Author Archives

John Irvine

On the Non-Effectiveness of Cost Effectiveness Analyses

Nortin Hadler MD
Robert McNutt MD

Take the example of a middle-aged woman undergoing chemotherapy for breast cancer. Month after month she receives a bill for $16,000. This purchases a monthly infusion of one chemotherapeutic agent.  Much of the bill is paid by her insurance, but her personal checking account will cough up about $1000 per month until she pays down her deductible.

The invoice, however, is an illusion. The amount is not the actual number of dollars required to pay for services and materials rendered. Most of the money is diverted in accordance with contractual agreements between the hospital and various agents, brokers, and insurers. The total transfer of those dollars is known but not readily accessible to any who was not privy to the negotiations. The $1000 co-pay is a tithe with totally obscure added value to be paid no matter how painfully.

Few of us know the direct cost of any medical intervention. The term “cost” is the money needed to produce a service. For example, the cost of a single chest-x-ray is amazingly cheap, just a few dollars. The materials are inexpensive, the x-ray machine can spit out exam after exam, and one person can service a multitude of patients, making the unit cost a bargain. The cost of many a test is so low that it could be given away without wobbling a hospital’s budget.

Continue reading…

Don’t Like Obamacare? Do We Have a Plan For You!

Struggling to break free from Obamacare oppression, Idaho is offering low-cost health plans that achieve this goal by avoiding covering anyone who’s been sick in the past and skimping on coverage for any diseases that might make you sick in the future. These strategies are, inconveniently, explicitly banned by the Affordable Care Act.

Fortunately, I have a solution perfect for Idaho and other GOPers eager to emulate Idaho’s example. My plan covers young and old, sick and healthy, fitness buff and couch potato, all for the same incredibly low price. No one, and no illness, is excluded.
Welcome to the Placebo HMO, dedicated to serving every American who fervently believes you don’t need real health insurance.

We’re a faith-based plan that offers empathetic, sincere and personalized advice from a broad range of highly skilled actors pretending to be doctors. Whether it’s a “seen everything” veteran like Tom Hanks or Meryl Streep in The Post or a bright-eyed idealist like Emma Stone and Ryan Gosling in La La Land, we provide unparalleled freedom of provider choice that plans dependent on actual doctors cannot match.

Continue reading…

On Theranos: It’s Time to Throw the Book at Healthcare Tech Frauds

Huge news hit today as Theranos, its Chairman and CEO Elizabeth Holmes and its former President and COO Ramesh “Sunny” Balwani were charged with “elaborate, years-long fraud” by the Securities and Exchange Commission. The litany of supposed violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 are almost as dizzying as the detailed factual allegations of repeated, willful fraud perpetuated by Holmes and Balwani on investors who likely should have known better.

Reviewing the SEC complaint against Holmes, it’s stunning to see the extent to which Holmes and Balwani were able to pull the wool over investors’ eyes. The highlights of the SEC allegations include:

Continue reading…

The Conflicted-Disruption Complex

Elizabeth Holmes, the founder and chief executive of the controversial company Theranos, has been charged with an “elaborate, years-long fraud” by the Securities and Exchange Commission. The SEC alleges that Holmes and former company president Ramesh “Sunny” Balwani deceived investors into believing that its key product — a portable blood analyzer —was capable of using drops of blood to do the kinds of workups that now require much more blood—up to ten milliters per test.  Holmes fooled many people including the Theranos board of board of directors, high-powered investors and high ranking members of the military including General James Mattis, a huge fan, who left the Theranos board to become President Trump’s Secretary of Defense.

Things don’t look good for the Theranos leadership in terms of the SEC charges. The company already saw a three-year partnership with Walgreen’s collapse leaving many customers wondering if they had been deceived. The technology, which Holmes and her company touted as disruptive and revolutionary, never worked. So what happened to permit so much enthusiasm and money to be spent on a useless technology?

First, the company never published on its technology. The promise of small volume blood testing sounded great and indeed is great for many reasons not the least of which a lot less misery for patients who need to get a lot of painful blood drawn for tests. But no publication, no data driven presentations at professional society meetings, a lack of transparency turned Theranos into an 8 billion dollar Dutch tulip bubble.

Continue reading…

Dear CMS Administrator Verma

Stephen Soumerai ScD
Ross Koppel PhD, FACMI

Your address to HIMSS acknowledges many of the problems with Healthcare IT, highlighting lack of interoperability, lack of data exchange, and lack of cybersecurity, and suggesting some regulations that could be eliminated. This is a welcome realization of some of EHR’s more obvious limitations and problems.  However, most of your recommendations for improvement of health IT are insufficient, unproven, or have been repeatedly shown to fail.

We applaud your acknowledgement of: 1. The frustration (and often rage) of many clinicians when using the current EHRs’ clunky and inefficient user interfaces; 2. Patients’ frustration and alienation when doctors spend much time entering data into the EHRs rather than listening to them; 3. The need for better cybersecurity; 4. Benefits of increased patient access to their data; and 5.Healthcare systems’ refusal to share patient data with others clinicians (data hoarding).

We are also delighted for your strong support for the Sync for Science program.

However, your solutions to these problems are faulty or have already failed—and thus we are obliged to explain why and how they fail:

  • Belief in the magic of value-based care as a cure for excessive spending
  • Claim that “open APIs” (defined in next sentence) will solve the problems of lack of interoperability. Here, APIs refer to software programs that try to translate different forms and formats of information into a single commonly understood item.
  • Belief that a patient’s personal data store or personal EHR, called “MyHealthEData,” will help solve the problems of patient care. 
  • Confusing patients with customers. We train doctors to make diagnoses, order and interpret tests, and help patients make profoundly complex decisions. Healthcare decisions are not like buying a toaster. 
  • Attributing so many of the problems of EHRs to the regulations created in 2009, the “Meaningful Use” rules.   In fact, meta-analyses of EHRs—both before the Meaningful Use rules, and after–fail to find they reduce costs, mortality, or morbidity.

Continue reading…

Why Lawmakers Must Vote Down Right to Try

Andrew McFadyen

As rare disease patient advocates, we work with terminally ill patients on a daily basis. A new version of the ‘Right to Try’ bill, which purports to help terminally ill patients access experimental medication, is set to be voted on in the House on Tuesday. While we understand the appeal of Right to Try, we also know it will do more harm than good. It is our duty to patients in need to urge Congress to reject Right to Try.

Thirty-eight states, representing 83% of the population in the USA, have signed Right to Try bills into law. These bills align with the model legislation crafted by libertarian think tank, The Goldwater Institute. Promoted as providing “immediate access to the medical treatments” for terminally ill patients outside of clinical trials, the cruel reality with Right to Try legislation is that it will not grant patients the immediate access to treatments they desperately need – and it never has. 

Looking past the myths that Right to Try proponents state ad nauseam, and looking past this legislation’s potential to create an unequal access to medication, the simple fact is: although over 270 million Americans are currently living within the boundaries governed with Right to Try laws – providing them with, as Goldwater claims, “immediate access to medical treatments they need” – there continues to be no concrete evidence of a patient ever receiving a life-saving medication under Right to Try legislations that they otherwise wouldn’t have received under the current Expanded Access Program. 

Tomorrow’s vote on a newly crafted Right to Try bill from House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) is more limited than Senator Ron Johnson’s earlier iterations, yet remains little more than a feel-good bill that will do nothing to change the landscape with respect to access to life-saving medications for patients in dire need. In essence, the landscape for access to medications for dying patients does not change tomorrow if a Federal Right to Try law is passed. Very clearly, those patients in dire need of help today will wake up tomorrow needing access to the same life-saving treatments, and feel the same despair when they are not given the access they need through Right to Try. 

Continue reading…

The One Way the Trump Administration Can Drive Competition Without Regulation

There is one way the Trump HHS and VA can thread the needle between provider economic self-interest and burdensome regulation and it’s based on Federal health IT policy.

This past week has seen a number of high-profile announcements from the Trump HHS including Secretary Azar and CMS Administrator Verma  about patient empowerment and enhanced transparency as a strategy to breathe life into healthcare reform. Meanwhile, VA Secretary Shulkin is under immense pressure to make their privatized Cerner EHR interoperable.

It’s pretty clear that the Trump HHS wants to do something about the frustrating and ineffective health IT policies that led to the 21st Century Cures Act information blocking provisions and that they’re hoping to leverage the $1 Trillion of federal spending in healthcare as an alternative to heavy-handed regulation.  This is all good but what can they actually do?

Most of Secretary Azar’s talk is about disruption:

“In fact, it will require some degree of federal intervention — perhaps even an uncomfortable degree. That may sound surprising coming from an administration that deeply believes in the power of markets and competition. But the status quo is far from a competitive free market in the economic sense of the term, and healthcare is such a complex system, that facilitating a competitive, value-based marketplace is going to be disruptive to existing actors.”

Continue reading…

Why Do We need ACOs and Insurance Companies? Part II

In my last post , I made fun of Ezekiel Emanuel and Joseph Liebman for predicting that ACOs would replace insurance companies by 2020. I noted that the 800 to 1,000 ACOs reportedly in existence today are nowhere near ready to accept full insurance risk because they have shown no ability to cut costs. [1]

Although Emanuel and Liebman were foolish to predict most ACOs would quickly evolve into successful insurance companies, they shared with all other ACO advocates the understanding that that’s what ACOs are supposed to do – over time they’re supposed to bear more and more financial risk. It’s just never been clear how much financial risk ACOs were supposed to take on. The Affordable Care Act, for example, which authorized CMS to establish an ACO program within Medicare, did not address that question.

A reasonable interpretation of statements and papers by ACO proponents is that they expected a substantial portion of ACOs to morph into insurance companies. According to an early paper  by several prominent ACO proponents, including Elliott Fisher, ACOs were expected to accept more risk in three stages: In stage 1 they would accept only upside risk (the opportunity to share in savings if they stayed under a target spending level); in stage 2 they would accept both up- and downside risk; and in stage 3 they would accept full insurance risk (they would no longer be paid fee-for-service, but would instead be paid “capitation” payments, aka premium payments), and would, therefore, have to set aside reserves. Presumably stage 3 ACOs would also have to be licensed by the insurance regulators in the states where they operate.Continue reading…

I am a Pediatrician. I Treated the Columbine Kids. I Have Not Spoken Out Before.

A National School Walkout Day is planned for March 14, 2018 at 10 a.m. and will last 17 minutes in honor of the 17 students and staff members killed at Marjory Stoneman Douglas High School in Parkland, Florida, on Valentine’s Day. The heart of the nation has seemed to shift overnight regarding the debate on guns, but this change has been almost two decades in the making. United and Delta Airlines pulled their support for the NRA, Dicks’ Sporting Goods will not sell assault-style weapons, and Walmart plans to raise the minimum age to purchase a gun to 21 years old.

I am a pediatrician. I treated the Columbine kids.

I have sat on the sidelines for far too long. I watched from a front row seat as frightened, grieving children who survived the shooting at Columbine High School on April 20, 1999 struggled to put their lives back together.  My pediatric internship began June 23, 1999, at the Children’s Hospital in Denver, Colorado, approximately 20 miles north of Columbine High School. Up until that time, a mass shooting inside the walls of a high school had been almost unimaginable. Many students who had survived by hiding under a desk in the library that tragic day crossed my path over the next three years.

As a physician I am bound by strict patient confidentiality laws. For that reason and out of respect for the survivors, I cannot tell you their names. I cannot tell you the stories they told me. Or the awful things I read in their charts. I will let your imagination fill in the blanks.

I can only leave you to guess at what they saw and the nightmares that haunted them. In reality, every student and teacher inside Columbine High School was irreparably damaged forever; they lost a huge part of themselves on that heartbreaking day.

Why has so little changed in almost 20 years since Columbine?

Continue reading…

Three Reasons Amazon’s Mega Partnership Is Fertile Ground For Innovation

Amazon has chosen its initial partners for its foray into healthcare—Berkshire Hathaway, the third largest public company in the world, and JPMorgan Chase, one of the largest banks in the world. Their mission is ambitious: to check the rise in health costs while concurrently enhancing patient satisfaction and outcomes. Can these three companies, none of which have expertise in healthcare, truly make a dent in healthcare costs? I would argue yes.

Here are three reasons why this partnership is fertile ground to realign innovation efforts with affordability and a long-term focus on health:

Self-insured employers play by different rules

The partnership’s first priority, as JPMorgan Chairman and CEO Jamie Dimon has stated, is to “create solutions that benefit our U.S. employees, their families, and potentially, all Americans.” Many have speculated this equates to covering their employees in a self-insured manner first. If this happens to be the case, the partnership will be constructing its model within a market that is conducive to minimizing costs.

In the private insurance market, private insurance companies are disincentivized to encourage innovation that lowers care costs, in part due to the Medical Loss Ratio. The Medical Loss Ratio is the ratio of expenditures in medical claims paid by an insurer for care of their beneficiaries to premium revenue. Private insurance companies are required to keep their MLR above 80% in the small group market and 85% in the large group market. Though the Medical Loss Ratio intends to ensure care is not withheld from beneficiaries, it also changes the profit maximization strategy for private insurers.

Instead of improving their bottom line with preventive care and finding ways to lower care costs, these private insurers profit when the 15 to 20% of premium revenues not seen as “medical loss” (such as overhead, administrative costs, and profit) is as large as possible. In order to maximize profit, the total revenue collected in premiums must also be as large as possible—pushing insurers to not only cover as many lives as possible, but raise premiums. Such a market discourages innovation meant to control care costs, as any successful initiatives would only end up diminishing the potential for profit.

Continue reading…


Forgotten Password?