Dr. Burns is the James Joo-Jin Kim Professor and Professor of Health Care Systems in the Wharton School at the University of Pennsylvania. He is also Director of the Wharton Center for Health Management & Economics. Dr. Burns teaches courses on healthcare strategy, strategic change, organization and management, managed care, and integrated delivery systems. Reviews of two of the four books written by Dr. Burns are now featured at our Business Bookshelf.
Burns and several of his Wharton School colleagues collaborated on this book as well as a subsequently published book, The Business of Healthcare Innovation, reviewed elsewhere. In the later work’s Introduction, when explaining the value chain perspective, Burns observes that it “analyzes the entire sequence from raw materials (input) market to final customer (output) market. The sequence is labeled a ‘value chain’ because each link in the chain adds value to its inputs. Each link seeks to maximize its contributions to the total product’s value added, thereby capturing as much profit as it can. This may involve focusing on only those links which add the greatest value (and let other firms focus on links that add less value), or encompassing as many links as possible in order to maximize the total profit captured (and leave as little as possible for other firms to divide up).” This is a key point because whatever decision is made, there can be–and almost always are–significant consequences insofar as gross volume, net income, and market share are concerned. In this earlier published volume, Burns and his Wharton School collaborators focus on a large segment of the healthcare industry, which, until now, has not received the attention it deserves. They rigorously examine “the trading relationships between [and among] the producers (manufacturers) of health care products, the purchasers of these products (group purchasing organizations, wholesalers/distributors), and the health care providers (hospital customers) that are the end users of those products–hence the title of this book.” Here are some of the questions to which Burns and his Wharton School collaborators respond.
It is important to keep in mind that this book was published in 2002. There have been several major developments within the healthcare industry since then, several of which Burns and his Wharton School collaborators examine in The Business of Healthcare Innovation (published in August 2005). In the concluding chapter of this book, Burns and John R. Kimberly suggest that in order to avoid the failure of prior organizational innovation (e.g. integrated healthcare), “the revamped health care value chain must find parties willing to pay for it.” Given the nature and extent of the investment required, it seems imperative that all of those involved share the costs as well as the benefits of organizational innovation. According to Burns and his Wharton associates, there is no acceptable alternative.
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