Arguably, the United States has the highest share of world-class hospitals. Ask health care professionals about the best hospitals in the world and you will hear names such as John Hopkins, MD Anderson Cancer Center, Harvard Medical School and the Cleveland Clinic.

With $800 billion spent annually on U.S. hospitals, the United States has the best-funded hospital infrastructure in the world.

Why, then, does the United States only manage to have the same life expectancy as Cuba, an economically underdeveloped nation? Is the U.S. health care system doing its job right? To put the question more broadly, how can we judge the performance of a health care system?

Health care systems have one primary purpose to keep people healthy and to do this cost-effectively. In 1996, McKinsey introduced a metric called health care productivity to quantify this.

This metric measures the reduction of disease burden achieved for every dollar spent in health care. Simply put, a good health care system will have a high level of health care productivity.

Stunningly, among the 34 OECD member countries, the United States has the lowest health care productivity. At first glance, this could lead one to conclude that the U.S. health care system is a total failure.

But if we measure productivity by disease condition, a slightly different and more nuanced picture emerges. The United States has the highest productivity in the world for managing breast cancer, but the lowest productivity in diabetes!

We see this duality in almost all high-income countries. Switzerland is the most productive country in the world for treating strokes, while being very poor at breast cancer. Canada is most productive in managing high blood pressure, but very poor in schizophrenia. The UK is world leader in managing diabetes, but does a poor job at handling asthma.

I am not arguing that the United States health care system does not have systemic issues. Issues such as defensive medicine (in response to a highly litigious legal environment) and lack of care coordination are well recognized.

In fact, all health care systems around the world have systemic issues. The point here is that, even within these constraints, they can do well in managing some diseases. The question then becomes, why do some countries succeed, while others do not?

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Health Care and Productivity