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HOSPITALS: Trying to put King/Drew in context

There’s a really interesting series in the LA Times about King/Drew Medical Center.  The first article is called Deadly errors and politics betray a hospital’s promise, and the second is called Underfunding is a myth, but the squandering is real. Things are not good at King/Drew and have not been good for some time (possible since its founding). However, there are some reasons why that’s the case. Furthermore, (in a mostly unspoken way) this is somewhat being reduced to an issue about race, with some pretty negative connotations being made. And there’s a lot more to it than that.

I’ll say a lot more about this later in an attempt to put both the health care and the politics in some context, but for now go read the articles. (Apologies to my Monday readers but I’ve been crunched on something else the last few days).

PHARMA: Cynical thought for the day

On December 8th medical students across the nation are going to protest overly intrusive marketing from drug reps. I can’t help wondering that, given the relative geekiness and terrible work hours of medical students/residents and the typical physical characteristics of detail babes reps, isn’t this a somewhat excessive piece of self-sacrifice?  Where else are they going to meet hot chicks/hunky guys?

PHARMA: Atlas is not impressed by the Illinois reimporter

Regular contributor, and one of several token free-marketer contributors to this deeply socialist blog, Atlas, does not like what he sees from the apparently failing effort of Illinois governor Rod Blagojevich to enroll anyone in the campaign to buy drugs from Canada.

Today on our local NPR outlet, Rahm Emmanuel (D-IL) was asked why the Illinois reimportation juggernaut had only signed up 1,200 Illini. His answer–well, we don’t have the money to advertise it. Hello? Where does he think big pharma gets the ad budgets that the great state so lusts for? From charging more than the cost of chemicals in Ireland and the UK, that’s where! Guess "great" ideas don’t sell themselves, eh? Well, guess what? Neither do great medicines! None of this stops our intrepid Governor from exporting his import fiasco like a dangerous contagion to other demagogues in charge of unfortunate states–Kansas is the latest victim. One wonders how much all this interstate politicking costs the taxpayer.

Later on the same program, Dr. Quentin Young (a former Cook County health commissioner and academic who is no friend of pharma) acknowledged that although AIDS is a pandemic worldwide, it is reduced to a chronic condition domestically. By what? Pharmaceuticals!

Meanwhile, while our Governor traipses across the fruited plain running for VP on a Clinton 08 ticket or whatever it is that he is trying to accomplish, Illinois Medicaid (which funds real FDA approved drugs for the needy, including many AIDS sufferers) is criminally underfunded due to the Governor’s foolish pledge (reminiscent of Bush the Elder) to never raise taxes regardless of how much his pharma bashing campaign accompanied by a bloated and corrupt security phalanx drains from the treasury. What’s more, having gambled and lost on the Presidential election, IL now faces the spectre of Federal retribution for its flouting of law and FDA regulation prohibiting reimportation in the form of denial of a Medicaid tax and spend maneuver that it was counting on to plug a multimillion dollar hole in the budget. What comes around, goes around.

Those of us who retain some semblance of sanity and economic literacy here in the Land of Lincoln can hardly wait to lose this loser of a Governor. Wish us well.

I did have to respond to Atlas because the hint of sanity, or at least of not running up a huge deficit just to avoid a tax increase, was implicit in his rant. And that gets us close to the ultimate heresy among Republicans of calling for a tax increase (even if George HW Bush’s tax increase did set us up for the party that was the 1990s). Atlas responded:

I can’t speak for the Republicans (I’m an independent you know). But if you’re going to write a check you’re going to have to cash it. Politicians of every stripe these days seem to be incognizant of this. Even Democrats won’t raise taxes in some cases, and Republicans seem to think deficits don’t matter. To some extent they may have a point (leveraging and all that), but at some point common sense dictates they do matter, and I think we’re getting there.

I think low taxes are good in that they stimulate the economy, and rates prevalent in the US and UK in the 60s (70%-90% at the highest marginal brackets) are counterproductive, except in that they inspired the Beatles to record "Taxman". But many people, I among them, would not object to paying more taxes if the money was really used for practical solutions to pressing problems.

The trouble is much of the money is wasted on corruption and folly. Having grown up in Chicago, I can assure you that many if not most of our tax dollars are wasted if not outright stolen by featherbedders and mobsters. So social reform must be accompanied by political reform, or many will trust in the private sector as the least worst vehicle for good works.

So there really is some dissension on the free-market right from the Rove-Bush-Cheney "deficits don’t matter" orthodoxy. Perhaps Atlas and I will be burnt at the same stake?

   

QUALITY: Wachter agrees that patient safety is only marginally improving

Somewhat beating a dead horse, five years and one day after To Err is Human, UCSF patient safety expert (and by definition rebel physician) Robert Wachter has a paper in Health Affairs in which he (using a survey of 400 hospitalists) grades the US health care system’s efforts on the patient safety issue. The press release notes that he "gives the U.S. health system an overall grade of C+ on patient safety, noting some improvement but considerable deficiencies in key categories." Especially as the only category that patient safety gets an A grade (albeit it an A minus) is in the regulatory sphere. I don’t think that THCB’s commentator of earlier this week Michael Millenson would be so generous with his grading. As he said in his piece in THCB on Monday, "As the horror stories fade, Congress can barely summon the energy to mandate voluntary error reporting." Wachter is impressed only by JCAHOs regs on checking orders and the impact of the emerging role of hospitalists.

Here’s the full paper, and it doesn’t really make for encouraging reading.

POLICY/INDUSTRY: Costs — The rate of increase decreases, but not enough to spoil everyone’s party, with UPDATE

There’s a confusing little piece in the WSJ about how health spending continues to rise at (a) worrying pace. It’s based on a HSC report and an EBRI report about the first half of this year, which suggest that last year’s trends are continuing. Incidentally neither of those reports seem to appear on those organizations’ websites for us mere mortals. The report is now up on HSC’s site,(although perhaps the SEC should be investigating how the WSJ got it early?) However, last year’s trends were a slowing to a mere 7.5% increase, which is only a little over double GDP growth. Anyway this is pretty much in line with CMS’ projection of a 7.8% rise in costs for 2003. A more nuanced observer might notice that it’s during recessions when we have double digit health care cost growth (e.g. 1990-2 and 2001-2) that the healthcare as a share of GDP number really takes off. The rest of the time it just continues a slow snake-like growth upwards. But this isn’t stopping the WSJ from panicking:

The finding suggests that health costs may continue to increase at unmanageable levels for employers and consumers. That outlook is distressing, because until recently the rise in health-care costs had appeared to be decelerating. The flattening of health-cost increases suggests health-insurance premiums will continue to rise at a similar pace.

But of course if you look in the other part of the WSJ you might notice that yesterday was a pretty good day for one part of the health sector–the insurers. Part of that was more irrational exuberance about the finalization of the Wellpoint/Anthem deal. But part of that increase was a big bump in the numbers and forecasts for Humana and Cigna and even bigger jumps in their stock prices. (Incidentally, can anyone else remember a merger going from final government approval one day to immediate ticker symbol transfer and final merger the next? I can’t but that’s what happened and Wednesday WLP stopped trading and handed its symbol over to ATH, which–now called WLP–went up another 7%!).

So if you were concerned about where all those extra premiums are going, don’t be. The health plans are looking after them very well indeed!

UPDATE: And if you needed proof of the frugality of health plans, Bill McGuire, CEO of United, is cashing in $114m in stock options, barely more than the $94m in total comp he had to scrape by on last year. Do you ever wonder if the tough captains of American industry ever stop to think that the more they are asked to pay for health care, the richer the health plans seem to get? Is that how generously they treat the rest of their suppliers?

POLITICS: Has Prop 72 won?

And if you weren’t convinced by the exit poll debacle, the terrorist lockdown in Ohio, the trashing of the optical scan tapes in Florida, and all the other bullshit that’s gone on in the electoral process (not to mention the "spoiled ballots" and felons list of 2000), then get this.

Apparently with all the late votes tallied Proposition 72 actually won in California. Or did it. Maybe it was a clerical error? Who the hell knows, but given that the excess votes came from heavily Democratic LA County and Contra Costa County, there may have been enough to move it over the line.

In any event, THCB is now officially on record as stating that voting and running elections needs to be taken away from the states and counties and given to a non-partisan, non-corruptible government agency that is focused purely on its mission. Perhaps the Hong Kong police force could do the job if the Dalai Lama or the Norwegian foreign ministry is unavailable.

HEALTH PLANS: Georgia names its price and Wellpoint/Anthem merger is done

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After a little bit of modest extortion, the Georgia insurance commissioner came into line for a mere $126m, mostly to be spent on upgrading hospitals and a little for telemedicine. So hey presto, WellPoint is now the nation’s new largest health insurer. Actually it’s Anthem that really took over Wellpoint, but they decided to keep the Wellpoint name.  Georgia actually did alright, as once Garamendi set the price in California at $250m, it was clear to everyone that a deal could be done, and Georgia seems to be the only one that got to renegotiate up!

Notably that a deal could be beneficial was clear to Wellpoint management and stockholders, who have seen the share price go up 30% since Garamendi gave his approval, and seen it rise from $85 to $125 in the little over a year since the deal was announced. (Perhaps the insurance commissioners had gone long before the deal!) In effect though the new company is really just an amalgamation of all the Blues that have been bought by the two companies over the last decade. It’s hard to see how beyond shedding some overhead in southern California (and it will be expensive overhead to shed given the buy-out clauses in place) there are actually any real economies of scale to be gained by putting all these Blues together. Add to that the fact that the underwriting cycle will get tougher from here on out, I wouldn’t be a buyer at these levels.  On the other hand I’ve been saying that for a year now and if I’d been short, well as the British traders say, I’d be having my arse handed to me on a plate.

By the way, if you spellcheck "Wellpoint" using Blogger’s spellchecker it comes back as "elephant"!

TECHNOLOGY: Dan Weintraub on the HIT world

If you want a slightly more thoughtful commentary than I provided live blogging the HIT conference, whip over to this column by Dan Weintraub on Technology and Health. Although he doesn’t come out and say it directly, Dan notes that the dis-integration of the system is the major barrier to inter-operability. And of course the VA and Kaiser are the models that he cites as doing the best work here — which means that no real Americans are going to enjoy the benefits (OK, OK, that doesn’t mean that veterans and KP members aren’t real Americans but in terms of the health care system they are weird exceptions!).

QUALITY: Millenson on Pay For Perfomance

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Michael Millenson week continues here at THCB!

Despite giving my team at IFTF almost no credit for inventing the phrase (oh, I can be as petty as any academic!) Michael has written a pretty good article called Pay for Performance: The best worst choice. Millenson notes that some adherents of antecedents of P4P existed long ago in the medical system before the AMA had them taken out, put up against the wall and shot (or the professional equivalent). Given that Millenson quotes the AMA Chair as saying that P4P is a "scam designed by multi-millionaire Health Plan CEOs to take advantage of gullible physicians", it seems that some things have changed little. And why would you want your performance be reflected in your pay, especially as your performance is apparently as bad (or at least as inconsistent) as much of the care delivered in this country, even by the most prestigious institutions. (See 30 years worth of Wennberg et al if you don’t believe me). For that matter, given the ability of the plans and the rest of the suppliers to game the system in the past, I would be worried as a doctor is I was going to essentially give a with-hold away that I might not see back. But for the rest of us, as Millenson says, given the choice that we have now, P4P is the best one out there.

BTW the article is published in a somewhat obscure British journal called Quality and Safety in Health Care. It’s subscription only, but you dear reader can get to this article by special arrangement only from this page. Ooh, the power of THCB!

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