 |
 |
|
 |
||
Print 
Download Reader 
|
|
|
|
||
Print Download Reader
 |
||||||
Remarks as Prepared to the American Dental AssociationMy wife Jackie and I had one of life’s great privileges this year. We became grandparents for the first time. In fact, it happened twice. A friend explained why there is such a strong bond between grandparents and grandchildren. He said, “They have a common enemy.” I’m going to spare you pictures or stories of little Braden or Ava, but I want to tell you one way that it has affected me. I have begun to see the passage of time in a different way. Standing at a hospital bed, I watched my son holding this tiny little soul, and suddenly I realized how quickly the past 25 years have passed. It was just yesterday that I held him for the first time. The lesson: Time passes. There is a phrase sociologists use: Demographics are destiny. Today, I want to talk about health care, and where the passage of time is leading and controlling our own national destiny. I am 55 years old. When I was born, health care occupied between four to five percent of the total economy. This year, when my grandchildren were born, one generation hence, our nation spends 16 cents of every dollar it generates on health care. Time passes so quickly. It won’t seem long before they are in the first grade. As they grow, we’ll start going to their soccer games and dance recitals. And though it won’t seem possible, they will turn nine years old. While that’s happening, health care will continue grow. By then, it will be 20% of the entire economy. It won’t be long before I get that call, “Grandpa, I got my drivers license.” It will happen, because time passes. Before you know it, she will finish college and soon be holding a baby of her own. I’ll be about 80 years old, and starting to think about retiring. If nothing has changed by then, health care will be nearly 30% of the economy. Now, if you’re like me, you are skeptical of logarithmic projections of current trends, because we all know that won’t happen. We will have either fixed it, or our nation will have been eliminated from the economic competition. In a global economy, there’s no place on the leader board for a nation that spends 25 or 30% of its entire economy on health care. Why? Because any nation that devotes that much to health care will have neglected education and all the other things it takes to maintain economic leadership. The human body has a warning system. It’s called pain and when it occurs, we are motivated to do things we otherwise might not be willing to do. The economy has the same warning system and people are feeling economic pain. Consumers are feeling it in their paychecks. The teachers in my home state were given the biggest salary increase in many years, but the take-home pay of most went down because of health care costs. A recent survey of employees reported health care costs were the second biggest concern of employees, exceeded only by losing their job. Employers are feeling it. They are finding it more and more difficult to compete with companies from other industrialized nations who devote less than half of what they do. You have all heard General Motors complain that the cost of a U.S. automobile contains more for health care than steel. I recently talked with the CEO of Starbucks Coffee, and he confided in me that they pay more for employee health care than coffee. Doctors and hospitals are feeling it. You want to provide high quality care for your patients, but reimbursement rates are going down, costs are going up, and for reasons that are completely understandable, you worry about the future. Enough about the problem: Let’s talk solutions. Today, I would like to talk about things we can do to ease the pain. I want to talk about a series of actions that the federal government is taking over the next two years that will initiate a decade-long reshaping of our health care system. Before I do that, could we just acknowledge that intuitively everybody here knows the biggest reason health care costs are going up: We don’t take good care of ourselves. Until we approach prevention and staying healthy with the same rigor we have for treatment after we are sick, a significant part of this problem will persist. We own that problem, every one of us. There’s another problem we have to own. Our health care system is cost-blind, quality-deaf, and our payment system rewards the wrong things. The way our system works, nobody knows the cost and it’s just about impossible to get an independent assessment of the quality. Patients and providers alike need to know—in fact, we deserve to know—the quality of care we get or give. How do we get there? We might start by admitting that we really don’t have a health care system. What we have is a large economic sector. There are millions of Americans who provide health care, or work in related businesses. But there is nothing that connects them into a system like every other economic system we have come to depend on. We all depend on economic systems to make life work. Virtually every person in this room has a cell phone. We bought our phone and service from different venders, yet we can call each other. Sellers aggressively competed for our business, but the system allows each one of them to optimize the value they give their customers. Most of you flew here on an airline that aggressively competed for your business, but each used the same system to optimize the quality and price they could offer you. I carry a bank card in my wallet and so do you. Banks compete aggressively for you to carry their card, and yet you can use an ATM or a computer anywhere in the world. They compete but use the same economic system to create value for those they serve. Our task, over the next decade, is to organize our health care sector into an economic system that rewards choices that produce high quality, low cost care. How would a system of competition based on value operate? For one thing—it must be transparent on cost and quality. Today, if a patient needs a hip replacement, they are typically given a list of hospitals and doctors that the insurance company is willing to pay for. That’s about all the patient knows. Wouldn’t it be better if the patient could be given reliable information on the number of similar procedures the provider had done during the last year? Wouldn’t it be better if they could know the quality of the outcome and the price? We need a system of competition in health care that is based on value. Value isn’t just price; value is the combination of quality and price. There are four cornerstones to a system of competition based on value. The first cornerstone: Connected interoperable electronic health records. The second: An independent assessment of the care a patient receives based on a standard set by medical specialists in the field. The third cornerstone: Information on cost of care that is understandable and comparable. The fourth cornerstone: Competition, incentives motivate. Given reliable information about quality and cost, patients, doctors, hospitals, and payers will make decisions that improve quality and reduce the cost overall. Progress is being made on all four cornerstones. Imagine walking into a bank to make a deposit in your savings account. The teller pulls a 5”x7” card from a green can that sits on the counter and records the amount of the deposit. Then a month later, the teller pulls the card from the can and calculates the interest earned. Unthinkable, but 85% of all medical records are paper. What’s more, those that are electronic are not interoperable. For electronic health records to become interoperable, national standards are needed. This is a problem faced and accomplished by every economic system including cell phones, bank cards, airlines, the internet. The good news: it is happening in health care, too. Measuring the quality of health care is the most challenging cornerstone, but progress is being made. Already, the AQA Alliance and Hospital Quality Alliance have developed quality measures for frequent procedures and conditions. The biggest challenge goes back to a lack of electronic records. Quality measurement, in most clinical settings, is a nurse that comes in on a Saturday and surveys a two-foot-high stack of paper files to see which patients got their hemoglobin A1C checked or when an antibiotic was administered. That isn’t a scalable model, and we have to get better at this. The quality measures need to be developed by doctors. If the doctor and the patient don’t accept the standard, the measure is meaningless. The third cornerstone: Cost. Today, the healthcare system isn’t organized in a way they can answer the question: How much will this cost? They simply don’t know. I had a conversation with one of the nation’s governors recently who was recovering from a knee replacement. He told me about having breakfast with his surgeon. He asked the doctor how many similar operations he performed; the answer was several each week. “Do you have any idea who much they cost?” He said, “I really don’t—eighteen or twenty thousand,” he guessed. No, the Governor told him, “It’s $34,000 so far, and I don’t have any of your bills yet.” That is significant, because if you ask a health economist what the most expensive medical device in a hospital is, what do you suppose they will say? It’s a ballpoint pen in the hand of doctor. Different doctors, treating the same conditions with similar outcomes, range widely in the costs incurred by their patients. Without consciousness of cost, we can all lose sight of value. The AQA Alliance in conjunction with the American Health Insurance Plans, are developing standards that will facilitate the measurement of price-based on comparable episodes of care. Undoubtedly the most important news on the development of incentives is the advent of pay-for-performance measures. It is a near certainty that pay for performance will be part of the reimbursement scheme of nearly every large payer in the near future. Not only are incentives rapidly becoming part of the provider landscape, but they must also become part of the landscape for consumers as well. When providers or patients have reliable information and a financial reason to care about value, the quality goes up and the price goes down. How would consumers actually get this information? The collection and development of this information will have to be done in local and regional quality collaborations between payers, providers, and health plans. Dozens of these are now starting to form spontaneously, and we are working to weave them into a formalized network. As they begin producing information, consumers will get it from a variety of sources, ranging from their employer or insurance company, to web-based services that will begin to assemble it into helpful consumer sites. I feel confident that none of us here is unrealistic about the difficulty. Changing the health care sector has proven to be hard. In fact, many people believe that there simply isn’t enough political will to change health care. I would suggest lack of political will isn’t the problem. In fact, the opposite is true. It is my observation that there is an over-abundance of political will. Once any meaningful change is proposed in a legislative setting, everyone unholsters their political will and points at each other. A perpetual standoff is created among economic interests. We need a new kind of leadership to solve this problem. The only force powerful enough to change the course of health care is consumer demand. Over many years, large payers of health care have attempted to organize health care into a more rational system. They have not succeeded. I believe their failure in large part is because the largest payer in world has not been part of the effort. I’m speaking of the Federal government. Between Medicare, Medicaid, the Department of Defense, Veterans Administration, and the Office of Personnel Management, the Federal government pays for nearly 40% of the health care in America. Without Federal leadership, it is simply impossible for any group of payers to get to critical mass. That has changed. On August 22 of this year, President Bush signed an Executive Order directing Federal agencies to make four important changes as a payer of health care. You will recognize them as the four cornerstones of a system of competition based on value. First, if you desire to do business with the Federal government electronically, your organization will need to migrate to health information technology systems that are interoperable according to recognized standards developed collaboratively within the industry. Second, if you desire to do business with the Federal government in the future, you need to adopt to quality standards currently being developed by the various specialty medical organizations. Third, if you are an insurance company and want to do business with the Federal government in the future, we need you to organize your claims information in a way that we can create comparable episodes of care. Last, we intend to begin moving to a system where at least part of the payment structure is a reward for high quality. The President feels strongly that this isn’t just the Federal government acting alone. As Secretary of Health and Human Services, I have asked the nation’s largest employers and unions to join with us in adopting the same four cornerstones. It is happening. In fact, in March or April of next year when payers put out their requests for proposals for 2008, over 60% of the entire marketplace will include these changes as a significant part of their criteria. No two-trillion-dollar sector organizes itself into an economic system quickly, but the process has begun. Electronic health record vendors will now need to adapt to provide interoperability. The medical community is organizing to measure and report quality. Insurance companies are preparing to begin pooling claims data in episodes of care. The Federal government and other payers are standardizing pay-for-performance measures. Within two years, competition based on value will begin to happen in some communities on frequent procedures and conditions. Within five years, the word “value” will be a standard part of the medical lexicon. In a decade, it will be ubiquitous. In conclusion, let me acknowledge there is a lot of change here, and change is hard. In a global economy, change is inevitable. There are three ways we could handle it.
This is the United States of America. We have become the strongest and most influential force in human history because we have been willing to lead. And lead, we will. Last revised: November 2, 2006 |
|
