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DSM/TECHNOLOGY: Is DSM going the way of the PBM? (mostly) by Matt Quinn

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From THCB’s disease management office, Matt Quinn passed this little morsel my way.  Apparently disease management is now so effective that employers, payers and traditional providers are increasingly unwilling to pay extra for guarantees that DSM works. Traditionally DSM companies have charged extra to guarantee performance, and then have been prepared to share risk–paying back some of the cost if the services didn’t save money on care of those patients in the DSM program. Now they are so effective that they just don’t need that extra revenue any more. As Matt writes:

    Essentially, LifeMasters and American Healthways (AH) are arguing that (in exchange for having no stake in whether their programs work or not) they can charge lower rates for their services.  And managed care companies are so confident in the power of disease management that they’re willing to save a few dollars in exchange for alleviating disease management companies from any risk.  AH’s three largest customers (representing about 70% of the company’s revenue) are all "essentially risk-free for AH from the standpoint of clinical and financial performance."  That these contracts are all in excess of five years in length raises the possibility that a plan could pound money down the proverbial rathole for years – and get little or nothing in return.

Now Matt may be being overly cynical about this, but consider Lifemasters’ CEO Cristobel Selecky’s statement "I think what everybody has come to realize is that after several years of doing financial measures, there’s a recognition that it’s very hard to do, and you never end up with any one right answer".  There seems to me to be a kernel of truth in her words, if not in her intent. Selecky could be interpreted as saying that, no-one knows what the heck DSM is supposed to be doing as part of the wider medical care process, so no-one can agree on whether it’s saving money or not, so customers are not prepared to pay extra to get rid of a risk that they can’t quantify or control.  That’s more or less what happened with the few at-risk contracts that the PBMs signed in the 1990s.  They are in general back in the business of processing claims for money. Matt thinks DSM will end up like "managed care"–looking like just another FFS plan–as a result, with a consequent (lack of) impact on costs:

    Perhaps this represents the next step back from the risk-sharing philosophy (in financial contracting) that helped allow managed care companies to reduce the rate of increase of medical costs in the 90’s.  I find it difficult to believe that–with little or no "skin" in the game–AH or LifeMasters (or your friendly neighborhood medical group for that matter) will work as hard to meet clinical or financial goals.  And how much did premiums increase this year?

  Maybe DSM works so well that it’s logically being "carved-in" to standard medical processes, and AH and Lifemasters and the rest are on their way to becoming extremely specialized call centers. However, this may all be a consequence of the fact that earlier this year AH had to pay a customer back $14m for not achieving goals in its DSM program–goals that AH later claimed couldn’t be verified anyway. (Interesting that they signed a contract to perform to goals that they knew they couldn’t measure!) Perhaps the DSM folks realize that its easier to just provide a service rather than be responsible for a defined piece of care, and that it’s called "going at risk" for a reason.

QUALITY QUICKIE: Are hospitals screwing over MD whistleblowers?

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Via DB’s Medical Rants, I found this series in the Pittsburgh Post-Gazette on how hospitals are using a wrinkle in an obscure 1986 Act to ruin–literally, professionally and financially– doctors who blow the whistle on poor quality care.  There are many short readable stories in this series, which is in day number 4.

We know from IOM reports and other sources that there are many mistakes made inside hospitals, and we know that many hospitals are desperate to improve their bottom lines, and avoid scandal, and would probably rather not hear about those errors.  So in my view, as Schwarzenneger said, where there is smoke there is usually fire. Go read and be very scared that this type of thing is going on, and then wonder if we really are serious about care quality.

TECHNOLOGY: Manhattan Research’s latest data on Cyberhealth

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I was kindly invited to sit in on a webinar by Manhattan Research this morning on their new Cybercitizen Health v3.0 data about ehealth consumers. The webinar used Placeware, a competitor of Webex that I used to use to do software demos.  Placeware was bought by the Evil Empire in Redmond last year and is the core of their new version of NetMeeting. Basically going to the pre-set up web site allows you to follow along with the speaker’s slides, while you dial into a conference call to hear the presentation.  You can also ask a question by typing into a box, and complete polls that the speaker sets you.  It’s a nice system, very suitable for online presentations and you can expect wider adoption of these webinars as people get used to it.

Manhattan Research is the survey part of the old Cyberdialogue, a company that made alot of noise tracking the eHealth space in the late 1990s, and incidentally was a rival in that to my group at Harris Interactive.  In 2001 the company split into two newly named units, with Fulcrum Analytics taking the CRM side of the business and Manhattan taking the research.  Manhattan has two major focuses in its syndicated research, Consumers and Doctors.  It performs extremely large and long phone surveys (3,500 consumer respondents with over 150 questions) and then follows up with online surveys. It’s physician survey has over 700 respondents, which is also very large for a doctor phone survey.  That means that you can cut the data several ways, which is useful for looking at subgroups of patients and physicians.  Harris, for comparison tends to do smaller phone surveys but larger online ones.  There’s a whole issue of survey statistical wonkiness that I won’t get into here, but take it from me that both these organizations do expensive and quality work, which is not the case for many, many surveys you’ll see quoted in the press.

So in this presentation Mark Bard, Manhattan’s president, pulled three broad themes out of the data.  I’ll relay them briefly here, but forgive the odd mistake as the presentation isn’t available online yet, and I was scribbling fast. (It probably won’t be available online unless you subscribe–getting more subscribers was, after all, the point of their webinar in the first place)

1) EHealth consumers are growing as share of overall online population.  There are 113 American adults online, 72 million use health information every 3 months or more, while another 10 have used some type of ehealth information at least once in the past year. The interesting part is the variation in activities online amongst the ehealth consumers, and their impact off-line.  The 82 million impact a further 50 million whose health they might be managing–Manhattan estimate that that includes 30 million kids, 10 million "lazy spouses" and 10 million parents or other elderly relatives.

2) About 20% of the 72 million are "caregivers".  That group is very active about using information found online. 68% use it to discuss care for themselves and others with their physician, 59% use it to discuss treatment options for particular diseases with physicians, and 65% conduct independent research about their and their relatives health online.

3) The roll of the connected consumer for health plans is also growing, but its currently very small. (I’ve commented on aspects of the reasons for this here and here). Of the 82 million, 19% had visited their health plan site, but there were few transactions going on. Only 26% (of that 19%)  had checked on a claim (though many more wanted to) and only 15% had filed one online. So while there has been some progress amongst health plans in their online strategies, they are far from hitting paydirt yet.

My assessment overall is that eHealth is hitting a natural wall, with most people who want information now finding it (although Manhattan projects their number to grow to over 100 million in the next five years.  The issues as pointed out by Mark Bard are:
a) What will be the role of the differing types of ehealth consumers in their off-line behavior–particularly in the doctor’s office and pharmacy.
b) How can the low number (>25%) of eHealth consumers currently doing transactions online be increased? (Hint: if it is built right they will come!)
c) How can health plans, providers and others make their online strategy a core part of their business process and outreach to consumers. It can be done and we’ll all be a lot better off when it is done!

INDUSTRY/TECHNOLOGY: Healthsouth wackiness hits new high

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Given my previous long ramblings about Healthsouth and my interest in mobile PCs for health care workers, I couldn’t let yesterday’s news pass without at least noticing that:

a) Richard Scrushy finally got hit with an indictment on a mere 85 counts of fraud yesterday.  The government thinks that he obtained $273 million illegally and wants it back.  Furthermore, if convicted on all charges he also faces 5 million years in prison and $6 gazillion in fines. (OK it’s 650 years in prison, but what’s the point of a sentence like that?)

b) Meanwhile Healthsouth is buying 5,000 Tablet PCs from Motion Computing to deploy at its 1,400  Rehabilitation Centers Nationwide. (The software comes from a company, Source Medical Solutions, of which Healthsouth owns a third).

c) Healthsouth seems to be defaulting on its bonds and may be headed for bankruptcy unless it can reschedule its debts.  So I hope Motion Computing is getting its cash up front….

POLICY: Oh Canada, implications for the US, part 1

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Medpundit has written an article over at Techcentralstation basically saying that Canadian doctors hate the system there and are leaving for the US.  I’ve responded briefly in the comments there, but am working on a much longer piece that will explain that in general Canadians are happier with their health care system than are Americans, get as good or better care at a much cheaper cost to society in a much more equitable system, and that the few Canadian doctors who are leaving are doing it for the money and to escape that terrible winter.

While you are waiting with bated breath for that intellectual feast, to introduce the notion I’m linking to an email debate between two major players in the health policy wonk world, Steffi Wollhandler and Ken Thorpe. Steffi has argued for a Canadian-style single payer for years. Ken, who was an under-secretary of HHS under Clinton, argues for essentially a redux of Clinton’s plan–which despite much BS talked at the time–was not a single payer plan as they both make clear.

Personally speaking, either one of these reform solutions would be better than what we have now. But in this blog I’m tying to forecast what I think will happen not what I want to happen.  So while you’re pondering the merits of the debate, in considering its relevance you may notice that:

a) this debate is happening in the Newark Ledger-Journal,  not the New York Times. This is not an insult to the fine people of the Ledger-Journal, but it’s scarcely the first source for news and information for most Americans.

b) two left of center, politically-active health care wonks are finding plenty to disagree on, and stress very little the  common ground they share opposing the current system–scarcely the makings of the national consensus that would be required for health care reform. Note that such consensus was not built properly by the Clintons in 1993-4.

c) Health care reform that doesn’t in some way get the doctors, the pharmas, and the insurers to buy-in/be bribed-in is very unlikely to happen–definitely not with a Republican house. So if you are watching for it, you need to see a Democratic President, massive public discontent (which is building but not there yet), and a unified vision of what problems need to be fixed and a "good enough" solution to fix them.  My guess is that the most identifiable "problems" are uninsurance and out of pocket cost control.  Neither administrative costs (Steffi’s bugbear) nor care coordination (Ken’s concern) are likely to get the public’s passion raised enough to get reform underway.

INDUSTRY: Aggressive collections by hospitals questioned.

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The Wall Street Journal reported last week on very aggressive tactics used by a few hospitals to collect on debts.  As you can’t see the WSJ articles unless you subscribe (for money!) I didn’t link to it, but med blogger Bard Parker did and he transcribed much of it onto his site A Chance to Cut is a Chance to Cure, and then asked me to comment. So read his opinions and come back.

For those of you who didn’t bother to follow my instructions, the WSJ reported that some hospitals are going after debtors who have ignored court hearings by actually having them carted off to jail.  Many of these hospitals are non-profit institutions who show considerably more aggressive tactics in debt recollection than most consumer goods companies.  Indeed several of the examples seem to be going after particularly low-income debtors, and essentially forcing them to pay up by whatever means they can–which usually means borrowing from family members who scramble to find bail money while the patient is sitting in a jail cell.

Bard Parker and most of his commentators are sympathetic to the hospitals, in general believing that this is done in a very few cases when the patients could pay but have ignored all other efforts to come to an arrangement. As he asked for my comments, I’ll give some random comments below, for what they’re worth:

a) While it’s true that this is a tiny minority of patients, it is symptomatic of the problems many Americans have paying unexpected medical bills. It’s extremely unlikely that the financial benefits of collecting some of this money are worth the bad publicity these institutions just got.

b) Americans indeed often go into debt irresponsibly, but visiting the ER to deal with a miscarriage isn’t the same as, say, buying a diamond you can’t really afford on credit, even though it might cost more.

c) As is now quite widely known, the uninsured often get charged the highest prices by hospitals, as they do not have the ability to get discounts off the "list price" as do insurance companies.  This "reverse" price discrimination isn’t exactly equitable or ethical.

d) Hospitals used to write all this bad debt off, and would charge more to well-insured patients to make up the difference.  Starting in the late 1980s aggressive insurance companies lowered their payments and got rid of the hospitals ability to cross-subsidize from "rich" patients to poorer ones.  But of course apart from the DSH program for a few inner city hospitals who treat a lot of uninsured patients, no new system of cross subsidization has been created.

e) The best system of cross-subsidization is called insurance.  The people shipped off to prison in the article (and another 42 million Americans) didn’t have it usually because they are too poor to buy it (or not forced by law to buy it) and because the market for individual insurance is dysfunctional. I’d rather have our sheriff’s deputies out preventing crimes, rather than acting as debt collectors for hospitals.  The way for that to happen is for policy makers to create an insurance system that works for the working poor including forcing them to participate. Then hospitals wouldn’t be bill collectors and patients wouldn’t have to avoid needed care for fear of not being able to pay. Hospitals would be better off in the long run if they put their considerable political clout behind the creation of such a system.

As I recently posted.  These aren’t the views of some wacked-out lefty conspiracy theorist, or at least if they are, they seemed to be shared by representatives of Pfizer.

INDUSTRY: Can anything else go wrong at Tenet? Maybe…

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Just when Tenet thought it was safe to poke its head out, a court has taken it back behind the woodshed and ordered it to pay $273m rather than the $9m it thought it owed to John C. Bedrosian, a cofounder of National Medical Enterprises. NME is of course one of the predecessors of Tenet, and the one that was taken to the woodshed itself for committing patients to involuntary psychiatric stays. Then at 4pm EST on Friday 31 October (nice timing , eh?) the Halloween horrors continued as prosecutors widened their probe of cardiac surgery (the issue that started the current rot at Tenet’s Redding, CA hospital) to several other hospitals. With that news at least one analyst, Sheryl Skolnick, of Fulcrum Global Partners, threw in the towel and lowered her price target for Tenet to $9.40  (it closed at $13 and change) based on the dire prediction of the break-up of the company. "If they broke it up, sold the assets and paid off all liabilities, they’d end up with $9.40 a share in value," she said.

Maybe that’s the end of the bad news, but on the other hand Tenet watchers worried about its relationship with the Feds might want to check this out. I heard from a little bird (and as this is not public info yet, treat it as rumor) that Tenet has chosen a tiny firm with fewer than 20 employees, 2 servers, and a single DSL line, to take over encounter reconciliation and JCAHO Core Measures submission for all its 110+ hospitals. (Perot Systems previously had the task). There are suspicions that Tenet’s choice may not have the people, experience, expertise, hardware or network infrastructure to do the job AND the (third strike) deadline for Tenet to get its Core Measures submission to JCAHO (they already have 2 strikes) correctly is in January. 

According to my scuttlebutt, their new vendor currently receives small extracted files of de-identified UB-92 data from about 65 hospitals on a monthly or quarterly basis and one employee manually checks them out before sunmitting them to JCAHO.  The new arrangement means that the vendor will need to receive (on a continuous transaction basis) raw encounter data from whatever ADT system that each of the Tenet hospitals has (they’re, of course, not all the same), process and reconcile data for each quarter (probably a couple of million records per hospital) and extract the pertinent data elements from it. My source severely doubts that this system is the sort of thing that anyone could develop from scratch (let alone test) in 75 days.  His guess is that any Tenet IT peron who knows anything (and would have done any due diligence) went the way of the (ex-) general counsel

This means that potentially Tenet is placing the ability of any and all of their hospitals to see Medicare patients in unproven hands. So in the worst case scenario, the company may end up with a bunch of non-Medicare admissible hospitals, which would make it worth less than in Scholnick’s worst case scenario!

PHARMA: Crestor & Statin slight update.

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Light blogging today…as other commitments are banging on the door, however, in relation to a couple of readers comments, I need to say a little more following up on my post on The Lancet vs Crestor issue.

Public Citizen is the most active consumer rights organization in healthcare in the US and Sidney Wolfe and his team have a consistent pattern of identifying problem areas. Public Citizen has a somewhat splotchy record in calling what’s harmful or not in medical care.  It was the driver behind getting silicone breast implants banned, while my reading of the medical evidence is that they weren’t statistically harmful.  However, they often are right and they recently put out a "do not take" advisory on Crestor in their Worst Pills Best Pills newsletter. Their logic was that in the clinical trials Crestor had caused cases of rhabdomyolysis in patients on 80mg doses–this is of course the disease that Baycol caused, even though Baycol never had those results in its clinical trials.  Astra-Zeneca subsequently  lowered the dosage of Crestor available, but I’ve heard an unconfirmed story of two cases of rhabdomyolysis recently appearing among Crestor users. Both cases were outside the U.S. and one patient was using the 40mg dose, the other was being uptitrated from 20mg to 40mg. In other words  very bad side effects may be occurring in smaller doses than were seen as causing rhabdomyolysis in the clinical trials. The Lancet specifically mentioned this risk in its editorial.

I’m in the scientific caboose as regards knowing about whether any of these statin issues are true or not.  My point is not that statins are harmful. While it’s very unlikely that Crestor, Lipitor or Zocor will be pulled from the market, people in the health care mainstream need to realize both that it could happen (and the Lancet article may be a "signal event" in that process) and that the impact of such an event would be huge on the pharma market.

POLICY: The uninsured–can Pfizer’s solution really help?

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I stumbled across the web site healthpolitics.com recently while looking for Jeanne Scott’s site health-politics.com (you spot the cunning difference!). HealthPolitics with Dr. Magee is a site which does a weekly power-point, talking head (literally!) and transcript presentation. It’s neatly done and when you find out the Dr. Magee is head of Pfizer’s Medical Humanities Initiative you understand that they have the bucks to make it so. I’ve seen a few of the webcasts, they are less than 10 minutes long.  Normally these webcasts are about extremely specific patient-physician issues, so the "healthpolitics" title is a bit of a misnomer.

This week, however, the program is about care for the uninsured. Worth watching; it runs about 8 minutes but you can click ahead and read the transcript and slides in about 3. Magee draws heavily on the Kaiser Family Fund backed study by Jack Hadley and John Holohan in Health Affairs that shows that government picked up $35bn of the tab for caring for the uninsured already. Magee ‘s solution is take to those funds and several other sources including cash paid out of pocket from by the uninsured and use it to give the uninsured health insurance.  Magee does not mention the follow up study by the same authors which showed that the uninsured would use "$33.9-68.7 billion (in 2001 dollars) in additional medical care if they were fully insured". In other words covering the uninsured with health insurance by using the current government funding would require extra money, but it would still be considerably less than, say, the $87bn going you know where this year.

Of course Pfizer (and its fellow pharmas and private insurers) are not going to be in favor of a comprehensive national health insurance policy.  However, because they have shown considerable ability to derail health reform in the past, any reform proposal needs to consider their position to be realistic. We are now in a situation where PhRMA, the big pharma trade group, has put its backing behind Medicare Drug Coverage, even though in the long run this will probably mean price controls over their products. Magee’s view seems to show that big pharma is willing to work on ways to get to insurance for the uninsured (who after all then would have more access to their products). Meanwhile the lefty Foundations like KFF believe that there’s less than $50bn required to get to comprehensive insurance for the uninsured, much of which could be recouped from the uninsured themselves (80% of whom, don’t forget, are working and who are already paying over $25bn out of pocket for care). This means that there is potentially less than $20-30 billion required out in new government funding to solve the whole deal.

Is this likely to happen?  Obviously not soon, and extremely unlikely unless we see a "regime change" next November. But given the fairly formless proposals offered by the Democratic candidates so far, this type of minimalist practical approach may make sense by February 2005.

PHARMA: The Lancet vs Crestor, or why I’m not on statins….yet!

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I’m going to start this with a little personal info. I am an ideal candidte for a life-time regimen of statins. I’m 40 years old. I have high-ish cholesterol and have had for a while, and my father had a  life-saving quadruple by-pass when he was 64. I do exercise but I’m careless about my eating habits and actually I’m sitting here eating a mid-afternoon snack of potato chips. (Incidentally, the chips are Safeway’s own brand Barbecue flavor, the best since the very evil Frito-Lay bought and closed Eagle Chips, whose Mesquite Thins BBQ were so good they must have been laced with crack cocaine. Where the hell was the Anti-trust guy at the DOJ when that happened? But I digress….).

As you know, statins lower "bad" cholesterol (LDL) and hence reduce heart disease.  There’s not too much dispute about that.  There’s also not too much dispute about the fact that they are financially the most important class of prescription drugs in the pharma marketplace and, as I posted about here, their future can make or break huge companies. Baycol’s removal from the market nearly broke Bayer, and Lipitor’s current success is responsible or keeping Pfizer top of the heap. Hence there’s an enormous amount riding on statins, and it’s a classic case of spend now, recoup later. For instance, after taking them for 25 years an at-risk 40 year old may avoid heart disease.

There are, though, repercussions from taking statins.  The side effects from Baycol included killing enough patients due to the kidney disease it created that it was withdrawn from the market.  A rational economist might say that the deaths of 52 patients were worth the millions Baycol would save from heart disease, but that’s not how humans work.  We like seeing the "identified life" (or conversely don’t like seeing the "identified death") and we don’t care too much about the unidentified lives that might be saved in years to come.  And of course in the case of Baycol there were alternative statins like Lipitor on the market. Lawyers who have already won over $500m with more to come from Baycol’s maker Bayer, are closely monitoring this situation! Here was a list from some class-action lawyers of various side-effects of Baycol, put above those the same lawyers claim are related to Lipitor.

Baycol’s alleged Side effects                           
>  Fibromyalgia                                                
>  Kidney Failure                                              
>  Memory Loss                                                
>  Myositis (muscle pain)                                 
>  Rhabdomyolysis  (leads to kidney failure)    
>  Hip Joint Problems
>  Nausea
>  Kidney & Urinary Tract Disorders
>  Liver Problems

Lipitor’s alleged Side effects
>  Fibromyalgia
>  Kidney Failure
>  Memory Loss
>  Myositis (muscle pain)
>  Rhabdomyolysis  (leads to kidney failure)

By now you’ll see where this is going.  If only a very few people have fatal complications from any drug, the trial lawyers will jump all over the pharma companies.  Of course the pharma’s fight very strongly to protect their turf and they are only really vulnerable when they "agree" with the FDA to withdraw a drug from the marketplace; something that has happened with increasing frequency in the past decade.  However, the sheer size of the statin market is so huge that it attracts pharma cos and trial-lawyers like moths to a lamp.

Last weekend, though, something new entered the picture. The world’s oldest and one of its most respected medical journals The Lancet came right out and said that a new statin, Crestor from Astra-Zeneca, had been rushed onto the market by the company and that the company had effectively pressured the FDA and authorities in other countries in the approval process.  For details go read The Lancet’s editorial and the accompanying rebuttal from the CEO of A-Z, Tom McKillop. The science of the issue is well covered by bloggers like Derick Lowe at In The Pipeline, and the impact on medical practice and how treatment patterns actually get adopted are well covered by the renaissance-doc Medpundit. But before you go look at their articles, let me end my market analysis and then my personal story.

Analysis: The Lancet says, while statins work to reduce LDL, we have enough of them about already. Meanwhile it says that Crestor–for which it criticizes the legitimacy of some of the clinical trials–reduces LDL but hasn’t yet been proven to reduce heart disease. As such it is being rushed to market for the primacy of A-Z’s profits. (I’ll refrain from going "Duh!). To my recollection only Pravachol (or is it  Mevacor?) which has been around for years, has had the time for a follow-up and can thus boast that it reduces heart disease and associated mortality as a consequence of lowering LDL.  It may well be that Lipitor, Zocor, etc and Crestor do, but as McKillop points out, they haven’t had time to prove themselves in that end-point, though they are all rushing through the clinical trials trying to prove so. The real development here is that a respected journal has cried foul on the whole pharma company process of getting a drug onto the market as quickly as possible. And they’ve directly linked that process to the withdrawal of Baycol due to its (fatal) side-effects. The ubiquity of those side-effects versus the positive saving of lives many years into the future is the key to the future use of statins. If physicians are essentially pushing statins onto patients based on "incomplete" clinical trials slanted towards a particular drug, the Lancet is right to raise a warning flag. Plus it will inevitably encourage other stories of side-effects, lawsuits and possibly reforms in how the FDA conducts approvals. However, don’t forget that the side-effects might be very, very rare, and so drugs that are good for the vast majority of people may be taken off the market. Watch this space very carefully.

My personal analysis I actually talked to my doctor about this a week or so ago. I asked about his view on statins without mentioning my fear of side-effects. Tacitly acknowledging my concern about doing something now with a potential near-term cost for an uncertain long term pay-off, he told me to think again when I’m 45.  Perhaps my early 60s and the threat of heart disease will seem closer then.  There’ll certainly be a ton more research for me to look at to assess the long-term use of these new statins.  Plus as an added bonus, if they’re off patent, they’ll be a darn site cheaper too!