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As outlined in Chapter 1, the US healthcare system plays host to a dizzying array of occupations and organizations that have taken the stage over the past century. The result is an unplanned, chaotic hodgepodge of players, aptly portrayed in Figure 2-1. This same view has been voiced by the Centers for Disease Control and Prevention (CDC), which developed a slimmed-down version called “Health Run” that (like its title) is still confusing (Figure 2-2).

Figure 2-1

The US Healthcare System as a Hodgepodge. EMR, Electronic Medical Record; MLR, Medical Loss Ratio. (Source: Diagram Adapted with Permission from Zhongyuan (Annie) Yu, PhD, Research Assistant Professor, School of Systems and Enterprises, Stevens Institute of Technology, Hoboken, NJ.)

Figure 2-2

“Health Run” of the Centers for Disease Control and Prevention. PCP, Primary Care Physician.

Nearly 40 years of teaching this material have made me realize there are some invariant principles that help to dispel the darkness and bring order out of chaos. Such principles also serve as a standard by which to evaluate the likely veracity of some new claim and judge the likely durability of some new trend in the industry. These principles are also portable—you can use them to understand any country’s healthcare system.


One principle is the interplay between the goals of access, quality, and cost (covered more fully in Chapter 5). Developed by economist Burton Weisbrod, “the healthcare quadrilemma” model suggests that efforts to address problems in access to healthcare by extending insurance coverage to previously uncovered segments of the population have multiple downstream effects (Figure 2-3).1 These include financial incentives to manufacturers and producers to invest more in technological research and development (R&D), since the costs of innovation are more likely to be covered. The resultant innovation, with its potential for higher quality, appeals to both providers and patients and thus leads to widespread adoption. The innovation carries a higher price tag as well, leading to simultaneously higher costs and higher quality. As costs rise and care improves, there is subsequent demand for greater insurance coverage. This cycle offers one plausible explanation for the observed trade-offs among these goals that make it hard to achieve all 3 simultaneously.

Figure 2-3

The Healthcare Quadrilemma. R&D, Research and Development.

There is more to the healthcare quadrilemma. It can be likened to a “flywheel” (ie, a mechanical device that efficiently stores kinetic energy). Consider the description offered by Jim Collins2:

Picture a huge, heavy flywheel—a massive metal disk mounted horizontally on an axle, about ...

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