January 8, 2013
Host: Ted Simons
Focus on Sustainability: Measuring the Wealth of Nature
- Sustainability scientist Ann Kinzig, a professor in ASU’s School of Sustainability and the School of Life Sciences, explains why we need to do a better job of measuring the value of nature if we hope to achieve a sustainable future.
- Ann Kinzig - Professor, ASU School of Sustainability and the School of Life Sciences
| Keywords: focus
Ted Simons: An ASU sustainability scientist says in order to achieve a sustainable future we must account for both the nature of wealth and the wealth of nature. But professor Ann Kinzigs: so far, we're only about half way there. Kinzig is the chief research strategist for the global snout of sustainability and also a professor in both the school of sustainability and the school of life sciences. I recently spoke with Ann Kinzig about her ideas on wealth and nature. Thanks for joining us tonight on "Arizona Horizon."
Ann Kinzig: Thank you for having me.
Ted Simons: And the idea of measure measuring the nature of wealth but not the wealth of nature. Talk to us more about this.
Ann Kinzig: So I connect this had notion of wealth to sustainability, and if you look at the definitions of sustainability, they are all basically focused on enhancing or delivering the wellbeing for future generations, our obligations to the future. And one of the most popular definitions was given by the bruntland commission report, and it says that sustainable development is development that meets the needs of current generations, without compromising the ability of future generations to meet their own needs, and on the face of it, that sounds great. It's an appealing, ethical principle that we should do that, that we cannot enhance our wellbeing by undermining the wellbeing of our descendants, but the problem is we cannot possibly know whether we're meeting that go goal. And how do we know whether our actions, or decisions today are enhancing or undermining the wellbeing of the future generations? The definition of sustainability that I like focuses on, on the concept of wealth. And now, the word for wealth, actually, comes from an old English word, wheel, which means wellbeing. And so, our wealth actually is the sum total of all of our assets. That contribute to our wellbeing. The problem, is we tend to focus too narrowly on particular aspects of wealth. So if we look at societal wealth, I think that we know that it includes the money that we have in the bank, this stocks, and Etc. And we know that it includes the things that we produce. Buildings and roads and cell phones and, and this table. So, we have that under control. We measured it perfectly. But, it also includes human capital, and it includes this notion that there is wealth in people's skills and knowledge and their creativity. And, and most importantly, and most overlooked, it includes the wealth and nature, nature provides us with a whole series of goods and services that deliver human wellbeing. And we don't tend to account for that wealth and nature very well at all.
Ted Simons: How do we account for that wealth?
Ann Kinzig: Well, so the closest that we have to wealth accounting, in this country, and in most nations, gross domestic product, everyone has heard of that, and what gross domestic product measures, is the, the value of marketed goods and services produced in the economy in a given year, that's what it measures. It is an imperfect measure of wealth. That's the goods and services that our assets can produce but not measure of the assets themselves. And so, we tend to assume if gdp is staying constant, or rising, that the value of the assets, that give rise to those goods and services is also rising. But, that does not have to be true. I could be creating the economy, the economy could be creating these goods and services by eating into the asset base, as it were. And I could create an income for myself this year by eating into my savings, but I cannot sustain that. So, we need a more direct measure of the asset base, that's one problem with gdp. But at least we are getting some measure of the value of goods and services produced in the market. So, for anything that we market, we look at prices as some measure of the value. The problem is, a lot of nature's services are not exchanged in the marketplace, so, we're only beginning to create measures for how we would value nature.
Ted Simons: And, I think you have given an example to where, you can measure the wealth in a tree, when you have cut it down, and you can use it for products, but, how do you measure the wealth of a tree still standing?
Ann Kinzig: Ok, so the value, I'm not an economist but let me tell you a bit of economics as I understand it. The value of any asset is what they say is the discounted stream of benefits that asset can provide. So, what we have to do for tree or for lake or riparian system, a whole forest, is ask what services that can provide to us over time and when the value of those services are. And now, those services fall into three basic categories. From our perspective. And one set of services of nature is the provisioning services, things that we use or consume. So, food, fiber, fuels. Actually, because those are marketed we have pretty good measure of their value. Not perfect, but pretty good. And the second set of services are what we call cultural services so these are the opportunities for recreation, the moral, satisfaction we might get from being good stewards, and a chance for spiritual renewal from being out in something that's beautiful and for the people of Arizona, and many other places, a cultural identity that comes with particular landscapes. And we account for some of those services reasonably well, and we pay money for recreation for instance, and others we don't do as well at, and the real category of overlooked service this is nature are what we call the regulating services, these are the protection that nature offers, so, for instance, the eco-systems can regulate the mosquito population and is they can carry diseases, so it can offer disease regulation, and a vegetated watershed, can reduce erosion or reduce the likelihood of flash floods. And nature offers protection in a variety of ways. We don't have a good handle on the, on that value of nature.
Ted Simons: I was going to say it, almost sounds as though you would have to look as far as to accommodate nature?
Ann Kinzig: You do need -- well, you cannot always -- not all commodities lend themselves to being put into the market. There are these things called public goods. National defense is one of them. We would never try to provide our national defense by asking individuals to buy aircraft carriers in the marketplace. So, by definition, you need Governments to provide public goods. That's going to also be true for some of nature's services, so, while we say that we have to pay for the things that we value, we don't always have to pay in the marketplace. We can pay by deciding to set land aside. We can pay by creating regulations that prevent certain erosion of natural capital. And so, yes, in a sense, we do have to commodify, we need to understand the value to us, and make sure we are securing it relative to that.
Ted Simons: Are we, we ready, though to, understand the natural capital, and to appreciate natural capital, and then to do something tangible to have that capital increased?
Ann Kinzig: Yes, we're ready. It's not going to be perfect when we first start so there are groups trying to calculate what they would call inclusive wealth. The sum total of produced in financial capital that we understand reasonably well, human capital that we have something of a handle on. We understand the value and labor and innovation, for instance, and natural capital, and they are starting to create the methods that would allow us to calculate inclusive wealth. They are not complete yet but we have a lot of scholars, economists and other people who have been working on that, this, they have preliminary measures of inclusive wealth, and if we start now, and improve those methods, it will get better, and it will give us much better understanding of the assets that we're managing, that support human wellbeing.
Ted Simons: If we do head in that direction, or at least appreciate where that direction is, but with that in mind, my last question, what kind of response have you and other people working in this field and on these ideas, what responses are you get something.
Ann Kinzig: Some positive and some, I think, more guarded. It's always hard to change the way that we do things. I think if you just talk to people logically and say, shouldn't we understand our are wealth? Shouldn't we understand whether the decisions we're taking today enhances or undermines that wealth? They would agree. The devil is always in the details. How do you do this accounting? And that's where people get bit less comfortable. It might alter the way that we have to do things, it might alter the way that we have to think about progress. Again, I think that the world in many ways is ready for that. I think that the latest recession tells us that maybe we should be rethinking the way that we think about progress in human wellbeing, and I think that, that ideas like inclusive wealth are sense be way forward for delivering sustainability.
Ted Simons: It's fascinating information, a lot to think when there. Thank you very much for joining us. We appreciate it.
Ann Kinzig: Thank you for having me. And that is it for now. I'm Ted Simons. Thank you very much for joining us. You have great evening.
Sustainable Health Care
- Dr. Denis Cortese, MD, director of ASU’s Healthcare Delivery and Policy Program, talks about his recent report “A Roadmap to High Value Healthcare Delivery” and what it suggests should be done to make the nation’s healthcare system more economically sustainable.
- Dr. Denis Cortese, MD - Director, ASU Healthcare Delivery and Policy Program
| Keywords: sustainability
, health care
Ted Simons: Health care experts at ASU recently published a road map to high value health care delivery. The report recommends steps to reduce costs and improve health care outcomes. Here to explain is co-author of the report, Dr. Dennis Cortese, director of ASU's health care delivery and policy program. He's also a former President and CEO of the Mayo Clinic. Good to have you here, and thanks for joining us.
Dr. Dennis Cortese: You are welcome. Pleasure.
Ted Simons: Let's start with the idea this the U.S., that, that major overhaul of health care in the United States is necessary. True?
Dr. Dennis Cortese:, True, the major overhaul, I believe, should be focused on what the vision is we're trying to accomplish with health care. We have a delivery system, insurance companies. We have the research and all those things in place so we don't have to do major overhaul those, as a matter of fact we have to deal with them. But, the overhaul should be aimed at what the vision is. What are we really trying to get out of health care. And when I would imagine most folks would like to get out of health care is health care. And an affordable and accessible brand of health care. Right.
Dr. Dennis Cortese: Actually, when I talk to people, I find that some people, myself included, would, actually, like to have the health care and get exactly excellent health care when we need it.
Ted Simons: Yes.
Dr. Dennis Cortese: But, most people I talked to would actually like to not have to need health care, in other words, if you have all of us living longer with chronic conditions. We are all having that over time. I have got five myself. So, I want to live with those, but I prefer not to have to engage with the health care system more than I need to. To keep living and functioning as healthfully as I can be. And as functional as I can be. So it's the two combinations, when you are sick, you really want the very best health care you can get. But when you have chronic conditions and you want to live happily and be active and, and golfing, fishing, sailing, working, attending school, whatever it would be, you really need health care system whose focus is keeping you out of it.
Ted Simons: Yes.
Dr. Dennis Cortese: And keeping you active.
Ted Simons: The affordable health care act, Obama care, is that a major overhaul?
Dr. Dennis Cortese: No, in our opinion it is not. And it is clearly a, an overhaul in respect to the issue of insurance. Eliminating a preexisting condition, and making an attempt to get more people ensured, but at the end of the day when that's completed, we'll still have a significant number of people who will not have insurance at the present time, in the current plan. We, personally, feel that everybody should have insurance. We think that everybody should be ensured. There is role for Government to help people afford it, who need it. And we would much prefer to see everyone own their own insurance. Have the choice of what insurance they would like to have, and be able to go to a marketplace to find that kind of insurance, like a national exchange of insurance products, like the Federal employee's health care plan that exists today. And we're not the only folk who have recommended this. It's been recommended for years, so that employers don't have to provide our insurance, and employers can help us to buy it. But, if we can get our own insurance, it becomes portable. We can go from place-to-place, and job-to-job. We own it, we have it, and there is a role for Government to try to make that happen.
Ted Simons: What would the role for Government be?
Dr. Dennis Cortese: Well, the role for Government it would be to help figure out which patients need financial support to purchase the product. It also would be to, to manage and oversee that marketplace. Like they do in so many other things, but my personal feeling is the Government should not be in the business of insurance. The actual managing of an insurance company, and the Government, itself, actually has about eight different types of insurance programs that they are involved with. There is Medicare and Medicaid. That we all know about. There is also the, the Federal employees' health care plan, which is large exchange of private insurance companies. And that individuals can from which who work for the Government, and the Government helps to fund the premium. To help them buy it, but it's managed by private insurance, and there is tricare, the military system that's just like the Federal employees' health care plan. And there is also the military system, there is the V.A. There is the indian health service, and when, and there is the children's insurance program, the s chip program that you heard about. So, the Government has its hands in many things, and Medicare particularly is an insurance company run by the Federal Government. Our proposal is it would be very nice if we could move to a single model for everyone.
Ted Simons: I don't want to get too far because I have other ideas regarding pay for value and these things, but when I hear that, I also hear the other side, that's too much Government involvement, too much Government supervision of health care.
Dr. Dennis Cortese: Right.
Ted Simons: How do you respond?
Dr. Dennis Cortese: We already have it. Government, the Government is everywhere into health care. It regulates at state levels for private insurance companies. It regulates at Federal levels for, if coverage for people who are, who are under the poverty limit for Medicaid. It regulates for Medicare. And so, the Government already is deeply involved. What we're suggesting is that, is that there is a role for Government, and the role for Government is to help people afford things. To pay for things. So, you start means testing. They do this in many, many different environments, so there are roles for Government and also for Government like, like helping to, to regulate the marketplace. To see that, that insurance companies are not involved with preexisting conditions. And I support this, that part of the bill. Completely, that they eliminated some of the things that made it hard for people to get insurance. Now, just as an aside as we shift over, part of this bill has whole other component. And the bill, the other component is really the new ways to pay for health care. And this is, this is really where the meat could really be found, the new ways to say we want better health care with better outcomes and lower cost, we're going to find ways to pay for that.
Ted Simons: And one of the ways for providers, I guess, better pay for providers with better outcomes, which equates to your idea of pay for value model. Explain that model.
Dr. Dennis Cortese: Well, first, let me make sure that, that I make this clear, we're not necessarily proposing that, that there be better pay for, for providers per se. What we're proposing is that, is that those providers, that are getting better outcomes, better safety. And better service and, and are producing lower costs over time, and there are pockets of this all around the United States, actually five states better than the European countries and, and in the Medicare model where the Government manages that insurance plan, they continue to talk about price controls and slicing and cutting the payments. And our proposal is find out who your best providers are, and best region, best country, and don't cut them. Leave them alone, we're not saying pay more. We're just saying, when you already have people who are producing the outcomes that you want, the safety that you want and the service, why would you ever reward them with a pay cut. And that is, that's a significant subtle, but significant difference, and you asked, ok, how do we measure this. Well, our concept is we should be thinking about values, that should be the purpose of the health care system, and by value, we mean this. We mean are we get what is we pay for? Are we get getting the quality for what we pay for? When you visit with politicians, visit with Presidents, and President Kennedy years ago, Clinton made it clear very quickly, basically, saying we're not get what is we pay for. That's the problem.
Ted Simons: Right.
Dr. Dennis Cortese: In the country. That's value statement. And we're not get what is we pay for, and I had to say to the President, unfortunately, we're getting exactly what we pay for. We are paying the most amount of money for the worst outcomes, the worst service, and the worst safety. And if we begin to start saying, let's measure the outcomes. That's quality measurement. Measure the safety, quality measurement. And measure the service. Quality measurement. And the military measures what they call readiness, that the military is ready to do what they need to do, we could also add private companies, will add productivity, or people at work. Our kids in school. That's the enumerator, that's the quality components. Not safety service, or are people active in functioning. Demoninator is how much are we paying? So, when all of these measurable. And when we measure them, we can find that there is a great deal of variability around the country, where there are providers. There are cities. There are states. That are getting much better outcomes at much lower costs.
Ted Simons: What are they doing? The cities, the states with the better outcomes?
Dr. Dennis Cortese: Well, it's multifactorial, but, when you analyze these, you begin to find couple of interesting things. First, the culture is different. In many of these states, particularly, there is culture of, of concern by the physicians that have been able to work with hospitals to start saying, we need to improve the health of the community and do this. Grand junction, Colorado is an excellent example of this, and they got together about, about 15, 17 years ago, began electronic records' system, began to work together, started a health plan themselves that would help cover the people if people wanted to collectively come together and, and they are all independent docs. And I think three major hospitals. They are independent. Not like all owned like by a Mayo Clinic. They are all independent. The outcomes are spectacular. The costs over time spectacular. And it's a culture. They wanted to do this, and as an aside, the ftc tried to block them on the insurance side for about three years. Finally, they got that approved. So, when you look at these things, you see culture. You see a higher level of integration. And coordination, integration means the physicians are getting together, working together, and communicating with each other, sharing knowledge and information. And, and, and coordination is what you do around the patient. And how do we coordinate the care for that patient. There is a much higher level of that going on in those locations.
Ted Simons: If it's going on in those locations, and it's working well, obviously, you would think they would show that to other location and is they would be interested, but that, that is not necessarily the case. How do you get the country as a whole most regions interested in doing something apparently different in the way that they are doing it now?
Dr. Dennis Cortese: Exactly. I think what we need to do is we need to look for powerful lever that you can pull to get the physicians and the payers to be in a more of an alignment. Right now, the payers are, basically, paying fee for service. And what that means when they pay fee for service, frankly, is that, is that physicians and hospitals make money when we're sick.
Ted Simons: Right.
Dr. Dennis Cortese: Now, that's not what we really want. When I talk to patients, they would prefer not to have to be hospitalized. Not to have to go to the emergency room. And if they can, not even have to go to see doctors on periodic basis. What we to keep those patients healthier, out of the hospital and out of doctor's offices, and living with their chronic conditions? Well, if we are successful doing that, we're going to lose money. Because fee for service model is, you are not selling the products. What we need is new payment system that begins to say, for those conditions, for those patients, we're going to pay you in such way that when you get these better outcomes, people are out of the hospital, Etc., we will cover your costs, plus a 3% to 5% margin, this is what we know by staying in business.
Ted Simons: Are you tip toeing into subsidies there?
Dr. Dennis Cortese: No. They are not at all. It's the cost of doing business. In other words, if I develop a model of care that will take care of asthma patients out of the hospital, out of the emergency room, and keeping them in school, I will probably design that with nurse, with home visits. With telemedicine. Making phone calls to people, whatever it would take, texting the children. Using special devices where they can blow in the flow meter and, and the reading comes into the nurse. And that we're proactively involved. Well, everything I just described is not paid for today. There is no fee for those services. What we're trying to say is bundle that. Bundle this into a package and say, for instance, in this town, perhaps we have 5,000 patients, children with asthma, and maybe 15% of them are the sickest and cost the most amount of money so we're down to somewhere around 500 to 1,000 children that we're focused on. So, we focus on them. And design programs, and we ask access if we do this with Medicaid, we ask access to, to bundle the costs for those kids that they incurred last year or the year before, and take that same amount of money, and no increase, and just the same amount of money and said, here it is, it's all you have got, and design any program that you want, and if you keep the kids out of the, of the hospital, and out of the emergency room, you will be making money.
Ted Simons: We have 30 seconds left. Very quickly, what response are you getting from these ideas?
Dr. Dennis Cortese: It's going across the country. There are many groups. The aco model that you hear about is in that direction, and it's slowly coming.
Ted Simons: All right. Very good. Good stuff and good to have you here. We appreciate it.
Dr. Dennis Cortese: Thanks for having me.