April 27th, 2011
09:22 AM ET

Former Treasury Secretary Paul O’Neill says cutting waste can save U.S. healthcare

America must get its healthcare costs under control, and former Secretary of the Treasury Paul O’Neill has strong ideas about how to do that.

(I've also asked Paul to take your questions online through the comment thread, Facebook and Twitter, so let them fly.)

Paul's take away on healthcare: Cut waste. Here's what he had to say:

For what Ryan, 
Simpson-Bowles and Obama have said about healthcare 
reform, I say, "A pox on all of your plans!"  Here's the reason: Right now in the 
American healthcare system we have $1 trillion worth of waste. Out of 
the $2.5 trillion we're spending, $1 trillion of it shouldn't be spent. So what's this made up of?

1.7 million 
Americans get an infection when they go into a care-giving facility.  We and others have demonstrated in different places around the country that 
it's possible to eliminate hospital-acquired infections.

There are 300 
million medication errors in this country every year. I've been advocating that we should require care-giving 
facilities every day at 8:00 in the morning to hook up to the Internet and 
post newly-identified, hospital-acquired infections along with patient and 
medication errors.

If we 
posted all the medication errors every day, it would be 
between 700,000 and 800,000 identified medication errors every day. Now 
we know how to solve those and other problems of waste in health
care.

None of the politicians seem to be interested in productivity 
improvement. They all want to cut some of these benefits, or take some 
more taxes from the people to pay for the system as it is, instead of 
attacking the fundamentals in their productivity that could make all this 
stuff go away.

The political people don't seem to understand something I know from 
running an industrial company. If you don't want to cut jobs 
or cut people's salaries, but you want to 
be the best in the world, the way to do it is to be as close to perfect 
in everything you do as possible.

So there's an opportunity here. Our society needs to improve the 
efficiency of healthcare.

(Send your questions for Paul O'Neill through the comment thread, Facebook and Twitter.)

Post by:
Topics: Economy • Health

soundoff (13 Responses)
  1. RAJ Dasaee

    Idea of saving $1.0 trillion can create good feelings within and intellectual satisfaction. Any idea is not the fact till we put it in action and see the result. Individual with serious mind trying to solve any problem can find answer creatively but when it is given to collective minds, then idea get dissovled in noise of all resistance, all arguments, all opposition. Why ? because collective minds are having habit of working mechanically on old ways, such collective mind lost intelligence to understand the issues deeply and avoid action on any fact. In reality idea is never a problem but to act on fact of idea is a problem. Complex collective minds, coditioned minds, fearful and confused minds cannot solve any problem and present day politicians are full of confusion. Till we have a solution to solve complex mind problem of old fashioned politicians, no solution will be found to all our present problem. Mind can work efficiently in freedom but cannot work efficiently in fear and pressure. Present day politicians are working under tremendous pressure and without there self-knowledge of their complex activities nothiing can move forward efficiently. What is way out ? in next election elect fresh, young, passionate and very intelligent candidates who is free from all ideology and work creatively to solve our nation problem seriously. We need to find out wether candidate is serious, matured, creative and intelligent or mechanical, old fashioned, operating from set conditioined ideology, expert in verbalization. It is in hands of American people to decide intelligently to elect rigtht leader who can act immediately, intelligently and solve our nation problems. Then we can see reality of saving $1.0 trillion by right and prompt action without any dealy or postponement.

    April 27, 2011 at 10:40 am | Reply
  2. Raleightom

    How about putting priority back on America's obligations to it's own ?

    I know there is rampant fraud in both the Medicare and Medicaid systems; but, the buck doesn't stop there. I feel Obama was on the right track before being forced to change his healthcare plans.

    If they want to fix it'; stop attacking the world ! When politicians speak of the deficit or budget they never mention cutting the budget and bring our armies home. They focus on thousands of PTSD cases and longer unemployment lines filled with X-Military totally unskilled for civilian life. You would think facing up to that problem now instead of later would help all around.

    I'm not promoting isolationism; just promoting taking care of America first.

    BTW: It's called an oil glut; far from a shortage. Look at American speculators before wasting resources on more oil. The oil situation came about as a result of the recession and promoting jobs via alternative energy; not from any shortage of oil or unrest in the Middle East.

    April 27, 2011 at 5:57 pm | Reply
  3. j. von hettlingen

    How can you cut waste, if people in general don't care, as long as they don't have to pay for it! Somebody has to knock some sense – the common good ethics – into their heads!

    April 27, 2011 at 6:17 pm | Reply
    • Christian

      So helping people stay alive and healthy is 'wasting' money, but if they do have/can get private insurance it is the insurance companies' profits that go through the roof. And if they don't make a profit off you, they 'pull the plug' by either cancelling your policy or literally pulling the plug on the healthcare you may need.

      It the same argument as with states privatizing prisons: the state loses money running their prisons so contracts out to private companies WHICH ALWAYS MANAGE TO MAKE A PROFIT.

      IT IS TOTALLY WRONG TO SPEAK OF WASTE AND POINT TO PRIVATIZATION AS THE SOLUTION; THE GOVT. SHOULD ELIMINATE WASTE THE SAME WAY THE PVT. COMPANIES DO...WITHOUT RAKING IN PROFITS!!!

      April 29, 2011 at 7:47 pm | Reply
  4. daliya robson

    saving medicare and Medicaid costs.

    We older sicker debilitated
    nearly dead people can offer to die before millions are spent on non
    essential and non effective tests etc and procedures that make doctors and
    hospitals rich but do not improve our lives. These end of life non essential
    procedures cost the country a lot of money and do not get us to heaven
    happier.
    If we are unable to get weller and will die anyway don't allow doctors and
    hospitals and labs to get rich doing procedures and tests and surgeries-like
    chopping out the stomach of someone that has no chance to live- already
    half dead but still have insurance to pay for this. .
    This is criminal waste of money and is practiced in hospitals to make them
    rich and not improve our last days on earth.

    VOLUNTEER TO GET STERILIZED-help welfare costs go down

    Someone should put the word out that the planet cannot have any more
    increase in population. Once can enjoy sex even with tubes tied.
    Families that cannot feed or educate their families should stop having
    children voluntarily to help usa survive financially.
    If one has a history of perversions, criminality, psychiatric illness .AIDS
    or some other inherited disease that will cost the government millions
    should one not be encouraged and educated towards some kind of patriotic
    act. If one is penniless and on the street or homeless and one does not
    have a means to provide for a child can we not educate towards being
    patriotic and not bring more children to burden society.

    April 27, 2011 at 10:49 pm | Reply
  5. LarryKegel(USArmy)

    The only cuts They should make is with the Insurance Companies!!! If They went by Obama Health Plan it would cut the cost... Just by People going to the Doctor instead of the Emergency room after the damage is done!!!

    April 28, 2011 at 9:44 am | Reply
  6. JA

    How about proper corporate taxation?

    April 28, 2011 at 3:12 pm | Reply
  7. havvalues

    Mr. O'Neill is 100% correct. He speaks of the proven methods,well known in Six Sigma and quality, Deming, Juran. CPII is known by many names. It takes commited Leadership to implement such a program. And it undeniably works in industry, government, and healthcare. Efficiency in processes, eliminating waste, lowers the cost and improves cycle time. If you drove your car 100 miles in an opposite direction from where you need to go for work every day, for no valid reason, this is highly inefficient and takes you longer to get to work. It doesn't take a rocket scientist to reason that if you eliminate the 100 miles in opposite direction, it will save you time and money. Eliminating waste in work processes will save time and money. GUARANTEED. And there is waste in all processes that have not been subjected to Six Sigma principles. There is no debate about it. The reason government doesn't eliminate waste, implement CPI, is clearly the fault of poor Leadership. If the president demanded a waste elimination program such as CPI, LSS, and put his focus on the program, demandeing results, attaching performance criteria and incentives, and checked with worker-levels to ensure it has been implemented successfully (meaning they contribute), it would happen then. The ROI would be ENORMOUS to taxpayers and productivity of the government. Government would cease doing wasteful things, and fraud would become non-existent. There is no incentive in government to run more efficiently, like businesses. True, constituents are 'fed up' with government waste. But government leadership is not knowledgeable or unwilling, possibly because they are elected without voters demanding CPI, or if appointed, because their leadership doesn't 'demand (seriously implement) CPI. We can vote, we can write to them to let them know we agree with Paul O'Neill and others like him who "get it" and put into practice these proven principles. I plan to send this article to the White House and my representatives. Mr O'Neill has proven these principles work, at Alcoa, Pittsburgh healthcare, US Treasury – do the research.

    April 28, 2011 at 6:29 pm | Reply
  8. james2

    Here are three ways to cut costs that the Democrats ought to sign on to:
    1. Use the power of the government to negotiate drug prices.
    2. Import cheaper medicine from Canada and Mexico.
    3. Fareed talks about Americans being stuck in America amidst the increasingly globalized economy. Why not let people take their Medicare coverage with them when they travel overseas?

    April 30, 2011 at 9:15 pm | Reply
  9. GOPisGreedOverPeople

    GOP solution = Soylent Green

    April 30, 2011 at 10:41 pm | Reply
  10. Jason Belkin

    Not bad idea I think better one how US government provide pharmacist companies with insurance. Costly insurances keep medication cost up add to health-care bill

    May 1, 2011 at 9:30 am | Reply
  11. MannyHM

    I'm reading the book "The Healing of America" by T.R. Reid. The U.S. health care system is either overpriced or inaccessible. How about having 2 or 3 states adopt the system in France, then 2 or 3 states adopt the system in Japan, then the same number for Germany and the U.K. All these countries cover all their citizens, spend less per citizen, and have better results. None of these countries have shareholders to satisfy. Think about it !

    May 1, 2011 at 5:25 pm | Reply

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