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by Yaneer Bar-Yam
Executive Summary

Saving money on healthcare: For decades, key decision makers in the public and private sectors have looked at cost-effectiveness in health-care as a top priority but with little success. Their steps have focused on putting a limit on fees, services, or care options. The upshot is that cost and quality seem to be in conflict.

We can demonstrate that harnessing costs need not sacrifice quality. Quality service and low costs can be achieved if there’s the right match of the task to those who perform it, and the right incentives to improve performance.

Making sure the right people and the right organizations deliver services is the key to effective and affordable healthcare. Neurosurgeons administering flu shots or nurses performing neurosurgery are obviously ineffective—less blatant mismatches have nonetheless taken a toll on health costs. We need only point to the frequent use of emergency rooms for non-emergency care.

A major problem hindering improvement efforts is that current incentives don’t encourage an effective use of the resources that are available. In order to address the health-care cost quagmire, it’s necessary to inherently promote the best use of resources. To this end, neither free markets nor managed care guarantees the right incentives. An oversight system that is effective must not interfere with the performance of care. Otherwise, cost control only makes care more cumbersome.

In this series, we present eight steps to dramatically improve the effectiveness of the healthcare system, both for those who receive services and those who give them.

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