It's good to be with you this morning to talk about the future of health care at a time when that future looks brighter than ever.
For years, we've known that health care costs were rising at an unsustainable rate. Families saw their health insurance premiums rise three times faster than their wages. Doctors saw patients go without medications they couldn't afford. Businesses saw health coverage grow into one of their biggest expenses. State and city governments saw rising health care bills crowd out investments in education and public services.
We knew it was possible to do better. Around the country, leading health systems and forward-looking communities were showing that you could bring costs down by improving care and promoting better health. There were hospitals cutting readmissions by doing better follow-up care; employers lowering costs with innovative wellness programs; states saving money by giving people more tools to help them quit smoking. The critical question for our health care system was whether we could help these pockets of excellence spread.
Three years ago, the answer to that question wasn't clear. After all, we had been talking about many of these issues for years. I like to quote a piece from the New York Times. "Although four fifths of the population is covered by some kind of health insurance, the protection afforded is often skimpy and unreliable . Close to half the people who file pleas for bankruptcy each year do so because of medical debts . Americans might bear these medical burdens more cheerfully were they getting their money's worth; but if the price of health care isn't right, neither is the product."
The article goes on to talk about the shortage of primary care physicians, unnecessary procedures, the high number of preventable deaths, and exorbitant out-of-pocket costs. It sounds very familiar, right? And it was published in 1977.
So it's understandable that there was some skepticism about the possibility improving care on a broad scale. We had been hearing the mantra of better care and lower costs for decades, but we had limited results to show for it.
That's why the last few years have been so exciting. From a health policy perspective, they have been the most transformative years in decades. Everyone knows the Affordable Care Act, the most important health legislation since Medicare and Medicaid. But we have also had historic tobacco control legislation, major children's health coverage legislation, the beginning of a national transition to electronic health records, an unprecedented campaign to end childhood obesity led by the First Lady, a first-of-its-kind effort to make health data available to innovators, and the list goes on.
But what's been even more thrilling is the wave of innovation we're seeing in state houses, town halls, hospitals, health centers, insurers, schools, and boardrooms across the country. More than ever before in my lifetime, we are seeing a surge of efforts to shape a better health care system for the future -- not just in pockets of excellence, but in cities and towns across the country.
In many cases, these efforts have been encouraged and supported by the policies I just mentioned. But the driving force behind them has been leaders on the state and local level who want to make health care work better for the people in their communities. Together, they are starting to answer the question of whether widespread improvement is possible, and the answer is: yes.
This morning, I want to talk briefly about three areas where we're seeing some of the biggest changes.
I can still remember one of the most heartbreaking letters I got since I took this job. It was from a woman in Maine whose elderly father had gone to the hospital with a minor infection. While he was receiving care, he acquired a much more serious infection. A day and a half after he came home, he collapsed. Within a couple months, he was dead.
In the US today, these stories are far too common. At any given time, about one in every 20 patients staying in a hospital has an infection related to their care -- even though these infections are largely preventable.
But we are seeing signs that the tide is turning. Our department recently released new data showing significant nationwide reductions in three common healthcare-associated infections since 2008. In particular, we've seen a nearly one third drop in central line blood stream infections -- one of the most common kinds. This means these infections are now falling at roughly four times the rate we saw a decade ago. And today, we are announcing new estimates that show that this reduction alone has saved up to 1,250 lives and an estimated $82 million.
Part of this drop can be explained by a national Action Plan for reducing these infections that our department launched in 2009. But efforts by state health departments and individual health systems and hospitals have been just as important.
The best example is probably the Partnership for Patients. The Partnership is an alliance created under the Affordable Care Act that seeks to reduce preventable injuries in hospitals by 40 percent and preventable hospital readmissions by 20 percent by the end of next year. Achieving these goals would save 60,000 lives and reduce Medicare costs alone by $10 billion over a three year period.
When we launched this Partnership a year ago, we weren't sure what reaction we would get. It was totally voluntary. There was no direct financial incentive for joining. But today, more than two thirds of America's hospitals -- over 4,000 in total -- have signed on to do their part to reduce these errors. And it's not just hospitals. We have more than 4,000 additional partners from employers to health insurers.
There is much more work to be done. But when you visit health systems around the country as I do, it's hard not to feel the change in the air. Every day, more and more care organizations are setting the same goal as a doctor I spoke to at Nationwide Children's Hospital in Columbus, Ohio. He told me that they did not strive to reduce harmful errors for the children they treat by 20 percent, or 40 percent. Their goal was to eliminate these preventable errors altogether. And we have never been moving faster towards that goal as a country than we are today.
Another area where we've seen dramatic gains is health information technology. The promise of electronic health records goes back to the 1960s. For decades now, Americans have been hearing that the days of musty cabinets and misplaced paper files were coming to an end. And yet when this Administration came into office, less than a fifth of doctors used even a basic digital record.
What we've seen since then is incredible. In just three years, the share of primary care doctors switching to electronic health records has almost doubled from 20 percent to 39 percent. The share of hospitals using electronic health records has more than doubled from 16 percent to 35 percent.
The potential health benefits from this shift are huge. One recent study looked at more than 27,000 adults with diabetes. Those with paper health records got the best standard of care seven percent of the time. Those with electronic health records got the best standard of care 51 percent of the time. That's a more than 600 percent improvement!
And in the long run, it's not hard to see how electronic health records might help bring down costs too, by reducing paperwork and helping eliminate duplicate tests and procedures.
This transformation would not be happening without the investments we made in the Recovery Act. From creating new centers to help small practices make the most of their health records, to working with industry to establish common standards, to providing incentive payments to help offset the upfront cost, we are eliminating many of the obstacles that kept this technology from spreading.
And today, I'm happy to announce that as of this March, nearly 225,000 health care providers and nearly 3,500 hospitals have signed up for these incentive payments, committing themselves not just to adopting electronic health records, but to using them to improve care.
But government action alone cannot explain the change we're seeing around the country. As I've traveled the country, I've seen a new level of interest among providers, driven in part by a new generation of doctors for whom a tablet computer in the pocket of their white coat is just as essential as a stethoscope around their neck. And there is a new level of excitement among technology developers too. Since 2009, hundreds of new health IT products have been developed, mostly by small companies with 50 or fewer employees. And venture capital investment in health IT is up more than 60 percent.
We're witnessing something that's never been done before: a national transformation in how we store and share health information, all happening in a matter of years.
Finally, a third area where we're seeing significant movement is the emergence of new care models. Everyone here understands the limitations of our current system, which rewards increases in the quantity of care, not improvements in the quality. It's a system nobody would design today if we started from scratch. But in the past, many have resisted change. The attitude was: better the devil we know, than the devil we don't.
That's why it's been so encouraging over the last couple years to see the response to some of the reforms in the health care law. This winter, 32 leading health systems and physician groups signed up to be Pioneer ACOs, pledging to lead the way in transforming their practices to emphasize prevention, improve care coordination, and cut waste. We estimate their efforts will improve care for about 800,000 people with Medicare, while saving up to $1.1 billion over five years.
Then, earlier this month, another 27 organizations signed on for a different version of the ACO model. They represent almost every kind of health organization you could imagine. And we've already received another 150 applications for a July start date. ACOs used to be a kind of code for the cutting edge care that could only be practiced at certain elite health systems. Now, it's a model that health organizations around the country are embracing as the best path forward.
And this isn't the only area where providers are stepping up. One recent survey of 69 hospital executives found that just one in six have bundled payments to pay for episodes of care in place now. But five in six expect to have them in place within two years. And health insurers are also taking the initiative, providing more support for models like medical homes that emphasize primary care and helping patients manage chronic conditions.
Change is sweeping our health care system. Across the country, health organizations are showing that high quality, low cost care isn't like being an NBA star, restricted only to those with special genes. Instead, it's more like being a great free throw shooter. Anyone can do it if they put in enough work.
Of course, we have a long way to go. The process of improving care is always incremental and changes in the health care system are never easy. It can be hard to focus on long-term reforms when there is always another patient to see.
But in many cases, the cost involved in these improvements is small: one of the most effective interventions for reducing healthcare-associated infections is a simple checklist. And in cases where change is more expensive, like adopting an electronic health records system, people are increasingly realizing that the cost of not changing is even higher.
After all, the alternative to lowering costs through improvement is lowering costs through blunt cuts. That would simply put more strain on a system that already is coming up short for doctors and patients.
The better path forward is improving care. And communities across America are showing it can be done. What we need to do now is make sure we continue to spur them on, whether it's by creating new incentives, providing technical assistance, or just helping them learn from each other. That's what this Administration has been working to do over the last three years. And it's what we'll continue to do with your help in the months to come.