FOR IMMEDIATE RELEASE CONTACT: LYDIA LENKER
governor phil bredesen
Graduates … Dr. Owen … Members of the Administration and Faculty … UT Trustees ... Friends … Loved ones … and Honored Guests. Welcome to the 2005 commencement of University of Tennessee Health Science Center. We are here to share a very special day in the life of each of today’s graduates.
First of all, to each of you graduating today, please let me offer my simple congratulations. You’ve accomplished something that is significant, and today marks a milestone in your lives, and a milestone in the lives of your parents and loved ones as well.
Graduates, today also weaves together your own destiny and that of the
Speak well of it, help it recruit good students and faculty, support it
financially. And most of all, bring credit on the
Today is a milestone in your lives. There will be others: marriage, the birth of children, those birthdays that end with a zero. Graduation is a forward-looking milestone, and you are entering a field that will see more change during your lifetime than any other.
The science of health care continues to forge ahead, and genetic science in particular will continue to power this for years to come. But the delivery of health care is just shambling along. The frontier in curing illness is increasingly in the economics and organization of health care delivery more than the science.
So I want to encourage you not to limit your attention and focus on the science, but to also understand the business, because these areas increasingly will be intertwined. Specifically, it's important to accept the fact that these are inter-related, and to work to balance them in a way that makes sense for the health of the individual patient and broader healthcare policy.
These ideas have particularly come home to me as I have worked to bring
In the language of software, Version 1 of Medicaid has been based on a 1960s view of what was needed and how to go about it. Over the years, we have taken the design, patched it and added to it and patched it again, and I would say in software terms that we are now up to about Medicaid version 1.56; what we need is a redesign, Medicaid 2.0.
I’d like to talk today about some underlying principles that I believe should be a part of the foundation of Medicaid 2.0.
First principle—that everybody should pay a little something for everything. Until and unless there is some economic tension, until the users of the system make for themselves choices as to how scarce resources are to be used, the system will continue to be inefficient.
Imagine you are shopping for groceries at the grocery store. You’ve seen the ads about the latest food products, you wheel your cart up and down the aisles and make your selections. Everything on the shelves is available, as much as you want, nothing is off limits. When you come to the checkout counter, you’re rung up, you never even see the total, your wallet stays in your pocket and the bill is just sent to the government and is never heard from again.
You’d spend a lot more than you do now. But this is exactly the way Medicaid works today. It is fundamental economics that if you want someone to make efficient choices, they have to have a little skin in the game.
The first principle is that everyone pays something. The second is for us to pay for the things that are important first.
Over the years, we’ve backed into an assumption that everything that can be placed under in the category of “health care” is somehow on an equal footing with everything else. But there is a vast range in the importance of different health care services.
If you need an appendectomy, it is vital and life saving. Most people would agree that if you are pregnant, you should have a doctor watching the pregnancy and making sure the child is born as healthy as possible. But at the other end of the spectrum, if you have a cold, there is not the same moral imperative that you have a decongestant to clear your head.
Step back with me a moment to look at what has happened in the health care economy. Since the 1960s, there has been a tremendous expansion of the resources available to pay for health care, in both the government and the private sectors. In the public sector, Medicare and Medicaid together this year will spend over $600 billion and are rapidly approaching a trillion dollars. When I was in college, that $600 billion was zero.
We have in
We need to exercise some choice here, and prioritize what we do.
If I have a serious disease, and can’t afford to pay for treatment, should the government be asked to step in? Of course. I’m a pregnant woman, and can’t pay the full cost of doctor visits to check on me and my baby, should the government be asked to help? Of course. But if I have heartburn, should someone else buy me the latest brand name remedy? Probably not. Especially probably not when many of these someone elses doing the paying are working poor without health benefits of their own and who often don’t feel they can afford these same things for themselves or their families.
I’ve described two commonsense principles we should keep in mind as we reinvent Medicaid: everybody pays something for everything, and pay for the important things first.
I now want to suggest a third principle: pay for what works.
You all know that there are huge variations in practice patterns in our health care system, and we need to stop treating them as all equal in our eyes and start focusing on outcomes. Every successful business I know concentrates on results.
I see this very clearly, for example, in the area of pharmaceuticals.
Drug companies have a wonderful business model. You invent new things, in a great many cases just variations on old themes, variations on which you can get new patents. You put your enormous marketing muscle behind selling these both to doctors and directly to the patients, you set prices that are typically paid by anonymous third parties and are therefore not a part of the purchasing decision.
The behavior this drives is to put the premium more on creating new products that can be patented and marketed rather than pioneering new ground in curing illness. Practitioners and payors both need to start exercising some discretion in what is prescribed and paid for: pay for what really works best, and not just for what is tricked up with a “new” and “improved” label or is overpriced for what new benefits it offers.
When I was growing up, I used to love to hunt and fish, and my uncle Ozzie had a huge collection of old Outdoor Life and Field and Stream magazines. I used to pour over them in the evening and copy things down, and one little nugget I have always remembered and is very apropos to what is happening in health care was the Hunter’s Prayer. It isn’t even really a prayer, it’s just a little couplet: “The wisest words / Of woods and glen / Shoot where they’re going / Not where they’ve been.”
The need and the political will are there to invent the next generation of Medicaid. If all we do with this opportunity is fool around with the federal/state funding formulas or try to get a bigger discount on some drugs, then we will have shot way behind the target.
But if we get ahead of the target, if we recognize where health care has been and continues to go and get out in front of it—get economic principles working for us; pay for the things that are important, pay for the things that work—then we’ll hit that target, we can devise a system that serves our people well in the years ahead.
This is something America can do … the time is right to do it … and you, as the next generation of medical professionals, are in the ideal position to lead the charge.
Whatever the outcome of this struggle, all of you being honored here today will feel its impact the most. All of you are the future of health care in our state and our country. And I challenge each of you, as you go out into the world, to always keep your eyes on the target.
It has been a great honor to be here today, and to offer a few thoughts as you pass this milestone. May God bless each of you and the work you have chosen, and may He give you the strength and wisdom to be a credit to your families, to your communities and to our great nation.
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This study quantifies the economic impact of the UTHSC on the economy of the state of Tennessee for FY2010.
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