The U.S. Department of Health and Human Services (HHS) — which has the largest budget of any federal department, spending a whopping $2 billion per day — is being advised by the Institute of Medicine (IOM; Washington) to review, revamp and rechart a new course for healthcare in America.

And they'll need to do it without any additional major financial infusions. This just as President-elect Barack Obama has named former Senate leader Tom Daschle as both the new HHS secretary and director of the White House Office of Health Reform (Medical Device Daily, Dec. 15, 2008).

Working double duty during a critical financial downturn in the U.S. seems to be the mantra for all. But the focus on HHS is going to be front and center, since Obama's campaign promised massive healthcare reform.

Rep. Henry Waxman (D-California) and Tom Davis (R-Virginia), the chair and ranking minority member, respectively, of the House Committee on Oversight and Government Reform, have called for HHS reform.

So IOM formed the Committee on Improving the Organization of the Department of Health and Human Services to Advance the Health of Our Population, chaired by Leonard Schaeffer, a noted professor at the University of Southern California (Los Angeles).

That group has just issued its report and recommendations.

"Mr. Waxman is concerned that HHS is organized in a way that will allow it to deal with new and major challenges that we face in the 21st century. The world has changed; HHS should change," Schaeffer told MDD.

It's also a prime time to clean house at HHS, because between 2007 and 2011, some 50% of managers in HHS are eligible for retirement. The huge turnover is an ideal time to bring in fresh ideas, new talent and to institute more efficient policies, he said.

The IOM summed up its recommendations in five major areas:

Define a 21st century vision.

Foster adaptability and alignment.

Ensure effectiveness and efficiency of the U.S. healthcare system.

Strengthen the HHS and U.S. public health and healthcare workforces.

Improve accountability and decision making.

Those are "big brush-stroke" mandates. Schaeffer explained the practical applications of each.

First, you can't achieve goals without defining the ultimate vision. And Schaeffer thinks that the new secretary will lend strong leadership in this area.

"Because Daschle is a former member of Congress, it is even more propitious," he said. "Doing a careful and thorough review of the country's challenges, we need to lay out the vision for the health of the country, the mission of HHS and lay out some specific goals to use as a basis to manage the department."

But you can't set goals without being accountable to them.

"The history of HHS is a long series of legislatively created programs and agencies layered on one another," Schaeffer said. "There are people, in good faith, pursing goals that may be outdated. The workload has changed and so the HHS has to adapt and to align itself around the current set of challenges."

The committee has recommended that HHS provide regular reporting to Congress so they can connect the dots back to the new set of goals.

Updated IT is critical

"To do that, there needs to be a more significant investment to build IT systems that gather information about the healthcare system at large and the activities of the department and allow the department to assess its own impact," Schaeffer said. "They need to accurately report to Congress on the health of the nation and the impact the department has on the health of the nation."

While HHS hasn't exactly been stagnant, he cites Medicare as an example. The law establishing Medicare dates back to 1965.

"A precept was that the Medicare program wouldn't get caught up into the practice of medicine," Schaeffer said. "But how it reimburses does impact the practice of medicine. They need to understand the impact of these issues on the health system."

Once the goals are set and a system for accountability is in place, the IOM recommends creating a system that ensures there is effectiveness and efficiency in the U.S. healthcare system, a sore point highlighted by many in the political arena and beyond.

"There are elements of the department that are doing their job as they understand their responsibility, but it may not have as good an impact on the healthcare system as it could," Shaeffer said. "Look at Medicare and Medicaid and you see a program that reimburses based on what has been done to a patient. In the IOM committee report, there's mention made that 45% of time, when you go to see the doctor, you don't get evidence-based medicine. Should we be reimbursing for activities that are not evidence-based? We need to make sure the department reimburses based on today's scientific evidence."

Wanted: More sophisticated HHS

Additionally, the committee recommends an across-the-board strengthening of the public health and healthcare workforces by coming up with a strategy to recruit people who have the skills for the 21st century, not just to replace the folks leaving jobs. "HHS in particular needs a more sophisticated staff," he said.

Also highlighted in the report are the nursing shortage and the maldistribution of physician specialists, as well as the need to shore up talent in the biosciences.

With so much to do and a razor-sharp economic crisis, what's realistically going to happen with these recommendations?

Shaeffer told MDD he believes the majority of above-mentioned tasks can be accomplished without any additional financial infusions to HHS.

"The issue that's most critical is the notion [that] you don't need to move the boxes around," he said. "You do need to improve goal-setting and decision making, management and accountability system. This is not because people at HHS aren't doing a good job, but because there's this gradual accretion over time of different duties, agencies and other influences. We've got to refocus the department on 21st century challenges."