Sec. Leavitt urges healthcare industry to embrace value-based system

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Secretary Michael Leavitt of U.S. Department Health & Human Services (HHS) warned that rising healthcare costs in this country are putting our nation in peril in his speech today at HIMSS 2007 in New Orleans. Healthcare costs continue to rise, from the 4 percent of the gross domestic product when he was born in 1951, to the current 16 percent seen today. Soon it will be 20 percent of the GDP, he forecast.

“People are feeling this in this country in their paychecks,” he said, as well as in numerous other ways. “There is an economic imperative that we do better.” The challenge in the next 10 years is to transform the healthcare sector through competition based on “value.”

Creating a system based on value in large part means getting much more information out to healthcare consumers so that they can make better decisions about their care. He related the amusing story of trying to do price comparisons when he had to get his first colonoscopy. It was a much more complicated process than he expected. Moreover, the colonoscopy prices he was eventually quoted were much higher than he would have ever guessed, he said.

Consumers do have a tendency to equate quality with price, Leavitt said, but the game would change significantly, and so would prices hopefully, if more information were available.

To get such a value-based system rolling, he urged the development of a system that would make available independent information about the number of medical procedures available in an area and which physicians provide them. The reporting would also grant details regarding how many procedures of that type are performed by a physician and how much they cost.

Consumers will always choose “high quality and low cost” in their decisions given the right information, he noted.

Leavitt has recently been pushing what he calls “four cornerstones” of quality healthcare. A number of major American corporations such as Verizon, Starbucks, CitiCorp, Merrill Lynch, several automakers, and others have already signed on to the initiative to make this a priority in their healthcare purchasing decisions. 

The four cornerstones include: interoperable health IT; price transparency of price information; transparency of quality information; and incentives to promote high-quality and cost-efficient healthcare.

Soon he expects that 60 percent of the healthcare marketplace will sign on to these cornerstones, and when 60 percent of a market signs on that means the “market moves,” he said. But, he added “we can’t get there without interoperable health records.”

Other efforts that HHS is overseeing include standards development through AHIC (American Health Information Community), EHR certification via CCHIT (Certification Commission for Healthcare Information Technology), as well as recent exceptions to the Stark Rule.

Leavitt urged attendees to work proactively to make the four cornerstones a reality. If you are an EHR vendor get your systems CCHIT certified; and, likewise, if you are in the market to buy an EHR get one that is certified, he added.