HHS IN THE 21st CENTURY

CHARTING A NEW COURSE FOR A HEALTHIER AMERICA

Committee on Improving the Organization of the U.S. Department of Health and Human Services (HHS) to Advance the Health of Our Population

Leonard D. Schaeffer, Andrea M. Schultz, and Judith A. Salerno, Editors

INSTITUTE OF MEDICINE OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

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Committee on Improving the Organization of the U.S. Department of Health and Human Services (HHS) to Advance the Health of Our Population Leonard D. Schaeffer, Andrea M. Schultz, and Judith A. Salerno, Editors

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THE NATIONAL ACADEMIES PRESS • 500 Fifth Street, N.W. • Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. Support for this project was provided by the National Academies. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. Library of Congress Cataloging-in-Publication Data HHS in the 21st century : charting a new course for a healthier America / Committee on Improving the Organization of the U.S. Department of Health and Human Services (HHS) to Advance the Health of Our Population ; Leonard D. Schaeffer, Andrea M. Schultz, and Judith A. Salerno, editors. p. ; cm. Includes bibliographical references. ISBN 978-0-309-13770-6 (hardcover) 1. United States. Dept. of Health and Human Services. 2. Public health—United States. 3. Medical policy—United States. I. Schaeffer, Leonard D. II. Schultz, Andrea M. III. Salerno, Judith A. IV. Institute of Medicine (U.S.). Committee on Improving the Organization of the U.S. Department of Health and Human Services (HHS) to Advance the Health of Our Population. [DNLM: 1. United States. Dept. of Health and Human Services. 2. Health Services Administration—United States. 3. Health Policy—United States. 4. Organizational Objectives—United States. 5. Organizational Policy—United States. 6. Program Evaluation—United States. 7. United States Government Agencies—United States. W 84 AA1 H589 2009] RA11.H47 2009 362.1—dc22 2009005930 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334- 3313 (in the Washington metropolitan area); Internet, http://www.nap.edu. For more information about the Institute of Medicine, visit the IOM home page at: www.iom.edu. Copyright 2009 by the National Academy of Sciences. All rights reserved. Printed in the United States of America Suggested citation: IOM (Institute of Medicine). 2009. HHS in the 21st century: Charting a new course for a healthier America. Washington, DC: The National Academies Press.

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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COMMITTEE ON IMPROVING THE ORGANIZATION OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) TO ADVANCE THE HEALTH OF OUR POPULATION LEONARD D. SCHAEFFER (Chair), Judge Robert Maclay Widney Professor, University of Southern California DAVID W. BEIER, Senior Vice President of Global Government and Corporate Affairs, Amgen KATHLEEN BUTO, Vice President, Health Policy, Johnson & Johnson MOLLY JOEL COYE, Founder and CEO, Health Technology Center ROBERT GRAHAM, Professor of Family Medicine, Robert and Myfanwy Smith Chair, Department of Family Medicine, University of Cincinnati College of Medicine MARK B. McCLELLAN, Senior Fellow, Economic Studies, Brookings Institution STANLEY B. PRUSINER, Professor of Neurology, Director, Institute for Neurodegenerative Diseases, University of California, San Francisco DONNA E. SHALALA, President, University of Miami STEPHEN M. SHORTELL, Blue Cross of California Distinguished Professor of Health Policy and Management; Professor of Organization Behavior; Dean, School of Public Health, University of California, Berkeley SUSANNE A. STOIBER, Consultant, Stoiber Health Policy, LLC LOUIS W. SULLIVAN, President Emeritus, Morehouse School of Medicine DAVID N. SUNDWALL, Executive Director, Utah Department of Health GAIL L. WARDEN, President Emeritus, Henry Ford Health System MYRL WEINBERG, President, National Health Council CATHERINE E. WOTEKI, Global Director of Scientific Affairs, Mars, Inc. Study Staff JUDITH A. SALERNO, Executive Officer ANDREA M. SCHULTZ, Associate Program Officer KATHARINE BOTHNER, Research Associate AMY PACKMAN, Administrative Assistant JUDITH L. ESTEP, Program Associate v

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Institute of Medicine Consultants DARREL J. GRINSTEAD, Hogan and Hartson, LLP BOB KOCHER, McKinsey and Company PAUL C. LIGHT, Robert F. Wagner School of Public Service, New York University NEIL E. WEISFELD, NEW Associates, LLC VICTORIA D. WEISFELD, NEW Associates, LLC vi

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Independent Report Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Alex M. Azar II, Eli Lilly and Company Jo Ivey Boufford, New York Academy of Medicine David Brailer, Health Evolution Partners Robin H. Carle, The Sullivan Alliance, Joint Center for Political and Economic Studies Jack C. Ebeler, Ebeler Consulting Arthur L. Kellermann, Department of Emergency Medicine, Emory University School of Medicine Howard K. Koh, Division of Public Health Practice, Harvard School of Public Health Judith R. Lave, Pennsylvania Medicaid Policy Center, Graduate School of Public Health, University of Pittsburgh Lawrence S. Lewin, Executive Consultant Philip A. Pizzo, Stanford University School of Medicine Beryl A. Radin, Scholar in Residence, Department of Public Administration and Policy, American University School of Public Affairs vii

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David Satcher, Satcher Health Leadership Institute Initiative, Morehouse College School of Medicine Michael R. Taylor, School of Public Health and Health Services, The George Washington University Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations nor did they see the final draft of the report before its release. The review of this report was overseen by Gilbert Omenn, Center for Computational Medicine and Biology, University of Michigan Medical School, and Floyd E. Bloom, Department of Molecular and Integrative Neuroscience, Professor Emeritus, The Scripps Research Institute. Appointed by the National Research Council and Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution. viii

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Foreword “Form follows function” is a principle of architectural design and a truism of biology. It is not, however, an imperative of human organiza- tions, and certainly not of government agencies. Rather, over a period of years, new responsibilities may be layered onto an existing agency, and old responsibilities removed, without a responsive realignment of posi- tions, procedures, and structures. From time to time, it is worth taking a step back from the current way of conducting government business, ex- amine practices in light of contemporary responsibilities, and seek ways to enable government to fulfill its obligations more successfully and effi- ciently. Prompted by a letter from Representatives Henry A. Waxman and Tom Davis, respectively the chair and ranking minority member of the House Committee on Oversight and Government Reform, the Institute of Medicine undertook just such an assessment of the Department of Health and Human Services. This large and diverse department profoundly af- fects the lives of Americans every day. To advise on how the depart- ment’s work can be improved, the IOM assembled an able and experienced committee, admirably led by its chair, Leonard D. Schaeffer. With an intensive effort, outstanding contributions from a select group of consulting experts, and superb support by staff member Andrea Schultz and IOM Executive Officer Judy Salerno, the committee prepared the following report and recommendations. We offer it in the hope that it will help a new secretary, Congress, and administration to serve the pub- lic and advance the health and well-being of the American people. Harvey V. Fineberg, M.D., Ph.D. President, Institute of Medicine ix

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Acknowledgments This report is the result of the contributions of many individuals who provided their expertise and shared their time throughout the study. The committee wishes to acknowledge those whose contributions energized our deliberations and enhanced the quality of our report. We would first like to thank the National Research Council Presi- dents’ Circle, whose generous funding made this study possible. Invaluable information was provided by the authors of two commis- sioned papers, Darrel Grinstead and Paul Light. During our meeting, Bob Kocher provided his expertise and insight. Our deliberations were cap- tured and organized into the text of this report by Neil and Vicki Weis- feld. Throughout, Dana McMurtry provided research assistance to the committee chair. The committee is greatly appreciative of the study staff for their tire- less work. We would like to give special thanks to Judith Salerno for her oversight and guidance and Andrea Schultz for her daily direction and dedication to the study. Thanks also go to Katharine Bothner for her ex- cellent research assistance, Amy Packman and Judy Estep for their ad- ministrative support, and Florence Poillon and Mark Goodin for copy- editing the final report. Finally, the committee is especially grateful to the numerous additional IOM staff members who contributed to the study process, pro- duction, and dissemination of the report: Anton Bandy, Clyde Behney, Christie Bell, Porter Coggeshall, Bronwyn Schrecker Jamrok, Jim Jen- sen, William McLeod, Abbey Meltzer, Linda Meyers, Maria Oria, Chris- tine Stencel, Lauren Tobias, Jackie Turner, and Jordan Wyndelts. xi

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Preface This report is the Institute of Medicine’s (IOM) response to a con- gressional request to study whether the Department of Health and Human Services (HHS) is ideally organized to meet the public health and health care cost challenges that our nation faces. Congressmen Waxman and Davis asked for recommendations that are administratively feasible, could be implemented in a relatively short time frame, and would not require significant new resources. The IOM then framed the request into a broad committee charge to examine the mission, organization, and gov- ernance of the department. Given the rapid pace of change in scientific knowledge and health care delivery, the fact that some priorities and funding levels may change as administrations change, and the reality that management styles and methods differ as new secretaries are appointed, the committee does not believe there is an “ideal” organization for the department. However, the committee does believe that HHS is ideally positioned to lead a coordi- nated national response to both enduring and new health challenges, and the committee’s recommendations are intended to support that effort. The committee also recognized that the department’s management and program responsibilities are challenged by health care costs that are rising faster than national economic growth, differences in medical prac- tice that are costly and undermine quality of care, and the growing num- ber of uninsured. The unprecedented strain on resources means that other important roles beyond safeguarding federal health programs, such as supporting advances in medicine and technology or rapidly responding to emergencies, are also at risk. xiii

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xiv PREFACE The committee’s recommendations would change the department in ways that allow it to leverage its purchasing power, relationships, work- force, and impartiality to affect both the future direction of our health care system and our population’s health. The majority of recommenda- tions reflect the experience and knowledge captured in the management literature—and validated by the experience of committee members— about creating high-performance organizations. Whether for-profit, nonprofit, or governmental, the principles for institutional success are similar. For the committee then, it followed that HHS should first establish a vision, mission, and implementation strategy that unite all parts of the organization in achieving a specific set of measurable goals. The depart- ment should also align its agencies and programs in order to coordinate, cross-pollinate, and mutually reinforce currently separate efforts aimed at achieving similar or related goals. Once aligned, the department will be in a stronger position to support improvements in efficiency, effective- ness, and outcomes across the entire health care system. The committee also recognized that the positive impact of changing organization, sys- tems, and cultures will occur only if qualified people are in place. There- fore, strengthening the HHS workforce, as well as the health care and public health workforces, is essential. Ultimately, the committee was concerned that maximizing HHS’s potential to bolster public- and private-sector efforts to reverse troubling trends in health measures and costs requires a different relationship with Congress. The committee envisioned a “new compact” with Congress that would require HHS to implement a rigorous decision-making proc- ess and have greater departmental accountability for informing Congress about progress toward its goals. In exchange, Congress would grant HHS the greater flexibility and management authority necessary to fulfill its mission. The committee hopes that its report will be of interest to multiple au- diences. However, we hope that our recommendations will provide spe- cific value to Congress and the next secretary of HHS, as they work together to develop a road map for the department in meeting twenty- first century health challenges and improving the health of the nation. I want to thank members of the committee for investing their time and energy in developing this report and producing recommendations based on sound research and reasoning. IOM staff was also deeply com- mitted and supportive, and I especially appreciate Harvey Fineberg’s

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xv PREFACE encouragement. Our committee was diverse in experience and back- ground and not always like-minded. Nonetheless, our deliberations, often energetic and spirited, were always characterized by the free exchange of ideas, creativity, and respect. Leonard D. Schaeffer Chair, Committee on Improving the Organization of the U.S. Department of Health and Human Services (HHS) to Advance the Health of Our Population

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Contents SUMMARY 1 1 INTRODUCTION 21 2 DEFINE A TWENTY-FIRST CENTURY VISION 39 3 FOSTER ADAPTABILITY AND ALIGNMENT 55 4 INCREASE EFFECTIVENESS AND EFFICIENCY OF THE U.S. HEALTH CARE SYSTEM 87 5 STRENGTHEN THE HHS AND U.S. PUBLIC HEALTH AND HEALTH CARE WORKFORCES 105 6 IMPROVE ACCOUNTABILITY AND DECISION MAKING 125 7 THE TRANSITION 147 APPENDIXES A Acronyms and Abbreviations 159 B Letter from Congressmen Waxman and Davis 163 C HHS Organizational Chart and Missions 165 D U.S. Secretaries of Health, Education, and Welfare (1953–1979) and HHS (1980–Present) 169 E Recommendations Directed to Congress 171 xvii

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xviii CONTENTS F Dissenting Opinions on Recommendation 3a 175 G The Reorganization Option: Views from Former Secretaries of the U.S. Department of Health and Human Services 191 H Statutory Framework for the Organization and Management of the U.S. Department of Health and Human Services 209 I Committee and Staff Biographies 263 INDEX 275

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Tables, Figures, and Boxes TABLES 7-1 Transition Steps, 150 G-1 Confirmation Dates for Initial Appointees to Key Department Posts, 205 FIGURES 1-1 Federal budget by department: actual spending FY 2007 (showing mandatory and discretionary spending), 22 1-2 Distribution of HHS actual expenditures, FY 2007, 28 1-3 Public Health Service budgets, by agency (actual spending FY 2001, FY 2003, FY 2007, and President’s budget request, FY 2009), 29 1-4 HHS mandatory and discretionary budget allocations, 2007, 30 3-1 Key factors in personal and population health, 70 4-1 Relationship between quality of care and Medicare spending, by state (2004), 91 4-2 Medicare spending for hospitalizations and inpatient physician services per decedent in the last two years of life among patients with at least one of nine chronic conditions receiving most of their care from selected Council of Teaching Hospitals (COTHs) integrated academic medical centers (deaths occurring 2001–2005), 92 C-1 HHS organizational chart, 165 xix

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xx TABLES, FIGURES, AND BOXES BOXES S-1 Statement of Task, 2 1-1 What Is Public Health?, 26 1-2 Recommendations, 34 2-1 Other Federal Departments with Major Health Programs, 42 2-2 Committees That Oversee HHS and Related Appropriations, 43 2-3 The Results of Increasing Health Care Costs, 50 4-1 Value in Health Care, 95 6-1 Selected Goal-Setting and Reporting Systems, 128 7-1 The Secretary-Designate—A Scenario, 148 F-1 Recommendation 3a, 175