The American health care system is at a crossroads that will redefine our industry and have long term consequences for the quality, cost and accessibility of medical care. The large and growing consensus is that the current system needs to be fixed. Top health care thinkers are stepping back and looking at the range of problems we face today, and those problems are daunting:
• The health care system is fragmented, and the quality it delivers is increasingly in doubt.
• Consumers are disassociated from their own responsibilities regarding their health and lifestyle choices and poorly informed of the costs associated with making bad decisions.
• Providers are rewarded for procedures instead of outcomes.
• Medical costs continue to skyrocket, and as they rise accessibility declines.

However, our existing system also enjoys tremendous advantages – advantages that industry critics often overlook and that any effective reform effort should preserve. Americans want a health care delivery model that continues to offer consumer choice and competition because these qualities drive innovation.

The goal, then, is to preserve the best features of our current system while correcting the range of issues facing the health care industry today.

I am proud to say that BlueCross BlueShield of Tennessee has been on the leading edge of health plans seeking comprehensive, innovative solutions to the challenges we face regarding the quality, cost and affordability of care. In doing so, we are working with providers, employers, members and government agencies and have introduced a range of programs that promise to transform our industry. To name just a few:
• Shared Health electronic personalized health records and electronic prescribing
• Real-time claims adjudication
• Hospital, physician and consumer transparency efforts
• Pay-for-performance programs that award providers for positive health outcomes, not for volume of procedures

Our long-term vision is to become an advocate and facilitator for a truly integrated and personalized health care management system. Getting there is the defining challenge for our company today, and we are approaching it through four key areas of focus: Wellness, Health IT, Evidence-Based Care and Affordable Care.

Personal Responsibility for Individual Health
It’s time for our industry to get very serious about wellness, creating positive interactions with people throughout the health care continuum. For decades our health care system has focused on “sick care.” As a result, health care networks only engaged with people once they became ill.

The American health care system of the future must change that orientation entirely. We need to be about “life care,” and that means a renewed focus on wellness. Everyone has the power to make decisions that lead to a longer and healthier life. The unhealthy lifestyle choices of Americans have consequences to their health and place financial burdens on the system that are borne by everyone. Simply put, the promise of better health and broader coverage begins with better personal choices.

Health Information Technology for Personalized Care
The foundation for the success of our vision rests upon the establishment of a health IT infrastructure that includes:
• Electronic medical records
• Transparency tools for consumers and providers
• Treatment and prescription tools to assist physicians
• Health and wellness tools for consumers

We are working to make these tools widely available, but they will have minimal impact on medical outcomes unless providers can build the IT infrastructure they need to use them, train appropriate staff on their use, and then ensure that the tools are actually used in real time. Until that happens, providers and members will continue to operate in an environment that promotes inefficiency and threatens the overall quality of care.

Evidence-Based Medicine for Quality Care
We also need to work more closely with providers to address consistency in the diagnosis, categorization and treatment of disease. The goal is to develop an evidence-based care approach that ensures compliance with proven treatments. There’s a growing gap between the recommended care of medical conditions and the actual care that patients receive. U.S. patients currently receive an average of 55 percent of the treatments recommended for their medical conditions. Up to $14 billion a year is lost on preventable adverse events and medical errors. Promoting and rewarding the practice of proven evidence-based medicine will improve the quality and the cost-efficiency of care.

Affordable Care for the Uninsured
The Congressional Budget Office has estimated that for every one percent increase in medical costs, 300,000 people lose their private, employer-sponsored coverage. Cost, quality and accessibility are intertwined. Higher medical costs drive people out of coverage, which in turn makes health care less efficient. Decreased medical costs bring more people into coverage, increasing the efficiency and value of that coverage. More money does not translate to better care. Recent studies of the Medicare system show that annual costs per enrollee vary greatly by region: averaging from $3,000 per patient to almost $9,000. Yet higher expenditures are not associated with better medical outcomes, and the differences do not go away even when adjusted for demographics.

Transformative Change
At BlueCross BlueShield of Tennessee, we believe that transformative efforts are needed to implement real, meaningful change in the health care system. The time has never been better for that change. The percentage of Americans listing health care as one of the most important problems facing the nation has reached record levels.

The initiative falls to the players in our current system – health plans, providers and members – to demonstrate new levels of innovation and collaboration to ensure the best health care system possible for Americans now and into the future. I can tell you that at BlueCross BlueShield of Tennessee we are on the crest of those efforts, working with intensity and focus to forge the partnerships needed to create positive change that:
• Drives efficiency and doesn’t just pass costs to the next person, organization or industry;
• Addresses the accessibility, cost and quality of care towards a model of accountability, wellness and value;
• Preserves the advantages of our current system while enhancing the benefits to everyone involved in health care delivery: members, who will receive better, more comprehensive “life care,” not “sick care;” the uninsured, who will be able to afford health coverage in a more efficient system; and providers, who will be rewarded for delivering care with quality and efficiency.

You’ll read more about our many accomplishments for 2007 in the pages that follow. But for all those accomplishments, I’m most proud of the transformative work we are doing today to ensure a strong, sustainable health care system for tomorrow.

Vicky Gregg
President and CEO