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STEVEN JOHN: Good afternoon from Minnesota Public Radio. I'm Steven John. Governor Pawlenty has ordered Minnesota State flags flown at half staff to honor tsunami victims in South Asia. Pawlenty ordered Minnesota flags at the Capitol and all public buildings and grounds flown at half staff from today until Friday.

Governor Pawlenty lays out his bonding proposal this afternoon. Pawlenty's wish list will set the stage for a debate over the size and scope of a Captiol improvements bill the legislature will take up this year. Lawmakers return to Saint Paul tomorrow. The governor says he hopes to see a new spirit of bipartisanship following last year's session, which trapped most initiatives in legislative gridlock.

TIM PAWLENTY: I'm optimistic that the session will be an improvement over last session. That's not a high bar. But I think the election gave people an opportunity to have their say on a partisan level. I think that gives us a fresh start to come here.

STEVEN JOHN: Democrats picked up 13 seats in November's house elections. Pawlenty says his overall priorities this session are to balance the budget, reform education, and health care funding, and negotiate a revenue sharing agreement with Native American casinos.

Police say the Augsburg college. Flu shot case has been given to federal prosecutors who will consider whether to file charges. Police had been looking into allegations that a licensed practical nurse, Michelle Torgerson, gave unauthorized flu shots at Augsburg in late November and early December. Torgerson has insisted the doses would have been thrown away if she hadn't used them and that she did nothing wrong in selling them to raise money for charity.

Partly to mostly sunny skies in most of Minnesota, except for the very far, far south, where there could be some flurries this afternoon. High temperatures should stay in the single digits below in the northwest, and to the mid-20s in the far southeast. That's news from NPR.

GARY EICHTEN: Thank you, Steven. Six minutes past 12:00.

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And good afternoon. Welcome back to Midday on Minnesota Public Radio. I'm Gary Eichten. During this hour of midday, we are featuring interviews with two of the state's most prominent business leaders as part of our continuing Voices of Minnesota interview series. We're going to hear today from Marilyn Carlson Nelson, who's the head of Carlson Companies, and Dr. Hugh Smith, who is the chair of the Mayo Clinic's Board of Governors. And here is the producer of our Voices of Minnesota series, Minnesota Public Radio's Dan Olson.

DAN OLSON: Marilyn Carlson Nelson embraces the power of business to do good the way some people believe in a religion. She says she's furious at how the corporate shenanigans of a few have lowered the public's opinion.

MARILYN CARLSON NELSON: The Enrons of the world have done just a terrible blow to the general population's attitude toward business and business leaders, where trust of business is, really, at its lowest point, I think, here, and across the world.

DAN OLSON: Critics of this country's health care system point to the millions of uninsured Americans as the most telling sign of the need for reform. Rochester Mayo Clinic's Dr. Hugh Smith says the number of Americans who go without health insurance includes many who he argues have the ability to afford some kind of coverage.

HUGH SMITH: There are over 40 million Americans without health insurance. The statistics are that 70% can afford it. They elect not to.

DAN OLSON: This hour, conversations with Mayo Clinic's Dr. Hugh Smith and with Carlson Companies' Marilyn Carlson Nelson. Minnetonka-based Carlson Companies is the world's largest travel services business. 65-year-old Marilyn Carlson Nelson is the chief executive officer and chairwoman. She is the oldest of two children, both daughters, of Arlene and the late Curt Carlson. Her father founded in 1938 the business that has grown into Carlson Companies. She took the reins in 1998.

Carlson Companies is huge, more than 180,000 employees doing more than $20 billion of business a year. Marilyn Carlson Nelson is wealthy. She's influential in business circles and Republican politics. Forbes Magazine ranks her in the top 50 of the country's most powerful women. Various groups rank the Carlson Companies as one of the country's best for women employees.

Marilyn Carlson Nelson is a graduate of Edina High School and Smith College, with studies in economics and political science in Paris and Geneva. Marilyn Carlson Nelson and her husband, Dr. Glen Nelson, have three children and nine grandchildren. We talked recently in a conference room next to her office at Carlson Companies' headquarters in Minnetonka.

Some of her most pointed responses were about the progress of women in business and about this country's educational achievement gap. The topic came up in a conversation about jobs. How is job outsourcing affecting Carlson Companies? Are you moving more activities from this country to other countries?

MARILYN CARLSON NELSON: That's such a wonderful question. Last year, I was hosting a global human resource meeting at Minnesuing Acres, our lodge up in northern Wisconsin, and one of the American HR professionals asked that question, are we going to be outsourcing? And the head of HR for India raised her hand and said, I don't understand outsourcing. Aren't we a global company? 180,000 in 120 countries. So the job for us is to put the right jobs in the right place.

Now, that said, we love Minnesota. The education rate is high. We have lower absenteeism here than anywhere else. Really, anywhere else, I think. The population is high energy, really understands what we're about, which is mission-driven kind of organization with integrity as the base.

So I believe that Minnesota will continue to be a very important source of jobs, and, and executives, for that matter, for our company. That said, I think that we will also be sourcing talent from the entire world and that Minnesota is a bit at risk to rest on our laurels, that what we were yesterday is not what we're going to be tomorrow. I'm deeply concerned that, with high graduation rates, that we have a terrible achievement gap.

It breaks my heart. I was a principal for a day last year at Washburn High School, and when you learn that in the Minneapolis school system, that the Blacks, Hispanics, and Indian experience is so different, that only 30% of those populations graduate on time, and that's wrong. Those are my potential employees, as well as General Mills potential employees, Cargos potential employees.

And we have to draw from the entire population, and we have to educate the entire population. And we really have to deal with this problem. Not only will it disenable us in terms of having our employee base look like our customer base, it will also provide attention in the community that will make us less creative, less innovative, and it will draw too much of our time and energy to social issues rather than creating economic vitality and innovation and quality of life improvements for all.

DAN OLSON: The tussle is on every legislative session to address those very issues that you're talking about, funding levels for k-12 education, funding for higher education. Carlson family has been very generous across the board, especially in higher education, University of Minnesota. But the systems can't rely on private donations exclusively. So what does that mean? Minnesota taxpayers have to step up and do more, tax ourselves more to pay for these inputs, if you will, to address these issues?

MARILYN CARLSON NELSON: We know several things. We know, first of all, that if we at Carlson have been able to get 20% productivity improvement by revisiting our processes, by revisiting our allocation, by working with the Duran Center over at the Carlson School on total quality improvement, we know-- and I believe that Governor Pawlenty is doing a great job-- that we can address our state's allocation of resources and our processes in the same way and try to achieve better productivity.

But we also know that education will respond to some of these techniques, but at the same time, there is a one-to-one nature in human relationships that's very, very important. And there, I do think that not only corporations, but the private individuals, we can tax ourselves or we can reorder our personal priorities.

And we can mentor a child. We can become a big brother or a big sister. We can, as corporations, try to adopt schools. We can, as individuals-- and I think, in fact, we must as individuals reassess our personal expenditures and see if there aren't ways that we can, as parents, as grandparents, as busy as we are, as busy sort of stressed, high-energy adults, we have got to re-engage in the schools.

We know that the schools where the children do best are the schools with parental involvement. If there aren't-- if there isn't that kind of support, you cannot raise taxes enough to create that kind of support. That is Minnesota. And we as Minnesotans really have to go back to saying what we're proud of, from our roots.

Our ancestors built the school and the barn before they built their home. And I think we have to remember that. And we've got to vest ourselves in the future. And that means. I can't protect my grandchildren if I don't protect those children who are left out.

If I don't worry about that achievement gap, if I don't care about the anger and the dislocation that it brings about, then how can I protect my child? Whether they're working in a tower in New York, whether they're working-- whether they're on a playground, we've seen violence in churchyards. Where will they be safe?

The world is-- we have much broader responsibility than we did before. We don't live in a little town anymore where we can be independent and isolated. We are so interdependent that we need to acknowledge with all our wonderful, high-energy, pioneering, independent spirit, we also need to acknowledge our interdependence.

DAN OLSON: Marilyn Carlson Nelson, the CEO of Minnetonka-based Carlson Companies. You're listening to Voices of Minnesota on Minnesota Public Radio. I'm Dan Olson. Carlson Companies is a nearly $21 billion a year business.

Marilyn Carlson Nelson says it has survived a triple whammy and is growing again. Terrorism, SARS, and a sinking economy hit the travel and entertainment company hard. The threat of terrorism lingers, but the economy has rebounded, and travelers' fears of catching SARS have apparently subsided.

The result is Carlson Companies' more than 800 hotels worldwide, its cruise ships, and its Carlson Wagonlit Travel businesses are growing. The company's restaurant business, including its 740 TGI Fridays, were not hit as hard and remain strong. The turnaround is illustrated by Carlson Companies signing a deal earlier this year with China to build hotels and try to corral some of the business from the Mainland's burgeoning middle class.

When she's not talking about Carlson Companies, Marilyn Carlson. Nelson is touting the business potential of women. She chairs the National Women's Business Council, an appointment made by President Bush.

There's been improvement in the employment and economic status of women in this country the last few decades. What do you think? Has the progress plateaued? Has it has it gone backward? Where is it at?

MARILYN CARLSON NELSON: No. We are interested in the fact that women are starting businesses as entrepreneurs at twice the rate of men. Now, I think it's a very interesting phenomenon. And it may mean that we in corporate America are not accommodating the women in our workforce with the kind of flexibility they need, especially at various flex point in their life.

I think we're doing better. I feel good here at Carlson about not only here in the headquarters, but really, across our network at the way we manage flexibility for people with small children, about the daycare, the daycare support that they get, and that piece, both for the women and the young men, has improved. The place that we feel-- that I feel we are not accommodating their needs is that more women seem to stop out right at the time their children get to about junior high, where they need lots of-- where they're involved in a lot of activities. They're not driving yet.

They may be at a kind of more vulnerable time sort of socially. And I'm looking to find some models of how to make sure that we can have reentry, that women can feel comfortable to step out. Because we do care about families. We do understand there are stress points, and that if either a male or a female executives needs to step out to accommodate their family, we are looking at how to facilitate their reentry.

What concerns me most is that Simmons College, along with the committee of 200, did a study of young women aged 14 to 17 and their attitudes toward business, and it broke my heart. Because what it said was that young women didn't see business as an opportunity to make a difference. Well, that makes me very sad, and actually, very angry.

It says that the Enrons of the world have done just a terrible blow, not just to the general population's attitude toward business and business leaders, where trust of business is, really, at its lowest point, I think, here, and across the world, where I see business as an opportunity to make extraordinary commit-- make an extraordinary difference. It's business, the economic engine, the creation of jobs, the knowledge sharing, the career development, but in addition, the opportunities to transfer knowledge.

If you work for us, and you're in our franchise area, and you go in and you teach the people in Taiwan or in Africa, you transfer franchise skills. You teach them to run a restaurant. You teach them to run a hotel. The predictability of their success, it's graduate school for them.

Sometimes, it's high school and graduate school all at once. But you can sit at home and you can say, I want to be a missionary. I want to go to Africa. And that's great and I value that. But the fact is that if you find a spot in business and you can create a mission-driven environment where people believe in themselves, where they care about each other, where they empower each other, that those people then can go back into their schools and into their communities and ultimately work across the world and can demonstrate that this kind of empowering, enabled environment where people believe in each other, where we believe in the good in each other can make such a powerful difference.

DAN OLSON: Marilyn Carlson Nelson. She's the chair and CEO of Minnetonka-based Carlson Companies, the world's largest travel services business. You're listening to Voices of Minnesota on Minnesota Public Radio. I'm Dan Olson.

Carlson Companies is the first major North American travel business to sign a code of conduct to protect children from commercial sexual exploitation. North America, by one estimate, has two dozen sex tour companies. It's unusual for a business to take a stand on a social issue. Marilyn Carlson Nelson says the motivation came, in part, from a request by the queen of Sweden.

The Carlson Family Foundation is a sponsor of the World Childhood Foundation. Started four years ago to fight the commercial sex trade of children. Why did you make a decision to support this?

MARILYN CARLSON NELSON: When Her Majesty, the Queen of Sweden, who had been a friend through many years, came to us, she was talking about things like child sex trafficking, where, at any moment in time, 200,000 children, some of them as young as six, are being bought and sold. And it's unthinkable. It's dark. And it's just a very difficult problem.

Not only did we found it, there are now projects in, I think, seven countries. And it has led us to hold babies in Russia that were picked up off the street, in orphanages. It's led us to visit with children who have been trafficked and then discarded and who were found near death. Have agencies that are reaching out and helping these people put together their broken hearts and their broken souls and their broken lives.

And then, the foundation has encouraged us also to look at the demand side, encouraging nations around the world to create a legal approach to this problem, which says that any one who travels and abuses children, takes advantage of children in another country for that kind of sexual pleasure will be incarcerated when they get back home. And there's now a global network of countries that is working to identify those, both those who are the regular abusers, and then has encouraged people in the various travel and tourism businesses to raise the awareness of this problem so that the occasional temptation which might come when people were traveling, in particular, men were traveling and were told this is just part of a culture, this is what we do here, that we, along with others in the travel and hospitality business, could become part of an awareness network that makes it clear that this is illegal in any country in the world and that it is inappropriate and that there are repercussions, and that you can, indeed, be incarcerated for that.

I was worried when we began to talk about this with our people because our business is a happy business. Our business is a business of providing leisure time activities and experiences for families, and individuals, and singles, and cruise ships, and so on. What's been so wonderful is that our customers, our employees, our suppliers are just saying, bravo. We cannot have this.

This is not consistent with the 21st century. We don't want 21st century slavery. And we want to participate with you in making sure that there's a high level of awareness and that we don't in any way encourage, but rather, become part of the solution with this problem.

DAN OLSON: Marilyn Carlson Nelson says some of her business training came while she was a child. She recalls two lessons, one about compounding interest, and the other about who controls the votes on the board of directors. The Carlson family was not wealthy when you were growing up. Tell the story of your father's advice about eating dessert.

MARILYN CARLSON NELSON: Well, we were a very close family, so we had the real kind of wealth, I think, that comes from having a very healthy, close family with an awful lot of relatives around us and a great support system. But in terms of financial well-being, I learned very early about choice, and that stewardship of capital, whether it's your weekly allowance, or your family's capital, or your corporation's capital, involves prioritizing and choice. And when my sister and I were very small and we ate at restaurants, sometimes, dessert was included, but sometimes, it wasn't. Dessert in those days was often Jell-O or tapioca or something.

But my father would always ask us to note if dessert was included. And if it wasn't, that we really shouldn't have it. And of course, we would beg for ice cream or a hot fudge sundae or something. And not that he didn't from time to time relent, but the fact was that he used it as an opportunity to teach us about compounding interest.

And we would have to sit with a little pencil at those darn old Formica tables in those restaurants and we would have to figure out if instead of eating dessert, we invested it, and we got whatever the percent was in those days interest, that we would double our money before long. And by the time you were finished, the idea that you ate dessert and it went away forever was just an appalling thought. And nowadays, I suppose it would be a good obesity program as well. Obesity prevention.

But it actually did make an impression. I remember-- I actually have a very vivid memory of being out in the backyard on one of those swing sets that we all used to have with the metal structure, and my sister and I were swinging. And my dad and mom came out and my dad was going to have a family vote. There were my mom, my sister and I, and he, and we were going to vote whether to take a vacation that summer or to invest in the company because he had a great new opportunity.

Well, we voted for the vacation, three of us. But then, he announced that he actually had four votes. So it ended up 4 to 3 and we didn't take the vacation.

DAN OLSON: Marilyn Carlson Nelson and her husband, Glen Nelson, are parents to three children. Nearly two decades ago, a college-age daughter died in a car crash. During our interview recorded late last fall, Marilyn Carlson Nelson says the memory of her daughter is always with her, especially during the fall of the year. How has that changed your life?

MARILYN CARLSON NELSON: Well, it was in 1985, and it was in the fall. So this fall, which has been so beautiful, it's as if I've particularly been thinking of Julie every day. I'm sure on one level, we don't have her laughter. We don't have her beautiful enthusiasm. She was the one who always said, look at the sunrise, everybody.

She just brought so much joy. And it's just like a ray of sunlight that went out of our lives. I think the most powerful lesson is, first, to cherish the people around you. Try not to let a day or a moment go by that you don't somehow overcome the petty things that get in the way of our relationships and that you let each other know. And you remind yourself how much you care.

And I don't think there's anything more powerful than acknowledging your relationships, not just with your family, but with your friends. Juliette died in October. The previous spring at Blake School, she had given a speech. And in her speech that few months earlier, she had said, what if you were told that you weren't going to make it home tonight? What would you regret?

Would it be the A that you didn't get? Would it be having to go to the second choice of college versus the first? Or would it be the friend in need that you didn't take time to serve, or the family member that you didn't hug, or the person that you said something rude to and never could take back? Juliette, in her own words, taught us that. And we've read and reread those words.

So I think that Glen and I-- sometimes, it may seem a little frantic. Perhaps it accelerated or amplified our sense that we should use the time that Juliette didn't ever have to try to make a difference. And as I've always said, I'd like to live each day so that if it were my last, I'd be willing to sign my name to it, just like a painter signs their name to a painting.

So sometimes, on the way home, I ask myself, was this a day you'd sign your name to? And I'm not always able to answer yes. But it's a good-- it's a really good exercise.

DAN OLSON: Marilyn Carlson Nelson, thank you so much for your time. What a pleasure to talk to you.

MARILYN CARLSON NELSON: It's a pleasure to talk to you.

DAN OLSON: Marilyn Carlson Nelson is the chair and chief executive officer of Carlson Companies. You're listening to Voices of Minnesota on Minnesota Public Radio. I'm Dan Olson.

Mayo Clinic in Rochester is one of the world's most highly regarded medical companies. The chair of the Mayo Clinic Board of Governors is Dr. Hugh Smith. I talked with him in his Rochester office.

Smith was born in Winnipeg, Manitoba, to an American father and Canadian mother. He played college hockey and was headed for a degree in engineering before he switched to medicine. His medical degree is from the University of Manitoba Medical School.

Smith is a cardiologist. He helps lead a health provider that employs more than 27,000 at its Rochester facility. Revenue last year from all Mayo Clinics, including those in Florida and Arizona, amounted to nearly $5 billion.

Mayo is facing increasing competition from other health care companies. All suppliers of health care are facing pressure to rein in rising health care costs. At the same time, there's a potential wave of medical advances on the horizon linked to biotechnology. Mayo and the University of Minnesota are partners in a Biotechnology Research Initiative. The research has been slowed by the inability of Minnesota lawmakers' last session to agree on a borrowing bill that includes money for helping fund the research.

The University of Minnesota, Mayo have large endowments. You've already, at Mayo, I think, funded some of this research effort out of your own pocket. Presumably, if you really wanted to go after it, you could just write the check for the whole thing, could you not?

HUGH SMITH: That's a great leading question, Dan. I'd love to be able to tell you yes, but there is not a big check that either the university or Mayo can write. I can't speak for the university, Dan, but I can just say, every dollar of endowment that Mayo has is fully invested in research now.

But we're still-- this is a major new biology, and it takes major investment. And so we're looking at a time-- we're on the cusp of some significant advances. And we've got a terrific investment so far at both the university and Mayo, but we're going to need this extra little oomph to really get us fully launched, and that's not quite there yet.

DAN OLSON: Are we talking about research that will, for example, in the case of the Olson family lineage, check back on my predecessors and be able to look ahead as well for genetic links to preventing disease?

HUGH SMITH: Yeah. The focus is on both genomics, which is looking at genetic predispositions-- for instance, your fairer than me. If both of us went out in the bright sunshine, you might sunburn. I might not. So that's just a simple genetic susceptibility.

And we use the old saying that genetics loads the gun, but the environment pulls the trigger. So what is it? What is it in our environments? Why do some people who smoke get lung cancer and some people don't? Is there a genetic predisposition? Almost certainly.

Is that something that we could identify more effectively with screening and be more effective in preventing or treating? Almost certainly. So that's where we're headed with that.

DAN OLSON: There are those who say states such as California and other places are so far ahead of Minnesota in this area, why bother? We're a smaller state. Granted, we have two famous institutions, Mayo and the University of Minnesota. But really, everyone is way far out ahead and we should more wisely spend our dollars, I think the argument goes, on some other areas of research.

HUGH SMITH: Yeah, well, I know there's this Minnesota nice, and we tend not to brag about ourselves, but I think we can carry it too far. In not bragging, that's fine, but being down on ourselves when we are really good and have some great, great potential here and some great already investment here is not to put Mayo and you and Minnesota, where they belong. Let me just say, California does have significant genomics and biotechnology investment, but so does Minnesota.

The combination of the university and Mayo is a big leg up. The other thing, this state has a great work ethic. It's got some a very well-educated workforce. There's a big commitment to education in this state. And it's one thing to have funding, but you have to have the people capable of moving it forward.

We're in the situation where we've got tremendous investment in technology and people here now. All we need is this extra oomph from the capitol to move us forward. I don't subscribe at all to throwing in the towel just because California happens to have a little bit of this or a little bit of that.

DAN OLSON: Dr. Hugh smith, the Chair of the Board of Governors of Rochester Mayo Clinic. Mayo, a few months ago, entered what some called the paperless age. Doctors' notes from patient visits are no longer written longhand, but instead, entered into a computer record-keeping system.

Digitizing patient records, supporters argue, saves money, time, and patient lives, because a single record available to everyone treating the patient reduces health care mistakes. But the paperless initiative is expensive. Health care companies have been slow to adopt it. The federal government supports the idea, but Congress recently declined to fund a government-backed effort that would encourage other health care providers to adopt the practice.

Perhaps you're proficient on the keyboard. Some medical doctors may not be as proficient as you. And so it takes them a while to get those notes into the digitized system. And doesn't that take valuable time, valuable medical doctor time away from seeing more patients?

HUGH SMITH: That was a great assumption, Dan, but if you saw me type, I use both index fingers, and it's painful to watch. We actually can dictate our notes. And the dictated notes are transcribed into the electronic medical record. Then, when I pull them up, I edit them with these two fingers.

But we're not asking physicians to be distracted from patient care by being the person at the keyboard. Some of our-- particularly, our younger physicians, who've had computer skills and typing skills, they find it fastest just to get on the keyboard. I prefer dictating.

DAN OLSON: Won't this sort of record keeping, not just at Mayo, but anywhere open up a brand and broad new realm of information to potential hackers, some 17-year-old sitting off somewhere who thinks it's going to be a challenge to break into Mayo's patient medical record system.

HUGH SMITH: That's a very valid question, and it's something that we have spent a great deal of time and effort building a very secure firewall. And we have-- by a firewall, that means we have essentially created an impervious barrier to outside hackers. I can't remember the number, but I think we detect and reject over 100,000 attempts a day. But we're not alone in this.

A lot of institutions face threats from hackers. I will just say that we put at the very top of our priorities the confidentiality of the medical record and the identity protection of our patients. It's essential to having our patients work in partnership with us in moving the science forward.

DAN OLSON: Well, I'm 54 years old. Is there a lot of pressure on medical companies to get a look at Dan's record to see if his sky high cholesterol is any lower and if he's any kind of a risk or, if old Dan has a propensity in his family history for skin cancer, or whatever. You name it. In other words, employers and others wanting to know what all of this fine research can tell them about my likelihood to croak early or live on and be productive.

HUGH SMITH: Well, I'm not going to speculate on your own personal health, Dan. All I'll say is that those questions and challenges have antedated electronics and the electronic medical record. And Mayo has a policy. No information is released to anyone except you and the physicians that you name without your own personal prior consent and approval.

And so is that an electronic challenge? Actually, it's existed for our paper records before, and we'll stand by those policies. It's up to you to give us the green light on if and when and where you want any portion of your medical record released.

DAN OLSON: Dr. Hugh Smith, Chair of the Rochester Mayo Clinic Board of Governors. You're listening to Voices of Minnesota on Minnesota Public Radio. I'm Dan Olson.

Dr. Smith's views on reforming the US health care system brought out some comparisons with Canada and other countries. The US spends more of its gross domestic product on health care than other industrialized nations. Reformers often point to Canada's nationalized system as a model.

But Canada is struggling with huge health care funding problems and long delays for patients. Every month, every year, tens of millions of Americans are going without health insurance, and instead, use emergency rooms as their health care system. So what's the solution?

HUGH SMITH: Well, if there was a simple solution, Dan, it would have been solved long ago. I think it's a combination of things that need to occur. The first is we're all required, if we have a car, to have car insurance. But there are over 40 million Americans without health insurance.

The statistics are that 70% can afford it. They elect not to. Now, who are those people? They're largely young people. Healthy. When I was that age, I thought I was immortal. That opinion is changing a bit.

But health insurance, when you're young and feeling healthy, is way down the list. But if you think of car insurance, there is a policy in car insurance that if you've had a lot of accidents, you wind up in an assigned risk group. What's happened with health insurance is those of us who get health insurance are virtually in assigned risk because 40 million of Americans are out there with no insurance, and they're largely the lower risk.

So one is having more universal health insurance. Two, make it more affordable. How do you make it more affordable? Well, maybe they have to sign up for is catastrophic health insurance. They may be young and healthy until the moment they're in a car accident. And so catastrophic insurance would be one way to go.

The other is to get the free market, the American enterprise really engaged in this. There is a federal employees health plan which is competitive-based on not just price, but on quality. So the federal employee health plan is probably a better way for us to go with Medicare.

It requires that people step up who are providing the care or providing the insurance and provide on the basis of cost, quality, and outcomes. So that should be happening, in fact, in Medicare.

There's another challenge in that health plans are required to cover lives up until age 65, and then they hand the problem over to somebody else. Does that encourage longer range thinking, or do you, just by the way it's set up, have private plans focused mostly on getting people through to age 65?

DAN OLSON: You were trained for medicine in Canada, and much is made of Canada's health care system and compared with Great Britain's. But they also have private hospitals for those people who don't want to stand in line, who don't want to wait. And if we went public, would that happen in the United States?

HUGH SMITH: Actually, if I could just back up, Great Britain has their National Health System, and then a private system, what's called a two-tier system. Canada has largely resisted a two-tier system. What Canada is coming around to realizing, the second tier exists south of their border in the US.

And so Canada has approached the cost problem by rationing resources at the front end, limiting supply. And that's a challenge. That's not the way to do it. I think you need to incent customers to use the limited supply or the limited dollar resources in a more thoughtful way. So Canada right now is having longer wait times for procedures. The outcome of that is, I get the sense, if Mayo is an example of a border city, that more and more Canadians are concerned about the wait time and are seeking health care south of the border.

DAN OLSON: What is our rationing system in this country? People like me, who have the privilege of having employer-paid health coverage, I'm taken care of. And yet, are we rationed as well, those of us with coverage, because of the management companies saying upfront, wait a minute. That's a little too much treatment you're getting there. Or, wait a minute, you can delay that treatment.

HUGH SMITH: Yeah. We haven't gone at this so much by limiting the number of MRI or CT scanners like Canada has done. The MRI and CT scanners are there. When we had a lot of HMOs in the 1990s, they told you what you could have and couldn't have.

Now, Americans love choice. So now, there's been an evolution, really, to, well, you can have it, but you may have to pay a portion of the percent of it. So it's making-- health care consumers are really being incented consumers. And I think understanding human nature and allowing people choice, but having them share, to a modest extent, in the consequence of choice is not really that bad. I think that's actually a positive component of the plan. It's what allows health care to become more affordable.

DAN OLSON: Is one of the reasons medical costs are rising so fast and medical costs are such a huge part of our gross national product compared to other countries is Americans just want too much health care? We go to the doctor's office too often. We're a little-- we're hypochondriacs.

HUGH SMITH: I think Americans are-- most Americans are pretty healthy. The rule of thumb is that between 15% and 20% of our population accounts for 80% of our costs. And many of those in that 15% to 20% can't help it. They have diabetes, or they have some chronic disease.

We need to get better at managing chronic disease in a long-term, preventive way. It should be managed to keep people out of hospital. It should be managed for the ounce of prevention and not managed as it is now, on the pound of cure. So we need to be much more proactive in identifying those patients at risk for a lot more downstream health problems, hospitalizations, and doing everything we can up front to prevent them.

DAN OLSON: On drug costs, are Americans, by and large, compared to some other people in developed countries taking too many medicines? Are we over prescribed? 80-year-olds taking cholesterol-lowering drugs when they beat the odds. My goodness, they're still alive at 80.

HUGH SMITH: That's a tricky social question. Let me give you-- since you chose cholesterol, I'm going to tell you that the greatest benefit in terms of cardiac event reduction and survival is for the lipid lowering drugs on those over 65. And so they're at highest risk, and they're the ones where the drugs have the biggest impact.

So I think what you're getting into, Dan, is something which is, you have to individualize. And I think we all know 85-year-olds going on 95, and we 85-year-olds going on 65. And so this is something for the physician and the patient to, I think, work out together. And none of us like to be regarded as someone who isn't an individual. And so I think cookbook medicine as its used, if it was used uniformly, without recognition of individual needs and lifestyle and health problems is not the way we want to go.

DAN OLSON: Do we know much about how we compare with patients in other developed countries? Do they take lots of pills, too?

HUGH SMITH: They do. And we're just seeing some data that would suggest that while Americans feel they're spending a lot for health care, if you look at the Western European countries, they're spending virtually every bit as much. And it's the old story. What are the benefits? What are the yields? What are the outcomes you're getting for that expense?

For example, about 10 years ago, I had an owner, employer of a small company of about 120 employees tell me that he was very concerned about the rising health care costs. And I appreciate that. He commented that he had just seen the bill for his administrative executive secretary, and she had gone into hospital. She'd had a gallbladder removed. And that he got a bill, and I can't remember the thousands, but it was something quite shocking to him.

The point is she had a laparoscopic surgery on a Thursday, and she was back working Tuesday. So he hadn't weighed into the equation, if she'd had surgery the old way, it might be two more weeks that he would be without his executive secretary. And when I made that comment to him, he kind of blanched and he said, yeah, I see what you mean. Because I think she was a pretty valuable person in his organization.

So the question is, yes, there's a cost, but what do you get for it? And I think that's part of why I couldn't give you a simple one note answer to your earlier question. Everything has a cost, and you really need to understand, what is its value? What is the gain for it?

DAN OLSON: Will wider use of physician assistants and nurse practitioners slow the rise in health care costs in this country, do you think, Dr. Smith?

HUGH SMITH: A little. But if you look at the physician component over the overall health picture, it's well under 25%. So you would be dealing with one of the smallest components of the cost. But that doesn't mean we shouldn't be turning our focus into everything that costs. And I believe, quite honestly, that allocating health care tasks to the least expensive level of competence is a good way to go.

Now, that requires judgment, and it requires wisdom as to what's the level of competence. But we're working on that. That's no different than any other sector of our economy. You want to always allocate tasks or functions to the least expensive level of confidence. Health care shouldn't be excluded from that form of efficiency.

DAN OLSON: You probably don't have a chance or time in your schedule to travel a lot, but as you talk with colleagues around the world, and as you see other countries' health care systems, what are some of the ideas? What are some of the techniques? What are some of the practices? What are some of the drug pricing policies that we could adopt here that you think puts us, frankly, a little bit behind the times in this health care culture?

HUGH SMITH: Well, I'm not sure we're behind the times. We've already talked about Canada. And I'm not sure that rationing resources is the way to go. People are moving with their feet, and we're seeing more of them getting health care south of the border.

You look at other countries, and they've either used rationing, or they're using systems that don't arbitrarily split your health care by the magical age of 65 from one group of responsible people to another, or-- and I think these are the ones that have the greatest hope-- they're harnessing the energies of free enterprise and competition and they're allowing the customer choice, understanding there's some co-pay for choice.

DAN OLSON: Dr. Hugh Smith is Chair of Rochester Mayo Clinic's Board of Governors. He's also a practicing physician. He had four appointments with patients lined up after we finished our late morning interview. He argues that Mayo's system of paying its doctors and reviewing their work is a good way to do medical business.

Are the Mayo doctors, are you any different from any other doctors in America? You have a health company. I think you have a contract with-- Mayo has a contract with health companies who are watching, waiting, seeing, oh, oh, Dr. Smith is ordering too many of this kind of procedure and in contact with you and saying, come on, what are you guys doing over there?

HUGH SMITH: That's a very interesting question. We are, I don't think, different from other doctors by being individuals. There are excellent doctors all around this country. But we work in a different environment. And there's two things I want to make about the environment.

The first is that all physicians at Mayo are salaried. That's an important point because I make decisions without any personal economic input into that decision. And when I ask a cardiac surgical colleague of mine to see a patient and I say, Tom, is this patient at the point where we should be considering cardiac surgery now? The answer I'm going to get from Tom is based entirely on the patient's status and timing of surgery and have nothing to do with his own economic aspect. That's part one.

Part two, I'm going to come back to the importance of the medical record and having the medical record go everywhere that the patient goes. Now, I talked about it earlier, that this means all the key information, all the key medical information on that patient is there at the time that I may make a decision regarding therapy for that patient. But also in that medical record are the results of histories, physical exam, test ordering, logical clinical decision-making, follow through of my colleagues.

So in a way, everyone at Mayo is practicing in a goldfish bowl. Every physician at Mayo has the quality of their practice under peer review by colleagues. Now, you can put all the rules you want into place. Let me tell you that ego is a powerful driver, and peer review is a powerful driver.

And so two of the things that are unique at Mayo are the salaried aspect. I won't spend any more time on that. But this other one that's very important is the peer review and practicing in a goldfish bowl.

So my colleagues know if I've ordered the right tests on these patients, if I've come to the logical clinical decision-making. Have I selected a form of therapy appropriate to their disease and severity of their disease at that time? I think there is a unique environment here that allows people to be their best.

DAN OLSON: Dr. Hugh Smith, thank you so much for your time. Pleasure to talk to you.

HUGH SMITH: Pleasure to talk to you, Dan.

DAN OLSON: Dr. Hugh Smith is the Chair of the Rochester Mayo Clinic Board of Governors. You've been listening to Voices of Minnesota on Minnesota Public Radio. I'm Dan Olson.

GARY EICHTEN: Well, that does it for our midday program today. Of course, Dan is the producer of our Voices of Minnesota series. Always does a fine job. If you're interested in hearing any of these Voices programs, just go to our website, minnesotapublicradio.org, and go to Midday, and then you can hear whatever programs you might be interested in. minnesotapublicradio.org is our web address.

Tomorrow, Midday goes to the Capitol. Each year for, oh, the last many years now, first day of the legislative session and the last day of the legislative session, we've gone to the Capitol to talk with legislative leaders, key legislators about the big issues. We'll be up there again tomorrow, Mike Mulcahy and I. Hope you can tune in, 11:00 to 1:00 here on Minnesota Public Radio. Thanks for joining us today.

SPEAKER: On Friday, January 14, join Garrison Keillor, the guy's all-star--