Despite my doubts as to whether we’re going to get a Medicare drug bill, the market has decided a) that we will and b) that the PBMs are going to benefit the most from it. The last two days have seen a 10% rise in the PBMs stock price, and in the last 2 months they’ve gone up above their all time highs of 2 years ago. Somewhere a little north of here, I feel a pullback is imminent–perhaps I can just get word to Ted Kennedy and we can split a short position together?
TECHNOLOGY/INDUSTRY: More Tenet-related scuttlebutt
Not that it’s my natural proclivity, but I am enjoying the rumor-mongering abilities that writing this kind of a blog gives me. You’ll recall a while back that I came upon some rumors that Tenet had hired a company for its JCAHO reporting that may have put at risk its ability to remain certified to treat Medicare patients.
The latest I’ve heard is that this company is having problems with a related product. Apparently they found out that no (database) tables were being created for 7 types of medical errors that hospitals report using their software (e.g. medication errors, falls, etc.). The error was part of a production release sent out over a month ago. In other words, the 10 hospitals using the product could have (and probably did) reported adverse incidents using the system for over a month and the data for those incidents (that would be used to defend themselves in court, identify risky situations, prevent medication errors, etc.) would be lost. Apparently the head of QA recently left and another senior QA guy followed suit, resulting in a "go along to get along" QA department.
This is a perfect example of how rushing software to market (without testing, let alone a detailed technical design document) can lead to big mistakes. Apparently this company develops on an ad-hoc basis, often sending out production releases every week.
PBMs/POLICY: Will tentative Medicare deal stick?
I noticed that the PBM stocks took off like a rocket at the end of the trading day yesterday. The news was that a tentative deal Medicare has been reached by the committee negotiating a compromise Medicare bill. PBMs are likely to add millions of members under the version of the bill that may be passed. However, of course this slight optimism is tempered by the fact that neither the hard-core Democrats like Ted Kennedy nor the fiscally-conservative Republicans are likely to sign on to this compromised version of the bill, because it either will lead to the death of Medicare as we know it, or the bankrupting of the Federal government–depending on your point of view.
In any event, I’m not sure that adding a large number of members via a government-funded program which may make them low-margin contractors is the best solution for fast future growth for PBM bottom lines.
PHARMA: Lipitor stops build up of plaque
When I first saw this headline: Pfizer’s Lipitor Stops The Plaque, I misread it and thought that it said Lipitor stops "plauge"–now that would be a hell of an off-label use!
POLICY: Canada Follow-up
Well I must be sniffing the air correctly. Today’s WSJ online has, other than its headline, a very fair piece on Canada and how hospitals direct traffic to high-tech procedures. It may be very unAmerican, but it seems to work pretty well in terms of allocating medical resources efficiently. If you don’t have a subscription to the WSJ Online, I can email you a copy if you email me.
UPDATE: The article is now freely available here.
TECHNOLOGY: Two quickies
While you get your teeth into the long post about Canada that I put up late yesterday, here are two interesting follow-ups to technology issues already tangentially discussed in THCB.
1) Patient-Physician email–Here’ s a thoughtful article about the overall issue from the Seattle Times. It dovetails with the Oregon article I posted about on Monday, and makes the obvious point that even if email enhances productivity, in a fee-for-service environment it’s unlikely to be adopted unless it has payment for the doctors attached. The docs at Group Health in Seattle don’t get paid that way, so they see the issue as how best to use their time rather than how best to maximize their billings.
2) VOIP (voice over Internet)–The extremely careful reader of the iHealthbeat column on synchronization I referenced last week would have noticed a bullet point about Vocera’s attempts to use health care as a testing ground for its voice over Wi-Fi product, which intends to replace paging and phones within hospitals. Well it looks like someone at the San Jose Merc was reading, or had been bugged by Vocera’s PR firm. Their comprehensive story about the installation at El Camino hospital is well worth a glance.
INDUSTRY: I promised that I wouldn’t write about this!
OK, OK I promised last week that I wouldn’t write about them or him again….but that doesn’t stop you reading about you know who at you know where.
POLICY: State budget crunches are real
Just in case you thought that state budget deficits caused by the ruinous Bush deficit/ending of the Clinton bubble (delete where applicable to suit your political taste) were somewhat academic, read this report on Colorado’s decision to remove legal immigrants from Medicaid eligibility.
I strive to be neutral in this blog, but on this issue I’m very biased. I’m a US citizen now, but I was a legal immigrant for many years. The only difference between being a green card holder and a citizen is that you can’t vote or do jury duty. Importantly you still pay the same taxes as every one else and presumably these Medicaid patients did too. It also looks that some workaround will be discovered to pay for their care, maybe. However, aside from the politics, the fact that the state is desperate enough to consider putting some 150 elderly nursing home residents out on the street, shows that this crisis in funding is real.
TECHNOLOGY: Patient-Physician email–Is it or is it not a “good thing”?
Two studies from Oregon, one from Kaiser Northwest and the other from Regence (Oregon Blues) contradict each other about patient physician email. You can see more either at iHealthbeat or from the Portland Business Journal (reg reqd for both). In the Regence case they found that the emails took longer than calls and increased follow up visits. At Kaiser they found that emails were shorter and averted some visits. More interestingly both studies showed that about 3 in 10 patients used email in these pilot programs. Although the reports say that’s small, I think it’s a big number that will get bigger. After all, think how email spread in other situations like in business and family settings.
However, the folks at Today in e-Health Business who have the good line into Forrester Research add that:
Forrester Research has found that 65% of patients who visited their physician’s Web site did so to use it to bypass the office receptionist, choosing to look up administrative details such as office hours. Additionally, one-third said they use the site as a credible source for researching general health and medication information, finds Forrester’s Consumer Technographics Q3 2003 North American Study. According to the study, 30% of physician Web site visitors renew prescriptions online. At more sophisticated physician Web sites, the study found, 13% of visitors report reviewing or paying bills, and 11% are viewing their medical records online.
No surprises here. At the moment people want to use email to get around phone tag more than they want to fundamentally change their relationship with their doctor. Online consultations, and other more advanced uses of asynchronous technology, will take a while–and of course for them to spread someone has to work out who pays!
Note: This is yet another of those topics where I have a larger post brewing in my "draft" folder. If anyone has examples or information about patient-physician email to add, please email me!
TECHNOLOGY: My, does Trizetto have a good PR firm!
Jeff Margolis, the former wunderkind CIO of the HMO world, is now CEO of Trizetto. As this somewhat fawning piece in the business section of the NY Times explains, Trizetto has grown to be a $300m revenue company, providing administrative IT outsourcing for health plans. Far be it from me to suggest that there was anything missing from this piece, and I do have admiration for anyone who can grow that big a company in under ten years; however, it might not have tested the NYT’s Melinda Ligos’ investigative powers too much to do the odd Google search and let the casual reader know a few other things about Trizetto.
For instance, while Trizetto may have been growing its revenue since 1998, it’s still managed to lose huge amounts of money over that time, and only just made its first profit. It’s lost over $280m in the last three years alone. Now that includes some fake losses (presumably write-downs from acquisitions) but even so, stripping out those write-downs, it looks like Trizetto lost $30m on $90m revenue from operations in 2000, made less than $3m on $218m in 2001 and made $13m on $265m revenue in 2002. However, these numbers are indeterminate because so much was written off that it’s impossible to tell accurately what was going on. The past quarter they made an official profit in terms of GAAP of just under $1m, although they guided down their revenues for the future. Still, you’ve got to wonder how well they would have done over time if they hadn’t been lucky enough to get out in the eHealth IPO window of 2000, and have a big reserve of cash to sit on.
Even more interestingly, there was no mention of the huge spike in Trizetto’s stock price immediately after its IPO which priced at $9 in 1999 but was up at over $80 at the height of the bubble in March 2000. If you had bought in then (as one reader who did lamented to me) you’d have seen your money drop by over 95% over three years. OK that may not be Trizetto’s fault alone, but the event that started the plunge was a very wierd announcement that they were going to take over IMS Health, the much bigger health care data company. That may not have been the best strategic move that Margolis ever made, although they ended up getting the Erisco unit from IMS as part of the deal.
I assume that Trizetto’s customers are happy and that the company will go onto be a big player. But the average NYT reader might want to know a little more about its background than Jeff Margolis’ health problems and that he used to hold company meetings in a local phone booth.
