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POLICY/INTERNATIONAL: Damn communists with endowments, again

So the Commonwealth Fund is at it again. Notice how “Commonwealth” has the same root as “Communist”? I thought you did.

Why else would they come out with yet another study showing that compared to other parts of the world that spend a whole lot less money, the U.S. Lags in Several Areas of Health Care. But don’t worry. If you get cancer here and have insurance, you might outlive those damn foreigners…or at least that’s what David Gratzer thinks is the main result of those studies.

If you want to see the whole article in Health Affairs, this is the link. But it doesn’t tell you anything we didn’t already know.

PBMs/BLOGS: A blogger at a major PBM

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Libratto is a blog written by a senior exec from a PBM, Bob Neaser at Express Scripts. I haven’t exactly been polite about PBMs or more accurately about their customers’ willingness to explore their business models over the years. I’ll be interested in watching this blog and seeing what Bob thinks. He’s been posting a little the last two months and I want to encourage him to make the arguments. He started with a rants about why employees should demand less waste in their health care benefits and I (and probably Eric Novack) would agree. But of course one man’s waste…

Still I’m looking forward to more from Bob, especially with the CVS/Caremark deal apparently changing the PBM model.

You should also look at Adam Fein’s blog Drug Channels. He has lots of interesting things to say about PBMs, pharmacy chains et al—even if he’s a little less cynical than I am!

PODCAST/TECH: Healia, Vimo, Healthline–3 Health 2.0 Execs talk about their business

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So in a first for THCB I put together a 4 way skype call for a podcast. On the call are three Health care tech start-up leaders: Dean Stephens, President, Healthline; Tom Eng, Chairman, Healia; and Chini Krishnan, CEO, Vimo.  The podcast is here, and I think you’ll find it pretty interesting.

Unfortunately the recording quality isn’t great. And worse there’s an ugly period between 29.30 and 32.00 mins when the others couldn’t hear me even though the recorder could (although Skype’s IM function did work and saved the day). So please wind on when your MP3 player gets to that part. (Someone who knows might want to help me with my recording setup and editing skills!) For those of you who can’t deal with the thrill/drawbacks of the new technology, the transcript will be up in a few days.

INTERNATIONAL: Cuba exporting doctors

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Here’s a long and interesting article on Cuban Medical Diplomacy. Essentially Castro has been exporting doctors all over the place, and now Chavez is using Venezuela’s oil money to pay for it. I was reading along wondering why we hadn’t imported a few Cuban MDs to handle the US inner cities when I discovered that apparently they offered to send 1,000 to Louisiana after Katrina, but were turned down.

The article is pretty favorable, even though it’s clear that the export of doctors and concentration on the medical care system is at least partly a propaganda stunt by the Cuban government. A couple of things worth noting, though.

First, sending doctors overseas to help other poor people may be worthy and all that (and has the positive benefits of upsetting foreign medical associations, as it’s done in Venezuela) but it doesn’t mean that human rights within Cuba are respected any more than there were during the Cold war. And sometimes the lack of human rights compounds the medical problems there. For example a colleague of mine’s daughter went to Cuba  to do a medical mission/training and met and married a Cuban doctor while there. That doctor was not allowed to leave with her to go to the US, and when he formally applied to do so, was fired from his job, and no longer allowed to practice. Thankfully he escaped by sea, after several, several terrifying attempts. But there is no justification for refusing to allow people to leave a country; and in this case it caused his medical training to be wasted.

Second, and this is my cynical side talking—isn’t excessive spending on health care something that only rich country like ours can afford? What has a poor country like Cuba gone without to provide doctors for the rest of the developing world?

TECH/QUALITY/THE INDUSTRY/HOSPTIALS: Transforming patient care, with UPDATE

Cisco has produced a video on transforming patient care which includes discussion from “Crossing the Chasm” author Geoffrey Moore, Jeff Rideout, Cisco’s head honcho Medical Director, several hospitals execs, and a cameo from me. Go to this site to register and take a look. I’ll also be answering questions in the discussion segment for the next week.

UPDATE: Now I’ve seen it. So here’s my take! I may look wooden and my answers are sometimes to questions that I wasn’t asked (oh, the  magic of editing!), but you only have to put up with literally a minute or two of me. The rest of the session is really interesting–everyone else is much more eloquent than I am and the technology featured-especially the instant translation services at San Mateo County hospital–is very interesting. Yes it’s product placement for Cisco, but well worth watching nontheless. Interesting that video-conferencing and PACS are what the hospital people view as the important changes, while I was talking mostly about IP telephony, automating vital signs recording (telelmetry) and location tracking. I must still be a futurist!

PBMs: Caremark sneaking out at the top? with UPDATE

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CVS has noticed that big PBMs are now making all their money on mail-order pharmacy, particularly from dumb clients who can’t be bothered to cross check what the PBM is charging for mail-oder generics with the price they can get at (say) Drugstore.com. So the chain stores “logical” next step is to buy the second biggest mail order pharmacy — Caremark —and get the attached smoke screening benefits management organization thrown in with the deal. The NY Times (surprise surprise) is focused on the wrong end of the deal, thinking that Caremark is a “middleman”. But the key is that all the profitability of PBMs comes from their mail order pharmacies, now that the rebating game is drying up.

And that profit comes from selling generics with huge mark-ups. So when Wal-mart puts CVS’ margins on their retail store cash business under threat, it’s not a stupid defensive move to acquire a big mail order house. On the other hand they’d better hope for better luck than the last time (part of) Caremark — the then PCS— was bought by a drug store. Rite-Aid bought PCS in 1998 for $1.5 billion, and sold it for $1 billion to Advance Paradigm in 2000.

But the Medpartners/Caremark guys, ten years after their disastrous foray into physician management, aren’t dumb. The generic mark-ups are about the last place the PBMs have to run to maintain their incredibly profitable business. And that party will end too, when the employers wake up.

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Given what the stock has done since they changed their focus to the small PBM they found that they owned by accident in the late 1990s, it looks to me that they’re sneaking out at the top.

UPDATE: Apparently the top wasnt quite as high as some punters this morning thought it was. Caremark opened at 54 spent most of the day at 51 and then fell when the final offer was revealed at 48 and change.

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