Above the Fold

PHARMA: Is it Nature or Nurture?

Remember the movie Trading Places when two rich old men put Dan Akroyd into the gutter and take Eddie Murphy out of it to figure out whether it’s nature or nurture that affects people’s outcomes?  Well there’s an equivalent going on in the Pharma industry right now. In this article, Fred Hassan’s Clean House, Forbes reports that almost all Schering-Plough’s management team have now followed him over from Pharmacia.  You may recall that Hassan went to Schering when he had a bit of free time on his hands, having very successfully sold Pharmacia to Pfizer for $58 billion in 2001. But you might also recall that at Pharmacia, Hassan had good drugs like the blockbuster Celebrex, Bextra , and some strong  therapeutic franchise’s elsewhere.

Now the whole team is over at Schering they’ll see whether they can make a success of going from the penthouse to the gutter (relatively speaking of course!).  Schering isn’t quite out of revenue or products but it will be nowhere near as easy a management job for this team as they had at Pharmacia. It reminds me a little of the Dilbert cartoon when the pointy haired boss announces to Dilbert and colleagues that "We always say that people are our most valuable asset, but I just did an audit and found that money is our most valuable asset–people came in 9th." Now Hassan and his team can prove that it is people not blockbuster product that can move the stock price.

Oh, and in Trading Places Eddie Murphy shone in the penthouse and Dan Akroyd (initially) fell to pieces in the gutter, showing that nurture or environment or, in pharma terms, product was the determining factor!

INDUSTRY: New HealthSouth management blames Scrushy

I know that you’re tired of hearing about it and I promise that this will be the last article I ever write about Healthsouth–but I couldn’t let go the little fact that, surprise, surprise, the new management that’s been in charge of Healthsouth–since the scandal broke earlier this year and they kicked out newly-indicted Richard Scrushy–says that it’s all his fault.

(Lucky this isn’t a video-blog so you didn’t notice me typing this with one hand, as the other had my fingers crossed behind my back).

PHARMA: A little more info on Crestor

There’s a little more info about the adverse events with Crestor, in a report called What’s the Matter with Crestor? from Friedman, Billings, Ramsey & Co Research. (I couldn’t find a way to get the report without opening a brokerage account!).

The research suggests so far that Crestor is not doing as well in the marketplace as was expected, and is being outpaced by Schering & Merck’s non-statin, LDL-lowering drug Zetia, which can be taken in addition to statins or by itself, and is useful for at least the 5% of population that cannot tolerate statins. The report says

    Data indicate that thus far, Crestor’s launch has been significantly slower than that of Zetia, a non-statin cholesterol-lowering drug, comparing total script volumes at similar times after launch. This is underscored by the fact that two recent comparator weeks for Zetia include the Christmas and New Years holidays, weeks that are typically slow for prescription volumes, and surprisingly, Zetia is still exceeding Crestor on an absolute basis. Crestor also lags Zetia in NRx market share, according to prescription audit data, holding 2.22% NRx share compared to Zetia’s 2.65% at similar periods in the launch trajectory, a better comparison than total prescriptions in our view, because it is less dependent on the absolute size of the market.

Translation for non-pharma folks is that Crestor hasn’t taken up as well as it might have done. Meanwhile the report also goes onto to confirm some of the issues around safety. You’ll recall that Public Citizen, and The Lancet have been bringing this issue to the forefront.

    According to the Medicines and Healthcare Products Regulatory Agency in the U.K., there have been 41 reports reflecting 45 muscular reactions associated with Crestor use. Of those reports, 35 were associated with the 10mg dose of the product, and notably, 3 of the reactions involved moderately increased levels of Creatine Phosphokinase (219-436 IU/L), according to data from the agency. Based on our research, normal Creatine Phosphokinase levels are in the 30-170 IU/L range and elevations associated with severe rhabdomyolysis are typically in the 35,000 IU/L range and up. The U.K. agency cautions that suspected adverse reactions are not necessarily caused by the drug and may relate to other factors such as underlying illnesses or other medicines; however, we believe that the early reports of muscle-related adverse events at the most common starting dose are notable.

I repeat that I am not a scientist or physician and have little understanding of the seriousness of these findings.  However, 35 of 45 muscle problems were reported on the 10mg dose– 1/4 of the dose that concerned The Lancet, and there were three reports of increased Creatine Phosphokinase which is a precursor to rhabdomyolysis. The question is whether the medical community views this as minor or whether they perceive that these very initial results are indicators of more trouble to come.

DSM/TECHNOLOGY: Is DSM going the way of the PBM? (mostly) by Matt Quinn

From THCB’s disease management office, Matt Quinn passed this little morsel my way.  Apparently disease management is now so effective that employers, payers and traditional providers are increasingly unwilling to pay extra for guarantees that DSM works. Traditionally DSM companies have charged extra to guarantee performance, and then have been prepared to share risk–paying back some of the cost if the services didn’t save money on care of those patients in the DSM program. Now they are so effective that they just don’t need that extra revenue any more. As Matt writes:

    Essentially, LifeMasters and American Healthways (AH) are arguing that (in exchange for having no stake in whether their programs work or not) they can charge lower rates for their services.  And managed care companies are so confident in the power of disease management that they’re willing to save a few dollars in exchange for alleviating disease management companies from any risk.  AH’s three largest customers (representing about 70% of the company’s revenue) are all "essentially risk-free for AH from the standpoint of clinical and financial performance."  That these contracts are all in excess of five years in length raises the possibility that a plan could pound money down the proverbial rathole for years – and get little or nothing in return.

Now Matt may be being overly cynical about this, but consider Lifemasters’ CEO Cristobel Selecky’s statement "I think what everybody has come to realize is that after several years of doing financial measures, there’s a recognition that it’s very hard to do, and you never end up with any one right answer".  There seems to me to be a kernel of truth in her words, if not in her intent. Selecky could be interpreted as saying that, no-one knows what the heck DSM is supposed to be doing as part of the wider medical care process, so no-one can agree on whether it’s saving money or not, so customers are not prepared to pay extra to get rid of a risk that they can’t quantify or control.  That’s more or less what happened with the few at-risk contracts that the PBMs signed in the 1990s.  They are in general back in the business of processing claims for money. Matt thinks DSM will end up like "managed care"–looking like just another FFS plan–as a result, with a consequent (lack of) impact on costs:

    Perhaps this represents the next step back from the risk-sharing philosophy (in financial contracting) that helped allow managed care companies to reduce the rate of increase of medical costs in the 90’s.  I find it difficult to believe that–with little or no "skin" in the game–AH or LifeMasters (or your friendly neighborhood medical group for that matter) will work as hard to meet clinical or financial goals.  And how much did premiums increase this year?

  Maybe DSM works so well that it’s logically being "carved-in" to standard medical processes, and AH and Lifemasters and the rest are on their way to becoming extremely specialized call centers. However, this may all be a consequence of the fact that earlier this year AH had to pay a customer back $14m for not achieving goals in its DSM program–goals that AH later claimed couldn’t be verified anyway. (Interesting that they signed a contract to perform to goals that they knew they couldn’t measure!) Perhaps the DSM folks realize that its easier to just provide a service rather than be responsible for a defined piece of care, and that it’s called "going at risk" for a reason.

QUALITY QUICKIE: Are hospitals screwing over MD whistleblowers?

Via DB’s Medical Rants, I found this series in the Pittsburgh Post-Gazette on how hospitals are using a wrinkle in an obscure 1986 Act to ruin–literally, professionally and financially– doctors who blow the whistle on poor quality care.  There are many short readable stories in this series, which is in day number 4.

We know from IOM reports and other sources that there are many mistakes made inside hospitals, and we know that many hospitals are desperate to improve their bottom lines, and avoid scandal, and would probably rather not hear about those errors.  So in my view, as Schwarzenneger said, where there is smoke there is usually fire. Go read and be very scared that this type of thing is going on, and then wonder if we really are serious about care quality.

TECHNOLOGY: Manhattan Research’s latest data on Cyberhealth

I was kindly invited to sit in on a webinar by Manhattan Research this morning on their new Cybercitizen Health v3.0 data about ehealth consumers. The webinar used Placeware, a competitor of Webex that I used to use to do software demos.  Placeware was bought by the Evil Empire in Redmond last year and is the core of their new version of NetMeeting. Basically going to the pre-set up web site allows you to follow along with the speaker’s slides, while you dial into a conference call to hear the presentation.  You can also ask a question by typing into a box, and complete polls that the speaker sets you.  It’s a nice system, very suitable for online presentations and you can expect wider adoption of these webinars as people get used to it.

Manhattan Research is the survey part of the old Cyberdialogue, a company that made alot of noise tracking the eHealth space in the late 1990s, and incidentally was a rival in that to my group at Harris Interactive.  In 2001 the company split into two newly named units, with Fulcrum Analytics taking the CRM side of the business and Manhattan taking the research.  Manhattan has two major focuses in its syndicated research, Consumers and Doctors.  It performs extremely large and long phone surveys (3,500 consumer respondents with over 150 questions) and then follows up with online surveys. It’s physician survey has over 700 respondents, which is also very large for a doctor phone survey.  That means that you can cut the data several ways, which is useful for looking at subgroups of patients and physicians.  Harris, for comparison tends to do smaller phone surveys but larger online ones.  There’s a whole issue of survey statistical wonkiness that I won’t get into here, but take it from me that both these organizations do expensive and quality work, which is not the case for many, many surveys you’ll see quoted in the press.

So in this presentation Mark Bard, Manhattan’s president, pulled three broad themes out of the data.  I’ll relay them briefly here, but forgive the odd mistake as the presentation isn’t available online yet, and I was scribbling fast. (It probably won’t be available online unless you subscribe–getting more subscribers was, after all, the point of their webinar in the first place)

1) EHealth consumers are growing as share of overall online population.  There are 113 American adults online, 72 million use health information every 3 months or more, while another 10 have used some type of ehealth information at least once in the past year. The interesting part is the variation in activities online amongst the ehealth consumers, and their impact off-line.  The 82 million impact a further 50 million whose health they might be managing–Manhattan estimate that that includes 30 million kids, 10 million "lazy spouses" and 10 million parents or other elderly relatives.

2) About 20% of the 72 million are "caregivers".  That group is very active about using information found online. 68% use it to discuss care for themselves and others with their physician, 59% use it to discuss treatment options for particular diseases with physicians, and 65% conduct independent research about their and their relatives health online.

3) The roll of the connected consumer for health plans is also growing, but its currently very small. (I’ve commented on aspects of the reasons for this here and here). Of the 82 million, 19% had visited their health plan site, but there were few transactions going on. Only 26% (of that 19%)  had checked on a claim (though many more wanted to) and only 15% had filed one online. So while there has been some progress amongst health plans in their online strategies, they are far from hitting paydirt yet.

My assessment overall is that eHealth is hitting a natural wall, with most people who want information now finding it (although Manhattan projects their number to grow to over 100 million in the next five years.  The issues as pointed out by Mark Bard are:
a) What will be the role of the differing types of ehealth consumers in their off-line behavior–particularly in the doctor’s office and pharmacy.
b) How can the low number (>25%) of eHealth consumers currently doing transactions online be increased? (Hint: if it is built right they will come!)
c) How can health plans, providers and others make their online strategy a core part of their business process and outreach to consumers. It can be done and we’ll all be a lot better off when it is done!

INDUSTRY/TECHNOLOGY: Healthsouth wackiness hits new high

Given my previous long ramblings about Healthsouth and my interest in mobile PCs for health care workers, I couldn’t let yesterday’s news pass without at least noticing that:

a) Richard Scrushy finally got hit with an indictment on a mere 85 counts of fraud yesterday.  The government thinks that he obtained $273 million illegally and wants it back.  Furthermore, if convicted on all charges he also faces 5 million years in prison and $6 gazillion in fines. (OK it’s 650 years in prison, but what’s the point of a sentence like that?)

b) Meanwhile Healthsouth is buying 5,000 Tablet PCs from Motion Computing to deploy at its 1,400  Rehabilitation Centers Nationwide. (The software comes from a company, Source Medical Solutions, of which Healthsouth owns a third).

c) Healthsouth seems to be defaulting on its bonds and may be headed for bankruptcy unless it can reschedule its debts.  So I hope Motion Computing is getting its cash up front….

POLICY: Oh Canada, implications for the US, part 1

Medpundit has written an article over at Techcentralstation basically saying that Canadian doctors hate the system there and are leaving for the US.  I’ve responded briefly in the comments there, but am working on a much longer piece that will explain that in general Canadians are happier with their health care system than are Americans, get as good or better care at a much cheaper cost to society in a much more equitable system, and that the few Canadian doctors who are leaving are doing it for the money and to escape that terrible winter.

While you are waiting with bated breath for that intellectual feast, to introduce the notion I’m linking to an email debate between two major players in the health policy wonk world, Steffi Wollhandler and Ken Thorpe. Steffi has argued for a Canadian-style single payer for years. Ken, who was an under-secretary of HHS under Clinton, argues for essentially a redux of Clinton’s plan–which despite much BS talked at the time–was not a single payer plan as they both make clear.

Personally speaking, either one of these reform solutions would be better than what we have now. But in this blog I’m tying to forecast what I think will happen not what I want to happen.  So while you’re pondering the merits of the debate, in considering its relevance you may notice that:

a) this debate is happening in the Newark Ledger-Journal,  not the New York Times. This is not an insult to the fine people of the Ledger-Journal, but it’s scarcely the first source for news and information for most Americans.

b) two left of center, politically-active health care wonks are finding plenty to disagree on, and stress very little the  common ground they share opposing the current system–scarcely the makings of the national consensus that would be required for health care reform. Note that such consensus was not built properly by the Clintons in 1993-4.

c) Health care reform that doesn’t in some way get the doctors, the pharmas, and the insurers to buy-in/be bribed-in is very unlikely to happen–definitely not with a Republican house. So if you are watching for it, you need to see a Democratic President, massive public discontent (which is building but not there yet), and a unified vision of what problems need to be fixed and a "good enough" solution to fix them.  My guess is that the most identifiable "problems" are uninsurance and out of pocket cost control.  Neither administrative costs (Steffi’s bugbear) nor care coordination (Ken’s concern) are likely to get the public’s passion raised enough to get reform underway.

INDUSTRY: Aggressive collections by hospitals questioned.

The Wall Street Journal reported last week on very aggressive tactics used by a few hospitals to collect on debts.  As you can’t see the WSJ articles unless you subscribe (for money!) I didn’t link to it, but med blogger Bard Parker did and he transcribed much of it onto his site A Chance to Cut is a Chance to Cure, and then asked me to comment. So read his opinions and come back.

For those of you who didn’t bother to follow my instructions, the WSJ reported that some hospitals are going after debtors who have ignored court hearings by actually having them carted off to jail.  Many of these hospitals are non-profit institutions who show considerably more aggressive tactics in debt recollection than most consumer goods companies.  Indeed several of the examples seem to be going after particularly low-income debtors, and essentially forcing them to pay up by whatever means they can–which usually means borrowing from family members who scramble to find bail money while the patient is sitting in a jail cell.

Bard Parker and most of his commentators are sympathetic to the hospitals, in general believing that this is done in a very few cases when the patients could pay but have ignored all other efforts to come to an arrangement. As he asked for my comments, I’ll give some random comments below, for what they’re worth:

a) While it’s true that this is a tiny minority of patients, it is symptomatic of the problems many Americans have paying unexpected medical bills. It’s extremely unlikely that the financial benefits of collecting some of this money are worth the bad publicity these institutions just got.

b) Americans indeed often go into debt irresponsibly, but visiting the ER to deal with a miscarriage isn’t the same as, say, buying a diamond you can’t really afford on credit, even though it might cost more.

c) As is now quite widely known, the uninsured often get charged the highest prices by hospitals, as they do not have the ability to get discounts off the "list price" as do insurance companies.  This "reverse" price discrimination isn’t exactly equitable or ethical.

d) Hospitals used to write all this bad debt off, and would charge more to well-insured patients to make up the difference.  Starting in the late 1980s aggressive insurance companies lowered their payments and got rid of the hospitals ability to cross-subsidize from "rich" patients to poorer ones.  But of course apart from the DSH program for a few inner city hospitals who treat a lot of uninsured patients, no new system of cross subsidization has been created.

e) The best system of cross-subsidization is called insurance.  The people shipped off to prison in the article (and another 42 million Americans) didn’t have it usually because they are too poor to buy it (or not forced by law to buy it) and because the market for individual insurance is dysfunctional. I’d rather have our sheriff’s deputies out preventing crimes, rather than acting as debt collectors for hospitals.  The way for that to happen is for policy makers to create an insurance system that works for the working poor including forcing them to participate. Then hospitals wouldn’t be bill collectors and patients wouldn’t have to avoid needed care for fear of not being able to pay. Hospitals would be better off in the long run if they put their considerable political clout behind the creation of such a system.

As I recently posted.  These aren’t the views of some wacked-out lefty conspiracy theorist, or at least if they are, they seemed to be shared by representatives of Pfizer.

INDUSTRY: Can anything else go wrong at Tenet? Maybe…

Just when Tenet thought it was safe to poke its head out, a court has taken it back behind the woodshed and ordered it to pay $273m rather than the $9m it thought it owed to John C. Bedrosian, a cofounder of National Medical Enterprises. NME is of course one of the predecessors of Tenet, and the one that was taken to the woodshed itself for committing patients to involuntary psychiatric stays. Then at 4pm EST on Friday 31 October (nice timing , eh?) the Halloween horrors continued as prosecutors widened their probe of cardiac surgery (the issue that started the current rot at Tenet’s Redding, CA hospital) to several other hospitals. With that news at least one analyst, Sheryl Skolnick, of Fulcrum Global Partners, threw in the towel and lowered her price target for Tenet to $9.40  (it closed at $13 and change) based on the dire prediction of the break-up of the company. "If they broke it up, sold the assets and paid off all liabilities, they’d end up with $9.40 a share in value," she said.

Maybe that’s the end of the bad news, but on the other hand Tenet watchers worried about its relationship with the Feds might want to check this out. I heard from a little bird (and as this is not public info yet, treat it as rumor) that Tenet has chosen a tiny firm with fewer than 20 employees, 2 servers, and a single DSL line, to take over encounter reconciliation and JCAHO Core Measures submission for all its 110+ hospitals. (Perot Systems previously had the task). There are suspicions that Tenet’s choice may not have the people, experience, expertise, hardware or network infrastructure to do the job AND the (third strike) deadline for Tenet to get its Core Measures submission to JCAHO (they already have 2 strikes) correctly is in January. 

According to my scuttlebutt, their new vendor currently receives small extracted files of de-identified UB-92 data from about 65 hospitals on a monthly or quarterly basis and one employee manually checks them out before sunmitting them to JCAHO.  The new arrangement means that the vendor will need to receive (on a continuous transaction basis) raw encounter data from whatever ADT system that each of the Tenet hospitals has (they’re, of course, not all the same), process and reconcile data for each quarter (probably a couple of million records per hospital) and extract the pertinent data elements from it. My source severely doubts that this system is the sort of thing that anyone could develop from scratch (let alone test) in 75 days.  His guess is that any Tenet IT peron who knows anything (and would have done any due diligence) went the way of the (ex-) general counsel

This means that potentially Tenet is placing the ability of any and all of their hospitals to see Medicare patients in unproven hands. So in the worst case scenario, the company may end up with a bunch of non-Medicare admissible hospitals, which would make it worth less than in Scholnick’s worst case scenario!


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