Tuesday, February 5, 2019
Blog Page 1045

POLICY: State budget crunches are real

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Just in case you thought that state budget deficits caused by the ruinous Bush deficit/ending of the Clinton bubble (delete where applicable to suit your political taste) were somewhat academic, read this report on Colorado’s decision to remove legal immigrants from Medicaid eligibility.

I strive to be neutral in this blog, but on this issue I’m very biased. I’m a US citizen now, but I was a legal immigrant for many years.  The only difference between being a green card holder and a citizen is that you can’t vote or do jury duty. Importantly you still pay the same taxes as every one else and presumably these Medicaid patients did too. It also looks that some workaround will be discovered to pay for their care, maybe. However, aside from the politics, the fact that the state is desperate enough to consider putting some 150 elderly nursing home residents out on the street, shows that this crisis in funding is real.

TECHNOLOGY: Patient-Physician email–Is it or is it not a “good thing”?

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Two studies from Oregon, one from Kaiser Northwest and the other from Regence (Oregon Blues) contradict each other about patient physician email. You can see more either at iHealthbeat or from the Portland Business Journal (reg reqd for both). In the Regence case they found that the emails took longer than calls and increased follow up visits.  At Kaiser they found that emails were shorter and averted some visits.  More interestingly both studies showed that about 3 in 10 patients used email in these pilot programs.  Although the reports say that’s small, I think it’s a big number that will get bigger. After all, think how email spread in other situations like in business and family settings.

However, the folks at Today in e-Health Business who have the good line into Forrester Research add that:

    Forrester Research has found that 65% of patients who visited their physician’s Web site did so to use it to bypass the office receptionist, choosing to look up administrative details such as office hours. Additionally, one-third said they use the site as a credible source for researching general health and medication information, finds Forrester’s Consumer Technographics Q3 2003 North American Study. According to the study, 30% of physician Web site visitors renew prescriptions online. At more sophisticated physician Web sites, the study found, 13% of visitors report reviewing or paying bills, and 11% are viewing their medical records online.

No surprises here.  At the moment people want to use email to get around phone tag more than they want to fundamentally change their relationship with their doctor. Online consultations, and other more advanced uses of asynchronous technology, will take a while–and of course for them to spread someone has to work out who pays!

Note: This is yet another of those topics where I have a larger post brewing in my "draft" folder.  If anyone has examples or information about patient-physician email to add, please email me!

TECHNOLOGY: My, does Trizetto have a good PR firm!

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Jeff Margolis, the former wunderkind CIO of the HMO world, is now CEO of Trizetto. As this somewhat fawning piece in the business section of the NY Times explains, Trizetto has grown to be a $300m revenue company, providing administrative IT outsourcing for health plans. Far be it from me to suggest that there was anything missing from this piece, and I do have admiration for anyone who can grow that big a company in under ten years; however, it might not have tested the NYT’s Melinda Ligos’ investigative powers too much to do the odd Google search and let the casual reader know a few other things about Trizetto.

For instance, while Trizetto may have been growing its revenue since 1998, it’s still managed to lose huge amounts of money over that time, and only just made its first profit. It’s lost over $280m in the last three years alone. Now that includes some fake losses (presumably write-downs from acquisitions) but even so, stripping out those write-downs, it looks like Trizetto lost $30m on $90m revenue from operations in 2000, made less than $3m on $218m in 2001 and made $13m on $265m revenue in 2002. However, these numbers are indeterminate because so much was written off that it’s impossible to tell accurately what was going on. The past quarter they made an official profit in terms of GAAP of just under $1m, although they guided down their revenues for the future. Still, you’ve got to wonder how well they would have done over time if they hadn’t been lucky enough to get out in the eHealth IPO window of 2000, and have a big reserve of cash to sit on.

Even more interestingly, there was no mention of the huge spike in Trizetto’s stock price immediately after its IPO which priced at $9 in 1999 but was up at over $80 at the height of the bubble in March 2000. If you had bought in then (as one reader who did lamented to me) you’d have seen your money drop by over 95% over three years.  OK that may not be Trizetto’s fault alone, but the event that started the plunge was a very wierd announcement that they were going to take over IMS Health, the much bigger health care data company. That may not have been the best strategic move that Margolis ever made, although they ended up getting the Erisco unit from IMS as part of the deal.

I assume that Trizetto’s customers are happy and that the company will go onto be a big player.  But the average NYT reader might want to know a little more about its background than Jeff Margolis’ health problems and that he used to hold company meetings in a local phone booth.

POLICY: Medicare competition as a political football.

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The New York Times points out a couple of things about the Medicare bill negotiations in this article, Competition Causes Widest Split Over Medicare. These issues won’t be strangers to those reading TheJeanneScottLetter, whether or not you were sent there by me.

Here’s the short-hand. The House bill introduces the notion that Medicare needs to compete with private plans, rather then allowing them as an option under Medicare+Choice as now.  In order to give this some teeth, it looks like premium cost-sharing, based on income, is emerging from the current Senate-House negotiations. The Democrats led by Ted Kennedy see the long term outcome of this being Medicare as welfare, with only some people getting a flat payment (defined contribution) to spend as a voucher amongst competing plans. Unstated is the Democrats belief that the private plans would skim the healthier and wealthier from the public plan, which would be left with those who couldn’t "trade up" to join the private plans,  and that traditional Medicare would be forced to cut services, and would eventually go broke.

That’s as maybe.  When Medicare Risk plans were growing in the early 90s they were able to make money getting 95% of the average cost of a recipient in the local area for each member they signed up, and usually they got people to sign up by offering them free insurance for drugs with no extra premiums. Several reports at the time suggested that plans were signing up healthier patients than average, and thus were skimming (duh!).  However, at some point even those patients got sick and more importantly payments were not put up in line with medical costs. The result was that benefits were cut within the Medicare Risk plans, and then many private plans pulled out of Medicare risk altogether. The percentage of Medicare enrollees in managed care plans went from 10% in 1995 to 18% 2000 but fell to 13% in 2003 (all January numbers, for more see the CMS site here).

What this tells me is that the government can pass regulations that can change health plan behavior in terms of its recruitment and profitability. So if a benevolent HIPAA administrator was sent down from Mars to run a neutral system in which there were private and public plans competing and incentives were designed to be even, it is possible that a mixed system could work. It might even improve the efficiency and quality of care delivery.

But this is politics and that’s not going to happen. Note that the House bill which includes the privatization thrust only passed by one vote, while the Senate bill had broader approval among Democrats. Bush will soon have to make a call as to whether it’s more important to shore up his support amongst conservative Republicans in the House, or whether it’s worth using his eroding political clout to have them cave on that, in order to be able to campaign as the President who passed Medicare drug coverage. If he does and if Medicare Reform passes including real competition between Medicare and private plans, watch out for a large battle in the years to come as this concept moves into reality. But realistically that’s looking less and less likely.

Up date: Harris Interactive’s latest poll shows that there’s a slight uptick in support for the Democrats on the health care issue with a plurality favoring the Dems 35% to 20%, although they don’t think it’s big enough for the Dems to be happy. Interestingly, among the over-65s who matter most in health care politics, it’s ony 36%-30% in favor of the Dems.

TECHNOLOGY: More on technology, handhelds and synchronization

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I’m still under the cosh on some other projects, so while you are waiting on my pearls of wisdom you should check out the interesting articles in this compendium from Modern Physician/PWC’s survey on technology use among physicians.  Then go look at iHealthbeat, where Robert Mittman has another interesting Technology Forecast on synchronization technology, which is an underlying background requirement for the mobile world we are heading into.  Much more on physicians and PDA use coming from me, but not this week!

PHARMA: Is it Nature or Nurture?

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Remember the movie Trading Places when two rich old men put Dan Akroyd into the gutter and take Eddie Murphy out of it to figure out whether it’s nature or nurture that affects people’s outcomes?  Well there’s an equivalent going on in the Pharma industry right now. In this article, Fred Hassan’s Clean House, Forbes reports that almost all Schering-Plough’s management team have now followed him over from Pharmacia.  You may recall that Hassan went to Schering when he had a bit of free time on his hands, having very successfully sold Pharmacia to Pfizer for $58 billion in 2001. But you might also recall that at Pharmacia, Hassan had good drugs like the blockbuster Celebrex, Bextra , and some strong  therapeutic franchise’s elsewhere.

Now the whole team is over at Schering they’ll see whether they can make a success of going from the penthouse to the gutter (relatively speaking of course!).  Schering isn’t quite out of revenue or products but it will be nowhere near as easy a management job for this team as they had at Pharmacia. It reminds me a little of the Dilbert cartoon when the pointy haired boss announces to Dilbert and colleagues that "We always say that people are our most valuable asset, but I just did an audit and found that money is our most valuable asset–people came in 9th." Now Hassan and his team can prove that it is people not blockbuster product that can move the stock price.

Oh, and in Trading Places Eddie Murphy shone in the penthouse and Dan Akroyd (initially) fell to pieces in the gutter, showing that nurture or environment or, in pharma terms, product was the determining factor!

INDUSTRY: New HealthSouth management blames Scrushy

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I know that you’re tired of hearing about it and I promise that this will be the last article I ever write about Healthsouth–but I couldn’t let go the little fact that, surprise, surprise, the new management that’s been in charge of Healthsouth–since the scandal broke earlier this year and they kicked out newly-indicted Richard Scrushy–says that it’s all his fault.

(Lucky this isn’t a video-blog so you didn’t notice me typing this with one hand, as the other had my fingers crossed behind my back).

PHARMA: A little more info on Crestor

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There’s a little more info about the adverse events with Crestor, in a report called What’s the Matter with Crestor? from Friedman, Billings, Ramsey & Co Research. (I couldn’t find a way to get the report without opening a brokerage account!).

The research suggests so far that Crestor is not doing as well in the marketplace as was expected, and is being outpaced by Schering & Merck’s non-statin, LDL-lowering drug Zetia, which can be taken in addition to statins or by itself, and is useful for at least the 5% of population that cannot tolerate statins. The report says

    Data indicate that thus far, Crestor’s launch has been significantly slower than that of Zetia, a non-statin cholesterol-lowering drug, comparing total script volumes at similar times after launch. This is underscored by the fact that two recent comparator weeks for Zetia include the Christmas and New Years holidays, weeks that are typically slow for prescription volumes, and surprisingly, Zetia is still exceeding Crestor on an absolute basis. Crestor also lags Zetia in NRx market share, according to prescription audit data, holding 2.22% NRx share compared to Zetia’s 2.65% at similar periods in the launch trajectory, a better comparison than total prescriptions in our view, because it is less dependent on the absolute size of the market.

Translation for non-pharma folks is that Crestor hasn’t taken up as well as it might have done. Meanwhile the report also goes onto to confirm some of the issues around safety. You’ll recall that Public Citizen, and The Lancet have been bringing this issue to the forefront.

    According to the Medicines and Healthcare Products Regulatory Agency in the U.K., there have been 41 reports reflecting 45 muscular reactions associated with Crestor use. Of those reports, 35 were associated with the 10mg dose of the product, and notably, 3 of the reactions involved moderately increased levels of Creatine Phosphokinase (219-436 IU/L), according to data from the agency. Based on our research, normal Creatine Phosphokinase levels are in the 30-170 IU/L range and elevations associated with severe rhabdomyolysis are typically in the 35,000 IU/L range and up. The U.K. agency cautions that suspected adverse reactions are not necessarily caused by the drug and may relate to other factors such as underlying illnesses or other medicines; however, we believe that the early reports of muscle-related adverse events at the most common starting dose are notable.

I repeat that I am not a scientist or physician and have little understanding of the seriousness of these findings.  However, 35 of 45 muscle problems were reported on the 10mg dose– 1/4 of the dose that concerned The Lancet, and there were three reports of increased Creatine Phosphokinase which is a precursor to rhabdomyolysis. The question is whether the medical community views this as minor or whether they perceive that these very initial results are indicators of more trouble to come.

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.