Clay Christensen of Harvard Business School said recently that in health care, competition does not help control costs but rather drives them up. He said the structure of the system pits hospitals that want to fill their beds against insurers that want to minimize reimbursement and access. His answer was the health-care provider and health-care insurer should be one and the same, suggesting an integrated system like Kaiser Permanente in California.
Well, I think it's an interesting idea. But all health care, ultimately, is local. There are communities where that model has worked well. Kaiser and Group Health of Puget Sound are examples of where that's worked very well. But it requires a unique physician culture. And even firms like Kaiser, which has tried to expand into other geographies, have found that it's incredibly hard to replicate. Where it can work, it's a fine model. It's just not going to work in most communities.