Blog Page 985

INDUSTRY/TECHNOLOGY: Healthsouth wackiness hits new high


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


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.


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…


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.


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?


I stumbled across the web site recently while looking for Jeanne Scott’s site (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!


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!

PHARMA: Pharma no longer a safe haven?


Merck, which span off Medco as featured in the previous story on today’s THCB, has not been having such a good time as its former subsidiary. It’s recent lay-offs of over 4,000 has lead to the now quite widespread belief in New Jersey that the sky is falling.  For instance this Reuters’ article says that the pharmaceutical area (is) no longer (a) safe haven for jobs.  It raises all the issues that THBC readers will be familiar with–Canadian imports, drying pipelines, Medicare drug coverage, expiring patents, government probes, generic competition, and more.

Perhaps it’s time for a little perspective here. No question that pharma is in a tight spot compared to the cream and jelly days of the late 1990s. However, this industry has always been tremedously profitable.  Some of my former colleagues some time ago went to see a company that’s now part of a giant UK conglomerate (the corporate name has expired but think of a common greeting). They toured the research facility and were amazed at the plushness, the marble sinks and the general over-abundance.  Their host noticed their observations and after noting that the policy consulting guys were always telling them to not be out in front with their profitability, said "we had to hide the money somewhere!" Even if big pharma’s profits fell by half, it would still be the most profitable business in America!

The last time the stock market beat down the Pharma stocks was in 1994.  If you’d bought Merck stock then at between $14 and $18, you’d still be very happy now.

PBMs: PBMs doing well while CaremarkRx/AdvancePCS’ deal is still uncertain


The newly independent PBM Medco Health Services’ stock has been doing very well since its independence from Merck just a few months ago.  In fact if you received Medco stock at the time of the disbursement you’ll find that it’s up about 30% while Merck’s is down about 15%. There are some grumbles on the Medco message board about the management, but that’s being ignored by the market  which has bid the stock up more than $5 since Medco increased its projected earnings for next year (from 44 cents a share to between 44c and 47c).

Meanwhile competitor CaremarkRx has also seen a decent rise in its stock. It’s now back up to roughly where it was before it fell on the news that it was "overpaying" for rival AdvancePCS on September 3. On Tuesday it announced results that beat the market’s expectations by a penny. More interestingly Caremark seems to be shrugging off a recent lawsuit that claimed it misled shareholders over a settlement concerning its failed purchase of Phycor back when it was called Medpartners. Neither its stock price nor that of AdvancePCS showed any concerns that the FTC’s has made a ‘Second Request’ regarding the merger deal. While the lawsuit claiming $3.2 billion is probably a long-shot, the FTC does have to look carefully at the merger. 

Between them Caremark and Medco control a big chunk of the mail-order drug market.  If the merger goes through, Caremark’s main job is increasing AdvancePCS’ use of mail-order. Currently about 10% of Advance’s drugs go out via mail order, whereas for Caremark it’s about 40%. (Medco’s is around 33%)  Of course supplying a drug via mail-order is much more profitable than just processing the claim and having another pharmacy fill the script.  If Caremark manages to increase mail-order use, it becomes a significant lever in its dealings with both pharmacies and perhaps manufacturers, and mail-order overall will become much more significant–something the FTC will be watching. This market concetration also goes for supplying mail-order and other services in the specialty pharmacy market–usually based around drugs for specific relatively rare diseases which use a lot of expensive drugs.. The Drug Cost Management Report (full article well worth reading) notes that:

    The existing managed care clients that AdvancePCS brings to the table could theoretically give the new company enough leverage to severely disadvantage other specialty pharmacy players, including CVS ProCare, Accredo Health, Curascript, Chronimed, Option Care and MIM Corporation’s Bioscrip unit.

Added to this concern from the FTC is the accusation from pharmacies that Medco and other PBMs are deliberately routing scripts away from them to their mail-order businesses. Meanwhile others like health plan Highmark are getting into this business.

Meanwhile the big health plans are likely to be looking at the PBM market. Given that merger-mania and the underwriting cycle will eventually reduce the possibilities for revenue growth in that market, reintegrating health plan and PBM services must be tempting to the folks in Indianapolis and Minneapolis.  After all, it’s not as if PBMs have actually helped health plans or employers actually do what they were supposed to do over the past decade–reduce the cost of the drug benefit!

PHARMA/HEALTH PLANS: Kaiser ends coverage for brands for seniors


Kaiser Permanente, the historic group-model HMO that dominates the California market and has over 650,000 members in its Medicare HMOs, has changed its benefits in response to higher costs. Kaiser has the reputation of being loathe to change its members’ benefits, and tends to keep its members for much longer than other health plans.  That is connected to the fact ,of course, that Kaiser is also one of the few HMOs which (essentially) owns its delivery system. Key changes, effective Jan. 1, to Kaiser’s Senior Advantage plan for Medicare members include:

    — Elimination of brand-name drug coverage
    — Unlimited generic drug coverage
    — Co-payments of $200 per day for hospital stays, not to exceed $3,000.
    — Co-payments of $10 to $50 for laboratory and radiology procedures.
    — Keeping local premiums unchanged at $80 a month, or lowering those that are higher than that in some areas.

The major change here of course is the elimination of brand-name drug coverage.  The SF Chronicle reports on some Kaiser members who are taking brand-name drugs and face huge increases in their monthly costs.

While some aspects of this move may yet be rolled back by Kaiser, especially for members who have no generic alternatives for their brand-name drugs, there are several wider implications:

a) All payers are now aggressively pushing against the cost of branded drugs. We’ve seen three-tiered formularies, higher co-pays, etc, etc, from PBMs and health plans. Essentially, if even Kaiser is joining in, insurers are giving up on controlling branded drug costs by giving up on covering them.  This begins to look like drug coverage before the rise of managed care in the early 1990s.  Traditionally most insurance didn’t cover drugs (which is why Medicare doesn’t now), and pharma companies are going to have to continue to deal with the effect of this non-coverage for their branded products. The difference for consumers is that branded drugs now cost much more than they used to, so consumers are likely to start pressurizing pharma companies on retail pricing–such as buying them in cheaper countries!

b) The current Medicare Prescription Drug bill does not include any price controls, generic substitution, or limits on the use of branded drugs–other than the "doughnut hole" in the middle of coverage.  Of course (if it passes!) the bill introduces a Medicare payment system that can and will be changed in the future.

c) The Medicare drug bill on the house side promotes the use of private plans for Medicare.  Given that Medicare HMOs have been losing members in recent years, I’m not so sure that there are great prospects for their success.  However, politically, this type of benefit cut by a well-respected HMO that has always had high member satisfaction, will make the privatization of Medicare even more politically unpalatable.