curbing the cost of health care

A new study conducted by the pharmaceutical company Novartis and McKinsey and Co. shows a stunning difference among countries with regard to health-care efficiency.

For example: Smoking rates are higher in France than in the United States, so the French population has higher rates of lung disease. Yet the French system is able to treat the disease far more effectively than happens in the United States, with levels of severity and fatality three times lower than those in this country. And yet France spends eight times less on treatments per person than the U.S. system.

Or consider Britain, which handles diabetes far more effectively than the United States, while spending less than half of what we spend per person. The study concludes that the British system is five times more productive in managing diabetes than is the United States.

To understand the issue better, I spoke with Daniel Vasella, the chairman (and former chief executive) of Novartis and a physician by training. He is also frankly pro-market and pro-American, both of which have made him a target for some criticism in Europe.

Vasella emphasized that there is no single model that works best, but he explained that France and Britain are better at tackling diabetes and lung disease because they take a systemic approach that gives all health-care providers incentive to focus on early detection and cost-effective treatment and that makes wellness the goal.

“In America,” he said, “no one has incentives to make quality and cost-effective outcomes the goal. There are so many stakeholders and they each want to protect themselves. Someone needs to ask, ‘What are the critical elements to increase quality?’ That’s what we’re going to pay for, nothing else.”

I asked him whether the lesson he has drawn is that only the government can produce system-wide improvements. “It pains me to say this as a free-market advocate, but you have to have [the] government act in this case. Health care is very complex. Only at a systemic level can you figure out what works best based on the evidence, and what procedures and treatments are not worth the money,” he said.

-- Fareed Zakaria