Charlie Rose Talks to Harvard's Michael Porter

The Harvard professor and competitiveness guru discusses corralling health-care costs and reanimating the American economy
“Despite the rhetoric I hear, thank God employers are still in the health-care system” Photograph El Tiempo/ZUMA Press

In your role at Harvard, you get to range over all the disciplines, right?
I teach in the medical school, the School of Public Health, the Kennedy School of Government, and the Business School. And it’s the best perch … because most of my work crosses boundaries. The work I’m doing on the way we deliver health care draws on ideas that are well-established in the management field but had really never entered the thinking of people in medical schools and hospitals.
What’s going to turn around health care in the U.S.?
The problem of health care today isn’t the one we’ve been debating for the last 20 or 30 years. The problem we’ve been debating is insurance—how to get more people covered. That’s important, but ultimately the issue is how we can get more value: improve the outcomes for the money we’re spending and deliver those excellent outcomes more efficiently. And that will require a restructuring of revolutionary proportions in how we organize health-care organizations, how doctors and nurses work together.
Describe this revolution.
Health care historically has been a very siloed field that’s organized around medical specialties—urology, cardiac surgery, and so forth—and around the supply of these specialty services. The patient is the ping-pong ball that moves from service to service. If you’re a diabetic, you need an endocrinologist. You need to worry about your eyes. You need to worry about your veins. Ultimately, health care fails the most basic test. It’s not organized around the needs of the patient. Until we make that fundamental transformation, we’re hobbled in our ability to bend the cost curve. Health care isn’t the 900-pound gorilla. It’s the 9 million-pound gorilla that will dominate our future budget problems.
We’ve just come through a huge debate on health care. We’ve dealt with access. Was cost just too much to bite off at the same time?
I could only assume that’s why. It was fundamentally the reform of the insurance system. And many of the reforms were good; we need to give full credit there. One of the problems we have in health care is we’ve got a lot of preventable things that are really driving the cost up. And we haven’t cracked the code of how to do that. The best work on prevention now is actually in the corporate sector. Companies understand that if their employees are sick, it’s really expensive. So despite the rhetoric I hear, thank God employers are still in the health-care system.
Tell me about this special report from the Harvard Business School on America’s economic future.
We decided to take this issue on because we were deeply disturbed about the path that the U.S. economy was on. We were seeing things we haven’t experienced in this country for many decades. Things like the sputtering of the job creation machine. If you look from 1970 to 2000, we would create, on average, 2 percent, 2.1 percent job growth every year. Around 2000, 2001, that just stopped. And our wages weren’t growing.
Is that because the world was changing and we weren’t?
That’s probably the biggest part of the problem. The rest of the world had been steadily improving their competitiveness, their skills, their infrastructure, reducing corruption, lowering their taxes.
How do you draw the line between spending and investing in the future?
Every person will define what they want as investment. But the data show that the things we really know are investments, that shape our future competitiveness, are development programs, education. And our physical infrastructure, that allows us to move goods and people and energy efficiently, has been declining. The president is right to be focusing on some of these areas. That said, our means are shrinking. We’ve got to reduce the amount of money we’re spending, and we have to increase revenues, too. But we would prefer that we do that by closing down loopholes and exemptions rather than driving up tax rates.
Does Big Business want a lower corporate rate, or would it prefer to keep the tax breaks?
This raises an important question about how business has contributed to the problem we have now, and part of it is special-interest lobbying. But we found, from thousands of executives—we surveyed our alumni for the first time in the history of our business school—and there’s overwhelming consensus that we should lower the corporate rate and close the loopholes. And the general public’s favorite, out of all the things we recommended, was to reduce the corporate tax rate and eliminate loopholes.

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