Mike Leavitt, Secretary of the Department of Health and Human Services (2005-09)
1st Annual AHRQ Meeting, September 28,
2007, Bethesda, MD
Introduction by Carolyn Clancy, M.D., Director of the
Agency for Healthcare Research and Quality (AHRQ)
So it is now my great pleasure to
introduce the 20th Secretary of Health and Human Services. As
I've been telling you, he's leading the Nation's efforts to protect the
health of all Americans and provide services to those in need. He
manages one of the largest civilian departments in the Federal Government, with
more than 67,000 employees, along with a budget that accounts for almost one
out of every four Federal dollars. He's given a considerable part of his life
to public service serving previously as the head of the Environmental
Protection Agency and three terms as Governor of Utah. He's organized a
nationwide campaign focused on value-driven health care, trying to provide
a framework in which all of our efforts to collaborate to improve quality will
of Utah, he also had the privilege of leading the Olympics. And,
actually it turned out these were the first Olympics after the events of
9-11 which gave it a whole new sort of dimension of issues to deal with in
terms of security. And in many, many other ways I'm
understanding that these Olympics were wildly successful and set new
benchmarks for success, integrity, financial performance, and so forth.
So, I've finally come to grasp that after the Olympics, Secretary Leavitt is
more than ready to take on the health care system. I give you
Mike Leavitt, HHS Secretary (2005-09)
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
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
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
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
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
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.
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
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
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 a 1960s 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
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
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 [the Centers for Medicare & Medicaid Services] 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
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 in this country, and
the environment in which we're operating is so different than it was 30 years
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
unchecked 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 years 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.
Current as of September 2007
Value and Sustainability in Health IT; Mike Leavitt, Secretary of the Department of Health and Human Services (2005-09). 1st Annual AHRQ Meeting, September 28, 2007. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/sec92807trans.htm