PO Box 409095
Chicago, IL 60640
Length: 11 minutes, 57 seconds
Interviewer: Neil McLaughlin, managing editor, Modern Healthcare
Interviewee: George Halvorson, chairman and chief executive officer, Kaiser Foundation Health Plan and Hospitals
[00:00:03.18] Neil McLaughlin: I'm Neil McLaughlin, managing editor of Modern Healthcare. We're talking with George Halvorson, chief executive officer of Kaiser Foundation Health Plan and Hospitals. Mr. Halvorson has also written a new book titled Health Care Reform Now: A Prescription for Change. Mr. Halvorson, why did you decide to write this book?
[00:00:24.20] George Halvorson: I think that it is time to reform healthcare in America. I think that we are overdue, in fact, in reforming American healthcare. So I wrote the book because I wanted to give people a sense of how reform might be possible. I wanted to write a how-to book, basically a user's guide for healthcare reform. So the book is built around some very basic concepts. I talk about the problems with the current system; I talk about misconceptions about the current system; I talk about shortcomings of the current system; and then I talk about opportunities. I talk about the fact that 70% of our costs are for people with chronic conditions. Then I talk about why that's important information and what can be done about it. In fact, I even put a chapter in the book so that I wasn't making sort of a vague statement. I put a chapter in the book that lists the primary chronic conditions, and then explains very directly what needs to be done to improve care for people with each of those conditions. So there's actually sort of a medical chapter in the book that talks about care improvement.
But I wanted to give people a sense of care improvement is possible. It's doable. It's achievable. And we just need to make a [unclear] doing it. So I wrote the book to help people with that thought process.
[00:01:44.20] Neil McLaughlin: Well, speaking of misconceptions, you talk in the book how, contrary to some economic theorists, market forces actually do shape the healthcare we get today. Could you explain that, please?
[00:01:58.13] George Halvorson: Right. I basically say that all of the healthcare providers are very directly influenced by how they're paid. And there are nearly 10,000 billing codes for procedures in healthcare, so everybody focuses on procedures. There are no billing codes for cures. There are no billing codes for outcomes. There are no billing codes for care improvement. And there aren't even any billing codes for providers communicating with each other.
Providers don't do what they're not paid to do. So we don't have good inter-writer communications. We don't have a focus on cures. But what we have a focus on is volume. So we get more volume in American healthcare than anyplace else in the world, but we have, in many cases, inadequate outcomes.
[00:02:43.26] Neil McLaughlin: In your book, you talk a lot about the need for electronic health records, and good data on clinical results. So far, the federal government has made very little progress in fostering or standardizing computerized healthcare information. How will we get to those goals that you suggest in the book?
[00:03:04.22] George Halvorson: I think what we need to do is have the major buyers in America insist that their health plans provide that data. I think the claims database is an electronic database. It has procedures, diagnoses, treatment information, doctor information. I think we need to take that database and use that as the starter set for healthcare improvement. I think with that database we can figure out, for example, asthmatic care. There's an epidemic of asthma in the country. Most asthma patients who are in the emergency room shouldn't be there. We don't deliver appropriate care a very high percentage of the time. So what I think we need to do is we need to make someone accountable for fixing asthma care. I think employers can make health plans accountable for that. And the health plans can put the tools in place to make the providers accountable for it. And the combination of that will improve asthma care in America. But I think that unless somebody is paid to improve the infrastructure of care, it will not improve. It has to be a market model.
[00:04:10.06] Neil McLaughlin: You talk about infrastructure, and I'll get back to that in a minute, but you also talk about the buyers of healthcare forcing the healthcare system to change. Given recent history, what makes you think the buyers will do that this time?
[00:04:29.07] George Halvorson: I think the buyers are ready for the next step. I think the buyers are looking for the next right thing to do. And I think if the buyers can't figure out the next right thing to do, that involves market forces, the default position is going to go to some kind of a single-payer model. And let the government take it over and have the buyers step out of the equation.
I think that would be a problem, because I think a smart buyer, a well-informed, smart buyer, can have a bigger positive impact on healthcare delivery, healthcare costs, healthcare quality, than a bureaucracy can ever have. So I think we need to introduce the buyer as a more active agent in healthcare reform than in the past. And in the past, the buyers, who wanted to be change agents, didn't have an agenda to use to get there. They didn't have, there was no pathway, there was no plan, there was no sense that if we demand these things, care would get better. And I think, today, that buyers are more sophisticated and understand that they could demand better care for their asthma patients, for their congestive heart failure patients, for their diabetic patients, and get it. So I think we're at a point where the buyers could insist that the health plans provide that. And the health plans now have a sufficient infrastructure database and skill set that if it were demanded of them, they could step forward and deliver. And I think 10 years ago that wasn't true. Ten years ago, the databases of the payers were less adequate, information about care improvement was less adequate, less complete. The sense of what best practices were was less well-defined.
So I think we've made progress. And I think it's time to now harvest the total impact of that progress and focus on that care improvement.
[00:06:20.03] Neil McLaughlin: You mentioned infrastructure earlier. In the book, you propose infrastructure vendors to help reform the system. What are those and how would they work?
[00:06:32.03] George Halvorson: Well, basically what I'm saying is that the employers should want healthcare infrastructure to perform better, as a buyer. And so they should pay someone to make it perform better. The combination of hospitals, primary-care doctors, specialty doctors, pharmacists, etc., should work more as a team. They're not going to work more as a team unless somebody incents, forces them, assists them, to work as a team.
So somebody has to be hired to do that work. And I think what we need to do is start with the condition; I think you cannot start with the process. If you start with the process, and do pay for performance, based on minor process improvements, ultimately it is minor process improvements. But if we go to the condition, and if we say "we want better care for our congestive heart failure patients," we know that we can cut the number of hospital admissions by 50% to 90%. We need those patients identified. We need them supported. We need the communication. We need the feedback systems. All of those things are possible. We need to demand, as buyers, that our health plans put that in place. And then let the health plans put it in place. And the health plans can do it with reward systems; they can do it with penalties; they can do it with contracts. There's a whole series of mechanisms that can be used to achieve that goal. But they can be an infrastructure reform vendor. Or, the care-management companies that are currently in that business could step up and say we could be an infrastructure reform vendor. Because we have the database, we have some of the information. And they could step up and take the database from the payers, and perform that function.
And so I've actually had a couple of e-mails since the draft of the book came out, from a couple of organizations that do that, saying that they were intrigued by the possibility and that they're thinking about stepping up to fit that role. I think there are systems companies that may say, "Gee there's a role here for us and a lot of this process improvement." The data processing. And they could do that. So I think there's a number of organizations that could step up and play that role. I think the organization that has the inside track, initially, is the health plan. There are also, I think, some health plans that will choose not to go down that path, but would rather just be conduits for dollars rather than change agents, relative to care delivery.
Because the infrastructure vendor has to be willing to sell the role of being a change agent for care delivery. And the buyer has to understand what change they want. And then they have to pay for it.
[00:09:08.05] Neil McLaughlin: You don't see the government fulfilling this kind of role?
[00:09:13.16] George Halvorson: Well, I think it would be hard for the government to do that. Because I think that--one of the things I talk about in the book is that the government has so many layers and so many bureaucratic involvements, and so many different constituencies involved, that it's hard for the government to be either nimble or creative. I think the government, however, could observe successful practices inspired by the employers, and step in and say, "You know, that really seemed to work very well for diabetics, for major employers. Let's apply that Medicare." I think the government could be a fast follower, could and should be a fast follower, but I think it's very hard for the government to do the point on that particular side of the agendas, because somebody has to be willing to take some risks and be creative, make mistakes, redo the process, and get it right the second time. And the government is not good at those kinds of--there are things that the government is exceptional at, and there are things the government is not good at. In a [unclear] to learning process, focus on process improvement is not typically a government skill set.
[00:10:23.01] Neil McLaughlin: One last question. Your book notes the variety of benefits of universal coverage for Americans, but how would you achieve that?
[00:10:33.18] George Halvorson: I think that we should set up an individual mandate in every state, so that every citizen must buy coverage. I think we should expand Medicaid. I think that we should cover everybody who is poor, not just people who are poor with families. I think we should expand SCHIP and I think we should require people to buy coverage, subsidizing coverage for the low-income people. I think the people who are low-income, who cannot afford to buy coverage, should have affordable coverage. And the subsidy, there are a couple of ways you can do that. There's the Minnesota care model, where the government, basically, issues vouchers to low-income people that they can use to join a health plan of their choice. Or there is a model where the people, basically, buy coverage, prove their income levels, and then have that subsidized by the government. There's a number of mechanisms to get there. But I think that's a good model, because it keeps the private marketplace performing in ways--well, I think the private marketplace can improve care, but I think that we can get there in a relatively small number of years using parts that we already have in the system. I don't think that we need to build something totally new. I think we can work out the existing infrastructure to get there.
[00:11:48.14] Neil McLaughlin: We've been talking with George Halvorson, head of Kaiser Foundation Health Plan and Hospitals. Thank you, Mr. Halvorson.
[00:11:55.29] George Halvorson: It's a pleasure to be here.