The Minnesota Way

January 19, 2009

Authors: Tim Pawlenty

Tim Pawlenty

Commentary on The Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey on Priorities for the Obama Administration by Tim Pawlenty, Governor of Minnesota

Our country faces a time of unprecedented challenges. In Minnesota, as in many states, the economic crisis means that difficult decisions confront us as we grapple with an imminent, extensive budget shortfall. But, this is also a time of great opportunity. As we weather this storm, we can improve the efficiency of our government and our systems so that we emerge stronger as a nation, and as individuals.

Nowhere is the need for improvement more evident—or more essential—than in our health care system. Spiraling health care costs must be contained, even as we strive to improve the quality of care and improve the health of our populations.

This time of crisis is precisely the moment to champion significant reforms. As the Obama administration sets its priorities for health care reform, it must address the challenge in a nonpartisan, comprehensive manner. In the long run, it will not work to simply pull more people into a broken system. We must fundamentally transform our health care system in order to make it sustainable.

Three core principles to accomplish this are the restructuring of the payment system to better align provider incentives and improve health care value, the modernization of the health care system to create more efficiency through the use of effective technologies, and the investment in public health to promote healthy behaviors among individuals and prevent future avoidable chronic health conditions.

As health reform is discussed in the coming months, Washington can look to states for innovation in these areas, and Minnesota sets an example. In May 2008, I signed into law a nation-leading, health-reform bill built on those same three principles. Although Minnesota has one of the nation's healthiest populations and a historically strong and inclusive health insurance system—both through employers and public programs—we are not immune to the current health care system's uneven quality and out-of-control costs.

Between 2000 and 2006, health care spending in Minnesota increased more than 60 percent, from $19 billion to more than $30 billion. Our 2008 health-reform law puts us on the path to achieving significant transformations that ultimately will save the system money (an estimated $7 billion by 2015) and will also improve health care quality and Minnesotans' health.

The current system of health care payment is based on volume rather than value. In today's system, the more you do as a provider, the more you make. Our payment system lacks incentives to improve care quality and actually penalizes providers for keeping people healthy. We need a system that will reward providers for keeping people healthy, instead of only encouraging them to treat the sick. To heal our ailing system, we need to fundamentally reform the way we pay for health care.

Our 2008 law represents a crucial first step in this payment reform. It increases the transparency of quality by establishing a single comprehensive set of provider quality measures and establishes a statewide system of quality-based incentive payments to be used by public and private health care purchasers. It addresses the uneven quality of care from provider to provider by allowing consumers and health care purchasers to compare providers on overall cost and quality.

It also establishes uniformly defined "bundled" health care services that provide an opportunity for providers to innovate on new care-delivery models while holding them accountable for the outcomes they achieve. It creates "health care homes" that focus on patient-centered health care experiences with payments for care coordination.

While every other industry has taken advantage of the promise that information technology holds to improve business, health care has lagged a generation behind. In health care, technology not only makes the business side more efficient, but also it improves the quality of care delivered and prevents avoidable medical errors.

Through Minnesota's e-Health Initiative, we have taken bold steps to accelerate the adoption of health IT. We are requiring that all health care providers have electronic health records by 2015 and that those records be certified as "interoperable."

Our 2008 legislation also includes the requirement that all health care providers and payers use an electronic prescribing system by 2011 in order to improve patient safety and the efficiency of our health care system. I have also announced a goal that all Minnesotans have the option of an online personal-health portfolio by 2011, and that all state employees have this choice by the end of 2009.

We are also striving to use technology for routine administrative transactions. Minnesota is the first state in the nation to require all health care providers and group purchasers to exchange common health care business transactions electronically by the end of 2009. This simple requirement will reduce health care administrative costs by more than $60 million a year.

One of the best ways to contain health care costs is to keep people healthy. The health care costs attributable to obesity and smoking are high—and growing—both in Minnesota and across the country. If we truly want to control costs, we must stop adding more people with preventable chronic disease to the health care system. That is why our 2008 reforms included a critical investment in public health.

While these efforts may be scaled back because of the economic crisis, we will still have millions of dollars for 2010 and 2011 to fund a Statewide Health Improvement Program to reduce the percentage of Minnesotans who are obese or overweight and to decrease tobacco use.

The goals of our reforms are simply stated: to improve the health of all Minnesotans, to improve the patient experience and to improve the affordability of health care. To get there, we are calling for and expecting an unprecedented level of collaboration between the public and private sectors in Minnesota to accomplish marketwide reforms, and this is a model the Obama administration can emulate.

The public and private sectors must work together to move health reform forward, and the federal government should encourage and support the kind of innovation that will allow us to accomplish our common goals. In addition, the federal and state governments must collaborate. For example, Medicare can gain by being a part of regional or state innovations, like ours, and work with states to align payment incentives across the market. Minnesota stands ready to offer our leadership, our learning and our collaboration.

The views presented in this commentary are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.

Citation

T. Pawlenty, The Minnesota Way, Modern Healthcare and The Commonwealth Fund, January 2009.