Erik Goldman10.01.12
Last year, in this column, I wrote about the Disney Institute’s program for healthcare executives focused on the Magic Kingdom’s “Five Philosophies” of customer service and how they could be applied in medicine.
Not being a big fan of Disney’s brand of commodi-tainment, the idea of hospital execs trying to serve up Mickey Mouse Medicine sorta creeped me out. But then, with today’s healthcare situation being as bad as it is, anything would be an improvement, and Disney does seem to know a thing or two about pleasing its customers.
So I drank me some chamomile tea, and got over it.
But nothing could have prepared me for the writhing dyspepsia I experienced when I read Dr. Atul Gawande’s recent article in the New Yorker, trumpeting the vital lessons that healthcare needs to learn from the Cheesecake Factory.
Dr. Gawande, a general and endocrine surgeon at Brigham & Women’s Hospital in Boston, thinks that this chain restaurant—with its ever-reliable customer service, fair prices and clockwork standardization—should be the model that healthcare systems emulate.
Though he acknowledges mixed feelings about the increasing corporatization of medicine, the implementation of strict protocols dictated and enforced by administrators, the potential for ruthless monopolization, Dr. Gawande none-the-less contends that American medicine—and American citizens—would be far better off if hospitals and clinics run like “casual dining establishments.”
He praises the Cheesecake Factory for its ability to consistently deliver a very wide variety of dishes—from Buffalo Wings and Hawaiian pizza to Wasabi-crusted Ahi tuna and roasted beet salads—in a palate-pleasing, family friendly, universally pleasant manner, at prices the vast majority of Americans can afford. At least once in a while.
The food, prices and service are extremely well-standardized throughout Cheesecake Factory’s system of 160 restaurants. Chefs, prep teams and wait staff are tightly monitored by administrators whose job it is to make sure that from the first greeting to the last pat of the tummy, every one of the 80 million customers served each year has a satisfying experience.
The Cheesecake Factory, says Dr. Gawande, is able to take the fine dining experience, mechanize it, scale it for the mass market, and bring it to ordinary folk at under $15 an entrée. Our healthcare systems, on the other hand, “provide us with the equivalent of greasy-spoon fare at four-star prices, and the results have been ruinous.”
His points are well argued—healthcare would definitely benefit from more intelligent management and carefully applied standards. Innovations in healthcare would be much more swiftly disseminated if clinics and hospitals were hubbed up and overseen by managers with discretion to mandate new and effective therapies. Everyone would be happier if medical people paid greater attention to “customer satisfaction.”
Dr. Gawande’s article really is a must-read for anyone interested in what’s going on in the trenches of American medicine. But as brilliant as he is—and I do consider him one of the nation’s most thoughtful healthcare commentators—he seems to overlook some really important issues. Which is why his notion of Cheesecake Clinics has me running for the bathroom.
For one, restaurants and healthcare facilities operate in vastly different economic environments, and this makes all the difference in the world.
The restaurant universe is still a fairly old-school, free-market environment in which people actually pay out-of-pocket for what they eat, and entrepreneurs compete to win customers with their particular combinations of food style, ambience and value.
Moreover, customers are quite free to make choices. They can choose to eat out or not; they can choose where and what to eat, based on what they like and what they’re able and willing to pay. “Comparison shopping” and restaurant-hopping are possible because in all but the most remote communities, there are many, many dining choices.
Whether it’s a trend-setting urban art-food purveyor (which Dr. Gawande likens to a cutting-edge research lab) or a local beer n’ burger joint—a restaurant needs to please its customers to succeed. Whatever the customer base may be and whatever they may desire, a restaurant must meet those expectations...or people simply go elsewhere.
Healthcare is very different. Most people aren’t paying out-of-pocket (co-pays aside) for the services they receive. Both “customer” and “proprietor” expect that a third party (insurance plan or government payor) should pick up the tab. Further, most people don’t really know what their healthcare options are, what they should cost or what to expect.
A diner can decide whether he wants pizza or sushi. A guy with chest pain can’t really determine if he should go with stents or bypass surgery. Further, people know that pizzas shouldn’t cost more than $20—unless of course they’re topped with black truffles, locally sourced goat cheese and heirloom sausage—so they know when they’re getting ripped off.
What’s the right price for a chest CT? Who knows! And if someone else is paying, who cares!!
The most important distinction of all is that dining out is really non-essential (though many in my downtown Manhattan nabe would beg to differ). Healthcare, when it is truly needed, is another matter.
Hospitals and clinics really haven’t had to be too customer-conscious because people will show up by default and in need, and somebody else will pay.
Imagine what eating out would be like if: people were not allowed to cook at home; a third-party was paying for everything (and in so doing, was able to dictate what was and was not on the menu); and nobody really knew what anything cost.
Just on socio-economic ground alone, the analogy between a local hospital and a fast food chain is a specious one. It’s also a pretty dangerous one, if you ask me. Why? Because restaurants and hospitals have different reasons for being, or at least they should.
The Cheesecake Factory’s primary goal is to turn a profit. It does so by providing great food at great prices to lots of people who choose to eat out. But the fact that you and your family enjoy yourselves is simply the means to the end. The goal is to make money for the company.
Should that be the modus operandi in healthcare?
Actually, your answer to that question really doesn’t matter because that’s what’s happening whether you like it or not. The last decade has been characterized by massive corporate takeovers and consolidations—first of major medical centers, then of local hospitals, and finally of formerly independent physicians’ practices.
Dr. Gawande describes it well when he writes, “Essentially, we’re moving from a Jeffersonian ideal of small guilds and independent craftsmen to a Hamiltonian recognition of the advantages that size and centralized control can bring.”
There’s no doubt that consolidation, standardization and oversight will ultimately bring greater profits to the companies that own and manage the clinics. But will it lead to better health for the nation? And does that question even matter?
A franchise restaurant mentality would certainly eliminate many of the inefficiencies that plague medical care, and it might—I say might—make physicians, nurses and support-staff a little more customer-conscious. But it would be a top-down, profit driven way of achieving these goals.
Not that there’s anything wrong with profit. But unlike a chain restaurant, the primary objective of a healthcare facility—be it a doctor’s office or a major medical center—ought to be helping people restore and optimize their health, not generating returns for shareholders.
That part gets easily lost amid all the attention to “best practices” and systems optimization—especially when the relationship between the client and the caregiver is disintermediated by a third party payor.
Then, there are the hidden costs: Big Food works because the massive corporate chains more or less dictate prices to farmers who, by and large, have become indentured servants in massive agricultural operations. Chain restaurants also depend on vast amounts of cheap commodity ingredients—many of which are subsidized by federal tax dollars. In other words, those delicious plates at Cheesecake Factory wouldn’t be so cheap if farm workers were paid a living wage and corn wasn’t subsidized by the Fed.
Implicit in the drive to consolidate and corporatize healthcare is the notion that larger scale operations are better able to save money. That’s a questionable assumption, at least according to a recent article in the Wall Street Journal.
It turns out that when hospitals buy physician practices, prices soar. That’s not a good sign, given the growing trend of hospital-practice mergers. The article spotlights a cardiology practice that was recently bought out by Nevada-based Renown Health System. Prior to the buyout, the practice was billing insurers $373 for a routine echocardiogram. Six months after the buyout, the fee was up to $1,605 for the same test.
The practice’s new owners gave all sorts of reasons for the increase: billing as an outpatient procedure costs more; the merger required a substantial investment in healthcare IT, blahdy blah. The reasons are beside the point. The price of a fairly common procedure more than quadrupled in six months…and there’s no evidence whatsoever that this added cost does anything to improve patient outcomes. It would be interesting to look at Renown Health System’s annual returns over the next few years, no?
The application of centralized management to medicine is, says Dr. Gawande, a massive experiment already underway. “The theory the country is about to test is that chains will make us better and more efficient.”
By “chains,” he is referring to highly systematized franchise models like the Cheesecake Factory. But the other meaning of the word may be even more apt.
Many clinicians these days feel that practicing medicine is becoming more and more like indentured servitude in a feudal economic system. Under duress, they give up ownership of their “land” (their practices), but continue to work that land for the benefit of a “Lord” (corporate owner) who guarantees at least a modest living and a modicum of protection. Until he doesn’t.
The interesting thing is that concurrent with the rising corporatization of medical practice there is also a strong movement away from insurance based medicine and toward direct pay practice models in which doctors and their patients—and in some cases, small local businesses—deal directly with each other.
Some doctors are simply getting fed up with exactly the kind of flowchart & spreadsheet mentality that Cheesecake Healthcare would amplify. They’re trying to break the very “chains” that Dr. Gawande describes. Rather than selling their practices they’re opting out of 3rd party payment systems altogether, and selling their services directly to their communities. It’s risky but in many places, it’s working.
Direct-pay practice actually drives efficiency and fosters better customer service, but in a far more human, face-to-face manner. Physicians in direct-pay clinics truly need to understand what their “customers” need and want. They also need to understand the economics of their community, so they can offer their services at prices the neighbors can afford.
This becomes possible because, by eliminating the administrative burden of insurance, doctors can drastically reduce their practice overhead.
In this sense, it’s the small, direct-pay, “boutique” clinics—not the massive insurance-based hospital systems—that bear the closest resemblance to the restaurant industry.
True, small and independent direct-pay practices do not have the bulk purchasing clout and diffusion of overhead of large systems. And you’ll never see the sort of practice standardization in the direct-pay sector that you will in the hospital-owned clinics. But it’s the indie clinics, much more so than the insurance-based networks that really have to know their customers, meet their expectations, and provide exemplary service.
Dr. Gawande rightly points out the virtues of systematic business intelligence exemplified by the Cheesecake Factory. But as I see it, a franchise restaurant management style combined with a profit-driven 3rd party payment mechanism is a recipe for something that America’s going to have a very hard time digesting.
Just some things to think about over your next plate of sesame crusted wild salmon…
Erik Goldman is the editor of Holistic Primary Care-News for Health & Healing, a quarterly medical news publication covering the field of holistic healthcare for an audience of roughly 65,000 primary care physicians. He is also co-founder of “Heal Thy Practice: Transforming Primary Care,” an annual conference focused on business models for integrative healthcarepractices. He is currently collaborating with Greg Stephens & Windrose Partners to develop the first Health Practitioner Marketing Forum, an educational gathering on opportunities and challenges in the healthcare practitioner channel. For more information, contact Erik at: 212 406-8957 or Erik@holisticprimarycare.net
Erik Goldman is the editor of Holistic Primary Care-News for Health & Healing, a quarterly medical news publication covering the field of holistic healthcare for an audience of roughly 65,000 primary care physicians. He is also co-founder of “Heal Thy Practice: Transforming Primary Care,” an annual conference focused on business models for integrative healthcarepractices. He is currently collaborating with Greg Stephens & Windrose Partners to develop the first Health Practitioner Marketing Forum, an educational gathering on opportunities and challenges in the healthcare practitioner channel. For more information, contact Erik at: 212 406-8957 or Erik@holisticprimarycare.net
