Why Health Care Quality Must be Improved and Why Health System Reform Must Occur

NCHC Writers
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Presentation to the American Federation of Teachers
and the National Education Association
Henry E. Simmons, M.D., M.P.H., F.A.C.P., President
National Coalition on Health Care

Washington, DC
March 31, 2001
 Good Afternoon. The purpose of this conference is to provide you some understanding and tools to help you negotiate better health care and value for several million AFT & NEA members and their families. Lynn Ohman, Jewell Gould, John Abraham, and Stan Wisniewski deserve a great deal of credit for their foresight in initiating this process.

As negotiators and as lobbyists for health care benefits, your members and their families depend on you to look after their best interests in an area which is vitally important to them. You have a difficult task.

Since your members currently use more than 10 billion dollars worth of health care each year, and since much of that huge and rapidly growing expenditure is currently wasted on poor quality and a dysfunctional system, it is important that today’s effort and subsequent efforts succeed in achieving the stated goals of better quality and value for your members.

There are currently many barriers or problems which will have to be dealt with if you are to succeed. I have been asked to describe these problems and what you and our nation will have to do to overcome them. I will conclude by suggesting to you a series of steps you could take, which could dramatically improve quality and safety and the health and welfare of your members and their families and, at the same time save hundreds of millions of dollars.

To bring this about, you will have to do things differently than you have in the past. You’re going to have to work together in far larger bargaining groups to maximize your leverage, and ultimately NEA & AFT are going to have to put their collective muscle behind a broad, National Coalition effort, which will be necessary to achieve the comprehensive system reforms needed to fix our system. Those reforms must include universal coverage, cost containment, improved quality of care, equitable financing and simplified administration.

The views I will share with you are those of the National Coalition on Health Care, the nation’s largest and most broadly representative alliance working to achieve necessary reforms. We are non-partisan. Former presidents Bush, Carter, and Ford honor us as co-chairs. Your packet has a list of our 80 members who represent or employ over 100 million Americans. NEA & AFT have been actively involved in this effort. Our Coalition has a long and productive record in highlighting and working to address our health care problems.

What are the problems? There are three, and they are interrelated.


The first is costs – which are now out of control and will soon double to over 2.6 trillion dollars. Despite all your negotiating and lobbying efforts to date, your premium costs are likely to rise annually at 3 times the inflation rate with no end in sight. Prescription drug costs will rise even faster.

Those most adversely and unfairly affected by rapidly rising costs will be employers such as yours who currently provide health insurance, and middle-class workers and their families, i.e. your members.

The Congressional Budget Office has warned that despite our supposed surplus and even under the most optimistic scenario, in which every cent of the surplus is used to pay off the national debt, the future cost of paying for health and retirement benefits will break the federal budget and again drive the deficit to unsustainable levels.


Largely due to rapidly rising costs, coverage is decreasing and the employment-based health insurance system is eroding. There are 10 million more uninsured today than when the current health care debate began, and one million more Americans are being added to the ranks of the uninsured each year. Most of these are from working middle-class families. We are already at a point where almost 80 million Americans are either uninsured or underinsured. The economic downturn which is underway will dramatically add to those already high numbers. As costs rise and as coverage falls, more costs will be shifted to your employers and your members to pay for care for the uninsured. This inequitable cost-shift will force more employers to drop or cut health insurance and the erosion of the employment-based system will increase.


But this is not all. There is a third major problem, i.e. poor quality which is the topic of this session today.

Any good businessman knows that if you don’t pay attention to quality, you could end up wasting 30 to 40% of what you spend. In the past, Treasury Secretary Paul O’Neill, who has extensively studied this problem, has publicly stated that in his judgment this is now the case in our health care system. Even though we have long known how difficult it is to contain costs in any sector if quality is poor, to this point in health care the focus, and your focus in bargaining, has been almost exclusively on cost. This has led to efforts to control costs by limiting fees, increasing beneficiary cost-sharing, decreasing benefits, and increasing the use of managed care.

Unfortunately, a large and growing body of evidence raises questions as to whether any or all of these approaches will, over the long term, contain costs. The reason is that the major drivers of rapidly rising cost are increasing intensity of care and a sharp increase in our use of technology, especially for care of the growing number of chronically ill and the elderly. This raises the critical question: Just how appropriate is the use of our technology and how good is the quality of our care?

Many people have at least some understanding of the magnitude of the coverage and cost problems, but very few understand that our third problem, poor quality, is even more serious and that unless it is addressed, our coverage and cost problems cannot be fixed. The reason is that these three problems are inextricably linked.

As already noted, poor quality raises costs and cost escalation leads to an increase in the number of uninsured. In the absence of insurance coverage, needed care is becoming increasingly difficult to get and when you can’t get the care you need, quality and your health are adversely affected. In fact, studies show that, other than aging, the biggest risk factor associated with a poor outcome or death is the lack of health insurance. Whether or not you receive timely care (which is increasingly determined by your insurance status) can determine whether you live or die.

But lack of coverage is only a small part of our quality problem. The biggest problem is that many people who have health insurance, including many of your members, receive very poor quality care. The evidence suggests that such care wastes hundreds of billions of dollars and injuries or kills millions of Americans, including many of your members and their families, each year. Poor quality is a major cause of unnecessary harm and cost escalation. So, we have a vicious cycle which feeds on itself: poor quality raises costs, rising costs lead to decreasing coverage, decreasing coverage leads to poor quality and poor quality in turn increases costs. We have created a perpetual motion machine headed in the wrong direction.

As a major cause of unnecessary harm and cost escalation, quality has become the central problem. Since there is no greater opportunity to control cost than by improving quality, it is critical that we address it now.

A discussion of the quality problem is very timely, because Congress is in the process of attempting to craft a “Patients’ Bill of Rights Act” to “fix” the quality problem which has allegedly been caused by managed care. This is a graphic illustration of how poorly understood the quality problem is.

We do have serious quality problems, but the real problems are not due to managed care and will not be solved by more appeals, greater access to specialists, more second opinions, more choice, an increased right to sue, or unlimited amounts of health care.

The reason is that the major underlying cause of our quality problem is not bad health professionals, though there are some. Poor quality is mostly due to inadequate science, a lack of evidence-based medicine, inadequate technology assessment, deficiencies in our data and major gaps in our quality control, standard setting, and information dissemination systems, i.e. a structurally flawed system.

As a result, too often no one, specialist or not, knows the right thing to do. The uncertainty which pervades much of medical practice today is manifested by the huge variation in care which exists from region to region, doctor to doctor, hospital to hospital. For example, breast cancer surgery rates for similar conditions vary 33 fold across the nation and there are many other examples of high variations in use (ICUs, prostate surgery, antibiotic use). In fact, the next time you hear someone claim that we have the best health care system in the world, you can reasonably ask, “Which one?”, because the type of health care delivered varies dramatically depending not on need or solid evidence, but on where you receive your care. Dr. Jack Wennberg, of Dartmouth, puts it succinctly when he says: “In health care, geography is destiny.” With so many different approaches being applied to similar patients, it is not possible that all physicians are doing the “right thing”.

Dr. David Eddy, one of the nation’s most respected quality experts, summarized the situation as follows:

“For centuries, the practice of medicine has been based on one huge assumption. The assumption is that physicians instinctively know the right thing to do. Somehow, the assumption goes, we physicians are able to assimilate all we have learned, process all the information we generate and make the right decision. That myth has been shattered. We are all coming up with different answers, and it is impossible for all of us to be correct. Our practices are way out in front of our intellectual lines of supply.”

Studies from Harvard and elsewhere show that medical accidents and medical errors are rampant in our health care system and that the combination of medical negligence, errors, and accidents constitute the nation’s “hidden epidemic”. Dr. Lucian Leape of Harvard has estimated that the chance of a patient being killed by a preventable hospital error is approximately 1 in every 300 admissions. Hospitals are one of the most dangerous settings in our nation. Contrast that with the one in two million chance of being killed by boarding a commercial airliner, which the public is far more concerned about. In fact, we are currently spending billions of dollars to improve airline safety and, in contrast, pitifully little to improve the safety of our health care system.

Dr. Leape has estimated that the number of preventable deaths each year from medical errors and accidents is the equivalent of three fully loaded jumbo jet crashes every two days with a total loss of life.

But as big as the problem of errors is, it is only a part of the quality problem. After a year of study, the President’s Quality Commission concluded, “Exhaustive research documents the fact that today, in America, there is no guarantee that any individual (insured or not), will receive high-quality care for any particular health problem. The health care system is plagued with overuse, underuse, and misuse of health care services”. These problems exist in all types of institutions, in managed care, in fee-for-service, and in our supposedly preeminent institutions. Last month the Institute of Medicine of the National Academy of Sciences released its second quality report. They concluded that our health care system is “broken”, and called for a major overhaul. They also called for a major national quality improvement effort backed by a billion dollars of federal funding.

In a speech at the National Press Club, Dr. David Lawrence, President of Kaiser Permanente, the nation’s largest HMO, concluded that, “Extrapolating from what we know, one can conclude that: the third leading cause of death in the U.S. is fatal mistakes that occur as a result of the misuse of our medical technologies. These accidents are responsible for over 400,000 deaths each year, and two-thirds of them are preventable. These numbers do not include the impact of failing to treat what we know how to treat, nor do they include the impact of overzealous use of care. Aside from the 43 million Americans lacking health insurance, the safety of health care is the single most important health care issue today.”

There is no other business in this country that would be allowed to continue to operate even a day with quality problems of that magnitude, nor would society pay more than a trillion dollars a year for its services. Yet this is now the case in our health care system.

The question I now want to pose is why do you continue to pay for and waste more and more of your members’ and employers’ dollars to perpetuate and reward a system this flawed?

Here’s where some of the myths become barriers to action. For instance, some honestly believe there are quality problems elsewhere, but not with “my” doctor or “my” hospital. Some feel that report cards on the system will fix its problems. Some feel that if it wasn’t for managed care or the insurance companies or the bureaucrats, the system would be just fine. Some feel we just need to spend more money to fix the system. All of these are myths.

The fact is the system is structurally flawed, and pitifully little is being done to fix it. The system will not correct itself as long as you and other payers are willing to spend 1.3 trillion dollars on the status quo. The system will not change as long as the public and your members fail to understand the magnitude and severity of the problem and demand change. It will not change if payers and consumers don’t find a way to identify, reward and support those providers and systems who want to, and who are ready to provide better quality and value. Until groups such as yours begin to use your influence, your credibility with your members and your considerable economic and political leverage, the system will not change.

We know we can do far better. There is absolutely no doubt that we can, and fortunately tools are now available to help you do just that. Some of them are being highlighted at this conference and there are others. Time will not permit me to describe them all, but let me review several.

Under a two-year federal grant from the Agency for Healthcare Research and Quality (AHRQ), our Coalition and the internationally respected Institute for Healthcare Improvement have launched a joint initiative – Accelerating Change Today (A.C.T.) for America’s Health – to identify, codify, and disseminate exemplary cases of quality improvement in health care and to facilitate the adoption of such better practices by providers, health care plans, health insurers, and consumers.

Our A.C.T. initiative has already released major, authoritative reports on best practices in two areas – how to reduce medical errors and improve patient safety, and how to improve care at the end of life. These reports are included in your materials. Both demonstrate how dramatic improvements have been made by a wide variety of health care institutions. They show the way. They can now be replicated by other institutions. And that’s where your leverage in the negotiation process with health care plans and providers becomes important. We will soon have available two other important case studies on how to improve cardiac care and how to improve care for the 125 million Americans with chronic diseases.

Our A.C.T. initiative is also working to engage health care purchasers such as yourselves in the quality improvement movement in a new way – by focusing attention on the opportunity to use the financial leverage they have with providers and insurers to foster the timely adoption of successful innovations. Our expanding work with the purchaser community is grounded in the belief that those such as you, who negotiate for health care services for large numbers of people, can and should play a larger, increasingly active and ongoing role in driving health quality improvement using a variety of strategies, including benchmarking, standard setting, and better data and reporting systems.

Our “best practice” case studies can be useful to you in negotiations with health care plans, for they show that it is possible to dramatically improve the quality, safety, and value of care. There is no longer any excuse for the status quo.

But we recognize that best practice development is only the first step. In order to assure that such best practices are applied to the care of your members, you as negotiators will need additional tools including:

· Action guides which detail for you and your health plans step-by-step ways to implement specific best practices in the health care delivery system in which your members receive care;

· You will need measures or metrics which you can use to determine the effectiveness of these best practices and provide you assurance that they are being applied. These measures are necessary to allow you to hold health plans accountable for instituting best practices.

· Finally, you will need user-friendly educational materials to provide to your members so that they can become actively involved in the quality improvement process by knowing what they should expect and the questions they should ask about the care rendered to them and their families.

These tools must still be developed. We know how to do that and we are currently in discussion with your leadership and leaders of other large groups to raise the resources necessary to complete this process.

So to summarize the facts on quality:

· You are paying billions of dollars for poor quality care.

· As a result, a great deal of unnecessary suffering, death, and injury is occurring and affecting your members and their loved ones.

· We know how to address these problems, but for a range of reasons the system is not currently doing so nor will it as long as patients and payers do not demand it.

· With the leverage available to NEA & AFT, you can make a real difference.

· That is the opportunity available to you. Given your fiduciary responsibilities, you have an obligation to act.


As I noted at the beginning, though quality is a central problem and one on which you can have some impact, it is not the only problem which must be addressed. How do we deal with the totality of the systemic problems we face? We know how not to do it. We know we don’t do it with band-aids or patches. We have forty years of experience attesting to the failures of such a strategy. It is now clear that managed care, the market, medical savings accounts, changes in tax treatment of health insurance benefits, a patient bill of rights, the Kennedy-Kassenbaum legislation or other partial steps will not alone address the problems we face. They can each make a contribution, but more extensive reforms will be necessary. What are those reforms?


After a great deal of study, our Coalition has concluded that solution will ultimately depend on the achievement, through a public/private partnership, of the following goals:

· Making sure every American has health insurance coverage;

· Improving the quality of all care;

· Controlling total system costs and stopping cost shifting;

· Creating a more viable and equitable mechanism of financing, and

· Simplifying administration.

Why must these goals be achieved? Because our three problems are inextricably intertwined. You can’t solve one without addressing them all.

As I indicated earlier, it’s a vicious cycle. Without universal coverage, you cannot assure equity or quality, and in the absence of quality, you cannot contain costs. In addition, without universal coverage you can neither make the system less complex administratively, control costs, stop risk selection and cost-shifting, achieve a level playing field of equitable financing, or create a truly competitive market-based system. In fact, those who created the managed competition hypothesis concluded that it could not work without assured universal coverage.

To those who claim that our nation cannot afford a system of universal coverage we would say this: Every other advanced nation is the world has done so while spending one half to two thirds as much per capita as we do and attaining health outcomes at least as good as, and in a number of areas better than, ours.


You can make important strides in improving the quality of health care and the safety of the system. Major gains are possible in each of these critical areas.

However, no matter how hard you try your actions alone cannot solve the whole quality problem nor achieve universal coverage, or create a level playing field or a more equitable reimbursement system. Nor can you alone stop the deterioration of our health care safety nets, including the employment based health care system. These are going to require national policy changes.

So in addition to mounting an effort to improve the quality and safety of health care. I urge you to participate in a parallel effort in partnership with the National Coalition on Health Care to build understanding of the need for and support for the other national reforms which will be necessary to achieve a better, more equitable, and more affordable health care system. The welfare of many depends on your success.

Thank you.

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