Above the Fold

PHARMA/INDUSTRY: Hurricane Katrina Direct Relief!

I was contacted late last night by Grace Davis who is one of "two moms" who is running a blog helping support relief for Katrina victims. The other mom is Victoria Powell, a doctors wife, who is visiting health clinics (and all types of other places offering help) in Mississippi to see what they need and getting them supplies. It’s a practical and innovative way of cutting through the bureaucracy, and it may be getting to some of the places that are otherwise being missed.

This morning they are putting out a call for supplies for health clinics that are running low on medication. If you are from a pharma company or a wholesaler or have some other way of getting them medical supplies, please go over the Hurricane Katrina Direct Relief! blog and see what you can do to help, or please pass it along to whomever in your organization is coordinating your efforts to help.  Many thanks.

PBMs: Are the rebate chickens coming home to roost?

Friday’s news that Caremark was settling with the Feds over a whistle-blower over rebates at AdvancePCS gave me some pause for thought. For a start, the number is $135m, and for a relatively low margin business like a PBM, that’s not nothing — especially as this was just for Federal employees and there are a hell of a lot more state employees than Federal ones (not to mention private sector employees) waiting in the wings with their lawsuits. AdvancePCS (which Caremark bought after the bad deeds were already done) was taking rebates — or what the rest of us might call bribes — from pharmaceutical companies to move volume from one branded product to another, and then hiding those rebates as administrative charges rather than passing them on to their clients. When the client is the Federal government, that effectively becomes fraudulent in a way that a smart whistle-blower (or in this case three of them) can can file a Qui Tam suit about it and become millionaires. But many similar suits are pending and many private clients of the big PBMs may start wondering how much of the rebates that the PBMs got were they passing along.  And the answer is not much.

It gets worse, in that a recent study by the University of Michigan found that their PBM was not only taking rebates to move market share from one branded product to another, but was working with big pharma to move share to branded products from generics! In other words although they were supposed to be acting as the University’s agent to reduce its drug costs, the PBM was taking money from pharma and the result was that their client ended up paying more.

I’ve been working on a piece that highlights some more of these cases and which has some numbers (all publicly available) to back them up. I’ll let that do most of the talking when it’s out in a few months. However, many of the games that the PBMs have been playing to make money are being found out.  Of course they still have the advantage of being able to buy drugs in great bulk and they still run highly efficient and profitable mail-order facilities, to which their clients are captive (even if their clients don’t understand quite why their that profitable).  Meanwhile the transparent PBM movement is in its infancy, so I’m not exactly sure that their gravy train is running off the tracks. But I think this settlement marks a big change in how PBMs have to behave, especially as come next year they’ll be working for the government a whole lot more.  Watch this space.

INDUSTRY/TECH: More ways to help Katrina victims: An open source response

Healthcare IT journo Neil Versel has a podcast up on his site of an interview with Jordan Glogau, chief technology officer of Preferred Health Resources, a medical billing services company in Nanuet, N.Y., made the following suggestion:

"Why don’t people nationwide volunteer to put up servers that are running open-source PM/EMR software like VistA or ClearHealth. I am sure that what the Red Cross is doing won’t have enough resources to address all the needs of everyone in trouble in the Gulf Coast states." with some ideas about how health care IT companies can help.

HHS has a site up with instructions for volunteers and many categories of people are needed (everyone it seems apart from consultants, insurance salesmen and policy wonks) .  Go to to take a look.

TECH/POLICY: Things to think about in Katrina’s aftermath

Here’s my FierceHealthcare editorial today:

In Katrina’s wake the inquests are beginning after the tragic failure to get help to where it was needed, especially in New Orleans. For healthcare organizations there are some immediate lessons, wherever in the country (or world) you might be. What is your disaster plan, and is it good enough to sustain you for several days in a potentially lawless environment, with no outside power or supplies? And do you have an evacuation plan for patients and staff? Obviously this matters most for hospitals, but given that all paper records and many computer systems have been destroyed, all healthcare organizations — no matter what size — need to make sure that their data is electronically backed up, redundantly, somewhere far away from them. If your vital data isn’t electronic, now is the time to make it so. Finally as a nation, we need to find a way to guarantee health care insurance and access to everyone displaced, and the best way to do that would be to guarantee it to everyone in America. –

POLICY/POLITICS: Blame for Katrina–enough to go around but it’s FEMA in the lead, with UPDATE

With all the BSing that’s gone on from the Administration about what went wrong and finger pointing, there is clearly much blame to go around. I’m impressed that New Orleans mayor Ray Nagin went ballistic when nothing was happening last Thursday night, but there are reasonable questions being asked of him by the right wing bloggers about why he didn’t or couldn’t use the city’s municipal and school buses to evacuate people in advance of the Hurricane or after it (I assume that after it he didn’t have anyone to drive the buses). Not that of course those questions are being asked in a particularly nice way, but I won’t discuss my last post or Nagin’s ethnicity.

However, even if there is local and state blame, that doesn’t absolve the Bush Administration for two reasons.  The first one is that there is a clear line of command in these situations, and this comes straight from Bush’s mouth on August 28, the Thursday before the storm.

Bushdisaster9kr THE PRESIDENT: This morning I spoke with FEMA Undersecretary Mike Brown and emergency management teams not only at the federal level but at the state level about the — Hurricane Katrina. I’ve also spoken to Governor Blanco of Louisiana, Governor Barbour of Mississippi, Governor Bush of Florida, and Governor Riley of Alabama. I want to thank all the folks at the federal level and the state level and the local level who have taken this storm seriously. I appreciate the efforts of the governors to prepare their citizenry for this upcoming storm. 

Yesterday, I signed a disaster declaration for the state of Louisiana, and this morning I signed a disaster declaration for the state of Mississippi. These declarations will allow federal agencies to coordinate all disaster relief efforts with state and local officials. We will do everything in our power to help the people in the communities affected by this storm.

In addition here’s an article which basically shows that even within all the bureaucratic BS going on, the Federal government is in charge in a disaster situation, and FEMA has the ability to do basically what it likes–which those of you hooked on The X-Files know has always been the case (although alien takeovers weren’t the issue last week)

But the main point is that, whatever the bureaucratic BS, a real leader would have got those buses into New Orleans and got the people out by Wednesday at least. That would have to be a Federal effort rounding up a few hundred buses in neighboring cities and getting them into New Orleans, while setting up tent cities to deal with the volunteers. It was this lack of action after the flood between Tuesday night and Friday morning that is the really criminal part, and even if the locals had screwed up, that does not mean that the Federal government is absolved of blame. We needed Presidential leadership, and we got little boy lost — again.

And as for health care, that goes for the evacuation of the hospitals too. It’s clear that that ended up being largely a private effort (and well down to HCA’s management which really stepped up in the crisis when it realized that the Feds weren’t helping.  Perhaps we should have completely for-profit private health care organizations so that all rescue efforts can be run out of Nashville! But if that’s not going to happen, and if every victim isn’t going to be in a hospital — as is clearly the case — then we have to depend on the Federal government.  After all this is the same Federal government that’ll move heaven and earth to make sure the sick people don’t smoke pot.

UPDATE: Brown was basically fired this afternoon–one week after Bush said "Brownie, you’re doing a hell of a job".  Odd.  Usually these incompetents get awarded the Presidential Medal of Freedom.

TECH: Disaster recovery

Echoing a theme that I’ve been pushing over at my FierceHealthcare newsletter the last two days, here’s a nasty story about the awful subject of disaster recovery.  Not only will Charity Hospital and University Hospital in New Orleans never reopen in their same place, but they have lost all their computer records.

The health care system is dealing with another major ordeal — its computers. The hospitals IT system was in New Orleans and they lost it. For some reason, their backup system also failed. Now, they have Internet access only on five laptops in their "war room." The university’s entire health care system is being run through those laptops.

For anybody in health care (or in any other business for that matter reading this) this is an almighty bloody wake-up call. How are your computer systems being backed up and where is your data. It needs to be backed up locally and also needs to be backed up redundantly somewhere much further away. Here’s an example of one service that’s literally keeping its customers’ businesses alive.

I don’t know who Charity’s CIO was, but not having their computer data backed up (if that is the case) is inexcusable. But worse is having all your medical records merely on paper in one place.  But that is of course the case for 90% of medical records in this country and probably the same proportion in New Orleans.

There are two choices here. First get a local electronic system that has redundant local and remote data back up.  Most serious IT companies have multiple centers for this eventuality.  Second, use an ASP system that handles the applications and the data in a remote place., There may be times when that’s not the best solution, but in times of complete disaster at least that data is safe.

And now put on your to-do list at the top 2 things.

One, if you are in business, go look at the state of your data back-up right now. If the place burned to the ground tonight, can you access your data immediately? Where is it? Are your suppliers set up to retrieve it?

Second, are your personal information and valuables safe?  Last week I ordered a fire-proof safe because, although I have data backed up pretty well (but not well enough as I don’t have it outside of the Bay Area but I will be changing that!) my passport, house papers, etc, etc are all in a file drawer. If you need more advice about personal data back ups, take a look at this New York Times Circuits article.

Meanwhile, if you are a vendor thinking about a way to get your ASP service in front of people, put data backup security at the top of your marketing list! Allscripts and Medem are ahead of you there, even if Glen Tullman is fudging a bit when he gets ePrescribing into the mix!

POLICY: Enthoven on the rational place for consumer choice in health care, and why CDHC is missing the point

It was a little while back that I heard a webinar from Michael Porter, and I described him as the next great business school professor to get lost in the health care quagmire. At Stanford Alain Enthoven has been stuck there for many, many years, (mind you, so am I!) but he at least has a deep and systemic understanding of how health care works, and how it could work better — even if he never enjoyed the satisfaction of seeing his ideas adopted on a national scale. You’ll recall that some of his ideas were at least partly behind the Clinton plan. (Incidentally Porter was pretty dismissive about Enthoven in the Q&A section of his talk). After I wrote my article (and another on Regina Herzlinger) I got some complimentary email from Enthoven, and I suspected that he wasn’t going to let the "consumer-directed" academics have it all their own way.

His response to Porter et al (with Laura Tollen from Kaiser Permanente’s Research Institute) is in an article at Health Affairs (free in its web only edition) called Competition In Health Care: It Takes Systems To Pursue Quality And Efficiency. What he does is to analyze what we need to do to create a rational market in health care, and then contrast that to Porter’s suggestions.

First up. Will high deductibles and personal HSAs really act as a market force on providers’ behavior?

Porter and Teisberg’s answer to these failings of the FFS indemnity system—“reasonable copays and large deductibles combined with medical savings accounts [that] would let patients take some financial responsibility for their choices”—is insufficient. Copays give patients some responsibility for the frequency with which they demand doctor visits but leave them insensitive to the costs of services provided during those visits. Deductibles aren’t a solution because health care expenses are concentrated among patients whose costs exceed reasonable deductibles. By most estimates, the most costly 30 percent of patients account for 90 percent of total health care spending.

This kind of insurance leaves patients cost-unconscious once they anticipate reaching the deductible or out-of-pocket spending limit. Coinsurance helps, but only to the point where limits on out-of-pocket spending—typical in most health insurance arrangements—are reached. Ironically, though, it is the very people who will exceed these limits (those who need expensive treatments) for whom Porter and Teisberg expect regional centers of excellence to compete on cost and quality.

Bingo.  Nothing more needs to be said, and I have never heard anything from the pro-HSA/personal account crowd explaining how to deal with that issue. Meanwhile despite the pro-consumer directed lobby’s idea that information is all that is needed it’s clear that information is necessary but not sufficient. Enthoven gives a couple of examples of why incentive change is needed for the information availability to work:

First, the most high-profile CABG patient in the nation—former President Bill Clinton—chose to undergo this procedure at New York–Presbyterian Hospital/Columbia University Medical Center in 2004, although this hospital ranked twenty-second in risk-adjusted CABG mortality rates among thirty-six hospitals performing the procedure in the state. In a more disappointing example, the Pennsylvania Health Care Cost Containment Council published a consumer guide to CABG surgery with risk-adjusted mortality data. In a random sample of 50 percent of Pennsylvania cardiologists, 87 percent said that the guide had little or no influence on their referral recommendations.If referring cardiologists do not use this information, it is unlikely that patients will. Although it is important to provide this kind of information, much more work must be done to make it useable for patients.

And then there’s the key issue of how to manage the chronically ill — the ones who we spend 70% of the money on — using care coordination between providers.

Under a completely free-choice model such as that of Porter and Teisberg, a patient with diabetes would seek out the best providers for diabetes, and a patient with congestive heart failure would do similarly. Putting aside doubts that ill patients will regularly travel far from home to centers of excellence, the problem remains: Many patients have multiple chronic conditions. In addition, people with chronic illnesses also need primary care. It simply cannot be good medicine for people with multiple chronic diseases to receive primary care and care for each of their conditions in separate locations, with different sets of doctors who don’t communicate regularly about the patient.To be fair, under the provider-level competitive model, one could imagine regional specialty centers that treat a variety of conditions that often coexist with one another (for example, the diabetes center would include experts in hypertension and heart disease). However, this raises the question of whether there are natural limits to the expansion of that expertise that stop short of a fully integrated delivery system. We do not think so.

Enthoven has me convinced that structured provider systems with virtual or real integration and their incentives alignment to produce the best care at a defined price per capita are the best way to deliver medical care to populations. That was the original goal of the HMO movement, even though it was destroyed when the HMO went from being a real organization to being just another insurance product for benefits consultants to sell. So why did this all get thrown out with the bathwater in the managed care backlash? Enthoven again gives the right answer, and this is confirmed by survey data from Harris that I was using at the time in the mid-1990s.  People wanted a choice, and when they were forced from free-to-them open access to managed care plans that used the same doctors but paid them less and pissed them off (the doctors that is), they didn’t like it. My doctor use to call PruCare (Prudential’s HMO "ZooCare") and I’m sure his patients noticed.  Enthoven is correct when he explains the consequences this way.

Conventional wisdom now has it that people don’t like managed care. The more nuanced truth is that they don’t choose managed care when their employers pay practically the full premium of whatever they choose. Then, there is little to be gained financially by accepting a limited provider network. In contrast, when employers pay a fixed-dollar amount and each employee can keep the full savings, experience shows that high percentages of employees choose economical care. For example, 70–80 percent of active employees and dependents covered by the University of California, CalPERS, and Wells Fargo in California choose HMOs.Another reason markets have not produced competition among IDSs is the widespread employer practice of offering only one insurance carrier, which, in turn, offers only one delivery system (although this is changing; see the discussion of tiered networks below). Seventy-seven percent of insured employees are offered only a single carrier.

So you can get consumers to make a choice within the context of real differences in the insurance product that they buy. But in a world where that’s going to work you really need to have organizations affiliated with the insurers that can actually manage the kind of team-based, guideline-driven medical care that is needed.

For a delivery system to market its superior efficiency, it usually needs to be affiliated with its own or a partner carrier. Thus, offering different carriers is a necessary but not sufficient condition for competition among delivery systems. Ten carriers all offering every FFS doctor in town is not competition, nor is one carrier offering three plan designs (HMO, PPO, point of service), all using the same doctors. Competition to serve whole employer groups on a single-carrier basis has historically resulted in all-inclusive networks. But for these to be effective, carriers must select providers based on quality, efficiency, and willingness to work in teams and with evidence-based guidelines. However, people want to choose their own doctors. In a world of competitive delivery system–based managed care, therefore, people must have a choice among managed care organizations as well as “unmanaged care”—if they are willing to pay the excess cost

In other words there needs to be a cooperative arrangement between payer and provider, and probably an exclusive one too. Sadly for all of us, that only appears to exist here in communities and states where there’s a long history of it (e.g. urban areas of California, Minnesota and Seattle). Otherwise managed care is the same gong show as FFS, with the money going to different places (insurance executives rather than specialist physicians).

Of course the overall problem that I fear Enthoven has shrunk away from over the years is that creating this kind of an incentive structure means creating an environment where consumers/employees/enrollees pay for membership of a system, and have the tools to judge whether that system is worth the extra money they need to pay for it at an open enrollment period. To my mind that really necessitates putting all small and medium businesses into a buying pool, And not just that. But now you need to know a little about buying pools, and I’ll use an example that I know well. Me.

I’m in a buying pool that called PacAdvantage, and it gets me a high deductible "non-system" plan from Blue Shield for about $200 a month; if I bought that same plan via it would be about $80 a month, until Blue Shield notices (as it did) that I had had knee surgery a few years back and was probably going to have knee problems again, and the price went up to over $400 a month. Of course for that price I could probably buy into an HMO with better coverage if it wasn’t using underwriting, but then again I probably wont use $400 a month’s worth of care (unless I have more knee surgery) so what would be the point?

What’s behind all my quibbling?  In the buying pool get a huge choice of benefit packages, and I will tailor the one I want to my situation. If I can get a better deal outside the pool I’ll take it. So inevitably the pools/buying groups will attract the sicker people (i.e. those who think they will have high health costs) and the healthier ones will take their chance on the individual market and increasingly on high-deductible plans, perhaps with an HSA attached. And of course those high-deductible plans won’t let in anyone who may be sick.  (Our good buddy Ron’s latest commercials which he sent me all state clearly that "medical underwriting is required")

So we have to bite the bullet here. If this is going to work to create the level playing field for integrated provider systems to compete on everyone has to to in a buying pool of some type, and the buying pools must offer the same benefits package. There must also be (as Enthoven mentions in the Oregon BENU pool) real-risk adjustment between the insurers so that they are dealing with the same level of acuity in the population. If that were to happen, and people were to choose their IDS (and plan which would be essentially the same thing) based on a combination of value for money and what trusted authorities (not that they exist here yet) say about their ability to deliver the co-ordinated, cost-effective, informed and evidence-based care that Enthoven’s talking about, then you’d slowly see a market driven alignment of providers to serve that outcome.

We are of course miles away from that outcome, and let’s not beat around the bush here. That arrangement is so close to a single payer universal insurance system that its opponents are able to tar it with the same brush. Enthoven objected to the Clinton plan mostly because it put Medicaid into its big buying pools. But, in the end, everyone has to go into them if this system is going to work–it cant be restricted just to the small business part of the commercial population and "everyone" includes Medicaid, Medicare, the uninsured and everyone else apart from possibly big businesses and the very wealthy. And that is of course how it’s done in Japan, Germany, and most other countries that use this type of a group approach to buying health care (And by the way their governments all also regulate price and provider supply).

And this intellectual "big tent" isn’t so crazy. After all it’s only in the UK where Enthoven’s ideas have ever been implemented at a policy level, and they were moving away from pure global budgeting single payer to an "internal market". Policy wise the "voucher/buying pool" group and the single payer group are so much more aligned than the other side, which really doesn’t give a rat’s arse about care quality or universal coverage. So given that the non-sense of Porter, Herzlinger and the Galen crowd is in the ascendancy, even if it doesn’t cure any of our fundamental problems and probably makes them worse, can we get Alain over to join in a truce between the "voucher" crowd and the "single payer" crowd.

POLICY/HEALTH PLANS: What to do about coverage in Katrina’s diaspora

Ezra Klein has an article up the thorny problem of how to get health coverage or continue it to those who have been displaced. Ezra suggests extending COBRA to all of them. The major problem there of course is that proving who worked where is going to be a nightmare, and with no income many people won’t be able to afford COBRA (or any other kind of insurance, just before you jump in Ron!), and those employers that won’t survive Katrina or which are already effectively finished, will not be able to make their monthly premium payments — which will at some point mean the end of those employers’ plans for ex-employees to buy into using COBRA. This solution may though work for those who have stable employers and have coverage that the employers are continuing to pay for while they’re effectively laid-off or have the money to buy an extension of that employer’s coverage (even if the employer itself is no more) if the insurers can be persuaded to allow that (which I’m sure under the circumstances they can).

For everyone else (which is probably the vast majority)  Ezra basically suggests what seems to be the current prevailing thought. Let those people go on Medicaid in whichever states they end up and let the states make sure that the Feds pick up the tab as part of the overall disaster relief effort as promised.

Of course this is one more reason why a simple national universal insurance system would be a better way of handling things. If everyone was covered then providers could give services in the certainty that they’d get paid. Don’t forget that this will be the situation for those who are over 65, as Medicare is a national system (albeit administered regionally).

And at the least Katrina has uncovered the ugly secret of what it’s like to go without in America today….and going without health care coverage is a big part of going without.

TECH: FEMA and the Wisconsin CHIN — incompetence together?

MrHISTalk had a little rant yesterday about the crappy demands from the Wisconsin Health Information Network that its users only use Internet Explorer.

User tip: those interoperability and open standards folks at the Wisconsin Health Information Exchange might want to get real web developers instead of the three doctors who appeared to have created their website (and who also run some for-profit ventures under the company name Asatte.) View it in a buggy, obsolete, and proprietary browser like Internet Explorer and it works. Try it with an open, standards-based browser like Firefox and you get this rude message: "Sorry, this page requires full support of modern browser functionality. Your browser does not support that functionality. Click here to get a current browser." Why would doctors waste time screwing around building websites when millions of Indians can do a far more professional job (and following international web standards) for $5 an hour? Even Asatte’s own site is hopelessly lip-locked onto Bill Gate’s buttocks, proudly proclaiming "Using XML to Office technology, Asatte allows authors and editors to use tools with which they are familiar, like Microsoft Word, to edit, maintain, and coordinate the creation of anything from small to massive publishing projects." Real programmers don’t "code" in Microsoft desktop applications (but doctors often do.)

But while we’re on FEMA’s case, its perhaps a little more serious that same thing is true for those people trying to use a non-IE browser while applying for disaster aid. I do though like the headline from the Good Morning Silicon Valley blog which reads, We’re a disaster agency; of course we use IE

On the other hand, I’ve sadly gone back to using IE since inexplicably a recent Firefox upgrade made it crawl on my machine.  And, now that I sometime use my GF’s Apple, am I alone in thinking that the usability of both Windows and Apple sucks, and that installing Linux didn’t seem to make things much better.

Isn’t it about time for some real innovation on (or maybe) off the desktop?

POLICY/POLITICS: A harrowing story from Katrina

SignalHealth pointed the way to this story, which I’ve since found at another source by a couple of hotel guests who were basically imprisoned in New Orleans and not allowed to leave by the law enforcement and FEMA people who were supposed to be there to help them. Now before you take this entirely at face value, I’ve Googled a little bit, and found that the two authors of this account are San Francisco Paramedics who are very active in their SEIU chapter and were extremely anti-Bush, the military and police to start off with, and are posting this on an extreme left-wing (by my standards not by Fox News standards) web site.

But the problem with thinking that they’ve just made all this up is that it correlates with so much else that we know about what happened. Late on Thursday night on FOX NEWS (really!) Geraldo was in the Convention Center saying "just let these people walk out of there". They weren’t allowed to go. They were just left there. Even worse was reported by another Fox correspondent, Shepard Smith, about people just abandoned on the freeway. It seems very likely that the two SF Paramedics were among those out there. See this for the link to that piece of video.

I saw someone on CNN or MSNBC — a white man – telling his story about how the buses that they’d paid for had been commandeered (UPDATE: I’ve found the link the story about the buses for the hotel guests)– that matches the Paramedics story. This guy was taken out by a black man standing next to him, who’s name he didn’t know but whom he credited with saving his life. (UPDATE: And here’s another story from a St Louis lawyer that confirms the bus story AND the trapped on the freeway story)

Over at HIStalk, there’s a link to this incredible story about how three college kids took a whole SUV load of water and supplies into the Convention center TWICE before any real help got in there. And they had to smuggle their way in as "press".

When you start putting these pieces together, it’s clear that something went badly, badly wrong in our emergency preparedness, and how we responded to desperate people in our own country. The only people who emerge with any real credit seem to be the health care workers in the hospitals who kept their patients alive against the odds, and the people who went around the official channels to do what they could.

I would not have said anything other than on Saturday night at a dinner party, in so-called liberal San Francisco no less, one woman started explaining to us all that these were stupid people who should have a) left before the hurricane, and b) should have taken adequate supplies with them to the convention center and SuperDome, and c) were dumb and not like us because….well you can get the gist if I tell you that she was white, and in fact Irish. I lost it and pointed out that the English said exactly the same thing about the dumb starving ungrateful Irish in the potato famine. If you have time, read the whole history of that very sorry episode and weep.

I can think of no better riposte than to link to the greatest essay ever written on the topic. Go read it and marvel at how little distance we’ve come.