| Redefining the Healthcare System through Four Cornerstones |
| Executive Advice | |
| By Michael Leavitt | |
| Wednesday, 18 July 2007 | |
 Could competition in healthcare based on the best quality at the lowest price be the answer to repairing a problematic system? Doctors, hospitals, pharmacies and labs would be connected electronically. The medical clipboard you are handed every time you walk in to see a doctor would be gone forever. Patients would able to consult with their doctor on e-mail if they choose. Patients – and others they permit – would be able to access their medical records in a convenient way. They would fill out less paperwork, have a better idea of how they were managing their health conditions and get automatic reminders when it was time for a follow-up appointment or to refill their prescription. Prescriptions would be submitted electronically to the drugstore. You can book an airline reservation and pick your seat assignment online – shouldn’t you be able to do the same at your doctor’s office? Connected information would be gathered anonymously so patients could receive cost and quality comparisons on doctors and hospitals they were considering. Quality comparisons would be based on standards developed by the medical family. Doctors and hospitals would be rewarded for the quality of their care, not just the quantity. Patients would save money if they made wise decisions about their health. I’m describing good old-fashioned competition. Competition based on value in healthcare – the best quality at the lowest price. Competition doesn’t just lower price; it also increases consumers’ options. The Medicare drug benefit is a clear demonstration. Instead of restricting choice to one government benefit, Congress allowed choices and competition. The market responded with innovative ideas and choices. After just a year, 90 percent of those eligible for the benefit now have drug coverage. Eighty percent are happy with their plan. Initially, actuaries estimated the average cost of a drug plan would be $37 a month. After a year of competition, the cost is $22 a month. Hundreds of billions of dollars have been saved for consumers and taxpayers because of competition. A system of competition based on value is built on four cornerstones: • Electronic health records – In the next three to five years, every doctor, hospital, pharmacy and lab needs to adopt an electronic medical records system. These systems need be compatible so information can be accessed and appropriately shared. • Quality measures – Every patient deserves to have an independent assessment of the quality of care different doctors and hospitals provide. A patient deserves to know beforehand if more people get infections at one hospital than another. We deserve to know what experience a doctor has with a particular kind of procedure. Quality reports need to be based on standards experts in the field agree on. • Comparable prices – People who have health insurance often don’t care about price. People who don’t have healthcare insurance can’t find out the price even if they ask. Hospitals and doctors are simply unprepared to answer the question: How much will this cost? Understandable, standard methods of grouping medical charges are being devised. The groupings are known as “episodes of care” – buckets of care that patients can compare. Without consciousness of the entire cost of a medical episode, practitioners lose sight of value. • Incentives – People deserve to know that everyone in the healthcare system has the incentive to increase quality and keep costs low. And that needs to include the patient. Transparent quality and price information makes that possible. Consumers should benefit when they chose high quality and lower cost. Forces of Change The only force strong enough to change the course of healthcare is a market based on consumer value. Large payers of healthcare have attempted to introduce market power into healthcare before, but success has been limited. One of the most important reasons is that the largest single healthcare payer, the federal government – which pays for 40 percent of all healthcare in America – has not been part of the effort. Without federal leadership, it is simply impossible to achieve critical mass in an effort to change the system. Last year, President Bush signed an executive order changing that. He directed federal agencies to make the four cornerstones a priority in they way they buy and organize healthcare. Others are doing the same. By spring, in addition to the federal government, employers all over America will formally commit to join this effort. When payers put out their requests for proposals for 2008, our goal is to have 100 million Americans covered by healthcare plans that include the four cornerstones as a significant part of their criteria. The healthcare marketplace has begun to respond. Electronic health record vendors are adapting their products to meet interoperability standards. The medical community has organized 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 incentives for patients and providers to pursue value. Within two years, competition based on value will begin to happen in selected communities on a few 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. All Americans need access to a basic health insurance policy – at an affordable rate – but too many people don’t have it. There are two distinctly different approaches emerging. One approach is for the federal government to insure everybody – one plan for everyone, run out of Washington, D.C. The result is predictable: less choice, long waits, lower satisfaction and higher taxes. The alternative is not only better, but also far more likely to be accepted by Americans who don’t want to have the government making decisions about their health. To solve the problem of the uninsured, we need a partnership between government and the private sector, each doing what it does best. Here’s the proposition: If you are poor and elderly, disabled, a pregnant mother or a child needing protection, the government will provide health insurance and pay for most of it through Medicare, Medicaid or SCHIP. For everyone else, state government, with help from the federal government, will organize the marketplace so every person has a choice of plans they can afford – either through their employer or as an individual. Extra help will be provided for those who still can’t afford a basic plan. Again, the results are predictable: more choices, higher satisfaction, lower costs and competition based on value. In his State of the Union Address, President Bush proposed new tools to help states willing to take this on, including a solution to one of the most difficult issues: the unequal tax treatment of those who have to buy insurance as an individual. Most Americans buy their health insurance through their workplace, and the government helps them with a tax break. That needs to continue. Millions of others can’t get insurance through work and are faced with buying it on their own. I am talking about a waitress, a construction worker, a student, a day care worker or a self-employed entrepreneur. As things stand today, not only do they pay higher rates, they get no tax break. The president’s proposal would ensure that whether you buy health insurance through your workplace, or buy it on your own, you get the same tax break. It is indefensible that a person who buys insurance individually is treated differently than a person who buys it through an employer. The president’s proposal would level the playing field for everyone. Access to health insurance is at the top of state legislative agendas across the country. More than a dozen states are currently exploring significant efforts to expand access to health insurance. Partnerships led by states involving federal resources, private sector innovation and the medical communities are needed. There is a strong desire and building momentum to fix the problem of the uninsured. This momentum will continue to grow because anxiety is growing. As the debate on access to healthcare unfolds, we need to keep our eye focused on one word: value. Michael O. Leavitt is the secretary of the U.S. Department of Health and Human Services. His comments were edited from a speech on Jan. 29, 2007, at the Detroit Economic Club. For more information, visit www.hhs.gov. |
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