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BLOGS:/INDUSTRY/POLICY A little bit of mini-forecasting for 2007

Crystal_ball
For the first major post of the year, I usually do a forecast of the big issues that I think will be happening.  Looking back at the last few forecasts, I noticed a couple of things. First, as ever in health care things take longer and longer to become a big deal.  So it seems that people have been forecasting consumer driven health plans for a long time—in fact I wrote part of a report on consumers in health care in 1997. The same thing is true with FDA reform, Medicare disease management, and state health initiatives. Be patient.

The big difference there seems to be coming up this year is that because of the Democrats’ win in the November elections, we are now going to have some real discussion about solving the problem of the uninsured, and the implications that has for the rest of the system. I will be talking more, in a piece tomorrow at Spot-on, about the various reform initiatives that are going to be in the news in the coming months. Even our local Governator is getting into the act, both as a Governor and as a  patient.

Realistically, there is nothing that Democrats can do a national scale to improve the situation of the uninsured or to reform the system.  To get anything properly done will require 60 votes in the Senate, and Presidential help.  That’s not going to come with the current occupant of the White House, who is still living in cloud cuckoo land that a few more HSA tax reforms will send all the nation’s health care problems back beyond the rainbow. Personally I think it’s too early for the Democrats to be introducing significant legislation.  I’m not even sure that the nation will be ready for health-care reform after the next Presidential election. Victor Fuchs has many times correctly predicted the failure of national health care legislation because he believes there will need to be a significant national crisis before it gets enacted. My sense is that the ongoing slow collapse of employment-based health insurance, will produce that level of crisis, but not quite yet.

So what do I think will be a big deal this year?  Some of these are obvious, but here goes anyway.

1. Discussions of reform plans And of course secret meetings amongst health care stake-holders to figure out how to subvert those discussions.

2. Investigations of Medicare managed care. This is just too big and a easy target for Pete Stark.  The bad behavior of the management of the largest Medicare managed care plan—even if the CEO has been sacrificed—will surely come up in the conversation, as will some of the equally bad if not worse behavior by the largest for-profit Blues plan. Hopefully, some of the good parts of care management that are slowly being introduced into Medicare, will not be the babies thrown out with the bath-water.

3.Employers getting smarter. With increasing numbers of articles in the Wall Street Journal, blog postings from smart consultants, and general understanding of what the health insurance and PBM industry has been up to, it’s likely that employers will not be standing for the kind of rate increases that exceed medical trend which they have been receiving for the past five years in the next year. At least I hope they’re not that dumb.  In fact it’s likely that insurers and PBMs will try to keep prices down, and even take lower profits, so as not to raise their customer’s ire.

4.Software coming of age? This is tough to compress into one bullet point, but enough medical groups are implementing electronic medical records, health plans are introducing care management software, and hospitals are starting to use IP-based telephony and other productivity tools, that we should actually start to see some of the productivity and quality improvements this technology has been promising in the next year or two. It’s also worth noting that the numbers of hospitals with PACS systems is increasing fast, and that some of the RHIOs are distributing software as a service which is making it more affordable for small physicians’ offices and hospitals.Obviously, it’s a wise move to keep your eye on a couple of sentinel events, such as the success or failure of Kaiser’s HealthConnect, and the relative acceptance of Windows Vista in health care.

5.Health 2.0 I may have a special bias here and I know some people say this is just hype, but I believe that by the end of 2007 there will be a significant number of patients and consumers using the new software tools that are currently being developed to significantly change how they interact with both their insurers and their providers. I somewhat agree with Unity Stoakes when he says that not much has happened in the last ten years in terms of advancing the tools patients are using online. I think that there is great appetite for improved search and improved tools. Steve Case at least agrees with me!
6. More sectarian strife among providers. The latest staving off of the Medicare Part B cuts papered over the cracks for a little while, but the difference between profitability among different specialties and different hospitals is becoming really politically visible. There’s no essential reason why diagnostic radiologists should earn four times the amount of primary care doctors, for example. At some point this discussion will start, so look for inklings of it this year.

7.Patient safety and the industrial process. I throw this in just because I interviewed Brent James last month. This year a new batch of studies will come out suggesting that error rates in hospitals may exceed 30%. Michael Millenson will get very upset, and at the time when hospitals have been making record profits, questions will begin to get asked about what we’re getting for our money.

8.Pharma trying to duck under the radar. Right at the end of last year, buried in the Christmas lull, the former Pfizer CEO was revealed to have been awarded $200 million, give or take, for his performance in wiping several billion off the company’s market capitalization. This kind of thing doesn’t help when the industry is trying avoid price controls on Medicare Part D. Given that the Democrats are now in power in the Congress, it is likely that Big Pharma will spend this year keeping its head down and trying to mend fences. I also suspect that we’ll have a big merger or two as that’s the only rational way for the industry to cut its vast marketing expenses.

9. Finally, in the year’s most important news, all is not well in west London as Chelsea are only in second place in the English Premier league, and the continued absence of several key players with injury—and of poor play of several expensive new players—combined with the brilliant form of Manchester United makes a third repeat championship look unlikely. My forecast is that Chelsea will make the race tight, but will end up coming second. They will also lose in the final of the European champions league, and Jose Murinho will exit at the end of the season. Of course I hope I am wrong about that forecast!

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Patti FraschAdam J. FeinChandresh ShahMartin GoldsmithMark Recent comment authors
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Patti Frasch
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Patti Frasch

Just a question;
I wanted to know what the individual consumers buying habits are for purchasing health care coverage. For example is there a time of year that purchasing spikes occur.
Thank You,
Patti Frasch

Adam J. Fein
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I am rolling out my four major channels trends for 2007 this week. My focus is much narrower than yours, but the first two are already posted:
Trend 1: Pharmacy Infrastructure Integration
Trend 2: Lobbying for Retail Pharmacy Profits
Best,
Adam

Chandresh Shah
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Chandresh Shah

If there was one single ‘technology thing (gadget/software/productivity tool)’ that doctors wanted, what would it be?
Maybe some entrepreneur reading these blogs might take a cue and just make your 2007 wish come true.
If not technology, perhaps ‘cheaper/lower cost’ this or that…

Martin Goldsmith
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Martin Goldsmith

Matt
Interesting lists – but the system is huge and movement is slow and chaotic. As for specifics– #4, #5, #6 #7 – ripples not waves. Sorry!

Mark
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Mark

Couldn’t agree more on #6, and the discussion has already started. Between Tom Bodenheimer’s road show in 2006, the overdue awakening of generalist physician societies, MedPAC’s recognition that the AMA’s RVU Update Committee is fundamentally flawed, and of course the deficit, somebody’s due for a slapping in 2007-08. Who will that somebody be? Hopefully the radiologists and procedurists who will no longer be able to depend on the generalists for political muscle. The Medicare SGR may have its problems, but one nice side effect of (trying to) enforce a zero-sum game in physician compensation is that it encourages physicians to… Read more »

Randy White
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I would also add that as the economy plunges in 2007, more people will be relying on the Emergency Room as their primary care provider since they will be: 1) Losing their health benefits 2) Too broke to pay 3) Legally able to receive care without being turned away I think the big imbalance could end up making Health Care industry’s back crack in an accelerated fashion, and emergency measures will need to be implemented. Just what those measures are remain to be seen without the proper planning. And as far as I can tell, no one knows how to… Read more »