Hospitals Aren't Going Obsolete, Azar Says

The HHS secretary emphasized the hospital's shifting role in a value-based healthcare delivery system.

Health and Human Services Secretary Alex Azar reassured the American Hospital Association on Wednesday morning that—despite some sobering headlines that suggest otherwise—hospitals are not growing less important to the U.S. healthcare system.

Rather, the role hospitals play is shifting as the healthcare delivery system transforms, Azar said in his speech emphasizing the administration's push toward a value-based system.

"The tale of increasing hospital irrelevance is not borne out in all the data," Azar said in his prepared remarks.

"Large-scale hospitals, and especially overnight stays, are taking on more of a specialized role within our system. But hospitals, broadly defined, aren't growing irrelevant."

• Sobering headlines: Azar specifically cited Ezekiel J. Emanuel's op-ed in The New York Times last February, "Are Hospitals Becoming Obsolete?" which begins with the alarming line, "Hospitals are disappearing." Azar acknowledged that the number of U.S. hospitals has declined significantly in the past few decades and that Emanuel's piece identified several factors that have contributed to this decline. But the story is "incomplete," Azar said.
   
• Trending spending: Although the number of hospitals has declined in recent decades, the relative amount of money being spent for hospital-based care has not, Azar said. In 1960, Americans made 32.4% of their health expenditures on hospital charges; that figure rose slightly to 33% in 2016, he said, citing National Health Expenditure data.
   
• Price and quality transparency: "Knowing prices and outcomes can enable every American to find better, cheaper healthcare. … We know, empirically, that when we empower healthcare consumers, market forces work," Azar said, describing a study of "more than 500,000 patients whose employers built a price transparency platform" to reduce costs.
   
• Publishing chargemaster: Hospitals will be required to post a list of their standard charges online in a machine-readable format beginning in January, Azar noted, harkening back to the IPPS proposal released last month. "I believe you ought to have the right to know what a procedure is going to cost, and what it's going to cost you, out of pocket—before you get it," he added. "We want your input on the best way to make this a reality, and we will applaud those who make this vision a reality on their own."

• Government burdens: "We are mindful of how they could be driving consolidation in the marketplace. As a matter of principle, we want to move to a system where our regulations and payment systems are agnostic about ownership structures. Economics and competition should drive markets, not us."
   
• Prescription drug pricing: Azar said the HHS blueprint to address the problem of high prices is part of the Trump administration's 2019 budget proposal. "As you likely know, the President will be delivering a speech on this topic on Friday, so stay tuned," he added.

The AHA published a video of Azar's full speech, which is included below:

Editor's note: This story was updated Thursday, May 10, to include a video of Azar's speech.