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2nd Annual National Accountable Care Organization Summit

Remarks as prepared for delivery by Secretary Sebelius on June 27th, 2011, Washington, DC.

Thank you, Mark, for that kind introduction.  Few people have done as much to improve America’s health and health care as Mark has over the last decade.  Every day, we build on the foundation he left at CMS.  And I’m especially grateful to Mark and Brookings for their work on Accountable Care Organizations – a concept they helped invent and have done as much as anyone to develop and promote.

I also want to thank everyone who’s here today, especially the hospital and physician leaders.  Having all of you here in this room is a powerful sign of how committed America’s health care providers are to improving care.

Finally, I want to acknowledge all those from the Health IT conference next door who are here for the opening session.  It’s fitting that we’re here together this morning because electronic health records can play a key role in almost everything Accountable Care Organizations hope to accomplish, from measuring and improving quality to helping providers work together more effectively.

We’re gathered this morning at a time when two trends are converging.  On the one hand, there is new urgency about rising health care costs.

It’s coming from working families who have had to give up raises in order to avoid health insurance cuts.  It’s coming from small businesses that have had to choose between offering health coverage to their current employees and adding new ones.  It’s coming from states where rising costs in Medicaid are crowding out investments in better schools and new roads.  And it’s coming from Medicare where the program’s trustees recently found that, even with Affordable Care Act reforms that added eight years to the life of the trust fund, it is still on pace to become insolvent in 2024.

At the same time, we have a growing understanding of how to bring down costs by improving care.  A recent study found that as many as one in three hospital patients are harmed by their care.  But I’ve visited innovative hospitals across the country that are showing that much better results are possible.  At Seton Medical System in Austin, they told me how they had reduced emergency room visits by a third and hospital stays by two thirds for a group of patients with asthma by providing better preventive care.  At Henry Ford Health System in Detroit, they told me how they had cut major categories of harms by 25 percent by improving communication between providers.  I’ve seen similar results everywhere from Norfolk to Denver to San Francisco.

Improving care is clearly the best approach to addressing rising costs – especially compared to recent proposals that would simply cut Medicare and Medicaid, without doing anything to address underlying growth in health care spending.  But it’s also clear that we are not improving fast enough.  So our challenge is to speed it up.

To do that, we need to change one of the unique facts about health care, which is that it’s a field in which innovators are actually punished financially.  In a system where empty beds don’t generate revenue, a hospital that provides excellent follow-up care to keep a patient from being readmitted may actually lose money.  In a system that primarily rewards procedures, there’s little reward for a physician practice that invests its time in helping its patients manage their diabetes.  This doesn’t make sense, and that’s where the Affordable Care Act comes in

This is a law that has three simple goals: better care, better health, and lower costs.  It achieves these goals in a variety of ways from strengthening our health insurance market to investing in prevention.  But it also contains more than 80 tools to help providers reinvent health care to make it more effective and affordable.  One of those exciting tools is Accountable Care Organizations.

The idea behind these organizations is very powerful.  By giving hospitals and physician’s groups a share of the savings when they reduce costs by improving care, we can start to reward innovation just like other fields do.  All of a sudden, there is a clear financial incentive to prioritize primary care and prevention.  Innovative programs for providing follow-up care to discharged patients and helping people manage their chronic conditions are no longer money-losing luxuries.  Patients can feel like they have active partners in getting and staying healthy, while still being able to see any doctor they choose.

Many of you know this already.  But I repeat it now because I hope that as you have your discussions today, you will keep in mind both of the powerful urgency behind change and the enormous possibilities of a health care system in which payers, doctors, and patients all benefit when health improves.

As you know, our department issued proposed rules to guide the creation of Accountable Care Organizations at the end of March.  These rules were carefully written by our staff, led by Dr. Don Berwick who many of you know as our nation’s leading expert on health care improvement.  He is the right leader in the right place at the right time, and in writing these proposed rules, he and his team carefully weighed the interests of hospitals, doctors, patients, and other stakeholders – but the emphasis here is on the word “proposed.”  These rules were a first draft, and even as we were writing them, we were looking forward to receiving comments that we knew would make these rules even stronger.

Altogether, we received more than 1,200 comments on everything from… (read complete speech here).

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