Can Toyota's Model Fix the Health Care Industry?

An earlier blog post concentrated on the reasons why it is increasingly difficult to provide adequate health care under a universal care approach. One of the reasons that was alluded to is that there are a large number of technological developments or surgical techniques whose costs are high but for which alternatives may be available. However, surgeons and the hospitals have understandable incentives to recommend the most expensive one because the profits that are generated from them are high. On the other hand, patients are more likely to insist on receiving the most sophisticated and costly procedures especially when another person is making meeting the financial costs. What results is an oversupply of medical care at the most expensive side of the spectrum.

Thus an attempt to institute a publicly funded health care insurance program would be faced with ever increasing costs and ultimate bankruptcy. A clever idea that has been introduced is the creation of an autonomous institution to determine the relative merits of new treatment procedures relative to the costs.

Writing on the Washington Post's Think TankTown page, Tom Emswiler reiterates the problems with health care provision and looking at the manufacturing methods successfully deployed by the Toyota Motor Corporation. Among these is the principle of adopting only reliable and fully tested technology which provides further justification for establishing the comparative effectiveness institute.

The requirement for this institute is undeniable but this blogger is cautious about the tendency to elevate every corporation and adopt its internally developed logic more widely. In essence, Toyota Motor Corporation is hugely successful but that is no reason to presume that wholesale adoption of its principles would engender similar success elsewhere.