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The Real World of Upward Integration in the Health Care Arena

| On 06, Jul 2011

In our efforts to control health care costs, we see all kinds of different approaches being used, a few of which have been discussed in this commentary over time. In the June 29 issue of The Wall Street Journal, pB1, we see an article about a major health insurer (Highmark) purchasing a major health care provider in the Pittsburgh area, the West Penn Allegheny Health System. This is the first major incidence of this occuring in an attempt to control health costs in a major metropolitan area.

This strategy illustrates a key principle we see in the analysis of systems through the eyes of TRIZ and that is upward system integration. The “joining” can be bottom up or top down, but the result is a consolidation of systems in an attempt to reduce cost, system complexity, or both. In principle, this merger of a health insurance company and a medical care provider system is no different that the Black and Decker PainStick replacing a ladder and roller pan. However, as we often mention in our workshops, when people get involved, things are not so clear and straighforward and it will be interesting to see what happens here over the next few years. The goal is to obviously reduce redundancy and costs, but it’s not so simiple as there is another 800 pound gorilla in the Pittsburgh health care arena overseen by the University of Pittsburgh Medical Center (UPMC). As soon as this announcement was made, UPMC said it would not renew its contract with Highmark saying that, in effect, it would be subsidizing its competitor. This will be interesting to watch over time. These two groups do not see the Ideal Result quite the same way!

When we teach TRIZ, we try to point out that, with very rare exceptions in the physical science arena, the definition of the Ideal Final Result will vary with who is doing the defining. Separating a training group into patients, nurses, doctors, hospital administrators, insurance providers, patient advocates, etc. is an excellent way to illustrate that everyone does not have the same definition of the IFR.

Keep an eye on this merger/acquisition and when problem solving, make sure that you have thought about all the different perspectives on the Ideal Final Result.