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Contact: Monty Jones, (512) 499-4363 Date: October 7, 2003 |
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Speech by Chancellor Mark G. Yudof |
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Greater Autonomy for State Institutions: Implications for Higher Education, Academic Health Centers and the Public The Association of Academic Health Centers, Key Biscayne, Florida October 2, 2003
(Yudof was introduced by Dr. James Guckian, Acting Executive Vice Chancellor for Health Affairs at U.T. System)
Thank you, Jim.
I always try to be introduced by someone who works for me. It makes for such a pleasant start to the day.
To all members of the Association, let me say that I am deeply honored to receive the John R. Hogness Award.
I particularly want to thank Frank Cerra. We were a team at the University of Minnesota, and I am proud of what we and many colleagues accomplished together. We even wrestled with Governor Ventura on the issues!
It is a great pleasure to have this opportunity to share some thoughts with you about the administration of America's academic health centers. I have some definite opinions on this subject, but you are the experts, so perhaps you can tell me if my ideas make sense. As Jim Guckian always tells me, I am frequently wrong but never in doubt.
The title for my talk, as printed in your program, is "Greater Autonomy for State Institutions: Implications for Higher Education, Academic Health Centers, and the Public." By the end of my remarks, you may well be thinking that greater autonomy for academic health centers constitutes the impossible dream, for there is no sign that quality assurance programs, Medicaid regulations, the FDA, or HIPAA will vanish anytime soon. And, I daresay, in your less grumpy moods, everyone here would recognize the need for such government involvement - even if some of the rules and paperwork sometimes seem excessive.
Instead of the concept of autonomy, perhaps, we may find it more useful to explore some possibilities for limited deregulation, or at least a new approach to regulation. It's just hard to think about any large-scale deregulation of an activity such as medicine, in which every member of society has a vital stake. And when I say "vital," I mean that literally, of course.
In addition, some substantial degree of regulation seems inevitable in societies where there are large distributional inequities in health care, as well as high costs and heavy government subsidies. I will come back to these themes.
So please bear with me if I seem to have divided your question or answered obliquely. Remember, I am a Philadelphia lawyer.
Before I go further, however, I wish to make this observation: The institutions that you represent are renowned throughout the world for their leadership in education, medical science, and compassionate health care. I, and probably all of you as well, am somewhat biased, but I believe we are justified in being proud of what our institutions and their people are accomplishing on behalf of humankind. The American health education and health research enterprise is, undeniably, one of the great achievements of civilization, and people such as you are responsible.
Now, I wish we could stop right there, with hearty congratulations and vigorous handshakes all around, and go out and enjoy the beach. But we must continue.
On reflection, we must acknowledge, to paraphrase Dickens, that these are the best of times and the worst of times for the nation's academic health institutions.
Signs of "the best of times" are plentiful.
The 21st century appears to be, supremely, the era of medical science and biology. This is a time when the publication of biomedical studies in peer-reviewed journals is routinely treated as a media event, with journalists carefully parsing out the technical verbiage to highlight the discovery of genes associated with particular maladies or human behavior.
If physics, atomic bombs, and space exploration dominated the second half of the 20th century, they are now back-page news compared to efforts to find new drugs, create more accurate medical tests, and identify malfunctioning genes that may explain autism, schizophrenia, or the many types of cancer. For example, in the last few days there was sustained media coverage of a new drug for fighting colon cancer and a possible breath test for diagnosing lung and breast cancer.
Linguists such as Steven Pinker speak of genetic hard-wiring for language, explaining why learning new languages is so difficult for adults; Washington is funding projects linking brain physiology with reading levels in children, so that, we hope, no child need be left behind in school; gene therapies to cure inherited diseases are the subject of experimentation and even clinical trials; and the use of adult and embryonic stem cells to restore damaged tissues appears to hold great promise--even for victims of severe spinal injuries.
The phrase "translational research" is much in vogue (so much so that even the Institute of Medicine embraces it) to describe the need to translate basic science into clinical applications. A similar development is occurring in molecular and cellular biology, and techniques have been developed to intensify exploration of the diversity of the biosphere for natural substances that may prove, like quinine, to be efficacious in treating diseases. The National Institutes of Health recently adopted a road map that, among other things, emphasizes new pathways to discovery, interdisciplinary research, and the re-engineering of clinical research.
Perhaps the hype - or certainly the hope -- sometimes exceeds the actual rate of progress in medicine or underestimates the obstacles on the way to the New Jerusalem. And there are non-scientific interlopers, modern medical alchemists, and wild-eyed popularizers, who, each in their way, do a disservice to both medicine and the public. Sometimes it is difficult to tell the clones from the clowns.
But medical research is now the paradigmatic public good. Funding for the NIH grows substantially, to $28 billion annually, even as research funding for the physical sciences and engineering rises ever so gradually. And the emphasis on the scientific method and evidence-based treatment are now seen as a model for other disciplines, including teaching, psychology, and social work.
There are parallel strides on the clinical side, for the links between the lab and the bedside, however imperfect, are growing stronger. To name only a few, think about implanted medical devices such as cardiac pacemakers and defibrillators, joint replacements, microsurgery techniques, the transplantation of kidneys and livers, the advances in neonatology, and improvements in patient safety.
Or consider the broad advancements in drug therapy - from the cholesterol-lowering drugs called statins, to the new classes of antidepressants, to the range of drugs for treating diabetes and for shrinking tumors.
We adapt so quickly to all these marvels, that we easily tend to forget what medical care, and daily life, were like before them. Young people would find it hard to believe, for example, that a gall bladder operation once meant weeks of recuperation while the incision through the abdominal muscles healed. Well, most young people find a lot of things hard to believe, and most of them are fortunate enough to think they will never be really sick, but you know what I mean.
Despite the kind of advancements I have cited, all is not well in Gotham -- or in the suburbs or rural areas. I come now to the part about the "worst of times."
One of the most troubling of the phenomena in our time is the fundamental asymmetry in modern medicine between scientific and technological advances, on the one hand, and the structure for delivering health care and its methods of financing, on the other.
Many, perhaps even most, academic health centers have experienced the problems associated with this asymmetry:
Given this extraordinary environment, need I even mention the minor topics of medical liability litigation, non-economic damages, or the delivery of health care to special populations such as prisoners?
In the midst of all these problems, it should not be surprising that the advertising of clinical care operations to improve market position is pervasive. Like me, you probably receive lots of spam over the Internet, offering to enlarge various body parts or grow hair. Once venerable medical institutions lose tens of millions of dollars overnight; hospitals are sold to private, non-academic managers; bond ratings suffer; and faculty and staff are laid off. A medical school, once viewed as a "cash cow" for a university campus, has become a very hungry mouth to be fed.
Things are so bad that jokes are made about university presidents who pass away and are told on Judgment Day that their special form of Hell is to run a university with two medical schools.
In my case, I journeyed from one fine medical school at the University of Minnesota to six splendid medical institutions in The University of Texas System. Since I am a lawyer, you may say that I fully deserve such punishment, and I am not even dead yet.
What explains this stark asymmetry -- the seemingly intractable problems of financing health care delivery at the very institutions that are most responsible for the brilliance of American medical research and education?
In any era of seismic change, some find scapegoats. In the 18th century, the old crime of sabotage acquired a modern name when saboteurs threw their wooden shoes, their sabots, into the scapegoat of the new and threatening machinery of the Industrial Revolution. Similarly, many fingers are pointed as the number of family farms declines or as clothing and furniture manufacturing jumps to other nations.
But history tells us that the reasons for genuinely revolutionary changes are usually more systemic and complex. With regard to modern medicine, I believe that demography explains a great deal. The now-aging baby boom generation, the largest population surge in history, is continuing to work its priorities through the political system. Baby-boomers are, by definition, quite numerous, and they vote.
The demographic trends certainly have implications for health care, and there are other social and economic factors that exacerbate these trends. In this regard, permit me to make a few observations:
First, we are going to face new choices about the rationing of health care because expenditures for medical care in the last two years of life, and particularly the last few weeks of life, consume a tremendous portion of all medical expenditures. It was recently estimated that $16 billion is being spent annually on "end-stage renal disease" patient care alone.
The desire not to put a price on human life is understandable, but our society's resources may not be adequate to continue to provide traditional end-of-life medical services to the growing class of the elderly. Our children and grandchildren may not be able to avoid this unpleasant task - another reason to be nice to them.
Look at the costs of health care by age. In 1996, the national average expenditure on health care was $3,918 per capita. But the average was $5,864 among persons ages 65 to 69. The average was $9,414 among person ages 75 to 79, and $16,465 for persons ages 85 and older.
People are living longer, but they often suffer from treatable chronic diseases, occasioning more and more patient visits.
According to the Census Bureau, there were about 35 million Americans over the age of 65 in 2000. Projections are that the number will rise to 46 million by 2015 and 62 million by 2025.
Projections are notoriously slippery if you demand precision. But they are useful for identifying trends, and in this case the trends are unmistakable, and the implications are disturbing, to say the least.
Society generally seems in denial about this problem, perhaps because the allocation of scarce health care resources involves tragic choices, as made clear in the classic study by Guido Calabresi and Philip Bobbit.
We may choose to build skyscrapers and bridges, even though we know the inevitability of a small percentage of the construction workers being killed or seriously injured. But that is very different from declining to spend the money necessary to search for six identifiable people whose boat went down on the open sea. So, too, in medicine, impersonal decisions about nationwide resource allocations have consequences, but it is more difficult to deny a single suffering human being the drugs that he or she needs for survival.
We know, nevertheless, even if we and the wider public do not always want to acknowledge it, that health care is being rationed in countless ways under the current system. To cite one example: Only a few hundred patients are currently receiving a new home dialysis treatment although it is estimated that 150,000 patients could benefit. However, every discussion of a deliberate, planned national system of rationing or allocation, that would bring meaningful reform to the system that has evolved around us, seems politically doomed even before it begins.
What we are left with is an ad hoc (and often inconsistent) system of health care allocation at many institutions, and, at some, a localized effort to ration care, particularly in states, like Texas, with a large percentage of the population that is uninsured. Texas is certainly not proud to be Number 1 in the nation in uninsured residents - one in four - but reports in the news this week make it clear that this is a growing national problem. Almost 44 million Americans are in that badly listing boat, including almost one-third of all Hispanics, although doubtless some of these passengers are healthy young people betting on their invincibility or even immortality. Almost 30 percent of young adults are uninsured, some by choice, some because they are unemployed.
My second observation is that there has been a subtle shift away from providing healthcare at public expense to the poor and toward growing middle-class entitlements. (A similar shift has occurred in higher education services generally.)
We see a natural progression toward expansion of Medicare and provision of pharmaceutical benefits to the elderly, regardless of income. There is nothing wrong with this, but it is clear that the newly popular expenditures on behalf of the numerous middle class can swamp the needs of those who are less well off.
My third point is that, although the vast improvements in science and clinical care enhance the prospects for individual patients, innovative interventions are often the most costly forms of health medical care -- even for quite modest gains in treatment. The perfect is indeed the enemy of the good. Each innovation in medical science may tend to worsen the problem of financing health care.
This is somewhat akin to the revolution in agriculture that began in the 20th century. Enhanced crop production, through precision farming and plant genetics, is a good thing - if we can only distribute the food to those who need it. But gains in productivity, paradoxically, tend to make farmers less well off because they drive down prices. The difference between agriculture and medicine, of course, is that commodity prices decline while health care costs continue their march steeply upward.
Fourth, the cost of medical care and higher education are among the pricing trends that most aggravate consumers. These two enterprises have much in common: Both, for example, are highly labor-intensive and require the services of highly trained professionals. And, while the manufacture of shoes and shirts and even some software development may drift offshore for the cheaper labor, offshore emergency rooms, surgery, algebra classes, and residence halls do not provide an answer to the problems in medical care and higher education.
All the experts agree - and all of us non-experts concur - that the cost of clinical care is likely to continue to rise far above the weighted consumer price index. This will occur despite the utmost efforts of you and your colleagues to manage costs, and despite or perhaps because of the continued introduction of new technologies.
Part of the continuing rising costs will result from an out-dated structure for service delivery and the training of health professionals (from pharmacists, to nurses, to allied health practitioners). Would-be reformers know that the culture is enormously resistant to a redefining of professional roles in health care. This may seem strange coming from me. I live in the past so much that I still carry a comb.
My fifth observation is that often patient-care decisions are not driven by the classic economic model of cost-benefit analysis, but are more aptly described by modern behavioral economics. Experience tells us that the emotional content of an event may outweigh its statistical probability (for example, the fear of the recurrence of cancer), and that the investment in clinical care may be further distorted by phenomena such as halo effects (such as the view that personable docs are also great practitioners), anchoring effects (the tendency to take the middle road), and endowment effects (such as over-valuing what belongs to you). Drug advertising probably doesn't help. My friend Bill McGuire tells me that when patients request specific prescription drugs from their physicians, they have about a two-thirds probability of getting their way.
Political processes and media coverage also reflect a behavioral economics perspective and may distort health care delivery by giving lower-risk maladies more attention than the higher-risk conditions.
My sixth observation concerns price differentiation, which is highly unpopular among the public but is already a reality. For any financing model to be viable for medical care, some form of price differentiation, say by income level or type of payer, is going to be critically important. Some patients will pay more, so that others can pay a price they can afford.
We can understand why most people are highly resistant to the idea of different charges for the same services. This resistance is strengthened by more perfect information on pricing. Nevertheless, we already live with price differentiation in college tuition rates, in buyer-beware markets such as automobiles and housing, in various sliding-scale social services, and elsewhere. Frequent flyer and cell phone plans are obfuscated forms of price differentiation.
And the seventh point I want to make is this: Despite the woeful example of planned economies in post-War Eastern Europe, our government's response to rising costs in medical care has often been to regulate more closely, often increasing bureaucracy and hence prices, and to artificially set prices.
The pricing structure is also affected by the government's massive subsidies. Starting in the early 1990s, total national expenditures on Medicare exceeded total expenditures on higher education, and the gap continues to widen.
All tax-financed health expenditures -at all levels of government - represent approximately 60 percent of total national health spending.
Increased regulation may be an inevitable result of pursuing some highly worthy goals, such as guaranteeing patient privacy and quality assurance. It is also clear that medical research and clinical care are consummately public goods, so it is not unreasonable for the government to take a more active role in the distribution of such goods. The delivery of health care has to be treated differently from the distribution of SUVs or lawn-mowing services. To my knowledge, no nation leaves medical care entirely to the market.
Unfortunately, government regulation tends to grow like kudzu (kood - zoo), which, for those of you who don't live in the South, is a plant that was introduced in the United States from Japan in the 1870's. It was brought in as a decorative vine and has, shall we say, gotten out of hand. Like kudzu, the best government intentions can grow like crazy.
What we have to do is fight the excesses of government regulation, the unnecessary and duplicative requirements, the noxious weeds that threaten to overtake the Government Code.
In Texas, we have had some success with deregulation, but we have more to do. We have for example freed academic health centers and universities from statewide rules on the management of overtime. A pedestrian topic to some, but for institutions operating on the slimmest of margins and obligated to stay open 24/7/365, as they say, this has been an important step forward.
One of the key questions behind excessive regulation is this: For institutions that draw a relatively small part of their resources from state funding, what degree of state control can reasonably be expected? Some of our institutions in Texas receive as little as 8 percent of their funding from the state legislature. Remember Yudof's Law: The lower the legislative appropriation, the greater the legislative oversight. Instead, maybe we should apply a sliding scale on regulation.
On the other hand, the question of the proper level of regulation is further complicated by the fact that academic health centers serve a 100 percent public mission, regardless of how much of their funding the public supplies.
The only sensible way forward would seem to be a system of carefully drawn regulation that serves to protect fundamental public interests, while also allowing institutions to operate in a financially viable manner that supports, rather than frustrates, their important public mission. We ought to at least move in that direction.
I am sure you could supplement my observations with those of your own, based on your day-to-day work on the front lines of your institutions.
As a society, we continue to search for the proper balance between values in the delivery of health care services, the proper economic and ethical models, and the proper distribution of rights and entitlements.
Someone has, without doubt, moved your cheese, and looking for it in the same old places will be of no avail. I am convinced that the present structure of financing medical care is not sustainable.
Everyone here knows that there are no easy solutions - a lesson that may not yet have been learned by everyone in society. So it is our duty to dedicate ourselves to helping put together the inevitably complex solutions that are needed in a complex world, while being on guard against the illusory quick fixes of others.
Add this challenge to the tasks of educating tomorrow's health professionals, expanding the frontiers of science, and bringing comfort to those in pain. The solution to the problem of financing health care delivery underlies our ability to continue to succeed on all these fronts. |
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Background Materials |
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Health center association recognizes Yudof for public service - October 7, 2003 (news release) |
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The University of Texas System Office of Public
Affairs || 210 West 6th Street, Suite 2.100
Austin, Texas 78701 || p: (512) 499-4363 || f: (512) 499-4358 || email: adebruyn@utsystem.edu |
