Pawlenty Pushes Capitalism at DHMC

Addressing reporters after his talk at Dartmouth-Hitchcock Medical Center

“We need to be problem-solvers and solution-providers…”

Tim Pawlenty, former two-term Governor of Minnesota, paused, his hands momentarily halting in midair. It was March 11 and he was addressing a group of doctors at Dartmouth Hitchcock Medical Center. Just ten days later, Pawlenty would become the first major GOP candidate to announce a presidential exploratory committee. Despite the fact that he was not yet officially pursuing a presidential bid, the audience paid very close attention to Pawlenty’s folksy speech. The air seemed fraught with the possibility that this man might soon be the most powerful man in the country—if not the world.

He was not a particularly imposing man. With an angular nose, a high forehead and a somewhat wrinkled face, his eyes were clear, but friendly. A small aw-shucks grin continually appeared on his face. He seemed more like a friendly neighbor than a removed rhetorician. This attitude dominated his speech—which felt more like a discussion between friends than a canned lecture. As the doctors stared intensely at the ex-Governor, he began to speak on healthcare and specifically, reforming healthcare policy and reigning in costs.

Most strikingly, Pawlenty presented a strongly capitalistic approach to fixing healthcare. He continually stressed that consumers must have “skin in the game.” If it was not in their self-interest to seek out the best and cheapest healthcare, he argued, they wouldn’t. As a result, costs would rise. Competition would not weed out the worst providers. He praised Health Savings Accounts as one method that gave consumers control over how to allocate money towards healthcare. Because they are tied to high deductible insurance plans, HSAs require patients to consider the real, marketplace costs of their healthcare procedures. As an aside, Pawlenty pointed out that the recently passed Obamacare would likely eliminate these competition-encouraging HSAs.

In fact, Pawlenty lambasted the big government approach to healthcare throughout his speech. Continually, he decried the “one-size-fits-all” idea—common in the methodology behind our bloated Medicare system—and stressed the importance of allowing consumers to choose different plans and methods. As he said repeatedly, “we’re gonna have to innovate.” Pawlenty believes that government intervention tends to stifle innovation. “If you want to change a comma in your Medicare, you have to go to Washington, D.C.” he stated—reinforcing exactly how gargantuan of a task it is to force innovation upon Kafkaesque bureaucracies.  Like Paul Ryan and other deficit hawks (including Keith Hennessey, who recently spoke on campus), Pawlenty stressed the unfeasible nature of current governmental healthcare programs, calling such entitlements as Medicare “mathematically unstable.” Pawlenty is right—these programs are growing at an unsustainable rate and will soon dwarf all other expenditures in the federal budget. The question is: how do we solve this issue?

Pawlenty described a plan based off of one he had begun in Minnesota during his tenure as governor. It focused on informing consumers about healthcare—thus freeing them to make their own choices. In Minnesota, Pawlenty had started a process that measured the quality of healthcare based on standards drawn from the Mayo Clinic. Pawlenty often praised the Mayo Clinic as one of the best healthcare providers in the world. Creating this information allowed consumers to make informed decisions—and it also allowed employers and other plan sponsors to provide incentives for consumers to seek treatment from cheaper and better providers. Everyone wins—except for the poorly run hospitals, which lose more and more business unless they improve. Pawlenty stressed that the profit would adjust and competition would result in better service at lower costs while also rewarding innovation. Sounds like a good deal, and a fresh change from our country’s inefficient “one-size-fits-all” approach to healthcare costs.

Pawlenty referred to one particular example of innovation: e-prescribing. He described how there was great opposition to introducing the new system—but in reality it cut out tons of inefficiency. Pawlenty spoke about how pharmacists, patients, and nurses would all be confused and waste time trying to decipher doctors’ poor handwriting.  Although a few of the members of the audience appeared slightly taken aback by Pawlenty’s frank talk about poor handwriting, his next anecdote was even more shocking.

Pawlenty then began to describe an interaction he had with a doctor after an appearance. The doctor came up to him and said, “if you cut my [Medicare] reimbursement rates, I will make the same amount of money.” Pawlenty did not understand, so he began to question the doctor. In response the doctor repeated,“…if you cut my reimbursement rates, I will make the same amount of money.” Pawlenty said that he was stunned that somebody would admit to essentially committing fraud—especially a doctor. He then explained that this was why reforming Medicare would not work. It just led to doctors (or at least the unethical ones) trying to increase volume in order to maintain their salaries. It was a case of misaligned incentives, which plagues the vast majority of government programs. As long as the incentives of doctors, patients, and taxpayers are not in sync, Medicare will only become more inefficient and costly.

After a few murmurs from the audience during this somewhat inflammatory anecdote, Pawlenty quickly pointed out that he believed that most doctors were far more ethical than that particular one. He called participation in the “healing arts” an act of service and commended each of the doctors for their accomplishments and their devotion to patients. In fact, he said that under his proposed system, he would want to include doctors in the planning and decision making process as much as possible. Rather than rely on D.C. politicians and bureaucrats, Pawlenty would prefer to have doctors drawing up standards of health care service, exploring innovative ideas, and improving health care. In particular, he stressed that we have to keep our eyes on three specific measurements: access to healthcare, quality of healthcare, and cost. These three measurements are certainly very suitable rubrics for measuring healthcare systems.

At that point, Pawlenty opened the floor to questions. Most of the questions were vague, asking for clarification on Pawlenty’s system. While Pawlenty could not provide specifics, he reemphasized the structure of his vision for healthcare: smaller government, greater consumer participation, and increased competition. While this answer was accepted, the doctors appeared slightly disgruntled at not having a particular system to pick apart. Pawlenty was right though—any single system will have at least one flaw and the most important thing is to make the system open to innovation and change. For the time-being, competition and creative destruction seem to be the best mechanisms for ensuring innovation and improved service, despite the fact that they can result in older, more inefficient hospitals being shut down.

One of the doctors attacked the actual framework of Pawlenty’s argument itself. He questioned whether providing consumers with choice was a good thing, arguing that it could lead to less preventive care. For example, he cited a study where those without insurance or who were financially responsible for their own healthcare often didn’t go to a hospital for stomach pain. As a result, their appendicitis went undiagnosed until the appendix actually burst, requiring surgery and much more expensive treatment. The doctor wondered if the average consumer could actually make informed decisions about managing his own health—and if such a policy would lead to actual savings or just more inefficiency.

Pawlenty responded by touting the benefits of information. He stressed that uninformed consumers are not particularly efficient, but that once their incentives were aligned, they would become more and more informed. When they had “skin in the game,” they would make better decisions than a politician in D.C. could. At the same time, he stressed that even with intangibles such as medical care, it has now become much easier to measure quality and to spread such information.

That sentiment seems particularly relevant now that the College has decided to pioneer the field of Health Care Delivery Science. Although a lot of the recent rallies led by Dartmouth Students Stand with Staff have pointed at President Kim’s new Center for Health Care Delivery Science as wasteful and hypocritical (given recent cuts to staff healthcare benefits),  it is, in fact, a growing and absolutely essential new field. For too long, America has ignored systemic issues with healthcare, and now rising costs (along with serious demographic changes) are threatening to bury the United States under a mountain of debt. Hopefully, the College can inspire new research into how to reduce costs and improve health care across this entire nation. Seems like a worthwhile pursuit.

Pawlenty left the room with a grin and a wave, relatively unscathed by the originally somewhat doubtful, if not directly hostile audience. This Reviewer had the sense that these doctors were frustrated with the current system—but wary of any politician bearing promises of a healthcare utopia. Pawlenty made few promises, instead steadfastly defending the need for a new approach—one that embraced competition and independent consumers. Calmly, he defended his ideals while remaining open to new arguments and ideas. At the same time, he noted that not all debates have been or will be as friendly as his appearance at the Dartmouth Hitchcock Medical Center was. He joked about how the Founding Fathers spit, swore and dueled over the great issues of their time. Today, we have less of that – but one wonders if C-SPAN would have a lot more viewers if the House still featured physical confrontations. Even in this more mellow time, Tim Pawlenty stands out as a politician with a certain sense of place.

At one point during the talk, he self-deprecatingly related a story about when he had first began running for Governor. While Pawlenty watched his little daughters play soccer, one of their teammates came running over and asked him if he was really running for Governor. He replied “yes”—at which she was awestruck. She said “Cool… can you get me Jesse Ventura’s autograph?” Pawlenty chuckled along with the rest of the audience—and then resumed talking about the necessity for healthcare reform to include competition. One wonders if this folksy combination of down-to-earth charm, relatable anecdotes and conservative ideology can win the GOP nomination.  Pawlenty’s sensible solutions to our nation’s healthcare policy challenges certainly showed that he has the necessary innovation and sense of perspective to guide our nation through a reassessment its priorities.

–J.P. Harrington