Alex Azar

Azar’s vision indicates that the path for transforming health care will not be disrupted under his leadership and that the pace of change could increase.

Innovation and disruption

Four Priorities From the New Head of Health and Human Services

  • Rob Schile
  • 2/7/2018

Alex Azar was recently approved as the next Secretary of the Department of Health and Human Services (HHS). He takes the lead of a department whose initiatives will impact everyone involved in health care. Azar is an experienced leader whose private sector roles will likely inform his new governmental position.

During his Senate Finance Committee hearing, Azar outlined his top four priorities, which reflect his own experience as well as the current administration’s objectives. Azar has outlined a vision that indicates that the path for transforming health care will not be disrupted under his leadership and that the pace may very well increase.

Azar’s top priorities

  1. Drug prices — Azar’s first priority is to address the skyrocketing prices of drugs. Azar believes that his background at Eli Lilly, coupled with his tenure at HHS — where he was instrumental in implementing the Medicare Part D drug program — position him to have an intimate understanding of how drug manufacturers, insurance, and the government interact with each other. To date, efforts aimed at bending the cost curve in health care have virtually ignored the cost of drugs. Having leadership at the helm of HHS with insights into the drug industry could prove to be a key to bringing prices under control.
  2. Health care affordability and availability — During his confirmation testimony, Azar focused on the need to make health care more affordable, available, and tailored to an individual’s need. His comments focused on the continued escalation of insurance premiums and the impacts it has had on individuals being squeezed out of coverage due to affordability, as well as the erosion of choices for consumers in the insurance market. He seems to be a strong believer in opening up markets to allow competition to drive down costs and, ultimately, improve risk pools through broader participation in the insurance marketplace.
  3. Shifting Medicare to paying for health and outcomes — Transitioning health care reimbursement from volume to value has been the focus of new payment models and innovation initiatives for many years. With a new administration, there was beginning to be some uncertainty about what the pace of change would be. Azar left no doubt about his thoughts in this area. He made it clear that his emphasis will be aimed at driving greater value in health care, and he will push for the transition from paying for procedures and sickness to paying for health and outcomes. He is a believer in improving the leverage of technologies that have been implemented, capitalizing on the best elements within programs, and replicating them across other programs. Azar suggested he will push for continued emphasis on new payment models aimed at value, and we could even see an acceleration in this transition.
  4. Tackling the opioid epidemic — Azar emphasized the need to have aggressive prevention, education, regulatory, and enforcement efforts targeted at curbing the overuse and abuse of opioids. He also stressed the need to deal with those suffering from addiction in a compassionate way.

Drug pricing controversy

There has been some controversy surrounding Azar’s nomination due to the escalation of drug prices under his leadership at Eli Lilly. Those who were in opposition to Azar questioned if he could really reduce drug prices when during his tenure at Eli Lilly he was responsible for approving price increases and never approving a price decrease. While this may be a good question, a contrarian viewpoint could be that at Eli Lilly, Azar had a responsibility to ensure the corporation was profitable and generated returns on investments to shareholders. In that regard, Azar was successful. At HHS, his role is different; if Azar brings the same level of commitment at HHS as he did at Eli Lilly, he may succeed in driving down drug prices. Despite the controversy, Azar’s background and tenure in the drug manufacturing industry bring interesting attributes for someone assuming leadership of HHS. In a time where drug prices are escalating at unprecedented levels and opioid addictions are on the rise, the insights of a drug industry insider could prove valuable to finding ways to reverse these trends.

Experienced leader

Azar is a capable and experienced leader. In 2001, he was approved as general counsel of HHS, where he played key roles in addressing major national health concerns. Some of the issues he worked on included anthrax attacks, small pox vaccinations, the severe acute respiratory syndrome (SARS) pandemic, and influenza outbreaks.

In 2005, Azar was confirmed as deputy secretary of HHS, where he was responsible for all day-to-day operations, and led the development and approval of all department regulations. For his prior roles at HHS, he received unanimous senate approval.

Azar’s private sector experience includes a variety of roles at Eli Lilly & Co. from 2007 – 2017, the most recent as president of operations in the United States. His deep understanding of the pharmaceutical industry combined with his public sector leadership could be a strong combination in his new position.

The transformation of health care will continue

Azar is sending a signal to health care providers everywhere that the transformation aimed at driving down costs and elevating quality and outcomes will continue full steam ahead. In addition, his specific priorities to drive down the cost of drugs and address the opioid epidemic will, if successful, help both providers and consumers by reducing cost burdens and negative outcomes associated with drug dependency.

Now is a good time for providers to assess their strategic priorities around payment transformation to ensure they are designed to advance their organizations in the right direction at the right speed.

Key steps organizations should be taking include:

  • Understand the advantages and disadvantages of the payment models currently being tested.
  • Learn about the new payment models under consideration — the number continues to grow!
  • Understand where your organization’s quality, cost, and outcome measures rank in relation to industry benchmarks.
  • Identify gaps in performance and develop plans to close those gaps.
  • Assess which payment models may be right for your organization, and what strategies are necessary to drive success.

How we can help

CLA has a deep understanding of the changes affecting all segments of health care industry. Not only do we understand the transformation, we have the ability to illustrate the impact of these changes on your organization and help you address some of the challenges you face.

As the payment environment continues to evolve, long-term success requires strategic actions that will advance an organization’s ability to deliver higher quality health care more efficiently. Given the pace of change, strategies aimed at maintaining the status quo will place your organization behind others. If you are unsure where to start or are struggling with the plans you have developed, the most important action to take is the next step forward.