This election is different. While proposals still intrigue me, I am overwhelmed by a sense that the major health care issues are managerial rather than legislative. I care much more about who a candidate will appoint than what legislation he or she proposes. Unfortunately, we are unlikely to learn about the “who” issue before the election.
Clearly, legislation is important. Repealing the Affordable Care Act (ACA), turning Medicaid into block grants to states, or turning Medicare into a voucher program would be major changes. But alterations of this magnitude seem unlikely.
Major supporters of repealing the ACA lost badly in the Republican primary. Recent Republican legislative proposals show growing acceptance of the law. And the near-term federal budget is not likely to demand major cuts in spending—absent large, unfunded tax cuts. Add to those considerations that Hillary Clinton is a supporter of the ACA and that Donald Trump has not expressed a coherent position on health care, and the likelihood for major legislation is low.
Even as the legislative agenda dims, management issues loom larger. Enabled by recent legislation, federal health care agencies have greater ability to shape health care delivery now than at any time in their history. Consider 2 areas where adept administration action could lead to major improvements: payment reform and administrative waste.
The ACA and Medicare Access and CHIP Reauthorization Act of 2015 both call for relating Medicare payments to value, not volume. The Centers for Medicare & Medicaid Services has made a start on this with the accountable care organization (ACO) program, the Comprehensive Primary Care Plus medical home model, and the comprehensive joint replacement model to bundle payments for hip or knee replacements. The Secretary of the Department of Health and Human Services (DHHS) has set a goal that 30% of Medicare payments be on a value basis (intended to reward clinicians and health care facilities for improving clinical processes, outcomes, and patient satisfaction, while reducing costs) by 2016 and 50% by 2018. This is on top of the diagnosis related group (DRG) system (involving predetermined payments for treating specific conditions), used to reimburse many hospitals and inpatient facilities. Many clinical organizations are on board.
What we need now are the specifics. When and how will additional payment changes be made? Reforming payments is enormously complex. There are issues about which patients and services to include, how the payment amount is set, how to integrate multiple changes, and the like. Ideally, the next administration will work with doctors and hospitals to move payment reform forward. This will require a very high degree of managerial competence.
Administrative waste in health care is enormous. There are so many office workers in the health care system that cutting administrative personnel in half would save much more than $100 billion annually, in addition to improving the experience of patients and physicians. There have been many analyses suggesting pathways to administrative cost savings. Broadly, they involve substituting technology for people: gathering health information automatically, integrating medical records and billing software, and making information flow from provider to provider.
The required changes are not technologically complex, but they are administratively difficult. Many big health systems will want to avoid sharing their data, since sharing data allows patients to switch physicians more readily. Furthermore, it is not in the interest of most software developers to make their software compatible with other vendors. We have seen this before. Fifteen years ago, cell phone companies fought tooth and nail the idea that consumers should be able to keep their cell number when they changed carriers.
The federal government has several levers to address administration inefficiencies. Federal purchasing power for insurance and medical care could be leveraged to require standardization. Regulation may also be necessary. Ultimately, the portability of cell phone numbers across carriers was mandated by the Federal Communications Commission. DHHS may be required to do the same in health care.
Here again, management is key. Health care is even more complex than cell phones. The next administration will need a detailed understanding of the issues and the personnel able to follow through on technically-involved topics.
What Do We Know About Good Managers?
There are many factors that enter into the staffing decisions of a new administration. As politics have become increasingly contentious, the tendency is to appoint politicians to preside over health agencies. This is particularly the case because hot-button issues such as abortion and reproductive rights fall under the health domain. Thus, George W. Bush and Barack Obama each appointed a former governor as their first Secretary of Health and Human Services (Tommy Thompson and Kathleen Sebelius, respectively). Unfortunately, neither former secretaries Thompson nor Sebelius were able to turn down the heat on health policy.
Interest groups are also important, and thus there is a tendency to appoint people from those groups. Shouldn’t the head of health policy be a physician? Although no one believes that physicians should be excluded from policy making, it is not obvious that physicians are better qualified for policy making than nonphysicians. The Department of Defense is led by civilians, not military personnel. Similarly, there has been significant criticism of key economic personnel for being too close to Wall Street.
There is a literature on effective business management that can help guide choices. General intelligence is clearly important for business leaders. Every business has a combination of broad themes (reform payments) and nuanced details (getting the ACO rules right) that successful managers must master. Equally important, however, is the ability to execute. The famous business analyst Peter Drucker argued 40 years ago that successful executives “get the right things done,” and that remains true today. For example, hospitals that have the best clinical performance use tools similar to executives in other industries: they standardize operations, set aggressive but attainable performance goals, and recruit and promote on the basis of performance.
If I could learn 2 pieces of information from former Secretary of State Clinton and Mr Trump, it would be these: who would you appoint to key positions in health care, and what would you charge them to do?
Ironically, the very length of the US campaign, and in particular the lengthy period between the election and taking office, means that we will likely not know the answers to these questions before we vote. In countries where governments change office shortly after the election, the government-in-waiting is identified in advance. In the United States, by contrast, presidential candidates typically defer such decisions until after the election. That would be OK in most years, but this year in particular, the “who” in policy is more important than the “what.”
About the author: David M. Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and Kennedy School of Government at Harvard University and a member of the Institute of Medicine. He served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was senior health care advisor to Barack Obama’s presidential campaign. He is a commissioner on Massachusetts’ Health Policy Commission. He is the author of the The Quality Cure (2014) and Your Money or Your Life (2004). He tweets at @cutler_econ.
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