Remarks as Delivered at 1st Annual AHRQ Meeting

Thank you very much.

What a nice introduction. Isn't she a terrific person?

One of the great privileges of my public service has been to work with wonderful people, none more capable than Carolyn.

There are big things happening in the Leavitt household these days. My wife and I have just become grandparents for the third time this week. I'm happy about that.

Someone explained to me not long ago why it is that grandparents have such a close bond with their grandchildren. He said they have a common enemy. I have yet to find that that's true, but it's a good thing to look out for.

The daughter that just presented us with this beautiful little girl Jaclyn Grace is my only daughter. We have five children. Some years ago, when she was about eight or nine, I was just beginning my public service, and I was on my way out the door early for a meeting about an hour and a half away. And I was leaving a little bit late, and so I was hurrying, and she came rubbing her eyes out of her room just as I was ready to walk out the door.

She said to me, "I need to ask you a question." I said, "Well, what is it?" She said, "I need to know if you get married, does it mean you're going to have a baby?"

And I said, "I'm kind of in a hurry, but the answer, I said, is no. That's not what it means." She said, "Well then how does that happen?"

So, you know, now I'm in fairly serious trouble, but I said, "Anne Marie, I really want to answer this question." My wife Jackie and I really try to be very careful about these kinds of answers. So I said, "I want to answer your question, but when I do I want mom to be there." She said, "You don't know, do you?"

I reminded her that she now does know, and I'm happy for that now as the beneficiary of her new knowledge.

May I just acknowledge, as well, what I think an important meeting this is? It's the first meeting of what I think will be many groups and organizations like this one that will come together to talk about what I believe is an emerging part of the American health infrastructure. And while I don't suspect you will issue T-shirts saying, "I was there for the first meeting," I think all of us could and should remember how important this was as a milestone.

I believe what we are doing is building for the first time a true healthcare system in America. I've been known to say I don't think we have a healthcare system in the United States right now. What we have is a big, vast, rapidly growing healthcare sector, but there's nothing that qualifies it really to be a system.

Now, we are surrounded by economic systems. We all have cell phones that we carry on our hip now. That's part of an economic system. You buy your minutes, and people compete on the basis of how much the minutes will cost and how fancy the telephone is, but they all work on the same system. They optimize the value they provide us by using this system.

Most of you flew here on an airplane from somewhere in America. People competed for your ticket, and different airlines offered you different prices, different service, and they have a brand that they've come to provide, but they all use the same system to optimize that value.

We have bank cards that we carry around. Mine's blue. Yours is probably red because some bank competed on the basis of interest rates or different qualities of service or location or something that attracted us to that bank, but they all use the same system to optimize the value that they provide. Nothing like that, really, in healthcare.

Now, we have micro systems. We have clinics and hospitals that kind of operate within, but there is no such thing in my judgment as a healthcare system yet. I believe we are building it.

I might add I don't think there is any such thing as a national market either. Healthcare is a sector made up of a lot of small or large metropolitan healthcare marketplaces. And I think those are critical components of the problem we're dealing with. But I think what we're talking about here is how, over the next decade, do we transition from an economic sector into an economic system?

Now some of you have heard me tell this story before but I'm going to repeat it because I think it's such an important principle of what is missing in our sector and what we're doing to organize it.

I'm 56-year-old. When I turned 56, I was reminded that it was time to have one of those over 50 tests. I'm talking about the colonoscopy. And I had one when I was 50. I don't remember a lot about it. I took my insurance card in and handed it to the doctor and sort of set back to endure the experience. But in the ensuing years two things happened. One is I became Secretary of Health and Human Services, and the other is I got a health savings account and I was a little more interested in what the price was, frankly.

And so this time I called a couple of hospitals and said, I need a colonoscopy, how much would it be? And both of them said to me, "I can't tell you. It's not the way the system works. You just come in and give me your card and we'll sort of work it out with your insurance company."

But that felt unsatisfying to me, and I decided I'm going to make a little field trip out of this. So I went back to HHS and I found some folks like Carolyn, and I said, "Why don't we organize what you in the business call an episode of care? Let's create a little bid sheet for my colonoscopy."

So I then called the doctors back and we went through it item by item. First of all, I was stunned by the price. I don't know what they charged me six years ago. I'm not sure that what they offered me was what they would charge me if I was there in a different situation, but the first one added up to $6,500. The second one was $5,500.

I went home to my wife and said, "You know, we could be talking about serious money here. Maybe when we go out to see our grandkids we ought to check around. Maybe it'll be cheaper out in, where we live in Utah." And sure enough it was. It was substantially cheaper than Washington D.C., just under $3,000.

Then a really interesting thing happened to me. I started asking myself, I wonder if there's some difference between the $6,000 version and the $3,000 version. I mean if you're going to get a colonoscopy, you don't want to cut any corners, right?

Wouldn't it have been a lot easier if, rather than having to make up my own bid sheet, there had been some kind of standard episode of care that I could compare? Wouldn't it have been a lot easier if I didn't have to worry about that difference, that there would be a real measure of quality that I could compare? Wouldn't it be a lot better if I didn't have to make a lot of embarrassing phone calls to come to that conclusion?

I think what I have just described is a competitive environment, a competition based on value in a health care system. Now we've all talked and I hope there's been discussion here about the fact that there are four cornerstones that go into developing that: electronic medical records, quality standards, standards for grouping charges, and then incentives where everybody has a motivation to have the higher quality at the lower cost.

I've come to realize that building anything you have to start with the basics. There's a place down the road from my house where they're building this very large building. And you've seen this happen. What do they do first? First thing you do is you dig a giant hole. And then equipment and people and trucks go into that hole, and you think there's nothing happening there. I wonder what they're doing in that hole. And it goes on for months. And then finally it kind of tops out, and then boom, it pops up. And then things get very slow again while they do the hard finishing work.

I think in building this system of health care that we're talking about and that you're all a participant in, that we have been working dutifully inside that hole. And it's not been evident to everybody in the world exactly what we're doing, but we're making substantial progress.

And when they build a large building, they often put up a big sign that has a picture of what that building is going to be on, in the future. And it gives people a sense of vision that something is going to happen. I, frankly, think we all need to do a better job of sort of putting that picture up in front of the world so that they know what we're moving toward. That we're moving toward a period of time when healthcare not only will be offering information but will also be far more convenient, and we need to do a good job of painting that picture.

But nevertheless, let's talk a little bit about what's been going on inside that giant hole the last several, few years. Let's just take each of the four cornerstones.

The first one - electronic medical records. All of you know that we have to deal with standards in order to make electronic medical records interoperable to create this system. Most of you will be aware that the last 20 months or so we've been working in the American Health Information Community or AHIC.

One of the first things we did was to create a standardizing or a certifying body. We refer to it as CCHIT. This is a means by which we can solve a very difficult problem that was presented to me by a young pathology student out at Stanford. I was there giving a speech about health IT and I was wandering through the hospital, and a guy called me over and he said, "I saw your talk. I thought you were right. I really believe this. And I'm just about ready to go off and start a practice in Tennessee." And he said, "I want to buy a system. I've just got one question for you: Which one should I buy, because I can only afford to do this one time, and I don't want to get one that's going the wrong direction?"

Well we didn't have a way to answer that question until about a year and a half ago, but one of the things that happened down in that hole was that we created CCHIT standards, and we now have 75 percent of the market that have begun to adopt that seal of approval that says we're moving toward interoperability.

Now we're doing everything we can to begin driving people into systems that have adopted that. We think that's a very powerful way in which to achieve standardization, and it's happening. We're working now to make certain that what goes on in AHIC in the development of standards and CCHIT can be perpetuated. We're working to move AHIC out of HHS into a private sector model where government is a participant and a sponsor, but it is operating independent of government so that as different administrations go and come over the years, it continues without political influence or, for that matter, dependence on government appropriations alone.

We've also, of course, been working on the second cornerstone, which is standards. Through the work of AHRC and many of you who in this room - AQA and HQA - we've developed basic standards. Now frankly, let's admit we're not very good at this yet, but we're getting better as we go, and we're learning as we go. And our momentum is beginning to increase.

If there were a motto, I think, that would best over-arch all of our work in developing this system, it would be "national standards, neighborhood strategies." Why do I say national standards? Well obviously if we're going to create this system, we've all got to be measuring the same thing and using the same language. Why do I say neighborhood strategies? Because it became clear to me, after having visited nearly 50 cities now where I am seeing quality initiatives undertaken, that this has to be done locally. This has got to look like a network of local activities as opposed to one giant mainframe. In other words, instead of having a mainframe that looks like a1960s or '70s, this has got to be built like a network of PCs.

For two reasons, one is just the basic logistics, but the other and perhaps the most important is trust. It's become clear to me that physicians and doctors and others have a big stake in this and that they're not about to trust somebody in Washington, D.C., alone to put all their data and to give them all their information. What they want is information that they can deal with, organize, and know who is providing it.

I talked to a doctor one day in Indianapolis, a sole practitioner O.B. He's very involved in one of the pilots. And he said to me, "Look, I'm obviously a big believer in this and I'm spending a lot of my time, but," he said, "imagine my surprise when I got a report card from one of our insurers that said I was a 20 percent doctor on the question of do I test my patients for HIV. Well I knew it was wrong because I test every one of them. I don't even give them an option. But I thought maybe my system is breaking down. So I went back and pulled every file, and we had done the test." He said, "I thought maybe I was losing money and we hadn't billed them, so I went back and pulled the files, and we had billed them all. So I'm trying to figure out, where is it that, in this process, that it broke down." He said, "I ultimately found out that the people doing the measuring and the insurance company were using different measures. One was using a procedure code, the other was using a billing code, and they were talking by each other."

Well what I learned from that was that, first of all, it meant a lot to that doctor to have it be accurate. It meant a lot to his patients, and he was willing to go along, so long as he could go down and work with the people who were doing the measure and fix it. He would have been far less willing to do it if he had to go someplace else.

So it became clear to me very early that if we were going to build this network it had to be national standards and neighborhood strategies.

Well where do we go from here in developing what I believe becomes a network? Many of you are here from Community Leader organizations. I want to thank you for making the commitment to come. We now have nearly 50 of them. May I describe for you the vision that I see in developing this network. We want to develop a framework for this network of value, of what we call Chartered Value Exchanges.

Now what is a value exchange? First of all, a value exchange is local - I want to underscore that word - local. Now local could be in a community. It could be in a metropolitan area. It could be in a region, but it is not national. It is local because it's where purchasers and plans and providers and consumers all work together to get usable information about quality that's available to the public. And again, it is local but it uses national standards.

Now there are dozens of potential value exchanges. The nearly 80 Community Leaders, of which nearly 50 are represented here today, I view as aspiring value exchanges. They vary in sophistication. Each one is unique, but they all aspire to the same thing, and that's to be able to measure quality and to be part of this network that becomes the system of healthcare in our country.

As I had mentioned earlier, there are varying degrees of sophistication, but we're working with all of them to improve it. And that's why it's so important that you're all here.

We're planning to issue charters for these value exchanges this fall. Now you can see, and I'm sure there's been some discussion about what the value of becoming a charter is and what the requirements are to become a charter. But I'd just like to say to all of you who are here as Community Leaders, that designation was created for the purpose of being able to nurture your efforts into what we hope and aspire you to become, which is a value exchange.

And once you become a value exchange, then we're able to do other things to help you because we know that you have sufficient sophistication and enough maturity in the development of your organization that we can begin to hook you into this network.

So ultimately what I see is a network, literally, across the entire country where every community has or is part of a value exchange. And through that value exchange we're able to develop information that is local but nationally standardized, and that people who are at the physician and provider level can deal directly with a local organization but know that it is part of a larger, national roll up.

I'm very pleased to announce today that we'll be going the extra mile for our newly chartered value exchanges. Instead of giving them raw data and leaving them to crunch the numbers, our Centers for Medicare and Medicaid Services will begin to crunch the numbers and to share the results of our chartered exchanges.

These measures will provide results on physician performances that will save the exchanges a lot of money and time. They'll provide actual ratios for specific physician groups on performance measures that have been adopted by AQA and endorsed by the National Quality Forum.

The exchanges will be able to see for themselves how many and how often certain groups of doctors have prescribed a certain procedure, for example. Value exchanges will also provide similar results for the private healthcare through a project that's been funded by the Robert Wood Johnson Foundation.

We've worked very closely with Robert Wood Johnson and other foundations who have an interest in this. We've wanted to create criteria for a value exchange that's very similar to the criteria that they have adopted and who they're going to support. I hope if you are a Community Leader you get that picture, that we have given you the designation of Community Leader because we think you have potential to emerge into a quality value exchange. And we are working with the others in the funding community that can, in fact, begin to add to your capacity.

So that's a roadmap to get there. And we think down in this large hole that we're working in over time, we'll begin to see this network begin to expand.

I might add that CMS is already providing consumers with a lot of data. Recently we began to post mortality rates for heart failure and heart attack at more than 4500 hospitals across the country. The rates are risk adjusted, taking into consideration previous health problems so that hospitals can be fairly compared one with another.

We've also posted a Web site with CMS information on payments for 2005 to hospitals and physicians. That information has been updated with data for 2006. Yesterday a table was added that I'm told shows physician payments for preventative services.

This is all about creating an atmosphere of transparency. And it all goes back to what we talked about before, and that is building a system where people have transparent information about cost and quality and creating a means by which the incentives drive people to higher quality and lower cost. And when we're done, I believe we're going to have a system, and it will make our healthcare system dramatically better and the lives of people improved.

In the words of Winston Churchill, this isn't the end, or even the beginning of the end, but it is at least the end of the beginning. Though I think it was Winston Churchill (wasn't it, Carolyn?) who also said the thing he admired most about Americans was that they always do the right thing after they've tried everything else.

So we're making great progress. Our goal is to have better health at lower cost for all Americans, and this is so important that we do it. Not just health-wise, but we've got an economic stake here. Things have changed so dramatically I this country, and the environment in which we're operating is so different than it was 30 years ago.

I mentioned that I was 56. When I was born in 1951, health care was four percent of the entire economy. When my daughter that I talked about was born, it had doubled to eight percent. When I walked into the hospital room and saw that grandbaby, I walked into a hospital that was part of a sector that now occupies 16 percent. It had doubled again.

That has economic ramifications that are profound. This problem is significant enough that left uncheck it has the capacity to undermine the prosperity of our country and our comparative position in the world and the economy that powers the quality of life that we all enjoy.

This is no casual challenge. It is a significant one that we have to deal with, and at the root of it is quality. How do we provide quality healthcare? And the answer is to create a system, a system that has electronic records that measures quality, that gives people information, and that provides everyone with the capacity to know or to have better quality at lower cost.

Now, it requires a lot of change, and I've come to believe in my own heart that there are three ways we can deal with the change and the challenge that I just talked about. The first is, we can fight it, and there're a lot of folks who have an intuition to do that. If we do, we're going to fail. The world and the global economy and the changes that are coming naturally will cause us to fail if we fight change. The second is we can just acquiesce to it. And if we do, we'll probably survive. More importantly, we could lead and prosper.

This country is 230-year-old. We have become the most powerful and important nation in human history. And we have done so because we've taken a uniquely American approach to solving problems and to creating opportunity and to giving people and consumers information so they can make decisions about their own lives. That's the difference. That's what this is about. It's about empowering people to make decisions about their own lives and not turning it simply over to insurance companies or to the government. It's about giving people the ability to make decisions about their own future.

And I want to leave all of you with the challenge that you go from today, that you go back to your communities, that you energize and lead because if we lead we will prosper, and if we do not, we will not, thank you.

Last revised: March 13, 2008