Courtesy of Knowledge@Wharton

Mike McCallister, president and CEO of Humana Inc., is precise when he chooses his words to describe the U.S. health care industry.

"We don't actually have a health care system. We have a lot of different systems that are glued together," he told an audience at the recent 2009 Wharton Health Care Business Conference.

McCallister began his keynote address by making that distinction, he said, because, in spite of all the political and economic talk going on, there is no single "health care system" in this country that needs to be reformed. Rather, he said, there is the health care sector -- a gigantic mix of varied players -- that is "broken, but can be fixed."

Because we don't have a system, he added, "we have the wrong objectives. We have the wrong forms of competition. The wrong geographic markets have been established, the wrong strategies and structures. The incentives are wrong for virtually everyone, including providers, payers and patients."

Humana, headquartered in Louisville, Ky., is one of the largest health and supplemental benefits companies in the country, with more than 10.5 million medical members. No longer in the hospital business, Humana is seeking to establish itself as a leader in "consumer engagement," or, as McCallister told his audience, in "harnessing the power of the consumer." In other aspects of the marketplace, consumers are "very powerful because generally [they] have actionable information at [their] fingertips," but in health care, "you can't get the price and quality information."

While McCallister applauded the goal of universal coverage, saying that "in a nation as wealthy as ours ... everybody should be covered in some fashion," he added that the endpoint will be impossible to achieve unless two interrelated objectives are met: "Cost and quality improvement is the dual imperative."

Excessive use of services is at the heart of the health care crisis. "If you lie down long enough, someone will scan you," he said, and the doctors and hospitals making money off the CT or MRI or PET scan aren't necessarily all to blame. Patients, he noted, can't seem to get enough medical care: The number of hospital and doctor visits increased by 20% in the past five years, and the demand for services is going to accelerate even more as 70 million baby boomers head into Medicare and the population as a whole keeps getting more and more obese, driving up the incidence of heart disease, diabetes and orthopedic injuries.