Thomas Friedman in The New York Times has written a seminal article on the (free registration required) impact of globalization on industrial competitiveness. Simply put, the web of fiber optic cables that now connects the world, coupled with the explosion in wireless connectivity, make borders, trade policies, and time zones completely irrelevant. And, the tremendous investment in education on the part of the Chinese, Indians, and others makes our lead in some areas of technology, science, medicine, incredibly tenuous.
Lots of adjectives, and you may well dismiss this as mere blog ranting. Before you do, note this. India passed its first comprehensive, enforceable Intellectual Property law last month.
Already, pharmaceutical firms, medical technology companies, software developers and the like are flocking to India, and deals are being consummated. India has a long tradition of excellence in science and math education, a highly motivated and ambitious workforce, lots of very experienced citizens presently working in the industrialized world, and many more scientists, mathematicians, physicists, and teachers than we do.
Companies are not investing in India just because it is cheaper. Yes, today the cost of labor is certainly less than in the US or EU, but the quality of the workforce, particularly in the sciences and technology, is rapidly approaching excellence. In the near future, we will find ourselves losing out to India and China not on the basis of cost, but due to their ability to compete head to head with our best.
IBM recently built an R&D center in China. After conducting an IQ test on graduates of the best universities in the country, evaluating the top 20,000, IBM selected the top 20. Unsurprisingly, some of their best research is now coming out of that facility. To paraphrase a Chinese researcher, when you are one in a million in India, there are a thousand others just like you.
What does this mean to you, or more accurately, why am I ranting about this in a blog that is ostensibly about managed care?
It frustrates me to no end that health plans, HMOs, the Blues, employee benefits purchasers, brokers and consultants don’t see the direct and vital link between health care and productivity. We are about to get our collective butts kicked by the rest of the world, in part because the health insurance industry does not understand that they are in the productivity business.
Medical guidelines, drug research, quality of care indicators, physician reimbursement, plan design and provider profiling focus on cost and highly questionable “quality” indicators. This is utter nonsense. If health care providers and payers want to be relevant, they had better figure out that their job, their reason for existence, is to enhance and improve the productivity of their customers’ workforces.
Stop thinking like a cost center and start thinking like a profit center. Or find your customers disappearing as they lose the competitive race to Indians and Chinese firms.