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TECH/CONSUMERS: It’s care delivery that matters most

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Here’s my FH editorial today….

This week two very different healthcare conferences rolled through San Francisco. One was about Consumer-Directed Health Care and was a cross between a capitalist land-grab and a political pep rally for HSA-backers and Canada-bashers. There are clearly interesting ideas from many start-ups as to how to better serve consumers , and plenty of new initiatives from bankers wanting to get at the new accounts being set up within health care. Google’s announcement of its new “Co-op” service that includes a “Health” component, and Intuit’s deal with Ingenix show that big time consumer companies are viewing this movement seriously.

Later in the week the National Patient Safety Conference saw clinicians discussing the issues of medial errors, nursing and clinical efficiency, and how to use technology to turn around provider performance. That is clearly a much bigger and even more intractable problem than making health care more consumer friendly. It’s also a movement that has been going on for more than twenty years, and we are really only seeing marginal improvements. Health care has many problems, but clearly the care delivery coal-face is where most health care money is spent, and where we have the most to change.

POLICY/PHARMA: Cato calls the Republicans on the Part D deceipt

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I approve of government programs done well. Michael Cannon doesn’t approve of them done much at all. We both disapprove of them being done expensively and then having so-called Conservatives in power lie bold face about their costs and enrollment rates. Yup, I’m sending you over to the Cato Institute blog. That might be a first for TPM Cafe, but it’s a great explanation of what’s wrong with Part D.

(Also posted at TPMcafe)

CODA: I haven’t made it thorugh Kling’s book yet, and I had a real problem with Cannon’s — as it missed the point so badly that I didn’t think it was worth reviewing. But with Radley Balko keeping up on the drug war stuff, Cato remains the thinking man’s right wing think-tank.

PHYSICIANS/BLOGS: Disheartened? Maybe

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I love people commenting on THCB, and 99% of the comments are very, very thoughtful. But I am a little dismayed that while only one person wants to comment on my long piece on the individual insurance market, one other on VC in health care (and that someone I wrote about clarifying a point she made) and none on my experience at the consumerism conference—28 people have something to say about a malpractice study I just point to!

People, malpractice is one percent of the dollars, and it’s about 17th on the list of major health care problems and issues we face in this country! It’s the abortion issue of health care—polarizing way way beyond it’s importance.  <sigh>

POLICY: talking about the inefficiencies of the insurance market…

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A Commonwealth Fund study from HSC in the latest Health Affairs reminds us that employees in small firms pay 18% more for health insurance when adjusted for value of plan adjusted premiums.  Here’s the full Health Affairs study

Meanwhile, to the surprise of absolutely nobody that’s been paying attention, another study in the same Health Affairs shows that increased competition in the  Medicare risk/Advantage program (i.e. the private plan part of it) is associated with greater use of advertising targeting healthier patients. More from PNHP’s Don McCanne on that.

PBMs: Is the edifice crumbling–not yet!

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Conundrum—It was reported in their most recent 10K that what Medco got in rebates from manufacturers went down, and that really hit profit from that sector of their business in the most recent quarter. But their overall profits went up?  How did they manage it?

Well I know (and told a private client all about it in research report) and have given you some hints before about where they make their money. But now Barbara Martinez at the WSJ has figured it out—their margins on generics are huge. And of course they control that channel by pushing their clients into mail order where they can make the generic substitutions as soon as the rebates go away. So the more generics they sell, and the more mail order they sell, the higher their margins are —even if they keep less of the rebate on the branded product.

And, as the WSJ article says, luckily for them their clients are too dumb to figure it out. (Other than Horizon Blues of New Jersey which is suing Medco)

But wait there’s a little more. Remember last year? That’s when the trade association of the big PBMs (PCMA) put out a report explaining what great savings mail order provided for purchasers of drugs. But the entire report neglected to mention that mail-order pharmacies are significantly more profitable then regular pharmacies, and it further neglected that the owners of the major mail-order houses are, of course, the big PBMs.

CONSUMERS/BLOGS: CDHC Conference

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Dmitriy did a nice job at his talk at the CDHCC meeting yesterday. You can see his slides here

I was the skunk in the room on a couple of panels. I asked a “question” at the payments and financial services panel, which basically said that HSAs were going to turn doctors into collections agencies….and got surrounded by lots of people afterwards who either agreed with me, or who told me that they were on the point of building the real-time credit guaranteeing, deductible adjudication network that was going to save physicians, and guarantee them that the patients with HDHPs actually pay their bills. They’d better be right, or else the doctors will start thinking that single payer, but one that at least guarantees to pay, is a pretty good alternative!

I was not the only skunk in the room on the Sally Pipes/Grace-Marie Turner debate (!) which I pointed out was as much of a  debate as the Republican Convention. One questioner stood up and said that the pro-HSA crowd (which he was on) would have to prove that they weren’t just about employers cost shifting to employees, or they’d lose the ideological battle. Too bloody right—unfortunately the data is in and that is exactly what’s going on. The PRI guys (Graham and Pipes) want to go to meetings to combat State Senator Sheila Kuhl’s call for single payer—what they are confused about is why the single payer guys think that HSAs are a godsend for their cause. Apparently they think everyone wants to have an HSA and take part in health care “ownership”.

I tried to be a moderate and merely pointed out that the ideologues in the HSA movement are treading on very dangerous ground as Americans love their employer-based insurance and know that there’s not much to replace it with. Just wait till they find out how dreadful life is in the individual market!

HEALTH PLANS/POLICY: RAND study on the individual market puzzles me a little

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Here are my longer comments on the RAND study about Consumer making in the individual insurance market published on the web last week by Health Affairs. Somewhat ironically I was interviewed and fairly extensively quoted in this Olga Pierce UPI story (yup, the Moonies got to me!) before I’d read the whole study, so I was mostly venting my prejudices about the individual insurance market as a whole in my comments there. This is a little long, so I’ve put it below the jump — but I think it’s very important.

Continue reading…

TECH: CDHCC Conf. Report Esther Dyson on start ups

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I’ll be dipping in and out of the CDHCC conference. Yesterday I popped in to remind Esther Dyson that we’d met 10 years ago, but now just know each other via email. (She emailed me during someone else’s talk to tell me to pay attention to it!) Esther didn’t really have a prepared talk—she’d been spending her time going weightless like one of those astronauts in training. She basically said that start-ups had to be realistic and very focused.

I asked her what VCs should be investing in. She suggested management of the chronically ill, such as compliance reminders, and products for women and family aimed at pregnant women and those with newborns.

Given that she’s spending a lot of time holding conferences on personal health records, Esther was asked about her vision for them….but more interesting was who was going to win. She said health plans were not trusted. We need something like banking system. She thinks that employers might be the driver of this. They’re well positioned to be the key. In the end its the consumer who has access, they’ll assign permission to providers and insurers to access that record. Each patient will have broad records, that will cut out lots of inefficiency, and pay up quicker. Then add data for researchers which will improve health care, even without changes in legislation.

Other interesting mentions; she’s getting involved in the open genome project. Genetic information is being put online. Esther will be one of the first to put her genes online. Esther realizes that this is a big political mess. (Perhaps we need an ICANN for health care). She said that we need to be clearer about how we ration things. But she didn’t really follow up on that.

Other talks—CEO of Healthline, the reborn Yourdoctor.com, and Intermap systems spent a while telling us how his search engine was better than everyone else’s. He might have noted that his site is only #7 when you do a Google search on the name, so perhaps the bug guys are scared of him! This is a third time restart for this technology and it’s pretty interesting, so maybe this will work out now. $42m in so far, though!

Ryan Phelan, ex Direct Medical Knowledge (which was basically PlaneTree online) had $5m investment in that and sold it to WebMD for $65m about 25 minutes later….instead of lying around on the beach drinking Krug (well maybe after a few years of that), she’s now started DNA Direct, which is aiming to be a consumer friendly hub for genetic testing. I thought that the presentation was succinct and that she may well have a real long term business model.

Today I’ll be dipping in some more. Pity Reggie is on before I get out of bed!

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