Summary1

OVERVIEW OF THE NATION’S HEALTH CHALLENGES

The U.S. Department of Health and Human Services (HHS), the largest department in the federal government in terms of budget, spends approximately $2 billion a day. The department’s activities touch the lives of virtually all Americans—financing health care for elderly, disabled, and indigent individuals; protecting against domestic and global health threats; ensuring the safety of food and medications; advancing the science of fighting disease; and improving health care for everyone.

The department faces many serious and complex challenges:

  • Health costs are rising, and a large number of Americans are uninsured and underinsured.

  • Medicare is financially unsustainable and unprepared to meet the high costs that will result when tens of millions of baby boomers attain eligibility.

  • The U.S. model of health care delivery does not ensure the efficient and effective prevention and management of chronic diseases, nor does it consistently apply principles of evidence-based medicine.

  • The possibility of global pandemics, emerging infections, and bioterrorism threatens to harm many Americans and to strain limited resources further.

1

This summary does not include references. Citations for the findings presented in the summary appear in the subsequent chapters.



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Summary 1 OVERVIEW OF THE NATION’S HEALTH CHALLENGES The U.S. Department of Health and Human Services (HHS), the largest department in the federal government in terms of budget, spends approximately $2 billion a day. The department’s activities touch the lives of virtually all Americans—financing health care for elderly, dis- abled, and indigent individuals; protecting against domestic and global health threats; ensuring the safety of food and medications; advancing the science of fighting disease; and improving health care for everyone. The department faces many serious and complex challenges: • Health costs are rising, and a large number of Americans are un- insured and underinsured. • Medicare is financially unsustainable and unprepared to meet the high costs that will result when tens of millions of baby boomers attain eligibility. • The U.S. model of health care delivery does not ensure the effi- cient and effective prevention and management of chronic dis- eases, nor does it consistently apply principles of evidence-based medicine. • The possibility of global pandemics, emerging infections, and bioterrorism threatens to harm many Americans and to strain limited resources further. 1 This summary does not include references. Citations for the findings presented in the summary appear in the subsequent chapters. 1

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2 HHS IN THE 21ST CENTURY • The public health infrastructure is weak and, in many locales, hard-pressed to meet current demands, much less those of the fu- ture. • The United States trails many other countries in achieving de- sired health outcomes and longevity, despite having the world’s highest level of per capita health care spending. Unfortunately, HHS is not a high-performance organization, oriented to change and steady improvement. Over the years, change at HHS has been driven by the piecemeal accretion of programs legislatively man- dated by various congressional committees, frequently without commen- surate resources or regard for the department’s capacity to manage them. One result is a department that is not optimally designed to meet the na- tion’s current and future health challenges. COMMITTEE CHARGE The department’s current structure, operations, and culture must be viewed against the backdrop of today’s environment and the needs of the future. It is in this context that Representatives Henry A. Waxman and Tom Davis, the chair and ranking minority member, respectively, of the U.S. House of Representatives Committee on Oversight and Government Reform in the 110th Congress, asked the Institute of Medicine (IOM) to assess whether HHS is “ideally organized” to meet the enduring and emerging health challenges facing our nation. Box S-1 describes the statement of task with which the committee was charged. BOX S-1 Statement of Task To respond to Representatives Waxman’s and Davis’s request for a study of the organizational challenges facing HHS and a set of recommendations to ad- dress them, the IOM framed the following statement of task for the Committee on Improving the Organization of the U.S. Department of Health and Human Ser- vices (HHS) to Advance the Health of Our Population: ● What are the unifying elements of the mission of the department? What are the missions of its constituent agencies, and how do their activities relate to the public health, health care quality, and health care cost challenges facing the United States?

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3 SUMMARY ● Are the activities of its individual agencies aligned to optimally support the overall health mission of HHS? Should the operations of individual agencies be changed, consolidated, or realigned to make them collectively more effec- tive in advancing the health of the nation? ● How can the governance of HHS be best organized to support and manage its responsibilities, function, and mission? How could the focus of individual agencies be improved to enhance their accountability and efficiency? ● How can relevant data be collected, integrated, and shared within and out- side HHS in a way that is available, transparent, and useful for government and public decision making? Assumptions and Approach The 15-member IOM committee—all of whose members had either direct management experience in the department or significant expertise in relevant areas—used multiple resources to better understand the inter- nal operational challenges that impede the department’s efficiency and effectiveness. The members received a summary of interviews with the secretaries who led the department during the six most recent presidential transitions, an analysis of key statutory requirements for the department, relevant management literature, and reports on HHS’s recent perform- ance. HHS has a staggering range of responsibilities. Addressing them is hampered by the diversity of its agencies’ missions and goals, little dis- cretionary funding, workforce shortages (and impending retirement of expert staff), fragmentation of responsibility for health issues across con- gressional committees, varying stakeholder priorities—including those of Congress and the White House—and difficulty in partnering effectively with states and the private sector. Such challenges partially explain the lack of progress in achieving the nation’s health goals, enumerated in the best-known of several sets of departmental aims, the Healthy People 2010 objectives. The most critical conclusion that the committee came to (especially in light of the representatives’ request that recommendations consider a shorter time frame and require minimal resources) was that large-scale reorganization of the entire department was not the best way to support key decision makers at HHS. The committee decided not to take the path of “moving around the boxes” for several reasons:

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4 HHS IN THE 21ST CENTURY • There is no obvious or single way to restructure such a huge, complex organization. • The time and energy required to make major changes would not only create distraction and paralysis, but also risks obsolescence owing to the rapidly changing environment and the possibility of health reform. • Different secretaries and Presidents have different management styles, making specific organizational structures more or less ap- propriate over time. • Management literature indicates that structure is only one ele- ment of successful organizational and managerial improvement, and that other elements such as strategy, systems, staff, skills, style, and shared values are also essential. HHS AS A CHANGE AGENT FOR IMPROVING THE NATION’S HEALTH Instead of wholesale reorganization, the committee made the follow- ing five interrelated recommendations for transforming the department into a powerful change agent, one that would create more value for the American people. The overarching themes of these recommendations are below. Many will require White House agreement and congressional support or action (see Appendix E), and all will require the secretary’s commitment and active engagement: • Define a twenty-first century vision. To meet twenty-first cen- tury challenges to America’s health, the secretary of HHS should clearly articulate and actively promote a vision for the nation’s health, ensure that the department’s mission supports that vision, and establish a small number of measurable goals focused on critical challenges (Recommendation 1). • Foster adaptability and alignment. To improve the public’s health and achieve the department’s goals, the secretary should align and focus the department on performance and encourage creative use of scientifically based approaches to meet new and enduring challenges (Recommendation 2). • Increase effectiveness and efficiency of the U.S. health care system. The secretary should accelerate the establishment of a

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5 SUMMARY collaborative, robust system for evaluating the health care sys- tem that would incorporate existing department and external re- search, stimulate new studies as needed, synthesize findings, and provide actionable feedback for policy makers, purchasers, pay- ers, providers, health care professionals, and the public (Rec- ommendation 3). • Strengthen the HHS and U.S. public health and health care workforces. The secretary should place a high priority on devel- oping a strategy and tools for workforce improvement within (1) HHS, (2) the public health and health care professions nation- wide, and (3) the biosciences (Recommendation 4). • Improve accountability and decision making. A “new com- pact” between Congress and the department is essential as HHS works toward achieving its vision for a healthy nation, depart- mental mission, and key health goals. Under this compact, the secretary would provide Congress and the nation regular, rigorous reports about departmental activities and assume greater accountability for improving performance and obtaining results; in return, Congress should allow the department greater flexibil- ity in its internal operations and decision making (Recommenda- tion 5). The last recommendation, which the committee believes would en- able development of a more effective working relationship—a new com- pact—between Congress and HHS, is essential to the implementation of all of these recommendations. This new compact would require a rigor- ous decision-making process and strengthened accountability, so that Congress is well informed of the department’s goals and can measure its progress, while giving HHS the necessary flexibility and renewed management authority to fulfill its mission. Splintered congressional oversight and appropriations, increasingly prescriptive laws, and ear- marked appropriations cause the department to be risk averse and slow to change. A new compact could enhance its ability to innovate and operate coordinated, productive programs that improve the quality of life for all Americans.

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6 HHS IN THE 21ST CENTURY DEFINE A TWENTY-FIRST CENTURY VISION The secretary should lead a process to identify and prioritize the na- tion’s major health challenges that engages states, private-sector con- stituencies, congressional committees, other federal agencies, and global health leaders. With these agreed-upon priorities in hand, the department can proceed to other steps in setting clear direction—developing a com- pelling, well-articulated vision for the nation’s health. It also must ensure that its mission statement adequately describes its role in achieving that vision. To focus its resources and activities and allow its performance to be evaluated, the department also should identify a small number of meas- urable, time-specific goals that relate to the nation’s major health priori- ties and its own internal challenges. The need for health reform will require the secretary and the depart- ment’s deep involvement. HHS has much to offer the reform process and, in any case, will be responsible for evaluating and eventually im- plementing many reforms. Recommendation 1 To meet twenty-first century challenges to America’s health, the secretary of HHS should clearly articulate and actively promote a vision for the nation’s health, ensure that the department’s mission supports that vision, and establish a small number of measurable goals focused on critical challenges. The secretary should lead a thorough and a. thoughtful process to identify and prioritize the nation’s key health challenges. b. The secretary should, in this process, consult widely with internal department leaders, others in the executive branch, Congress, governors and state-level officials, health care providers, scien- tific and professional organizations, and public interest and advocacy groups. c. The secretary should establish a vision, mission, and goals that respond to twenty-first century challenges, enable greater programmatic continu- ity over time, and that can be used to focus de-

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7 SUMMARY partment staff and activities on leading priorities, strengthen the public health infrastructure, facili- tate assessment of impact, and lead to corrective action. d. The secretary, working closely with the White House and Congress, should take a major role in promoting and achieving health reform nation- wide. FOSTER ADAPTABILITY AND ALIGNMENT The department must be able to meet the nation’s health challenges, adapt quickly to changing circumstances, and solve problems creatively, using solid evidence and sound science. To accomplish this, all health and human services operations in the department need to be better aligned. Under HHS’s current structure, 30 official positions report directly to the secretary. This large number may impede coordination and efficient decision making. Management theory and research discourage such a wide span of control. Consideration of alternative management struc- tures, which would establish a clear process for making policy and opera- tional decisions, is desirable. In addition to the secretary’s leadership, the success of the depart- ment depends on the leadership and scientific integrity of several senior officials. For example, the surgeon general is responsible for providing scientifically valid information about health risks to the American public; heads of key scientific agencies—notably, the National Institutes of Health (NIH), Food and Drug Administration (FDA), and Centers for Disease Control and Prevention (CDC)—are responsible for preserving and advancing the scientific missions of the department. These officials should be appointed based on their experience and leadership skills, without regard to ideology. To help ensure insulation from political pres- sure, Congress should also consider establishing multiyear, fixed terms of office for these positions. To avoid gaps in leadership, all top HHS leaders should be identified and appointed expeditiously. Public health focuses on the health of populations, rather than indi- viduals. It protects the public from health risks, promotes beneficial health behavior, prevents disease and disability, and provides basic health services for vulnerable populations. HHS should integrate public

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8 HHS IN THE 21ST CENTURY health principles across its programs, including the major financing and research programs. HHS policies and health and human services programs should incor- porate current scientific knowledge and evidence-based practices. To accomplish this, the department needs to strengthen the science base of its programs and policy decisions. Political considerations cannot be al- lowed to override scientific evidence in the department’s decision mak- ing. Further, research funding needs to be stabilized and become more predictable. The Agency for Healthcare Research and Quality (AHRQ) is a primary example of an agency in need of stable, predictable funding. It has not had its own budget allocation since 2002, despite its mission to support, conduct, and disseminate research that improves access to care and the outcomes, quality, cost, and utilization of health care services— in other words, to gain the types of information needed to create value in the U.S. health system. Nowhere is the weakness of HHS’s science base more apparent or potentially harmful to the public’s health than in the area of food safety. Authority for food safety is diffused across several federal agencies, with FDA and the Food Safety and Inspection Service of the U.S. Department of Agriculture (USDA) both playing lead roles. Currently, U.S. food safety agencies are ill-equipped and understaffed and cannot keep pace with the globalization of the food supply or advances in food science and technology. Recommendation 2 To improve the public’s health and achieve the de- partment’s goals, the secretary should align and fo- cus the department on performance and encourage creative use of scientifically based approaches to meet new and enduring challenges. a. The heads of all department units should ensure that their activities and operations are aligned with the department’s vision, mission, and goals and marshal their resources to achieve them. b. The secretary should reduce directly reporting senior-level officials to a manageable number. Al- though secretarial management styles differ, a rigorous decision-making process for both policy

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9 SUMMARY and operations must be established, along with accountability for results. c. The secretary should ensure a more prominent and powerful role for the surgeon general, who, in addition to leading the Commissioned Corps, should be a strong advocate for the health of the American people and work actively to educate Americans on important health issues. The secre- tary should work with the President and Con- gress to establish a process for identifying surgeon general candidates for presidential appointment that gives high priority to qualifications and lead- ership, and Congress is strongly urged to consider a longer term for this office. d. The secretary should work with the President and Congress to establish a selection process for the department’s senior-level officials that pro- tects the scientific and administrative integrity of major departmental units, promotes progress to- ward departmental goals, and is based primarily on the candidates’ qualifications and experience. Congress again is strongly urged to consider longer terms for some of these officials— especially the directors of NIH and CDC, and the commissioner of FDA—which would provide critical continuity in the nation’s public health and scientific endeavors. e. The President should make timely appointments and Congress should expedite the confirmation process for key HHS officials, including the secre- tary, deputy secretary, surgeon general, and the heads of FDA and NIH. Secretarial appoint- ments, such as the director of CDC, should also be expedited. f. The secretary should ensure that all department health programs, including the reimbursement pro- grams, reinforce public health priorities and strategies in order to provide a consistent frame- work for protecting the public from health risks, promoting health, preventing disease and disabil-

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10 HHS IN THE 21ST CENTURY ity, and providing health services for vulnerable populations in the most efficient, cost-effective ways. g. To maximize value in the health care system, the secretary must strengthen the scientific base and capabilities of the department and ensure that agencies’ research findings are shared depart- ment-wide and that current best evidence is used for departmental decision making, including the Centers for Medicare and Medicaid Services (CMS) reimbursement policy. h. Congress should allocate sufficient, predictable funding for NIH, CDC, FDA, and AHRQ in order to preserve and enhance these agencies’ scientific missions. Congress should also establish a specific budget line for AHRQ that is independent of ap- propriations to other HHS agencies. i. To address the growing threat of food-borne ill- nesses, Congress should unify the USDA’s Food Safety and Inspection Service and the food safety activities of FDA within HHS and ensure provi- sion of adequate resources for high-quality in- spection, enforcement, and research. INCREASE EFFECTIVENESS AND EFFICIENCY OF THE U.S. HEALTH CARE SYSTEM Health care accounts for nearly one-sixth of the U.S. gross domestic product, and Medicare and Medicaid account for 85 percent of HHS ex- penditures. These programs significantly contribute to rising national debt, and continued escalating costs threaten their sustainability. Worse, our high national health care expenditures have not produced commensurate gains in the health of the nation or in the quality of care Americans receive. Research comparing the marked differences in care patterns (frequency of surgery, for example) provided in different parts of the country shows that not only are some patterns much more expen- sive, but residents of these high-cost areas have no better—and some- times worse—health outcomes.

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11 SUMMARY Many factors contribute to high health care costs, including provi- sion of care that is not evidence based, lack of integration across provid- ers and settings, overreliance on medical specialists, and inappropriate adoption of new technologies and procedures. Because Medicare and Medicaid have such a powerful influence on the U.S. health care system, these programs could be leaders in creating a value-driven health system and increasing evidence-based care. Achieving a value-driven system will require analyses of the clinical- and cost-effectiveness of options for disease prevention and treatment and the way care is organized and delivered. These analyses should build on existing data collection efforts in agencies such as CDC, FDA, NIH, CMS, and AHRQ—as well as on external data sources—and will require transparent and credible analytic tools. The committee sees this type of research as providing useful guidance in clinical decision making, but recognizes it cannot be an absolute guide to the clinical care of individual patients, whose circumstances vary widely. With new and better information available from comparative effec- tiveness analyses, CMS can develop a range of incentives for • better management of high-cost chronic illnesses; • use of primary, versus specialist, care; • reduced geographic variation in care patterns; • better integration of care, through, for example, establishment of a medical home or similar mechanism for assuring continuous, accessible, comprehensive, and coordinated care for Medicare and Medicaid patients; and • more efficient practices, generally, including widespread adop- tion of electronic information exchange and electronic medical records. Americans are becoming better informed about their health, health care technologies, and ways of navigating the health care system. They are also becoming increasingly responsible for managing their own health and illnesses. Today’s consumers need access to unbiased, clearly worded, evidence-based, and up-to-date information about health con- cerns, prevention strategies, and the advantages and disadvantages of alternative tests, treatments, medications, and interventions. When they have full information, individuals often wisely make more conservative, less costly treatment choices.

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12 HHS IN THE 21ST CENTURY At the patient level, the use of health information technology can help ensure the continuity and integration of care, improve health care quality, reduce costs, and expand access to affordable services. Secure electronic information exchanges among physicians—so that all neces- sary patient information is available at the point of care—can enable bet- ter, more informed treatment, and be designed to protect patient privacy. For the public health system, health information technology can fa- cilitate early detection of disease outbreaks and environmental hazards, improve monitoring of chronic diseases, and quickly identify adverse events involving drugs or other agents. Recommendation 3 The secretary should accelerate the establishment of a collaborative, robust system for evaluating the health care system that would incorporate existing department and external research, stimulate new studies as needed, synthesize findings, and provide actionable feedback for policy makers, purchasers, payers, providers, health care professionals, and the public. a. The secretary should work with Congress to es- tablish a capability for assessing the comparative value—including clinical- and cost-effectiveness— of medical interventions and procedures, preven- tive and treatment technologies, and methods of organizing and delivering care. The assessment of comparative value should begin by leveraging department-wide data sources in conjunction with supportive evidence from providers, payers, and health researchers. 2 b. The secretary should work with Congress to en- sure that the department’s programs and reim- 2 The committee did not reach consensus on recommendation 3a. Although the majority of the committee supports the language of the recommendation, David Beier, J.D., Senior Vice President of Global Government and Corporate Affairs, Amgen; Kathleen Buto, M.P.A., Vice President, Health Policy, Johnson & Johnson; and Myrl Weinberg, C.A.E., President, National Health Council, did not agree with the majority’s view and provided dissenting opinions, which can be found in Appendix F. They were not able to agree on a common statement.

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13 SUMMARY bursement policies are outcomes based, reflecting best available evidence of value and creating in- centives for adoption of best practices, including integration of care, in order to improve quality and efficiency. c. The department should collaborate with state and local public health agencies and community-based organizations, as both sources and users of prac- tical program guidance. d. The department should provide authoritative, plain-language, and current evidence-based infor- mation to the public regarding prevention and treatment options. e. To assess the health of the American people and overall health system performance accurately, the department needs current data from the nation’s health system. To facilitate collection of these data, the department should actively promote the universal adoption of electronic information capa- bilities—including health information exchange and electronic medical, personal health records— for administrative and clinical purposes. STRENGTHEN THE HHS AND U.S. PUBLIC HEALTH AND HEALTH CARE WORKFORCES Analysts predict serious shortages of people with the right back- grounds, training, and skills in the department’s senior levels, in the na- tion’s health care workforce, in state and local public health agencies, and in the science establishment. These shortages can manifest them- selves in the number, professional mix, geographic distribution, or com- position of the workforces. The problems include • an aging workforce, nearing retirement, in HHS and state and lo- cal health departments, especially among experienced scientists, managers, and professionals; • a wide array of new health challenges that require strong new skills;

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14 HHS IN THE 21ST CENTURY • shortages of primary care physicians and professionals in certain fields, such as oral health, mental health, and nursing; • a shortage of talent in the biological and other health sciences; and • underrepresentation of minority groups in the HHS workforce and among the nation’s health professionals. During the five-year period that began in 2007, half of all managers within HHS will be eligible to retire. Many are hard-to-replace, experi- enced senior managers and professionals. The committee believes that HHS will need to look for replacements not only within the department (using delayed retirements and appropriate advancement of current staff), but also toward more effective recruitment from the private sector and academic institutions. To make government service more attractive, fed- eral hiring practices should be revised, and greater flexibility in fringe benefits and work patterns—such as telecommuting and flexible sched- ules—should be offered. The health care workforce outside the department is also under strain. The balance between primary and specialist physicians continues to tip toward specialists, even though communities served by more pri- mary care physicians have less costly care and better outcomes. Redress- ing this imbalance should be a key societal goal. Advanced practice nurses and physician assistants may help fill primary care gaps. Mean- while, the aging of the U.S. population and associated increases in the prevalence of chronic diseases create growing demand for health care professionals skilled in geriatrics. Information technology may help alle- viate some geographic or specialty shortages. Constituting one-fourth of the nation’s population, African Ameri- cans, Hispanic Americans, and Native Americans collectively account for only six percent of the nation’s physicians. Certain Asian American groups experience similar underrepresentation. Minority professionals tend to practice in underserved minority communities and may be able to provide residents with more culturally competent care. Federal support for health workforce training programs is uneven. Title VII support for public health, preventive medicine, and dental pub- lic health training was eliminated in the President’s fiscal year (FY) 2009 budget, despite the difficulties recruiting staff in these disciplines, as re- ported by state and local health departments. To continue advances in the health-related sciences, the nation needs biomedical scientists, health economists, other health service researchers,

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15 SUMMARY biostatisticians, and epidemiologists. The difficulty of attracting young people to these vital fields begins at the earliest grade levels, with poor math and science skills, and extends throughout the education pipeline. Recommendation 4 The secretary should place a high priority on devel- oping a strategy and tools for workforce improve- ment (1) in HHS, (2) in the public health and health care professions nationwide, and (3) in the biosci- ences. a. The secretary should immediately strengthen workforce planning in the department and de- velop a comprehensive strategy to recruit highly qualified public- and private-sector individuals in order to offset the large number of experienced staff expected to retire soon. b. Congress should authorize the department, in co- operation with the Office of Personnel Manage- ment, to assemble a package of current and innovative programs and benefits designed to en- courage talented, experienced individuals to transi- tion back and forth between government and private-sector service, thereby identifying ways to leverage the best of both. c. Congress should provide the secretary with addi- tional authority to reward performance, innova- tion, and the achievement of results, through bonuses, merit-based pay, recognition awards, or other mechanisms of proven effectiveness. d. The secretary, in concert with other public and private partners, should develop a comprehensive national strategy to assess and address current and projected gaps in the number, professional mix, geographic distribution, and diversity of the U.S. public health and health care workforces. e. To help close projected gaps, the department should evaluate existing health care professional training programs, continued education pro- grams, and graduate medical education funding

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16 HHS IN THE 21ST CENTURY and should encourage Congress to invest in pro- grams with proven effectiveness. f. Congress should give the secretary authority to create new programs that invest in the future generation of biomedical and health services re- searchers, enabling the continued discovery of new, more effective methods of preventing, treat- ing, and curing disease; promoting health; im- proving health care delivery and organization; and controlling health system costs. IMPROVE ACCOUNTABILITY AND DECISION MAKING A strong system of accountability will provide information needed to improve HHS performance and will lead ultimately to better health for the American people. Accountability should begin with the development of measurable, time-specific goals 3 and should include • clear lines of responsibility, • quantifiable targets and time-specific milestones, • strategies to overcome perceived barriers, • regular reporting and assessments, • a reward and recognition system that promotes achievement, • a clear understanding of progress, and • corrective action as needed. To facilitate improved accountability, HHS needs a department-wide information system that would provide a panoramic view of how its health and human services programs work together to achieve depart- mental goals. Data supporting this system should come from within the department and from its key government partners. The information sys- 3 HHS currently operates under a complex web of internally and externally generated goal-setting and reporting requirements, which includes Healthy People 2010, the de- partment’s five-year strategic plan, the Government Performance and Results Act, the Program Assessment Rating Tool, and the President’s Management Agenda. Hundreds of discrete data points must be documented to satisfy these requirements; yet true account- ability is still lacking, because these reports are not used to guide strategies for improved performance or for funding decisions.

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17 SUMMARY tem should coordinate and integrate existing data collection efforts— such as those of the National Center for Health Statistics—and minimize creation of new ones. It should provide actionable feedback that would guide management decisions and facilitate preparation of an annual “State of the Nation’s Health” report to Congress. The committee determined that increased congressional involvement in HHS management and operations has hindered the department’s flexi- bility. For example, during the past two decades, Congress has acted 125 times to give FDA increased regulatory responsibilities, but without pro- viding the additional resources needed to meet them. Congressional re- sponsibility and oversight for HHS are scattered across 12 Senate and House committees and six subcommittees, which hampers the depart- ment’s coherence. Greater management flexibility for the secretary is essential to im- proving the value obtained from HHS programs. With increased flexibil- ity, the secretary could, for example, do the following: • Rationalize Medicare and Medicaid reimbursement, in order to improve outcomes of care and produce savings. • Combat fraud and abuse more effectively and recoup billions of dollars in improper payments. • Make HHS programs more transparent and consistent across federal regions. One way to provide greater flexibility would be to create a strategic initiative fund, drawn from the budgets of HHS agencies. Similar to the Department of Defense’s Defense Advanced Research Projects Agency (DARPA) and the NIH common fund, this fund would allow the devel- opment of cross-agency and cross-departmental initiatives, as well as facilitate timely responses to public health threats. Underlying the development of all of the committee’s preceding rec- ommendations is the recognition that an updated and streamlined rela- tionship is needed between Congress and the department. Under this “new compact,” HHS would provide greater accountability in exchange for more flexibility. The new compact would allow HHS and its future secretaries to achieve higher performance and provide more value to Americans, while improving Congress’s ability to monitor the depart- ment’s progress. In this way, a revitalized Department of Health and Human Services would be much better positioned to meet the nation’s twenty-first century health care challenges.

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18 HHS IN THE 21ST CENTURY Recommendation 5 A “new compact” between Congress and the depart- ment is essential as HHS works toward achieving its vision for a healthy nation, departmental mission, and key health goals. Under this compact, the secre- tary would provide Congress and the nation regular, rigorous reports about departmental activities and assume greater accountability for improving per- formance and obtaining results; in return, Congress should allow the department greater flexibility in its internal operations and decision making. a. To enable greater accountability, the secretary should oversee development and implementation of a department-wide data, evaluation, and infor- mation system. The system should be based on a broad analytic framework designed to aid in managing departmental operations, learning from program experience, evaluating the costs and impact of programs, and determining whether they provide sufficient value for the in- vestment of public funds. b. Congress should authorize the secretary to direct funding from the budgets of all departmental units to support the development of an HHS-wide information system. Funding for such a system would benefit all department units. c. The department should use the data, evaluation, and information system to • enable the secretary to provide Congress with regular reports on progress toward achieving departmental goals, • inform policy development, • facilitate cross-department activities, • provide operational information to program management for quality improvement and midcourse corrections, and • support effective long-range planning.

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19 SUMMARY d. For those outside the department, the system should • be accessible, transparent, timely, and reliable, and • provide useful, privacy-protected information regarding department activities. e. The department should demonstrate accountabil- ity through continuous critical assessment of pro- gram efficiency, equity, impact on health, and cost-effectiveness, and through corrective action for underperforming programs. f. The secretary, in collaboration with the surgeon general, should present Congress and the public with an annual “State of the Nation’s Health” re- port that describes progress toward achieving the vision for the nation’s health and the depart- ment’s key health goals. g. Congress should establish a new, strategic initia- tive fund to enable the secretary to support cross- agency and cross-departmental activities that ex- hibit innovation in responding to twenty-first century challenges, and to respond quickly to new, unforeseen, or expanding public health threats. ENSURING A SMOOTH TRANSITION TO A NEW SECRETARY Recognizing how important the transition period is to a new secre- tary and to the department, the committee provides informal advice for achieving a successful transition. It organized the preceding recommen- dations into a timetable, indicating what should be done in the first 90 days, the first year in office, and throughout the secretary’s term (see Chapter 7). The committee has also translated some of its general think- ing—about vision and goals, alignment and accountability, workforce, and its other recommendations—into specific suggestions for action.

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20 HHS IN THE 21ST CENTURY This informal advice is not meant to be a rigid blueprint, but is intended to help a new secretary manage the political, budgetary, personnel, pol- icy, and planning challenges that come with the appointment to this vital post.