they really are representatives. the people he talks to back home are his constituents. they probably do not think much about the capital issue. it is still remaining to be seen. >> we will give you the last word. >> gov. dukakis was a clear example of how you can be heard- -- be hurt early in the summer if you let these attacks defining. that is not mean -- that does not mean that we could end up the president romney. >> thank you both for being with us. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

presidentow raúl, vice- joe biden talks about issues affecting seniors -- tomorrow. we have his remarks live on c- span-2 at 11:45 eastern. next, the national governors' association annual meeting halls a session on innovative strategies to improve health care and lower medicaid costs. they discuss hospitals, quality of health services and emergency response teams. this is an hour and a half. >> good morning and welcome. nga healthir of the and human services committee or hhs committee. i'd like to call the meeting of the health and human services committee to order at this time. i am pleased to be joined by my

friend and neighbor governor quinn. i want to thank heather and william garner, the nga staff for their work in preparing for this meeting. the proceedings of this meeting are open to the press and to all meeting attendees. since taking office again, last year, my administration has been working to improve health outcomes for iowans and i know my fellow governors are striving to do the same for their citizens in their states. at the last meeting of this committee, we heard about iowa's help this state in the nation initiative which is a private the lead, publicly- endorsed, a initiative to improve the health all iowans. we also heard from some of the federal wallace of initiatives. today, we will focus our and attention on ways to better

leverage the data for focusing on bringing down the costs of care for high cost medicaid beneficiaries. this is something governors have identified to be a problem in just about every state. and as you may have heard, health care and medicaid have received quite a bit of news here as of late. regardless of party, i believe every governor is interested in improving the service delivery which is provided, providing end of the presentation. of like to yield two our committee vice chair, pat qui nn for opening remarks. >> i think this is a timely discussion. the concept of an ovation, cost reduction, improvements in our health care system, i think all of us understand this is one of the challenges of our time. in illinois we had to make tough

choices in restructuring our medicaid system. we had to reduce liabilities by $2.70 billion out of $15 billion. we did that through efficiencies and reductions as well as new revenues to repair the program 's long-term deficit. we reduced the medicaid spending three reductions by $1.60 billion, and then we raised our cigarette tax by $1 per pack. that will allow us also to match our cigarette money with more money from washington for medicaid. a part of our reform or restructuring in illinois and fall to the modernizing of our systems through electronic to focus notcords only on traditional medical care but integrating our mental health and human services as well. in coming time, we are committed

to and rolling 50% for medicaid clients into some sort of coordinated care. the medical innovations project goal is to redesign our health care delivery system to be more patient-centered with a focus on improving health outcomes. we want a while this system. we want to enhance patient access and patient safety -- we want a while this system. we plan to achieve this goal by testing community interest and capacity to provide alternative models of delivering care that we may not have today but we would like to see for tomorrow. i also join with terry. we had an interesting discussion in washington on the importance of a statewide effort for wellness. i was showing us a good model led by their leading health insurer. we were interested in trying to do similar things in illinois. i walked across illinois at 11 years ago, started on the centennial bridge at the border

of the davenport, i am and rock island, ill. it and walked across our state from the mississippi river to lake michigan and chicago. on behalf of decent health care for everybody. i am happy to say that since then, we have had great reforms at the federal level off. the affordable care act to allow our state to carry out the mission of getting more people decent health care coverage. we intend to work hard on that. i think it is important that we hear today from experts that can help us reach the policy goal for everybody. and so i will yield back to you and will take it from there. >> thank you very much, governor. i am pleased to introduce our first speaker -- dr. jeffrey brenner. he is a family physician who has worked in camden, new jersey, for 12 years.

he owned and operated as a solo practice, urban family medicine office, and provided a full spectrum of family health services to a large hispanic medicaid population including delivering babies, caring for children and adults and doing home visits. recognizing the need for a new way for hospitals, providers and residents to collaborate, he founded and has run the captain -- the camden coalition for health care providers since 2003. the camden coalition is a non- profit organization committed to providing quality capacity and accessibility to health care delivery within the city of camden. through the camp in coalition, local, state calder's -- in the camden coalition, they are working to better provide care for camden city residents. the floor is yours. we look forward to your

comments. >> thank you, governors. i am a family doctor and i am here today because i spent my career taking care of medicaid recipients and i do not think we're getting our money's worth. i want to show you evidence of that and talk about ways we can do it better. about 10 years ago as a medical student project i have a young person work with me for the summer to collect patient-level data from three local hospitals. this is the billing data that they used to build the state or bill insurance companies. and we got raw patient data, the name, address, date of birth, admission, charges, receipts and insurance status forever city resident. the word for this is called an all-payer database. people never get a hold of information like this. this is locked behind walls within hospitals or at a state or federal level or with insurance companies. what i learned from the data,

what is stunning about how our health care system works, half the population in camden, goes to er in one year. someone went 113 times in one year. in this city of trenton where we have a sister in addition, they found somebody that had been 345450 times in one year. the total amount of money in one year is $100 million. we spend $2.80 trillion as a country and i cannot get my head around that number. it can buy a lot more than what we are doing with it now. we spend twice as much on all health care systems. this is for emergency room and hospital care for a city of 79,000 people. we are the first, second and third poorest city in in the

country. $100 million with by a dramatic moment -- dramatically different addresses. 30% of the costs go to 1% of the patients. spending in health care is highly concentrated. 80% of the costco to 13% of the patients. i have looked at employees data, the labor union, and multiple states. that basic rule holds up everywhere you look in healthcare. a small sliver of people are driving much of the cost. we as a health care system ignore those patients for the most part in the system is not set up to deal with their needs. we are good with the average patient. we are not equipped to deal with the sick patient. we can translate their hearts and lungs and put them in the ico and rescue them, but beyond that, we deliver on coordinated care that is very expensive.

27% of medicare recipients are seniors and are readmitted within 30 days to a hospital. that would be like spending $10,000, $20,000 for that unit of service where it was defective because they had to come back within 30 days and get another unit of service. it speaks volumes about the disorganized system we have created. the number one reason to go to n. e. r. in camden is head colds. there were 12,000 visits for colds. and thousand visits a for bader infections. -- for virus infections. my primary care of this is boarded up and close right now, as are many primary care offices, because my payment rates in medicaid kept dropping on average to $19 per visit while i have the billing data. i can tell you the hospitals bill and receive $150, $800 for

these visits. sa.have built we expanded emergency rooms. offices like mine continue to be boarded up and closed and have no felly. the problem in health care is that we pay a lot of money if you cut, or hospitalize somebody, but we pay very little money if you talk to them. in my ofifce, i make more money when i treat head colds and then i do treating the sick patient. hi can bill slightly more for our complex patient, but if i run from room to room to room, i can see a lot of patience and an hour. if i get stopped talking to a complex patient, that could take me half an hour, 45 minutes. i may as well send the patient out the door with a $50 bill because i have wasted a lot of time and money. that is wrong and does not make any sense.

the other side of the delivery system, if they can amputate the person' sfoot, keep them in the hospital makes an enormous amount of money. we have a distortion in the marketplace in how we pay for services. one of the segmentation's of the data we found very useful was the geographic segmentation. this is a map of the city of camden. this is 5.5 years of data for three hospitals with the home address of the patients mapping out the payments of three hospitals for their er care. this is a small city, nine square miles. the red areas are 6% of the census blocks, 10% of the land mass, 18% of patients but 27% of visits to hospitals and 37% of payments to hospitals. it turns out the way we housed people in america is you get older and disabled, you cannot live in the middle of nowhere.

you get congregated into specific housing patterns. so the two most expensive buildings in the city of camden are beautiful buildings with great management. the building called northgate 2, has a senior duel eligible. 600 patients had $12 million in payments for hospital care over a five-year period. building at the bottom is a nursing home. 300 patients had $15 million over 5.5 years carrot the stories collected from these patients are tragic and i am deeply ashamed of the health care provider -- as a health care provider are difficult our system is to use. these are patients with complex issues, they may be illiterate, blind, deaf, disabled. we have taken this basic framework and begun to explore data sets. we have a nonprofit formed in trenton that does a similar work that has outreach in the

community, that tries to get them to collaborate. we found to date a very important to start conversations and get people. in the right direction. we found similar patterns of looking at their data of specific geographies and buildings collecting high cost complex patients. you do not need the data to find the buildings. if you ask a ems services or the emergency room doctors, they can tell you these buildings. this is newark, miller geographic patterns were complex patients are being collected -- similar to graphic patterns. this is data from the state of maine, and wanted to find out if the basic premise held up in all rural state. retarded data from three counties in maine it just for medicaid patients -- we charted a data from three counties in maine for medicaid patients. it is hard to live in the middle of nowhere is to get more

disabled. you end up close to the town center. this makes the problem easier to deal with. a team working with patients would need to drive 50 miles, you are collected into towns. believe it or not, all of this data analysis, we had very little funding to do this. i have 15 hospital's date, 3 counties in maine and we have open source password encryption. all of the analysis has been done on microsoft access and i have a 23-year-old kid getting a master's degree at peen doing all of this. there is a $1,000 piece of software. this is not that difficult to do. the problem is getting the data. so our organization is a non- profit. my board members are local primary care providers, hospitals, behavior health providers. and i have community residence

on the board. our goal is to make the city of camden of first city and the country to dramatically bend the cost curve and improve quality. there is no city or state in the country that has ever managed to reduce the trendline and spending in health care. and we think it is -- and if the country does this it makes a powerful statement for all of you that this is not a technical problem waiting for a vendor. that this is a complex, political, spiritual and moral problem that we are wasting public dollars and need to spend them in very different ways, and that we have misaligned incentives in this system where people are paid more for sickness, for cutting, scanning and hospitalizing, then they are for taking care of patients. our organization is trying to take basic ideas and business, our country0 years has become very productive. healthcare does not innovate in the same way other parts of our

economy have innovated. we invented new devices, but the basic process of how we deliver care and how we organize ourselves has not changed in 100 years. that is what needs to change. we have a gap in health care where we are spending more and more money but we are not getting value for that money. our organization spends a lot of time and primary care of this is helping them to redesign how they deliver services. between hospitals and doctors, trying to get them to share data. and deeply involved with patients, helping them learn how to better manage illnesses. go quickly through some slides but i want to make an essential point. all of our care starts with the data. we get real time data every day from local hospitals and we sit down and look at who has been in admitted and go up to the bedside within 24 hours. this is not telephonic case management. there are no gadgets.

we are not hooking people ought to remotes. are going to visit them in the hospital and go into their house within 24 hours. opening up the medicine cabinet, pulling out all of the 50 different old medicines they have, to sort them out and throw them away and organize their care. then we are going with them to their primary care office, sitting in the exam room, 60-90 minutes and the sitting there and helping them learn how to talk to their doctor and how to advocate for themselves. so this is very hard work. it is boots on the ground. it is not something you consult with telephonic case management which is primarily the model used all over the country to deal with complex, high-cost patients. week-old data from camden, trenton and -- we pulled date. in camden it's 80% of the patients that this in more than

one hospital in a single year. one hospital cannot solve this problem. one health center cannot solve that. this is a community-level problem. the community has to get engaged and salt and local stakeholders have to work together-- and solve it. we had legislation that was signed by governor christie in october to create a medicare accountable demonstration project. the premise is that if we save money in camden we get our act together and learn how to play nice and reduce costs for the state for medicaid, that the state will share the savings back with us to create a virtuous cycle. instead of costs going up, if we manage to lower costs we can share in the savings. the bill is better care at lower cost with no up-front funding. is a fear about aco's generally speaking -- in camden,

i would end up competing aco's. it would not make any sense. it would be bewildering. our model is a collaborative model in which working under the roof of one nonprofit three local hospitals, local church groups, federal health centers, primary care providers, per day -- behavior health care providers can work together. that is what we have been working for 10 years to figure out and are slowly making progress. thank you very much for the chance to stick with peak to yo. >> next, i am pleased today to introduce mr. david velinga, president and ceo of the mercy medical center which is an acute care nonprofit catholic hospital situation and three campuses in

the des moines, iowa, area. i have known dave for many years. i was a patient in his hospital in mason city when i was hit by a truck. but that is another story. with more than 7000 employees and a medical staff of more than 1000 physicians and allied health providers, including 380 employed physicians and 130 allied health professionals, they provide services and support to a network of critical access hospitals and health care facilities in 18 centro iowan communities. he has 10 wholly owned subsidiaries. in addition to mercy, he serves as senior vice president for operations for catholic health networks and the ceo of mercy health network. a joint operating venture between catholic health initiatives and headquartered in denver, colorado, and trinity

help headquartered in michigan. the floor is yours. >> thank you. whenever i am doing these types of talks, it is engaging providers, payers and government, i am reminded of my daughter who went to the university of iowa and then went to the university of southern california for her master's degree in medical-social work. my mother, who is 90, can never figure out why my daughters and sons of leave and did not settle back in orange city, iowa. and last thanksgiving, my mother you come back? they have a nice hospital. they need social workers. i can take care of you. leave santa monica. come back. so meghan would say to my mom,

grandma, i have this great condominium that is close to the ocean, which i am paying for. i have this nice car that i can get around in very well, which i am paying for. and i have this graduate program that i am in at u.s. see that i am paying for pensions that, i love being on my own. [laughter] and it is that idea that historically doctors and hospitals and social sense systems and government comes to this issue of health care. we come together as we all have our my message is it is time to engage all of us. we are tired of the fee-for- service system that has diminished our health care system and ready for a new system. i will talk about mercy des moines. it is a big place. we are responsible for about 11

other hospitals. we have about 13,000 employees. 650 employed positions across the state of iowa. there are multiple good systems in iowa, but integration is occurring. the market is driving this. our point is patients, providers, payers, and government need to be engaged together to achieve the triple aim of better care, lower-cost health care communities. our providers must demonstrate quality and efficiency. they need to use data. dr. brenner's comments are so pertinent. hospitals, providers, and government have not had data to make good decisions.

we have been driven by a fee- for-service system. it is time to get rid of that. we must make sure we pay for value and not volume. that is the pertinent issue. how do we change our payment systems to incent us to do the right thing? we need to have the right incentives. patients must assume greater responsibility. they cannot do that on their own. they have to have the doctor brenner's of the world working with them. it is a patient, a physician, a pair, and government responsibility. government must be sure to pay for value rather than volume. the market is driving us to value-based payment. it is happening.

physicians and hospitals are ready for this. they are tired of feeling we need to crank out more volume to meet the population's needs. we need payment systems that allow us to be rewarded economically for the value we create. there is huge value to be created with the money we have. mercy it is all in. we have made this commitment. we have said this is our strategy going forward. we believe it is relentless regardless of what happens legislatively. the market is driving us. we are all in. the tool uses clinical integration. one is primary medical homes. we have been using this for 15 years. the second is patient-centered systems. this is not the gazillion- dollar i.t. systems we hear about.

these can be very simple things. dave came home and said it would be great if i had a disease registry. his teenage son developed in a weekend. it is not expensive and sophisticated. it is simple. it can provide enormous amounts of data to do great work. we have invested in health coaches. each of our primary care clinics have multiple health coaches. we have transition coaches in the hospital to make sure the transition goes quickly and easily. we have ambulatory care clinics. with a sick patient, they go to

the ambulatory clinic to make sure they get the intensive care they need and maybe avoid hospitalization. the standard care processes. we have agreements between specialists and primary care doctors. we do this, you do that. we avoid redundancy between primary and specialist physicians. data management -- we do not need to do everything. the top 30% of patients. we need to do everything for a small segment of patients and we will have dramatically reduced costs. the drivers of cost reductions are simple. they are intuitive to you. counter to how we have worked for 35 years where we have been paid on a fee-for-service business. the more we do, the more we get we want to reverse the incentives so we can provide value instead of just volume. the second is the decrease in

the episodic cost. we will give increased primary- care offices. we will improve primary care. the decrease in the administrative cost structure with improved service capabilities. this is actual data we have. everything must change. we need to change the system. we do not have to change it for every patient. we need to focus on the highest cost chronic patients. you look at the triple multiple chronic diagnoses. there are only 399 patients, but it is over $2,000 per member per month. the multiple dominant is 14% at $955. you start to say, where can we make the most impact in the work we do?

we now have the state. it is the first time ever where insurance companies are providing data. otherwise, this would be very isolated. i know my hospital data. jeff knows his physician data. this is not expensive stuff. we need to find a way to bring the data together to analyze it. the results are remarkable. patients with diabetic test, 24% compared to 30%. patients on coumadin, 65% from 75%. significant improvement. what we have before was patients

with congestive heart failure were coming into the hospital. it would be big, expensive bill. they would go back, get sick. doctors would say to do this and this. the reality is that would go home and nobody would follow up with them. they would get sick and come back. they would come back into our hospital. economically, they came back to the emergency room and hospital. we improved ourselves economically but worsened care of the patient and increased the cost. this is not high tech stuff. using case managers and telephones, we would call the patient and asked about their weight. if it was changing, the case manager would say to do this. what happened was an 85% reduction in admissions. in a fee-for-service world, that hampered our economic

performance. but look at what the cost savings did. this was done through no additional payment or steps other than it was the right thing to do. this shows you mercy incenting positions resulting in increased performance. the benefits are real. think of the one test. look at the results. 50% decrease in heart failure. a 12 point decrease in blood pressure over 10 years will prevent one death for every 11 patients treated. those tests results in real outcomes. mercy applied these same benefit design and incentives to our own employee health population. premium costs have increased less each year. you can see a decline in our

employee costs and an actual decline last year. we attribute it to basic benefit-design risk assessment, doing patient-centered medical homes for our own employees. it is not a sophisticated stuff. it is basic data, and getting it and using it. lessons learned are this. engage everybody. do not focus on one of the other. governor branstad is doing that in our state, bringing people together. physicians and hospitals are ready for the engagement. state governments should support i.t. systems, not the

million dollar effort, the data warehouse. get patient information to the providers. support clinical integration. remove the legal and regulatory barriers so doctors and hospitals can work together to provide better care. do not create barriers. take down the ones that exist. strength in primary care. that is the backbone of population health management. hospitals have resisted that.

the message is they should be supporting it. the better they are at it, the better they will be at providing in patient care. ensure medicaid payment model rewards value not volume. reward value not volume. mercy is participating in three key initiatives. the home health program is a step in the right direction. we have to provide medical homes every site across the state and will participate in it. there is a workgroup redesigning iowa's health care delivery system. i think it will be tremendously successful. then the healthy state initiative. we're proud of what we have done. we know we're 10% of the way. we have a long way to go. we're on track. my message to you is engaged positions in your state, hospitals in a collaborative fashion to say let's go in that direction. >> mr. vellinga, thank you for your fine presentation. in my previous position as president of des moines university, we worked closely

with mercy and other providers in the chronic care coalition working on congestive heart and diabetes patients. you have been working on this a long time. we appreciate your leadership. we will come back for questions. i will turn it over to governor quinn to introduce our next speaker. >> i am pleased to introduce jennifer decubellis. she is the director for hennepin county in minnesota. she is the area director in human services and public health with the responsibility for health care reform. before joining hennepin county in february of last year, she worked in houston, texas, as the assistant deputy director for the mental health and mental retardation office.

she improved efficiencies between multiple agencies as a means to improve patient care and reduce costs. in hennepin county, she has taken on a similar role. the county operated health plan, the county federally qualified health care center, and the social service arm of hennepin county. the idea is to make a streamlined model for health care reform. jennifer, the floor is yours. we look forward to your comments. >> i appreciate the opportunity to be here. hennepin has newly embarked on health care initiatives trying to look at things differently. imagine not knowing where you

will sleep or where your next meal is coming from. often we find patients not taking medications or managing blood pressure. the biggest failure of health care is we are not paying attention to bringing together health care services with social services and basic needs. that is the opportunity hennepin county is working to resolve. we identified we were in crisis. about two years back as the economy to turn for the worse, as a counter provider, we saw more people accessing services because of unemployment or under-employment. more people were coming to safety net providers. revenues were down. demands were up. the system was in crisis around health care. with every crisis is opportunity. that is what we're looking to maximize. we looked at where we were

spending our greatest dollars. you have heard others mention the top 5% in hennepin county are utilizing 64% of our dollars. it was an approach to see what they were utilizing. we found was crisis-driven care. it is our most expensive venue. most of the dollars are going to crisis services, not preventative care. we noticed system fragmentation. systems that were not working well together. systems provide specific services but do not look across the span of holistic needs the individual's need and ensure folks do not fall between the gaps. as a safety net provider, we were looking at cost shifting. we have an opportunity to look at what happens in the jails and shelters and other downstream costs where we were funneling a lot of dollars into deep end services instead of ensuring health and wellness up front.

hennepin health is one initiative in the state of minnesota of many. the state of minnesota is working on integrating and coordinating across continuance of care. they're working directly with providers and counties on initiatives where they best know the needs of the populations they serve. they are encouraging multiple models. it is not a one-size-fits-all approach. i am sharing the hennepin health model that is one of many in the state of minnesota. we have our hospitals, federally qualified community clinics, social services arm, and our health plan working together to try and find a service system that works

together well. we are talking to partners and providers in the community to say we have got to stop competing and start collaborating. when we compete and do not share our successes and failures, we do not maximize the opportunity to improve the system across the span of care. the premise is if we do not meet basic needs, we will not get their attention on health care. what we found looking at the top 5% is individuals labeled non-compliant. the health care system felt they had done all they could to work with the population. in looking at the details of the individuals' lives, we found there were reasons for that. it was transportation, lack of resources, talking to patients about why they're going to emergency rooms in large volume. it is not because that is where they prefer to get care. we found transportation was a challenge. if they had a neighbor that could drive them, they needed to go today. they did not have funding for preventive service or did not know how to access them.

they knew to call 911 and have an ambulance take them to the hospital. those are huge opportunities to reduce costs and change delivery. we're working with the medicaid expansion population. that is where we found in the bulk of our dollars going to come of population typically not connected to care and services. we started january of 2012. we have great learnings i will share with you. we have only build about 30% of what we know needs to change to provide better outcomes. population statistics are telling. 68% of our population are a minority status. mental health needs make up 60% of the population having one or both conditions. chronic pain at 30%. and stable housing at 30%. 30% of these folks are very transient in shelters, corrections, the emergency department because they do not have another place to go.

30% have one or more chronic diseases. we have taken the opportunity to work with tier 3 members. it is the highest cost individuals the system is working the least for. the system is not working. that is why they are in the deep end services. for every one individual we can turn care around for, we free up amazing dollars to get to the next tier and continue to recycle dollars through the service system. objectives are to improve the outcomes for patients. we have added in improving the experience or providers. if we do this on the backs of providers by reducing rates and opportunities, we're not going to have more providers coming

into the system. that is what we need. we're watching for provider satisfaction. we have heard providers want this as much as the system and payers want it. providers got into the business to provide good it outcomes and health care. they need the tools to do so. core elements of hennepin health, we have patients helping us design the system. we're utilizing the health care home approach to get as many people involved in preventive services as possible. integration across systems is critical. we have a unique opportunity because we operate several pieces of the system. this is replicable in any system where providers need to be incentivized to work together. the cost and duplication of services are incredible. i met with one individual in a shelter who was confused about what was happening. he said i have got a lot of people working hard to get me where i need to be, but i do not understand where i should

be going. what i found looking into it was he had a case worker from the health plan assigned to him because he was a high utilize it. he had a case worker at the clinic in the shelter where he was living. he had a social worker assigned from the hospital. they were trying to reduce admissions. he had a social services social worker trying to meet his needs. none of these social workers or caseworker's new the others existed. a huge failure in the system. folks were off and running in separate directions and sometimes in the same direction. a waste of resources in an individual who could not get the care he needed. he just knew he needed health. we have tried to solve that. we're looking at one core patient record.

there are a lot of different systems. the one core patient record is the way to bring those together. we have created a dashboard. if i am a provider, the last thing i want to do is wade through a lot of notes. i need a dashboard that tells me the key things i need to know. it bubbles up from the record to give them key indicators. the dash board for a social worker is different from the nurses. it is the ability to be able to flag that another worker has been assigned. we're pulling those folks into virtual teams. we do not all need to work for the same place. we do need to coordinate care and understand who is on point to get to the outcomes we want to have for individuals. it is reducing admissions. it is reducing crisis services. it is working to increase getting people into preventive care. spending more dollars upstream to prevent higher cost downstream services.

we're working to reduce churn. -- it is reducing admissions. it is reducing crissi services it is working to increase getting people into preventive care. spending more dollars upstream to prevent higher cost downstream services. we're also working a lot on reducing churn. every eight months, individuals are falling off of medicaid benefits because of the renewal process and paperwork. it is not that they suddenly got a wonderful job and no longer need care.

they are transient and moving from place to place. they do not always know they have a renewal date coming up or how to complete the paperwork. it is a system so you're able to meet their needs. hennepin is 100% at risk. they have given us a per member, per month amount goes to the insurance company. we do have an insurance company in the project that gives that. the difference is the gear shifting. we have the dollars. we have to provide medicaid benefits. we have the opportunities to spend dollars in other ways. an example is somebody who has diabetes and is in the hospital greater than six times a year for insulin issues. we are finding it is simple things like my refrigerator is not working. i do not have a place to keep my medicine. an $800 refrigerator being purchased by hennepin health can reduce hospitalization. huge cost savings and easy answers. we found the model for everyone

we take care, we're able to fund social services for others. it is constantly releasing more of the funding back into the system to take care of a larger population. the other interesting part about the approach is in the past when funds are not shared across systems, folks do not take care of each other. we have individuals who are stuck in a hospital bed, medically stable but high needs. traumatic brain injury, behavior issues. high needs and nobody wants to take them. at the point the system does not work together, a hospital is on the hook for that. they are medically stable. there is no reason to get payment at that point. in the past, some were not motivated. now we wave a red flag and social service is at the table. we have nursing homes saying we

are willing to partner with you. nursing homes said now we are all in it together, the hospital is motivated to support the nursing homes. the nursing homes said we will take the difficult patients. when the patient is difficult, we need your behavioral health team helping to manage them. if you are not there in the traditional model providing support, the tendency is to call 911. send an ambulance, send them to the hospital. as soon as they are hospitalized, the placement does not want them back. it is the opportunity to incentivized working together in the wellness of individuals. it has had great successes. early learning, dental, and emergency. on day three it was identified a high population were going to the e.d. for dental care. you get a visit and charge.

they prescribed pain medications and refer you to a dentist. that population does not have a way to get to the dentist or the dentist is not available. they came back in for pain medication. we have high chemical dependency in this population. we probably made that worse. we identified that through data. we made same day dental access. stop giving them the band-aid and making it worse. let's get them into dental care the same day, provide the care they need, and solve the problem. those are the constant opportunities we keep finding of we are systems can work together to make huge improvements. pharmacy consoles have been deployed. we found in the top tier it was not uncommon to have 11 different providers and 7

different pharmacies in 12 months. providers were duplicating services and tests that had been run somewhere else because the payments system does not motivate them to go find out what happened. or the data and technology does not allow them to know the provider existed. we are looking to change that. our pharmacy consoles have been able to do outreach and medication management to bring costs down by 50%. medication delivery is another initiative. folks were not taking medication. with the low income population, the person was often not going to the pharmacy. we make sure they get the medication and understand how to take them so we can successfully deploy the resources. we're gradually working our way through the list to say where is the system failing, how do

we change it for this individual, how do we expand across the entire population where we find issues not working well together? those are some of the care initiatives we have. it is a small initiative of things moving as we learn more about what is broken in the system. typically health care plan and providers do not share information. we are taking our health plan and merging with providers. we're saying we do not want two nurse lines. duplication of costs. the health plan does not

necessarily need the information. the providers are the ones that need to act on it. bringing those together is huge. the same with disease management and outreach calls. there is a volume of information that often does not get to the provider. the provider is the one that can impact care. we're looking at continual of care lenghts, behavioral health care programs. they have improved lives and outcomes. the patient gets referred to another level of care, but there is not the linkage of having a system that works well between transitions. challenges to resolve. we have several challenges we're looking for solutions for. members lose benefits if we do not develop a system that let them state on benefits. what happens is they go to fill the prescription and are told they no longer have benefits and need to pay out a pocket. they cannot pay out of pocket.

this is a population of less than $700 a month. if they cannot pay for it, they stop medication and in the back in the emergency department. we have cycled back through the system again. we have got to find a way to keep folks engaged. you have heard all this talk about the power of having data. as we talk about bringing health care with public health and social services, one of the big fragmentations is our statutes do not support it. we have health care statutes that define what data can be shared. we have welfare statutes. we do not have statutes that clearly define how those worlds work together. that has been a real challenge for getting information into the right hands of the right time. informed consent is the ideal way to share information. there are folks jumping between crisis situations in dire situations where we need to be

able to quickly deploy resources to get them better care. we need to figure out how to do that in a cost-effective way. thank you. >> thank you, miss decubellis. we appreciate your presentation and the presentation and perspective of each of the speakers. now we would open it for questions. yes. >> thank you to everyone for their presentations. it was very informative. it gives us pause for thought on what we can do at the state level. dr. brenner, i was fascinated a the, you made that health care has not innovated. i was thinking about that in my own lifetime. in the last 50 years, it seems

like we have seen a lot of innovation with newt surgeries and procedures, transplanted organs, knee replacements. it has been remarkable. the advancement of drugs has given us a better quality of life and improve life in the surgery room with better outcomes and quicker recovery. it seems we have had significant innovation. in the united states, our health care is expensive. it looks like the quality is very good, particularly for problems that would be life threatening like cancer, heart problems. america is probably the best place in the world to have better outcomes for those diseases and problems. what do you mean by lack of

innovation in health care? if there is a lack of innovation, why? >> that is a wonderful question. thank you for picking up on a comment. >> we have seen incredible innovation. surgeries', medications. it would be as though we were apple and had invented an amazing iphone, but every time we did a redesign, it took 10 years to come out of the laboratory. what makes i.t. so innovative is just-in-time manufacturing. at the plant where they make the iphone, raw materials come into the plant almost the same day the product comes out the other end. there is very little product on the shelves.

every time they cycled through new version of the iphone, the just-in-time manufacturing system is finely attuned to make the product come out. that is a process for engineering. the cars that come off of assembly lines, anyone on the assembly line can hit the button and stop it if there is a flaw or error. as a result, it is not just the we have a new and different kind of car, but that the way we make the car has been reengineered. in health care, we do incredible things every day. but the sum total of all parts is often a failure. a 70-year-old patient was flagged because he was frequently going to emergency rooms and hospitals. our team went to see him. he drew up air and went to inject into his arm. he was sight-impaired and could not see what he was doing. it was a process failure. the medication in the bottle is brilliant.

we should be proud we are able to produce that. but there are so many failures built into what happened to the patient. many of us do not realize how broken is until we are sick or have a relative sick in a hospital bed and 20 different doctors come into the room every day. you slowly start to realize none of them are talking to one another and you know more about the care delivery process. we have incredible quality in

certain areas and abysmal quality and others. we think probably 100,000 people died a year in hospital from preventable errors. we do amazing things. we transplant their hearts and then throw them into the community. they are bewildered at home. they are lost. they called primary care offices. they get put on hold. they come in. i agree with what you are saying. the product is innovative. how the pieces of the system add up is often a failure. >> why is that? what is causing the stifling a better process. they find ways to do it or they do not survive. someone else comes along with a better product. what is it about medical processes that we are not finding innovative ways to streamline process commensurate with the products we are making? >> there is no financial incentive. if we get all parts to work together, you will close hospitals.

there is a wonderful example of this in a close health care system in which the insured owns the hospital and employs the doctors. they did a complete redesign of all the processes of care. for the average primary care office, they lower the number of patients. the average doctor has 2500 patients. that is why there are too many people in the waiting room. that is why when you call, it is busy. when you get in the room, you are waiting for an hour for the doctor to spend 10 minutes with you. they cut down a number of patients the average doctor has. they put nurses back in the office. they gave the doctor time to answer the phone. you could make a telephone appointment or e-mail the doctor to get things done. the reengineered care so every patient hospitalized got some tlc and special attention. they dropped emergency room and hospitals use by 30%. if we dropped the bed days for hospitals by 5%, you close the mall.

hospitals are in the same business as hotels. it is about occupancy rates. every hotel looks at the occupancy rates per day. they are good at building service lines and marketing those because of how we pay for health care in private insurance models and medicare and medicaid. it is by and large a volume- based model. you will put yourself out of business. there are wonderful examples of innovation being shut down because it reduced volume of service. >> from a hospital person, we see tremendous innovation in the area doctor brenner mentioned. the more volume you do, the more you get paid.

on the primary care side, it does not mean hiring mid-level practitioners to do other work to keep patients out of your hospital or clinic. your state has done a great job. it is one of the states with lower costs than iowa. we are second or third. your systems in the state have taken is to integrate care and financing so they assume risk. now they have an economic advantage to say we're going to try to keep our population healthy. that is a fundamental shift going on in health care. we're moving from fee-for- service or volume to value.

where iowa is going has led many in those directions working together across the continuing. >> i would echo that. you have heard me talk about provider groups where we are duplicating. fee-for-service incentivizes a practitioner to do more. it does not pay me if i go look at what david did three weeks ago for the same patient. we have got to turn the incentives around. we are saying we are in this together. if we can bring costs down and improve outcomes, we all gain. providers are starting to look at it differently.

it is not about me doing more. it is about doing less but better with what i am doing. if not giving extra radiation to a patient is better for them and i can look at the radiology he did, we can turn the system around. it is merging the payment system to match it. >> i would like to follow-up and ask a big picture issue. i understand what all of your saying and the manner in which you think we can reduce costs. are you suggesting the current system has more than sufficient funding, we just do not use the money efficiently? >> we spend twice as much as any of the industrialized country in cover far fewer people. i do not think the french are a dying industry.

i do not think the germans, swiss, canadians. i realize each system has good and bad points. ours does as well. we are a country that does not like to look around the world and take best practices from other places. i think that is a shame. there is enough money in the system now. the problem is any business that has done change management, sometimes you have to spend money up front to reengineer things to make money on the back end. we're going to make investments in people, resources, human capital. states have an incredible role to play. states at the leading edge are places where the government. states at the leading edge are places where the governor or others have banged their hands on the table and brought people together. >> we think there is enough money in the system if incentives are restructured. we're getting data and starting to realize how we are in effectively using the resources we have.

i think the answer is yes. we are close to being able to say, i am close to being able to say yes we are. >> it is not pulling the rug out from under providers. it is the diagram we shared where you need to gradually improve systems and release funding that can be used. if the gradual process happens, that is what will keep providers whole and not shut them out of business. if someone says tomorrow there's been a reform happening and we are changing it, systems will not be ready to switch. we will lose quality providers. i would take a cautious approach. i would take a cautious approach but agree.

>> thank you for an outstanding panel. each of you is so insightful and have proven your theory. you are doing it every day and it works. i was reminded as i was listening to this great panel. about 20 years ago, many big city mayors thought we would never get a handle on violent crime. it was going to go up. the costs were going to continue to go up. the arrests were going to continue to go up. then they applied comstat measuring performance where you have the opportunity to rest your most violent offenders. i have been following your work for many years. as my second health secretary will tell you, i bang my fists on the table often.

my wrist is near broken over this issue. i see you are doing it. we need a common platform that takes a system that is uncoordinated and disconnected. it makes it better coordinated and connected. the third thing you have to go through quickly was the notion of the patient dashboard, the ability for the patient to see that they are ordinance on the cost grid. i wondered if he might elaborate on that and the role a better- informed patient plays in helping us to reduce costs. i agree. i think there's plenty of money

in the system. it is not being deployed properly. >> you caught on to an opportunity we have with public health. we cannot solve health care issues. take the obesity issue. we cannot solve that in 10 or 20 minutes with a physician visit. it needs to be getting word out to the general public with individuals owning their own health care. we can employ folks to do behavior changes that will health. it is using all parts of the system. right now, public health often operates separate from social services and health care communities.

we're pulling together a strategy to say we need front end education. we need food resources available for them to make health the terraces. it is taking a system approached saying we have to bring all resources to the table to give patients the tools they need to make healthy choices. >> what is the dashboard? is that something i.t. or the internet allows you to do? is it on the iphone? what is the patient dashboard? >> it is a provider dashboard that bubbles up what people need to see to meet their specialization. there are models across the country where there is a patient dashboard where they can go in and see their own labs and recommendations. what is being encouraged is charting. there are a lot of tools individuals with computer access can be brought into.

working with the low income population, we're finding we need to get them into public libraries to have some of those tools. using cell phones, and deploying cell phones the remind people to take medications and remind them they have not sent in their health or blood pressure. because of the payment mechanisms, physicians are bringing individuals in to check blood pressure. that is a huge waste in the system. there are a lot of patients tools that can be deployed at low cost. >> we are running out of time. i want to give governor markell the chance to pass the last question. >> i agree. this is a terrific presentation. i want to drill into the issue

you were talking about. you said if we reduced by 5% the admission rates to hospitals, all the hospitals would go out of business. i think this is probably the most complicated public policy challenge we have. it is a total of reorientation of an entire industry. it is easier for me to understand how we can start to make providers whole by rewarding quality as opposed to paying on the fee-for-service model. can you explain how it works? i can sort of see how you do it with doctors and health care providers. given your analogy to hotels, how do we get there with institutions? >> states have an important role to play. we have inflated the largest economic level in the history

of mankind. health care is 18% of our economy. hospitals are a significant portion of that as are the high- tech specialty portion as well. we have done that through bonds. we have a mountain of debt underlying. the states have guaranteed a lot of that. the big short is to sell short hospital bonds because if you look at the cost of what is in this, half of the costs are hospitals and doctors. the bulk of the federal debt going forward is health care. it will be larger than the entire rest of spending in government.

it will be drawing a lot of money out of medicare and cutting payments and rearranging payments to doctors and hospitals. hospitals being the biggest chunk of that. we're looking at a cataclysmic change in an industry. it is just like other industries. the underpinnings of what was going on in the economic system changed rapidly. the other analogy is psychiatric hospitals. at one point, they were 1/3 of your state budgets. in the 1970's, we de- institutionalized that care. the question is whether we're going to build a system on the other side. health care is 18% of the economy. housing is about 11%. finance is about 7%.

think about what it will do to the model of urban redevelopment, the major employment gains we've had in health. it is being built on a mountain of debt. we have a problem. all over the country, hospitals are closing down. private equity is buying them up. that will be propped up by unnecessary occupancy through paying for medicare. when you have a capacity problem, states have an important role of the during out the transition model so we do not have massive unemployment and other problems. sequestration could be going off the cliff for a lot of hospitals. >> hospitals are rapidly becoming not just hospitals. doctors are rapidly becoming not

just doctors. you see the rapid development of the integrated system. doctors, hospitals, appears coming together to provide a better product. it is rapidly changing. i support that. i think it makes sense. right now, we have a foot in two boats. it is a delicate dance. my lense says they are ready for this conversation. the market is driving this conversation. government needs to educate and support for the development of that and reward those for doing the right thing. the reality is we have the system we designed. we pay on a fee-for-service basis. we get more volume. that is what we have.

now we have to pay for and reword those that create value, not just micromanage everything, but create a system that values the value created. >> i would like to provide an update on the activities and opportunities in the health division of the nga. it provides governors and staff with information, technical assistance, policy analysis, and periodic meetings facilitating. strange. the health division will focus on medicaid cost containment, health system transformation, prescription drug abuse prevention, workforce planning. i would like to turn it over to the executive director to highlight some of the planned activities and new initiatives from the center for best practices.

>> we are in the process of launching an initiative that ties to the presentations today. we want to invite you to tell us what else we can be doing to health you with costs in general. most of you have met christa. she is driving much of this agenda. she lets me speak for her occasionally. we currently have an initiative to get states together to compare notes and best practices on the abuse of prescription drugs. it is something important to virtually every state.

it is worse in some places than others. we will have six or seven states funded to do meetings for a year. it will run about $50,000 per state for your expenses. we will be putting on leadership retreats for systems transformations. we will have technical assistance teams going to states as well to work on child health care and how we limit preterm births. a very important piece for medicaid. it is directly applicable to medicaid but all kids as well. we will be having a meeting next week with 41 states registered with representatives to talk about the implications of the supreme court decision last week and what options you have. we will launch a new web site about labor day. i think it will be the first of several virtual centers of best practices. it will be aimed at health. it will have case studies from virtually every state. it will have listings of your scope of practice laws state-by- state. we are doing some things with the state of maryland on expanding dental services.

many of the medicaid kids are not getting sufficient and services. more to the point for today's presentation, steve lieberman taught me the bank robber's rule of health care. you may recall willie sutton said he robbed banks because that is where the money is. the rule here is why do you look at the expense of patients? that is where the money is. that is where the need is. the other side of that is 80% of the population does not need much health care in any given year.

focusing on expensive patients is an important piece of this. we sometimes bifurcate in ways that do not make sense. we worry about unusual use of resources. excessive use of hospitalization, nursing homes, or emergency rooms. we have only begun talking about how to give these people better health. it will require less health care services. it is how we take care of these people. it takes more than just a doctor or hospital. increasingly, we are understanding that behavior help is a very important part in order to reduce physical health costs. this is when the fee it states that integrates the physical and behavioral -- few stats that integrates physical and behavioral health. we have begun to solicit other foundations for health care

analysis that will be available for all governors. one of the first things we do is software that we can give you that can replicate what jeff has done. most of you have the data said to do it at least for medicaid patients. some of you already do it so it is not new. we will have the identification as part of this initiative. separately and equally as important, it is one thing to identify the patients and characterized them in different ways reject most of these to

have chronic disease. -- them in different ways, most of these do have chronic diseases. they're very much alive. you can do something about their health. just by identifying the high- cost patients, how do you treat them? there is no simple straight answer. we have some sense of holistic treatments. one of the things we will be doing is putting in place some of these facts are already out there. they have not been tested across states. we can begin to look. what can we do to directly affect its? and at one solution fits every state. a lot of health care is still lynn local in nature. we're going to try to set up tests that will allow us to

evaluate what would work. we understand that health care is a dominant issue for all of us. medicaid is not only driving par but state retirees and employees are costly. it is important that we address that say you can get back to the transportation as well as health care. we understand that. we are soliciting foundation funding and other things to help broaden and share what is going on. a gives you software and technical support to do analysis if you need it. we are available for all of that.

i really encourage you to tell us what we can do more in ways that can be useful to you, whether it is some aspect in your state or whether it is these more systemic kinds of activities. thank you for letting me tell you a little bit about what we're trying to do. tell us what else you do to be helpful. to correct our time has expired. i want to thank the audience and our panelists for your presentation. this is a huge issue that affects us all greatly. i think you gave us some really great insights. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]