Newt on Healthcare Contracting

Among Gingrich’s healthcare contracting ideals are a pro-technology and patient-centric approach.

Ten years ago, then-Georgia Congressman Newt Gingrich crafted a document called the “Contract with America,” calling for tax cuts, a balanced budget, increased defense spending, welfare reform and other changes. Today, the former Speaker of the House maintains his own brand of activism, devoting much of his time and attention to the issue of healthcare.

He is the founder of the Center for Health Transformation (, a group of private- and public-sector individuals working to identify existing programs, which, if implemented on a wider scale, could provide better outcomes at lower costs. Last year, Gingrich authored “Saving Lives and Saving Money.” In it, he describes what he refers to as a Twenty-first Century System of Health and Healthcare, in which the individual is at the center of care, better outcomes are achieved at lesser costs, and doctors and hospitals use technology to guide their decision-making.

In October 2004, Gingrich and former Nebraska Democratic Sen. Bob Kerrey were asked by the National Quality Forum – a nonprofit group comprising public and private health organizations, and drug firms – to co-chair the National Commission for Quality Long Term Care, which is purposed to improve the quality of long-term care and to find ways to finance such care for a growing population of aging baby boomers.

Always opinionated, Gingrich believes that decision-making authority for healthcare must be returned to the individual. He says well-informed consumers make better – and, ultimately, less expensive – choices than third-party payers about their healthcare.

Gingrich is a big supporter of Medicare drug benefits. He believes that the federal government should pay for pharmaceuticals that can keep people healthy and productive. Better that, he says, than waiting for a catastrophic event to occur that will render a person acutely ill and unable to work.

Finally, Gingrich advocates health savings accounts, which would allow individuals to accumulate money tax-free to pay for qualified medical expenses and long-term care insurance. These accounts would give consumers more control over their healthcare and introduce a competitive dynamic that could help bring costs down and quality up. He says health savings accounts would provide people direct incentives to practice healthy lifestyles. What’s more, they would take healthcare payment decisions out of the hands of third-party payers. And Gingrich says that’s good, because individuals who control their own health dollars are wise purchasers of healthcare.

Cut and dry
JHC asked the former member of the U.S. House of Representa-tives (1978 to 1999) and Speaker of the House (1995 to 1999) some straightforward questions about his healthcare ideals. Following is what Gingrich had to say.

The Journal of Healthcare Contracting: If you were really, really sick, where would you want to be treated?

Newt Gingrich: It would depend on the sickness. I would want to consult a number of places, and select the “best of breed,” that is, the facility with the best outcomes. A firm called HealthShare (Acton, Mass.) puts Medicare outcomes data through an expert system. You can see which hospitals offer the best outcomes. Sometimes those that do are less expensive than those that provide poor care.

The second thing I’d look for is whether the hospital operates an electronic ICU, in which the patient is monitored 24 hours a day by an ICU doctor or nurse. Several healthcare systems have this, including Sutter Health, Sentara and Columbia-Presbyterian. They’re saving more than one life per bed, per year, and they’re getting people out of the ICU almost a full day earlier than others. It’s about avoiding mistakes and instituting better practices.

If you have a very difficult health problem that involves specialists, the difference between the best provider in the world and an average provider can easily be life and death. Frequency is the most important characteristic. If your doctor only does five of a certain procedure a year, don’t allow him to perform it on you.

Another point I’d make – and the Institute of Medicine has written about this – is that a person is 2,000 times more likely to die in a hospital from a mistake than in a civilian airline crash.

And finally, if you have a choice of hospitals in which to receive treatment, go to one that is integrated electronically, such as Mayo Clinic. I have a very simple principle: Paper kills.

JHC: In the ideal U.S. healthcare system, describe the responsibilities of the federal government, state governments and the individual in terms of financing and delivering high-quality care. How does that vision differ from today’s reality?

Gingrich: I’m a Theodore Roosevelt Republican. The government has a strong regulatory interest in public health. In fact, the government has under-performed in this area. We don’t have the same kind of regulatory strength in healthcare as we do in aviation and pharmaceuticals. I’d like to see a stronger government role in setting minimum standards.

Second, the government has to play a role in setting the rules of the game. [Some time ago], automakers were required to publicly post how much their cars cost. As a result, in 1999, 14 percent of car shoppers went online to check out prices before buying a car, and they saved on average 2 percent by doing so. By last year, 64 percent of the country went online to check out car prices. So I start from this premise: We should give the public a system of knowledge, so they can go online and learn about healthcare costs and quality before making a decision about where to be treated and by whom. One of our projects – the Right to Know Project – would ensure that this happens.

Of course, this kind of information is useless unless a person uses it. If I gain 25 pounds eating French fries, that’s not McDonald’s fault. McDonald’s didn’t make me order the supersized fries. That was my decision. If you’re a diabetic, you can lead an amazingly full life, but you have to be the managing partner in your healthcare, with the help of your doctors and nurses. Now, things are different for children, and that’s why I advocate serving healthy foods at schools.

I think we should bite the bullet and accept the fact that we want income transfer to ensure that every person has access to a health savings account. In his acceptance speech at the Republican Convention in New York, the President proposed that the federal government transfer several thousand dollars per family to the working poor and to small businesses, so that every working person can buy health insurance.

We should allow interstate purchasing of health insurance, so everyone has access to a marketplace of choices. Our goal should be 100 percent coverage by health insurance. Candidly, for people over a certain income level, we have to mandate this. Half of the increase of the uninsured population is due to people with incomes of more than $50,000. They’re calculating that they won’t get sick, and that if they do, they won’t pay the bill. That’s plain wrong.

Humana has it right. If the consumer needs a certain kind of drug, they cover it. Yes, they have incentives for choosing the least expensive one. But they believe that taking properly prescribed pharmaceuticals keeps people out of the hospital. Medium- and small-sized companies with health reimbursement accounts and health savings accounts are averaging a 44 percent reduction in premiums. A smart employer would take that savings and give it to employees as a tax-free savings account, which they could use to take care of themselves.

One factory we know of signed a contract with its employees that said the employer would waive diabetics’ co-pay for drugs. As a result, 94 percent of their people fell into compliance. That employer was calculating that it would save more money avoiding emergency room visits than it would lose by waiving the co-pay.

JHC: One of the programs cited by the Center for Health Transformation is SilverSneakers in Tempe, Ariz., which encourages older adults to increase their levels of physical activity. Why did you cite this program?

Gingrich: We have to think of our health as having physical, mental and spiritual components. One of the great things about SilverSneakers is that it achieved a 63 percent reduction in depression among women. Why? Because when they’re isolated and alone, older people get depressed. We’re social animals. SilverSneakers brings them together three times a week. People are exercising and being social. So their mental and spiritual well-being is higher. And it turns out that if you’re happier, if you’re interacting with other people and your energy level is up, you’re healthier. What I’m trying to do is re-integrate the complete human into a health-oriented program. We’re putting together a diabetes coalition aimed at the same concept.

We visited Nestle in Switzerland, the largest food company in the world. They were showing us the research they are doing on nutrition. When we spoke with them, we talked about a patient-centered healthcare system. But they corrected us and said that what we want instead is an individual-centered system. Healthcare rests on three things, they said: activity, attitude and nutrition. If you have those three things in place, people generally won’t become patients until much later in life.

We need an entirely new approach to the way we compensate healthcare providers. If I want to minimize hospitalization, how will I compensate everybody? There is a project in Americus, Ga., in which doctors get paid to give information prescriptions. Diabetics, for example, are sent to online services such as MEDLINE (a National Library of Medicine database) to learn more about diabetes.

The point is how do you build a system in which you compensate providers for answering e-mails and managing relationships with people before they become patients?

Last year, Novo Nordisk funded a program on diabetes and obesity. One part of the program was a focus group with a number of obese women. We walked through the problems of obesity and the risks of contracting diabetes. At the end of the two-hour session, the women pointed out that the information was wonderful and that they would pass it on to people they knew who needed to hear it. At some risk, the moderator asked them, “What about you?” They said, “This can’t apply to us because, if it did, our doctors would have said something.” Doctors have an obligation to tell their patients – regardless of the reason for the visit – all about their weight status and the risks they face by being overweight. But we don’t finance that.

JHC: In the introduction to your book, “Saving Lives & Saving Money,” why do you say that managed care companies never really managed care but, rather, they managed costs? What is the future of managed care in this country?

Gingrich: With rare exceptions, no company I know of has enough information to truly be a managed care company. That said, Kaiser Permanente does approach this quite systematically. They have an integrated health information system, which I believe is the model for the future.

Every individual in America should be part of an integrated information system, including an electronic health record that is routinely scanned by an expert system. We’re experiencing an explosion of biological knowledge. We know that specific genes can be precursors to health problems. If we can match an individual’s DNA profile with these genes, we can catch medical conditions sooner. If we know that an individual is susceptible to a particular condition, we can recommend that he or she eat particular foods.

If you asked Americans if they would like to be coached in how to live the longest life possible, they would say yes. [Japanese people] live healthy, active lives, an average 10 to 12 years longer than Americans. It’s almost entirely a function of activity, attitude and nutrition. My argument is this: I am all for this country getting actively coached on health issues.

Ironically, some of the laws that Congress has passed – such as the Stark Amendments and the Medicare anti-kickback statute – have inhibited the growth of electronic information systems. Doctors don’t have the capital to invest in them. So we’ve under-invested in doctors for reasons that now appear to be anti-technology and just plain wrong. JHC: What’s your opinion on the Medical Device Cooperation Act of 2004, which calls for the Department of Health and Human Services to oversee the activities of group purchasing organizations?

Gingrich: If hospitals can get access to pricing information, they will be able to choose the least expensive option. I’m a big fan of Wal-Mart. They do three things: They know what the customer wants, they have the lowest possible costs, and they have the most efficient internal systems.

Part of what’s wrong with our healthcare system is that knowledge is so fragmented and kept so close by so many players. You don’t have an honest market. I’ve said to the drug companies, “You’ve been in a seller’s market for 30 years. Now you have two choices: You can go to a regulator’s market or a buyer’s market. But you won’t stay in a seller’s market.” The same thing applies to pharmacy benefit managers.

My point is there should be an open market where hospitals can go to find 12 different prices. Vendors don’t get lifetime contracts with Wal-Mart. As a result, costs are driven down.

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