Excerpts from Priceless: Curing the Healthcare Crisis

Special Publications | Health


Monday, July 23, 2012
by John C. Goodman


CAN ENTREPRENEURSHIP BE COPIED?

Time and again, President Obama has told us how he intends to solve our healthcare problems: spend money on pilot programs and other experiments, find out what works, and then copy it. He’s also repeatedly said the same thing about education. The only difference: In education, we’ve already been following this approach with no success for twenty-five years.

Still, if the president were right about health and education, why wouldn’t the same idea apply to every other field? Why couldn’t we study the best way to make a computer or invest in the stock market—and then copy it?

I want to propose a principle that covers all of this: entrepreneurship cannot be replicated. Put differently, there is no such thing as a cookbook entrepreneur. Let’s suppose for a moment that I am wrong. Suppose we could study the behavior of successful entrepreneurs and write down the keys to their success in a book that everyone could read and copy. Consider Bill Gates, Warren Buffett and Sam Walton. If we could discover what they did right, and everyone copied their behavior, then we could all become billionaires. Right? Well, not quite. Here’s the problem: In order for each of us to be a billionaire, we have to each be doing something that produces a billion dollars’ worth of goods and services. But if all we’re doing is copying action items out of a book, then we are not doing anything special. And if we’re not doing anything special, we are definitely not producing a billion dollars of value added.

In mathematics, Gödel’s Theorem says that no complex, axiomatic system can be both consistent and complete. What I am proposing is something similar for social science. Although some habits of highly successful people can be identified and copied, not enough of them can be copied for each of us to become highly successful ourselves through copycat behavior alone.

This is Goodman’s Nonreplicability Theorem.

In healthcare, it’s already been borne out. Scholars associated with the Brookings Institution identified ten of the best hospital regions in the country and then tried to identify common characteristics that could be replicated.1 There were almost none. Some regions had doctors on staff. Others paid fee-for-service. Some had electronic medical records. Others did not. A separate study of physicians’ practices found much the same thing.2 There were simply not enough objective characteristics that the practices had in common to allow an independent party to set up a successful practice by copycat alone.

By the way, this is not bad news. It is good news. How much fun would life be if we all went around copying what we read in a book?


1 Atul Gawande, Donald Berwick, Elliott Fisher, and Mark B. McClellan, “10 Steps to Better Healthcare,” New York Times, August 12, 2009, http://www.nytimes.com/ 2009/08/13/opinion/13gawande.html. See also John C. Goodman, “The Demand- Side Approach to Changing What Doctors Do,” John Goodman’s Health Policy Blog, November 16, 2009, http://healthblog.ncpa.org/the-demand-side-approach-to -changing-what-doctors-do/.

2 Mark Kelley, “Productivity Still Drives Compensation in High Performing Group Practices,” Health Affairs Blog, December 20, 2010, http://healthaffairs.org/blog/2010/ 12/20/productivity-still-drives-compensation-in-high-performing-group-practices/.