Tag: Costs

Health Insurance and Life Expectancy

Oct 28, 2010• 22

By JOHN GOODMAN, PhD

Did you know that Hispanic Americans live longer than non-Hispanic whites? If that doesn’t knock your socks off, consider this: American Hispanics are three times as likely to be uninsured as non-Hispanic whites.

If you’re still not blown away, maybe you haven’t been following the twists and turns of the health policy debate. As I wrote at my blog the other day, the Centers for Disease Control (CDC) discovery that Hispanics (one-third of whom are uninsured) have a life expectancy that is 2 1/2 years longer than whites (90% of whom have health insurance) makes mincemeat out of the oft-repeated idea that the uninsured get less health care and die earlier than everyone else.

In support of the conventional wisdom, for example, the Physicians for a National Health Care Program (PNHCP) went so far as to claim that a whopping 45,000 people die every year because they are uninsured. That figure, repeated as though it were unquestioned fact by President Obama and most of the health care media, is almost as large as the number of American soldiers killed in the entire Vietnam War!

Families USA went so far as to make the astounding claim that 6 people die every day in Florida because they are uninsured. Eight die every day in California; and 25 die in New York. In Texas, the report implies that more people die every two months from lack of health insurance than the number killed at the battle of the Alamo (counting only losses on our side, that is). Nationwide, says the PNHCP, an uninsured person dies every 12 minutes.

Suing the Right to Life

Oct 25, 2010• 18

By LUCAS RESTREPO, MD

Last week, the fire department of a small town in Tennessee called South Fulton ignored the call of a man who needed help quelling a fire near his house. The firefighters declined lending a hand because the caller neglected to pay a $75 bill, the prerequisite for deserving assistance. The caller tried to put down the fire with a garden hose, but after two hours, his house caught on fire. When the property of a neighbor who had paid the $75 became threatened by the flames, the gallant firemen promptly answered the call of duty. The brave public servants prevented the flames from spreading to the property of their responsible contributor, carefully avoiding to suppress the conflagration’s source. Someone has to teach a lesson to the free-loaders in our society, explains a high-minded commentator.

Our health care system works exactly like South Fulton’s worthy fire department: we are entitled to health care only if we have money or qualify for Medicare or Medicaid. If you don’t have money, your health entirely depends on the charity of health care providers, who, as our admirable firefighters, may refuse to help.

I wish to argue that, besides being cruel and inhumane, the “South Fulton health care model” is a latent threat to society. The cost and effort of preventive medicine and basic primary care (fire prevention, putting down a small fire) is less than dealing with instances of end-organ failure (a house in flames). Moreover, having uninsured people (not aiming water to the fire source) creates a constant economic liability to responsible costumers (the neighborhood). On the other hand, why should someone become a doctor, nurse, or health insurance company founder (a firefighter) without being an altruist? Do firefighters dream of wealth and leisure?

The costs of not doing anything about a burning house are always paid in full by society ―and some costs are not immediately apparent. Who loves the sight and smell of a charred landscape? Where will the man live now that he has no house? Will he react violently to the inaction of the firemen? Will the reputation of the fire department (and the city’s) go up in smoke?

Medicare Costs Rise, Health Outcomes Suffer When Seniors Are Over-Medicated

Oct 19, 2010• 6

By NAOMI FREUNDLICH

The problem of elderly people taking too many medications is not new, but continues to pose a serious risk to health as well as contribute significantly to rising Medicare costs. The fact is that nearly 20% of adults aged 65 years and older who are not hospitalized take 10 or more medications daily. This number is not the result of shoddy care, but rather achieved when doctors simply follow practice guidelines for several common, co-existing conditions like diabetes, high blood pressure and depression, for example. If you look at all seniors (those both in and out of the hospital) the American Society of Consultant Pharmacists reports that the average 65-69 year old takes nearly 14 prescriptions per year; by ages 80-84 that number averages an astounding 18 prescription drugs per year.

What’s troubling is that instead of improving the health of seniors, evidence is growing that the more medications an elderly person takes, the more likely he is to experience falls, cognitive decline, loss of mobility, depression and even cardiac problems. These adverse drug effects may be mistaken for Alzheimer’s disease or other dementias too. The bottom line: Experts estimate that up to one-third of the elderly in our communities may be over-medicated and some 20% of their hospital admissions are due to adverse drug events. The costs related to over-medication in the elderly are thought to exceed $80 billion each year.

Although the problem of so-called “polypharmacy” among seniors results in significant economic and public health costs, little has been done to remedy the problem. In fact, in a recent commentary in the Journal of the American Medical Association, Jerry Avorn, associate professor of medicine at Harvard Medical School and author of the book “Powerful Medicines,” says that “many aspects of the US health care system act to discourage optimal prescribing” for the elderly.

For example, elderly Americans are highly underrepresented in the clinical trials for many of the drugs that doctors commonly prescribe for them. Seniors may metabolize these medications differently and they are often more sensitive to side effects and counter-indications with other drugs than younger people. They also take many more drugs (often all at the same time) than any subjects who take part in controlled clinical trials. Disturbingly, doctors sometimes end up prescribing a new medication to treat the adverse effects of a pill the elderly patient has been taking for years.

PBM Industry Reforms can Reduce Wasteful Health Care Spending, Protect Patient Choice of Pharmacy

Oct 19, 2010• 3

By CSS

American businessman Victor Kiam best described the small business owners’ mindset by declaring, “An entrepreneur assumes the risk and is dedicated and committed to the success of whatever he or she undertakes.” However, external forces can occasionally constrain even the most astute entrepreneur, as is the case with independent community pharmacy owners. These same forces needlessly inflate prescription drug costs for employers and health plan sponsors, while undermining patient choice and health outcomes.

Pharmacy benefit managers (PBMs) are hired by employers, government agencies, health insurance plans and unions to administer prescription drug plans. They morphed over time from simple claim adjudicators to gigantic drug middlemen operating a byzantine drug delivery system that benefits them at the expense of others. They reap windfall profits simply for processing claims and operating mail order pharmacies. In 2009, the three largest PBMs – CVS Caremark (which includes the CVS pharmacy retail chain), Medco Health Solutions, and Express Scripts – made $6.4 billion, $1.1 billion and $776 million respectively in profits. By contrast, independent pharmacies operate off of slim profit margins that are driven by prescription drug reimbursement. Despite the rising cost of many medicines, these rates have been declining for years.

Local pharmacists have a Hobson’s choice: accept onerous, non-negotiable contract terms dictated by PBMs or lose access to both new and long-term patients. When the contracts are signed community pharmacies are dragged into a profit-draining, bureaucratic abyss. If they have the temerity to complain, PBMs can often freely void the contract. U.S. Representatives Anthony Weiner (D-NY) and Jerry Moran (R-KS) introduced H.R. 5234, the PBM Audit Reform and Transparency Act of 2010; a bipartisan-supported bill designed to tackle some of the most egregious practices of the PBM industry. Its passage is a must.

First Bend in the Health Care Cost Curve

Oct 12, 2010• 14

By PAUL LEVY

Recent trends in radiology imaging portend a dramatic and rapid reduction in this segment of a hospital’s business plan. Even before capitated (or global) payments have come into full play, there has been a large reduction in the number of some types of imaging studies in hospitals.

Our Chief of Radiology summarizes our experience — common to other hospitals as well — and provides some of the reasons.

The biggest hit has been in CT, the modality we are most dependent on for revenue. We are about 10% down in CT cases from last year, due to a combination of patient and physician fears about radiation exposure, more prudent ordering of studies by physicians, leakage out of the medical center, and the introduction of physician incentive programs (to minimize the amount of imaging) by some insurers.

Also, and very surprising, we have not seen an upswing in ultrasound or MRI to match the CT volume drop. We have, however, seen an increase in the number of patients arriving with their scans on CD ROMS having been imaged at other lower priced vendors. We don’t bill for these interpretations even though we are frequently asked to reinterpret the studies for our clinicians, and BIDMC is paying to store these images on our PACS systems.

By the way, this occurred while our overall patient volume increased during the same period.

The result of these trends will be to reduce the number of radiologists working in hospitals, and there will also probably result in a reduction of salaries for this physician specialty.

Paul Levy is the President and CEO of Beth Israel Deaconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

Too Many Promises

Oct 10, 2010• 2

By JOHN GOODMAN, PhD

I don’t know what it is about public officials and Ponzi schemes, but the former finds the latter irresistibly attractive almost everywhere. Maybe it’s the fact that the law lets them get away with it. They get off scott-free when they do the very same thing that landed Bernie Madoff in the hoosegow.

Although national attention tends to focus on Social Security, Medicare and other unfunded federal obligations, many state and local governments are in far worse shape. As I explained at my blog the other day, post-retirement health care promises are the fastest growing component. I believe we are on the cusp of a spate of local bankruptcies. Although states cannot declare bankruptcy, they can default on their debt. In California, this seems almost inevitable.

Did you know that the average state has unfunded retiree benefits equal to more than one-fifth (22%) of the income of its residents? Seven states (Alaska, Ohio, Hawaii, New Jersey, New Mexico, Illinois and Kentucky) have unfunded obligations in excess of one-third of their states’ annual income. In Alaska, it’s about half (48%). Take Ohio, for example. The state needs 41% of one year’s income of its citizens right now — in the bank, earning interest — in order to fund its future obligations. And if it doesn’t do that this year, next year it will need even more.

New Study Proves Reducing Healthcare Costs While Improving Care Is Achievable

Sep 23, 2010• 37

By DAVID WENNBERG, MD

The results are in: population-based care management doesn’t just improve patient satisfaction – it also can significantly reduce medical costs.

It is widely known that chronic disease accounts for 75% of the total cost of healthcare in the United States. In the late 1990s, the care management industry grew out of the need to combat this problem, by increasing medication compliance, reducing gaps in care, and helping individuals become more empowered to actively manage their own health.

Care management programs have long been shown to increase medication compliance and use of other preventative services, and individuals who participate in care management programs find them extremely valuable. Yet the care management industry has always faced challenges in verifiably demonstrating the effectiveness of its programs in reducing medical costs. Several methodologies have been created to attempt to reverse-engineer a calculation of savings delivered by care management programs, but the gold standard of healthcare effectiveness measures, a randomized controlled trial, has rarely been done and none in a large population.

I’m pleased to say that this is no longer the case. A study from Health Dialog appearing in the New England Journal of Medicine today, uses a randomized controlled trial to definitively show the savings delivered by an enhanced care management program. The trial looked at 174,120 individuals over twelve months, measuring those individuals’ health outcomes and the total savings as a result of an enhanced care management program. The program included chronic condition management and patient decision support programs, and these services were delivered telephonically as well as online.Continue reading…

EHR Mythology 101

Sep 13, 2010• 25

By MARGALIT GUR-ARIE

Healthcare IT is bustling with activity these days. There are big changes in the air and, only time will tell, but we may be witnessing a defining moment in HIT. Naturally, everybody involved has an opinion and some folks, yours truly included, have more than one.

Below are some of the more popular opinions amongst physicians and a considerable portion of industry analysts.

The current EHRs on the market are outdated legacy systems

This is the battle cry of every new entrant to the market. First the ASP, or web based, vendors referred to the existing client/server vendors as legacy systems. This is about to change once the iPhone EHR vendors start calling the web EHRs legacy systems. One common thing that new vendors tend to gloss over is the fact that the existing vendors did not stop writing software in 1995. Most incumbents are releasing updates and major new versions on a regular basis, and by now most Visual Basic code has been replaced by .NET and the latest Java technologies. True, here and there, you can still find MUMPS platforms, but even the VA’s VistA is in the process of getting a major upgrade towards generic web based capabilities, not to mention the futuristic bombshell veteran EHR vendor e-MDs is about to toss into the mix.Continue reading…

Consumers to Pay More Under Reform

Sep 10, 2010• 32

By MERRILL GOOZNER

The latest analysis of health care reform – out this week from bean counters at Medicare – shows reform will raise health care spending slightly over the next 10 years, not reduce it as promised by President Obama. That won’t make selling it on the stump any easier. Yet there’s a glimmer of hope in the out years of the 10-year projection that the plan will begin to “bend the cost curve.”

Here’s the real bad news for reform supporters. The private insurance market will absorb most of the increase, and most of that will fall on individuals. Employer contributions for their workers’ private insurance will actually fall $120 billion in 2019 from previous projections because of reform.

Individuals will get hit two ways. First, the actuaries at CMS are projecting a huge 9 percent increase in out-of-pocket expenses in 2018 and 2019, after the so-called “Cadillac tax” goes into effect. This is a steep excise tax on high-cost insurance plans. To avoid tax penalties, experts expect employers with such plans – which may only be high-cost because they are filled with sicker and older beneficiaries – will reduce coverage by increasing co-pays and deductibles.

A second factor driving out-of-pocket expenses higher for individuals under reform will be the insurance mandate, which will drive many people to seek coverage through the new state exchanges. CMS predicts over 30 million people will be getting insurance through the exchanges in 2019, substantially more than the 24 million projected by the Congressional Budget Office last March, when reform passed.

How to save $40 billion in health care costs

Aug 18, 2010• 39

By JANE SARASOHN-KAHN

Electronic health records (EHRs) broaden access to patient data and provide the platform for pushing evidence-based decision support to clinicians at the point-of-care. This promotes optimal care for patients, reduces medical errors, optimizes the use of labor, reduces duplication of tests, and by the way, improves patient outcomes. When done in aggregate across all health providers, a team from McKinsey estimates that $40 billion of costs could be saved in the U.S. health system.

Reforming hospitals with IT investment in the McKinsey Quarterly talks about the American Reinvestment and Recovery Act’s (ARRA) $20+ billion worth of stimulus funding under the HITECH Act and estimates that 80% of existing hospital IT applications will be affected by the regulation. Hospitals will be spending about $120 billion to meet the adoption and meaningful use provisions of the Act. This equates to $80,000 to $100,000 per hospital bed. ARRA incentive payments will cover roughly 20% of this cash outlay, meaning that $60-80K won’t to covered.

But McKinsey says, “Hold on!” There are ways to recoup the spending gap between HITECH incentives and cash-out-of-the-hospitals-budget. McKinsey’s research calculates that optimizing labor, reducing adverse drug events and duplicate tests, and adopting revenue cycle management can help the average hospital save $25,000 to $44,000 per bed each year. That gets to the $40 billion in annual savings when multiplied across all hospital beds in the U.S.Continue reading…