What Can Healthcare Learn From Henry Ford?
By: Patrick Jordan, MBA, MA | August 07, 2014
A year after producing the first Model T and with an eye to improve productivity, Henry Ford famously told his management team that “Any customer can have a car painted any color that he wants so long as it is black.” Nobody liked the idea. After selling 10,607 Model T’s the previous year, which was more than any manufacturer had ever sold, the company’s sales people thought even greater sales could be achieved with more models. Ford disagreed and said they were too preoccupied with the 5% of those with special wants, not the 95% of buyers. It was this line of thinking — addressing the needs of the largest segment of buyers and standardizing production — that took the cost of Model T from $950 in 1908 to $300 in 1924.
Standardization plays a critical role in healthcare. In research, standardization is the hallmark of the scientific method and GCP guidelines, enabling comparisons of patients to patients and medicines to medicines. Standardization can improve health outcomes, sometimes dramatically. By standardizing the way central venous catheters are inserted at the University of Michigan’s ICU, the infection rate dropped by 66% in only three months. In the first 18 months of broader use, the standardized process saved 1,500 lives and $100 million. The remarkable process was not complex — the first item on a five-step checklist: wash hands with soap!
Even with striking benefits and sometimes straightforward processes, standardization can be notoriously difficult to implement in healthcare. The New England Journal of Medicine published data in 2003 that showed that coronary artery disease patients received the “recommended care” 68% of the time, cerebrovascular disease 59%, and chronic obstructive pulmonary disease 58% — despite being three of the leading causes of death. Geography also contributes to the variability. Atul Gawande wrote a seminal piece in The New Yorker in 2009 about the wide differences in healthcare spending between McAllen and El Paso, Texas. Last year The Dartmouth Atlas reported that per capita healthcare spending in Miami was more than twice that of Grand Junction, Colorado. The variation in spending and treatment patterns has been well documented, but what can be done about it is less clear.
In some instances, we are deepening our knowledge about biology and healthcare to such an extent that customization actually becomes the more desirable approach. New insights on genetic markers, such as the BRCA1 gene, epitomize customization, with care tailored to the genetic profile. Socioeconomics and behavioral insights can enlighten our approach to customized care too. Considering that 5% of patients consume approximately half of US healthcare spending, a tailored approach to assisting these high-risk patients—those with certain conditions like heart failure or COPD, those who have been hospitalized in the previous six months, or those discharged on weekends or holidays and without family and social support. One study showed that high-risk patients receiving customized discharge support consumed 50% less Medicare costs than those with the usual care.
It's hard to argue with Ford's view of the importance of standardization. By the time the 10 millionth car rolled off the assembly line, half of the cars in the world would have his name on them. Today, more than 250 models of cars are on the road, so ultimately an argument for customization would hold sway. Yet Ford still had it right about that black car: a century on, the color consistently ranks in the top choices, with manufacturers "customizing the color" with different micas and glass flakes. Healthcare will likely follow the same alternating sequence of standardization and customization, of scaling and refining, to yield better outcomes and costs.