Tuesday, February 5, 2019
Blog Page 1044

PHARMA: Stock update and Medicare

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While the PBM stocks have been going up, the same thing is happening to the big pharma stocks, as you can see in this chart of a pharma stock index , and in the performance of Merck’s near 10% surge in the last 3 days. There’s more in this Forbes article.

However, the legislation may have been sent out from the conference committee, but it has three major pieces undecided. These include the issues of competition, long-term cost control and Health Savings Accounts.  If they couldn’t get a solution out of the two moderate Democrats on the committee, is there really a chance that this will get past Ted Kennedy? Lefty economist Paul Krugman explains why not.

So I’m still pondering shorting the PBMs…..

POLICY: More on uninsurance

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A while back the Bloviator and I had some discussions parsing out the 2002 uninsurance numbers. There was some controversy (that the two of us settled to our satisfaction, at least) about those numbers from the census bureau to do with how many of the 43 million it counted as uninsured were uninsured for the whole year. Now Health Affairs has published a Commonwealth Fund-sponsored article by Pamela Short and Deborah Grefe at Penn State that examines in great detail uninsurance between 1996 and 1999. While this data is of necessity a little old, you must remember that we were in an employment boom then–so things were as good as they were ever going to get for employment-based insurance in the modern economy–and also that things are worse now.  Still, onto the highlights.

The authors looked at large slice of the non-Medicare under-65 population which had approximately 225 million adults.  (It excluded immigrants, newborns and some others). Out of that 225 million number 84 million (37%) were uninsured at some time in the 4 years. Of those 84 million roughly 15 million (or 6% of the total) were more or less uninsured the whole time. As for the rest, the authors use a fairly complicated 6 way breakdown which I will grossly over-simplify into the fact that 50 million were uninsured for 5 months or more during that four year period. Roughly 32 million of that sub-group (64%) were uninsured for at least a year or more. If you are counting along at home that leaves another 20 million who had one or more short breaks in their coverage of less than 5 months.

So in my assessment, what’s new about this research? 

1) Well it’s usually assumed that at any one time 20 odd million are uninsured for a whole year (a little less than half the 43 odd million uninsured at any one time).  But if you take this rolling view rather than the snapshot, you have 15 million hard-core uninsured essentially for ever and another 32 million who’ve had a year or more uninsured in a four year period.  So rather than the 43 million oft-quoted snapshot number, some 57 million have been uninsured for more than a year in a four year period. These are the hard core uninsured and they measure nearly 25% of adults. And incidentally that is more people than voted for any one candidate in the 2000 election.

2) Counting this crudely, and making some assumptions, there seem to be three groups; one that is nowhere near getting insurance, One that is swinging between government programs like Medicaid, some employer based insurance and no insurance, and a smaller group that is cobbling together a patchwork of employer insurance, individually-bought insurance and uninsurance. The first two groups are the lower income ones.

The authors conclusions are that separate policy solutions are needed for each group–unless we have universal coverage.  That’s true in so far as it goes, but the authors know and (restrained by the terms of this data study) don’t state that the peverse dynamics of the individual insurance "market", the cost of COBRA coverage, and the difficulty of maintaining Medicaid coverage, all combine to make viable policy solutions targeted to sub-groups of the uninsured almost impossible to create.  The only actual options for universal insurance are :
a)some kind of employer-mandate, or
b)some kind of individual-mandate, both backed-up by government schemes either in terms of premium support for the poor or guaranteed insurance (e.g. Medicaid expansion). Or
c) of course single payer, Medicare for all.

There is clearly no political will for any of these reforms now. But perhaps if word gets out that not only is one in seven people uninsured now, but over one in three of us might be in this jam sometime in the next four years, that political will might become more apparent. One thing we do know: voluntary universal insurance is a fiction.

PBMs: No one’s listening to me?

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Despite my doubts as to whether we’re going to get a Medicare drug bill, the market has decided a) that we will and b) that the PBMs are going to benefit the most from it. The last two days have seen a 10% rise in the PBMs stock price, and in the last 2 months they’ve gone up above their all time highs of 2 years ago. Somewhere a little north of here, I feel a pullback is imminent–perhaps I can just get word to Ted Kennedy and we can split a short position together?

TECHNOLOGY/INDUSTRY: More Tenet-related scuttlebutt

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Not that it’s my natural proclivity, but I am enjoying the rumor-mongering abilities that writing this kind of a blog gives me. You’ll recall a while back that I came upon some rumors that Tenet had hired a company for its JCAHO reporting that may have put at risk its ability to remain certified to treat Medicare patients.

The latest I’ve heard is that this company is having problems with a related product. Apparently they found out that no (database) tables were being created for 7 types of medical errors that hospitals report using their software (e.g. medication errors, falls, etc.).  The error was part of a production release sent out over a month ago.  In other words, the 10 hospitals using the product could have (and probably did) reported adverse incidents using the system for over a month and the data for those incidents (that would be used to defend themselves in court, identify risky situations, prevent medication errors, etc.) would be lost. Apparently the head of QA recently left and another senior QA guy followed suit, resulting in a "go along to get along" QA department. 

This is a perfect example of how rushing software to market (without testing, let alone a detailed technical design document) can lead to big mistakes. Apparently this company develops on an ad-hoc basis, often sending out production releases every week.

PBMs/POLICY: Will tentative Medicare deal stick?

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I noticed that the PBM stocks took off like a rocket at the end of the trading day yesterday. The news was that a tentative deal Medicare has been reached by the committee negotiating a compromise Medicare bill. PBMs are likely to add millions of members under the version of the bill that may be passed. However, of course this slight optimism is tempered by the fact that neither the hard-core Democrats like Ted Kennedy nor the fiscally-conservative Republicans are likely to sign on to this compromised version of the bill, because it either will lead to the death of Medicare as we know it, or the bankrupting of the Federal government–depending on your point of view.

In any event, I’m not sure that adding a large number of members via a government-funded program which may make them low-margin contractors is the best solution for fast future growth for PBM bottom lines.

PHARMA: Lipitor stops build up of plaque

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When I first saw this headline: Pfizer’s Lipitor Stops The Plaque, I misread it and thought that it said Lipitor stops "plauge"–now that would be a hell of an off-label use!

POLICY: Canada Follow-up

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Well I must be sniffing the air correctly.  Today’s WSJ online has, other than its headline, a very fair piece on Canada and how hospitals direct traffic to high-tech procedures.  It may be very unAmerican, but it seems to work pretty well in terms of allocating medical resources efficiently.  If you don’t have a subscription to the WSJ Online, I can email you a copy if you email me.

UPDATE: The article is now freely available here.

TECHNOLOGY: Two quickies

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While you get your teeth into the long post about Canada that I put up late yesterday, here are two interesting follow-ups to technology issues already tangentially discussed in THCB.

1) Patient-Physician email–Here’ s a thoughtful article about the overall issue from the Seattle Times. It dovetails with the Oregon article I posted about on Monday, and makes the obvious point that even if email enhances productivity, in a fee-for-service environment it’s unlikely to be adopted unless it has payment for the doctors attached.  The docs at Group Health in Seattle don’t get paid that way, so they see the issue as how best to use their time rather than how best to maximize their billings.

2) VOIP (voice over Internet)–The extremely careful reader of the iHealthbeat column on synchronization I referenced last week would have noticed a bullet point about Vocera’s attempts to use health care as a testing ground for its voice over Wi-Fi product, which intends to replace paging and phones within hospitals. Well it looks like someone at the San Jose Merc was reading, or had been bugged by Vocera’s PR firm.  Their comprehensive story about the installation at El Camino hospital is well worth a glance.

INDUSTRY: I promised that I wouldn’t write about this!

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OK, OK I promised last week that I wouldn’t write about them or him again….but that doesn’t stop you reading about you know who at you know where.

POLICY: Oh Canada

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This article is about Canada’s health system and its relationship to the US health policy debate.  It is not meant to be an endorsement of Canada’s system, or an endorsement of single payer for the US. From my personal point of view, while I think serious health care reform is unlikely in the next few years in the US, some foreign models of health insurance are very useful for the US debate. But the combined local/employer insurance systems seen in Japan, Germany and Holland provide a more likely and familiar model for the US, than the Canadian or UK single-payer systems. However, this article isn’t about what might happen here or which system is better. This article is about the distortions that are frequently heard in the US, and in Canada for that matter, about the Canadian system. It’s also a lot longer than the average post, such as my recent post on Canada, Steffi and Ken, and you can download it as a separate document here if you want to print it out and savor/criticize it over a cup of coffee.

This article is dedicated to the amazing Medpundit. Despite the fact that I disagree with a huge percentage of what she says, Sydney Smith manages to cover virtually all of health care and medicine in her excellent blog, while writing book reviews, keeping up a full time solo family practice, and claiming that she’s not posting as much as she used to.  Her article on Canadian physician emigration and the vigorous support she got from her commenters finally got me to get off the dime and put in my several cents worth.

Before I jump into this it’s worth noting that some of the differences between these health care systems are cultural. There have been several interesting descriptions of the international variations in medical practices. In one great book written in the 1980s, The Painful Prescription,  Aaron and Schwartz describe rationing of hospital care in Europe and the UK compared to the US. For instance they pointed out that  in the UK kidney dialysis was not used at nearly the levels among the elderly as it was in the US (or in fact in Europe).  So they concluded that care was rationed and as a direct consequence people died. (If you have ESRD and don’t get treatment eventually your kidneys shut down and you die). However, many other commentators, including Lynn Payer in her book Medicine and Culture which is very well described by Humphrey Taylor from Harris, have shown fairly conclusively that many cultures just regard "care" in a different way. In that sense the dialysis-use figures could be seen as the aggrandizement of hundreds of decisions not to over-tax elderly patients with a long and difficult treatment that wouldn’t help their quality of life, even as it extended it slightly. Indeed, it’s equally cultural relative to accuse Americans of "over-care" by doing CABGs on 95 year olds who are soon going to die anyway. So while you’re reading the rest of this article you need to bear in mind that some of the differences that are ascribed to policy are due to culture. Having said that; many are not. 

Before we start, recall that Canada has a single payer in each province that provides uniform health insurance to all its citizens. To provide that care it contracts directly and exclusively with physicians and hospitals, who remain largely autonomous but have no other customers. The US in contrast has a mixed-private-public system for which the government provides about half the money. Insurance is only universal for those over 65, and roughly 14% of the population has no insurance coverage, with very varying levels of coverage for the rest–mostly coming through employers. The latest comparable numbers have the US spending roughly 14% of GDP on health care while that number is around 11% in Canada. So at a macro level, the Canadians pay less as a share of their income to cover more of their people. (In fact as its GDP per capita is lower than America’s Canada spends considerably less per citizen). While single-payer advocates tout those numbers, many critics claim that Canada rations care, and that both patients and physicians are leaving Canada to give and receive care that’s not available at home.

Given that, it’s worth looking at two main aspects of the Canadian system that frequently come up for criticism. How are patients doing? What’s going on with physicians? And are they really all leaving the Great White North to escape its health care system?

The Patient Experience

It’s simplistic and true to say that Canadians have free access to basic health care. Americans have varied access based mostly on insurance. And it’s accepted that, as a corollary, all Canadians have less access to high-technology health care than do most Americans, However, googling around the web you’ll find indications that 18% of Canadians cannot get access to first contact care, (although only 10% have had trouble getting routine day time care). Still even 10% lacking access to care isn’t nothing, especially in a universal insurance system.  Luckily the Commonwealth Fund has over the years funded my old colleagues at Harris and Harvard, led by Bob Blendon, to do several studies over the years about these issues.  They asked consumers’ views in several countries, but we’ll concentrate on Canada and the US. (Note: When you open a link that is a powerpoint slide, hit the page down button as there might be 2 or 3 slides in that one link)

System satisfaction: Canadians were very happy with their system in the  late 1980s but were much less happy by 1998 and also in 2001, after a period of funding reduction.  But they are still happier than Americans, or at least only 18% want to completely rebuild the system, as opposed to over 28% of Americans. (The 2003 American number is over 30%–I don’t have the latest Canadian numbers, but they have been spending increasingly more and their incoming PM has promised to maintain that level. So as satisfaction went down due to less money you can expect that level to increase when there’s more. It’s also worth noting that the Canadians saved the rest of their economy some money, while during the large boom in the US in the 1990s, the health care sector stayed steady as a share of GDP.

Access to care: In terms of actually getting care and accessing doctors, both Americans and Canadians felt access was about the same. But in terms of access to care, by 2001 26% of Canadians thought it was getting worse, and only 6% getting better. 20% of Americans thought their access was getting worse too, but 17% thought it was getting better.

But then we get to some of the key issues. In Canada for elective surgery you have to wait; two thirds of Americans can get it within a month. Most Canadians have to wait more than a month and more than 25% have waited more than 4 months. No one waits that long in the US (presumably so long as they can qualify for coverage).

Costs matter: But in the US costs really matter. Over a quarter of Americans had out-of-pocket costs of over $1,000, compared to less than 5% of Canadians. Americans were two to five times more likely than Canadians to have an access problem due to cost, such as not getting a needed drug or not seeing a doctor. And when you look at those with below average incomes, in Canada only 9% failed to get recommended follow up care due to cost. In the US, over one third did not. More than a quarter of Americans (26%)–including 39% of those with below average incomes–didn’t fill a prescription because of costs, more than twice the number than in Canada. 21% of Americans have problems paying medical bills compared to only 5% in Canada, and that goes for 35% of Americans with below average incomes. So on a macro level it’s true that nationally Canadians sacrifice getting access to expensive resources (such as MRIs and surgeons). But in turn they don’t have to put up with the individual cost issues that are a problem for many Americans, especially the poorer ones.

If you look at the same type of indicators amongst those who are sick in similar study (also from Blendon’s group)  they are virtually all the same, with problems of access to specialty care and hospitals in Canada matched by access problems due to cost being 2-3 times worse for the sick in the US. Here are the sources for the full charts for the "healthys" and the "sick".

The impatient inpatient: This is where the arguments get anecdotal, and little ridiculous. I never understand, for instance, why American small business owners who have to buy insurance in the world’s most dysfunctional market complain so much about the prospect of Canadian-style health care. In 1993 I talked to a Rotary Club where, before I even got my international comparisons slide out, the small business owners in the room came after me with the classic anti-Canadian argument that goes something like "When he needed care the Prime Minister of Alberta/Nova Scotia/Yukon Territory/Canada came down to the US". There has always been an extremely limited number of Canadians getting new high-tech care in the US that isn’t available in Canada, almost always paid for by their province.  However this has been transposed into the argument that thousands of Canadians are flooding across the border to get care that is unavailable at home.  There is even the very occasional and underfilled patient bus trip coming down to get prescriptions and treatments unavailable in Canada, of course massively outnumbered by the buses taking Americans to buy cheaper drugs up north.

While the argument about Canadians flooding south to get medical care withheld from them up north is widely heard, it’s bullshit. Yup, lots of Canadians get care in the US, but that’s because, due to the better weather, the higher incomes, going to college or that NAFTA thing, they eitherlive here, or are on vacation in Florida to escape that terrible winter. Work done by a team led by Steve Katz at University of Michigan with  the Evans/Barer/Cardiff team at UBC which looked into this in obsessive detail found essentially no evidence of Canadians crossing the border to get care. (Incidentally plenty of Americans are still going up there for non-covered surgery like laser corrective eye surgery, which is cheaper and just as good up north). In fact according to Canadian insurers there appears to be no interest amongst Canadian consumers in commercial insurance products to cover care abroad, other than standard holiday cover. Note that this is not the case in the UK, where private insurance allows about 10% of Brits to jump the queue to get surgery in a private hospital. So it looks like the Canadians accept the fact that they have to wait for surgery, and not surprisingly don’t want to come down here to pay for it out of pocket.

The Grumpy Doctors

As mentioned earlier, I started working on this article partly because Sydney Smith over at Medpundit wrote a piece saying essentially that Canadian doctors felt that their system sucked, they all wanted to move to the US and that many of them already had–leading to a doctor shortage in Canada. She concluded:

    And why are Canadian physicians leaving their patients in the lurch? Not for the money. They leave for better research opportunities, for greater professional and clinical autonomy, better job choices, and better medical facilities. They leave, in other words, for all the advantages conferred by a free-market healthcare system–the same advantages that we American physicians take for granted when we yearn for a Canadian-style system. We should look to Canada, all right, but not as a role model. We should look to them instead as a warning. There but for the grace of God–and a strong independent streak–go we.

Before we look more at the emigration factor, again it’s worth looking at a relatively recent study by the Harvard team. In 2000 they asked a set of questions to doctors in the same five (English-speaking nations) nations where they surveyed patients in 1998 and 2001. It was indeed true that doctors in Canada were pretty miserable, and you certainly can trawl the Internet and easily find grumpy Canadian doctors, and many anecdotal stories of them leaving for the good life in the US. In the Harvard study, Canadian doctors did believe that their ability to provide quality care had got worse in the last five years, but only slightly more Canadian doctors believed this (59% v 56% for generalists and 67% v 60% for specialists) than did Americans. And Canadians were only slightly more pessimistic that the quality of care would decline (61% v 54%) in the future. But when asked about major problems in their practice, compared to Americans they were one-third less likely to regard external review of clinical decisions to control costs as a problem (13% v 36%), and less than one-half as likely to see limitations on drugs they could prescribe (18% v 43%), or to be concerned that their patients couldn’t afford necessary prescription drugs (17% v 48%). These of course are the typical hassles that make up the drudgery of a physician’s daily practice. The real concerns of Canadian physicians compared to Americans were, of course, limitations on specialist referrals (66% v 29%) and access to hospital care (64% v 8%) for their patients.

Then things get really interesting.  When asked, more directly if their actual patients often lacked access to newest drugs or medical technology only 26% of Canadian doctors said so–roughly the same as the 27% of Americans. And when asked if their patients get sicker because they are not able to get the health care they need, instead of the high numbers you might expect, only 12% of Canadian doctors said so, as opposed to 18% of Americans. So it appears that Canadian physicians think that by and large that Canadian patients do actually get the care they need, or if they don’t, it seems not to impact their health.

Then when asked about their satisfaction with their own practice 72% were very or somewhat satisfied compared to 68% of Americans.  And when you ask the classic three Harris questions about satisfaction with the system and the need for reform, Canadian docs are much less likely to want "complete rebuilding" (4% vs 12%), and similarly much more likely (25% vs 16%) to think that their system "works well." Here is the full physician chart set.

There’s no question that Canadian doctors are less happy than they were, but that’s more to do with the funding (and pay) cuts they saw over the previous decade (which were a symptom of the Canadian government getting its health care spending under control) than anything fundamentally wrong with the system.

The dissatisfied disappearing physician. But what about all those Canadian doctors fleeing the country? Well let’s first look at why they are fleeing. There are several Canadian researchers or specialists in the US taking advantage of bigger budgets for their research, or training in something Canada leaves to its bigger, richer neighbor. A 1994 survey of Canadian physicians living in the United States found that postgraduate training in the United States was associated with subsequent emigration–in other words they went there, they liked it and stayed or went back later. Other reasons for staying in the US included professional/clinical autonomy, availability of medical facilities and jobs, and remuneration, although this last factor was curiously considered equally important by Canada-based docs as a reason for staying behind. (They clearly hadn’t asked their √©migr√© colleagues what they were making!)

Now we’re starting to get somewhere. Just as Canada takes advantage of America’s over abundance of facilities to buy high-tech services for its patients on the margin (usually before it later adopts them in its own facilities) it also does the same for doctors who want to work in highly-specialized cutting edge technology areas. As in many other industries, the opportunities to do the coolest stuff tend to be here in the States. For an example, look to this somewhat tongue-in-cheek debate between Robert Califf, a Duke cardiologist and a Canadian colleague David Naylor which asked if American cardiac care is better than Canadian care?

By now you know the answer. If as a patient or a cardiologist you make it to Duke (or another high-end American institution), you find quicker access to more expensive technologies.

    Califf noted  that Americans experienced "differences in mortality over time largely because of the difference in the rate of revascularization between the countries"  Conversely, "simply stated, for people with heart disease, the US offers greater access, better technology, and greater creativity in solving clinical problems," Califf said. "There’s no question when you look at the systems, the US has better access to cardiologists, better access to technology-not because as cardiologists you’re not smart enough to use it, you’re just not allowed to use it when you want to-and very rapid access to new technologies."

But then he admitted some more interesting nuggets

    "Yes, we cost more to the patient, and we have problems with prescription drugs, but in the category of respect for cardiovascular practitioners, there’s no question who gets more respect, and if you want to make more money, just move south"

His debating partner, Dr David Naylor responded that:

    Revascularization may provide a mortality advantage. From a broader population perspective, though, these differences are unlikely to change the fact that in overall survival after the age of 65, Canadians come out ahead of the US. "The US does of course come out ahead in what is spent," he added, roughly double that spent in Canada on care of the elderly.

In the last part of what was a pretty funny debate for a bunch of dry heart docs, Califf got rather serious and actually came over as a fan of the Canadian system but felt that it just needed more money:

    "I would submit that the US is going to have to become more like Canada in terms of its healthcare system, because there’s no other solution in sight, but I would also submit that if you don’t ratchet up your expenditures on healthcare with the demographic that you and we share, you’re going to be facing an even more explosive situation than you currently have."

However part of what he said in jest is true. It is logical for Canadian doctors who need no additional qualifications to work in the US to go south for another reason.  It pays better; much better!  Canadian physician incomes averaged about C$135,000, and even surgical specialists get only about C$180,000. In the US specialists in groups averaged somewhere between $150,000 and $350,000, primary care around $150,000–and don’t forget that Canadian dollars are worth 1/3 less than their American namesakes! In fact this chart of international physician incomes shows that virtually any doctor would be better off moving to the US. (Actually FYI Japanese doctors make more than Americans).  So when Medpundit says that Canadian doctors are coming here in droves, you can’t exactly blame them.  Only one little thing is a bit strange; they are not!

The brave folks from UBC led again by my old colleagues Morris Barer and Bob Evans, as reported in this issue brief called The myth of Canadian physician emigration, show that although roughly 500 doctors a year are leaving to the US, somewhere between 250 and 300 were coming back the other way, and that the deficit was more than made up of other doctors immigrating to Canada–mostly Brits who thought that Canadian pay scales were pretty good compared to what they got at home! Even at its greatest extent Canada was losing 1.4% gross of its physicians and more than making it up through returning Canadians and importing foreigners.  And even though Canada has fewer docs per head than the US (2.1 per 1,000 v 2.6) it has more than the UK or Japan (1.7 & 1.6) so these numbers are not significant either as a share of all doctors or proportionally to the population. It is worth pointing out that the other 99% of Canadian doctors didn’t believe that doubling their salary was enough to compensate for the associated unpleasantness of having to move to the US!

Conclusion: There are No Easy Answers

My primary objective in writing this piece is not to deride the good work done by those on all sides of this issue.  Instead it’s to show that while looking at international comparisons is valuable, it’s not OK to look on the surface and ignore the many complexities underneath that surface. Worse it’s totally dishonest to take "facts" out of context or tell blatant lies–but there’s no tax on lying.

Health systems everywhere are under financial strain–always have been and always will be. Canada certainly limits access to high technology and specialists by limiting investment in them upstream. The US does not, but citizens living in Canada are very unlikely to run into severe financial trouble because of their health–not so here.  Meanwhile, poorer Canadians have a roughly comparable experience with their medical system as do other Canadians.  Poor Americans certainly do not enjoy the benefits of their system as much as their richer compatriots. You might also have a sneaking suspicion that as their health system is more popular with Canadians than with their doctors (while the opposite is true in the US) perhaps the Canadian system is actually run in favor of the consumers rather than the producers of health care!

There are certainly cultural differences between Americans and Canadians, as Michael Moore pointed out in Bowling For Columbine. But there are also structural ones that are creations of policy. We are heading into a period of policy discussion again, and inevitably the Canadian system will come up in the conversation. It would be nice if that conversation was based somewhat in reality.