What's the True Cost of U.S. Healthcare?

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Nov. 21 (Bloomberg) -- John Noseworthy, MD, a professor at the Mayo Clinic Department of Neurology, discusses the cost of U.S. healthcare with Betty Liu Bloomberg's The Year Ahead: 2014 conference at the Art Institute of Chicago. (Source: Bloomberg)

We have been talking about in 2014, what are the biggest challenges, the biggest things that are keeping you up at night?

To meet the needs of our patients.

We have to provide the highest quality care and it has to be affordable.

As the leader of the organization, we have to make sure we have a sufficiently strong business model.

Cutting costs is always a part of every company that wants to become more efficient.

For you, how are you cutting cost?

Essentially through improving the way we deliver care to make it more efficient, get the answers more quickly, bring the teams together, use technology to do so, drive out unnecessary costs so that we can be paid for the value of our work.

You will be paid less eventually with the affordable care act.

This is one of the drivers for your initiative.

The impact of this is quite significant.

I can imagine.

Have you gamed out or have you measured out with that significance will be?

There are many parts in this.

We learn more everyday as this rolls out.

I'll reimbursement may be reduced by at least one percent over the next 40 years.

-- 20% over the next 40 years.

Driving efficiency is where we can cut costs.

What does that mean?

Essentially, right now the payment model in medicine is reversed.

The more you do, the more you get paid.

We don't believe that is the way of the future.

Ultimately, health care should be reimbursed when we do what patients want.

When we get high-quality, safe answers quickly and we should be paid for that value rather than the volume of our work.

What has to happen next is that payment reform needs to happen next to drive the industry toward the deficiency, high quality care lower cost.

That has not happened yet.

Do you think the affordable care act addresses that issue?

No.

the affordable care act addresses people getting coverage, providing health care coverage.

We think that's a good thing.

It does not guarantee access to health care.

Especially if the patients -- or the doctors will receive lower reimbursement.

How do we deliver care more efficiently and how we get paid for it?

Aren't there going to be some pluses?

There will be a decrease in revenue for you because of the affordable care act.

There will be more people that will be online with insurance that they did not have before.

That means that you don't have to cover in many ways the uninsured.

I think that is true for the industry as a whole in many ways.

There will be some reimbursement.

It depends on the mix of patients you see.

The mayo clinic am a we see patients from all over the world.

Many of our patients are insured and that is a good thing.

55% of our patients are medicare.

More of our work is in the medicare population.

The reimbursement currently does not cover the cost of their care and that is going to be driven down.

We have work to do to continue to be efficient and to be successful.

You concerned that the whole controversy over getting healthcare.gov online and getting the few number of people that have been able to sign on to the exchange -- that that will undermine the eventual success of the affordable care act?

I think it is clear that this has not rolled out in the way the president intended and i think it remains to be seen what will happen to that.

Regardless of what happens with the affordable care act, patients need efficient care that is affordable.

We are focused like a laser on improving the quality and safety of our work and reducing the cost of care.

That is a good thing for patients regardless of what happens to the affordable care act.

This is what is coming.

It is not just wholly dependent on hospitals to cut these costs.

It is the entire industry.

Biomedical technologies, insurers, payers, the whole thing.

Do feel they are in line with what you are saying?

The affordable care act has brought these groups together to work more efficiently together.

We also what is coming.

I think that is a good thing.

We spoke recently with the ceo of penn health care.

He spoke about the reduction of revenue.

This is what he said about the smaller independent hospitals.

I'm afraid that there will be many hospitals closing across the country.

I think it will be a very difficult time for independent, small hospital operators.

He was saying that there will be a consolidation of smaller independent hospitals around the country.

Is that something you agree with?

That is happening across the industry.

We are better to integrate care rather than to build large consolidated systems.

Webmail system -- clinic has done -- what mayo clinic has done is digitized the business of medicine to create management tools for smaller hospitals to remain independent and join our network because we believe using those tools they can provide better care, more efficiently, locally and fewer patients have to migrate to a larger hospital.

The sole digital revolution.

You believe that hospitals are ready for this?

That patients are ready to see their records online, to see everything translated and transferred electronically worse that the one area that will be held back?

I think we're moving quickly in a direction.

It is complex.

There are sociological issues and there are concerns about privacy.

There is no doubt that that is where we are going in the future.

We are creating that.

We're leaving that initiative.

We think that is the best way.

All that we know about patient's needs to be consolidated around them.

Most of the cost and health care is because of our fragmented system and the uneven quality.

Patients suffer from that, employers suffer from that.

We're spending too much money.

If we address the fragmentation and the value of health care, we will have a sustainable and a much better system.

I am optimistic about that.

Dr.

james noseworthy, thank you so much for joining us.

That was a mayo clinic ceo and president dr.

James noseworthy.

Back to you.

Betty liu joining us there.

With the head of the mayo clinic.

We have some breaking news to bring you.

Gm share sale plan -- this is the u.s. treasury may sell its remaining 31.1 million shares by years end.

This text has been automatically generated. It may not be 100% accurate.

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