Remember when the health-care cost crisis was at the top of our concerns, before the credit crunch, the recession, the potential demise of the U.S. banking and auto industries, etc., sprang up to demand our attention?  Well, while the headlines have been dominated by other pressing concerns, health-care costs have gotten no better.  Some sobering numbers:  In 2008, according to the National Coalition on Health Care, total national health expenditures were expected to rise 6.9%–two times the rate of inflation. Total spending was $2.4 TRILLION in 2007, or $7,900 per person. Health-care spending represented 17% of the gross domestic product.  Health-care expenditures played a significant role in bringing down the Big Three auto makers and are inexorably pushing federal and state budgets over the edge of sustainability.  According to the Congressional Budget Office, the current system will claim more than 30% of GDP by 2035.

So, as we get ready for the coming debate about universal health care, we thought it worthwhile to point out an interesting article by Atul Gawande in a recent New Yorker about learning from others’ experiences.  The lessons apply to corporate strategy as well.

Gawande points out that many industrialized countries have some sort of universal health care that costs less than the U.S. system while delivering a better result.  BUT those plans take very different forms, and the main determinant of form was not ideology.  Instead, the form of each country’s universal coverage grew incrementally from each country’s prior health-care system.  The article is an interesting illustration of “path dependency” applied to universal health care.

Here’s an excerpt:

Yet wherever the prospect of universal health insurance has been considered, it has been widely attacked as a Bolshevik fantasy—a coercive system to be imposed upon people by benighted socialist master planners. People fear the unintended consequences of drastic change, the blunt force of government. However terrible the system may seem, we all know that it could be worse—especially for those who already have dependable coverage and access to good doctors and hospitals.

Many would-be reformers hold that “true” reform must simply override those fears. They believe that a new system will be far better for most people, and that those who would hang on to the old do so out of either lack of imagination or narrow self-interest. On the left, then, single-payer enthusiasts argue that the only coherent solution is to end private health insurance and replace it with a national insurance program. And, on the right, the free marketeers argue that the only coherent solution is to end public insurance and employer-controlled health benefits so that we can all buy our own coverage and put market forces to work.

Neither side can stand the other. But both reserve special contempt for the pragmatists, who would build around the mess we have. The country has this one chance, the idealist maintains, to sweep away our inhumane, wasteful patchwork system and replace it with something new and more rational. So we should prepare for a bold overhaul, just as every other Western democracy has. True reform requires transformation at a stroke. But is this really the way it has occurred in other countries? The answer is no. And the reality of how health reform has come about elsewhere is both surprising and instructive.

We’re often reminded that path dependency applies to business, as well. Corporate strategies often look great on the drawing board–some action, such as an acquisition, will fill a hole, and the company will go on to great things. But results are often disappointing. Maybe the acquirer isn’t very good at acquisitions. Maybe the strategic vision means moving into a new market that’s more complicated than it appears to be from a distance. Maybe customers don’t act the way a company thinks they should.

The point is this: When companies make a bold strategic move, they can’t deal in the abstract; they have to confront the messy reality that will determine whether a strategy can truly succeed or whether it will just look good in a two-by-two matrix.