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Above the Fold
Consumers: Patient Power Inc.
Somebody has come up with the really clever idea of building a site specializing in patient empowerment t-shirts. A new company called MedTees has set up an online store where you can find pro-patient stuff you would never find anywhere else. They specialize in shirts that let patients poke fun of their conditions – a very good thing for people who have gone through serious operations or who suffer from chronic illness.
The woman in the picture is Helen Smith, a Tennessee psychologist who nearly died as a result of a misdiagnosed heart problem. She says her shirt helped her recover from the trauma of nearly dying. Helen is better known as in the blogosphere as Dr. Helen. She talks about her story here.
UPDATE: The Chicago Tribune ran a story on Wes and Diane Fisher, the couple who came up with the idea. They plan to take the project non-profit.
TECH: WebMD, a little curious…
Milt Freudenhiem gets to chat with Marty Wygod, and what he wants to talk about is how WebMD Health “Wants to Go Beyond Information”. WebMD is the old consumer web businesses of WebMD plus the private-labeled consumer sites they run for health plans and employers. Now while you could have (or maybe did) read all about WebMD Health’s strategy on THCB last year (hey the Times is only 6 months late so we’ll be charitable), the weird thing is why it’s being featured.
After all EmDeon, which is the old WebMD’s businesses that comprises the old Envoy claims transaction system and the older Medical Manager practice management system, and the Porex plastics company that was Wygod’s original holding company, still owns most of WebMD Health. Plus it’s vastly bigger. The web business brought in $4 million profit on $45m in revenue last quarter (or an annual run rate of $200m). Pretty decent growth from a $120m business in FY 2004, but not exactly Google-type margins. Meanwhile the real revenue (some $1.2 bn annual run rate) is in the old transaction services and practice management systems. Although the margins there are of course much lower (under 4% compared to 10% on the web side).
Now they say they want to sell off the transaction business and the practice management part. Which leaves them the WebMD Health web business and the plastics company. This is full circle. WebMD was originally a fake web-company. It couldn’t make its core web services work (either technically or as a business), so it took the logical approach of converting its incredible bubble stock price into the acquisition of MedEAmerica, Envoy, Medical Manager and a few other companies that had actual businesses. Now with Web2.0 emerging, and health plans finally deciding that they do give a rats arse about their customers’ online experience, it’s going back to being a web company.
The key issue though is that it’s doing it as an ASP, and it’ll be putting its client health plans’ members’ data on its own servers. That potentially gives it lots of power, which is whey health plans were afraid of it back in the late 1990s and created a fake competitor to it called….(forgot the name, answers on a post card please) Medunite (thanks!) which they later disbanded. Theoretically WebMD could be moving clients between plans as they own the relationship. So it’s an interesting concept, and they have enough tools that they could get it — the consumer eHealth experience — right eventually.
But all the same, 10 years to build a web business that’s $200m in revenue. Given the amount of cash Marty Wygod already had, it barely seems that all this chopping and changing to come out with a small web company justitfies the brain damage of the last decade. And furthermore, is it really worthy of a NYT exclusive profile?
Mike Magee, on How Are Insurers Handling Medicare Part D?
I don’t normally pay too much attention to Mike Magee beacause although he has the excellent web address of healthpolitics.com he rarely talks about politics, plus he’s sponsored heavily by Pfizer and his independence is a little in question. However, his discussion of How Insurers are handling Medicare Part D? is excellent.
PHARMA/POLICY: One estimate of what Part D is wasting, with UPDATE
Dean Baker working under the auspices of the liberal Campaign for America’s Future has written a study of what is being wasted on Part D. His number is $80 billion a year!. Given that the whole program was originally supposed to cost less than $50 billion a year that’s quite some number! The number he’s calculated is (I think) the difference between what the government will pay now and what it would have paid if it was negotiating for the drugs at the VA rate, plus the amount the CBO says CMS is spending on private administration of the project above what it would have cost to simply add one sole plan to Medicare.
Whether or not this analysis is fair, the Dems are nuts if they don’t get a great sound bite out of this.
UPDATE: Of course one Dem, Henry Waxman, is watching.
POLICY/QUALITY: Pat Salber on childhood abuse and adult health
Pat Salber has a remarkable and very personal piece on the connection between childhood abuse and poor adult health . There seems to be a direct link and if there is, it certainly puts the “personal responsibility” crowd into a tight intellectual corner.
POLICY/INTERNATIONAL: South Africa, the future of the US?
I know most of you don’t have access to the WSJ, so I’m reprinting liberally from its story about the CDHP in South Africa. You know what I think by now on the subject, but it’s worth noting that the proponents of high deductible plans are viewing this as a success. Read these snippets:
Whatever Discovery’s advantages, they are available only to a small sliver of South Africans. About seven million people in this nation of 47 million have private insurance, entitling them to use a system of private doctors and hospitals that is considered on a par with Western nations in quality. The rest — including most of the estimated five million people infected with the AIDS virus — are stuck with the public system of hospitals and clinics, which are mostly underfunded and overwhelmed.
<snip>
Discovery has a 26% share of the private-insurance market in South Africa, at least twice that of its nearest competitor. The majority of insured South Africans have high-deductible plans and have put aside some of their income in a savings account with tax advantages to spend on medical care. That is the combination President Bush is promoting in the U.S.
Most of Discovery’s rivals in South Africa have tried to copy its points program, and the idea is making some headway in the U.S., too.
<Snip>
Discovery says preliminary studies of its South African members suggest its incentives are having an impact. The most striking result: People age 50 to 54 who were actively chasing wellness points saw their health spending decrease even as they aged. However, the data cover only a few years and haven’t been published in a medical journal.
<Snip>
Skeptics in South Africa, including officials at the nation’s health-insurance regulator, say Discovery’s rewards program isn’t the win-win situation the company claims. They believe the real goal of the program is to attract a vigorous, health-conscious clientele and discourage older and sicker people from signing up for Discovery’s insurance plans.
"You discount things that younger and healthier people tend to like," says Alex van den Heever, a senior technical adviser at the regulator, which is called the Council for Medical Schemes.
<Snip>
And now it gets interesting, because like the Singaporeans the South Africans are going to do something about the destruction which underwriting and self-selection wreaks on the risk pool.
The problem of cream-skimming by insurers is a familiar one to health economists, and recently South Africa has taken steps to prevent it. Starting in about a year, companies whose insured populations are disproportionately filled with the young and healthy will have to pay a penalty. Discovery says its customer base is close to average now, and it doesn’t believe its success is the result of cherry-picking healthy people.
Discovery Holdings, the parent of Discovery Health, saw net profit jump 40% in the year ended June 30, 2005, to $97.4 million. The company is majority-owned by FirstRand Ltd., a South African financial-services company, but trades separately on South Africa’s main stock exchange. Its stock price has more than doubled since the beginning of 2004.
<Snip>
Another measure of the Vitality program’s value is how members’ health-care costs change over time. The insurer measures this using the "loss ratio," which is the cost of paying a member’s annual health claims divided by the annual premium. If the insurer receives $5,000 in premiums and pays out $2,500 to cover claims, the loss ratio is 50%.
Discovery examined 1,467 insured people age 50 to 54. From 2000 through 2003, those with elite status in Vitality saw their loss ratio fall to 70% from 73%, while the loss ratio for nonelite members rose to 80% from 72%. In the 30-34 age bracket, members in both the elite and nonelite categories saw loss ratios rise but the ratio rose faster for nonelite members.
Discovery says the study excluded those with family coverage and focused on individual members so that it could be sure the person racking up the points was the same one filing the health claims.
The bottom line seems to suggest some health benefit for eager point-getters, but Discovery’s own actuary, Mark Litow of Milliman Inc., acknowledges "we’d have to follow it much longer" to prove anything. Also, separating cause and effect is difficult: It is possible that the elite Vitality members would have pursued a healthy lifestyle even if they didn’t get rewards for it.
Alex van den Heever, the senior adviser at the government regulator, says: "I do not trust any commercial entity that has a big financial incentive to produce research." Discovery’s Mr. Gore says the government is welcome to examine the raw data. So far the company hasn’t submitted the data to a peer-reviewed medical journal. It says it might at some point.
Meanwhile, Discovery has brought its Vitality rewards program to the U.S., where it has a subsidiary called Destiny Health. Destiny’s South Africa-style plans, which combine a high deductible, a medical-savings account and reward points, are available in Illinois, Maryland, Massachusetts, Texas, Virginia, Washington, D.C., and Wisconsin.
And they don’t have to contend with any of that messy risk adjustment here. On the other hand, if there was a level playing field we might find out if any of this CDHP stuff worked (backing out for health and income). It’s just that the way the US is regulated we won’t because any insurer is by definition better off avoiding sick people. The rest is just window-dressing.
Pity, because there are certainly some interesting approaches in the CDHP morass.
THCB: Jobs, Jobs, Jobs
I’m still experimenting with seeing if I can get a “jobs and job-seekers” community going on THCB
Telecare Corporation is looking to hire a senior project manager to lead an enterprise system implementation of a healthcare billing / administrative system across multiple lines of care. It’s in Alameda, California,(next to Oakland) and the CIO is an ex-colleague and great guy.
Hi-Mark Software does data consolidation, data cleansing and reporting services and is looking for someone familiar with the “Managed Care” / “Benefits Administration” side of the healthcare business who is well connected to do business development. Prefarable location is near Alpharetta, Georgia but they may be flexilbe for the right person
If that sounds like you, email me and I’ll put you in touch. And if you’re looking but these aren’t for you, I get calls from head hunters all the time, so send me your info anyway.
PHYSICIANS/TECH: Why diagnostic radiologists won’t make $400K a year forever
One of the smartest observers of the medical scene, UCSF’s Bob Wachter had an interesting article in the NEJM on The Implications of Medical Outsourcing. Here’s the key point:
By severing the connection between the "assay" and its interpretation, digitization allows the assay to be performed by a lower-wage technician at the patient’s bedside and the more cognitively complex interpretation to be performed by a physician who no longer needs to be in the building — or the country.
Of course they’ll be lots of resistance to this — and if anything Wachter understates the extent of the war that’s about to happen (think specialty hospitals). But eventually collaboration software (as being plugged by Microsoft and Nortel) will remove the need for much direct physical connection between patient and physician, and skilled technicians and lower-paid clinicians will mediate between them.
Until of course the availability of lower-paid physical physicians re-disintermediates that trend. If you have no idea what I’m talking about, do yourself a favor and read Eric Schlosser’s fantastic article on why it’s cheaper to hire people than machines to pick strawberries.
QUALITY/PHYSICIAN/PHARMA: Test of Survival
Those of you who like your reality dressed up as fiction might like this new book, which Greg Pawelski recommends as telling lots of truth about the oncology-industrial complex. It’s called A Test of Survival and the web site is worth exploring at least.
