technologies. he worked in the business school. that was established relationship. no malfeasance on the part of the american, but he was trying to reach into people's work that may have other connections. then we have the suspects or the spies in yonkers. they had treated zero sons. son by avicki's previous marriage. they arrived in the united states in the 1980's. a lot of times -- and i get this a lot at media interviews we are doing -- a relationship with russia is so good. just a few days ago before the arrest, president medvedev and president obama had such a great time. all of that is true.

the context in which you should think about these operations, what was going on with these guys were sent here? when they were set, the soviet union -- still existed and the cold war was still on. think about that as you understand it. pretty normal people. they lived in a normal sort of house and drew an old mitsubishi montero. vicky was a well-known left-wing journalist. more on her in a minute. juan -- remember what i said

about access. he claimed to be peruvian coup had been living in europe like before he came to the united states. here is a russian -- actually, he was ukrainian -- u.s. recycled himself to become a peruvian, but he does not hang out with other peruvians because they might figure this out. he hangs out in uruguay and the united states. there is not a lot of information about the sky. he was at jat professor at baruch college. the administration found him to not be a very good instructor. the students mostly remember him for his lengthy lectures on what a swell guy hugo chavez was. professional ethics were in the context of the

russian intelligence service. the fbi was doing audio surveillance of the residency. they heard a discussion between lazaro and his wife. he was upset because he set a -- set information to russia and they said he did not say who the source was. the made up the sexy name they would find interesting to satisfy them. it is not the sort of thing that is normally considered ethical behavior. actually was caribbean. -- peruvian. she started our career as a journalist en route. -- peru. there was a famous incident in 1984 when she and a cameraman or

taken hostage by the m.r.t.a. -- communist rebels in peru -- and held hostage for some time. some people think this was arranged. on the other hand, people have also observed that her publicly expressed politically reduced to a sharp left turn after that. it is hard to know if this was all a big set up or if she was a leftist sympathizer. it is hard to know. interestingly enough, after she was arrested -- she was well known in the new york city hispanic community -- there is briefly a committee to defend her.

not much has been heard out of the committee to defend her because the u.s. government had the goods on her. there is talk about how they discussed the use of invisible ow juan lazaro used radiograms to communicate with moscow. there was word about peruke receiving money from a russian government official. it happened again seven years later. i am glad i did not donate money to your defense committee. [laughter] in new jersey, we had the murphy street richard and cynthia murphy.

they were good all-american family. what strikes me about this picture is those poor little girls. one can only hope that they are not old enough to fully comprehend what has happened. one of the newspapers spoke with the neighbors. their kids and our kids hung around all the time. there are the sweetest of little girls. the allies of obviously gotten tragically different. this is their very normal suburban home. these were remarkably normal people aside from the fact they happen to be russian spies. a little bit about murphy. he came to the united states in the mid 1990's. he claimed to be an american born in philadelphia. his birth certificate was forced. that turned out to us and consequences a little bit later in their intelligence career. there is some indication, it may be some hence, that he may have been a bit of a problem.

the fbi surveiled a meeting in 2002. murphy was moaning and complaining about all sorts of things that were not going right. he talked about money and how much they would get all of which led metsos to tell him he was happy he was not his handler. on a couple of occasions, the money that metsos got my from murphy. this is why cynthia murphy was more complex than he was. she had a bachelor's degree from nyu. she got an mba from columbia. she was on linkedin, but i cannot find her place. cynthia murphy is a common name.

she later took a job as the vice president of a financial services company in new york. it was a company that did people's taxes. among their clients was a guy named petrokov who made it into the news. he was a venture capitalist. the was co-chair of hillary clinton's campaign. you might reasonably expect a russian intelligence officer to have interest in this. moscow encouraged her to cultivate a relationship and told her to try to get the relationship to be more than about just taxes. there is no indication that that ever happened in terms of anything in the criminal complaint. petrokov stated she never talked about anything but taxes with him. we have a lot of information

here on their spy career. richard murphy, for example, in june 2009 was surveiled doing a brush path with a russian government official at one of the two training stations in white plains, new york. murphy was coming down the stairs and the officer was coming up the stairs. merkley was wearing a backpack. as they got closer to each other, the guy sticks something in the backpack and they keep on walking. subsequently, the s.b.r. said a message to them saying and no one noticed anything suspicious. we were watching, but leathe s.v.r. did not figure it out. the moscow center ordered richard murphy to buy a particular brand of computer and bring it to moscow, which he

did. he came back with the same brand of computer with a different serial number. the computer was apparently used for electronic communications in moscow. remember, i told you that murphy had a fake birth certificate. the directors like to have their staff have real documentation. richard murphy's per certificate was fate. that appears to be a factor of what they were able to do. audio surveillance discussing the criminal complaint has richard and cynthia talking about applying for a job at the state department. they knew he would not stand up to the background checks. there were problems with the documentation. there is some indication that she had analogous problems. what those maybe, we do not know. in 2009, the center tells said

the yet to strengthen their ties -- her ties with our professors and classmates. she was at columbia, a place where movers and shakers due to. they told her to develop a relationship with people who do may have access or information. they said they would run the checks on them in moscow. there was no reason to think they were likely to be dangerous. also, as an added specific bit, she was asked to provide information on any fellow students at columbia that had applied or had already gone to work at the cia. there were also some of those folks operating out of seattle. one of them was michael zottoli.

they claim to be born in yonkers. he got married and had one child. he appears to have had a difficult situation. he went to work as an accountant at a telecom firm in bellevue, washington, where he had a reputation as being a bit of a henpecked husband. he was always taking phone calls from his wife and wood duck out of the office and have arguments with his wife. he was also known as being plot. he would go off on what a horrible person president bush was. also, interestingly enough, his neighbors and his co-workers -- he was very vague about his background.

they would ask about his accent. he would say, "where you think my accent was from." he never answered the specific question. the fbi went into their apartment onetime and filed remnants of notes from where they had received radiogram a transmissions from the moscow center. this is his life not looking her best in her mug shot. anna chapman's mug shot, she was great. patricia mills claimed to be canadian. they were both good students. their professors remembered them well. she always claimed to be canadian, but she also had a bit of an asset. her neighbor still she was from yugoslavia.

that story circulated in the apartment building that she was probably a yugoslav, but no one could understand what she would not admit it. subsequently they move to this apartment building in arlington. now we are getting down to some of the more minor players. semenko came here in 2005. he is not an illegal. he may be an agent or some in- between category, but he is not an illegal as such. he made no secret of the fact that he studied at amur state university, which is near china. he freely ended that he studied at one point in china. he came to the united states and got a master's degree at seton hall university in diplomacy and

international relations. coincidentally, a man i worked for 15 years ago is now the dean of that school. i ran into him at a christmas party. the told me he came to a recent reunion. he was very vague about what he was doing. we asked him what he was up to and he said "things." he was sort of evasive. he studied in china. he spoke a number of languages. it may be the reason he was evasive because the best job he was able to get was in a travel agency in new york. he then moved to arlington. the travel agency is on the very same street as my house in

arlington. he was very -- a very prolific networker. he cultivated a china expert at the new america foundation. he was also on linkedin and he ran a blog. it is still read it. it is still up. he wrote a blog bond china. the last one was three days before he was arrested. if you want to look at chinese economics to the eyes of an illegal, you can go to wordpress.com. finally, we are led to anna chapman. she went to the u.k. in 2001, met a guy named chapman. they got married and divorced.

she allowed him to take nude photographs of her which is a reason she is an international star today. i would not be showing you those today. she got her british passport. she used it to come to the united states in 2006 where she set up an on-line real-estate business. she was one of those girls who was in the middle of the social scene in manhattan. she was allegedly roads dating one of new york's restaurateurs. even the prosecutors admit that they did not catch are doing much of anything that compared to the other folks. that said, she was definitely on a number of occasions observed using wireless networks all of her laptop computer to pass information to russian intelligence officers. she would be sitting in the barnes and nobles or wherever and activate this network and communicate information to a

intelligence officer who may be in a nearby car, that sort of thing. she was here under her true name. she was not born chapman, but she legitimately came chapman. she was not concealing who she was, she was concealing her relationship with the s.v.r. finally, we have someone else under their real name. he was out of seattle. he was working for microsoft. they came to the u.s. in october 2009. he got a job in -- with microsoft, and in july 2010 it went back where he came from. none of these people i mentioned was charged on anything directly related with espionage. there were convicted of money- laundering and whatnot.

the federal government was able to get him to admit to immigration laws. the government has not indicated how they came across this guy. it does not appear to have any direct connection with any of the others. he just came out in the course of the investigation. in late june 2010, all of these people were arrested. one of them got away. metsos got away in cyprus. it was very clear from the get go that both the u.s. government and the russian government, which had recently reset their relations, were trying to not make a bigger deal about this than they could. the question does arise as to why these arrest happened when they did? it appears the answer was that one or more of these folks was

tried to go back to russia and they may lose the opportunity to get them. basically, in the course of 10 days, eight swap was arranged. that is really fast. in the past, there had been any number of swaps in the past, but they take months and sometimes years to arrange. some of these folks spent years languishing in jail before a swap can be arranged. this one took place in 10 days. it shows the improvement of u.s.-russian relations. we sent the 10 or 11 to russia. the swap happened at the airport. the new york post was dismayed that and chapman was leading us. -- anna chapman was leaving us. in exchange, for russians were sent to the west. one was a former officer who was

convicted in 2003. the gatt 18 years for espionage. the russians alleged he had a role in betraying robert patton -- robert hampton. sergey was a former officer of the russian military intelligence. he was convicted in 2006 for selling information to the british intelligence service. -- a nuclear expert at the russian institute was charged with passing classified information to a british firm that was allegedly a cia front. the was the most controversial of this lot. lord knows what the truth is, but it appeared on its face that

he was probably an asset because all the information that the russian government alleged that he passed to the british firm was information that was available -- was publicly available in russia. it was open source information. they said it was classified and he was not supposed to pass it along. there is suspicion that he was a crusading scholar that was not real happy about some of the policy implications and use the opportunity to silence him. there may be things that were going on beneath the surface we do not know about. all he was ever convicted of was passing publicly available information to this company which may or may not have been a front for the cia. finally, another s.v.r. officer

who cultivated a longstanding friendship but had not actually betrayed and russia, the suspicions arose about him. he was called on a business trip to cuba where he was arrested, roughed up, taken back to moscow, and from in the slammer. they are giving us all free people -- three people who are honest to god it russian intelligence officers. if they choose to cooperate, these people can be debriefed at length. there are a lot of secrets inside the heads of at least three of those men. the russians have allow visitors to walk right out the door. that is really remarkable that they were willing to do that. i would be fascinated to note the decision making that went into that decision.

what is the aftermath for our 11 russians? they came back to russia where they're treated as he rose. but at a meeting with vladimir prudent. the lead them in singing patriotic soviet songs. they were decorated by the russian president, medvedev. they were all given or promised jobs. chapman has taken a job at a russian bank. she is also on the council of the young guard, which is a political group associated with putin. donald heathfield is a senior adviser to russian oil company. patricia mills got a job as a adviser for another russian oil company. someone was offered a job, but

refused it because she wanted to go back to peru and resume her career as a journalist in peru. stories showed up in the peruvian press that there were irregularities with our documentation in peru as well. she appears to have falsified some forms. prosecutors want her in peru. as far as i know, she is still in moscow. what happened to the others, i do not know. they were promised jobs. anna chapman has become a cultural icon both here and in russia. she is now hosting a show on western television, "secrets of the world with anna chapman." she was a vip guest at what the russian space launches. a story came across yester day where she had a contract to design uniforms for russian cosmonauts.

in russia, the annual holiday is new years. she had a high-profile appearance on television where she did a sketch with a russian actor who is famous in russia for playing the russian cultural equivalent of james bond. it is a scene where this james bond character to is actually shy, retiring, and self- effacing, and not good with women. he is sitting in a cafe and an chapman.ing anna she also is apparently going to be running for parliament. [laughter] party.mber of putin's

we are moving towards the end. one of the big questions is how did the u.s. government ever become alerted to these people? there is much, much, much that is still to come out about this. it does appear -- and not only does it appear that the new york post never turned down an opportunity to put chapman on the cover, but it appears the main information here and possibly the initial break came officer who was working for the cia. there were initial reports there was a kgb officer who was working for the cia. the apparently it really was working for the cia, but it appears he was

counterintelligence, not in the illegal sector, where this guy worked. there is a lot to be sorted out. the picture here is hemmed in the k.g.b. special forces unit serving in the afghan war in the 1980's. we talked about the kgb and the s.v.r. having special operations and 7 tons capability. that is what he did in the '80s. his father was a hero of the soviet union, which does not have a precise equivalent in the united states. imagine the congressional medal of freedom plus the medal of honor. something like that. that was his dad. this guy apparently worked in new york according to russian press reports. he was allegedly recruited in the 1990's. he eventually came back to moscow. he was reportedly deputy chief

of the american part -- american department. if this is true, he was the number two guy who was responsible for sending illegals to the u.s., canada, and latin america. whoever was in that job would have been in the position to do that. it is very plausible. he defected in june 2010. his wife and children were already out of the country by this time. what does this all add up to? we have seen a lot here. we spoke about russians cultivating their contacts. we've seen them operating in various parts of the country. one thing i'd think is interesting is that i have not seen anybody you're out of california. i would have expected someone in silicon valley or the russian consulate in san francisco. i do not know at the russians did not have any money there for

some strange reason, or that we never found them were or letting them operate. it is all very strange to me. we saw all these assets come from heathfield. they have a full range of issues. they were surveiled reporting on china, chechnya, central asia, nuclear arms control, afghanistan -- george freeman was here a few weeks ago to give a talk. he told me that donald heathfield had tried to serve his company -- had tried to sell his company software. he was trying to see what the private intelligence organization had. some in the intelligence community remember -- one that was cast to report on people in

the cia. cynthia murphy said in a report on the global gold market that was sent to the ministry of finance in russia. one of them make contact with the u.s. government official who worked in something associated with nuclear weapons. there is no information at all to suggest the americans did anything wrong. more information in a 2008 presidential election and getting gossip out of the white house. at the end of the day, -- unless there is something big out there we have not heard about, which i suppose is entirely possible -- i am struck by how little the russians got out of the other end of it. i would just leave you with a question. i am undecided on this myself. is there more to be found?

where these people a horrible failure in totality or was their main mission something that was much more prospective. president putin said they were just performing intelligence functions in case the more traditional means became impossible. this sounds like a next ex post facto justification, but maybe he was right. all this was a big mystery. hopefully in 10 years or so, we can have someone who is really involved in the investigation and come back to a spy museum event and give us some real insight. with that, i will be glad to take any questions or comments that you may have. [applause] we have nancy and a metal working the microphones.

wait until the microphone gets to you. >> when exactly did they start the investigation? i saw a couple of different dates. >> it does not actually clear. by 2004 they were looking at some of these folks. there is no answer to that. it may have been much earlier. if you believe, for example, that this guy started working for the u.s. in the '90s and that maybe by the end of the decade is back in moscow, they could have been as early as the late nineties. we truly do not know at this point. it was at least seven years ago. >> just to follow up, you said there was some surveillance in latin america in the year 2000. whose surveillance was that? >> it is interesting when you look at the criminal complaint which is where i have that

information, it does not say who was doing the surveillance, merely saying the surveillance took place. it is a great question. there is probably multiple possible answers to that question. i would have no basis for choosing among them. i will leave that to you. right here. >> can you summarize what most of the charges against these individuals work? -- were? how long might they have been in jail? >> most of these people with one exception were charged with money laundering and various forms of conspiracy. i am trying to remember what their exposure to jail was. my recollection is something around 15 to 25 years.

it became immediately clear that was not what was actually happening. theoretically it was something in that range. other questions. over here in the middle. >> you spoke to the two little girls. these children are american citizens. what happens if they grow up in what to come back to the united states? will that be blocked? it is our citizenship stripped? these children are not accused of spying. >> it is probably the most difficult for those children that are teenagers now. are there any immigration lawyers here? they were born here. those who are born here or u.s. citizens.ly

most of these folks who had u.s. citizenship through naturalization have had their citizenship stripped. those who falsely claimed to have been americans obviously were never american citizens. they do not need their citizenship stripped. for those kids, i am not aware. if you are born here, you are a citizen. if they want to combat -- come back someday, i guess they can come back. you cannot deny a visa for an american citizen. it could be difficult for a child who is old enough to have a pretty good sense of what is going on. "my parents are not who they claim to have been." [laughter] other questions? thank you. i did not see that. >> what kind of damage at these

people done? >> from what we know, i would say basically nine. -- none. it may be that there is information yet to come out or it may be that, as i say, their purpose in the year was more avoiding damage that they might have been in the position in the future to do. i have seen no allegations that they were -- that they obtained any information that was supposed to be sensitive. what they did acquire was not even supposed to be very interesting. from what we know now, i would say no. we will take that one and then we would take the lady over here in the blue. >> is there any indication that this is just the tip of the iceberg or vice versa?

that is with respect to this group. are there other groups likely or not? >> you can certainly bet there are numerous russian intelligence officers operating here in the embassies and consulates. as far as other illegals -- be short at -- the short answer is that we do not know. if the story that colonel alexander really was our source -- if that is actually true, he would have been in a position to know about presumably everybody or there may have been one or two officers, but probably everybody here. we probably, for the moment, dr. entire stable of illegals. that is obviously inference. it is important to note that from the historical information that we have, that the illegals

are never out there in large numbers. it was estimated in 1985 that the kgb globally only had about 200 and military intelligence had about 140 or 150. if that is true and -- if that is true, i would be willing to wage a small amount of money that in 2010 we got them all. even if it is true, i am sure they are working or placing them already. the lady in the blue over here who has been waiting. >> thank you. it is probably too early to know, but i thought i would ask. it seems clear that anna chapman is having a great time over there.

do the others at any sense of saying they wish they were back in the u.s.? where do they think, "thank god, we are back in russia." >> two of them got cushy jobs. no. with the obsession of wine, we do not know anything about the others. i do not ever expect to hear much of anything about them at all. i do not think the russian press would grant it. you can expect silence or you can expect good news about our spies, but he will not here grumbling, i do not think. >> we heard in a previous

lecture about chess pieces. is there a relationship here in terms of china? >> i do not know much about china. what i note you know. you're the same lecture. it is a similar sort of concept. i really cannot comment. anything else? going once, going twice -- thank you very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> next, a panel on financing options for u.s. healthcare. after that, the dnc winter meeting. then, the national governors' association on job creation and competing globally. the national governor's association winter meetings are

being held in washington this weekend. tomorrow our live coverage begins with a form of the sustainability of medicaid. that is alive tomorrow at 11:00 a.m. eastern here on c-span. as the nation's governors meet here in washington, used the c- span video library to learn more about the state budget chief executives. see inaugurals of the governors and your state of the state addresses all free online. surge, watch, clip, and share any time. now, a discussion of the future of health care. hospital executives and officials from the u.s. department of health and human services discuss patient centered care. this is one hour and 30 minutes. care organizations which many are touting as a

model for health-care reform. although the legislation passed last year encourages the establishment of these bigalke -- aco's it does not gotten a lot of attention. i want to thank them for sponsoring this panel and extend a warm welcome to john kirsner he will leave the dcussion. he is an advate for insurance companies, plans, hospitals, and government organizations. we are delighted they will monitor this. with that, i turn it over to john. [applause] >> thank you very much. i would like to say thank you to the university of miami for giving us the opportunity to be

here today. be a sponsor.re happy to we are a large law firm. we have 37 offices in 17 countries. when we heard about the forum to be presented, it was a natural for the reach of our rm to match up the strengths. two of our strongest offices are located in south florida. our healthcare finance practice is among the strong this and our firm, providing innovative solutions. with that little commercial, let me get to the meat of the introductions.

the objective of our panel is to talk about a patient centered care and accountable care. the perspective of the leaders who have agreed to be here to talk with us on this panel included viewpoint of physicians, hospitals, medical centers, payers, and denied state government as well. they are a great panel of people. dr. toby cosgrove will speak first. steve jones is the president of the university hospital. john bigalke bigalke is head of the practice area. tony rodgers is deputy administrator for strategic planner. with that said, i am going to introduce our panelist in reverse order. after i got done introducing

them, toby is last and he will speak first. that seemed to make the most sense. rodgers money has over 30 years of experience. -- tony rodgers has 30 years of experience. he has worke in lansing, michigan. he was a past director of the arizona medicaid program providing health careoverage for over 1.3 million people from arizona. john bigalke has acted as vice chair and industry leader for health sciences at deloitte. he had 20 years of public accounting practice. he is the partner.

he provides service to many key players including health net, cigna, universal american and others. he also provides advisory services to many leading providers. the perspective that he will bring today will focus unaccountable care. steve jones as president and ceo of robert wood johnson hospitals. he is work in a variety of roles. the hospitals and health systems is a for hospital system, an academic medical center that includes a children's hospital. he is a board member of the hospital association and a veteran of the united states air force were specialized in russian linguistics. hopefully, he will be able to

help us weave through the acronyms of accountable care with that background. if [laughter] dr. cosgrove is president and ceo of the cleveland foundation. it is a $4.6 billion health-care system and is one of the most well-known health care systems in the world. he emphasizes patient care and experience. he has reorganized the model into a patient's centered institute model, a perfect person to talk about getting it across. he joined in 1975. he led the clinic's heart program on a 10-year run. he was an air force surgeon. he served in vietnam. he earned a bronze star. yes performed over 22,000

surgery's, which is at numbers i have a hard time getting -- she has performed -- he has performed over 22,000 which is a number i have a hard time getting my head around. i would like to introduce you to mr. costs grow. >> i want to thank you for including me. this is an opportunityor a great discussi. art institution is unique in how it is a forms and organized. we are in not-for-profit organization. we are the second-largest group practice in the united states. we have a physician leadership. we are all salaried. there are no financial incentives.

we have an annual professional review which we take very seriously. lester, we spent 8000 man hours. there is no tenure. we have one-share -- one-year contracts. i hope for numbers 35. [laughter] we have had to the beginning growth. physicians have become interested in being part of the group practice. a number of employees has reached 40,000. we are scattered across the large area. the organization of our group is quite different than most. most hospitals or organized -- are organize around professional groups like radiologist, etc. we took a different view.

rather than organizing our hospital around doctors, we decided to organize it around patients, an awful -- a novel idea. we put them together, medical and surgical. we do them around as these systems. they had a single leadership and, and location for these physicians. take the vascular institute. it has cardiologists and vascular medicine. the neurological institute would have urologist and psychiatrists. the location this is coming --

this is a health care delivery system. you need to have the patients in the right facility at the right time for the right care. th go for the entire range of care. we have partnered with minute clinic and have outpatient facilities where you can get strep throat swabs. we have family health centers, there are currently 17 of them scattered around cleveland. these aressociated with community hospitals. there are nine that surround t main campus. the commonfter ailments of individuals. the main campu has become a high-tech facility, 1200. we no longer feared do

psychiatrists. it has heart operations in complicated orthopedics. in florida, we have 170 doctors. it is growing rapidly. they are building it on the same plan. in las vegas, we have the center for brain help looking after neurologic disease. this is not the crash of a 747, it is a new building. in cleveland or canada,e have -- cleveland clinic's welna wellness center. we are building one in of gadaffi -- in abu dhabi.

we will have over 1100 beds in abu dhabi in the next few years. this enterprise is heldogether by electronic medical records that looks over 6 million patients. they are all tied together with medical records. we got a nice shot out from the president. -- shout out from the president. what holds us together is the transportation system. it includes land transportation, three helicopters, and aircraft which can pick up patients from anywhere in the world and transfer them to our facility. this is part getting the right patients in the right place at the right time.

it has gone progressively up as we have at the capabilities to the paent. we do not think that all hospitals can be a things to all people. it is important that we began to centlize our activities of patients have an adequate volume to develop quality which comes from having volume and from having the efficiency that goes with it. if you look at our health care system, we have of obsteics previously in a number of places. we have concentrated it. this will be reduced further. some hospitals only do 800 deliveries a year.

we plan on continuing to consolidate. with the dead inpatient rehabilitation -- we've looked at inpatient rehabilitation. there are four cornerstones, quality, innovation, a team mark, and a service. the u.s. news. we are numbers 4 in that. we do not know that is a measure of quality. it is more important that you measure outcomes. these are our books that we published ery year. it is good, bad, and different. i did not know what we can measure. it is pretty easy in cardiac surgery to measure outcomes. to either walk out or get carried out. [laughter] i asked dermatologist to come up

with their on metrics. we have asked of the dermatologist to not to say they are great determined colleges -- grated terminology a great to the metricsbut th to this. we believe in transparency around these outcomes is important. as far as innovation is concerned, we think it is baked into our legacy from our care delivery in and continue to increase with over 2000 projects. the number of publications coming out is over 1200 a year. the patent are shown here. there are 36 spin-off companies. teamwork is another one of our

corners torrance. madison is no longer an individual sport. -- madison is no longer an individual sport. -- medicine is in no longer an individual sport. no longer will one individual be able to surround the amounts of knowledge that you need. it has grown enormously from the individuals who formed the teams back in the early 50's. they've also become more sophisticated. each one of these represented a different country. the 13 to plastic surgery.

the teams have become more sophisticated. this is a cornerstone for us. it is what we are all about. we recently said that patients should be seen when they want to see. they are given a in appointment. it is more than a clinical outcome. we pointed to individuals to be th chief experienced officers. one is a surgeon. one is a head nurse. if we start by treating patients at the door. we help them find their way through our organization. we have art on the walls that acts as a locator and allows you

to break up the monotony of the facility. we designed our rooms with large amounts of glass. families can spend the night there. we think dignity is important. they design a gown that no longer believes your cheek flapping in the breeze. [laughter] [applause] thank god i have a wife that directs me in the right direction. you cannot tell the playj heirs without a scorecard. we have color-coded all the people who work in the hospital. the patient is given this card so when someone is green comes in and it is a clinical technician.

a resident is a white coat with black lettering. patients know who is coming into the room and why they are there. patients visiting hours are now a thing of the past. he can come in anytime you want and stay as long as you want. it is no longer about taking care of a patient but a family. we have all the medical records. it is no longer the doctor's record. this is your record. you should have access one ever you want either electronically or in paper form. massage therapy is available on the floors of. there is that there be that comes into the hospital. nothing is better than a leak from a lab -- lick from a lab. there are prayer rooms. it is important for our patients and for our employees that we began to discuss the major cause of premature death.

obesity, sedentary lifestyle, and smoking. we started outy making the campus smoke-free. we decided not to hire smokers. we test them coming in. if they test positive for nicotine, we allowed them to have a smoking sensation opportunity and they can reapply. this applies to doctors and all caregivers. resulted inhe county. but these are the incidence in ohio. it was 28%. it is now gone down 15%. you can make a difference of public health. we took trans that out of our food.

we tip soda out of vending machines. we have a major wheat reduction program including free weight watchers, yoga, etc. we have lost 180,000 pounds so far. [applause] i would like to say that it is a start. we probably have 2 million more to go. a journey of 1,000 miles starts with a single step. we are in the service business. it is about putting patients first. we had done everything we can to putsnize our system so it co patients at the center of the activity. thank you very much. >> thank you. i appreciate the chance to

participate in this discussion about the development of aco's or that transformation, particulates from the academic medical center. let me see if i can advance this. there we are. we are the principal teaching hospital for the medical school. it is one of our state medical schools. we are the principal teaching facility. we are the flagship of a four hospital system. there is a pediatric system. the center of excellence have

credit basilar institute. we are proud of what they do for our country. in cancer care, it is new jersey's only comprehensive cancer center. we have a cancer hospital connected by a sky bridge. we have the children's hospital. one of our system members is the children specialized hospital. it is the leading provider of children's specialty services. we are also a level one thomas center in new jersey. -- level one trauma center in new jersey.

we are co owners of a provider sponsored managed care organization. i believe that will pay an accountable care organizations. the role of an academic medical center is you need with patient care, education and discovery. the challenge is balancing that academic mission in a low-cost environment. that is clearly where we are going. two months ago, at the annual meeting they talked about the leadership role of academic medical centers in said that it was very important that using the strings of the medical center that they need to become engaged in the transportation needed to improve the help of all. there are challenges to the

developments while we await regulations so we understand what the requirements are. we know there are challenges they need. we also have four hospitals on the same information platform. there is a lot more to do to be fully iegrated and to have the integration move among the ambulatory care facilities. access to the large enough supply, you read about the experience in massachusetts. they went their transformation. -- true transformation. we are uniquely situated. they have been doingesearch for more than 20 years. we think that gives us a leg up.

comprehensive case management is lacking. to most medical centers have not assumed responsibility. there are fundamental change in the revenue stream. position alignments will be more critical. they are cllenging. they have the roles and irresponsibility of the chairs and the need for us to align with physicians and our community. physician leadership is critical. physician alignment will be critical. how we mix those with the academic medical center with the changes we know are needed to

engage in the physicians and our community. in new jersey's experience, five systems have a major teaching hospitals as their flag ship. this is the only one with a medical school on the campus. if each of the health systems are working to be ready. it happens that we are all co owners of the managed-care organization. we are working individually and as a group for what they can do with us. physician groups are mainly fragmented. there are lots of them. there are very few large multi specialty groups.

our practice is among the largest. they are positioning themselves .o develop, -- to develop aco's they will block hospitals out of the leadership. hospital services are a commodity they plan to buy. the strategy for development, we want to leverage the existing strong relationships with our medical school. e positions are broadly in our community. we give patients from all 21 counties. we are enhancing position alignment strategies. we are developing accountable care organizations that we call robert wood johnson partners.

it includes standard best performance measures. the department of health is releasing help. we received an embargoed one. we believe n. transparency. it is interesting, the development of partners. we find many organizations that are looking for staffs to provide the leadership. in our county, they provide this. new jersey is a very highly unionized state. there are labeled -- there are

labor unions. if they are looking to manage the cost and quality of their employees. they are interested in the developments of the care organization. there are other large employers. we just started those. it does come to lot of the pharmaceutical companies. there are opportunities there. in our state, medicaid want to transform its population which is just under a million. we are talking about new brunswick. there are one of five systems that managed to do it.

there is a strong business case for health care reform. there is a strong business case for transformation. i believe there is for academic medical centers to be involved in this development. the first is value. there is the economic engine. more important that, the economic engine is our responsibility to the small and midsize businesses. in order to build all of our state's economy is common the more we can do to help manage health-carcosts, the better. there is leisure about reduction from those

organizations like the clinic. they have managed these populations. they are incorporating the next generation of professionals in what the best practices are. the need for transformation is ear. we are waiting the political change that mighcome in washington. the pressure to increase value will not change. in 1993, remember the clinton health plan? president clinton came to the robert wood johnson university hospital. be ready for receive visited to talk about health care reform. what happens when they did not advance? employers stroke change. it is very clear and that we

need health care reform. there is a need for this. they must help that change. thank you very much. i look forward to questions from the panel. [applause] >> i am glad to be here this afternoon. it is very rare that you have an opportunity to speak at the podium. there are a couple of points i live like to make. in my job, i work with a lot of providers and health plans. i hear what each of you have to say about the redeeming qualities of the other. that will have to change.

we are talking about today are the tip of the iceberg. it is a first step in trying to do some of the things that are described. when you look at the population, you talk about medicaid. medicaid follows medicare. what about large employer sells bonds? what about geography? what about things like workmen's comp? you have to realize it is a much bigger than a set of regulations on payments a defines medicare population. at some point in the future, this is how we will have to manage the cost. i start with that to ask you to step back. think of this differently.

i'm not talking about rationing. i'm talking about caring for a polation before they become a patient. never have to see the inside of a patient room. creasing the incentive for them to be paid in a way that creates that kd of environment. that will require a different business model. i put out some of the attributes that you can argue. i would suggest that you think about their view of the consumer of the future purses may be what we might start off today. i should probably use the word "consumer." you think about them not just in the middle of postoperative care

or other things like that, but may be early on. i would love to see some the things they are talking about. there are so many stories. i was at a meetingn chicago. newt gingrich was there. that was fascinating. newt gingrichold a story of trying to manage down the cost of health care and a county in rural southern states and talking about the social conflict between recognition of a young adolescent headed for its severe obesity and the consequences of that, of being unwilling to intervene. and then complaining about having to pay for the cost of the reno -- the renal care.

how do we create technology and support systems that cross over all of the aspects of care? had we figure out how to measure risk and rewd the right behavior to the right people? the incentives are not here today. i believe we will go to more of a risk model. that is when you start getting the best behavior out of the system. all of them are rewarded for this kind of behavior. you have to understand how to evaluate that risk. ending care management support. the upper end of the spectrum is treating this.

there is a past majority that are night there -- that are not there. they can be helpful. if you look up what it is going to take to do the things i am describing, you are going to have to have a different leadership and governance model. providers have a real challenge. the incentives for doctors, if you look at them by age, a specialty, the incentives are very difficult to influence behavior. it'll take a different governance model. you are glad to have to have the kind of information that helps you cross your population.

being able to save data as of april population there are real time decisions with real-boards on how to care for patients and how to do clinical re- engineerin network and physician alignment. he mentioned the challenges of physician alignment. if you talk to people who are doing very big things today in the provider world, i think you'll get lots of different definition.

there is access to capital. it is hard for not for profits. there are a whole host of skills and risk-management. i a take this down to competencies'. i thin most i talked till are open-minded about collaboration. it could be a fool -- full arrangement. i think you'll find they are interested in having discussions on how to collaborate with the providers. they see the future.

dana the btle hasted shift. my sugstion of the that you do an honest inventory. we can see what good it can be. look at where your gaps are. think of innovative ways of obtaining the resources. this is an overview. we can get into a lot more detail that i will leave that for now. with that, i will turn it over. [applause] >> thank you for inviting me here. it is about 38 degrees.

i thought it could be helpful as the administrator for planning to give you a strategic you cm whites -- a cm whats -- of what cms will be driving the system to do. we have three games. one is better care for individuals their health care to reducing costs through improvement. many of the speakers have already talked about their success in achieving many of these goals. we know the system can achieve the goals. we see a significant variants. what is causing it? the way we have reimbursed the system has created a culture in the delivery system that is th

counter opposition to what we are trying to accomplish. we take this responsibility and we realign how they will operate in the future. we cannot as the system to reform if we cannot do it ourselves. we realize the excellence and operations is how we relate to the system in the future and how we ensure our organizational alignment with organizations that are organically a line to helping us achieve it. it should go to the organizations. the patient delivery system and our community halt efforts have to be integrated with agencies that are focused on these

particular areas. within the business environment, one of my roles is to reorient the business environment toward this new delivery system. we do not want to do prescriptive policy. we would rather be -- we would rather do descriptive policy. we want to be able to expose the performance of the delivery system and look for opportunities. then of course public information. more and permission about how the delivery system works. they are investing in the future. if you want to boil it down, we

see it produces a cigna began amounts of unjustified variants and patient safety. we the get these lies. he can see where it is. are beginning to see into the system where it is. over time, we are going to be tracking it and driving it into a delivery system. these are on the top levels of where we see significa cost versus the national average versus the best practis. we can get the difference by areas or whether it is miami or louisiana or texas. there is a relationship between the cost and quaty that see.

if you look at all of the red, it begins to break down where we are seeing the best practices. our goal is to work with the delivery system and not regulate its to move it from being red to green. we can move it and its use bt practices more quickly. it is our goal to have measurable improvement in ^ that is felt by our beneficiaries. it will reduce cost because the system will continually improve. community health will become part of what the delivery system is concerned about. we believe there will be a longitudinal relationship.

the system will allow a smooth flow of transition between commercial health coverage to medicaid and eveually into medicare. ouroal is to create incentives that make the system organically aligned. it with a look at this as an evolutionary process, -- if we look at this as an evolutionary process, it is episodic and non- integrated. the system doug -- does what it is paid to do. there is no consequences for not coordinating care. we want to move it to accountable care. out ther is this integrated health system of vision that we have. it is patient centered and uses the technology is to create a greater engagement between patits and physicians and their health care team. it sees a patient longitude

elite. it rewards the risk for invation. that is the basic molecule of a patient centered system and informed and activated patient, a prepared exchange with a team. we have to provide tools that help them raise their health literacynds more accuracy engaged in their management. we have to have clinical teams that have the electronic put records and the ability to exchange that information. there has to be a common place by the patient and physician have a common set of information that they are both acting on. to do this, we believe we have to bring the pressure several

parks -- several strategies. one is the electronic health records and what we are doing in investing. service delivery redesigned investment to our innovation center, which will be investing in helping the delivery system five redesign itself. quality and cost reporting transparency. of the patients -- the payment reform. payment reform going from 8 feet per service transactional based system to more shared savings, bundled payments, value-pace payments to allow the system to invest in what it knows will work. to cree a divery system that has accountable care and medical integred with a comment organically alliant goal --

allied goal to achieve the highest value result for that patient. the expiration of -- that patient will be engaged i the system over time. this is our management focus. we will be coming out wh regulations in the near future. the diffusion of medical homes as a foundational organizational delivery system model that we will build an ovation on. we cannot do it on a fragmented system carry we have to have accountable care organizations. ar specific focus in to douse 11 will be to reduce readmission rate -- our specific focus into dell's 11 will be to reduce readmission rates. as well as to begin to purchase services based on value, which means quality and cost will be

to factors and which we purchase services. we're already starting that. we will be moving back into the delivery system. if there is a way to describe what's an organization -- beneficiary, patient focus. when the person is not a patient, they are still part of the thinking of the delivery system. they're thinking about the family, the social environment, the about the public health environment. moving to address those upstream issues. when the beneficiary becomes a patient, the system is very patient centered. it is focused on h to improve the care and innovate around the patient experience and the care management. organized to manage care

processes across the continuum of care, using the effective use of technology. unless we do something in the delivery system to great accountable organizations, which will fail in most cases to move physicians and hospitals to adopt electronic help records. the aco is a strategy to create a market and the reason why physicians will want to accommodate electric help records. they will realize to be a part of anccountable care organization, they will need to know how to meaningful the use that tool. if we are good at this, i results will be improved care coordination. we will be sharing and learning from each other. patient activation, raising literacy of our consumers, and efficient delivery and elimination of waste and reduion in cost to continuous

improvement. if we are successful, less of a regulatory environment and health care. a free cup of these organically alliance systems to do what is best for the patient. it is going to be our goal to not dictate with the structure should be. we know there will be hospitals, organize it -- organizations, and physician that will have staff models and provider networks. theyill have a number of providers coming together in a loosely affiliated organization, all centered a round b we expect the aco to do -- govern and lead. if we look at the medical home, but we see a maturingrocess that is necessary.

it is an important part of this strategy. we know we have to move it from being just a primary care or a specialist provider. it has basic electronic help information technology. or the ability to manage the individual patientpisode to a medical home 2.0 which has patient registry information, the greatest patient access and communication to electronic exchange, is connected into the public health and bio surveillance system that has enhanced ability to report on a two weight basis. there is a two-way quality of reporting so that we can provide information on opportunities to improve quality. the medical home 3.0, which is fully capable, has advanced care management.

has agreed to participate in the community transitional research as part of a broader are virtual community. is connected to to meditate resources. can make referrals that have patience learning centers that patients be, and learn for themselves. it has a resource for they can go online to get materials that helps them raise their health literacy. helps to be part of the community. finally, integrated into optical systems. is able to do biometric monitoring of individuals so that we can keep them from being institutionalized this is our vision and where you will see our innovation investment. our free particles and the means to achve this -- are 3-

particles is the transformation -- that includes our payment models, the service delivery contacting, our performance management, etc., the delivery system transformation that is going to to this common goal. finally, not because it is low priority, of bringing the patient into the center of this effort to, this is what we're going to be focused on a. -- focused on. i hope we will have a good dialogue. thank you. [applause] >> thank you. those we wonderful presentations and i know we all thank the speakers. we wanted to give ourselv a sufficient amount of time so that we could take questions from the audience.

i hope there are a number of questions that you folks will have. i think you should be able to come to the microphonend asked your questions. i will ask a question of the panelists first. one thing that i do want t emphasize is i am going to ask that they keep their responses short. if we can do it, and answer a minutes each, i think there is going to be a real interest in a lot of questions. let's try it and be will be quick on the answers. here is the first question. a recent leak came across a " in a book -- this is what it is. we have a hard time vings as they are. because we can never get what

they were out of our heads. we do not see the problems that exist, of the shadow of the last one. many commentators and many people that i talk with, my partners, my clients, they're talking about and comparing this reform effort to reform efforts of the 1990's. to the efforts of managed-care event i believe it -- it w very fair to say that the managed care organizations did not managed care. what is different this time? why is it going to work this time? that is the question. i am going to ask tony rogers to respond first. on behalf of the government. maybe wean run down very quickly. >> i was lucky enough to be part of that managed care backlash in

the 1990's. i can only tell you a conversation i had with a ceo of a very large health management and i have said -- i was saying that we have become adversaries to physicians and the people that provi the service. we were focused on reducing cost and not looking at the bigger picture. he said, it is not our problem. it is the physicians problem. what is different this time? we know we need to bring the physicians, hospitals, at the delivery system into the process. the solutions do not come from washington. they come from you. we're trying to create an environment in which you can provide solutions to your community. this is the problem. we know that you know what the problem is. we have to provide you with an environment where you can work out these problems and a delivery system that is in line in doing that.

that is what i think is different. >> the global economy today is not what it was back then. we are trying to compete globally and there is pressure there on the business environment. ceos in america are very engaged in this dialogue today. that is part of it. levels of sophistication of information that is available is starting to plant evidence out there that is irrefutable. >> i would agree with that. in 1983, it was just hospitals. what is different now is that we do have a vision for where the health delivery system needs to

go. the physicians being engaged is a critical parts and the decision support -- we have different tools and techniques available to us that we did not have in 1993 or 1983. it is clear that transformation is coming. >> i would say that i would agree with all the things tt ha been said. there ione similarity that i'm very concerned about. we have not talked about the recipients of health care. the thing that is probably going to bankrt the health care system and the united states right now is the epidemic of obesity. it now accounts for 10% of the health care costs in e united states and is projected to go to 20%. until then began -- both of the planhave neglected the recipient of health care trade until we bring the men with incentives that lead them in the

same direction -- until we bring them and with incentives. >> i would ask that you identify yourself. >> i am a physician in new orleans. a couple of questions. patient accountability was not included any of those diagrams. that somehow has to be built into the equation. as a practicing physician, noncompliance is -- can throw away all of your accountability out the window. what is the government's opinion about that issue? the other issue is when i see your medical home model, i can tell you that our group is at 1.5. we already do a lot of i.t. and tracking for the largest geriatric population. however, we only come to see

those patients in one isolated and countertrade -- isolated. in their interest in promoting this new way of doing business, are they keeping up with upgrading their method of paying physicians for services? this is what we are talking about. shifting away from patient and counter to this management process. interacting through the internet's and where we in code for that. >> gobs tony, i think you should take that one. >> i think your first question was about how you get compliance. there are t ways to get compliance.

>> you have to create a different relationship. we have to then honor that choice by helping to that position become the medical home for the patient. that means pain care managent fees. we have already begun rolling out some initiatives ithat. between the visits, the physician has the responsibility -- the medical home as the responsibility to provide the care management. when the position is not involved in the care management, ca management is not optimized. position, a nurse practitioner, a medical team in need to be part of the care manager process great the need to be engaged

with the patient. they need the financing to be able to do so. in terms of the patients mpliance, this is always a struggle. we are looking at beneficiary incentive programs. our hope is that the medical home environment will engage the patient around the patnt's issues, and around their barriers, not around a standardized of view. but every patient has the story, has a journey. we want to give the providers less ability to manage that journey to the benefit of a patient. that requires electronic health information. for the position to be able to -- for the physician to be able to see whether the patnt is getting care or not, we will be

providing those organizations with the information. this is the first time that we will lead locked -- electronically share information with organizations that come together and said, i will help manage care for this patient. >> i am a professor of health care magement. with the growth of acos, to lawless lag behind? -- do the laws lags behind? of a pullback on that, i trust that laws are rescinded in terms of their utilization, does that cause the potential for additional market power in the system? >> good question. i cannot talk about the specifics. we have been working with the

department of justice and with the ftc about anticompetitive safe harbors that will be necessary. under what conditions and what parameters that needs to be set. the goal is that as much as possible, there should be competition. there should not be a single source of accountable care in the community. to do that, the department of justice and the ftc are looking for how they form and will be evaluating them as they submit their applications based on the potential for anti-competitive behavior. we are working with them. the good part is that there will be opportunities for the community to comments. because we are working with the department of justice and the ftc in a very collaborative way

and with the irs, it is going to make it easier for us to communicate when there is issues that we need to reconcile. the interesting saying is the commitment of those organizations to making this work. the recognition that this is necessary and they are not fighting it. they just want to make it work for everybody. >> in other words, an organization ds not have to lead to a the kind of centralization that some are worried about. i think if it does lead that way, i cannot imagine what the department of justice and the federal trade commission would prosecute those cases

vigorously. i am from ohio. up in toledo, the ftc and the ohio attorney general are looking very closely at a hospital right now. these folks are going to look at these issues. we have to be very aware of these issues. the vertical integration that we are looking at here should not necessarily raise that specter. i also would make the point that at the open door 4 m -- forum that was hd in october, there was quite a bit of discussion about whether there would be an anti trust safe harbor. there was a lot of discussion by folks from the gornment and others that the principles of clinical integration that the ftc has put forth the numr of business advisory letters probably make a pretty good starting point for antitrust compliance with the accountable

care organizations. if you look at what the ftc has put out since to dozen to, predicted as a tomb -- 2002, there is a lot about it. remember that at least for the demonstration, the secretary of health and human services has the ability to waive some of the applications of those laws and regulationif she deems it appropriate to do so. that is going to be something that we will find out how that all works out. i'm a pediatrician at the university of mmi medical campus. thank you. i can believe and excited about the transformation that we will see improvements in medical care. what i do not see happening necessarily is that we are going

to transform population health. ife do not change help, we will not rein in costs. i am grateful that the third bullet isopulation health. it is still the third bullet. in your list about comes, it does not reall less any think that would be considered a population health outcome. when everybody else outside of government starts thinking about population health, it will be very important to know how we define that. if the population, what my insurance plan covers, the folks that are able to walk through my practice door. will it be a geographic population? huckabee compensate for the -- how do we compensate? i am very interested in your comments about how we change the dynamic.

the incentives right now -- i do not see them lined up to tackle that. >> would you to like to take a shot at that? >> i should to some of the examples in terms of population health. i think we have shown the same sort ofhing around both obesity and smoking. the the two big issues, i think. acting as an employer and a provider, we have a big stake in that. it is also going to take both carrots and sticks to begin to ve some impetus, some impact on population in terms of

improving health. i do not think we will do one without the other. >> i did not think any one health care delivery system can tackle the entire state population. that first up is critical. we anticipate multiple markets. if they promote wellness, and they stop smoking, i think you take the steps. we will start in those populations. >> have a responsibility. >> if i could just add a comment. to do population health, you need ingredients. one is the flow of information. until recently, there was not good flow of information across the different aspects of the

system. you have to have that in place. if you look in the various pieces, the ingredients are being developed. there is a lot of pieces and place. as they mature, they will make it much easier. >> to tell you what our strategy is, if you look at the communities, -- canada is formed around a grant that was given -- how to use the information technology to have a broader impact on population. organizing beyond around -- organizing around communities. because there was a market to -- we ask them, what do youeed from us? they said, we need information.

that is what we are providing. we need to coordinate with our federal agencies. the problem has been, you cannot do this with a four-person practice. you cannot do it with a clinic. been it is a model. if you look at that and you see that model, we are using that as a starng point. it will be our goal to reduce the number of heart attacksnd heart disease in the pulation. we are formulating a strategy to do that. how we will use these developing organizations to be part of this.

>> go-ahead. >> the american health-care recipients undoubtedly is the beneficiary othe world's finest technological infrastructure. all too often, that infrastructure is not used to create equality by the practitioner. behind behavior interventions, destructive technologies, chemicals -- county schools succeed without structural changes -- town of the goals succeed without structural changes? for example, by medical malpractice. >> why don't we start with you, doctor? >> towards reform clearly was -- tort reform was the third rail. it was not touched.

you had a group of legislators that you had to deal with. it was a non starter from the get go. the rationale for that is that this is a relatively small peentage of the health care cost across the country, probably accounting for less than 3%. but the legislation was trying to do is go after bigger fish and get something that legislatively was going to get through congress. eventually, that is going to have to be one more incremental step. it is not an essential step for the things that we talked about. >> back when the legislation was being written, there was a lot

of dialogue to the constituencies and when you get to the subject of evidence based medicine, clinical guidelines, there was a discussion about a quid pro quo of there. there is some agreement to move toward that direction, would there be some kind of the reform? that did not get there. i do not think he will have as much sucss with the latter i must you fix the former. there has been discussion. >> you know, this is such a hot- button issue. you can argue it from both sides. physicians to practice -- the practice and a delivery system seem to have less liabilities.

electronic health records reduce its liability if it is coordinated. it will help to reduce liability. we know that best practice drives those things down. at some point, accountable care organizations and medical homes will be organized in a way that we can then have an organized discussion about how we address any additional liabilities that need to be addssed. either through the aco or through other means. to the patient, t the consumer, the reason ts is a hot-button issue is that they think they ll lose something. until that changes, until there is a trust, it will be hard to address this as legislation.

>> thank you. >> i am a family physician. my question has to do with primary care. i think we are engaging to go into battle and we forgot to trained marines. what i mean by this is it takes a good 12-13 years to get a primary care physician that is fully trained. we are going to get a 36 million people into the system. if you do the math, it means you will mean an emmy -- need 12,000-15,000 primary-care physicians courage where are they going to come from? if you go to any family medicine conference, he will see that most of them look like me and older. [laughter]

already -- i have retired because i was driven out of business by medicare. what are you going to do about this shortage of physicians that would be critically worse in the next few months or years? >> i will make the first comet, ok? there is a lot of things that dr. do today that they do not need to do. that will not solve the problem, but it will help. able allow you to do more. the cause >> there is some capacity to was worth a lot of this. you can change the incentives. the medical home model, the position is awarded for the

health of his population as opposed to having to do something that fits a coach. he will create -- a code. you will see some physicians willing to shift into that. >> i agree. it has to find the need for more primary care. they will have different incentives in family medicine. primary care will be recognized. it uses a team approach, not his physician. that team is critical. that is the way we will cover more americans. >> i would just add to that. we are also looking at a huge shortage of nurses. that is something around a milln a shortage of nurses.

as we chan the care model, we will change to the providers are. right now, for example, in cardiac surgery, we have a physician assistants to help 13 car? surgeons. -- help card debt surgeons. -- cardiac surgeons. i thi we will see the jobs migrates to person who is able to do them and not to the most qualified or over qualified individual. >> what i would like to do, if we could, we are in our last seven minutes or so. i'm apologetic that i did not think we will have any more time for any more questions. first, i want to thank the university of miami so much for allowing us the opportunity here today.

to really have a good discussion. as the close, i am going to ask each of our panelists to give some final thoughts. what are the takeaways that each of them would like to provide to us? what i would ask is that we go in reverse order of presenters. tony, if you would start. >> i sense people are ready for a change. but there are a lot of questions. a lot of still unanswered issues that will have to be addressed. what i tried to provide is a framework to date of where we see its drive the system. i do understand that we need to come out and work with communities, who work with organizations.

one of the takeaways that will help me articulate this to our new center for innovation, their role in helping to prepare communities, organizations, to be successful in this new world of accountable care. in advance of moving the systems to regulation, in this direction. the other thing i will give you is that we are focused and aligned to transform the delivery system for america. that is where cms is putting the efforts. we're bringing in people that will help us with that. we want to make it part of a think tank, if you well. -- if you will. >> i think i will get this quotation rit. the definition of insanity is

doing the same thing over and over again and excepting -- expecting the same result. that is what's we have done in health care. i do not know how many of you watched the president's address last night. enough i enough with the rhetoric. the system is broken. you cannot deny that. no matter what perspective you have, it is broken. competitively, we are leak -- losing ground despite the wonderful things that we do. each of you who is in a position to influence, try to start the next conversation giving the other party the benefit of the doubt. >> the take away is that a solution is a partnership. we have talked about providers, insurers, the employers, are pension. it will take that partnership to transform the system.

>> i would like to thank the university and john for convening a us and giving us the opportunity. i want to thank tawny for the work that he does. this is difficult controversial work. consider this an attaboy. that is sucking up, is dead? -- isn't it? at the end of the day, but or partnership is correct. we have to get the incentives right for all parties involved. we have to get the incentives right for patients, for the physicians, providers, and as soon as we all lined the incentives, i think people of goodwill will provide the right solution. i think we are in a period of

ransition. i fully believe that we can and must come out with a better system than we have now that will addre all of those peoples and individual groups. the key to that is getting the incentives correct. >> thank you very much. [applause] [captioning performed by national captioning institute] aptions copyright national cable satellite corp. 2011]

since we were last together in school reform and restoring government. he has tirelessly advocated for the residents of the district for more than 30 years. his dedication to children and their families has been a hallmark of service. it can be summed up by his singular governing philosophy. welcome mayor vincent great. -- vincent gray. [applause]

>> good morning. will latewe say a special welcome to well committee. let me wish you a happy birthday. i also want to welcome the vice what other chairs of the committee and all of the state chairs who are herend the chief of staff, bill daley. wellthe chair of our state committee for the district of committee -- or the district of columbia -- for the district of columbia is here. [applause] the folks of the district of

columbia, please stand up and be recognized. [applause] i am delighted to be here. i appreciate it mentioned by governor kaine about what we have done for the children of the dirict of columbia. we are working hard on it. i introduced legislation to do what was a fairly bold moves, to create pre-kindergarten services for everyone in the district. we introduced the legislation and we said we would get ourselves six years to get that done. we said we were going to create higher education incentive grants and other programs

associated with it. i am pleased to stand here today to say this program has been so popular that it has not taken us six years. in september, we became the first city in america to say we have a seat in an organized education program for every child between3 and 4 years old -- between 3 and 4 years old in the district of columbia. we have seen an enrollment increase in our traditional public schools in the district of columbia and we are on an upsurge. we are some really challenged budget fairly. we just closed a budget gap and we are facing a $500 million budget gap next year. since we are so strapped, there

is a nasty rumor going around that you cannot spenyour money in the district of columbia. we want you to spend every dime you have in your pocket in the district of columbia. we take credit cards. we take checks. and given e challenges we have, we will take an io from everyone in this room because we know you are good for it. as we face the challenges in the district of columbia, we also face the challenge of disenfranchisement. the word, "indivisible with liberty and justice for all" -- when our liberty and justice going to come to the people of this city? [applause]

we just saw the republican majority take away the limited vote that our outstanding congresswoman had in the congress. she could vote until early january. what did that mean? it meant she could pass a vote to break a tie. that has been taken away from her. that on thheels of us paying $3.60 billion in federal taxes per year. us sending our sons, daughters, and relatives to fight the measure -- to fight democracy -- fight for democracy in other places and the comeback and they cannot get the rights they thought to get in other places in the world. [applause]

it is time, ladies and gentlemen. we ask our democratic friends, our democratic militants to stand with the 600,000 people in the district of columbia. it is time to eliminate this kind of injustice in the nation's capital of the democratic world. there are 119 democratic capitals in the free world. we are the only one that does not have a vote in the national legislature. it is time for that to end. [applause] i have to be candid with you. it is not that we want vote. we believe not only should we have a vote in congress. but given our commitment to this nation, we should b working toward becoming the 51st state of this nation.

it is right and it is just. i welcome you to the city. i asked you to do great work on our behalf. i look over to joining you in charlotte in 2012 when we come together for ouronvention. i look forward in 2012 to be able to say, we have stood up. we have made a concerted effort and we can show some progress toward eliminating the injustice we suffer every day in this nation's capital. thank you and i was you -- i wish you a successful meeting. [applause] >> thank you, mayor gray. [applause]

thank you very much, mayor gray. and thank you for reminding us -- 119 capitals. you reminded us of the unique position of the district of columbia. we are pleased to be joined by someone who is nstranger to some of you, the honorable bill daley. he was the head of the office of corporate responsibility for j.p. morgan/chase. he has extensive experience in the business world. he can do the demonstration well-positioned to help the president in a challenging time carry out and push through his agenda to win the future. in his political life, he was the campaign chairman for al gore's political -- presidential run in 2000. he served as special counsel to president clinton in 1993.

join me in giving a warm dnc welcome to bill daley. [applause] >> thank you very much. thank you. thank you very much chairman kaine. let me wish you a happy birthday. from what i heard, i heard about the reception at the white house and the open bar at the white house. it was so impressed -- i am impressed with the turn out here today. obviously, the democratic party could not be in better hands that it has been under tim kaine's leadership. he is a leader.

he is someone who has proven leadership in the political realm and as governor of virginia. i know the president is appreciative of the leadership and the time and energy he has given. you know how hard he works. we are all grateful for your leadership. let me also recognize mayor gray. you would have thought i would have learned never to follow a mayor. [laughter] it is not a good thing. some things are just stupid. the mayor is giving great leadership. the passion with which he spoke about this city and the need to bring quality and representation to the people of the city -- we all continue that fight. the president feels as strongly as he does for the people of the district. we will be joined by our outstanding secretary of labor, secretary solis later this

morning. last, but not least, let me knowledge the hard work of the north carolina -- the dnc officers. that we acknowledge myriends from illinois. i have to do that if i plan on going home in two years. [laughter] obviously, i tnk all of you for what you are doingo win elections and the links you go -- lengths you go to make policy. making the case is not just about what happens in washington. it is about winning support and driving change across the country. that is what you help the president do every day. thats what youelp democra do every day. when someone tries to knock us

down, you have kept the fight going. i think about what happened last december. a lot of talking heads, the conventional wisdom in this town -- whenever the conventional wisdom in this town says something, take your money and go to las vegas and bet against them. they said the president's agenda was done. in just the span of a few days, thk about what we were able to accomplish. we got a deal to expand middle- class tax cuts and tax credits for college students and small businesses, something that is already making a difference in our economy and helping to create jobs. not only that. there was a treaty to reduce the number of nuclear weapons in the world and go after loose nukes, a bill to take care of 9/11 first responders, and the

repeal of don't ask, don't tell. so that gays and lesbians can buy for their country openly. [applause] your efforts are important to keep his agenda moving forward. we have got to keep up the fight. at this time in our country, there is not a day that goes by that am notawed -- not awed by the number of the competing problems the president has to address and there is not a date i am not -- a day i am not impressed by the leadership he provides. the question is, how do we succeed in a global economy that is more connected and more competitive than ever in our lifetime? how do we ensure that new jobs and businesses are taking root

here in our country? how do we win the future. as the president has said, this is going to depend on having the most skilled workers, the strongest commitment to research, and the fastest, most reliable way to move our goods and information. we have to out-educate, out- innovate, and out-build the rest of the world. it is important that you carry this message back to your communities. in education, we have initiated the most ambitious reforms in decades. we launched race to the top. it says two states across the country, if you raise your standards and look f innovative ways to improve performance, we will show you the money. 40 states are pursuing their own vision of reform. at the same time, a lot of people said it was not possible

to end subsidies to banks for college loans. but the president and our colleagues in congress got it done. we are making college more affordable to millions of students and revitalizing our community colleges. next is an ovation. [applause] thank you. community colleges play an enormous part to the -- in the future of this country. we must strengthen them. they must be the bulwark of the future jobs in the country. next is innovation. last week, president obama this is it intel in oregon. they have one of the most advanced plans for building microprocessors. that plant is a window for our future, proving that we can be more than consumers of things. we can manufacture in obeyed the products he and sell them around the world. that is why we are backing more

research, extending tax credits for businesses that in debate on our shor and pushing clean energy standards that will create jobs, in our dependence on foreign oil, and by climate change. we have to out-build the rest of the world. we cannoexpect to grow on a 20th-century infrastructure. om high speed rail to high- speed internet. we have to invest company-- invests in -- and that in companies that move equipment quickly. we have to reform our government, including making sure our government lives within its means. we have got to stop spending on things we do not need so that we can make investments in the things we do need. this involves some difficult choices.

we had to cut back on some things we would not ordinarily want to cut because we do not have the money to pay for everything. the president's budget includes more than $1 trillion in deficit reduction. the president also increases investment in clean energy, infrastructure, and job training programs. he has extended tax incentives that will spur investment in hiring. it would be a mistake to balance the budget by sacrificing our future. [applause] th is where i would like to close. there have been two tough years for our country. in hard times, it is easy for people to lose faith. have still got the world's largest economic, the best universities, the most

productive workers, the most innovative entrepreneurs. we can point to two years of incredible progress. two years ago we were in a crisis worse than any of us have known in our lifetimes. today, our economy is growing and we are adding jobs. we pass reforms to prevent future financial crises and to stop people from being exploited and denied coverage by passing health care reform. we are fighting hate crimes with bills that have been held up for many years. we have succeeded because you have had the president's back. while the president was making the ca in congress, you were making the case in your communities. you motivate your friends and neighbors to call their representatives and not on doors

and spread the word to their local papers and facebook. those actions made all the difference. with your continued support, there is no telling how much we can accomplish in the next two years. we have elections to win. more importantly, we have big things to do. thank you. together, there is no stopping us. thank you and god bless you. [applause] >> thank you bildaley. we look forward to working with you to support the president and the agenda of with the next two years. your strong leadership will be a key ingredient in the reelection of the president in 2012. i would like to abish the hard work of the vice chairs of the -- like to acknowledge the hard work of the vice chairs of the dnc. jane is our vice chair. mike hda travels all over the

country advocating for important causes. congresswoman debbie wasserman schultz is what our most effective advocate. she carries the democratic message as well as anybody in this room. our treasurer is a key reason to widely -- why the dnc finances are so strong. linda, it is great to be with you today and work with you. raymond, thank you.

it is great to have you here. donna brazil has been part of the meeting for the last couple of days. we all know donna. her efforts on behalf of candidates and committees at all levels -- she has been in sixth in states for the dnc since election day. she is a spectacular boys for us. gi a bid around-- applause she is a -- donna is a spectacular voice for us. if a big round of applause for the vice chairs. [applause]

>> i am going to start and andy is going to finish. our finance department is fortunate to have a strong base of supporters who believe in the president, the party, and our principles of governing and who are willing to put their money behind their beliefs. we worked on the field, data, and charts -- and targeting in places where we felt we could lend some expertise and some manpower. we were able to do that without taking a single penny from lobbyists and other special interests. that is important. [applause] thank you.

something that is important to be present in our efforts to increase the grass roots control of the party. we continue to out-raise the rnc. our goal is to support the presidt and democratic candidates by strengthening the dnc and the democratic party. we want to be in the best position going into the 2012 elections. governor kaine and others are working to improve our lives. the assault -- i am will do whatever i can to help this president. i don't know about you, but i am fired up and ready to go. [applause] >> thank you, jane, you have

done a terrific job this year. in the the citizens united world of funding, the other side has done well. in federally regulated fund raising, we had a terrific year. we raised $122 million. bells were contributions that averaged $55 each -- those were contributions that averaged $55 each. we always go back four years for the comparable period. in 2006, we raised $69 million. in to doesn't end, we raised $122 million. -- in the doesn't 10, we raised 200 -- in 2010, we raised $122 million. jane and her team and the team

governor kaine put together did a terrific job. as soon as we are done, go to the website. it is $10. we had 1,067,000 separate individuals giving us money last year. that is up 61% since 2006. [applause] 400 it the thousand of them had never given to be -democrat 450,000 -- 450,000 of them had never given to the democratic national committee before. in terms of the fund raising team, we are doing great. where we are right now, we have

a $15 million bank debt. we have about $1 million in payables. we are a little ahead of them. we have a lot of work to do. we do not ve as many billionaires. we have to do this. the year is off to a great start. we have whittled down some of our payables. we are a doing very well. the first contribution of 2011 was from my mother. in november, she was 90 and about two turn 91. we thought this was a good buy. she was still here for a thanksgiving. we were thrilled, but a little surprised. christmas, new year's ev she

was determined to get one more calendar year max out for the dnc. she left us on january 3. darned if she was going to stick around long enough to see nancy pelosi and her battle to john boehner. -- her gavel to john bain [applause] -- to john boehner. >> thank you. e whole finance team is here and they have done superb work. we now have a great visitor. it is someone you know and you know well. it is secretary hilda solis. secretary sillies has been a public servant.

it says since first -- secretary hilda sully's has been a public servant or 30 years -- secretary hilda solis has been a public servant for 30 years. she led the battle to raise california's minimum wage. she served in congress for almost one day. her priorities for expanded access or affordable health care, improving the lives of working families. she was a recognized leader on clean energy jobs. she authored the screen dogs act that provided funding for veterans -- author d green -- authored the green jobs act.

there is nobody better who could be u.s. secretary of labor and hilda solis. we areleased to have her with us today. give her a warm welcome. [applause] >> all right, folks. we are ready. thank you for inviting me. thank you for being so gracious for that kind introduction. i understand it is your birthday. happy birthday. in addition, i want to thank the dnc officers and my colleagues on the hill with whom we work in tandem to get good things done for our country.

two years ago this week approximately, i was sworn in to office by our newly elected president at the time, president barack obama to be the first latina cabinet member in our history. [applause] aside from that, coming in was tough. as you know, we were in the depths of a recession. we were losing a hundred thousand jobs per month. the president took strong and decisive action. we passed the recovery act. we we want the health care system. we reform the financial system. we got out of that mess. we got america back to work. we added 1.1 million private- sector jobs in 2010 alone.

i _ private sector because we get a lot of criticism -- i underscore private sector because we get a lot of criticism say that we do not create jobs that lead anywhere. it has been across industries and regions and a first committee. do not let the pundits tell you that is not the case. i have to report on that every month. we are taking steps necessary to establish america's leadership role. clean energy, rebuilding american road bridges -- american roads, bridges, and railways. each of you know that there is a lot more work to be done. i have travelled across this great country and have met with

many workers of every age and background. unfortunately, some have jobs. some are still looking. some have given up. i know we all understand their frustration and their pain. i know that all of you have put in your time and energy to help build the this democratic party. we know our country is strongest when we are united. have travelled around the country in the lead up to be november election to remind the team knows why it matters to both -- it matters to vote. and also to remind our women that they will nevere second- class citizens in our party. [applause] and we need to be excited here. in places where we talk directly to latinos, union members, and women, guess what?

places like nevada, colorado, and california, even with the wind in our faces, we were able to win. [applause] but we know of our work is not done. not every corner of america came out. people now have to be reminded. the american public needs to know. we need to be out there reminding them that the election do matter. they've really do. as your secretary of labor -- they really do. as your secretary of labor i have been following elections in indiana, colorado, florida, and different places around the country. even in my own state of california. we know many states are facing tough budget decisions. we know there is room for shared sacrifice, shared sacrifice.

we have seen our brothers and sisters and public employee unions willingly give up their fair share. they have offered to negotiate in good faith to help their states stay afloat in been in these tough times. the governors in wisconsin and ohio are not just asking the workers to tighten their belts. they are asking them to give up their uniquely american rights as workers. [audience booing] these are our neighbors, friends, and families. they teach our kids. they risked their lives to keep us faith in our communities. all they are asking for is to be treated with respect and dignity. [applause]

guess what, folks? all they are really asking for is the opportunity to sit down at the table like grown-ups and to work together to solve problems. thats what collective bargaining is all about. [applause] ladies and gentlemen, we know that sitting down together and working through our problems does not cause budget problems. as i recall, that is how you solve budget problems. in every family across this country, when times are tough,

we do that. we sit down at the table and we talked and we discussed and we negotiate. during these tough times, these governors are not finding that as a solution. admittedly, i am a little bit by is. at some of you know, i come from a union -- admittedly, i am a little bit biased. at some of you know, i come from a union households. my mother worked tirelessly in a toy manufacturing plant for many years trying to make a good life or her children. there were seven of us. i thought there went back to mexico and came back later in life and work hard as a firm worker. he worked in carpentry and the oil industry. he ended up a shop steward in a union to help immigrant workers

who could not speak english understand that they had protections here. any person who works in this country has right to be protected. every administration, republican and democrat, has opted to uold those laws. that is what i am doing today. [applause] all my parents wanted, like many of you, was that they wanted to be paid an honest wait for an honest today's work. -- an honest day's work. that is what it will -- was the workers in wisconsin wants. but it is not what the other party wants. that is why the work that you do is so important to america's

working families. while the other party is working to take america back to the days when we did not have collective bargaining and shared responsibility, democrats have a different plant. in the state of the union address, president obama set out his plan to win the future by out-educating, buy out innovate thing, and out -- out- innovating and out-building the rest of the world. what is really exciting, the reason i love this administration is that president obama and i share a vision

[applause] i just want to thank them for their leadership. we had spirited discussions. we came up with a list of recommendations that were voted on and approved unanimously. we found out that moving forward we obviously want to help the dnc do what they do well, which is when elections, but we want to do it in a most -- more inclusive matter.

committees have played crucial roles in the election of the president in this country. we are going to do what we do, but we will do it in a more inclusive manner. i am proud of the co-chair of the dnc budget and finance committee to present our report. we had a great day yesterday. [applause] the report contains a number of recommendations including carry forward mechanisms that continue between meetings. i want to thank him for his leadership. the black caucus, hispanic caucus and asian caucus were critical in bringing this to the table. we had in all but from the congressional black caucus as well. that involvement will continue. i will entertain a motion to accept the report. it is there a second? is there any discussion? all in favor say aye?

all opposed, no? the motion is passed. i want to welcome everyone here. we have a number of new members. there are new state chairs, the vice chairs, other new members. i welcome you to this first meeting. i hope it has been an exciting one. uc we have a light on the table and a lot of challenges. we have reason to be optimistic about the battles ahead. this is the first meeting we have had since the midterms. we have to acknowledge it was a tough night. it was a very tough night. it did not go the way we wanted. we won some very close late breaking statewide races that came our way, but we lost seats. it was more than seats. i thought about what the

congressman said the other day in the executive committee. we are not about numbers, we are about people. when i think about the midterms, i think about people. i think about really good public servants i know. i imagined you think about good public service you knew who were returned to the state legislative body, the center cells, are the governor's office. most of them did not return not because they were not doing the right thing. they did the right thing. when people did the right thing in a political climate where it is tough to do the right thing, make unpopular choices because they need to to move the nation forward -- obviously we want to see those people rewarded. we do not want to see good people there do the right thing not get rewarded. we see this in politics and elsewhere that sometimes when you do the right thing, there could be a backlash. the empire strikes back they say.

there are those who did the right thing to are either not back -- like the speaker, who did a magnificent job. speaker nancy pelosi -- [applause] she is still there and fighting for us, but not in the same position. there were some challenges in the midterms. there were some bright spots. the challenges were independent voters to support the president in 2008 did not support democratic candidates nationally. independent voters moved pretty significantly in two years. that is something we have to work on. our young voters who do not have a great history of midterm turnout but had an amazing surge in 2008, we actually solid young voters do better in 2010. we did not get to where we

wanted to with young voters. and with women voters -- the democratic party has had a tradition of winning women voters by a healthy margin. the margin was narrower in the midterms. there are challenges we have to grapple with. we are digging to the data, working with our candidates, having discussions with the president and our congressional leadership for the next the did zero years. there were a couple of bright spots. there is some banks involved. turnout at some of the democratic port constituencies was really good. african-american voters nationally turned out very well. they understood what was at stake. [applause] just a piece of data i just felt remarkable -- i would just use this as an example, but there are others -- wisconsin voting.

we had a horrible election night in wisconsin. we lost a spectacular senator -- senator fine gold. we lost the governor's race. 2006 in wisconsin, we had a great night. we won the governor's race. we won congressional seats. in the most democratic jurisdiction in wisconsin, the city of milwaukee. the voting turnout in 2010 was almost 15% higher than it was in 2006. democrats voted fairly well in that city. we have to acknowledge that. the african-american vote and latin american debt was strong. the rookie races in colorado, nevada, and california. the the voting in washington and oregon was very strong. any race that was not excited election night -- i followed it.

after election night, the colorado senate race at the oregon governor's race and the washington senate race and the l.a. senate race and the minnesota governor's race -- all the linebackers switched our way. it told us that in the close races, it is field politics that matter. field activity was going on because the state parties, organizing volunteers, -- there were bright spots. you cannot sugar coated. it was a tough night. after that night, i remembered a wonderful line i always remember after anything tough because it tells you, "progress is not always one straight line, it is one step forward, two steps back." if you ever needed proof of that proposition, all the pundits after the midterms -- it was

horrible, nothing was going to get done, the other guys were offense, we were defense. we ended up with a president and a congress that got more good work done then nine of 11 responders. what a spectacular thing. [applause] the other guys try to block but we made it happen. the start treaty, the compromise that would extend unemployment benefits and adjust payroll taxes for folks. there were things a lot of people did not want to swallow. the president said, "we are going to come back and talk about that again in the heart of the presidential election when everybody is paying attention." in those pitches -- achievements in the lame-duck, he played a big role. when i did not mention is the repeal of "don't ask, don't tell." [applause]

that one went through so many twists and turns. i know people were frustrated. it was up and down. it was part of the defense authorization. republicans blocked it. even in the middle of december it looked tough. but you all waited. we put out the call. can you help us with petitions we could deliver to key senators to get them on board? within 72-hours, we had nearly three-quarters of a million petitions to deliver to the members of congress. we also have to say, break activism by so many wonderful activists and the american public saying, "we want you to do this." the american military saying, "we want you to do this." we have seen the president continue cents with a strong stated the union, with a compelling and compassion presentation to a grieving

nation in the aftermath of the chorus the shooting in tucson. things can look dark one day, and how quickly they can turn. there is a lesson there, too. we are going to go to a lot of cycles and a lot of ups and downs. the challenges we face in november have not slowed us down. they have not made us trim our sails. the energized us. we are battling with a great president to do good work. but there is one thing the election has done, it has enabled us to paint in stark contrast the choice that is before the country. you heard secretary solis do it better than anybody. i cannot talk her. the choice is simple -- we are optimistic. we are hopeful. the other guys will be the doom and gloomers, but we are going to win. we are going to be about the future, looking for, tackling

new challenges rather than looking backwards and fighting about the battles of the past. we are going to focus every day of the economy. we are going to take it -- make it stronger by innovating and educating the rest of the world. on the economy -- i get into these discussions. i am sure you do, too. i do not just talk to democrats. i have a lot of france or independents or republicans. i will tell you three things -- at the end of the bush administration, gdp of this nation was shrinking by 6% a year. that is what this president inherited. that is unparalleled since the great depression in american history that we would shrink by that degree. now the gdp is growing again. it has for the past year. economists are revising up the gdp estimate. we went from a shrinking economy

to a growing economy. in jobs -- we are not where we want to be yet in any area. the president came in at a time when jobs had fallen off a cliff. we lost seven baht to 50,000 jobs in january 2009 when he was inaugurated -- 750,000 jobs in january 2009 when he was inaugurated. we were losing jobs under republican leadership. under democratic leadership, we are gaining jobs. data point three -- if you put a dollar in the stock market the day george bush was inaugurated in 2001, what was it worked when he left office? 78 cents.

in eight years, it declined by 22%. if you put a dollar in the stock market the day president obama was inaugurated, it is worth $1.50. we grow the economy, we at build jobs, we protect people's savings. all the other side, we are winning the future. we are coming out of the ditch they made. we are battling for green energy and battling for inclusion. the other side is the party of the past. they said if they got power they would focus on jobs. let me tell you what they have been focusing on -- if you look at republican governors all over this country, we see massive education cuts. i was in texas last week, wisconsin and illinois the week before. i get to these democrats and republicans. what think i have seen is that with republicans at the helm, there are massive cuts in

education. hell are we going to innovate, out educate, and continued to grow and we were cutting that talent expansion that is public education? we cannot do it. [applause] that is not a pro-jobs strategy if that is what they are pursuing. other strategies they are pursuing in the house -- there is an effort to focus on issues and take away the rights of women. you saw last week the house voted to completely defund planned parenthood. cervical cancer screenings? education, health care, protecting women's choices, contraception -- what does that have to do with jobs? going after women -- what does that have to do with jobs? ec secretary solis try to redefine what forcible rape means -- another bill house republicans tried to push.

they all had their names on the bill. we will not let any of the sponsors forget what they were trying to do to american women. [applause] you heard the secretary talked about wisconsin and the other states. i was in madison. let me put it first -- if it was a company, what c.e.o. do we admire that comes into a company and wages a public war on their own work force right out of the gate? there are some who do that, but there are nine we admire to do that. c.e.o. s we admire know it is about a partnership. you do not come in and wage war

on your employees. try to make public employees vote for you and they go after them? these are the people who teach our kids. the care for our parents and grandparents in nursing homes. they keep our streets safe or provide fire protection. the notion we are going to go after them, make them evil, and make them the bogey man even when they are willing to engage in the shared sacrifice that public and police engaged in almost every day, shows what the other side is all about. the first thing the republicans did when they came in, it was not about jobs. they wanted to repeal health care. they wanted to take away from 7 million small businesses the tax credit that that -- the tax credit to small businesses are getting. they want to make it more expensive to be a small business. that was a guest jobs, but they wanted to do it. i heard somebody say this -- is

anybody else -- does anybody else find it odd that the way they go after this is by calling it obama care? if about care -- care is a bad word? care is a negative? it is wrong to care? we are against care? we're going to fight against care? i am glenn obama cares. [applause] i am glad obama cares. i am glad democrats care. [applause] if it does not democrats during that somebody gets kicked around when someone has a pre- existing illness, who is going to care? if it is not democrats caring about the cost of college and try to expand programs so people

can afford it, who is going to care? we do care. that is when the great things about being a democrat and we should be proud of that and be proud of our president. we are focusing on the future and the other party is fighting the battles of the past. i think you'll see more of this over the next two years. it will be easy for us to make that choice plan to americans. just to give you a little preview, but the time we are next together, the reelect will be up and running. it will likely begin in the second quarter of the year. the president has announced in an unusual way the real light will not be in the d.c. area. the president said it worked in chicago the first time, there were some good karma there, let me go back home and get outside of the beltway imaginations that could take you off the ball and make sure the reelect work where it worked so well. i know we will be deeply engaged at every level.

there is also the exciting announcement about the people's convention in charlotte. it was a tough choice. we had four great cities -- cleveland, minneapolis, st. louis, charlotte. every city had their checks in the plus column. every city had their checks in the minus column. north carolina was the state we won by the narrowest margin percentage wise of any of the states and we won in 2008. i, as short share, i wanted to send a message that we're not playing defense in 2012. we are not playing for 275, just get it over, just did it into the end zone -- we are going to play for the big win. if we are going to play in every corner of the country. [applause] we are going to go into territory that the other guys think is theirs. if we play strong in north carolina, we are going to play

strong in virginia. we're going to play strong in florida, in the south, everywhere. that is what is so exciting. the convention will be a little different. in keeping with the spirit of the president's campaign and keeping with the spirit of the way we have raised funds into this organization, we have already made an important decision. the 2012 democratic national convention will not take corporate cash. we will cap contributions. we will prohibit contributions from federally regulated lobbyists. we are not doing that because these are bad folks. this is a natural extension of the dnc standing pledge to not accept these contributions. we do that because there is a belief and a fear among some many americans that all seats at the table are bought up and regular folks cannot be the ones financing conventions, financing

campaigns, achieving the victories. when the president ran the campaign, he said it would be tough to win an election doing this, but he wanted everybody to know that if he were an individual, you are welcome. we are not letting the institutional players by all the seats at the table. we set a huge bar by calling charlotte the people's convention. it will be the most of -- the first convention we have ever held. it will set the standard for later conventions. we want to set the standard in diversity and finance. let me finish with a couple of things. it is a time of transition. there are some announcements already about some staff changes in the white house, at the dnc, and the forthcoming re-elect. [applause] not that kind of transition. that is the va i'll over there.

-- virginia aisle over there. clyde williams -- stand-up. [applause] most of you have worked with clyde and know him from the white house deputy chief of staff. they are married and had wanted to go back to new york from where they are from. they are giving back to new york. it is bittersweet except we will not release this clyde because we will be doing the same work. he is not going to be on south capitol street in washington. he is going to be in new york doing great things. u.s. a much public service left eye in you, we thank you for your wonderful contribution to

the organization. we look forward to looking more together with you down the road. please give him a big round of applause. [applause] the second step transition i want to announce is the executive director. so many of you knew her three many campaign cycles. in 2008, as to the ballard estate director for the obama campaign. she came into the dnc and has been announced as the deputy campaign manager of re-elect forms. she would be leaving to do that. jan is the one right next door to me. we work on all these issues together. we figure them out. she has been a remarkable

leader. for someone who is as young as she is, she will do a lot of good work. i want to give her a memento. out of her window, she gets to see the capital. out of her window in chicago, if she was the frozen lake michigan six months of the year. [laughter] i am sorry, ill. guys. i know she has left the capitol view, we wanted to give her something she did take to hang on her wall is still have that view. if he would come up, we want to present you with something. [applause] it was the capital before everybody signed all over it. [applause] and then, a great announcement.

some of you know, and we helped him with us -- we have a new executive director. we celebrate the one going out, and we celebrate the one coming in. many of you know patrick. [applause] if you do not know him, he has a great background in political campaigns and political work. a great background in the legal work -- labor movement. an organizer by heart and my conviction. it but that organizing talent for president obama in 2008. he has deep reaches into the constituencies that make up the broad democratic family. starting next week, patrick will be your new executive director. please give patrick a big round of applause. [applause]

i always close with a truman . at the va it -- as a virginia governor, you always have to close with a jefferson line. i was at the rural caucus this morning. what my favorite chairman lines was, "every american farmer thinks he is smarter than the president of the united states, and the american farmer would be right." americanism is not embodied in any one person, is it a it -- it is a distillation of all the heroes who have fought and died for the common good. our party is not embodied in any one person. we are the party of jefferson, roosevelt, clinton, obama, schism, solis, the party of emigrants with big dreams and big ideas, young americans studying for college degrees, and older americans retraining in the fields. we are a party of wage workers,

on japan worse, hard working mothers and fathers all over this country. that is to we are. we are the sum of american strength, and that some is always greatest -- > its parts. together, we are going to win in 2012 and we are going to win the future. thank you very much. [applause] >> next, the national governor'' association forum on job creation and competing globally. live at 7:00 a.m., your calls and comments on "washington journal." >> on road to the white house, former arkansas governor mike peck a week promoting his current book. he shares his thoughts on president obama, social and fiscal issues, and his possible run in the 2712 presidential election.

what c-span's wrote to the white house today at 6:30 and nikon 30 eastern and pacific. >> now, michael porter talks to governors about the importance of states being competitive globally. he made the remarks at the national governors' association winter meeting in washington, d.c., where he was part of the morning session. >> good morning, everyone. >> as the chair, i would like to welcome each and every one of you to the 2011 nga winter meeting. i want to start by apolozing for my laryngitis and to assure you that you can shake my hand. this is just an overzealous reaction to the boeing tanker award. this is an attack for allergies.

i took your advice last night to shut up. they have a motion for the adoption of the rules of procedure for the meeting. it has been moved and seconded. any discussion? all in favor? those opposed? part of the rules require tt any governor who wants to submit in a policy resolution for adoption at the meeti will need a 75% vote to amend the rules to do so. please submit anything in writing by friday. i would like, if i could, to take a moment to recognize o new colleague. this is a historic moment for the national governors association to have 29 new colleagues.

congratulations to each and every one of the and welcome to the national governors associion. [applause] all of us who are incumbent governors would say to you that it is one of the best jobs in america. we would also say to you that based on the circumstances of our times th it is truly one of the most challenging jobs in america. we have a wonderful group of governors, spouses, former governors, state officials, federal officials, foreign government, dignitaries, corporate partners, members of the media and many others here today. i want to thank all of you for coming. anyone around this table knows that we did not get here without the tremendous support of a spouse, a friend, a family member gov. heineman, our two spouses are leading them as they go to this meeting over the next three days. he would like to introduce to

you are two responses to tell you that today they will make all of us proud as they lead the spouse's delegation to walter reed. there they will participate in supporting our military families. they will read to children there and they will greet their families. they dedicated their time to the veterans of my home state in the washer tanned of veterans across america. my husband, mike, and gov. heineman's wife, sally. if you would stand? thank you. [applause]

we're joined here today by a delegation from the hunan province. we also have a delegation from canada who has joined us today. a point of personal privige, if i might. to all of us who have known ray, he served as natnal director for the nga for 28 years. he has seen us through amazing times. this is his last meeting. please take the time, if you would, to thank ray for all that he has done on behalf of all of us over the 28-year span. join olla said the reception following to honor ray and all that he has done for our nation and the governor. [applause] [applause]

for those of you who do not know where he is headed, he is moving to higher education to inspire a generation to join us in the public service and to lead the nation of tomorrow. let me begin today by saying that we certainly live in interesting times. the times are downright challenging for all of us. from conflicts abroad to fiscal challenges on the home front to families needing to save and build for their futures, these times are testing all of us. as americans, we always face up to our challenges and our job as governors is to leave those solutions to find a path for root for a competitive america. we're now just beginning to regain our footingrom the severest economic downturn that most of us will ever experience in our lifetime. we have not yet fully recovered and we may have many tough

fiscal challenges ahead. as we gather here this morning, all of us have one thing on our mind and that is how do we regain quickly our competitive edge. we're going to address that question over the next three days and leave you a lot of good ideas to take your home state to grow your economies and balance your budget. that is what the governors do at these meetings. we share ideas and experiences. we figure of solutions to the problems that we fe. that is with the national governors' association is all about. our greatest opportunity in the most fervid challeng is building a strong, competitive state economy in each of our home states. all the demandthat we face, health care, pensions, infrastructure will all be much harder to meet if we do not have thriving economies with more people employed in high- quality jobs in growing industries. we also know that having a more

educated population is an essential ingredient for a competitive economy. the days when jobs paid middle- class wages and required only high school diplomas are behind us. the job market of tomorrow will belong to those who have some credentials beyond high school. a certificate or a degree. the jobs will move to where those skilled workers are and if we're not careful that means overseas. that is why we are opening the 2011 winter meeting with the discussion about competitiveness with one of the leading experts in america on this subject. it is also why i am focusing on productivity in my chairs initiative, complete to compete. in front of you are materials that to the little bit about this initiative. i would like to draw your attention to couple of points. complete to compete is about promoting better measures of performance for our higher

education institutions. it is no longer and have to know how many students are enrolling in our colleges. we need to know how many students are actually completing their certificates and agrees. how long is it taking them? are they taking up a spot that to go to entering freshmen? how many students end up in remedial class is making a for the k-12 system are preparing their students. it also highlights what is working in our state. when it comes to graduating year students, there will be new and innovative ideas for how we fund and maintain high quality higher education in america. we will be hearing more about this initiative and opportunity to participate over the course of the meeting. i encourage your to contact the nga staff if you need more

resources to deal with these higher education issues that are facing us today in these difficult economic times. we are truly fortunate today to be joined by dr. michael porter who has spent his career examining factors that allow nations, states, and businesses to compete in the modern, global economi. pressure porter's 1990 publication, the competive advantage of nations, printed a new theory that is well accepted today about nations and regions competition and what powers their economic prosperity. his theory of industrial clusters has given rise to new ways of thinking about how governments create environment for high quality job growth and strong business expansion. his way of thinking recognizes that human talent is a critical element for such growth and that a state higher education system can be a powerful engine if it is properly aligned with

the region's economic goals. prof. porter is regnized as the father of the modern field of competitive strategy and has been identified in a variety of rankings and surveys as the world's most influential thinker on management to competitiveness. he's the bishop william lawrence prossor at the base at harvard business scol. this position is the highest professional recognition that can be awarded to a harvard faculty member. in 2001, harvard business school and university joined nacreous the institute for strategy and competitiveness dedicated to furthering progress reporter's work. i commend his reza made to you. you will find it both interesting. one thing i found more interesting is that he is the seor policy adviser to the boston red sox. my home team could use a little strategy session with dr. porter.

this is why you guys are doing so good. prof. porter has been kind enough to bring to each of us some very specific analysis regarding our state's economy and competitive strengths. if you pay for this backup, it would cost you thousands of dollars. you will find that analysis and materials in front of you. i think i speak for all of us in saying, tell us how we can use this information to grow our economies and their citizens back to work which is the fundamental challenge that each of us as governors face. dr. porter, think for joining us and we look forward to our discussion with you. [applause] >> thank you, governor. that is very kind. we are very hopeful for the red sox this year. hopefully we will have a good year. i am so honored to have this opportunity to speak to all of the.

it is really quite a remarkable moments in our country's history and also in the history of many of our states. you had your hands full. all of you. the country has their hands full in terms of our competitiveness. this is a time when i think our position is challenge of a level that i have never experienced before as states, we are of focusing on a fundamental challenge of trying get fiscal houses in order. ultimately, that will not solve our problem. as governor grigory just said, the only way to create prosperity is to actually build competitive economies. that is a long term agenda. at a time when there's so much pressure on now coming the here

and now, dealing with the fiscal problem, what i like to talk to run to dave may seem a little difficult to think about at this moment, but ultimately, i think it will be single greatest agenda that will determine ultimately the success of your states. that is building an economic strategy in which you can get the consensus of of the key stakeholders in your state to create competitiveness. that is the fundamental agenda. if we can do that, they will have the resources to deal with the other problems and issues in our society. that is the ultimate agenda. hat is the core agenda. how do we build competitive state economies? we have very limited time this morning and we will only be able to give started on that discussion. in order to try and make this

discussion continue from each of you and from a year has a presentation that we prepared about your state. it has a lot of very rich data to try and benchmark where you are, talk about the nature of your economy as it is toy, how it is progressing and the stars to provide some of the facts that i think you will all media and many of you probably already know which ofhe necessary to create that economic strategy. i would like to put the presentation the side for the purpes of this discussion. i'm not going to follow those presentations. i will talk to you now about strategy for the next 20 minutes or so. this presentation is background information for you. as we go out of this meeting, we would offer to work with any of you. we would work to continue this discussion. hopefully, we can have a dialogue.

we want to create successful economies in your states. this ultimately, i believe is the fundamental challenge that you face. as i said one minute ago, already has some very short- term challenges in terms of achieving fiscal stability in your states. gov. gregoire talked about that. when you are doing short-term thin like cutting, it is portant to do long-term things at the same time. you have to offer not just a challenging short-term agenda to the citizens of your stay, but you have to offer some kind of a positive longer-term agenda. if you can do these two things together, we have found over and over again the you'll be a

lot more successful. all of you talk about is the negative stuff, you will get much less of traction and willingness of citizens to move ahead than if you could also offer a positive agenda. that is why even though it time like this, you talk about economic strategy, and you get by, it is incredibly important. we see that states differ tremendously and the economic performance. this is one of the many charts that talk about how the states are doing in terms of the fundamental agenda of prosperity. we see tremendous differences. we see states with very high levels of prosperity that are not growing. we see states that are moving up, states moving in every possible direction. you have to get a handle on where your state stands and that will dictator particular strategy that you will pursue. the question is, how do we think

about that economic strategy? what will it take for your state to actually build some momentum and bui a competitive economy that will allow you to create jobs over time? that is the agenda that we would like to talk about today. in order to do that, we have to understand this idea of competitiveness. but i have found is that competitiveness is widely misunderstood. it is misunderstood in ways that create unnecessary divisiveness and controversy in states about economic strategy. combativeness is it fundamentally the productivity with which you can use the state's people and capital and resources in order to proce valuable goods and services. if you are a productive state, you can produce a lot of value in a de's work.

they could be able to support high wages. it is as simple as that. your prosperity is determined by your productivity. but if you're never productive, you have a reay hard time competing against other locations. if you are setting policy is that improve productivity, you're going to have ultimately improved wages and create jobs. if you are setting policies that make it harder to be productive in business, you will be moving in the wrong direction. productivity determines wages. productivity sets jobs. productivity determines the standard of living. this is the fire loss of the

modern global economy. thmore we are open to the rest of the world and the more our businesses can invest, it is productivity that determines whether your particular state is going to succeed. your agenda must be limited on your question of how can we improve productivity. we also need innovation. if a company in your state is doing the same thing that it did 10 years ago, using the same production process, producing the same product come it wil be hard to succeed. we have all these other nations out there with the low wages. this is why innovation and so on fortin. we he to keep moving the bar, particularly in the united states where we want a high standard of living. we need to stimulate innovation and process these products. part of a stay competitive this agenda has to be how can we step up the level of innovation in our state? to do that, again, we have to create the right environment for business. that is your job. the job is not to compete but create the right environment. when we find is that if you can

trade the right of barman for productivity and innovation that competitiveness is not a zero sum game. your state success does not mean that another state needs to fail. few are addressing fundamental productivity, we could now get more prosperous. that is something on which there is no ubt. if we think the wrong way about competitiveness, the making their cells in serious trouble. we will talk with iran about how state should compete. when some level, you all the compete. the question is how should we do that from a strategic point of view. this benchmarks the performance of this state. i've got some of gov. christie because he also works with princeton university. i will take an opportunity to use him as an example.

you can see that it is the seventh most prosperous state in america. look at the productivity metric here. it is also the seventh most productive state and that is not an accident. prosperity depends on productivity. is the fifth highest wages ayed. that is the maximum. these are all connected. in order to be so productive, we see that new jersey has a very high ranking in innovation. they have been a great state in generating patents and new ideas. as you look at this chart, you can see that there are some yellow and red highlighting. new jersey, although they are in a good position today, they have slowed down their productivity improvements.

they have slowed down the rate of innovation. the clusters are not growing any more. gov. christie's fundamental challenges non the level of productivity. his fundamental challenges to had to get the engine of innovation a cnge improvements going again. that is the fundamental challenge. other states will be in very different circumstances. some of you have to create stronger foundations so you can move up in the first place. others of your starting to progress in you're going back to make some transitions in terms of industry. every state has a different strategic challenge. every state must have its own unique strategy. that state's strategy will

require, will demand that you engage the private sector. if you do not engage in the private sector, all of the strategy in the world will fail. it is 85% or more of everything economic in your state. you have to give the private sector on board. is a challenge when things are little bit partisan. competitiveness and economic strategy, you cannot b partisan. you have to fundamentally and gives the private sector to be successful. let's talk about strategy at the state level. at the state level, there are three big strategy issues that we see over and over again as we hava chance to work at the state level, not only in the united states but elsewhere in the world. one has to do the general business environment. everyone of you that has estate offering a business environment.

the business environment has to support productivity. how do you improve it? where are the constraints in your business environment relevant to peers at your level? what will it take if you want to move up? that is agenda number one. number two are the clusters. what fields are you strong in? where do you have the merging or existing strengths. it is not about having firms in a lot of different indusies. it does not work like that. the way to build productivity is to have critical mass is of expertise, suppliers, and supporting industries in particular fields. every state economy is specialized in a certain set of fields in which it builds up some unique position.

the question is where is your state specializing in how can you reinforce and improve that? that is the second agenda. the third agenda of is the one that has to do with multiple levels of geography. it is partially due to federal policies but your competitiveness is also affected by how well your neighboring states do, what we found is that you want a strong neighbors. strong neighbors making more prosperous. that is an actual fact. your state is not homogeneous unless your tiny. most of your states consist of multiple subregions, different metropolitan areas. in some cases, your actual economy crosses state borders. four of its successful strategy is to manage across geographic levels.

you need to work across state borders and effectively with the federal government. they're better leave a piece on that shelf. what you're going to find is that you will not achieve the success were hoping for. the business environment can consist of four big pieces. one ishe input available. you have to improve the uncut. if you're going to be more productive, you need to have more input. yet the better people if you want to be more productive. the second piece is the set of

rules that you put in place about how businesses than in your state with other rules and regulations that govern competition. you want rules for efficiency and productivity. with their peace has to do with the relevant to the -- the supporting industries in your state. finally, the demand conditions. whether the state is a sophisticated market for goods and services because the regulations that encourage sophistication because the policies you said there really encourage new businesses to grow because you're really encouraged -- encourage it accumulates that demand. of the stateevel, there are many differences in instances, but there are a number of issues that are important in almost every state in terms of the business in burma.

one is regulation and permitting. getting that to be efficient and fast is fundamental. most do have that issue and almost all of you do better. two, there is a lot of unnecessary costs of doing busine that we have allowed to grow up in america and your states. unnecessary costs in the sense that we're spending more of the value that we're getting. whether it is energy, health care, you have to find a way to reduce those unnecessary costs. when there are unnecessary costs to doing business, do you know what that does? it reduces the wages in your state. the depend on productivity. if companies are wasting money because they're spending too much te on permitting, that means they can pay less. do not think of this as some abstract thing, these costs. think of this as coming out of

the pocketbooks of your citizens. states have an obligation to make the environment as efficient and supportive of productivity as possible. again, time is short. most of you need to get your training system better aligned with the needs of industry. we see that in state after state. many of you need to improve your infrastructure. we spend a fair amount of money on infrastructure, we just do not spend it smartly. we do not spend it on the pieces of infrastructure that really have a big economic impact because we tend to spread it around because of the political process to put in place. if you could do a better job of prioritizing investment, it would make a big difference. infrastructure investments that speed up commerce, support productivity in the economy. anything you can do the ease the burden on small businesses will pay big dividends. we know small businesses really generate most of the jobs. any cost falls

disproportionately among small businesses because they're small. anything they have to do hurts them more. finally of course, there's the issue of education. education is fundamental and there will be more discussion of that in the session, so i will not cover that. without the talent pool and the skill base, we simply cannot be productive. this is the biggest single issue facing america. we do not have a strong enough talent pool to allow us to justify our high wages. that is a challenge of the state level as well. the business in burma is part of the story and impving that overall, for all companies but also we find that true competitive success requires you go further and really undersnd the composition of your economy, what kind of business is the state in?

by the business is developing these clusters? we look a state onomy, there are two types of industries. one of is what recall local industries. these are industries that every state will have a retail come utilities, health care. these are industries that serve almost totally the local market. there are based on serving the population tt lives in your state. there are the majority of all jobs, local jobs. there are al what we call the tradedlusters. these are industries that have to compete across state and across countries. it is this traded a part of ur economy that really drive you to prosperity. they have much our wages. they have much higher

productivity. they have much higher rates of innovation. we have given you the data on your state in terms of the mix of your state economy in terms of the treated and loc clusters. what is a cluster? it is a critical mass in a particular field. this is the crown jewel in massachusetts, as governor matthews knows. is the life sciences cluster. it is not only manufacturing companies but also service, support, supporting institutions like universities that all come together with expertise and technology in a particular field. here is another cluster in the oil and gas in houston. this got its start selling oil. because houston has built this enormously succeful cluster, now they did not sell much oil. when it sells technology,