National Press Club

Mayo Clinic CEO calls for reimbursement reforms at National Press Club Luncheon

April 9, 2013 | By Ken Dalecki | kdalecki@hotmail.com

Dr. John H. Noseworthy, president and chief executive officer of the Mayo Clinic addresses National Press Club Luncheon on April 9, 2013

Dr. John H. Noseworthy, president and chief executive officer of the Mayo Clinic addresses National Press Club Luncheon on April 9, 2013

Photo/Image: Marshall. H. Cohen

Dr. John H. Noseworthy, president and chief executive officer of the Mayo Clinic, called for scrapping the current federal reimbursement system for Medicare and Medicaid patients at a National Press Club Luncheon address April 9 and replacing it with one that rewards health care providers who use the most effective and cost-efficent treatments.

The U.S. "faces perhaps the most profound challenge in its history" regarding health care as a result of the Patient Protection and Affordable Care Act, also known as "Obamacare," Noseworthy said.

Congress and the administration should repeal the Sustainable Growth Rate (SGR) now used to reimburse health-care providers for teatment of Medicare and Medicaid patients, Noseworthy said. "SGR is broken," he said.

Many health-care providers are dropping such patients because reimbusement rates have not kept pace with costs, Noseworthy said.

In addition to not keeping pace with costs, it "makes no distinction" between good and bad health-care practices and rewards those who are not cost-effective, Noseworthy said. He offered a three-step program to improve the nation's health care system:

1. Putting proven procedures into practice quickly and consistently by developing a data base of best practices ... something Mayo and its partners are working on.

2. Lowering cost by adopting efficient treatment options shown to work through data collection involving millions of patients. "There is no tradeoff in lowering cost and improving quality," he said.

3. Replacing the SGR reimbursement system with one that rewards innovation and results.

Noseworthy expressed general satisfaction with Obamacare in addressing primary-care issues but said changes are needed to address more advanced care, such as joint replacement and cancer treatment. Data collection systems that pinpoint effective treatment can foster competition that drives down costs while improving outcomes, he said.

Asked if Mayo might start turning away Medicare patients, Noseworthy said "we would hate to" but added "its tough when you don't get paid" enough to cover costs. Federal health-care budget cuts force health-care providers to find savings though innovation but will also slow research and eventually require staff cuts, he said.

Mayo treats more than a million patients annually from around the world at primary facilities in Rochester, Minn., Jacksonville, Fla., and Phoenix/Scottsdale, Ariz. It employs about 3,800 physicians and scientists and nearly 51,000 allied health staff and has annual revenues of nearly $8.5 billion. Mayo plans to spend up to $3.5 billion on an expansion in Rochester but suggested it might have to expand elsewhere if the state does not help pay for new infrastucture in the city, Noseworthy said.