Health care is the biggest business in America. The U.S. health care industry generated nearly $2.5 trillion in revenue last year, an amount that has been growing by 5 to 10 percent a year since 1999. Unlike the rest of the economy, however, there are no economic rewards for keeping people healthy, improving the quality of care or reducing the costs of health care.
“Health care in America is badly organized, highly inconsistent, internally dysfunctional, sometimes brilliant, almost always compassionate, close to data free, amazingly unaccountable in key areas, too often wasteful, too often dangerous, and extremely expensive,” writes George Halvorson in his fifth book, Health Care Will Not Reform Itself (Productivity Press, 2009).
Halvorson has been the CEO of Kaiser Permanente, the largest HMO in the world with 8.5 million members, for the last eight years. Prior to that, he ran Health Partners in Bloomington and has been a frequent guest and speaker at the Opus College of Business on the topic of health care trends. And he has been in the thick of President Obama’s health policy reform efforts from the beginning because he believes that the United States cannot achieve the potential of low cost, high-quality health care unless every American has access to both health and medical services.
Understandably then, many policymakers, when confronted with the problem of how to pay for expanding insurance coverage to all, want policies in place that will refocus the production system on value rather than volume, on reducing the costs of insurance coverage and of health care delivery, and on improving health. Whichever health policy reform passes the Congress and reaches the president this year will have been the product of trying to achieve the twin goals of universal coverage and cost containment. Unfortunately, as was much too obvious the last year, it seems impossible to achieve both goals in one legislative act. Because in American health care, what is one person’s cost containment is another person’s income.
If health care truly has become such a big business in this country, it also is true that it has a relatively small number of producers in local communities across a nation of 305 million citizens. Each of us buys our health care in our own community. Together we purchase $2.5 trillion in services through our places of employment, via insurance plans or membership in public plans such as Medicare, Medicaid, TriCare for military service families, and the Veterans Administration Healthcare.
The key trends in health care are value-based practice and healthy people. Because our health and our health care practice vary substantially across America, finding the future depends on community- based examples and policies that realign our incentives and our rewards.
“Americans have invested much more than any other nation in knowing all there is to know about health and illnesses but very little in how best to use this information.”
Another important voice in health care reform is Dr. Atul Gawande. I came to know Dr. Gawande in 1993 when, as a young doctor, he volunteered to work for Congressman Jim Cooper (D-Tenn.) during President Clinton’s efforts at universal coverage and cost containment. Gawande, who is now a cancer surgeon at Brigham Women and Children’s Hospital in Boston, takes time to research new trends in health care improvement. He gained attention in 2009 for writing two New Yorker articles, one comparing the cost per Medicare beneficiary of living in McAllen, Tex., versus El Paso, Tex. He argued that practice-style differences, together with the presence of physician-owned hospitals in McAllen, cost patients there (and Medicare) twice as much as the average for patients in El Paso.
Already a best-selling author of two books on medicine and public policy, Gawande also published The Checklist Manifesto. As its subtitle suggests, the book is about “how to get things right” in medicine. Americans have invested much more than any other nation in knowing all there is to know about health and illnesses but very little in how best to use this information.
“The volume and complexity of what we know has exceeded our individual ability to deliver its benefits correctly, safely, or reliably,” Gawande writes. As a result, costs of all kinds – insurance, medical errors, deaths in hospitals – are growing every day. He argues it’s time we try a different strategy – one that is being used successfully in the airline industry and by those who design and build skyscrapers. The checklist builds teamwork in decision-making rather than just knowledge and experience, and it is simple and effective.
Opus College of Business Decision Sciences Department Chair Dr. John Olson and his colleagues have begun consulting on how best to take our Six Sigma approaches to an even more effective level. Olson has helped combine the Lean Enterprise and Six Sigma approaches to process improvement into a Lean Six Sigma curriculum. He has worked with key staff at the Minneapolis Veterans Administration to be trained in these tools, and they have used them to significantly improve infection rates and patient flow.
Those of us who have watched the evolution of the U.S. Senate and House health policy reform legislation can attest to the fact that the trend in the business of health care is toward developing health care systems that can reform themselves. Both 2009 bills empowered pilot projects across America to increase effectiveness and accountability, rewarding quality and value with more business.
President Obama insisted on investing in health information technology and in comparative effectiveness research and analysis. The bills have a Center for Innovation in CMS and independent commissions to try and do for public payment systems what Congress seems politically incapable of doing: rewarding value-based health and health care delivery through accountable care organizations.
A final, important local voice in this conversation about reform is Richard Pettingill, who retired after seven highly successful years as CEO of Allina Health System in Minnesota. He is now a 2010 Advanced Leadership Fellow at Harvard, teaching leadership and developing a program he calls Healthy People 2020. His experiences led him to believe our future lies in developing a national dialogue on social determinants of health care costs, starting at the grassroots level in communities across the country.
These are the big policy trends that are evidenced by the too-long debate and public confusion over health reform. Upper Midwest health care leaders are on the forefront of the future of the movement for community-based health system and health improvement. Now we’re just waiting for the policymakers to catch up.
About the author: David Durenberger served as senior U.S. senator from Minnesota from 1978 to 1995. His health policy experience spans three decades. He is the author of Prescription for Change, a book on health care reform through consumer choice and is a Senior Health Policy Fellow in the Opus College of Business.