The Direct Project is the lightweight version of moving health data around between providers. While there’s been lots of fuss about NHIN, HIEs and data interoperability, the Direct project has sensibly been dumbed down enough so that it reminds everyone of email. Sure, it’s encrypted, standardized, blah blah, but it looks enough like email that it may just work. Today ONC announced that more or less every vendor has signed on, so that emailing medical records should soon be very common.

By PAUL LEVY

A story in the Washington Post talks about health insurance companies seeking new lines of unregulated business as the profitability of health insurance falls and as more and more requirements are placed on that line of business as a result of the federal health reform law. Here’s an excerpt: “Insurers have moved into technology, health-care delivery, physician management, workplace wellness, financial services and overseas ventures in wide-ranging efforts to mitigate the new rules imposed by the law.”

I raised some of these issues several months ago, where I also suggested that a merger of the Number 2 and Number 3 Massachusetts health plans might be forthcoming. Well, they tried, but decided not to, as they announced a few weeks ago.

Meanwhile, Blue Cross Blue Shield of Massachusetts is clearly laying the groundwork to shed its non-profit status. And, really, why not? It is in no way a charitable organization of the sort envisioned in earlier years, and the constraints of being a nonprofit bind in a number of ways.

When the HPHC and Tufts merger fell through, the operative statement was: “We have now determined that we are stronger as individual competitors than one company.”

I predict that will turn out to be a strategic error. In the new world order, scale matters. This statement is, to me, revealing in its own way: “Our operations are very different and, in many important aspects, not fully compatible without significant changes to existing processes and applications.” In other words, they chose not to merge because it felt like it was not currently cost-effective to change. This suggests that the operations of the two plans as presently configured are not scalable. But if they don’t merge, they will be left behind by those with stronger market power. For now, that is BCBS of MA. In the future, as the business becomes less about taking on insurance risk and more about other services, it could well include some major national players as well. Now, rather than later, would be a better time to consolidate assets and use the cash on hand to make the investments that will be needed to grab market opportunities in the future.

By MARGALIT GUR ARIE

A new lawsuit has been filed this month in an attempt to curtail the unconsented and currently legal traffic of de-identified medical records, this time against pharmacy giant Walgreens. The class action suit brought by Todd Murphy, a citizen of the State of California, on behalf of his children, is alleging that the company’s sale of prescription histories to data mining companies, servicing the marketing efforts of pharmaceutical companies, is an unfair, unlawful and deceptive business practice allowing Walgreen Co. to unjustly enrich itself while depriving the rightful owners of the data of their ability to benefit from the commercial value of their prescription records. There is no mention of privacy violations anywhere in the brief, and this is what makes this legal action very unique and potentially a landmark in the effort to control unauthorized sales of medical records.

The deceptive business practices are pretty straight forward to understand, since it seems that Walgreens makes all customers sign a privacy notice stating unequivocally that the company will not disclose patient information without first obtaining authorization from the patient. Furthermore California law prohibits pharmacists from disclosing prescription information to unauthorized third parties, which arguably makes the sale of data also unlawful. The bulk of the brief is describing the injury to plaintiffs caused by “detailing”, i.e. targeted in-person marketing by pharmaceutical reps to physicians, which is substantially aided by information extracted from plaintiffs prescription patterns. Detailing is portrayed as a ruthless drug company strategy to increase sales of newer and more expensive brand-name drugs, thus increasing the costs of health care, endangering patients and harming the doctor-patient relationship.

And here is where the complaint gets interesting.Continue reading…

By VANESSA HURLEY

What if I told you that across the country there’s a procedure being performed on pregnant women that makes their newborns more likely to end up sick and in a $3,000-a-day Neonatal Intensive Care Unit (NICU)?

Too outrageous to believe?

It’s true.

Early elective delivery ‚ when labor is induced 3 to 4 weeks early without medical necessity , is on the rise in the U.S. According to a report released in January 2011 by the Leapfrog Group, between 1992 and 2003 the number of these births increased from 19% to 29%. Seven hospitals across the country perform these deliveries on 100% of women without medical necessity, and over thirty others perform them 50% of the time or more.

The American College of Obstetricians and Gynecologists (ACOG) has long recognized the risks associated with inducing labor when it is not medically needed. One retrospective study found that infants born at 37 weeks are nearly 23 times more likely to suffer severe respiratory distress than those born between 39 and 41 weeks. ACOG thinks this is unacceptable.

So why do hospitals do it? Experts see a few possible explanations:

1. Obstetricians deliver but don’t care for newborns. They move quickly from birth to birth, and lack a complete understanding of the complications associated with early deliveries.
2. Natural deliveries are difficult to anticipate. Nature can be fickle and tends to ignore the schedules of busy physicians. Patients may simply agree because they see little harm in early deliveries.

There’s yet another incentive worth pondering. It’s prefaced by a big green $, and followed by plenty of zeros. NICUs – where many pre-term babies end up – are highly profitable for hospitals. John Lantos, a former Chief of General Pediatrics at the University of Chicago, recently wrote in Health Affairs:

The NICU – which represented nearly 4 percent of total admissions [for the hospital] ‚Äì had generated 11 percent of the net revenue. Since most of the academic medical center’s divisions either barely broke even or lost money, that meant that a staggering 69 percent of the net profits of the entire hospital system came from the 4 percent of hospital admissions to the NICU.

In other words, healthy, full-term babies are not nearly as profitable as preemies. The average cost of caring for a premature baby is $41,610 versus just $2,830 for a full term baby. A clear line can be drawn between more early term births and more days spent (and dollars generated) in the NICU. Increasing the numbers of preterm births creates a perceived need for additional NICU beds, thereby increasing the need to fill those beds. A self perpetuating cycle quickly emerges.Continue reading…

Heritage Provider Network used to be an under-the-radar IPA in S. California. Then they announced a $3m prize for anyone able to correctly predict hospital admissions from their data. Now they’ve announced a series of milestone prizes over the next year of up to $230,000 for teams leading in the big race. This is really interesting! As you know at Health 2.0 we like prize challenges!

By JOHN GOODMAN

Tyler Cowen posted 10 common mistakes of market-oriented economists the other day, paired with 14 common mistakes of left-wing economists. That prompted Ezra Klein to propose his own list of mistakes and others are chiming in.

I think it’s too bad that economists are classified as right and left. After all, economics is a science and reality is reality. Why should political preferences interfere with the scientific quest for truth? Milton Friedman once said there are only two kinds of economics: good economics and bad economics. I not only agree, I think only “good economics” qualifies as “economics.” But I’ll yield to convention for the remainder of this post.

On health care, Tyler says right-of-center economists go wrong in two ways:

1. I’m all for Health Savings Accounts, Tyler writes, but unless done on a Singaporean scale, and with lots of forced savings, they’re not a health care plan to significantly benefit most Americans.
2. There is less of a coherent health care plan, coming from this side [the right] than one might like to think. There is already considerable health care cost control embedded in the Affordable Care Act (ACA), most of all for Medicare, and this is not admitted with sufficient frequency.Continue reading…