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Premier Healthcare Alliance Breakthroughs Conference

Washington, DC
June 10, 2010

Thank you, Susan, for that nice introduction. It’s great to be here with you this afternoon.

Premier has a long history of joining forces with our Department – whether it’s working with the Centers for Medicare and Medicaid Services on improving health care quality or the Centers for Disease Control and Prevention on reducing healthcare-associated infections or the Food and Drug Administration on tracking the safety of medicines.

It’s a natural partnership because we share the same goal: building a higher-performing health care system where more Americans can get better care at a better price.

There are a lot of groups that talk about this goal. But there are two qualities that set Premier and its members apart.

First, you’ve been focusing on these issues for a long time. Premier was one of the original groups to link payment with performance. You were talking about health care quality back before it was cool.

Second, you’ve backed up your words with actions. It’s easy to talk about transforming our health care system – to put out a press release or stamp your logo at the bottom of a letter. But what you’ve done is harder: you’ve taken these reforms and made them work in hospitals across the country.

So we’re grateful to have you as a partner. And we’re grateful for your leadership.

I’m glad to be here with you today because the need to improve the performance of our health care system has never been greater.

As our health care system has grown, so has the cost of inefficiency. Fifty years ago, having an ineffective health care system was like having a hangnail – painful, but you could deal with it. Today, when health care makes up one sixth of our economy, it’s like having a heart attack – it threatens our future.

If we can’t make our health care system work better, the consequences will go way beyond health care. Skyrocketing insurance premiums will eat up more and more of Americans’ paychecks. American businesses will far further behind their foreign competitors who have lower health care costs. The Medicare trust fund will slide closer towards the red. Our federal deficit will widen. And most importantly, Americans will still live sicker and die sooner than their peers around the world.

We can’t afford to continue down this path.

That’s why President Obama has charted a new course.

Over the last year and a half, the Obama Administration has undertaken an ambitious, multi-year plan to move us towards a higher-performing 21st century health care system that will add to our prosperity, not subtract from it. A health care system that builds on the system we have, keeping what works, but also incorporates the latest evidence, the most advanced technology, smarter incentives for health care providers, and a new focus on keeping people healthy.

Today, I’d like to talk about this plan and how you can help us make it a reality.

One thing a lot of people don’t realize about this Administration’s health agenda is that it didn’t start with the Affordable Care Act.

It actually began right after President Obama took office. As you know, one of the first bills he signed was the Recovery Act, which was one of the most transformative health innovation bills in American history. In particular, it began to address three of the biggest and most persistent obstacles preventing Americans from living healthier lives.

First, we made a historic investment in prevention, providing grants to support some of the most promising and proven community strategies around the country for promoting wellness and reducing chronic disease – from serving healthier school lunches to designing more walkable neighborhoods.

These grants will create models across the country for healthy living. If you want to know how to get people in your city or town to eat a healthier diet or get more exercise or quit smoking, you’ll be able to visit these communities and learn from their strategies.

Second, we invested in our primary care workforce, expanding our national network of community health centers and providing new funds to train primary care doctors and nurses.

Too many Americans today can’t get the health care they need, simple because they can’t get a doctor. With these investments, we’re going to boost our healthcare workforce so all Americans whether you live in a town of 300 people or a city of 3 million people can get a doctor.

The third Recovery Act investment we made was in health information technology. We know electronic health records can save money, slash paperwork and help doctors deliver better care. Many of you have shown this in your own hospitals.

Yet today, only 20 percent of hospitals and 10 percent of doctors use even basic electronic health records. We need to do better. So we’re making it easier for health care providers to adopt these technologies by building regional extension centers where you can get advice about installing and using these health records and creating new frameworks that will allow you to securely share health information with other providers.

All of these efforts began last year. But we still have a long way to go. And hospitals can help.

You can help us start a national movement to embrace prevention. You can experiment with new ways to help more patients reach doctors like telemedicine. You can help us understand how to promote health information technology in a way that maximizes the benefits patients.

Without taking these steps, it will be impossible to give Americans the 21st century health care system they deserve. But these steps alone will not be enough.

That’s why, with the help of groups like Premier, we took a long overdue step and passed the Affordable Care Act!

The first part of this law – the part that’s gotten the most attention – are the insurance reforms. And I want to explain briefly how they’ll work.

Over the next four years, Americans will get a wide range of new health insurance options and protections.

Many of these reforms are already taking effect – from a tax credit to help small businesses cover their workers to a new high risk pool for uninsured Americans with preexisting conditions to a provision that allows young adults to stay on their parents’ insurance plans up to age 26. Just today, we’re mailing out the first $250 rebate checks that will be available to seniors who fall into the Medicare prescription drug donut hole this year.

One goal of these reforms is to give Americans some immediate relief and plug some of the biggest gaps in our insurance system right away.

But these reforms will also serve as a bridge until 2014. That’s when the most important parts of the Affordable Care Act kick in: a new health insurance exchange where families and small businesses will be able to purchase coverage regardless of their health status and the largest middle class tax cut for health care in American history to help them afford it.

That means that for the first time in our history, every single American will have access to affordable health insurance. Altogether, it’s estimated that 32 million people who were previously uninsured will get coverage.

And it’s important to notice that this second phase of our health agenda fits with the first. A big part of the reason we’re investing in prevention and our health care workforce and electronic health records it that so the Americans coming into our health care system that can accommodate them.

I also want to point out that while providing coverage to tens of millions of Americans will cost money, it will also produce savings.

We spend $56 billion a year on uncompensated care for the uninsured today. Before the Affordable Care Act, that number that was expected to grow to $141 billion within the next decade.

By expanding access to insurance, we’re going to help people get the routine care they need to stay healthy instead of putting it off and showing up in your emergency rooms once they get sick.

Ultimately, getting everybody into the system makes it easier to improve the system.

This is the part of the Affordable Care Act that everyone’s heard a lot about.

But we knew that to get to the underlying problems in our health care system, we also had to change the incentives for providers so that doctors and hospitals can get rewarded for delivering high quality care.

Your job is to heal people so that they can get out of their hospital bed and go home to their family. But today, a hospital with empty beds is a hospital that’s not making any money.

We pay for quantity, not quality. For volume, not value. And that makes it harder for you to deliver the kind of care we know works best.

You at Premier know this better than anyone. For years, you’ve been on the cutting edge of changing the way we pay for care to benefit patients, hospitals, and our entire health care system.

Your High Quality Incentive Demonstration project showed that when 250 hospitals were rewarded for top performance, their quality of care rose across the board, saving thousands of lives.

Your QUEST program has showed that when hospitals have access to better information about the quality of care they provide, you can create a virtuous cycle where hospitals improve their performance to match their peers, which then drives other hospitals to improve their performance.

What we’ll do under the Affordable Care Act is help these valuable models spread. And we’re going to do that by making Medicare a leader for improving our health care system, not a follower.

Medicare touches every hospital system in the country and almost every provider. It covers nearly $1.5 billion of procedures, tests, visits, and medicines a day.

That can be a $1.5 billion a day force for maintaining the status quo. Or it can be a $1.5 billion force for transforming our health care system to keep patients healthier and save money.

We want to make Medicare a force for health care improvement.

So for example: today, one out of five Medicare patients who leaves a hospital is back within 30 days. Often, this is because they didn’t get the right follow-up care: they didn’t eat the right diet or take the right medicines or get the right wound care.

We know that one solution to this problem is bundling payments: saying to hospitals, providers, and the facilities that provide follow-up care, “here’s one payment for your patient. If you can coordinate care and keep your patients healthy, you’re going to benefit instead of be punished financially. So we’re funding demonstration projects for bundling.

The Affordable Care Act also provides unprecedented support for coordinated care models like Accountable Care Organizations and medical homes. We’ve seen examples from across the country of how health care providers can deliver better care with lower costs when they work in teams.

Last week, I visited two hospital systems – the Mayo Clinic in Minnesota and Gunderson Lutheran in Wisconsin – that are using these models successfully to provide better care at lower costs. This new law will give us a chance to show that those models can work on a larger scale.

The Affordable Care Act establishes an Independent Payment Advisory Board, a group of nonpolitical experts who will provide advice to Congress on where to find savings in our health care system.

It will create a Patient-Centered Outcomes Research Institute to provide information to doctors and patients about which treatments are most effective. Today, we have 6,000 different drugs and more than 4,000 procedures for 68,000 diagnoses. No single person can keep up with the latest news on all of them. So we’re creating a center where doctors and patients can find evidence to help them make the best decision.

It will also establish an Innovation Center at the Centers for Medicare and Medicaid Services to promote additional models of payment to support patient-centered care that we can introduce in the years to come. And I understand that Premier has already suggested several innovation models with CMS to meet our priorities of improving the delivery of care and bringing down costs.

These changes are all happening in Medicare. But history shows that when Medicare leads the rest of the country follows.

For example, when Medicare stopped paying for so-called “never-events” – medical errors that should never happen like operating on the wrong body part – a couple years ago, other payers stopped paying for these too.

Most of these models we’re trying to promote don’t need to be invented. They’re already being used in hospitals across the country. We just need to identify the best ones and then help them spread.

As we design all these programs, we’ll be eager to get your input. You’re on the front lines, and nobody knows what works and what doesn’t better than you. I also hope you’ll use your reputation to encourage hospitals around the country to take advantage of these new programs.

As we move forward with our ambitious agenda to create a 21st century health care system, we’re fortunate that the President has nominated Dr. Don Berwick – one of our country’s best-known experts on these kinds of reforms – to lead the Centers for Medicare and Medicaid Services.

Many of you have worked closely with Dr. Berwick over the years, and you know that no one has a better understanding of the challenges involved in these reforms and the urgency of overcoming those challenges.

And I know you join me in hoping the Senate will act quickly to confirm him.

The challenges we’re talking about today aren’t new. We’ve been talking about changing incentives for providers and investing in our health workforce and the importance of prevention for decades.

During those years, we’ve made great strides in medicine. America’s hospitals today are stocked with new drugs, equipped with advanced machinery, and staffed by caring nurses and doctors who have mastered sophisticated treatments. Patients that would have been untreatable thirty years ago now survive and even thrive thanks to the advanced care you provide.

But over the last few decades, we’ve had fewer innovations in how to provide health care as a country. We’ve had great advances in rare surgeries, but fewer advances in preventing common surgical errors. We’ve had great advances in treating high cholesterol, but fewer advances in promoting the kinds of lifestyles that can keep cholesterol levels low.

The result is that we have a health care system that costs too much and delivers too little.

The good news is that we have a plan to do better. Building on successes like our department’s collaborations with Premier, working with partners like the ones in this room, we believe we can steadily build the 21st century health care system Americans deserve.

We will know we have succeeded when people travel to America from around the world not just to learn about the most cutting edge, new surgical technique or hear about a new blockbuster medicine, but also to learn about how to build a patient-centered health care system, to discover the most effective strategies for reducing health disparities, to develop a plan for building a healthier country.

We have a long way to go. But we are headed in the right direction. And I hope you will continue to work with us to get there.

Thank you.