Posted on May 14, 2013 by Bill George |
0 Comments | Filed In: Health Care, Press
Great article in Huffington Post by my wife Penny George: why integrative medicine is key to solving our nation’s health problems, speaking today at U. Wisconsin conference w/ His Holiness the Dalai Lama, Dr. Richard Davidson, Dr. Dan Goleman, Don Berwick & Arianna Huffington. We’ll never get upstream on health issues until we look at the whole person – mind, body and spirit – and people begin to take responsibility for their health. Penny is doing great work to advance this cause.
Leadership Kudos this week go to President Barack Obama, who had “a very good week.” Obama’s steady head about foreign policy – tough-minded but cool – and the tireless efforts of Secretary of State Hillary Clinton are showing consistent results. The latest was the ultimate success of Obama’s policy in Libya that paid off when strongman Colonel Moamar Gaddafi was killed in Thursday’s shootout. On Friday the President announced the end of U.S. engagement in Iraq with all troops slated to come home by the end of the year, a peaceful end to nine years of bloodshed. These successes add to his support of the Arab Spring and the liberation of Egypt and mounting signals that he would like to move away from involvement in Afghanistan. Meanwhile, the President is being very tough with the Pakistanis and holding off Iran’s advances in the Middle East. Finally, he signed at long last three free trade bills with South Korea, Columbia, and Panama that will give a boost to the economy, in spite of opposition from his own party.
Leadership Gaffes go to Abbott Labs and its CEO Miles White for breaking up a great health care company by spinning off Abbott’s $18 billion pharmaceutical business in search of “unlocking shareholder value.” In his 12 years as Abbott’s CEO, White has done a good job in moving the company into medical devices and expanding its revenues in all its businesses. It is hard to see how any sustainable economic value will be created by this bit of financial engineering. Abbott’s move seems intended to mask the reality that the company has been unable to fulfill its mission of discovering drugs and is facing the loss of patent protection on its leading drug. To its credit Abbott has followed a broad health care strategy similar to Johnson & Johnson and Novartis, but the latter two firmly believe their breadth and impact on health care are well served by their strategies. After decades of success, why shift to chasing short-term shareholder value?
Tonight President Obama addresses the nation at a joint session of Congress about his plans to expand job growth. Here’s what he should say:
My Fellow Americans:
Our country is facing a jobs crisis of major proportions, the greatest since the 1930s. This nation’s strength is based on its strong economy and the global corporations that dominated their industries and fueled growth throughout the world. But now that strength is waning, as other nations, from China, India, Singapore, and Brazil to Germany and Switzerland, threaten to outstrip us in competitiveness.
In the 1990s our economy produced 23 million jobs and three consecutive years of budget surpluses. The combination of the Bush tax cuts and spending to finance two wars and entitlement plans created an enormous debt burden that future generations will be forced to carry. The historic downgrade of the U.S. debt rating from AAA to AA+ by Standard and Poor’s is a warning we cannot ignore.
The excesses of the past decade have imperiled our fiscal stability and left 25 million Americans – 16.2% of the workforce – unable to find full-time jobs. As a result, the United States has its smallest full-time workforce – less than 55 percent – and hundreds of thousands are dropping out each month.
When I came into office, I inherited a broken economy. Our banks, insurance companies and automobile makers were on the brink of bankruptcy. We took aggressive steps to stop the bleeding, and prevented the world from depression. I launched a $893 billion stimulus package but it had limited impact on the structural jobs crisis.
A robust recovery must start with jobs growth. Recent figures confirm that jobs are not growing, and there is no indication they will return without aggressive actions on our part. Yet we continue to get pulled off course by partisan showdowns over the budget and debt ceiling.
We need to stop making it difficult to grow businesses and hire workers in America. In response to excesses of the past, we overregulated our industries. With domestic growth approaching zero and the challenging regulatory, tax and political climate, companies are investing instead in rapidly growing emerging markets in Asia, Latin America and Middle East.
As a result, the jobs crisis is more severe than ever. The U.S. has sunk further into debt, and the country has reached the limits of its borrowing capacity. Our political stalemate has paralyzed our ability to take decisive action.
Therefore, I will use the powers entrusted in me as your President to take the actions required to put Americans back to work and restore domestic growth. All these steps must be taken without increasing the budget deficit.
Here is my plan:
Restore fiscal stability by implementing the proposals of the Simpson-Bowles Commission to bring revenues and expenditures in line and reduce deficits by $4 trillion.
With the recent debt downgrade, the government cannot subsidize federal jobs; therefore, I am appointing John Bryon, my Secretary of Commerce nominee and a former CEO, as Jobs Czar to work closely with American employers, large and small alike, to stimulate domestic investment and create 10 million jobs over the next decade.
To create a positive climate for business investment like that of the 1980s and 1990s under Republican presidents Ronald Reagan and George H. W. Bush and Democrat Bill Clinton, I am ordering all federal agencies to reduce or suspend unnecessary regulations and focus instead on expanding private sector jobs in the energy, transportation, health care, information technology, and financial service industries, as well as small businesses.
To prepare unemployed Americans for 21st century jobs, I will reprogram existing funds to invest in retraining and vocational/technical education.
To make America more attractive for investment, I propose reducing the corporate rate to 20 percent, while eliminating complex deductions and credits.
For the remainder of my term, I will suspend taxes on repatriated foreign profits for corporations that reinvest their portion of the $1 trillion in cash trapped overseas in manufacturing, research, and job creation.
I will expand the number of H1-B visas, travel visas and green cards to make America an attractive place for immigrants to visit, work and start companies.
To expand exports, I will implement a free trade policy by moving ahead with free trade agreements with South Korea, Columbia and Panama, while working with nations of this hemisphere to turn NAFTA into the Americas Free Trade Agreement.
As your President, I am prepared to put my re-election on the line to put Americans back to work, reignite economic growth, and restore America’s competitiveness. While my plan will not please the extremes of either political party, I ask all Americans to join me in this commitment by putting their country ahead of partisan politics.
I have written on the importance of investing in America as a way to rebuild the economy and create jobs, not only replace the ones that we have lost. It is time for Obama 2.0. Below I’ve pulled together my series on the emergence of Obama 2.0 as the President.
In talking with dozens of chief executives, I hear pragmatic managers focused on building their businesses and earning fair returns for shareholders, yet extremely concerned about government policy. Here are the real reasons they are not investing in America:
They expect no real domestic growth for the foreseeable future. In contrast, they foresee emerging markets sustaining double-digit growth. As a chief executive at a large consumer products company told me: “Half our revenues already come from Asia; within 10 years it will be 70 percent. Naturally, we are shifting more operations there.”
To compete with local companies, global companies are investing overseas in factories and sales and marketing personnel. Foreign governments like China and Singapore make investments very attractive. One chief executive noted that he chose China for his $62 million factory because local subsidies reduced his investment to only $13 million.
Companies are also moving infrastructure support from the United States to lower-cost areas in Asia. Unable to obtain visas for its Indian employees, a major computer software company moved most of its software operations to India, where well-educated employees enjoy higher standards of living at one-quarter of the cost.
Without domestic growth, there is no need for additional employees. Instead, companies are achieving productivity gains by running lean. Mounting costs of doing business and increased benefit costs have created so much uncertainty that chief executives are reluctant to hire, especially small business owners.
Chief executives feel they have access in Washington, but limited influence. Without any business people in the Obama administration, there are no advocates for sound business policies. A successful commercial banker described how open the president appeared to his concerns, yet the next day — without any consultation — the administration announced a new $50 billion bank tax.
Ask yourself: if you were faced with these conditions, would you be investing in America and hiring more people? Unless the climate in Washington changes dramatically, this no-growth, no-jobs environment will continue indefinitely.
In Obama 1.0, the president stabilized the economy with government spending that minimized job losses and personal bankruptcies. But the economy has stagnated as these policies have been ineffective in stimulating private sector growth, jobs and innovation. Relying on monetary policies and deficits to drive consumer spending is not working, because the economy is experiencing fundamental structural changes that are impervious to these macroeconomic approaches. That’s why there are 26 million people — 16.5 percent of the workforce — who would like to be working full time but are not.
Now is the time to introduce Obama 2.0 by initiating pro-growth economic policies that will invigorate job growth. This means investing in America to unlock the $2 trillion currently in corporate coffers and to stimulate private-sector hiring. Mr. Obama also needs to make fundamental changes in relationships with the business community, overcoming the distrust that has developed on both sides.
The president’s Labor Day proposals were encouraging. He offered a 100 percent deduction for capital investment until the end of 2011, an increase in research and development tax credits that would make them permanent, and an additional $50 billion in infrastructure spending. All three initiatives suggest Mr. Obama is finally moving away from trying to cure the economy’s ills with deficit-fueled government spending and beginning to enact policies that foster private-sector investment and job creation.
Health and Wellness The health reform act granted access to 25 million more Americans, but offers no concrete way to pay for their health care. The president should declare a “national health and wellness campaign” and charge Americans with taking responsibility for their health. Incentives need to be reversed to reward people for staying healthy and holding medical systems responsible for keeping people healthy.
Education The United States is rapidly deteriorating into a two-tier education system, which can only lead to greater unemployment and political rifts. Education Secretary Arne Duncan’s “race to the top” is on the right track, but we need to educate people for 21st century jobs.
Infrastructure The antiquated infrastructure in the United States will take huge investments to bring it up to world-class standards. Are we prepared to raise the bar to the levels of Europe, Japan and even China?
Jobs With 27 million Americans looking for full-time jobs, America cannot have a vibrant economy until people get back to work. This requires investments in retraining and vocational/technical education.
Manufacturing and Exports The manufacturing sector and exports are suddenly showing signs of life, led by the resurgence of the Big Three domestic automobile makers. President Obama’s new Jobs and Competitiveness Council, led by Jeffrey R. Immelt of General Electric, is an important first step. New tax incentives will spur investments in automated, high-tech manufacturing and increase exports.
Innovation Entrepreneurship and innovation are America’s competitive advantages. We need to stimulate investments in research and development, inventions, breakthrough ideas and venture capital.
New companies and small businesses New jobs come from start-ups and small businesses. We need to ease regulations to let companies build their businesses and expand hiring.
If the president begins such an “Invest in America” program and asks Americans to make sacrifices to bring this country back to global leadership, he can set off an American renewal.
Tomorrow night the President addresses the nation. He’s made great strides to rebuild relationships with business leaders over the last four months, but now it is time to reconnect with the American people. He must address the big issues facing our country:
Monday’s Wall Street Journal covers the complete highlights of last week WSJ CEO Council in Washington. Here I would like to share some of my own reflections.
I participated as a subject expert on the “Restoring Confidence in Business” task force, one of five CEO task forces to develop the recommendations highlighted in today’s paper. The others included 1) health care, 2) global finance, 3) energy and the environment, and 4) creating sustainable jobs.
Throughout the two-day event we heard from significant members of the Obama administration, including Secretaries Gates (Defense), Geithner (Treasury), and Duncan (Education), White House economists Summers and Goolsbee, and Republican and Democratic House and Senate leaders.
The most impressive speaker and most sensible was New York Mayor Mike Bloomberg. He has as keen an understanding of what it will take to get the country and New York moving ahead as anyone I’ve heard. Too bad he’s not running for President in 2012! As he pointed out, a fiscally-conservative, socially-liberal candidate does not have much chance of getting either party’s nomination. Nor could an independent ever hope to garner the majority of electoral votes required to avoid resolution by the House of Representatives.
As for other speakers, Bob Gates and Arne Duncan both made very strong impressions. Gates’ departure as Defense Secretary in 2012 will leave a void that will be hard to fill. He has guided DOD skillfully through two administrations and two wars, and was quite clear that he is planning to reduce unnecessary costs to bring budget levels down.
Sounding more like a free marketer than a typical education leader, Duncan is making significant progress in reforming the nation’s K-12 education systems. His “Race to the Top” is committed to focusing on rewarding the best teachers and getting rid of those who aren’t cutting it, and using federal funds to do so. He’s supporting school closures and their replacement with public charter schools.
At the other end of the spectrum were the politicians and economists. The only one of this group that made any sense to me was Republican Eric Cantor, the new House Majority Leader. More typical was Austan Goolsbee, chairman of the White House Council of Economic Advisors, who seemed to be clueless about what steps were required to get the economy growing and create private sector jobs. It was even more discouraging to listen to Rep. Kevin McCarthy, the new Republican Whip, who promised to block every spending bill, reduce the Fed’s charter, and generally serve as an obstructionist, without having anything positive to offer. After listening to Goolsbee and McCarthy, I made a mental note not to come back to Washington for anything remotely political during the next two years.
In sharp contrast, the nineteen proposals developed by the one hundred CEOs in attendance were logical, sensible, and hopeful. If only someone in Washington was listening! When it came time to vote on the final recommendations, I found it difficult not to support all nineteen of them as vastly superior to what we were hearing from the politicians.
The business community is blessed with a remarkable group of new corporate CEOs. As a group, they are pragmatic rather than ideological, slightly to the right of center, and willing to put the long-term interests of the country ahead of their short-term self interests. They have learned the lessons from their predecessors’ failures, especially in chasing short-term stock price gains.
They seem committed to using their leadership roles and their company missions to create exceptional products and services for their customers, sustainable, well-paying jobs for their employees, and value for their shareholders. They keenly understand the important role that their companies play in building a growing economy and healthy communities, while preserving the societal ecosystems that have enabled capitalism to flourish for the past century. They too are extremely frustrated that no one in the White House or Congress seems to understand what it will take to get U.S. private-sector economy back to creating jobs and growing.
Bill’s Bottom Line: In spite of polls showing the American public lacks trust in its leaders, this new group of CEOs are worthy of trust and support for their ideas.
Additional Wall Street Journal Articles and Video Clips from the Meeting
Earlier this week I had the privilege of participating in the Wall Street Journal’s CEO Council Annual Meeting in Washington, DC. Over the course of two days 100 leaders in the areas of business, finance, and policy came together to discuss and propose solutions to some of the world’s largest policy challenges: health care, energy, the environment, jobs, and global finance.
Two things I wanted to share. First is an article written by Joann Lublinn, and second is my appearance on CNBC discussing my experience from the meeting.
WSJ: Medtronic Ex-CEO Suggests Steps to Boost Business
William W. George, a former chief executive of Medtronic Inc., suggested steps to stimulate business investment in the U.S., including 100% depreciation on capital equipment through 2012 and a reduction in the 35% repatriation tax rate to 20% for businesses that “invest in tangible assets.”
A lower repatriation tax rate “would have a direct [positive] tradeoff,” Mr. George said in an interview Tuesday morning at The Wall Street Journal CEO Council. He now is a management practice professor at Harvard’s business school. He also sits on the boards of Exxon Mobil Corp. and Goldman Sachs Group Inc.
Mr. George advocates a tax holiday on tangible capital assets for any company that holds assets for a decade — and eventually, a graduated capital-gains tax. And he favors making it easier for foreign graduates of U.S. universities to obtain visas so they can work in the U.S. and possibly start companies here. At the moment, he added, “we are not graduating that many Americans with technical degrees.”
Taken together, such actions will stimulate U.S. job creation and long-term investment at a time when foreign competition is intensifying, according to Mr. George. Other countries see their economies rebounding faster than the U.S., he noted. “Why can’t we get this country moving [again]?”
But split control of Congress could impede passage of certain economic revival steps, Mr. George said. “We’ve had [political] gridlock for two years,” he observed. “We could have gridlock for six years.”
The politicians chatter Sunday night during the historic House vote on access to health insurance gave the impression that reform was done. Speaker Pelosi called it an extension of the Declaration of Independence, declaring, “health care is a right,” not a responsibility. Republican Boehner all but claimed it marked the end of free enterprise.
Wrong on all counts.
Passing this bill is a momentous step in granting health case insurance to 32 million Americans who lack access, something we can finally take pride in. But it certainly doesn’t end the urgent need for health care reform. Rather, this is the end of the beginning. Now the hard work must begin in earnest.
The bill addresses only one of four essential elements of health care. Left unaddressed are cost, quality and lifestyles. Unless we focus on all four, we will continue to have a dysfunctional system with unaffordable costs.
The bill does virtually nothing to constrain health care costs. It is “paid for” with tax increases that take effect this year and projected cuts in Medicare reimbursement, while delaying most benefits until 2014. If we don’t get health care costs under control before then, the CBO projected deficit reductions will turn into a trillion dollar increase the following decade.
Even the current round of Medicare cuts – over 20% for many physicians and hospitals – is unsustainable, as politicians plan to reverse them retroactively. If they don’t, many physicians and hospitals will refuse to take Medicare patients, just as the Baby Boomers enter the Medicare system. Last month Mayo Clinic in Scottsdale announced it could not afford to accept Medicare patients. Longer term, this could push the U.S. toward the British system of splitting into private and public systems.
Nor does this bill constrain insurance premiums. Wellpoint’s 38 percent rate hikes in California are going into effect, in spite of jawboning by HHS Secretary Kathryn Sebelius. Expect other insurers to follow. Can you think of any other product or service that could pull off price increases of this magnitude?
To bring health care costs under control and sustain access for all Americans, three things are urgently needed:
Realigning incentives for individuals and health care professionals
Improving quality of medicine
Taking responsibility for healthy lifestyles
Incentives. The incentives in the current system are perverse. There are no rewards for people who stay well, and no penalties for leading unhealthy lifestyles or overusing the system. Nor are there incentives for doctors and hospitals to keep people healthy and to prevent disease. Studies have shown that those who do so find themselves losing income.
As a result, primary care physicians are forced to pack more office visits into already crowded schedules, while spending less time with each patient. Specialists are incentivized to do more procedures, even when lower cost alternatives are available. Hospitals are forced to conduct more tests and get people out of the hospital before they are ready.
We need to realign these incentives by rewarding people for healthy lifestyles and taking more cost-effective approaches to their health. Hospitals and physicians should be rewarded for keeping people well, by paying for outcomes and managing groups of patients with similar disease states, as well as for prevention and wellness.
Quality. Experts like Donald Berwick, MD of Institute for Health Improvement and Charles Denham, MD of Texas Medical Institute of Technology have identified ten quality issues whose correction could save tens of billions each. Managing chronic disease, which accounts for 75 percent of health care costs, in a systematic manner instead of as a series of acute events, could improve outcomes and quality of life for millions of people, while dramatically lowering the cost of care. Yet there is no national push to get either of these things done.
Lifestyles. It is estimated that lifestyle issues like unhealthy diets, smoking, alcohol, lack of physical exercise, and unmanaged stress account for more than half of all health care costs. Addressing these issues requires a national movement for wellness and prevention, modeled after the highly successful anti-smoking campaign, something virtually ignored in the current legislation. To motivate people to take responsibility for their health and live healthy lives, there also must be rewards for those who do and penalties for those who don’t. Many successful ideas have been demonstrated locally through consumer-driven health plans and the integrated health movement. Now those must be taken to scale nationally.
This is a complex set of priorities to realize in an already-stressed system. It is too complex to leave in the hands of politicians who lack deep knowledge of health care and are swayed by lobbyists. For these reasons it is likely that solutions will be demonstrated in local communities and then taken to scale nationally. This is a long, arduous process. But unless we being immediately, the U.S. health care system will make our country less competitive and less healthy.
Now is the time for health care leaders locally and nationally to step up to these challenges and to lead the movement of the U.S. to healthy lifestyles and an effective health care system. Let’s get on with the hard work.
It was a quick-hitting discussion touching on everything from client-patient relationships, to corporate accountability, to the need for forthright internal and external communication (which we all agreed is necessity for effective management in a health care crisis).
In the end, I concluded that in health care, a company must retain and project core value of trust, integrity, transparency, and openess to be a successful organization. But I think it was my fellow panelist, Dr. Frist, who made one of the most compelling and pithy points of the night: “Leadership is built around healing, and healing is built around value… if you build value, you are a healer.”
Take a look at the video links below for the entirety of the discussion. And as always, please let me know your thoughts.
7:56pm EST –@Bill_George: “#health – waiting for pres. obama’s speech: anticipate he’ll take middle ground on insurance & propose ins exchange instead of public option”
Last night I was confident of several things. First, my Twitter addiction had officially taken hold, and I would fuel it by tweeting my way through the President’s Address to Congress (“Hey, that would make great material for a blog post”…). Second, this speech would define the remainder of the health care reform debate. The President would either steer Congress further into the quagmire or redirect them towards drier, middle ground.
7:59pm – “#soccer – miserable first half for u.s. – donovan had great chance at the end – must do much better in 2nd half”
Lastly the President, and certainly the cast of characters on the House floor, would likely be far more entertaining than the first half of the US v. Trinidad & Tobago soccer game. But I digress.
I switched channels just as the President’s cabinet weaved across the floor. And as the President himself assumed the podium, I wondered: would this speech be a high-flying rhetorical display, or a practical treatise? Would the President go on the attack or play defense? How deep in the weeds would he get on policy? Would he be the Democratic politician, or the bipartisan leader? Most importantly, how would Congress and America respond? One way to answer at least that last question would be to do just that: respond. So, I did. The following is an array of my Twitter conversations across the duration of the Address, intermingled with a few respective clarifications. What were the in-the-moment reactions to the President’s speech? As they say in the Tweetdom, “follow me”:
8:04pm – “#hcr Pres. Obama must retake control of hcr debate tonite. not about dems and repubs but what’s in it for us and how will he pay for plan?”
And the President was off: “When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse.”
8:10pm – “#health – interesting that Pres started with jobs crisis – at least he is facing that reality but no solutions offered – on to health care”
At the time I was intrigued, but it made perfect sense for the President to set the proper scene: America’s struggling but slowly-recovering economy. This placed the issue in proper context. Cost-effective, long-term health care reform is one necessary component of regaining a strong financial footing and putting Americans back to work.
8:19pm –“#hcr – Pres doing job of making the case for insurance reform – We shouldn’t lose coverage with pre-existing conditions or loss of jobs.”
8:26pm – “#health – insurance exchange makes sense -self-funded? run by government? In lieu of public option? Mandatory coverage good but a tough sell”
I was very impressed with President’s cohesiveness and efficiency in these opening lines. And he was very shrewd to highlight issues of universal agreement alongside issues of universal debate. Compelling recognition of shared interest, this was an important and recurring strategy in the speech, as well as an important step in making the debate respectful as Congress moving forward.
8:33pm – “#health – good move to take on bogus claims by Palin, et al and insurance companies denying coverage”
I had hoped the President would take “death-panels” head-on, and he did so with a confidence and above-the-fray dignity that every President should project in such circumstances.
8:40pm – “· #health – looks like public option is back. He is doing a good job (finally) of making the case. promising savings, but where’s the beef?”
I concede that it’s difficult to interweave important policy nuances into an hour long speech, but the details are what matter right now. At this point, I was still waiting. And so were the Republicans, as they waved copies of a GOP health care bill.
8:48pm – “#health – are medicare savings he’s promising real, or just more reimbursement cuts? Good move to take on malpractice costs and tort reform.
Time, and the Congressional Budget Office, will tell if the savings are legitimate. However, I was pleased with the President’s stance on malpractice and torts. He scored points with independents and conservative Democrats with that one.
9:07pm – “#soccer – US beats T&T 1-0. Great win on the road. Much better play in 2nd half. Good for Ricky Clark. On to World Cup – Let’s get top seed.”
I just had to check the score. And to my pleasant surprise, the US came a winner tonight. Switching back to the speech as the applause boomed and the President stepped down, I pondered: was Obama’s speech a winner too?
9:09pm – “#health – an excellent speech by Obama. Finally, he is back to being a leader and taking control of debate – now the hard work begins.”