Purchasers of health care, long-time supporters of organized systems of care, are watching with growing alarm as horizontal and vertical mergers between providers accelerate. Buyers with experience in other sectors understand that consolidation can improve efficiency, quality, and the generation of capital, especially where there is excess capacity and abundant waste. They are equally aware, however, that ‘over’-consolidation can lead to pricing power, the absence of competition, and the crowding out of disruptive innovations.
Catalyst for Payment Reform(CPR), a non-profit working on behalf of large employers and public health care purchasers to improve the quality and affordability of health care through payment innovation, convened a National Summit on Provider Market Power on June 11th in Washington D.C.
There, the nation’s leading experts discussed and debated how to maintain enough competition among health care providers to stimulate improvements in the delivery and affordability of care.
Participating experts stated that by as early as 2006, over 75% of U.S. metropolitan statistical areas (MSAs) had experienced enough hospital mergers to be considered ‘highly consolidated’ – a trend that continues. Economists agreed that the evidence demonstrates that highly-consolidated providers can raise prices considerably. Provider leaders offered their views on why consolidation is occurring, including to meet the demands for integration and efficiency, to counterbalance a highly-consolidated health insurance market, and to have enough income to invest in IT systems and other infrastructure necessary for population management.
The recent Medicare report on variation in hospital “prices” is not exactly news. In fact, I wonder why anyone (including the NY Times and NPR) covered it, let alone make it a lead story.
As you probably know, Medicare reported that hospital charges for specific treatments, such as joint replacement surgery, greatly vary from one hospital to another. (This includes charges for all services during the hospitalization, including room charges, drugs, tests, therapy visits, etc.) Everyone in the healthcare business knows that charges do not equal the actual prices paid to hospitals, no more than automobile sticker prices equal the prices that car buyers actually pay. Except that for the past thirty years, the gap for hospitals greatly exceeds (in percentage terms) the gap for cars. This is not just a nonstory, it is an old nonstory.
So reporters tried to give it a new spin. One angle concerns the uninsured, who may have to pay full charges. I will write about this in a future blog. Another angle is that by publishing these charges, Medicare will encourage patients to shop around. That is the subject of this blog.
I suppose it is okay to tell patients that the amount they might have to pay out of their own pockets may vary from one hospital to the next. But the published charge data is useless for computing out of pocket payments; in fact, it may be worse than useless. As even the NY Times noted, insured patients make copayments based on prices that their insurers negotiate with hospitals. These prices are essentially uncorrelated with charges. So a patient who visits a hospital with low charges may well make higher out-of-pocket payments than a patient who visits a high charge hospital. It is a crap shoot.
Over four years of Congresses, Sage Bionetworks has drawn together leading thinkers and doers throughout the fields of genetic research and drug development. For two days each year, the conference floor is colonized by clumps of eagerly networking PhDs from academic, pharma, government, non-profits, biotech firms, and patient advocacy groups–people who often glide from one domain to another within this tight-knit cohort.
A cohort, certainly, we can characterize this group of attendees, sharing as they do a mysterious language drawn from years of research most of us will never understand. But is it a community? That will be tested over the following year as Sage Bionetworks lets go of the Congress. Founder Stephen Friend says it is up to others to create the next Congress, and its success or failure will be a measurement of the sweat and passion that Friend and Sage have put into attempts to build a community.
Why should a reader look further at this struggle among a tiny elite, rather than clicking on the next article? Well, first, if you’re one of the 48% of Americans who took a prescription drug this month, you should be concerned about where new breakthrough drugs will emerge. If you visit this web site because you want a more responsive health care system that can match patients to treatments more quickly and cheaply, recognize that new methods are important nowhere as much as at the foundation of the system where new treatments are discovered. And if you are just curious about the potential for global cross-institutional teams and loose networks connecting experts with ordinary members of the public to find creative solutions to old problems, this article will provide insights.
Don’t get too close, you don’t know what I have
The premise on which Friend founded Sage is that research and drug development have stagnated and cannot progress without more collaboration and data sharing. Therefore, with all due regard for the presentations at the recent Sage Congress on cancer research projects and other individual experiments, the real theme of the conference is in the keynotes about open source, the use of social media, and crowdsourcing. The challenge of this community–if we find that it has indeed become a community–is to analyze and deal with the particular challenges that genetic research and drug development inject into trends toward open collaboration.
It has always been my assumption that my new practice will be as “digital” as possible. No, I am not going into urology, I am talking about computers. [Waiting for the chuckles to subside]
For at least ten years, I’ve used a digital EKG and spirometer that integrated with our medical record system, taking the data and storing it as meaningful numbers, not just pictures of squiggly lines (which is how EKG’s and spirometry reports appear to most folks). Since this has been obvious from the early EMR days, the interfaces between medical devices and EMR systems has been a given. I never considered any other way of doing these studies, and never considered using them without a robust interface.
Imagine my surprise when I was informed that my EMR manufacturer would charge me $750 to allow it’s system to interface with a device from their list of “approved devices.” Now, they do “discount” the second interface to $500, and then take a measly $250 for each additional device I want to integrate, so I guess I shouldn’t complain. Yet I couldn’t walk away from this news without feeling like I had been gouged.
Gouging is the practice of charging extra for someone for something they have no choice but to get. I need a lab interface, and the EMR vendor (not just mine, all of the major EMR vendors do it) charges an interface fee to the lab company, despite the fact that the interface has been done thousands of times and undoubtedly has a very well-worn implementation path. This one doesn’t hurt me personally, as it is the lab company (that faceless corporate entity) that must dole out the cash to a third-party to do business with me.
Doing construction in my office, I constantly worry about being gouged. When the original estimate of the cost of construction is again superseded because of an unforeseen problem with the ductwork, I am at the mercy of the builder. Fortunately, I think I found a construction company with integrity. Perhaps I am too ignorant to know I am being overcharged, but I would rather assume better of my builders (who I’ve grown to like).
Yet thinking about gouging ultimately brings me back to the whole purpose of what I am doing with my new practice, and what drove me away from the health care system everyone is so fond of. If there is anywhere in life where people get gouged or are in constant fear of gouging, it is in health care. Continue reading…
Google’s informal corporate slogan is “Don’t be evil.” Whole Foods is a Fortune 500 company with a net revenue of 10 billion dollar that prides itself on a commitment to social responsibility. Both companies have pledged to do long-term good in the world, even at the expense of short-term gains, and both are wildly successful.
If corporations can be profitable as a result of their commitments to social justice and corporate ethics, why can’t this doctrine be extended to the pharmaceutical industry? Someday, a company called GoodPharma might reach the Fortune 500 on the basis of a pledge to improve access to medicine, conduct international research trials in accordance with the highest standards of research ethics, engage in research on orphan diseases, publish negative research findings, promptly report information about adverse effects, and generally act as a model for ethical industry practices. If this business model hasn’t been explored, it should be.
A key lesson of science is the importance of a control group; I worry that a lot of coverage and discussion of the biopharma industry (in which I work) neglects this lesson, and instead contrasts (implicitly or explicitly) industry behavior to that of an imagined, idealized standard of perfection, and fails to place the actions in the context of medical science as a whole.
I appreciate critical coverage of the industry: reporters should always maintain high standards, approach new information skeptically, and not take anything at face value.
However, what disappoints me is the common, implicit assumption that industry science deserves to be treated as a special case, rather than considered within the broader framework of contemporary research. I’m especially disappointed by the frequent assumption that the behavior of industry scientists should be viewed more skeptically than the behavior of academic scientists; this strikes me as a magical, often self-serving belief that has now become elevated to the status of conventional wisdom.
Take data sharing, a topic in the news today (and discussed very thoughtfully here by John Wilbanks, the guru of open science). While most media coverage of this topic (both today and over the years) has focused on the transparency of industry research, I’ve been attending the annual Sage Commons Congress since its inception in 2010 (disclosure: I served as a founding advisor to Sage, a non-profit organization focused on open science, founded by Eric Schadt and Stephen Friend), and hearing every year about how incredibly difficult it is to get academic groups to share with each other, for a wide variety of reasons. (See this exceptional talk from Josh Sommer of the Chordoma Foundation at the First Sage Congress). Getting scientists (or any group of competitive human beings) to exchange data turns out to be a real problem — especially in the highly-regulated environment in which clinical data sit.
In a well-publicized and well-written article in the New Yorker, Atul Gawande (one of my doctor writing heroes) talks about his visit to the popular restaurant, The Cheesecake Factory, and how that visit got him thinking about the sad state of health care.
The chain serves more than eighty million people per year. I pictured semi-frozen bags of beet salad shipped from Mexico, buckets of precooked pasta and production-line hummus, fish from a box. And yet nothing smacked of mass production. My beets were crisp and fresh, the hummus creamy, the salmon like butter in my mouth. No doubt everything we ordered was sweeter, fattier, and bigger than it had to be. But the Cheesecake Factory knows its customers. The whole table was happy (with the possible exception of Ethan, aged sixteen, who picked the onions out of his Hawaiian pizza).
I wondered how they pulled it off. I asked one of the Cheesecake Factory line cooks how much of the food was premade. He told me that everything’s pretty much made from scratch—except the cheesecake, which actually is from a cheesecake factory, in Calabasas, California.
I’d come from the hospital that day. In medicine, too, we are trying to deliver a range of services to millions of people at a reasonable cost and with a consistent level of quality. Unlike the Cheesecake Factory, we haven’t figured out how. Our costs are soaring, the service is typically mediocre, and the quality is unreliable. Every clinician has his or her own way of doing things, and the rates of failure and complication (not to mention the costs) for a given service routinely vary by a factor of two or three, even within the same hospital.
I got an unusual request last week. I had written a prescription of a generic medication (which has been generic for a couple of years) and the prescription was denied by the insurance carrier. The reason for denial: I had to try a brand-name medication first.
Stop. Read that again. They wouldn’t allow me to give a prescription for the (cheaper) generic drug because I had to try the brand-name medication first. This is opposite of the usual reason for denial, the availability of a cheaper alternative than the prescribed drug, and, to my knowledge, is the first time I have ever seen it upside-down like this, and I have been in the ring for the duration of the drug formulary death cage match of awesomeness. I’ve seen it all unfold.
Here is what happened.
I am not, like many physicians and patients, against the idea of cost-control through the use of drug formularies. Medications are very expensive (unnecessarily expensive, as I have discussed previously), and the previously strong influence of drug reps made many doctors quick to jump for the latest and greatest medication. I did this myself, during the first few years of practice – before the advent of drug formularies.
We were constantly detailed on new NSAID’s, antibiotics, cholesterol, and blood pressure pills. There was always a reason the latest drug was worth using over the old one (sounds a lot like fancy smart phones, doesn’t it?), and since insurance paid the same for brand drugs, I was often influenced by the drug reps.
Have you ever wondered about what goes on behind the scenes—how new drugs are magically produced and brought forth? We’ll continue to take the mystery out of clinical research and drug development and to provide background information so that both patients and physicians can make more informed decisions about whether they wish to participate in clinical trials or not.
To develop a medicine, from the time of discovery of the chemical until it reaches your drug store, takes an average of 12-15 years and the participation of thousands of volunteers in the process of clinical trials (Fig 1).
Very few people participate in clinical trials—it is even less than 5% for patients with cancer—due to lack of awareness or knowledge about the process. We’ll go into detail about how drugs are developed in later posts.
An inadequate number of volunteers is one of the major bottlenecks in drug development, delaying the product’s release and usefulness to the public. Of course, many people may suffer or even die during this wait, if they have an illness that is not yet otherwise treatable. So if you want new medicines, learn about—and decide if you wish to participate in—the process. I have, as a volunteer subject, researcher, and advocate.Continue reading…
By the numbers, pharma’s usage of the social media to drive corporate, brand and disease management objectives has never been greater. But how robust are pharma’s channels and programs on Facebook, YouTube, Twitter and other networks?
Consider a few table stakes for digital communication generally:
- Tell the whole truth and nothing but
- If applicable, open comments but police spam and abuse (a concept FB now enforces for all unbranded health pages).
- Support the brand you have while you build the one you want.
- Stratify messages, channels and audiences to support that strategy.
- Develop and monitor KPIs, some qualitative. It’s not just about the money.
Now consider a few typical characteristics of pharma social media content these days: