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THE PROBLEM: HOW RESEARCH AND OPERATIONS ARE ORGANIZED IN HEALTHCARE TODAY

Healthcare operations and research are systematically separate in most of healthcare today. Although more than $100 billion is spent in the United States on medical research annually, and the National Institutes of Health (NIH) budget allocates more than $30 billion a year to identifying novel biologic pathways and new therapeutics, very little is spent on understanding or improving how current patient care is delivered. In fact, only 0.2%–0.3% of U.S. healthcare expenditures support health services research, the very broad category of study that focuses on how healthcare is delivered, its quality, and its cost. Instead, most research dollars focus on basic science, pharmaceutical research, and medical device development.1

But even this perhaps understates the problem. The vast majority of hospitals and healthcare systems simply do not have a research and development (R&D) department as it would be understood in most other industries, where the aims of R&D are aligned with the needs of the enterprise. Most hospitals and health systems do not have any research department at all. Even in the epicenters of academic medicine, almost all research is focused on basic science or clinical trials. This is reflected in total spending on R&D in healthcare delivery systems compared to other industries (Figure 1-1). To put this in perspective, the automobile industry spends 2000% more than the healthcare delivery system on R&D; even the food and beverage industry spends more than 500% more on R&D than the healthcare delivery system does. We see this at the local level, too: If you are responsible for healthcare operations, how often have you used research-quality methods to understand if a project really worked? If you are a researcher, how often have you engaged in the annual or strategic planning process for how care would be delivered at your health system? The chances are that the answer to both questions is the same: never.

Figure 1-1

R&D spending in U.S. industries. Although pharmaceutical, biotech, and medical device companies spend substantial amounts on R&D, the healthcare delivery system (hospitals, ambulatory care, nursing, and residential facilities) spend only about 0.1% of revenue on R&D. (Adapted from Moses et al, 2015)

Joe Biden, the 47th vice president of the United States, once said, “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.”2 The evidence is overwhelming that we have fundamentally undervalued R&D for the healthcare delivery system. But that is beginning to change.

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Research and operations are kept remarkably separate in healthcare today. The healthcare delivery system spends much less than 1% of revenue on R&D.

HISTORICAL CONTEXT: HOW DID IT GET THIS WAY?

Healthcare changed almost unimaginably in the 20th century. Harvard professor ...

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