Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Health CEOs Call for $500 Billion in Cost Savings in Medicare

By Jane Norman, CQ HealthBeat Associate Editor

June 12, 2009 -- As Congress debates how to rein in cost and at the same time improve quality in the nation's health care system, top executives from nine health provider organizations Friday endorsed a set of ideas tied to coordinated care for patients that they predicted could save the Medicare system some $500 to $600 billion in 10 years.

"We will not control health care costs until we create clear incentives for providers — the people who deliver care — to focus on quality and efficiency," the CEOs, many of them from the West Coast, said in a report produced by the non-profit New America Foundation.

At a forum organized by the foundation, the CEOs said that the traditional fee-for-service Medicare system is unsustainable and that providers should be held accountable by Medicare for reasonable cost and quality standards by a specified date. Because Medicare drives so much of what goes on in the rest of the health system, change should start there and in Medicaid to the degree possible in that program, they said.

They also declared that Medicare should begin the transition toward bundled payment models, encourage accountable organizations that accept full responsibility for high-quality patient care and efficient performance, make payments contingent on compliance with strict quality standards and eliminate the Sustainable Growth Rate (SGR) for determining physician payments. The SGR is a mechanism devised by Congress in 1997 to keep a lid on the growth of such payments in comparison with the growth of the economy overall.

The CEOs did not specify how much each of their recommendations would save Medicare, but they said they "firmly believe" that up to 30 percent of the $2.4 trillion now spent on health care is the result of too few efforts to coordinate care and not enough attention to quality.

They also said that in the broader context of the health overhaul, they support health exchanges or new marketplaces for purchase of health insurance, reforms that end discrimination based on age, sex or health status; subsidies financed through "broadly shared responsibility" to ensure affordable coverage; and a mandate that individuals be covered by insurance.

"We really are here to try to create space for a bipartisan conversation about health reform," said Len Nichols, director of the centrist foundation's health policy efforts and a health official with the Office of Management and Budget during the Clinton administration.
Nancy-Ann DeParle, the White House director of health reform, spoke briefly at the event and praised the health CEOs for coming together to make the recommendations, calling them a "very serious group of people who actually serve patients," manage budgets and work with insurance companies and the government. "We embrace a lot of the ideas you have here," she said, including elimination of the SGR. "You're the leaders in your sector," she said.

The CEOs are Patricia A. Gabow, CEO and medical director of Denver Health; Scott Armstrong, president and CEO of Group Health Cooperative in Seattle; Nicholas Wolter, CEO of the Billings Clinic in Billings, Mont.; Anthony R. Tersigni, president and CEO of Ascension Health in St. Louis; Gary Kaplan, chairman and CEO of Virginia Mason Medical Center in Seattle; Lloyd Dean, president and CEO of Catholic Healthcare West; Kenneth C. Frazier, president for Global Human Health at Merck & Co. Inc.; Bruce Bodaken, chairman and CEO of Blue Shield of California; and Donna Katen-Bahensky, president and chief executive officer of the University of Wisconsin Hospital and Clinics.

Armstrong said Group Health Cooperative is a nonprofit health care system that coordinates care and coverage, with 610,000 people enrolled in a broad portfolio of health plans. It is the largest integrated group practice in the Pacific Northwest, with 950 physicians caring for patients through medical centers spanning Washington and Idaho.

Cooperative health arrangements are under study as a possible component of the health care overhaul proposal to be written by the Senate Finance Committee, at the suggestion of Sen. Kent Conrad, D-N.D., and as a way of deflecting criticism over a government-sponsored plan.

As an example of the way Group Health provides coordinated care, Armstrong said the cooperative decided eight years ago to invest in medical technology that tracks patient care. Every provider, including pharmacists and nurses, has "up to the minute" access on patient records on clinical care, any time day or night, he said. "Every one of our patients can get access to that clinical information from literally any computer in the world," he added. "They can look at their lab results. They can schedule an appointment with their doctor. They can e-mail their physician and expect a reply the next morning."

Publication Details