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HOSPITALS: Can Tenet really afford $1 billion to settle?

Those dumb speculators who gave up on Tenet when its stock fell to $9, should have hung on. In the past week it’s been up as high as $13. However, that may all change with the reports that Tenet is discussing a global settlement with the Federal government of around $1 Billion to settle claims that it defrauded Medicare. Even if it sells all its California hospitals (for a guestimated $600m) and it dips deeply into its credit line (which is around $800m), this certainly puts Tenet in a very tough spot. If the number required to keep operating and to be allowed to stay in the Medicare program is that high, you have to suspect that the company will have trouble surviving. And back when I was losing money on its stock it allegedly had only $30m put aside for this settlement.

Meanwhile not many questions about the settlement were raised at the Tenet shareholders meeting, which Matt Quinn reviewed recently in TCHB. Perhaps shareholders should have been paying more attention.

PHARMA/POLICY: Kaiser FF reports on Seniors views on the Medicare bill

In a vain attempt to clear THCB’s backlog — I tend to save every interesting story and lately there have been too many — I’m just posting a quick link to the Kaiser Family Foundation’s recent focus groups with Medicare recipients. Lots of good stuff here which the wonks among you will dive into (if you haven’t already) but the top line is that seniors think the new law is confusing and a bad deal. Seems to be proof that while Tom Delay and Denny Hastert can please the drug companies, PBMs and HMOs all at one, it indeed could all cause their good friend George W. Bush some dis-pleasure come November. Not that he hasn’t got his hands full elsewhere.

Note another senior (Ted Kennedy)’s line on the matter–(I can’t find it so I’m paraphrasing…please send it to me if you have it) "Who do you trust, the Republicans who fought against Medicare every step of the way and are now giving your money to the drug companies and the HMOs, or the Democrats who founded Medicare and will fight every day until it covers every senior completely"

POLICY: Craziness and deception from the College of Pediatricians

So the American College of Pediatricians has come out in unanimous favor of a constitutional amendment to ban gay marriage. In their terms this is based on "the firm knowledge that the basic father-mother family unit, within marriage, is the optimal setting for childhood development". So how many of you reading this think that the leading national association for Pediatricians has just gone off its rocker?

Don’t worry it hasn’t, or at least not completely. The actual mainstream organization is the American Academy of Pediatrics. And although they too have some very dubious policy reccomendations, such as this one promoting the ban on marijuana for adults because this will supposedly help children (whatever the cost to adults or society, if indeed prohibition does help children, which it doesn’t),they’re unlikely to move into the firestorm of the gay marriage "debate". Not that I’m an expert but it seems to me that kids brought up in gay families do OK, and plenty brought up in heterosexual ones don’t!

However, my real concern is that when the wider public hears this news, how are they supposed to know that the American College of Pediatricians is a bunch of radical fundamentalist wingnuts who bitterly oppose abortion, gays, sodomy, contraception, and probably opening hours for supermarkets on Sunday? (OK I made the last piece up, but it’s probably true). Their web site demands that their members "maintain high ethical standards personally and professionally". Pity that the organization itself is prepared to be completely deceptive in its very name!

PHARMA: A quick update on the GSK Paxil probe, by The Industry Veteran

The Industry Veteran has a quick contribution to the Paxil story, gathered from the home town press of GSK.

    The London press claims that the British Healthcare Regulatory Agency is too cozy with GSK and that it took an outsider such as Eliot Spitzer to initiate a probe of the company’s Paxil malfeasance. It looks to me as if the Brits are already less inclined than the American press and government to swallow Big Pharma’s propaganda. If they decide to really get off their asses, the industry better set aside billions in litigation reserves.

POLICY/SYSTEM: Costs increases slowing slightly

The Center for Health System Change is out with its assessment of cost increases for 2003. And believe it or not, they say costs increases are slowing, down to a mere 7.9% from 9.5% in 2002 and 10% in 2001. This is worrying news for the health care system which is having trouble making its price increases stick with the rest of society slowly improving news for the economy which is being suffocated by increasing health care costs, which result in more un and under-insured individuals and more trouble for government and employers in these cash-strapped times.

HOSPITALS/POLICY: For-profits cost more, but that’s not the point!

In a publication that (hat-tip to Jacob at Family Medicine Notes who is also to be congratulated on the excellent upgrade to Medlogs) comes from the Journal of the Canadian Medical Association a meta-analysis confirms that in the US for-profit hospitals charge about 20% more than non-profits. This is not new news by any means. In fact I remembered reading almost exactly the same thing when I first learnt about the US hospital sector back in 1990. What the Canadians have done is to do a really thorough evaluation of every and any study of the topic, and it basically confirms my (often faulty) memory. Unsurprisingly Steffie and David go almost apoplectic about this in an accompanying opinion piece.

    “Investor-owned hospitals charge outrageous prices for inferior care.” said Dr. Steffie Woolhandler. “That’s not just an opinion, it’s now a proven fact. The for-profits skimp on nurses, but spend lavishly on their executives and paper-pushers.” Previous research by Drs. Woolhandler and Himmelstetin, based on financial filings by virtually all U.S. hospitals, found that administration accounted for 24.5% of total costs at non-profit hospitals vs. 34% at for-profits, while payroll costs for clinical personnel were 7 percentage points higher at non-profits.

    Dr. Woolhandler also noted that: “Previous studies have shown a consistent pattern – investor-ownership compromises care and raises costs. For-profit dialysis clinics have higher death rates. For-profit nursing homes deliver lower quality care. For profit hospices give dying patients less care. For-profit rehab facilities cost Medicare more. And for profit HMOs deliver poor quality care and have extraordinarily high overhead costs.”

Indeed their article quotes many very well known instances of for-profit companies caught with their hand well inside the cookie jar, usually that belonging to Medicare, and yes Messrs Scott, Barbakow and Scrushy know who they’re referring to! But what I’m going to say now probably will stun many of my readers who still think I’m an unreconstructed Lenninst, even though I voted for Maggie Thatcher twice in the 1980s:–I don’t believe that it’s the for-profit nature of the hospitals that’s the problem.

While it’s impossible to judge from the Canadian meta-analysis, I don’t think that these studies are necessarily apples to apples comparisons. Now get ready for some gross THCB oversimplifications here, but follow my line of reasoning. In the US there are basically three types of hospitals: a) big academic teaching hospitals, which often are in the inner cities but have a strong reputation for excellence and receive massive cross-subsidies from Medicare; b) smaller inner-city or rural hospitals that cater to a poorer population; and c) suburban hospitals that have a wealthier population. In crass terms, the first group muddles along financially cross-subsidizing from a variety of funding sources, the second group lives in the financial toilet (and is the venue for most hospital closures) while the third group tends to do very nicely thank-you. Almost all for-profit hospitals are in that group (of course) but that doesn’t mean that they are necessarily much worse offenders in terms of how much they charge, how much they upcode Medicare DRGs, and how little they give away in charity care/or fail to recover bad debts than their non-profit neighbors. Non-profit hospitals in the suburbs tend to act very like their for-profit equivalents and have tended historically to be fairly profitable. It’s not entirely a joke that Ian Morrison called one of his clients “The Sisters of Sustainable Competitive Advantage”.

I stand to be corrected on this but my guess is that if you directly compare for-profit hospitals with non-profit hospitals of the same ilk, rather than a random selection of all non-profits, you’ll most likely see that the for-profits charge slightly more and give slightly less charity care, but not by the huge amounts suggested in this study. So in other words, there’s not too much wrong with for-profit hospitals per se. Yes they tend to be in chains that centralize decisions and centralize profits, and yes more often than not they get involved in dubious practices like upcoding and paying their CEOs way too much. The problem with that line of argument is that many of the same things happen on a lesser scale in many other hospitals. And as the vast majority of hospitals are independent or are in very small non-profit systems, if you multiply up the minor “infractions” at each one, you might end up with a total in dollars that rivals the big nauseates we see in the newspapers from a Columbia or a Tenet.

Now, I do believe that these infractions are indeed a problem. So who do I blame? Most of the problem lies with the incentive system that we put hospitals under. And that system (as I’ve been saying since my very first ever post on THCB) is mostly controlled by the graduated fee-per-episode system that Medicare uses to reward hospital care. A very similar system also incents physicians and other providers to do as much as they can (and in some cases to commit outright fraud). Whether they are officially for-profit or not, everyone in the system likes extra income, and if you set up a payment system that incents more activity at a higher price and has no corresponding checks or balances, then you are going to get higher costs. This could be fixed by changing the way Medicare pays providers (and its HMO intermediaries). Potentially the very baby steps CMS is taking down the Pay for Performance path might help in that direction. But focusing on purely the role of the for-profits is like blaming the guy who owns the bar for making a profit off his patron being an alcoholic.

BLOGNOTES: Jeanne Scott’s website coming to life, and Bloglet

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The wonderful Jeanne Scott of TheJeanneScottLetter is getting her newsletters back up. The most recent two are up on her site health-politics.com and she promises that the rest will follow. So go read! And subscribe if you haven’t already by emailing her.

On an unrelated Blognote, I finally went back through my archives of "drafts" (of which there were over one hundred remnants of things I wanted to comment on that I’d saved but never gotten to) and I’ll be trying to knock some out over the coming days. Of course it would help if current healthcare events stopped too!

Finally, I (hope that) the bloglet email service down on the right of your screen is now working with an accurate daily teaser of what’s in THCB. I tried to email those of you who have subscribed to that (free shareware) service about it the other day, but as I got zero responses either the email didn’t work, your spam filters kept me out, or I’m just not worth replying to! Please tell me it’s not the latter!

INTERNATIONAL: Tight elections and the Canada/US comparison

Up north they are having an election in the land where they no longer ever win the Stanley Cup, (although it should be noted that like the “Swiss” who won the Americas Cup over the New Zealanders mostly because the Swiss had a Kiwi crew, most “American” hockey teams are stuffed with Canucks). And the election is going to be very close. Go to this chart and follow the polls along from 2000 to today — interesting stuff and a potted history of Canadian politics in the last 4 years.

So what does this have to do with health care in the US. Well you’ve guessed it, the old chestnut of health care systems comparisons has reared its ugly head in THCB. As I mentioned a couple of weeks back, the Canadians are not planning on moving to an American system. That includes the newly resurgent Conservatives. Even if they win (and its about even in the polls now) both they and the governing Liberals are promising more cash for the current system, rather than changing course. In fact at the bottom of this news story in which (Liberal PM) Martin is trying damn hard to paint the Conservatives a shade of Republican–with references to gays and abortion–the health care issue is made clear:

    Harper (Conservative Leader, BTW) said on Friday he would inject C$10.4 billion ($7.7 billion) to C$15.2 billion into the ailing health-care system over the next five years. He pledged C$600 million to $800 million to cover drug costs over C$5,000 a year, and C$2 billion to C$3 billion a year for general health costs.

    On Thursday, Martin pledged C$26 billion to C$28 billion in new spending — including plans for a national day-care program and an expanded military — which he said could be done without driving the federal budget into the red. He too has pledged to inject more money into the public health-care system.

So basically they are outdoing each other for who will spend more on health care. And don’t forget that the Liberal government under Chretien in the 1990s actually cut healthcare costs and reduced healthcare as a share of GDP–not something that Americans have ever seen happen here!

So given that the Canadians are not heading our way, why bring this up? Well funnily enough a new report from both Federal Governments is out comparing the two countries’ health care systems. And what were the findings? Well no surprises. Insured Americans had a slightly better time in the system than all Canadians, while uninsured Americans had a worse experience. Cost was a big issue for Americans, while not one for Canadians, while waiting times were an issue for a large minority of Canucks.

    Americans were more likely to report that the quality of their health care services in general was excellent compared with Canadians (42 percent compared to 39 percent.) Among uninsured American respondents, 28 percent said the quality of the health care services they received was “excellent,” 44 percent “good,” and 28 percent “fair” or “poor.” When asked about their satisfaction with health care services in general, 53 percent of Americans and 44 percent of Canadians said they were “very satisfied,” while 37 percent of Americans and 43 percent of Canadians said they were “somewhat satisfied.” Among uninsured Americans, 39 percent were “very satisfied” with the services they received, and 40 percent were “somewhat satisfied.”

    Unmet medical needs during the past 12 months were reported by 13 percent of Americans and 11 percent of Canadians. Among those with an unmet need, Americans were more likely to identify cost as the primary barrier to health care (53 percent of unmet needs cases), while Canadians cited waiting for care as the primary barrier (32 percent of cases). Among the 11 percent of American respondents who were uninsured, four out of every ten reported an unmet medical need. Likewise, only 43 percent of the uninsured respondents said they had a regular medical doctor, compared with 80 percent of total American respondents and 85 percent of Canadian respondents.

So the message is fairly clear. With 40% of the uninsured with an unmet medical need, and less than half having access to a regular doctor, if you’re going to be uninsured in the US, move up north! Alternatively, maybe you should vote down here?

QUALITY: More evidence on the scantity of EBM

In this post, a little more from last week’s IFTF meeting. The variation in practice of evidence-based medicine was described in a speech by Bern Shen, as one of the major "impediments" to health and healthcare. THCB readers, MedRants readers and all health policy wonks (via Wennberg’s work at Dartmouth) have long known about this problem. A typical example was in the Journal of the ACC (here’s the abstract) last week, showing that heart patients usually don’t receive appropriate post-discharge drug therapy:

    Dr. Javed Butler from Vanderbilt University in Nashville, Tennessee and colleagues assessed ACEI (ace inhibitor) use among 960 hospitalized heart failure patients. They discovered that 55 percent of the patients were discharged with an ACEI order. By postdischarge day thirty, 77 percent had filled their ACEI prescription, but by one year only 63 percent were still taking the medication. "Although we expected the rate of long-term use to go down over time, we were surprised at the magnitude to which it did," Butler said in a statement.

    Moreover, if patients are not prescribed an ACEI at discharge, the chance of initiating one in the outpatient setting is "very unlikely," Butler told Reuters Health. For patients with no discharge order for ACEIs, only about 12 percent had been prescribed one by 30 days. By one year, only 19 percent of were current ACEI users.

Of course, as I’ve blogged about before, the solution is not that simple. It’s very hard for physicians to practice the "right" way all the time and even harder for them to communicate this to their patients. It requires education of physicians and patients, and the installation of sophisticated tracking information technology. None of these three are particularly in evidence in the US, although as I’ll describe in a post later this week, the Brits are marching down this path, at least for primary care.

At the meeting Dr. Catharina Maulbecker Armstrong described a service she’d been involved in running in Switzerland, where high end executives were advised about what their course of treatment should be based on the latest protocols. The service consulted with the patients’ doctors about their clients’ treatment course, but soon found that the doctors were calling them asking advice about treatment protocols for other patients. As she put it, the doctors otherwise were relying on their 20 year old memory of their medical school professors’ 20 year old memory of what to do! OK, so that’s a little over-simplified, but it does reflect the underlying the problem–physicians are taught to be independent actors relying on their memory, working on one area of the body. Moving to a medical education system based on doctors leading a team (which includes the patient), using information systems to apply the latest medical knowledge and viewing the care of the patient holistically is a non-trivial challenge.

However, Michael Millenson,author of Demanding Medical Excellence and the quality bete noir of many doctors, was also at the meeting. Although he had some uncharacteristically charitable words for some hospital folks who were making the effort to improve quality across the board (in the pursuit of reduction of medical errors), he was a little scornful of their pleas for grant funding to help them do it. As he pointed out, the folks in the room from GM and other big manufacturers probably didn’t rely on Foundation grants to improve their quality–it’s part of what the market demands. It’s the interference with that "market" demand by the medical profession that has radicalized Millenson. (I’ll be reporting on his upcoming speech to a bunch of doctors at the end of the month, or maybe I’ll be carrying back his body to his family!)

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