The Henry Fords of Healthcare

Abstract

Health systems in Western countries are plagued by inefficiency and will likely require a substantial increase in the tax burden as populations age. Patients might also face a gradual decrease in the quality and scope of services. The organisational changes needed to drive costs down and increase quality and safety have been poorly implemented under welfare state models due to excessive regulation. While some of these systems have gradually opened up to private actors, most of the benefits of free markets have not been transferred to healthcare provision. By contrast, developing countries are not stuck in the Western model. Their greater openness has paved the way for the "Henry Fords of healthcare" who are achieving substantial cost savings and productivity gains. A common feature of their innovative models is the use of an assembly-line approach to healthcare provision, which would be difficult to introduce in Western healthcare systems without major reform. Healthcare organisation gives each local hospital the task of treating broad ranges of conditions, which makes high levels of specialisation harder to achieve. Moreover, healthcare systems are frequently organised such that patients receive portions of care from a variety of health providers, which restricts economies of scale. Western health officials could encourage trade in healthcare as a means of cutting costs and reducing waiting times, but the current welfare-state contract between the individual and the public sector hinders such initiatives.