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Category: The Business of Health Care

Breaking Up is Good to Do

By KIM BELLARD

Last week General Electric announced it was breaking itself up. GE is an American icon, part of America’s industrial landscape for the last 129 years, but the 21st century has not been kind to it. The breakup didn’t come as a complete surprise. Then later in the week Johnson and Johnson, another longtime American icon, also announced it would split itself up, and I thought, well, that’s interesting. When on the same day Toshiba said it was splitting itself up, I thought, hmm, I may have to write about this.

Healthcare is still in the consolidation phase, but there may be some lessons here for it.

For most of its existence, GE was an acquirer, gobbling up companies with the belief that its vaunted management structure could provide value no matter what the industry. This was most famously true in the Jack Welch days, but since those days it has been gradually shrinking itself, spinning off some of its more problematic divisions, like appliances, locomotives, and much of its once-huge financial services business. It will spin off its healthcare business in early 2023 and its renewable energy and power business in early 2024; its aviation business will keep the GE name. 

“A healthcare investor wants to invest in healthcare,” CEO Larry Culp explained. “We know we are under-owned in each of those three sectors, in part because of our structure.”

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Not Your Father’s Job Market

By KIM BELLARD

If you, like me, continue to think that TikTok is mostly about dumb stunts (case in point: vandalizing school property in the devious licks challenge; case in point: risking lives and limbs in the milk crate challenge), or, more charitably, as an unexpected platform for social activism (case in point: spamming the Texas abortion reporting site), you probably also missed that TikTok thinks it could take on LinkedIn.  

Welcome to #TikTokresumes.  Welcome to the Gen Z workplace.  If healthcare is having a hard time adapting to Gen Z patients – and it is — then dealing with Gen Z workers is even harder.  

TikTok actually announced the program in early July, but, as a baby boomer, I did not get the memo.  It was a pilot program, only active from July 7 to July 31, and only for a select number of employers, which included Chipotle and Target.  The announcement stated:

TikTok believes there’s an opportunity to bring more value to people’s experience with TikTok by enhancing the utility of the platform as a channel for recruitment. Short, creative videos, combined with TikTok’s easy-to-use, built-in creation tools have organically created new ways to discover talented candidates and career opportunities. 

Interested job-seekers were “encouraged to creatively and authentically showcase their skillsets and experiences.”  Nick Tran, TikTok’s Global Head of Marketing, noted: “#CareerTok is already a thriving subculture on the platform and we can’t wait to see how the community embraces TikTok Resumes and helps to reimagine recruiting and job discovery.”  

Marissa Andrada, chief diversity, inclusion and people officer at Chipotle, told SHRM: “Given the current hiring climate and our strong growth trajectory, it’s essential to find new platforms to directly engage in meaningful career conversations with Gen Z.  TikTok has been ingrained into Chipotle’s DNA for some time, and now we’re evolving our presence to help bring in top talent to our restaurants.”

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Money and Values: For Healthcare Workers, It’s Time They Align

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By WYNNE ARMAND and CHRISTIAN MEWALDT

It shouldn’t be controversial to say that promoting the well-being of patients and our community should be at the core of our decisions in health care — even when competing factors exist. Yet we have grown increasingly uncomfortable to realize that we’ve been investing in companies whose products — including fossil fuels — are at the crux of diseases we treat.

In 2018 alone, fossil fuel combustion-produced particulate matter was responsible for an estimated 9 million deaths worldwide, according to a recent publication by researchers from Harvard University and the Universities of Birmingham and Leicester in the United Kingdom. Other health effects are extensive, including increased cardiovascular disease and respiratory illnesses, especially in small children. Fossil fuels are also widely considered a primary driver of climate change, and their combustion contributes to the increased numbers of record heat waves and heat-related deaths, as many US communities are facing this summer.

Our hospitals, as tax-exempt nonprofits, provide us retirement plans in the form of 403(b)s, financial accounts similar to 401(k)s that are offered by for-profit companies. As employees who are eligible for benefits, we are typically automatically enrolled in the retirement savings plan, with contribution limits determined by the Internal Revenue Service (IRS). Recently, we learned that by the end of 2020, of the $35 trillion in US retirement assets, $1.2 trillion were invested in these 403(b) plans, according to Investment Company Institute, the trade association for investment companies.

With healthcare representing the largest sector of employers in the US, with nearly 7 million employees at hospitals alone, our employers should provide us with options for retirement funds that do not contain fossil fuel investments that ultimately undermine our duty to patients.  While retirement finances aren’t our focus during our workdays, the effects of our collective $1.2 trillion investment do appear in clinical settings.

The default choice at our institution, like many, is a target-date fund composed of “passive investments”, i.e. indexed stocks and bonds that rebalance as the employee’s retirement date nears. Most also offer pre-screened mutual funds chosen by the employer’s investment committee, or allow participants to transition retirement funds into a brokerage account to self-manage investments. To choose an alternative investment strategy requires financial know-how and effort, so, unsurprisingly, most of us invest in the default. The largest, most-used are the Vanguard Target Retirement Index Funds, which have an estimated $292 billion invested in fossil fuel companies.

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A Plan to Conquer U.S. Drug Shortages

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By JESSICA DALEY and WAYNE RUSSELL

COVID-19 has focused the nation’s attention on the risks associated with complex, global supply chains, particularly related to healthcare products and prescription drugs. While supply disruptions of personal protective equipment (PPE) captured headlines, the pandemic also compromised the drug supply chain. With much of the United States’ generic drugs manufactured overseas, exportation bans coupled with increased global demand created significant challenges for U.S.-based providers to secure basic, life-sustaining and life-saving therapies.

As an “easy” solution, many are now calling for manufacturers to produce medications domestically. While expanding investment in U.S. drug-making capacity is a vital component of a reliable supply strategy, moving the majority of production onshore is unrealistic.

Creating a dependable drug supply chain is a multi-faceted issue that requires a thoughtful, diversified strategy.

Repairing the Market is Job #1

Drug shortages have been pervasive for more than a decade – well before COVID-19’s onset. While shortages are triggered in a number of ways, arecent Food and Drug Administration (FDA) report says economics are a main causative factor.

Almost all shortage drugs are older, low-cost generics costing less than $9/dose. Because these products don’t generate blockbuster profits, manufacturers are less willing to invest capital to improve quality, build redundant capacity or source safety stock. Over time, market competition continues to erode price and further compress profits, leading to a war of attrition where competitive players exit the market – leaving behind as few asone or two manufacturers in many important categories.

Relocating production to the United States will not address generic drugs’ inherent profitability problem. Increased regulations, environmental and otherwise, could lead to higher production costs, which begs the question: will healthcare providers trade the potential for higher costs for predictability in supply?

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Redefining Values in American Health Care

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By RICHARD HOEHN, MD

Experts claim we could have been better prepared when the COVID-19 pandemic struck in early 2020. With an annual budget of $400-700 million, the Strategic National Stockpile (SNS) is designed to respond to chemical, biological, and other disasters. Its $8 billion inventory included 13,000 ventilators and a limited supply of personal protective equipment, N95 masks, and medical supplies. This left state and local governments scrambling as the COVID-19 pandemic accelerated and the capacity of many hospitals was overwhelmed.

Faced with immediate and visible death and suffering, leaders took drastic steps to contain the virus, “flatten the curve,” and mitigate economic consequences. Trillions of dollars were allocated to recovery and stimulus packages.

This scenario mirrors our general approach to health care: chronic underfunding of public health followed by high costs and loss of life.

While not as shocking as a sudden pandemic, millions of Americans struggle daily with medical and socioeconomic challenges. Our health care system is designed to care for these patients when they have a problem, not to keep them well. This creates a dichotomy where a minority of the population spends most of the health care dollars and little is invested in the remaining majority

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The Medical-Industrial Complex Pads Its Pockets As We Empty Ours

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By MIKE MAGEE, MD

A report this month published in the British Medical Journal found that 80% of 293 physician leaders and board members of 10 of the most influential medical associations in the United States (including the American College of Physicians, American College of Cardiology, American Psychiatric Association, Infectious Disease Society of America, American College of Rheumatology, the American Society of Clinical Oncology, Endocrine Society, American Thoracic Society, and Orthopaedic Trauma Association) received financial payments of $130 million in total for “leadership” activities between 2017 and 2019.

In doing so, they were replicating the behavior established in 1939 by Vannevar Bush. Born March 11, 1890, in Everett, Massachusetts, the only son of a Universalist preacher and the grandson of a whaler, Bush earned a math degree from Tufts, followed by a PhD in engineering from MIT. From the beginning of his career he straddled the academic and the industrial in a way that anticipated the future of almost all scientific research.

In 1939, with the Second World War consuming both Europe and Asia, the father of the Medical-Industrial Complex met with the president of Harvard University and the president of Bell Labs, and mapped out a strategy for overcoming our lack of scientific preparedness. Out of that small meeting came a short, four-paragraph proposal for a centralized science operation—outside the control of the military—which he presented to President Roosevelt on June 12, 1940.

The president read the report, seized his pen, and scratched at the top, “OK-FDR.” With that stroke, the National Defense Research Committee (NDRC) was created, and with it, the fully codified and institutionalized era of academic-industrial partnerships in research.

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Lasting Lessons From Health Care’s ‘Money Back Guarantee’ Experiment

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Ceci Connolly
Matt DoBias

By CECI CONNOLLY and MATT DOBIAS

When it comes to money back guarantees in health care, it’s often less about the money and more about the guarantee.

That’s the biggest takeaway shared by two organizations—Geisinger Health System and Group Health Cooperative of South Central Wisconsin (GHCSCW)—that separately rolled out closely-watched campaigns to refund patients their out-of-pocket costs for health care experiences that fell short of expectations.

Both programs started as a way to inject a basic level of consumerism into a process long bereft of one. In fact, as consumer frustration over medical costs rise, a money back guarantee has the potential to win back a dissatisfied public.

But like many experiments in health care, the effort produced some unexpected results as well. Instead of a rush on refunds, executives from both systems said their money-back pledge served even better as a continuous-improvement tool, with patients providing almost instantaneous feedback to staff who felt newly empowered to address problems.

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A Dream Deferred? Price Transparency in the American Healthcare System

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By JOANNE RODRIGUES-CRAIG

Financial well-being, or the state of an individual’s personal monetary affairs, is one of the six core indicators of wellness in the Gallup-Healthways Well-Being Index. Poor financial well-being can lead to a whole host of short and long term mental and physical health issues, including depression, anxiety, troubled relationships and chronic stress.[1] [2]

It is surprising how American hospitals and other health providers have neglected financial well-being when considering their patients’ health. In a recent study by the American Cancer Association, 56% of Americans suffer from hardships related to the cost of care.[3] Medical costs are the primary cause of 67% of all bankruptcies in the United States.[4] To think that health care costs are not having a deleterious effect on American’s general well-being is a complete fallacy.

Even as a former health technology data scientist, I was largely in the dark about how health provider pricing works. Finding health provider pricing is like pulling teeth; it’s extremely time0consuming, frustrating (and sometimes painful) to get a health estimate for even the simplest procedures. Having poor or inadequate insurance can feel like a weight holding you down during your most vulnerable time, in the midst of a major health crisis.

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Immediate Changes Needed for Physicians to Stay in Business During the Pandemic

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Practices cannot survive the COVID-19 cash flow crisis

By JEFF LIVINGSTON, MD

Will doctors be able to keep their practices open during the worst pandemic in our lifetime? Our country needs every available doctor in the country to fight the challenges of Covid-19. Doctors working in independent practices face an immediate cash flow crisis threatening their ability to continue services.

The CARES Act was signed into law on Friday, March 27, 2020. The law offers much-needed help to the acute needs of hospitals and the medical supply chain. This aid will facilitate the production of critical supplies such as ventilators and PPE. The law failed to consider the needs of the doctors who will run the ventilators and wear the masks.

Cash flow crisis

Private-practice physician groups experienced an unprecedented reduction in in-office visits as they moved to provide a safe and secure environment for patients and staff. In compliance with CDC guidelines, practices suspended preventative care, nonurgent visits, nonemergent surgery, and office procedures.

These necessary practice changes help keep patients safe and slow the spread of Covid-19. The unintended consequence is an unreported and unrecognized cash flow crisis threatening the viability of physician practices.

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A Full-Scale Assault on Medical Debt, Part 3

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By BOB HERTZ

The only way to fully eliminate medical debt would be a comprehensive single payer plan, which allowed no fees at the point of service.

However, such a plan would require setting all prices for all doctors, hospitals, labs, and drug companies. All providers would have to be satisfied – in advance — with what the government is going to pay them on each procedure.

Countries like Germany accomplish this through collective bargaining. Japan, France, Taiwan, Israel and Scandinavia also have national fee schedules. However, I do not think you could get all the providers in Toledo to agree on one schedule, much less every provider group in America. 

Single payer would also require new income and payroll taxes of at least ten per cent more than we pay now, if we want first-dollar coverage.

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