>> thank you, dan. my book which was released in november has a title with a slight sense of irony, free market is in quotes and a talk about how the free market which we think of as the

quintessential opposite of the government was created by the government. this is clearly a pushback against some of the talk we hear recently to keep the government out of health care, keep the government out of my medicare, is the government up to the task of reforming the health care system? after the shaky roll out of the insurance exchange is, is it up to the task of really anything? i started this book in 2008 a four there was an obamacare or even a president obama, but it has a lot to say about the affordable care act and white is the way it is and the content. so it was in a way fortuitous that events play themselves out as they did so that i can really lead up to what's happening today, which is very much part of the historical picture. i start out with the conventional view, or at least the widely held view, of how

government regulators and private industries interact, or failed to interact, which is a true really across the economy. my focus is health care but you could look at a number of different industries. we have a wall regulars on one side, private industry on the other. people tend to see the regulators as a necessary evil to keep some constraints on potential access of the private market but also as a lid on some of the innovation of the private market. they are antagonists in which the private industry should be as free of the regulators as possible. one i'm going to argued is that they are really partners in a joint venture, to use a metaphor, if you want to have a field of flowers someone cuts to tell the field someone's got to garden it, someone has to fertilize it. what do you want, the gardeners or the flowers? you have to have a both and i'm

arguing that to have robust private industry, or free market if you prefer the term, you have to have both. i begin each chapter with a quote. i start out looking at the conventional view, this is from the economist. they talk about regulation as interference, and talk about it as a $169 billion hidden tax of that figure comes from the cato institute which has a slant on this. first of all when you think about it in an industry that generates about $2.7 trillion in revenue, that's a low rate of taxation. i would argue it is really more in the nature of an investment and a tax. and it's what makes the rest of the $2.7 trillion possible. this view of the antagonist has particularly been pervasive in health care. if you look briefly historically, teddy roosevelt first raised the issue of a

national universal coverage plan in 1912 and its third party candidacy. he did not succeed. a few years later some of the states picked up the call. i know it's hard to read the details but on the left from 1918 was the pushback that talked about labors of socialistic attempt to take over our health care system. sound familiar almost 100 years later? in the 1940s harry truman proposed a similar plan. that was called socialized medicine. if you can see the puppeteer with the marionettes, is called socialized medicine and its it's inside a communist system. in the 1960s when medicare was proposed, that guy, an actor at the time who may look familiar proposed this was socialized medicine and would lead not going to socialized health care

system that to an entire soviet style economy. and then we seen the last four or five years with the affordable care act, hands and software health care, hands off my medicare, government and industry should not be mixing government should stay out. what i want you proposed is it is a partnership, that the proper graphic is more like the yin and yang. and that we can even look at some of the theorists of the free market for support for this. this is a quote i begin with from adam smith, the father of free market economics in 1776. one of the duties of the sovereign is to maintain public institutions and public works without which the wonders of the free market would not be possible. what i look at is initially a couple of case studies be on health care, and some thought examples. what would these indices look like if the government had not

intervened? what with the computer industry look like if we didn't have the internet? say what you want about al gore but the government did, in fact create the internet. we had personal computers before the internet, before the internet was commercialized. 1984 was when apple introduced the first macintosh computer, but the industry would look nothing like it does today were it not for the internet. interstate highways did a similar thing for automobiles, particularly trucks and buses. the satellites the government launched, tv the we know today, particularly cable-tv. and more disciplined, fannie mae and freddie mark -- freddie mac. it created a whole industry. we can then look in more detail at health care and say how has this played out, what does it say about this debate, keep the

government out of my health care, and the affordable care act actually fix things? this is a graphic i came up with to visualize the progressive of health care regulation or back to the 1800 some of the public health regulations sanitation, and layer upon layer, medicare and medicaid and today health reform in the form of the affordable care act. with significant is the latest don't tend to go away. with very few exceptions. wantonce a program is in place it stays. we tend to build. the conventional view would say this is crowding out the private sector. has it? here's the growth of national health expenditures in the united states. if the work a crowd that out that my be good thing because we have seen astronomical growth to the point that health is now almost 18% of our entire economy and it continues to grow at a rate of unknown and the rest of the developed world.

what happened as it's going on the left hand column as a percentage of gdp goes up, the percentage of spending for public sources has gone up. it's now over 50% or counter spinning as a percentage of federal spending has gone up now over a quarter of all health care spending. what has it done to the private sector? the amount of private money spent per capita on health care has continued to go through the roof. i would say that shows its synergy, not antagonism. health care as jobs in june the growth of health to implement it now more than 10% of all nonfarm jobs. those shaded areas are recessions. witness health care particularly taken off? it's during the recession. this is a giant jobs program that is done quite a bit for our economy as well as for our health.

what i do in the book is to take four key sectors of health care and dive into them in some depth to show from the history, to show from the system state of the growth and to show through case studies how they grow through, because of government intervention, not despite government intervention but i will spend most of my talk referring to armor suit goes but hospitals and medical profession private health insurance are also aspects of talk about. if you buy the book you will see those issues discussed in much more detail. let's take a look at pharmaceuticals. my quote is from a senior official of pfizer, the largest pharmaceutical country and will talk about the national institutes of health which fund basic research and described relationship between private industry, nih, as symbiotic. this is industry acknowledging some iosa's. -- some iosa's.

this is showing profitability for showing rates of return for the industry. it's hard to read those numbers but consistently close to 20%. unheard of. those lines are the average for u.s. industry which is about four or 5%. we are looking at an industry that is four to five times as profitable as the american norm. over the past 20 years it's been the most profitable all but for three years and has been in the top three every year. sales of pharmaceuticals have gone up like wildfire. recently been leveled off in a come back to that in a minute to talk about the governments role there. what does this have to do with regulatory programs? first, patents. animatedly system a loss the free market. it restrains who can offer a product. it's the bedrock foundation of the pharmaceutical any executive in

the industry will tell you. it is this program that makes the business model of pharmaceutical profitable. beyond that we have the fda which instills customer confidence that the drugs we take won't kill us and they will not lose their patients. the first lot was in 1906. the new drug law announced with a lot of fanfare but it meant we didn't have a number of products like this add for cocaine toothpaste drops. maybe we would be better off with him by the fda make sure that drugs that were considered unsafe were kept away from us. in 1938 the law was substantial expanded after scandal involving something called a licks her and antibiotic preparation they killed over 100 children and it was part of fdr's new deal regulation of drugs was enhanced. so the industry benefits from an

assurance of safety. that few other industries have. most people will look in the medicine cabinet and see a pill bottle and see the name of the manufacturer and know that company made and they're making profits. if he knew anything about the industry you would know the fda is part of it. few people outside the industry see as a national institutes of health, nih, which funds most of the basic biomedical research that goes on in the world really. almost $30 billion a year. those numbers have gone up recently. the red is the stimulus which added a little to it but it still remains way up there. i argued in the book that basic biomedical research is in the nature of the public good something that benefits us all that a private company can't really produce a because they can't really charge for it. if you make a finding and law

of nature, it's not patentable. it is therefore everyone to use. it's necessary to develop new drugs, but it's almost impossible to charge for. it's highly speculative when you invest in understanding health structure or the function of genes, e.g. don't know whether it will lead to nothing we do something in 50 years, lead to something next year, so a private company can't take that risk. what do we do? the government steps in as it has in the 1930s but they provide the public good so that private industry in an attempt to commercialize it, create products that actually reach patients. has government funding crowd out private research? quite to the contrary. the top dotted line is the growth in spending of private pharmaceutical companies which since 1980s has been more than nih even, and that continues to widen. we've seen the foundation of

public goods, basic research allowing the private companies to do the applied research. those numbers for private companies may be somewhat inflated. they're a little controversial but the national science foundation, get did an analysis of years ago which found that are lower than that but still substantial. you're still looking at growth in private research in tandem with growth in government research. among the aspects i discuss our something called cooperative research and development agreements in which nih will find a private partner, to commercialize drug. i talk as a case study about the drug taxol which is widely prescribed on -- the less overused that it was developed through the department of agriculture which found the bark of the tree has medicinal properties and then three series of partnerships between public, academic and private industry

labs, taxol was isolated and synthesized and then nih found bristol-myers squibb as a partner to commercialize it. from the 1980s, the purpose was to allow the biotechnology industry to take off and the service exceeded at doing that. we also have other programs i talk about come to provide special predatory favors, financing for companies that may drugs for rare diseases, a whole major profitable subset of the industry. what if it is good be the biggest of all, the human genome product it were seeing patricia maisch medicine before our eyes from conventional therapy gene-based therapy, how to do that? we need a map. a map of the human genome. the nih did not end during the

1990s it developed a map of the genome. since then private companies have isolated specific genes and then i developed developing gene therapy, diagnostic techniques and otherwise of harnessing it. what has nih been? did develop a new center. and 2011 the national center for transitional sciences was launched to explicitly find private companies that would commercialize genomic therapy. what nih now does is to isolate genes, they find potential drugs from those genes. they actually do the preclinical study at labs and animals, they do some of the optional clinical studies in humans which private companies traditionally do and then they look for private partner which is when to take the drug once some of the risk has been taken out of once established it's a likely candidate.

there will be huge profits huge therapeutic outcomes from then and it is the free market existing because the government is before our eyes creating it. and then when all is said and done who buys the product? a huge market for pharmaceuticals is the government again. medicare this is a figure of medicare spending for different components. 11% is outpatient prescription drugs. there are drugs administered in doctors offices administered in hospitals and medicaid. but that altogether, you are talking about a least $100 billion a year in sales for these products that the government develops with one hand and then buys them up with the other. what with the industry look like had the government not intervene. without question with would have fewer drugs, lower profits, less

public trust, pharmaceuticals without the fda and certainly nowhere near the frontier of biotechnology and genomic medicine that we are facing today. let me briefly describe other industries i look at. hospitals, a quote. the point is medicare is indispensable to the american hospital industry. hospital construction in constant dollars going up very steadily over the second half of the 20th century. where were the bumps? arlie 1950s right after the hill-burton act was passed which bumped hundreds of billions dollars in the 1970 right after medicare. modem i case studies is on the for-profit chain which the most part came into being in the late 1960s. what is it that brought them about? it could hardly be a coincidence that right after medicare, the

for-profit chains came into being. one explicit the medicare did visit reassured investors that there was a steady source of revenue for these hospitals. to other industries have the government to pay the bill if there are shortfalls. medicare spending, we all know that story. that will have to be reined in at some point. the party will be over by the meantime it is creating hospitals as we know them today. has that crowded out? hospital spending, again hardly. we have sub industries with ancillary providers. home health outpatient physical therapy, ambulatory surgical centers, all relied entirely on

medicare funding. you can see in 1980 you have ambulatory surgical centers because medicare wasn't covering them. what would hospitals look like without government intervention? fewer academic medical centers, few or no profit chains fewer hospitals and fewer ancillary providers. the medical profession, this quote i love. it's from a former president of the american college of cardiology. medicare made us rich as simple as that. he couldn't have stated it more clearly. or i would see more truthfully. medicare spending showing a relentless rise under part b. the growth of the number of dr. starr in the 1960s for one explicit government program to increase medical school enrollment, twice the number of practicing physicians as we did back then again because of explicit government policy. medical schools to write a

significant amount of their revenue from government sources. faculty members heavily reimbursed by medicare and medicaid and federal grants for research. residents of interns, the numbers, because medicare has paid for them. the downside is we have, the way we pay for them to disgorge primary care you can see the number of physicians cha-ching primary-care going down. we reimbursed specialist under medicare much more generously. on the left primary-care is 1.2. nonsurgical encircled specials are a friend double that. i look at them that skill is develop the habits revived under a committee, controlled by the ama which has been heavily stacked in favor of specialist. so what with the medical profession look like without government? would have half-asleep physicians, probably more

primary-care which might be a good thing, fewer specialists and lower salaries. finally private health insurance. as the cbo pointed out we subsidize it heavily with a tax break for the insurance you get through an employer. this figure i find astounding. if you look at the upper right hand corner, that number in red 35.4, that is the percent of all the premiums paid in the country represented by the tax breaks, tax subsidies for not having to declare income. 35% means more than one-third of the cost of private employer-based health care in this country is paid for by the government. think about it. that makes it the third most expensive government health care program after medicare and medicaid, flying below a lot of people's radar screens. it has created a profitable private health insurance industry that we have today.

hmo, we would not have as many. had the government not begin funding and giving favors to hmos in the '70s. maybe for better, maybe for worse but the managed care industry would not exist as we know it today. and in the government is under mediscare. you can see that going up in the '90s. private health insurance without government intervention, les employment-based coverage les or possibly no managed care, higher cost because they would be a tax subsidy and perhaps a different political dynamic for universal coverage. the debates were having today over the affordable care act would be very, very different. the affordable care act what is

that about? that's about obama's skill at getting private industry pharmaceuticals insurance plans, hospitals, even the ama on board on the sink new frontiers do business and then those companies beginning to realize the new customers for insurance companies, the new patients for hospitals. there's a downside to this, serious downsides. one of them is regulatory capture for those are regulated takeover the spigot of funding. that red line on the left is money spent by health care industry are lobbying. those bluebloods are all the other industries. they spent a lot of money making sure that the governments generosity continues and that is resulted in the most expensive system in the world which i argue in the book because of this dynamic we spend almost twice as much either per capita are as a

percent of gdp than any other industrialized country. we've gone too far down the road to roll this back. for better or worse, we have a free market system created and maintained by the government. isn't hopeless? i described a few ideas for ways to nudge the system toward towards something that's more balanced and maybe more efficient, doing something about the administrative complexity tilted towards specialty care the overcommercialization in terms of physician-centric and the proliferation of technology. some cases the affordable care act will help, in some cases it might actually hurt but i think we can be pushing things forward. i ended by asking what would health care in general look like if the government had not intervened? in the upper left we see a hospital pharmacy from the 1950s. the upper right we see a hospital room from the 1950s. in the center in the bottom we

see the iconic picture of physician's office from the 1930s. i would argue that if it were not for the government that was to be our health care. so while there are downsides to this, our health care as we know it today is reliant on public support. thank you. [applause] >> i want to take you on a slightly different path through the same health care maze that professor field has so ably described. his book is a superb one. i would say buy it. >> i would agree. >> it's a good story. and one that lawyers need to understand. what i want to do is think allowed with you about something

that law students might be interested in, lawyers probably don't want to think about ever again, but that is the art and artifice of constructing a facebook a trusted counselor a complex world like this and tries to take all this material and put it in a way that physicians law students who get inside a field and when they start to practice, to understand it, not just as it exists today but with some sense of why it exists the way it does to some sense of history. without the history, teaching health law is just a collection of papers stuck together with statutes. what i want to do is propose what i case should do is to equip lawyers to understand the history of a field, the core legal framework that defines the work of lawyers because this is a large crate -- playground after all.

what forces are for change and in some legal fields change is slow, although almost nothing to slow today in health law. the forces for change cover everything from in health issues to dramatic changes in the or decision of delivery. it's a field which lawyers look at and say oh my god i have to learn this stuff or think of the opportunities for clients that i can talk to about new revenue generation. so this casebook, the genesis of this casebook was a law and economic conference that three of my co-authors and i attended. we were the three progressive left wing liberals at a conservative economic conference where the idea was to spread the gospel of free market, laissez-faire capitalism.

and the four of us sat down at lunch almost immediately and said, why are we here? we understand the value of economics but this seems to be to mission-driven. we mapped out the framework focusing on access to care, cost control of it quality of care and personhood, which was what bioethics tried to capture. within two years within the first edition of her book in 1987 about five years later we added 10 and economists and we quickly was we didn't need the economist to get at the rapid change of this profession and ferment caused by the rapid velocity in the system. the book as a genesis driven either market model, and trying to understand how health care

was evolving with the medicare act, with the hmo act, the pressures that were foot. and so the goal was to create something with these things in mind that would try to capture the status quo and predictable change. let me see if i can take you through somewhat rapidly the shape of the book. there it is. 1819 pages of bathroom reading over several years perhaps. very dense. and the question is what's the task of the casebook? my hypothesis is the task of a casebook is to provide organizing principles plus history plus the regulatory tool. step one need to look at the core relationships in health care delivery because health

care delivery is charged with core relationship, the doctor with the patient, the fundamental treatment. and then the doctor and i did in the for treating the patient with complex problems that require long-term care of some kind and surgical intervention or the use of drugs over time. the doctor has to interact with technology, more and more, technology for the diagnosis and treatment, drug devices and increasingly information sources, m-health sources of one kind or another flooding the doctor. the patient, the patient relationship really starts with the ability to get access to care. if you can't get access to care, then you are not a patient to your simply a dying individual in many cases. the patient needs good quality care, and quality has become as a result of the affordable care act and increasing obsession

with in hospital management. because they have to pay now for bad quality, increasingly. the patient has to contend with the payment of cared which wasn't much of an issue in the '70s, but has become a dramatic issue today with rapidly increasing costs orphan drug costs and so on. third you have to look at hospitals. one has it been a great deal of time on hospitals, the structure, accreditation organization, the fact they are all merging and what that means to get a look at other institutions that are being fond rapidly, surgical centers retail clinics out of cvs and rite aid and ultimately the think is most important in the case book and the hardest to teach, the payers private insurance as they rapidly retool under the affordable care act and the insurance exchanges. medicare in its complexity and medicaid. medicaid being the single

biggest source of growing revenue for private insurers as they move into medicare managed care plans. they are excited. there's a lot of money churning through the system. the second category are to look at when you're designing a casebook is what are the parameters of the law. this is a huge topic. it's got to be huge legal topic. you start with contract law with the fiduciary obligation that we stuck on physicians as protectors of our interest because we are a interest, because we are a good and they another look at tort law as a kind of inadequate quality control mechanism, one that existed all by itself back in the 60s without much other tools. any other tools to with look at antitrust for market power, fraud and abuse because there's a lot of waste in the system that forced trillions of dollars through our economy. we look at the question of legal

status of the institutions that provide care. i'm going to come back to these rather rapidly. you look at federal regulations, models that certainly is not unique. we have this in military procurement regulations but this is quite characteristic of how medicare tries to muscle the behavior through contract control. seven kanye regulation by medicare in particular, through fine-tuning payment and withholding payment and docking organizations that are substandard regulation through pay for performance and as professor field has ably argued, once the government sets in place all of these mechanisms private insurance tends to fall because it is simply easier to do so in many cases. you follow the model because it's easier for everybody, including those who are subject to the model.

the third access of casebook design and educational teaching i think is trying to set the lawsuit up to be a lawyer and who is ahead of the game who looks ahead and sees what the problems are, what the opportunities are, understand the system. the uncertainties, the broader policy conflict. you do that in a casebook by picking cases that are new and challenging perhaps a good sent by judge richard posner the also pushes the envelope. you pick things that are provocative. you design problems that push the envelope yonder where the law really can safely predict. and you look at what the points are. professor field has focused on regulation versus competition. competing models and it's a false dichotomy to most of these are false dichotomies, that's the way you present things as a

law professor. menu rapidly make students realize you really can't test on that simply. it's much more complicated. that's early two of regulation with competition. number two disclosure versus consumer. could -- should you tell patients. you have this tension which is pulling out all the time right now in the regulatory sphere connected conscious of hospitals but should they disclose adverse events? number three, this is a much bigger theme, patient sovereignty, patient engagement in decision-making versus her facial judgment. should we trust the doctor as if it is sure to look out for our best interest and be passive just say yes if we don't do that

already. the law has evolved to informed consent. but informed consent is a failed option. works miserably. so there's a great ferment and his has to be captured in a casebook. you get to choose your own treatment and say no. you get to choose how you die. to what extent you have a voice how can we improve voice for patient? this shows up in the case law. it shows up in the literature. it's playing itself out. fourth, the hardest to capture i think in a way that is exciting to see access to health care. we're are more expensive than other countries but access is much more in many ways, even for those that have insurance you don't have the ability to pop off to switzerland for a highly technical treatment if we are not satisfied with what we get in italy. in the u.s.

in italy you do. there are other problems with many of these countries but access is really not one of them, at least at a basic level. let me back up. that was the initial task. doctor-patient, hospitals, other institutions. the doctor, the good old view probably the 1930s when doctors actually knew what a stethoscope was. now they probably can't -- probably only a nurse can still do that. there's a hospital with a brilliant team of our only exit the consummate irascible providers. but we want our doctors to be this good and this good looking. this is an iconic representation of all the technologies that have to be mastered by

providers. immediately a casebook test kit cover medical device regulations, product liability, and all the problems that have to do with the doctor-patient relationship overlaid with high-tech. the changes and is very complicated and cause a problem. that are simplifying strategies to these are viagra dispensers as an easy model. i'm kidding. here's an example of what's happening with health information technology which is one of the areas that's rapidly becoming an obsession in health care, and i think for the better. you can see what's happening. you can see the predictions over time, up to 2018, this is the forecast. which have to do i think in the future and when your student absorbing it and when all lawyer trying to figure out is the

forecast, you have to be a futurist and access some of us to figure out how am i going to grow my firm, my practice, how am i going to instead what's going on when a client comes in who is 23 and as an app for the iphone that will revolutionize something he says. only 23, you can hardly understand him. but you need to understand technology. you can see the electronic health records will be settling in, nation data analysis health information exchanges are going to be blossoming. trying to figure out where the growth is going to be. you have seen slides like this but this is something you have to let students know because they don't feel it because they are still under parents employment-based insurance. what are the cost? there's the u.s. there's the insured all through employment and there's the

uninsured. no matter how you look at it you don't have access that matches our competition in the european union. and canada. the patient professor field give you a good history. history. here's would have with out-of-pocket spending with the passage of medicare in 1965 and it's moving into effect in 1966. the floodgates opened. absolutely poured money into the system, and we suddenly had to spend much less because the elderly are obviously higher consumers of health care. out-of-pocket spending dropped precipitously. the hospital, not much to say. there's a hospital room of tomorrow. very high-tech. i don't expect you to read. one would expect good hospitals to be completely wired with telemetry and all kinds of technologies and no ids to trip over and pull out of you think that everything is

designed smartly, smart architecture. number two, the parameters i talked about antitrust. the fiduciary obligation, the good old days trust me i'm a doctor. but professor field indicated the income variation for specialist can you trust a special is when they're driven by generating a target income and they want it to peak of last year question start to worry about financial conference of interest that are internalized when a dog or cardiologist wants to order that treadmill test every year for you. so we have less trust i think that the agency model is slipping. medical malpractice that's the law firms and, well done very lively tool. pushed back against by tort reform. said to do tort reform as immediate pushback against liability because lobbyists have

made it very, very hard progressively to sue except for very large cases. waste in the system. it is all fun. it is all subject to federal regulation. is simply waste. the status institutions, for example, here's another controversial issue in health care. nonprofit status, should hospitals retain nonprofit status or is that another example of waste in the system for which we don't get benefits? here are some new york hospitals. the argument is their charity care is on the left, their tax exempt is in the center. they make a lot of money out of it tax exempt status. this is a friction point and the boundary question about a whole legal status to the internal revenue code. and, of course the regulatory

structure. here i recommend professor field's first book the appendices are full of good examples but i'm trying to sell books. full of good examples of the structure of federal regulation and how complicated it is. usually republicans do this with a very, very elaborate chart but the chart for the republican national committee is just as complicated. simply have to recognize this is the way you run things. and, finally, uncertainty, the competing models. another example much like what professor field mentioned. socialist plot to in the midway of life, public schools socialism, public water system socialism, public highways. public parks and public health care socialism. i looked through google images and i found a number of

republican lawmakers with socialism coming out of the mouth as recently as probably yesterday. so the world will survive this. there's an example of a good model for thinking about it. the other thing i thought that was accountability and transparency we have to have data and then have to pump it out. you and i as shoppers have to shop smartly, and our employers have to shop smartly. and this is the patient engagement model i've talked about before. removing from this to empowered patients. the law has already pushes in that direction with informed consent doctrine and other tools overdue the zone of self-direction. and i don't know what that means and i don't know if i trust it. that's a topic for a class, for

a debate for what it means to turn intellectual's occupations like by dietary supplements which are totally unrelated is that a good idea? i doubt it. the empowered patient. and health reform and the affordable care act and access is simply a wisconsin analysis. how much each household would be better off in 2019 due to the affordable care act. this is no longer a liberal state but this is a liberal analysis because they look at regulations of how you do benefits. one view of this heavy regulated model of health care the dark side, you know which side that comes from and this side, the happy president waiting for the

good news about the exchanges to trickle out and another 50 million americans to sign up. thanks. [applause] >> we have time for a few questions. somebody who knows something. >> she knows something because she was a student of ours. >> good point. >> i finished the book last night, professor field, and i was saying that reminded me of your nonprofit class and all the health law and health policy classes i've taken to is really nice and i tremendously enjoyed the book. >> thank you. >> i wanted to ask you both a question about the nonprofit status of hospitals. it's in the news now community

benefits new rules by the irs in the aca making hospitals have to show how exactly they're doing benefits. the new stipulation, i don't know if it's new but research doesn't count towards this community benefit. and also the fact that the university of pittsburg medical center is being sued by the city of pittsburgh, and the city of pittsburgh is contending that they should not tax exempt status in the city at the city love they know what happened charitable mission. so i was wondering if you think that this community benefit rule, that the irs i just updated with the aca and will have an impact for making sure hospitals are actually doing some sort of community benefit and whether you think that case will be one of many to come? >> i think there's increasing pressure on hospitals to do

something to maintain their tax exempt the status. they been on good -- awkward situation and medicare medicaid, and the main reason for being pakistan to went away when many other uninsured patients were suddenly turned away. we ask that they pick up some of the slack for those who remain uninsured, to do some committee outreach and research and so forth. that now we have the affordable care act which will presumably once the exchanges are working pick up even more of the slack. i don't think nonprofit status will go away for hospitals. i think it's too entrenched. there's too much to talk about the private sector, to me investors. too many industries connected to the hospital that depend on maintaining their status but i do think we are going to chip away at everything they will have new responsibilities and they will begin to function even more like their for-profit counterparts. >> i think the officer of the

pittsburgh example, pittsburgh is the hot spot for a long time. they keep a fire lit under hospitals, soda security, so do other towns hungry for revenue. that describes a lot of the politics in the u.s. but i think this is not going to go away. the other observation is nonprofit status seems to produce better qualities. that doesn't translate always to a cash benefit being the quality of tax-exempt benefits. the quality seems to be somewhat better. the other thing i would add is a lot of nonprofit hospitals are mission-driven by religious thought. there are a very high percentage of hospitals are catholic, a catholic system. and there are other religious systems. they had a nation that is quite explicit. in the inside of one of those hospitals on the board you will

find they take it quite seriously. more i think than a hospital that is simply a nonprofit without a mission added onto the side of it goes away. has to do with lobbying power. >> could you come up to the podium for the tv audience? [inaudible] >> thank you both. fantastic presentation. question for professor field specifically. i know you didn't intend it but one of the points i took away from the presentation was kind of the mess that is being created of increasing health care costs and access going down

and for competition worldwide. and so my only real question is do either of you have any advice or the generation that actually has to fix that mess that we are getting into? >> well, as i said at the end and as a talk in the last couple chapters of the book, i think we're too far down the road. i think we have actually created this monster and the monster comes back and bite bites the hand that feeds it and demands more and more and more money. i don't think we're going to turn back. what we can do is work at the margins, and some of things we can do is change the fee for payment service has a lot to do with the inefficiencies and distortions of the system. we can work public and private fears to change that. a tilt towards specialization i think we could be designing paradigms. physician ventures which i think a lot to do with the realization

that we can put more control so that the that is the way medicare reimburse us for certain kinds of services. a conservative that anti-complexity where you have 10 different entities treat you when you're in the hospital, each one with different insurance plan. unfortunately, the affordable care act may make that worse but i think it would be an area for the next round of reform. i think the think the glass half and decide if we're not going to change this dynamic. the glass half-full side is we continue to harness it inappropriate changes for more efficient care and we do have the best care in the world and that's something to be thankful for. >> my reaction is that there will be continued pressure at some of tension points after scott, particularly with transparency. there's already a source of friction that same ssi but making available physician

payments for medicare, not on a website that is searchable. you have to request the data but to make it available for the first time. i think you'll see more and more of this transparency where one can find out things to you and i may not know what to do with it that are plenty of organizations that will sort it. it puts providers, hospitals on the spot. it changes them embarrasses them and makes them uncompetitive compared to their more praiseworthy peers. i think you'll see a lot of this, and this is sort of market driven data that changes the way you shop. and it has an effect on institutions. they don't like to be embarrassed. i have seen that from the inside. they don't want to have bad data adverse to them or false claims. >> thank you very much. i appreciate that.

>> you both talk a lot about speed you should know who this is. this is erica and managed to be the research assistant for both of us on our books. >> how do you think that will affect the health care, whether it's transparency, cost transparency, insurance companies allowing patients to cost shop between them, the sunshine act make more transparent physician payments from pharmaceutical companies. do you really think it's going to make that big of a difference if you think in the end there will be not necessary to gaming the system but a way to work around the system transparency? >> i think any general transparency is a good thing but good thing, better have the information and not. most people won't use but most people are not going to get on

the website and see my doctor prescribed a drug, does he consult for the company to the given speaker fees? what's the hospital rating on medicare? however there are going to be people who study public health who are going to look for that data, and they are going to make a difference in terms of how providers behave. and i think that can drive the system. and the previous question was about what the new generation can do i think using that data. i think making health care more accountable, even if it's only a small number of people who are capable of doing that. i think they can move the machine even if it's incrementally adverse. so i think it will end up being a positive force. >> i agree, although i will have to say cynically that as a disclosure is a cheap rhetorical. it seems as if you are doing something about economic conflict of interest or reducing adverse events. and the data goes up in a way that is hard to process or

people just don't comply with posting it, you have a problem. out the an example. the affordable care act create a website to go along with hospital comparison so you could track by various indicators how good you could look at three '04 of any hospitals and convey them. infantry, physicians who comply with reporting requirements can see on the website the physicians i figured saved by the time they figured out the administrative costs of compliance and the record-keeping, they don't really care about some little bonus they could. they will scrap the bonus but it takes too much time. some of these regulatory approaches haven't been thought through but they will be refined. i think people, look at reignition you care about that when your mother is going in for surgery. you might say to your doctor, can i get another hospital for the surgery?

i think it matters and they will change over time. nothing is static. the thing about health care it's not static. what doesn't work well today regulatory may work better tomorrow. fingers crossed. >> probably can take one more question. if anyone has one. >> i was wondering what would be, if we could implement any regulation tomorrow, what would be the number one regulation or legal instrument you would want to put in place tomorrow? >> if it were up to me and i were the health care czar for a day, i would change fee for service to a different mode of payment. i think that is -- you pay someone for every level peace that they do and they're going

to get a lot of little pieces. if you paid me for the number of minutes i lectured i would lecture for a lot more than i do. if you paid me for every student, and that came up in class, i would enlist a lot more comments. i think doctors and hospitals are the same. the faster we do the experiment with bundled payments and other ways of reversing and find out what works and put that into practice, the faster we will begin to resolve the issue. >> i agree with that. i would like to see managed care in the day until it got a bit overwrought. it seems to me it's hard to change physician practice once it's rolling along and the income is dependent upon a but seems to me by billing as result produce more

efficiencies and hostile to any way in which you can force institutions to thank about how to be efficient and lower cost should be productive. in the long run i'd be optimistic. right now i think accountable accountable care organizations, the latest study i saw yesterday, said that they were managing to hit the quality index and they weren't getting any shared savings yet. it has improved out yet to be a boon in terms of this particular model of efficiency, but i think it will be. >> thank you. spent with that we will draw this to a close but it's time to eat and drink and we will get hard copies of the book, so thank you all for coming. [applause] [inaudible conversations]

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