Creating a twenty-first century healthcare system that is affordable to both our nation and to every American requires a systematic effort at process improvement that is quality-focused and cost-conscious.

Expenditures for healthcare at the macro or national level as a percentage of GDP can be viewed as having two components: the purchase of goods and investment in research. This is no different from any other business model predicated upon continuous product improvement. When you purchase your computer, you are paying for the computer itself and all its features, but you are also providing the manufacturer with funds to do R&D to produce a better version tomorrow. Successful businesses have turned this model into an art form-they had to, because their survival depends on it. The healthcare system has created chaos in this process, and that must change; our personal survival depends on it.

Investment in Research and Development

The current system of medical research is broken. It's too slow (approximately ten years for the development of a drug and seventeen years for a discovery in the lab to be translated into a life-saving treatment in the clinic); it's too expensive (approximately $1.5 billion to develop one drug); it's too risky (only one out of a thousand compounds ever makes it into the clinic as a drug); and it's too fragmented (there is a lack of seamless integration between basic, translational, and clinical research essential for product development). The federal government, working through agencies such as the National Inst.i.tutes of Health, the Food and Drug Administration, and the Center for Medicare and Medicaid, in conjunction with academia and industry, can radically improve this process of turning new knowledge into new cures.

Delivery

The system of product delivery today is plagued by fraud and abuse, contributing to a dramatic waste of money, time, talent, and expertise. Crucially, healthcare providers lack an adequate modern information technology system. Not only does our current paper-based system kill patients through unnecessary errors and inefficiencies, but it is killing the fundamental system of care delivery.

Visitors should be appalled by the number of forms they must fill out at most health facilities, and at the way the same process is repeated at every place within a facility. We can do better. Modern medical facilities like the Mayo Clinic, Intermountain Healthcare, Gundersen Lutheran, Sutter Health, and the Cleveland Clinic have found a better system of electronic medicine that makes a person's healthcare portable. It also improves access to data among different facilities in order to avoid unnecessary duplication of medical tests and procedures, a problem that costs significant money and time to both patients and doctors.

Whether apparent or not, fraud and abuse affect every person's healthcare. Stopping the thieves will save the system hundreds of billions of dollars per year. That's why eliminating fraud is essential, as described in the next chapter.

A twenty-first century health system can a.s.sure every American access to continuously improving, affordable, state-of-the-art care, just as we always expect to see better TVs or cell phones. It requires a new business model in which each producer or provider strives to produce the finest quality product or service in the most efficient manner, and the government creates a regulatory framework that a.s.sures these products and services are integrated into an efficient system that offers real choice to consumers.

Appropriateness

Perhaps Americans' most important healthcare concern is to receive the right care for the right reason that achieves the right outcome. In fact, there is no other reason than this to seek professional care. People trust and depend on the medical profession to consider their unique needs and to have the expertise and tools necessary to a.s.sure personalized care.

In the past, physicians made a diagnosis according to patient history, physical exam, lab tests, and X-rays. Then, based on treatments approved by the Food and Drug Administration (FDA) that had been tested on others, they prescribed a treatment plan, and both patient and physician hoped for the best. This. .h.i.t or miss process should be a thing of the past.

Thanks to breakthroughs in science and technology, we will soon be able to radically transform healthcare so that treatment is no longer based on population medicine, but on personalized medicine.

This can begin with modernizing the FDA, which should create a science-based regulatory framework to approve medical products based on the scientific knowledge of their mechanism of action in individuals, not just on the observation of outcomes in large populations. By implementing this framework within large and diverse healthcare delivery systems, modern information management systems can monitor performance of medical products after regulatory approval. This can allow us to continuously define and communicate to patients and physicians the safety and effectiveness of those products.

We must also create a strategy for individual wellness that enables healthcare providers to use emerging tools of science and technology to identify risk or susceptibility to disease, and to personalize prevention strategies relating to lifestyle, nutrition, access to early detection, and continuous health management. Numerous creative interventions are now being developed that empower individuals to continuously engage in managing their own health using wireless at-home systems. Those systems can monitor health parameters and provide guidance for prevention interventions to Internet-based and employer worksite programs that promote wellness.

Appropriate care is the key to optimal quality at the lowest possible cost. For example, the FDA recently commissioned a study to use genomic data to help define the optimal dose of Coumadin, a blood thinner widely used to prevent blood clots. By using this new technology to better provide the right dose for patients, the right outcome was achieved. Fewer patients were under-dosed, which could cause continued clots resulting in strokes and other serious problems, and fewer patients were over-dosed, which could necessitate emergency treatment for bleeding. In spite of the cost of doing the genomic test in all patients, the projected cost savings for one year due to reduced complications requiring additional medical care reached hundreds of millions of dollars. The real story is not just saving money, but saving people the horrendous burden of an unnecessary stroke or hemorrhage.

HOW CAN WE a.s.sURE THAT CARE IS AVAILABLE, AFFORDABLE, AND APPROPRIATE? THE FOUR BOXES OF HEALTH AND HEALTHCARE THAT MUST BE CHANGED.

To create a system of better healthcare at lower cost, we have to stop fighting over how much it would cost to expand the current system and talk instead about real change in the four distinct but interrelated boxes of health and healthcare: The Individual. A personalized health system will only work if the individual is empowered and engaged. This requires people to be equipped with the knowledge and access they need; they also have to understand, accept, and be incentivized to make responsible choices.

In this system, you will have more individual rights but also more responsibilities. You will have access to more information and choices but will be expected to become partners in your own health and healthcare. Even the best doctor, of course, can't help a patient who is unwilling to comply with medical and preventive recommendations.

The Culture and Society. We need to maximize positive cultural and societal patterns for a healthy community. This includes changing the policies, inst.i.tutions, and environment that impact the choices made by individuals.

For example, given the current epidemic of childhood obesity, we should insist that schools serve healthy lunches, offer healthy snacks, and include physical education as part of the daily curriculum. Likewise, if we encourage healthy diets but high-risk neighborhoods have no access in their local stores to fresh fruit and vegetables-or if healthy food is prohibitively expensive-we will probably not have much impact.

The Delivery System. We have to create an effective, efficient, and productive health delivery system. This means we must adopt new technologies, new models, and a new culture. A future where the healthcare system focuses on the individual, where learning is constant and in real-time, and where innovations are much more rapidly driven through the system will require a different type of delivery system. There will be more partnering, increased reliance on IT-a.s.sISTED knowledge and expert systems, and an emphasis on health professionals acting as consultants to one another.

The System of Financing. Finally, we need a financing method that enables not a single-payer system, but a 300 million-payer insurance system. There is no one-size-fits-all solution to expand insurance coverage, particularly because there are so many reasons why some Americans lack insurance. Some of the uninsured can afford insurance but have chosen not to buy it; some are temporarily uninsured because they have moved, lost a job, or their employer stopped offering coverage; and some are chronically uninsured and are essentially locked out of the system. The savings from better health and better quality care can be used to insure every American through a robust, compet.i.tive private market that leads to more choices at lower costs.

A PRO-JOBS, PRO-GROWTH PLAN FOR HEALTH REFORM:.

The Center for Health Transformation's Plan for Better Health and Healthcare

The solution is to build a system that gives every American more choices of greater quality at lower costs. This will not be found in the giant healthcare bill pa.s.sed by Congress. This encompa.s.sed the secular-socialist model of more spending, more regulations, and more bureaucracy.

At the Center for Health Transformation, we have been working for the past seven years to develop transformative solutions. If Americans want to build a system that is available, affordable, and appropriate for every American, we should take the following innovative, practical steps: Reward health and wellness. The Centers for Disease Control and Prevention reports that 64 percent of adults are either overweight or obese. The CDC also states that diabetes is a major factor in killing more than 220,000 Americans every year. These two conditions, which cost our system hundreds of billions of dollars annually, mostly stem from poor individual choices. We must focus on health-then healthcare-and individuals must take an active role in becoming healthier. Tools like the Gallup-Healthways Well-Being Index can help identify and focus on communities most in need. Leadership like that shown by First Lady Mich.e.l.le Obama with her "Let's Move" initiative is also essential.

We should give health plans, employers, and Medicare and Medicaid more lat.i.tude to design benefits to encourage, incentivize, and reward healthy behaviors. We should incentivize individuals to partic.i.p.ate in worksite wellness programs, focus on prevention, and adopt healthy lifestyles. We should create broader incentives to purchase healthier foods in the food stamp and WIC programs. We should also increase federal funding to public schools that 1) have physical education five days a week for every K-12 student, and 2) provide breakfasts, lunches, and vending machines that promote healthy foods.

Meet the needs of the chronically ill. Most individuals with chronic diseases want to control their own care. The mother of an asthmatic child, for example, should have a device at home that measures the child's peak airflow and should be taught when to change her medication, rather than having to go to a doctor each time.

Being able to obtain and manage more health dollars in Health Savings Accounts is a start. A good model for self-management is the Cash and Counseling program for the homebound disabled under Medicaid. Program partic.i.p.ants can manage their own budgets and hire and fire the people who provide them with custodial services and medical care. Satisfaction rates approach 100 percent, according to the Robert Wood Johnson Foundation.1 We should also encourage health plans to specialize in managing chronic diseases instead of demanding that every plan be all things to all people. For example, special-needs plans in Medicare Advantage actively compete to enroll and cover the sickest Medicare beneficiaries and stay in business by meeting their needs. This is the alternative to forcing insurers to take high-cost patients for cut-rate premiums, which guarantees these patients will be unwanted and ultimately untreated.

Speed medical breakthroughs to patients. Breakthrough drugs, innovative devices, and new therapies to treat rare, complex diseases and chronic conditions should be sped to the market. As discussed above, we can do this by cutting red tape before and during review by the FDA, and by deploying information technology to monitor the quality of drugs and devices once they reach the marketplace. Faster time to market will save lives and money.

Make insurance affordable. The current taxation of health insurance is arbitrary and unfair, giving lavish subsidies to some, like those who get "Cadillac" coverage from their employers, and almost no relief to people who have to buy their own policy. More equitable tax treatment, in addition to other market improvements, would lower costs for individuals and families. Many health economists argue tax relief for health insurance should be a fixed-dollar amount, independent of the amount of insurance purchased. We should give Americans the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount.

Make health insurance more secure. The first step toward genuine security is portability, which is also the best way to solve the problems of pre-existing conditions. Employers should be encouraged to provide employees with insurance that travels with them from job to job and in and out of the labor market. Moreover, individuals should be allowed to buy health insurance across state lines. When insurers compete for consumers, prices will fall and quality will improve.

Help small businesses. The self-employed, small businesses, and certain organizations are legally prohibited from banding together to purchase health insurance. This limits not only the freedom of private citizens to collectively organize, but it creates an enormous barrier to obtaining health insurance. We should allow individuals and small businesses to pool together, giving these a.s.sociations greater bargaining power for more affordable coverage.

Inform consumers. Patients and consumers need to have clear, reliable data on cost and quality before they make decisions about their care. In fact, they have a right to know this information. But finding such information is virtually impossible. Sources like Medicare claims data (stripped of patient information) can help consumers answer important questions about their care. Government data-paid for by the taxpayers-can answer these questions and should be made public. Websites like those created by former Governor Jeb Bush in Florida, Governor Sonny Perdue in Georgia, and insurers like WellPoint, as well as dozens of other resources, effectively inform consumers about the quality of the doctors and providers they see and the products and services they need. Genuine public access to valuable information data will push providers, health plans, public programs, and all other stakeholders to improve.

Allow doctors and patients to control costs. Doctors and patients are currently trapped by government-imposed payment rates. Under Medicare, doctors are not paid if they communicate with their patients by phone or e-mail. Medicare pays by tasks-there is a list of about 7,500 of them-but doctors do not get paid to advise patients on how to lower their drug costs or how to comparison shop online. In short, they get paid when people are sick, not to keep them healthy.

So long as total cost to the government does not rise and quality of care does not suffer, doctors should have the freedom to repackage and re-price their services. And payment should take into account the quality of the care delivered. A number of private insurers are experimenting with more effective and more pro-health payment systems, but the sheer size of Medicare gives it the potential to make a decisive difference.

Migrate every doctor to best practices. In order to ensure that health is the driving focus of our renewal efforts, we should determine what methods are actually saving lives and money, then design public policy to encourage their widespread adoption. For example, according to the Dartmouth Health Atlas, the definitive authority on healthcare quality and variation, if America's 5,500 hospitals provided care at the level of Intermountain Healthcare in Utah or the Mayo Clinic in Minnesota, Medicare alone would save 32 percent of total spending ever year-with better health outcomes.2 We need to make best practice minimum practice.

We should create a private-sector-led best-practice initiative that educates the industry on doc.u.mented, evidence-based best practices that work. This initiative should support the development and diffusion of knowledge in order to expand care, improve outcomes, and lower costs-and explicitly should not be used by government to ration care.

Paying for quality care. Our current payment system pays doctors and providers for simply delivering care regardless of the outcome. Doctors, hospitals, and other providers that deliver better care are mostly paid at the same rate as those who provide poorer care. Like any other rational market, we need a reimburs.e.m.e.nt model that takes into account the quality of the care delivered, not simply that it was delivered.

We must incentivize the use of best practices, chronic care management tools, and information technology. We need to eliminate the vast geographical differences in reimburs.e.m.e.nt, and to promote the development and use of primary care and its providers. The delivery reform proposal released in November 2008 by Kaiser, Intermountain Healthcare, and the Mayo Clinic provides a range of options that would be vast improvements over the status quo, including bundled or episode-based payments, Accountable Care Organizations, and chronic care coordination payments.3 Don't cut Medicare. Obama's health reform bill cut Medicare by around $500 billion. This is wrong. Medicare is undoubtedly unsustainable, as the government has promised far more than it can deliver. But this problem will not be solved by cutting the program in order to create new unfunded liabilities for young people.

A sound roadmap to sh.o.r.e up Medicare was released in 2000 by the National Bipartisan Commission on the Future of Medicare. Central pieces of that report have been implemented, most notably the prescription drug benefit, but others, particularly those that address the program's long-term solvency, have been ignored. Reviving many of these recommendations, along with new proposals, can save Medicare for future generations. Solutions include:* Introducing premium support to stimulate compet.i.tion among providers and private insurers.

* Increasing beneficiary choice.

* Introducing the same compet.i.tive features of the prescription drug benefit and the Medicare Advantage program to other areas, such as durable medical equipment and Part B drug pricing.

* Targeting a.s.sistance to lower- and moderate-income seniors.

* Incentivizing beneficiaries to seek out Centers of Excellence that deliver the highest-quality, lowest-cost care. Consumer demand will help address the egregious geographic variance in cost and quality.

Protect early retirees. More than 80 percent of the 78 million baby boomers will likely retire before they become eligible for Medicare. This is often the most difficult time for individuals and families to find affordable insurance. We can build a viable bridge to Medicare by allowing employers to obtain individually owned insurance for their retirees at group rates; allowing them to deposit some or all the premium amount for post-retirement insurance into a retiree's Health Savings Account; and allowing employers and younger employees to save tax-free for post-retirement health.

Transform Medicaid and drive innovation in the states. Governors and legislators know their const.i.tuents and understand the special needs of their local communities far better than anyone in Washington. They should have much more freedom to improve their Medicaid programs in their own communities. Key priorities should be to mainstream Medicaid beneficiaries into private insurance coverage, be it with an employer or an individual policy; to utilize modern information technology systems; and to identify and adopt the best practices in Medicaid across the country so that other states may duplicate and improve upon them. These kinds of changes will turn Medicaid from the disaster that it currently is into an effective, efficient program.

Stop healthcare fraud. Criminal fraud accounts for as much as 10 percent of all healthcare spending, according to the National Health Care Anti-Fraud a.s.sociation. That is more than $200 billion every year. Medicare fraud alone could account for as much as $40 billion a year. This crime, enabled by our current paper-based system, can be detected, eliminated, and prevented with the right kind of electronic resources, such as enhanced coordination of benefits, third-party liability verification, and electronic payment.

Cut waste. If our healthcare system moved from manual paper and phone processes to electronic administration, we could save an estimated $30 billion a year. For example, today 90 percent of all medical claims are paid by printing a paper check and mailing it through the U.S. Postal Service. Electronic payment through direct deposit-think PayPal for health-could alone save an estimated $11 billion every year.

We should migrate all payers and providers to fully electronic processes for administration, including claims submission, insurance eligibility verification, claims status inquiry, claims remittance, and electronic payment. All payers-CMS, state Medicaid programs, and private plans-must lead by making a real investment in their own electronic processes building on claims submission, followed by rewarding and then requiring their use.

Eliminate junk lawsuits to reform civil justice and eliminate defensive medicine. Last year President Obama pledged to consider civil justice reform. We do not need to study or test medical malpractice any longer: the current system is unarguably broken. States across the country-Texas in particular-have already implemented key reforms including liability protection for using health information technology or following clinical standards of care; caps on non-economic damages; loser pays laws; and new alternative dispute resolutions where patients get compensated for unexpected, adverse medical outcomes without lawyers, courtrooms, judges, or juries.

Move from paper-based care to modern, electronic tools. The 2009 stimulus allocated tens of billions of dollars toward encouraging physicians and providers to adopt twenty-first century tools such as electronic prescribing and electronic health records. While I opposed the inclusion of this investment in the stimulus bill, these are valuable tools nonetheless. We have a new book at the Center for Health Transformation ent.i.tled Paper Kills 2.0, edited by David Merritt, that proves conclusively that technology saves lives and money. Updated, accurate, and comprehensive patient information at the point of care will prevent medical errors and will allow physicians, nurses, and providers to make better, more informed decisions. Electronic access to information will reduce duplicative and unnecessary tests and treatments. Automating c.u.mbersome, manual processes will streamline workflow, eliminate inefficiencies, and lower costs. We must continue striving to get these technologies into the hands of doctors and nurses and to ensure that information is portable, accurate, secure, and protected.

The solutions presented here can be the foundation for an individual-centered system. We must insist that our elected leaders have the courage to embrace them.

A TIME TO CHOOSE.

President Obama's healthcare reform will raise taxes, destroy jobs, and allow Washington bureaucrats to make decisions that ought to be made by individual Americans together with their families and doctors. At a time when we are already suffering from over-taxation, high unemployment, and excessive regulation, it's the last thing America needs.

We can create a better system, one that prioritizes individual health and wellness, delivers personalized, best practice care, and insures every American. The changes and solutions outlined in this plan are the right reforms to build such a future. By addressing health, quality, costs, and coverage:* We will not need to raise taxes. We can bring down healthcare costs and save hundreds of billions of dollars by focusing on the right priorities.

* We will not need to introduce a government-run plan into the private insurance market. Choice is more powerful than a single government plan. Tax fairness, open markets, and access to insurance for all will deliver many more choices at lower cost.

* We will not need nor should we ever resort to government rationing of healthcare. More choices and higher quality will lower costs and empower consumers.

* We will not need to cut Medicare. We can save future generations from crushing debt by focusing on health, quality care, and efficiency.

* We will not need to mandate that employers, including small businesses, provide health insurance. The right reforms that balance a robust private sector with effective public programs will give all Americans the financial means and choices to get the coverage that is best for them and their families-without saddling small businesses with debt.

The choice is clear. We can implement transformative programs-for better health, more efficient delivery, sound public programs, and a compet.i.tive marketplace-that will a.s.sure that all Americans have access to quality healthcare that is available, affordable, and appropriate. Or we can accept the left-wing approach of ushering in a government-run system that will destroy our economy along with our health.

The choice is ours-and the time for choosing is now.

We should repeal the 2010 big-government act pa.s.sed on a narrow partisan basis with extraordinary corruption and bribery, and start over in the right direction with the right policies.

CHAPTER SIXTEEN.

Solutions for Stopping Healthcare Fraud With Jim Frogue, Vice President of the Center for Health Transformation and Editor of Stop Paying the Crooks Every year we taxpayers pay $70-120 billion to crooks through Medicare and Medicaid alone. This ought to be the first source of new money to pay for health reform.

Why raise taxes on honest people or cut health benefits for honest senior citizens or penalize honest doctors and hospitals when the system is run so incompetently that it currently gives billions to criminals every month?

This problem is so great that at the Center for Health Transformation, we have initiated an entire ant.i.theft and antifraud project led by Jim Frogue, the coauthor of this chapter.

Fraud, waste, and abuse in our healthcare sector are more pervasive than people think-they const.i.tuted a third or more of the $2.5 trillion spent on healthcare services in 2009. To his credit, President Obama noted in his September 9, 2009 address to Congress there are "hundreds of billions of dollars in waste and fraud" in the system.

Other top officials and representatives have drawn attention to the problem as well. Health and Human Services secretary Kathleen Sebelius said at the January 28, 2010 National Summit on Health Care Fraud, "We believe the problem of healthcare fraud is bigger than government, law enforcement, or private industry can handle alone."

At the White House Health Summit on February 25, 2010, Senator Tom Coburn suggested, "20 percent of the cost of government healthcare is fraud." Senator Chuck Schumer of New York later responded, "I was glad to hear my friend Tom Coburn's remarks. I think we agree with most of them, and particularly the point that about a third of all the spending that's done in Medicare and Medicaid . . . doesn't go to really good health care, goes to other things."