Year: 2017

Amazon (Probably) Is About to Lose Out

Nov 23, 2017• 4

By ROGER COLLIER

Dear Jeff Bezos:

It looked like a great idea when you started to build a team of healthcare specialists back in the summer. Despite — or perhaps because of — endless attempts to control costs and improve quality, American healthcare remains (in the words of a recent THCB post) “a version of Afghanistan…replete with tribal conflicts, warlords, corruption, a bad communication system, [and] language problems.” Surely, there must be opportunities for Amazon.

Healthcare reporters were quick to pick up on rumors of your company entering the pharmacy business. If Amazon’s purchasing, distribution, delivery and marketing skills could be applied to the Whole Foods grocery business, imagine what might be achieved in the $500 billion pharmacy market. And imagine how this base could be used to transform the entire healthcare industry. No wonder drugstore chains and drug manufacturers saw their stocks swoon as the rumors spread.

Now it seems Amazon may have been aced out.

CVS Health, the largest retail pharmacy chain and a major pharmacy benefits manager, is in talks to buy Aetna, the third largest US health insurer, for more than $66 billion. While some analysts see this as primarily a defensive maneuver to thwart Amazon, it has the potential to dramatically change the healthcare playing field.

In the short run, both CVS and Aetna would be better protected against their current weaknesses. CVS’ PBM business is increasingly vulnerable as major insurers bring drug negotiations in-house, while its retail stores face growing competition from on-line pharmacies and – more recently – from federal approval of Walgreens’ acquisition of Rite-Aid. Aetna has its own weaknesses: it lost money on the Obamacare exchanges, and the continuing move of large groups to ASO contracts means less profitable underwritten business.

What investors are saying about the state of digital health

Nov 22, 2017

Health 2.0 caught up with some of our favorite investors who have a strong pulse on what’s happening in digital health care both past and present. We talked about company evaluation, unmet needs in health care, and their biggest surprises yet.

Read the full interview featuring Lisa Suennen of GE Ventures, Bryan Roberts of Venrock, Rich Roth ofDignity Health, and Brent Stackhouse of Mount Sinai Ventures.

Here’s a preview…

“Pretty much all of my investments are in first time CEOs, which is not particularly what the venture capital playbook tells you to go do. But I find those people to be very hungry and largely underappreciated by the rest of the world. They’re also very willing to bash their head against a brick wall with me for a while, in order to try to succeed at something that is hard to do.”
– Bryan Roberts, Venrock on what he looks for in an investment.

“There are so “many tech people who want to work their way into health care venture capital. When I started in health care venture in 1998 you couldn’t give it away. I wonder how long it will be before the cycle ends?”

– Lisa Suennen, GE Ventures on what surprises her about the industry right now.

Catch up with Lisa Suennen, Bryan Roberts, and others at Health 2.0’s WinterTech event on January 10, 2018 in San Francisco where you’ll hear more on investment trends, IPO, and the rise in consumer choices. Register today for WinterTech before the early price ends.

Health Care Needs Its Rosa Parks Moment

Nov 22, 2017• 3

BY SHANNON BROWNLEE

On Wednesday, October 25, 2017 I was at the inaugural Society for Participatory Medicine conference. It was a fantastic day and the ending keynote was the superb Shannon Brownlee. It was great to catch up with her and I’m grateful that she agreed to let THCB publish her speech. Settle back with a cup of coffee (or as it’s Thanksgiving, perhaps something stronger), and enjoy–Matthew Holt

George Burns once said, the secret to a good sermon is to have a good beginning and a good ending—and to have the two as close together as possible. I think the same is true of final keynotes after a fantastic conference. So I will do my best to begin and end well, and keep the middle to a minimum.

I have two main goals today. First, I want to praise the work you are doing, and set it into a wider context of the radical transformation of health care that has to happen if we want to achieve a system that is accountable to patients and communities, affordable, effective — and universal: everybody in, nobody out.

My second goal is to recruit you. I’m the co-founder of the Right Care Alliance, which is a grassroots movement of patients, doctors, nurses, community organizers dedicated to bringing about a better health system. We have 11 councils and chapters formed or forming in half a dozen cities. I would like nothing more than at the end of this talk, for every one of you to go to www.rightcarealliance.org and sign up.

But first, I want to tell you a bit about why I’m here and what radicalized me. My father, Mick Brownlee, died three years ago this Thanksgiving, and through his various ailments over the course of the previous 30 years, I’ve seen the best of medicine, and the worst.

My father was a sculptor and a scholar, but he was also a stoic, so when he began suffering debilitating headaches in his early 50s, he ignored them, until my stepmother saw him stagger and fall against a wall in the kitchen, clutching his head. She took him to the local emergency room, at a small community hospital in eastern Oregon. This was the 1970s, and the hospital had just bought a new fangled machine—a CT scanner, which showed a mass just behind his left ear. It would turn out to be a very slow growing cancer, a meningioma, that was successfully removed, thanks to the wonders of CT and brain surgery. What a miracle!

Fast forward 15 years, and Mick was prescribed a statin drug for his slightly elevated cholesterol. One day, he was fine. The next he wasn’t, not because his cholesterol had changed, but the cutoff point for statin recommendations had been lowered. Not long after Mick began taking the statin, he began feeling tired and suffering mild chest pain, which was written of as angina. What we didn’t know at the time was the statin was causing his body to destroy his muscles, a side effect called rhabdomyolysis. Even his doctor didn’t recognize his symptoms, because back then, the drug companies hid how often patients suffered this side effect.

The statin caught up with Mick at an exhibit in Seattle of Chinese bronzes, ancient bells and other sculptures that my father had been studying in art books his whole career. Halfway through the exhibit, he told my brother to take him home; he was too tired to take another step.

Three days later, he was in the hospital on dialysis. The rhabdomyolysis had finally begun to destroy his kidneys. Three weeks later, he was sent home alive with one kidney barely functional. Soon his health would begin to deteriorate at a steady pace.Continue reading…

Purging Healthcare of Unnatural Acts

Nov 21, 2017• 32

BY UWE REINHARDT

In tribute to Uwe we are re-running this instant classic from THCB’s archives. Originally published on Jan 31, 2017.

Everyone knows (or should know) that forcing a commercial health insurer to write for an individual a health insurance policy at a premium that falls short of the insurer’s best ex ante estimate of the cost of health care that individual will require is to force that insurer into what economists might call an unnatural act.

Remarkably, countries that rely on competing private health insurers to operate their universal, national health insurance systems all do just that. They allow each insurer to set the premium for a government-mandated , comprehensive benefit package, but require that each insurer “community-rate” that premium by charging the company’s individual customers that same premium, regardless of their health status and even age (with the exception of children).

American economists wonder why these countries do that, given that in the economist’s eyes community-rated health insurance premiums are “inefficient,” as economists define that term in their intra-professional dictionary.

The Affordable Care Act of 2010 (ACA, otherwise known as “ObamaCare”) also mandates private insurers to quote community-rated premiums on the electronic market places created by the ACA, allowing adjustments only for age and whether or not an applicant smokes. But within age bands and smoker-status, insurers must charge the same premium to individual applicants regardless of their health status.

As fellow economist Mark V. Pauly points out in an illuminating two-part interview with Saurabh Jha, M.D., published earlier on this blog, aside from the “inefficiency” of that policy, it has some untoward but eminently predictable consequences. It happens when healthier people disobey the mandate to purchase insurance, leaving the risk pools of those insured in the ACA market places with sicker and sicker individuals, thus driving up the community-rated premiums. As Pauly points out at length, a weakly enforced mandate on individuals to be insured can become the Achilles heel of community rating.

The Great American Hypertension Epidemic of 2017

Nov 16, 2017• 14

By MICHEL ACCAD, MD

On November 15, 2017, an epidemic of hypertension broke out and could rapidly affect tens of millions of Americans. The epicenter of the outbreak was traced back to the meeting of the American Heart Association in Anaheim, CA.

The pathogen was released in a special 488-page document labeled “Hypertension Guidelines.” The document’s suspicious content was apparently noted by meeting personnel, but initial attempts to contain it with an embargo failed and the virus was leaked to the press. Within minutes, the entire healthcare ecosystem was contaminated.

At this point, strong measures are necessary to stem the epidemic. Everyone is advised not to click on any document or any link connected to this virus. Instead, we are offering the following code that will serve both as a decoy and as an antidote for the virulent trojan horse.

Only a strong dose of common sense packed in a few lines of text can possibly save us from an otherwise lethal epidemic of nonsense. Please save the following text on your EHR cloud or hard-drive, commit it to memory or to a dot phrase, and copy and paste it on all relevant quality and pay-for-performance reports you are asked to submit.

What Baseball Can Teach Doctors

Nov 16, 2017• 5

By MICHAEL MILLENSON

Baseball, like medicine, is deeply imbued with a sense of tradition, and no team more so than the New York Yankees, disdainful of innovations like placing players’ names on the backs of their jerseys and resistant to eroding strict standards related to haircuts and beards.

It’s why doctors and patients alike should pay special attention to why the Yankees parted ways with their old manager and what they now seek instead. In a word: “collaboration.”

That’s the takeaway from a recent New York Times article examining why the Yankees declined to re-sign manager Joe Girardi despite his stellar “outcomes” (to use a medical term); i.e., the best record in baseball during his 10 years at the Yankees’ helm. But Yankees executives believe the game has changed. The model for future success is the Los Angeles Dodgers, the tradition- and cash-rich franchise on the opposite coast that went to this year’s World Series while the Yankees sat home.

The new way to win? According to Dodgers executives, it requires a combination of statistical analysis, shared decisions and communication between and among all stakeholders based on collaborative relationships.

The New Health Care Experience For Consumers

Nov 16, 2017• 1

By HEALTH 2.o SPONSORED CONTENT

We are human and we need health care. These are universal truths. Here’s another one – we are consumers. Consumers who happen to be in a constant state of adapting to new health care protocols. The advent of value-based care over fee-for-service has also seen an emergence of empowered consumers who are not only informed but savvy in their health care decision making. Where do I purchase? From who? How much does it cost? How much can I afford? When do I purchase? What if I need a specialist? The list goes on. Luckily there is an ever-growing group of people and organizations who continue to make the consumer experience streamlined, affordable, and personal. Even in the gravest of scenarios.

Remembering Uwe

Nov 15, 2017• 3

By JEFF GOLDSMITH

The healthcare world learned with great sadness this week of the passing of our friend, Uwe Reinhardt. I met Uwe in 1982 at the Federation of American Hospitals meeting in Las Vegas. Uwe opened the meeting by apologizing, in his disarming German accent, for not being his usual sharp self. He had, he said, skipped breakfast because his wife May had instructed him not to pay for anything in Las Vegas that he could get for free at home. This was vintage Reinhardt, innocent and knowing at the same time. That meeting was the beginning of a long and warm friendship.

Uwe would have been acutely uncomfortable with his colleagues referring to him as a “giant” in our field, because he was genuinely humble, and had not forgotten what it felt like growing up poor in devastated post-War Germany after WWII. And there was no sterner test of humility that occupying the James Madison Professorship of Political Economy at Princeton, just about as flossy an academic title as you will find.

For many years, Uwe taught a standing-room-only undergraduate course in Accounting at Princeton. The way he taught it was as a cleverly disguised course in moral philosophy. A main trope: “how would a ‘seasoned adult’ look at this problem?” A ‘seasoned adult’ was someone who had lost his or her moral compass and sense of shame. So, where would a ‘seasoned adult’ book a bribe paid to a foreign official to obtain a contract, etc.? He was cleverly goading them not to lose their sense of outrage and their own moral compass, a tricky task without patronizing them.

Trump’s New Man at HHS

Nov 15, 2017• 3

By STEVE FINDLAY

President Trump’s nominee to be the next HHS Secretary—Alex Azar—has a sparkling resume and by most accounts is a practical, accomplished and solid choice to lead the agency and the federal government’s health programs for at least the next 3 years.

He served as HHS Deputy Secretary under George W. Bush.

But the choice is yet another by the Trump administration that puts industry leaders in charge of public policy and programs. And in this case that could matter as much as the appointment of Scott Pruitt to head the EPA—although I do not equate the two personally since Pruitt is a severe partisan with a disdain for the federal government while Azar apparently acquitted himself well while serving at HHS under Bush.

The problem is Azar spent most of the last 10 years at pharmaceutical giant Eli Lilly and was president of Lilly’s U.S. affiliate before leaving that post in January. He also served on the board of the biopharmaceutical industry trade group BIO.

A Brief History of Price Controls by Annoyed Republican Administrations

Nov 15, 2017• 17

By UWE REINHARDT

Although, unlike most other nations, the U.S. has only two parties worth the name, their professed doctrines compared with their actions strikes me as more confusing than the well-known Slutsky Decomposition which, as everyone knows, can be derived simply from a straightforward application of Kramer’s rule to a matrix of second partial derivatives of a multivariable demand function.

The leaders of the drug industry, for example, probably are now breaking out the champagne in the soothing belief that their aggressive pricing policies for even old drugs are safe for at least the next eight years from the allegedly fearsome, regulation-prone, price-controlling Democrats. My advice to them is: Cool it! Follow me through a brief history of Republican health policy, to learn what Republicans will do to the health-care sector when it ticks them off.

Republicans like to tar Democrats over allegedly socialist policy instruments such as price controls, global budgets and deficit-financed government spending. Democrats usually roll over to take that abuse, almost like hanging onto their posteriors signs that says “Kick me.” I say “abuse,” because Republicans have never shied away from using the Democrats’ allegedly left-wing tactics when health care chews up their budgets or turns voters against them.