Former HHS Secretary Dr. Donna Shalala: From Academia to the Healthcare Battleground

For most of her life, Donna Shalala, PhD, president of the University of Miami, has been engrossed in academia. Then, in the early 1990s, healthcare became her new academia.

Donna Shalala, PhD, was the secretary of HHS under President Clinton.Dr. Shalala served as the secretary of HHS from 1993 to 2001 — the entire time Bill Clinton was president, making her the longest-serving HHS secretary in U.S. history. President Clinton appointed her at a time when HHS had a budget of nearly $600 billion, which included pretty much everything under the sun at the time: Medicare, Medicaid, Social Security, the National Institutes of Health, Centers for Disease Control and Prevention — the list goes on.

Before serving as secretary of HHS, Dr. Shalala was a renowned university president and administrator. In addition to teaching, she served as president of Hunter College of the City University of New York and as chancellor of the University of Wisconsin-Madison, right before her HHS tenure began. HHS was not her first jump into government waters, though — she was the assistant secretary for policy development and research within the Department of Housing and Urban Development, or HUD, under President Jimmy Carter.

Here, Dr. Shalala shares the experiences she had at HHS, the reasons why healthcare reform did not work in 1993, her thoughts on President Barack Obama's healthcare reform law and where hospitals and healthcare need to go today.

Question: During your eight-year HHS tenure, you focused on welfare reform, health insurance for children, the drug approval process, the National Institutes of Health, women's health issues and a slew of other issues to improve hospital care. What issues were you most proud of tackling, and what areas do you think could have used more effort?

Dr. Donna Shalala: We spent a lot of time worrying about healthcare reform at the beginning of the administration. Eventually, we got the Children's Health Insurance Program and reforms of some of the disability laws, which improved access to healthcare for millions of Americans. As you said, we worked on major health issues, and our major health agencies went through big reviews. The budget of the National Institutes of Health also doubled, and other public health agencies were involved with every [health] crisis that occurred.

My proudest achievements? Probably that children were healthier by end of the administration. We were the first ones to obtain universal immunizations for all children. We worked very hard so every child could get immunizations — and on time. We also worked hard on tobacco cases and significantly reduced the use of teenage tobacco and [incidence of] teenage pregnancy.

Q: You mentioned the healthcare reform of 1993. When President Clinton first took office, he and his wife, now Secretary of State Hillary Clinton, backed a plan for universal healthcare. Why did this healthcare reform effort fall short?

DS: We simply didn't submit a proposal quickly, and it was very large, very comprehensive, very complex and very difficult to explain. We also weren't able to line up stakeholders, like the hospitals, physicians and providers of all kinds. We sort of got everyone a little angry at us in terms of a proposal, as opposed to President Obama, who got them all lined up in preparation of his proposal.

Q: Do you have any anecdotes, stories or general memories — good or bad — that you think could define your time at HHS?

DS: The bad times were when we lost healthcare reform. The good times are when we made progress in AIDS, for example. Many people were dying from AIDS, but we created programs that made enough drugs and had enough resources so that we were saving thousands of American lives, and we were beginning to do it internationally as well. The doubling of the NIH budget was positive, too. In the long run, this country's investment in science and the products of science are what will improve the health of the world.

We also put a tremendous emphasis on making children healthier and giving them access to healthcare. I remember at the beginning of the administration, the president asked that all kids get immunized, but it couldn't be done because we didn't have universal healthcare. I pointed out my dog, Bucky, a golden retriever, who obviously didn't have health insurance, but I received constant reminders from the vet: "Dear Bucky, it's time for your shot." I said shoot, if we can get all dogs — and cows and sheep — in the country to get immunized, we could do the same for children. We organized this effort state-by-state, hospital-by-hospital, and the hospitals were huge leaders. In this country now, almost all children get shots and on time.

I also remember visiting rural hospitals that had been converted to long-term acute-care facilities and were still able to work because they used a combination of physicians and nurses to reach out to the community. We were able to change formulas to keep facilities in rural America. I'm proud of our efforts in that regard.

Q: What are your thoughts about President Barack Obama's healthcare reform law, the Patient Protection and Affordable Care Act, and its implementation thus far? How do you see the law panning out in the future?

DS: Well, there are some things that are front-ended, like preventive benefits, extending health insurance to the children of parents until [the children] are 26. The most significant parts have yet to come. Coverage for millions of Americans will occur over the next couple of years, and that is a very significant step. States are going to have to decide to participate [in the Medicaid expansion], and getting more covered there is a major step.

But we still have to work at keeping healthcare costs down. That's the big challenge. Do we really want to shift costs onto beneficiaries? People in Medicare, for example, are quite old and quite poor. Most Americans like their healthcare, but they wish it was less expensive. I don't think shifting costs onto beneficiaries is going to work.

We need to get inside system and see where we can save money. There are a lot of inefficiencies and a lot of fraud in the system. HHS has been very systematic in their delivery [of the law], and they've done a great job. There has been minimal controversy even though it's a complex job.

Q: Speaking of fraud, HHS announced in February that the government has recovered roughly $4.1 billion in taxpayer dollars in fiscal year 2011 from healthcare fraud prevention and enforcement efforts. What are your reactions to HHS' and CMS' heightened fraud and abuse efforts?

DS: There is still a lot to do. Every administration has worked on this, and they need new tools to go after fraud. The biggest way to go after fraud is to change the incentives. Fee-for-service, the way in which we pay for healthcare, is not the right structure. In cases of healthcare fraud, we need to go in and put people in jail and keep them there for very long periods of time.

Q: When it comes to hospitals and health systems, do you see a lot of similarities or differences in their roles now compared with when you led HHS?

DS: Definitely similarities. I think their challenges today are similar, mainly in the implementation of health policy. There is not enough credit given to the role of policy implementation. For healthcare policies, 1 percent is actual policy making, and 99 percent is implementation. At the end of the day, the success of the government with the new healthcare reform will depend on implementation. Hospitals are doing very well with this right now.

Q: In your opinion, what should the role of a hospital be today? What are hospitals doing right, and what could they be better at?

DS: We can always be better at safety and readmissions. There's no question about that. We also have to reduce some of our hospital system errors to an appropriate level and have proper staffing and staffing ratios.

The days of hierarchy in healthcare are over, and we're going to have to manage healthcare in teams. The role of nursing is changing. Nurses are going to be doing a lot more than they are currently doing in preventive healthcare. Hospitals started out as the hub of healthcare, but I think in terms of the delivery system, the hospital is going to be the place where we can use integrated teams of physicians and nurses.

Q: The Congressional Budget Office just released a report citing healthcare spending is lower than expected, but it still represents a sizable amount of the federal deficit. Given your interest in healthcare fiscal policy, what are your thoughts on how healthcare costs can be reined in? How do you view Medicare and Medicaid right now?

DS: There is still too much spending in healthcare. We are a major provider here at the University of Miami, but there are other major costs.

The public needs to take more responsibility for its own health. If everyone exercised, ate right and didn't smoke, we'd have plenty of money for healthcare in the U.S. I think there are a lot of low-tech things we can do that don't require fancy equipment or people with elaborate training. We need to shift more interest and focus and energy onto the preventive part of healthcare. Most important — the role of nursing. Seventy percent of primary care can be done by nurses, and primary care physicians should be there for the ambiguity of the healthcare system. They are not being utilized correctly, in my judgment.

Medicare won't be insolvent, but I also don't think we can shift more costs onto beneficiaries. We have to pull costs out of system and slow down cost increases through a combination of prevention and making the system more seamless.

Q: If you had to give a final diagnosis of how to fix the U.S. healthcare system and keep healthcare costs under control, what would it be?

DS: Get the economic incentive of doing unnecessary procedures on patients out of the system. We need to pay on the basis of value and outcomes, which is where we are headed. Physicians and hospitals also need more responsibility for the allocation of resources to take care of patients.

What I wouldn't do: I would not put more money into the system or expand fee-for-service. I like the ACO model. We "own" our physicians here, so we are in a different position than other healthcare organizations that use private physicians. Because we own our physicians and insure 22,000 lives, it's the perfect place to experiment. Universities are the natural places to try some of these ACO measures, and we are trying to get ourselves organized to do that.

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