For real results, the next HHS secretary must boldly shift to value-based health care

This month the Senate is conducting confirmation hearings for President Trump’s nominee Alex Azar to be secretary of the Department of Health and Human Services.

This is an interesting choice, and not for the reason most people think. Yes, Azar is a pharmaceutical executive and has been deeply involved in some of the most innovative and controversial work in health care today. His work at Eli Lilly and Company placed him squarely in the middle of intense debates and public scrutiny, much like he’s about to face during the confirmation process. But as a corporate executive, Azar understands what many career Washington bureaucrats do not: the nature of true accountability, how to focus on value, and what it means to drive change — especially change that leverages established, proven market-based principles centered on a clear ROI. Azar should use that understanding to improve health care and drive us closer to what we know works better: paying for the value of health care, not volume.

{mosads}This year, efforts to repeal or change the Patient Protection and Affordable Care Act (ACA) topped the priority list. So much time was spent discussing it, yet ironically neither the defenders nor the opponents of ACA examined critical fundamental changes that would make health care more affordable or would ultimately protect more patients. Amid policymaker debates and public discussions, few conversations addressed the core principles of reform, which are to improve quality, drive down costs and transform the system into one that serves people — patients and taxpayers — and works for purchasers and providers. These principles make up the value agenda.

Implementing the value agenda consists of three key pillars, each of which could be accelerated with congressional support and action. Absent that, progress is still possible, but leadership in the executive branch is necessary. That is why I urge Secretary Azar, when confirmed, to make value-driven health care priority No. 1.



First, we must recognize the giant sucking sound in the economy, caused by the dramatic waste, fraud and abuse that is derailing the health care system. This costs American taxpayers an estimated $340 billion each year, about one-third of the Centers for Medicare and Medicaid Services’ health care spending estimate of $1.03 trillion. That is a travesty by any measure. With that money, we could give every American a 22 percent cut in their income taxes, pay down the federal deficit or invest in much-needed infrastructure improvements. By shifting to value-based care, which aligns payments to care quality and outcomes, we begin to clean up the waste, fraud and abuse in health care. The secretary should make it a priority to cut health care spending on services that are not tied to outcomes, and redirect the money to truly serve patients. Failure would be utterly wasteful and an abuse of taxpayer money.

Second, since the federal government is the single largest purchaser of health care in the country, it is time that government join with the private sector to accelerate better quality care at a more affordable cost. What holds them back? One answer is vested interests benefiting from today’s nonsensical health care economics. They argue that delivering more care must be delivering better care. The evidence proves that argument is wrong. Business and government working cooperatively could use combined market power to force a major change in how we finance health care. Again, those who need affordable, quality health care would be the winners.

Third, and most critically, the next HHS secretary must be bold and willing to take a page from the most successful value-based payment, benefit and delivery models that exist in the private sector. For example, large employers are successfully redesigning how to treat patients with multiple chronic diseases and pay for them in primary care settings; they have identified centers of excellence for certain high-cost surgeries where patients receive best-in-class care at less cost; and they have supported the development of medical organizations that will assume responsibility and accountability for the quality of care they deliver, known as Accountable Care Organizations. These are not theoretical pilots; these are real models that government could scale to benefit patients in Medicare, Medicaid, the military and veterans, etc. Implement these reforms and the secretary will see real results that deliver not just cost-effective care but truly superior outcomes.

I know it can happen. I’ve seen it work. It needs to become America’s standard in every community.  

As a former governor who cares deeply about health care, and as a leader of a nonprofit coalition focused exclusively in that area, I know we are well beyond the point of half-measures and rhetoric. I know there are people in Washington, as well as in states across the country, who are willing to roll up their sleeves and get to work on real reform. We have the blueprint; we just need the will to build it, and to take lessons from the boardroom as well as the exam room.

Former Michigan Gov. John Engler (R) is chairman of the DRIVE Health Initiative and a past president of Business Roundtable and the National Association of Manufacturers.