By Jaan Sidorov, MD

Investors just ponied up well over $100 billion for a piece of the social media giant Facebook. While Mr. Zuckerberg and his co-founders deserve a hearty congratulations, I find some eerie parallels between Facebook and accountable care organizations.  The similarity does not bode well for either business model.

1. The users are not the customers: Facebook sells its users to marketeers.  ACOs sells its patients’ health care utilization to insurers.

2. It’s the data and it’s not yours: Facebook’s targeted ads are constructed off of prior usage patterns. ACO’s shared savings calculations are built off off actuarially determined health care utilization patterns.

3. Sovereign hostility: Washington DC views information technology and health care as distractions from the true task at hand: restoring the U.S. manufacturing base.

4. Do you care, really? Now that the wunderkids in charge of Facebook have made their millions, it remains to be seen if they’ll work as hard in delivering value to its users.  Ditto for all the salaried docs working for ACOs, who no longer have to arrive early, skip lunch and stay late.

5. The long term: Yahoo once was the darling of internet investors.  Even if ACOs have initial success, is a better care model being developed as you are reading this?

Continue reading “The Facebook-ACO-Military-Industrial Complex”

By Aaron Carroll, MD

As I noted last week, I get a little annoyed by the seemingly constant public complaints of physicians, coupled with threats to leave medicine and dire warnings that no one will want to be a doctor in the future. This is in spite of it still being one of the most trusted professions around, and one that is darn well compensated. So it’s nice to see that the general public hasn’t bought into this meme yet (from the AAMC 2011 Medical School Enrollment Survey):

• First-year medical school enrollment in 2016–2017 is projected to reach 21,376. This projection represents a 29.6% increase above first-year enrollment in 2002–2003 and comes close to reaching the 30% targeted increase by 2015 the AAMC called for in 2006.
• Of the projected 2002–2016 growth, 58% will be at the 125 medical schools that were accredited as of 2002. New schools since 2002 will experience 25% of the growth, and the balance (17%) will come from schools that are currently in LCME applicant- or candidate-school standing.

Continue reading “So it Turns Out that Lots and Lots of People Still Want to Be Doctors”

By Peter Ubel

Imagine for a moment that you are an oncologist caring for a 53-year-old man with metastatic cancer, a person whose tumor has spread to lung and liver.

With standard chemotherapy, this man can expect to live around 12 months.  That standard treatment isn’t all that expensive in today’s terms, only $25,000 and his insurance company will pick up the entire tab since he is already maxed out on his yearly deductible and co-pays.

But wait!  Before prescribing the standard treatment, you find out there is a new chemotherapy on the market, one that costs $75,000 (in other words, fifty thousand dollars more than usual care) and has no more side effects than that standard treatment.

How much longer would patients like this have to live, on average, for you to feel that this new chemotherapy is warranted?

That’s not an easy question to answer.  But it’s not an impossible one either.  Clearly if the treatment would provide only, say, 1 day of additional survival on average, that would not amount to $50,000 well spent.  Just as clearly, if this man could expect 10 years of additional life, no one would deny him this new treatment.

So when, between 1 day and 10 years, does it become a tough call whether to prescribe this new treatment?

Continue reading “Paying an Arm and a Leg for a Month of Life?”

By John Goodman

Social Security, Medicare, Medicaid and other social insurance programs are bankrupting America. They will produce ever-escalating deficits for as far as the eye can see.

So what can we do about it? All we hear out of Washington are “eat-your-spinach” solutions — both from Democrats and Republicans. These involve cutting benefits, forcing doctors to ration health care, etc. Naturally, the beneficiaries resist such change.

My colleagues and I at the National Center for Policy Analysis have been thinking about a different approach. Reform of entitlement programs should be a win-win proposition. That is, it should be good for the individual who agrees to accept fewer government benefits as well as for the taxpayers.

Does that sound too good to be true?

Here is part of the idea.

Opportunities to Opt Out. People of any age should have the choice to opt out of social insurance in favor of alternatives that better meet their individual and family needs. In particular, they should be able to substitute assets and arrangements they have voluntarily chosen, and that they own and control, for the government systems they are now forced to be part of. In particular:

• People should be able to substitute private savings, private pensions and annuities, and private insurance for participation in Social Security.
• They should be able to substitute private insurance and private health savings for participation in Medicare and for participation in the federalized health care system sometimes called ObamaCare.

Continue reading “How We Can Keep from Going Broke”

By Harold Pollack

This post considers potential pitfalls of home HIV testing. It provides an excuse to write a slightly less nerdy column on the mathematics of screening tests.

My friend and co-author A. David Paltiel flew in from Yale to speak with my University of Chicago students. David is a national authority on medical cost-effectiveness, particularly in matters connected with HIV. For example, this beautiful New England Journal of Medicine piece showed that population HIV screening is surprisingly cost-effective, even in relatively low-risk populations. In significant measure due to this analysis, the Centers for Disease Control and Prevention modified national guidelines to promote much more aggressive HIV screening in a variety of settings. So if your primary care doctor or emergency department nurse asks you whether you’d like an HIV test–blame Paltiel.

David and I have published related work on issues surrounding home HIV tests, now under FDA review. (See a great earlier commentary by Walensky and Paltiel here.) To simplify things, the idea here is that you could go to your local Walgreen’s and buy a test kit for about $40. You swab the thing around your mouth. In about 20 minutes, with impressive “accuracy” (in a minute I’ll explain why the commonsense word “accuracy” is a slippery way to describe screening tests), the test will say whether you are HIV-infected.

One natural group of customers might be romantically-involved University of Chicago students: They go out on a date. It goes well. They buy a pair of test kits (maybe romantically sharing one) for a quick HIV test. If the tests come out well…. whatever one cares to happen can now proceed.

Is this test a good idea? In some ways, yes. This normalizes testing. Some people will get tested who would not otherwise obtain care. But there are a variety of reasons to worry. One issue concerns the ability of ordinary people not to mess the test up. A second issue concerns whether home HIV tests will lead people to avoid other medical and public health systems that could provide better counseling and (if needed) stronger post-test linkages to care.

Continue reading “Don’t Try This at Home: The Mathematics of HIV Testing in Low-Risk Populations”

By John Goodman

We’re not quite there yet. But there is a new website that is getting close.

A small, emerging online service called MediBid is creating an actual market that puts doctors together with patients who need care.

Here’s the best thing about it. Patients who use this service can cut their health care costs in half. No, that’s not a misprint. Patients who obtain care through MediBid pay about half as much as BlueCross pays. Ditto for all the major employer plans as well as the other big insurance companies. Patients frequently pay even less than what government pays under Medicare.

Here’s the worst thing about it. Once ObamaCare kicks in, entrepreneurial ventures like this one will probably be nipped in the bud. That’s because the Obama administration doesn’t believe that patients can or should be able to buy care in an open marketplace. In fact, once they get through implementing the 2,700-page bill with 159 regulatory agencies and 10,000 pages of regulations, patients are unlikely to ever see a real price for any type of care.

At least for the time being, however, a market for medical care is emerging. Here’s how it works.

Patients who are willing to travel and able to pay cash, can request bids or estimates for specific medical procedures. They fill out medical questionnaires and they can upload their medical records. The patient’s identity is kept confidential until a transaction is consummated. MediBid-affiliated physicians and other medical providers respond by submitting competitive bids for the requested care.

Continue reading “Can Health Care Be Bought and Sold on eBay?”

By Emma Dolan

The Government Accountability Office (GAO) recently released a report that cites “substantial variation” in the prices paid for implantable medical devices in the Medicare program, and a lack of robust data needed to properly compare the prices paid for these devices across surveyed hospitals. A key driver of both of these findings is the existence of confidentiality clauses in medical device purchasing contracts that prohibit hospitals from sharing prices with third parties, including physicians, the health plans that pay for these devices, and patients.

It was with a sense of déjà-vu that I read this report; in 2010, UC Berkeley professor James Robinson and I published a series of briefs looking at variation in implantable device prices in California hospitals as part of a joint Value-Based Purchasing of Medical Devices project between the Berkeley Center for Health Technology and the Integrated Healthcare Association (IHA). This project included data collection on device costs, total surgical costs, complications, and length of stay for seven orthopedic and cardiac procedures in 45 California hospitals.

The data, as well as a series of IHA-sponsored roundtable conversations with stakeholders, found the same thing that the GAO report finds: a lack of transparency in device prices, sometimes driven by clauses that prohibit hospitals from disclosing the prices paid for devices, a lack of alignment between hospitals and the physicians practicing within their facilities, and very substantial variation in both the prices paid for devices and the total costs of the procedures used to implant these devices. For example, the average cost hospitals paid for knee implants ranged from $3,408 to $10,830, and the average paid for implantable cardioverter-defibrillators ranged from $19,578 to $35,916. There was also a substantial amount of within-hospital variation in device prices.

Continue reading “Price Variation and Confidentiality in the Market for Medical Devices”

By Mike Miliard

Healthcare reform is arguably the hot-button political issue of our time. And with the Supreme Court locked and loaded to decide the fate of the Affordable Care Act this summer, it’s a safe bet the controversial two-year-old legislation will have a huge impact on the 2012 election and beyond.

But what about health IT? If “Obamacare” has been a lightning rod, sparking historically nasty partisan bickering – Congress vs. President Obama, Republicans vs. Democrats, Fox News vs. MSNBC, the Tea Party vs. MoveOn.org – Washington’s efforts to spur healthcare information technology have enjoyed much broader support, on both sides of the aisle.

Just last week, a Washington think tank whose healthcare wing is led by two erstwhile rival Senate Majority Leaders put its weight behind smarter and more widespread use of technology and data exchange in healthcare organizations nationwide.

“To deliver high-quality, cost-effective care, a physician or hospital needs good information,” said former senator Bill Frist, MD, upon the release of a report, on Jan. 27, from the Bipartisan Policy Center’s Task Force on Delivery System Reform and Health IT. “Data about patients has to flow across primary care physicians, hospitals, labs, and anywhere that patients receive care.”

Continue reading “The Political Economy of Health Information Technology”

By Aaron Carroll MD

Lots of interesting feedback on my post on sugar regulation. Some of you have accused me of making straw man arguments; others have used straw man arguments to question my post. So let me take a few minutes to be clear about what I was saying. The article I referenced specifically questioned whether sugar should be regulated like alcohol and tobacco.

We regulate alcohol by making it illegal to use it before the age of 21. Period. We regulate alcohol by making businesses get a specific, and often hard-to-get, license to sell it. Where I live, it’s illegal to sell it on Sunday. We don’t regulate alcohol by limiting the amount you can put in a drink. Any bar can make any drink they like, with as much or as little alcohol as they want.

We regulate tobacco by making it illegal to use it before the age of 18. Period. We regulate it by making businesses sell it in specific areas, often hard-to-get at. It’s illegal to put it in vending machines. But we don’t regulate tobacco by limiting the amount you can put in a cigar. Any cigar maker can put as much or as little tobacco in as they want.

So when someone says that they want to regulate sugar like alcohol or tobacco, that’s what I think of. And it was what they meant, according to reports:

Sugar is so toxic it should be controlled like alcohol, according to new report that goes so far as to suggest setting an age limit of 17 years to buy soda pop.

Continue reading “Should Sugar Be Controlled Like Alcohol? Part II”

By Jason Shafrin

One of the provisions in the Patient Protection and Affordable Care Act (a.k.a ACA, a.k.a. Health Reform, a.k.a. Obamacare) is that it limits the profits of health insurance companies. The ACA imposes a minimum medical loss ratio (MLR) on all insurers. The MLR is the amount of money spent on covered person medical care divided by the total revenue received through premiums. There is some debate of what constitutes ‘medical care’ (e.g., do investments in electronic health records count as medical care?), but insurer profits certainly are non-medical.

The ACA requires health insurers in the individual and small group market to spend 80 percent of their premiums (after subtracting taxes and regulatory fees) on medical costs. The corresponding figure for large groups is 85 percent. According to a recent Kaiser tracking poll, 60 percent of the public views the MLR concept favorably, although only 38 percent was aware that the provision is in the ACA. Insurance brokers may be getting squeezed for insurers to meet this amount.

Even though the MLR is a national law, it may not apply in your state. Continue reading “Does Obamacare Limit Profits for Health Insurance Companies in Your State?”