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Governor Phil Bredesen shares his thoughts on healthcare reform with local industry executives at the Hermitage Hotel last month.

Last month, Gov. Phil Bredesen stood before a packed ballroom at The Hermitage Hotel to address members of the Nashville Health Care Council (NHCC) as he shared his thoughts and concerns about the future of healthcare on a state and national level.

Thomas Cigarran, chairman of Healthways and the NHCC, introduced Bredesen not only as a political leader but also as a "colleague" and a member of Nashville's entrepreneurial healthcare community. Cigarran lauded Bredesen's efforts to "lead Tennessee out of a major fiscal crisis" largely through reforming "a TennCare program that was out of control" and finding a way to continue many benefits while reigning in costs. He added Gov. Bredesen has been successful by identifying priorities such as education, calling for accountability throughout state government and requiring the state to operate within its fiscal means.

"Even though he's a Democrat … I have to say, he's our kind of Democrat," Cigarran joked.

Bredesen good naturedly replied, "Really, I hope you were recording all that. I'm going to put it in a commercial … 'this is what Republicans are saying about Bredesen.'"

Settling into the more serious topic of healthcare policy, he noted, "I think we are entering a period in which there are going to be significant changes on a national level to healthcare."

Bredesen said whichever candidate is elected will have to face mounting pressure to address healthcare on a number of fronts.

"The fiscal pressures tend to be enormous," he said of the worsening economy.

Bredesen noted that $4 gasoline had become a lightening rod for many citizens. However, he went back to check and compare statistics from the year he graduated from high school … 1961.

"If gasoline had gone up at the same rate as per capita expenditures in healthcare over that period of time, it would now be $15 per gallon," he said, underscoring soaring healthcare costs.

He added that the status quo has been to patch holes in the system rather than to overhaul it in some intelligent way.

"The fundamental problem we have today is that the incentives are totally messed up in healthcare," he stressed, adding that all the things that make the American economy work really well don't apply when it comes to healthcare.

Bredesen said there were certainly many reasons for the growing cost of healthcare but at the heart of the matter … the way low-level decisions are made on a daily basis … is backwards in comparison to how we make decisions for most other services. He used the example of going to a grocery store where everything was beautifully displayed and heavily advertised. An employee guided you through the shopping experience. Throughout, you never saw any prices and didn't see a total. The grocery bill was sent to a third party who paid it.

"In that environment," Bredesen pointed out, "a box of oatmeal would cost $20. And that's a perfect description of what is going on in healthcare today."

He continued, "And that's not going to get fixed by offering tax credits for buying oatmeal or a better grocery information system." He added, "It's going to get fixed by reengaging the incentive system so that decisions are made in a way that gives value."

Although Bredesen didn't elaborate on the nuts and bolts of how to "fix" the national system, he did say that the same principles applied on a smaller scale in the state.

His major healthcare initiative in 2008 has been to restructure the long-term care system to offer more community- and home-based services. Bredesen said Tennessee has been successful in passing legislation where other states have failed because the administration spent a lot of time on the front end explaining the concepts to the nursing home industry and convincing them this was a way for them to be "more successful not less successful."

Bredesen told skilled nursing facility administrators that they would have to evolve in much the same way as hospitals have since the 1950s. Six decades ago, patients checked into a hospital and either got better … or didn't. Acute care was basically the only service available. Today, of course, hospitals have multiple inpatient and outpatient options with a number of the ancillary service lines being the most profitable.

"I told the nursing home industry, 'you guys have to go through exactly the same transition," he said, adding that the underlying message is that traditional long-term care facilities need to look at ways to broaden the services they provide to the elderly and disabled.

"If you do so, this is not taking away … this is additive," Bredesen preached.

The second area on which he focused was stepping back and taking a look at how healthcare has evolved over time and coming up with a system that isn't all things to all people but is good enough.

He noted that when the Medicaid program was launched in 1965, it was a very simply designed program to assist poor women and their children. By the time he took over as governor, TennCare had 47 separate categories of eligibility. He added the nation's current Medicaid program really bears no resemblance to when it started.

It isn't sustainable, he said, to be all things to all people. Moving forward, he said it was important to put together a system that is "good enough for everyone."

Bredesen noted, "Healthcare in the United States is a huge system. It's one-sixth of the economy today. It has enormous entrepreneurial interest in it."

However, he added, in moving forward with any reform, he said it was important to remember healthcare works differently than other economic activity in that people tend to access it when they are scared for themselves or a family member.

Despite that, he said continuing reform is necessary. Pointing to TennCare reform, he noted additional changes would be made regarding 24-hour, private duty nursing … a statement that has garnered a great deal of media coverage over the past few weeks.

"In 2000 it was $17 million, which in the scheme of TennCare is like a penny under the table," he said of why it wasn't addressed in the initial round of reform. "In 2008, that same benefit is a $250 million benefit. It is a benefit in TennCare that does not exist in nearly every other state," he continued, adding that it isn't included in the state health plan, federal health plan or in Medicare.

In response to a question, he stressed that eliminating around-the-clock private duty nursing isn't a contradiction to the long-term care initiative to base more services in the home and community. He pointed out that the idea is to best fit the resources to the need in a fiscally responsible way. Where it makes sense and is less expensive for someone to receive services at home, that would certainly be preferable, he said, but the goal is to place people into the most appropriate level of care.

"The reality is, it's something that's very expensive and needs to be fixed, and we just missed it," Bredesen said. "In any dynamic system, you don't get it all right in the beginning." Bringing it back to a national level, Bredesen said that efforts at reform should be expected to be full of tweaks along the way.

Answering questions from the audience, he said that while medical information systems certainly represented an important element in efficiency but couldn't be counted on to offset medical inflation. Bredesen stressed his desire to see "large, organized systems of care" where numerous caregivers are interconnected. This type of connectivity, he said, is already present in systems such as Vanderbilt. In the future, he said he thought rural physicians would have the opportunity to be part of larger hospital systems so that a patient's case history, prescriptions and drug interactions, and diagnostic tests would be at providers' fingertips to better ensure coordinated care.

"I really believe things are going to change in healthcare … certainly over the course of the next decade," he said, adding, "This is something that needs to be done very carefully."

Bredesen continued, "Whenever these changes take place, it means the world is full of opportunity." He noted that about half the people in the room wouldn't like the changes, while the other half would find a way to make a new system profitable.

"I think it's a very exciting time to be involved in healthcare," he concluded.

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