In a speech delivered to the 2007 HIMSS Annual Conference and Exhibition Thursday morning, Health and Human Services Secretary Michael Leavitt said he expects a rapid transformation to a competition-based healthcare system in the United States.
Leavitt said that as major employers prepare 2008 RFPs for healthcare contracts, firms that comprise 60 percent of the total healthcare market will include the same requirements the federal government uses in its value-driven healthcare initiative.
The initiative, sometimes referred to as President Bush's healthcare transparency plan, was first announced in an executive order last August. In 2007, all federal programs including Medicare, the Veterans Affairs health system and the Federal Employees Health Benefit Program must adhere to the four cornestones of the program when purchasing healthcare: ensure interoperability and data-sharing capacity, use quality measures, develop episodes of care for price comparison and buy healthcare services on the basis of high quality and low cost.
Leavitt announced in December that he was recruiting major employers to join the effort, and was on his way to Texas later on Thursday to announce the commitment of leading companies in Dallas and Houstan. Already, more than 175 companies have formally committed to the plan.
"Major employers and payers are committing themselves to these four cornerstones," Leavitt said. "And when sixty percent of a market moves, the system changes."
Speaking to a group of chief information officers and IT specialists, Leavitt emphasized the need for interoperable systems that improve quality of care, produce data that enable price and quality comparisons among providers, and enable consumers to make better choices when spending valuable healthcare dollars.
But, he said, "our goal isn't just to digitize healthcar data, it's to create a 'system' out of a sector. We can't do that without healthcare IT."
The system Leavitt said he envisions is based on competition through quality, not just lowest price. Such a system also requires that Americans let go of the idea that price is currently an indicator of quality – in reality, he said, the highest priced hospital is not necessarily the highest quality provider.
"Competition works in healthcare," Leavitt continued. "We saw a powerful indicator of this with the introduction of the Medicare Part D drug benefit program."
Currently, the Part D benefit has enrolled 90 percent of all adults eligible for the program and he said surveys show that at least 80 percent are happy with the plan. More to the point, Leavitt continued, "billions of dollars" have been saved by consumers, and the average plan price has dropped from an original estimate of $37 a month to $22 a month.
"The actuaries will tell you that this savings has come about because of the competition," the Secretary said.