cost of their care by third party payment, I began looking for a way to link them to the cost that would reward them for using the system in a cost-effective way. Adjusting to a new financial accountability will be difficult for patients and physicians, but a better patient-physician relationship will be a just reward.”

David B. Kendall, is at the Progressive Policy Institute, 600 Pennsylvania Avenue, S.E., Suite 400, Washington, D.C. 20003. Mr. Kendall has worked on health policy as a legislative staffer and as a policy analyst since 1989. He currently telecommutes from his home in Missoula, Montana.

Rita Ricardo-Campbell, Ph.D., is a Senior Fellow, Emerita at the Hoover Institute, Stanford University, Stanford, CA 94305. She notes, “the U.S. Needs a Consumer-Driven—Not Provider-Driven, Not Insurer-Driven, Nor Government-Driven Medical Care System.”

Robert N. Shamansky, Esq., is with Benesch, Friedlander, Copeland, Copeland & Arnoff, Chicago, Illinois. To explain his cautious stance about the SEC, he notes: “I discovered in 1988 that securities transfer agents did not use national databases to locate so-called ‘lost’ securities owners to deliver dividends, even though their corporate clients used those same national databases to locate anyone who owed them money. Thus, whoever didn’t deliver the dividends kept the interest on the undelivered dividends.”

Kevin Vigilante, M.D., is a Clinical Associate Professor of Medicine at Brown University’s School of Medicine, 8 Holsmith Court, Rumford, RI 02916. He notes, “After working with disadvantaged indigent patients for over 15 years, first in the ER and then caring for HIV(+) women, I have become intimately aware of the obstacles these patients face and the indignities they suffer in the current health care system. In my view, it is imperative that they be empowered with a greater degree of choice so they and access the same quality of care as other, more affluent, Americans.”

Anthony Welters, J.D., is the chairman and chief executive officer of AmeriChoice Corporation, 8045 Leesburg Pike, Suite 650, Vienna, VA 22182. He notes, “I am a native of the type of inner-city neighborhoods served by the health care company I helped found.” A lawyer by training, Welters brought a wealth of government experience to his first venture in health care in the late 1980s. Today, his company, AmeriChoice Corporation, is one of the largest and most successful private sector companies serving beneficiaries of public sector health care programs.


[Home] [Regina E. Herzlinger] [Contributors] [Contents] [Essays] [Reviews]


Professor Herzlinger provides a compelling argument for consumer-driven health care. The health care system has been marked for decades with rising costs and consumer dissatisfaction. Professor Herzlinger challenges the reader to look beyond solutions that are based on what consumers should want to solutions that give consumers what they want."—Barbara Bigelow, Ph.D., co-editor, Health Care Management Review, professor of management, Clark University Graduate School of Management

 "Regina Herzlinger has a formidable reputation as an expert on reforming health care. There are lessons here for all of us who care about reforming our health systems to make them better."
—David Willets, MP, Shadow Work and Pensions Secretary and member of parliament, UK.

 "This book is a must-read for anyone who wants to know why the American model of health insurance benefits that has been around for about 50 years is all washed up, and what is most likely to replace it."
—Roger Feldman, Blue Cross Professor of Health Insurance, University of Minnesota

 "No other author in the health field could write a book like Consumer-Driven Health Care, or make the kind of impact that Regina Herzlinger can make on America’s $1.5 trillion health care industry. As one of the health field’s most respected economists and business strategists, Professor Herzlinger can persuade corporate CEOs, Washington policymakers, benefits administrators, and hospital executives to reshape their strategy based on a market run by consumers. Remarkably, for an academic, she can write. This book translates health economics into simple English, reducing the “mystery-inside-a-
conundrum” field into everyday transactions like selecting a health plan that any health care consumer can recognize. Consumer-Driven Health Care will be a top candidate for health care’s 'book of the year.' "
—Russell C. Coile, Jr., consultant, editor, Russ Coile’s Health Trends, and author, Competing On Excellence  


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