It’s my birthday and I’m taking the day, more or less, off, if you don’t count cooking dinner for 30 of my closest friends who are coming by tonight…see you tomorrow!
You can treat this as an open thread!
Above the Fold
POLICY: Congress is slowly getting it together
It’s not exactly major health reform, not universal health insurance, not even anything on the scale of the 2003 Medicare bill, but Congress is starting to put some legislation together on health reform. The new patient safety bill sets up a system for error reporting. It may be voluntary and underfunded, but at least it’s a response to something health care policy wonks know has been a problem for decades. Ditto with the forthcoming legislation on data interoperability. Love it or hate it, the Senate is clearly going to take another run at malpractice, and there’s also "reform" of the laws around state mandates for health insurance in the Associate Health Plan legislation that’s coming out of the House. In addition Nancy Johnson (R-CT) is proposing to mainstream pay for performance as the way Medicare pays physicians. None of this is too significant for the overall health system, although individual laws will have an impact on different players in the system. But the activity signals that Congress realizes that there are fundamental problems in our health care system, even though we are an election or two away from having the real stomach to do anything about it.
QUALITY: Voluntary error reporting system eventually rolls out of Congress
So Congress has finally passed a bill creating a voluntary medical error reporting system. Baby steps six years after To Err Is Human, but I had to turn to Michael Millenson expecting him to be overly cynical. But do I glimpse a softening, or even some hope for real change, in his comment? Here’s what Michael emailed to me:
Congress has taken a step with great symbolic weight but only a very modest practical effect and even more minimal funding. While this, of course, is a specialty of our national legislators, particularly in this era of tight budgets — talk big and carry a small stick — the bottom line is that the preventable deaths and injuries being suffered by tens of thousands of anonymous American hospital patients every year doesn’t push very many political buttons. If a majority of both Congress wasn’t comprised of middle-aged men and women with elderly parents, we might not have gotten any legislation at all. Still, the fact that Congress could actually pass a bill related to medical errors sends an important message to health care providers that real oversight from someone outside the industry has finally arrived.
HEALTH PLANS/PBMs: Wall Street loves ’em
It’s a wacky day on Wall Street. Since Aetna’s quarterly announcement that it made a decent profit hitting expectations, the entire sector has gone a little doolally. And not all at once but over the course of the day. Look at this chart below and you’ll see that all the big health plans are up following Aetna’s lead.
And if that wasn’t crazy enough, the PBMs are doing even better. Express Scripts came in with lower revenue than expected but beat forecasts on profits. That took it through the roof today, and its now up 10% in the last week! Caremark and Medco are following. Pity I didn’t buy them all back in 2001.
One day I’ll figure this stock market thing out. But then again last night I went to see Enron: The Smartest Guys in the Room, and I don’t necessarily think that Wall Street gets it right all the time!
TECH: VistA, apparently free really means “cheap”, sort of
Neil Versel has done a little poking around and found that when the NY Times says that CMS will give VistA away for free, they actually mean for a license fee of $2,700. So free just got quite a lot more expensive…
POLICY: War on Pain doctors gets another scalp
So this time it’s the University of Arizona Pain Clinic which is planning to close. Why? It’s main doctor has left and they can’t find anyone to replace him — I wonder why. So what does that mean?
During the past year, the UA Pain Clinic logged more than 5,800 patient procedures and outpatient visits and is estimated to treat 750 chronic-pain patients who require ongoing care, UPH records show.
So a mere 750 patients in chronic pain will be scrambling to find new doctors or face more pain….score another one for the DEA and its medical "ethics".
HOSPITALS: And while we’re on the subject of making too much money
If you read the Bruce Bodaken interview referenced in my other post today you’ll see that he complains about a certain hospital organization pricing too aggressively and being cut out of part of the CalPERS HMO network that Blue Shield runs. That unnamed organization is of course Sutter Health, which has used it’s local oligopoly power gained by a series of quasi-mergers in the mid-1990s to raise its prices and its profits considerably.
Now I’m not clever enough to really understand who is accountable for what in a big non-profit hospital, and by the time you add into that mix a "system" made up of all types of different management and ownership arrangements, without any clear stockholding ownership, then I’m lost completely. Back in the mid-1990s when it joined Sutter, Cal Pacific medical center was bleeding money. I speculated to my clients back then that I wasn’t sure that other parts of the Sutter system would have bailed it had it gone under. But Sutter took advantage of its bargaining power to push up costs, and the plans took it in the shorts for a few seconds until they realized that they could turn round and stick that cost onto their clients, and still make record profits. (Actually that’s not exactly how this long 2003 article on Sutter’s integration describes Sutter’s strategy, so you might read it for a more balanced view!) So everyone was happy.
Or almost everyone. Now Cal Pacific is making too much money. So much that the City of San Francisco, which I assume is pretty broke given the way it comes after me for egregious property taxes and parking tickets, and is increasing bus & train fares for its poorest residents again, is revoking its non-profit classification and is going after Cal Pacific for property taxes.
Which leads us to the old age question of, what exactly is non-profit about wealthy hospital systems that throw off a ton of margin? Or for that matter similarly profitable health plans? I suspect this question will come back again. But don’t worry guys, my in-depth analysis of oil companies seems to indicate that you won’t have to pay any tax on all those profits anyway.
POLICY/HEALTH PLANS: Bruce Bodaken–as good as can be expected but…
The SF Chron had an interview with Blue Shield of California CEO Bruce Bodaken . In general when you’re looking across the spectrum of the self-interested actors in American health care, the genuine non-profit insurers (e.g. Kaiser and a few of the Blues like BS of CA) are the ones doing the most innovative work, and are certainly — given the system that we’ve got — better than most of the shysters who are taking over our insurance system. And that doesn’t even count the Richard Scrushy’s and Fred Hassan‘s of the world who think that the health care system should be run exclusively in their personal interest. However when asked about why, if he supports universal health insurance (and by implication community rating) we need the extra cost of a private health insurance sector, Bodaken’s speechwriter let him down badly.
Q: What is your response to those who say the ultimate way to promote efficiency is to avoid wasting money on red tape and bureaucracy in the insurance system?
A: When we look at the administrative costs of a single-payer system versus the private system, we often are comparing apples and oranges. We are doing things that the government isn’t doing. The government isn’t managing chronic disease. The government isn’t providing Web sites and opportunities for people to interface with their physician as well as with their health plan. If the government can administer the program more efficiently, you would (save money).
So by that logic back in the early 1990s, before there was any chronic disease management (which by the way should make care cheaper overall and therefore should not be a cost-add) and before anyone had heard of a web site, public and private health care administrative costs should have been the same. The really has me ROTFLMAO. And yes Steffie and David’s classic article on the vast differential between private and public program administrative costs was published in the NEJM in, wait for it,1991.
Now I understand that Bruce has a tough spot to defend, and that he’s an advocate of universal insurance — but please can he come up with a better answer than this for the seminal question of why health plans need to stay around.
Hint: For just a teeny portion of that huge "surplus" BS of Ca is running as it put my rates up again this year, I can help.
TECH: Accenture slams hand that fed it well in door, and then stamps on it
This title alone had me really chortling — Accenture Slams CRM As Ineffective. Beyond the fact that no one in health care has yet made CRM work, didn’t anyone at Accenture get the slight irony of this, given they made so much money in the late 1990s.
Let me spell it out a bit more clearly. Who is the leader in CRM software (you know, the stuff that’s ineffective?) Why that was Siebel System which basically invented the concept in the mid 1990s. And what did Siebel do with 10% of its pre-IPO stock? Why they gave it to Accenture (then called Andersen Consulting). And why would they do that? Was there any chance that Accenture might just tell all its clients to put in a CRM system and, given the very tight relationship between Accenture and Siebel, might that just have been a Siebel CRM that they put in?
Now they’re telling us that they didn’t work. Not to worry–remember that Andersen got 10% of the company prior to the 1996 IPO. Remember what happened next?
This article suggests that by 2001 Andersen was down to owning only 3%, suggesting that it had sold some 7% of the company over that time. Siebel’s market cap at about $8 a share is now around $4.5bn, but for most of 2000 and 2001 it was worth more than $50bn which means that if they got their timing right Accenture could have walked off with up to $3 or 4 billion in profits on their investment. All in all not bad for something their clients say is ineffective! But they’ll need some more consulting to fix that.
The ultimate joke is that Siebel now has a new CEO. Who? Well it’s George Shaheen, the guy who left Accenture to go to dotcom flame out Webvan at the top of the market….what goes around comes around. But don’t worry — according to the 1996 S-1, Shaheen got 88,000 shares of Siebel stock too, which split 4 times in the next 4 years giving him over 250K shares. So if he got any of that off at a decent number, he did just fine.
POLICY/PHYSICIANS: Medpundit spreads (perhaps legitimate) FUD on P4P
Sydney (Medpundit) is very smart. Much of what she believes is wrong (i.e. I disagree with her), but she’s a great indicator of where the conservative (in both senses of the word) solo doc is, and you can bet your sweet ass that her and her ilk are not happy about the move towards pay for performance. Where she’s sharper than the rest of the tools in her shed is that she realizes that the WaPo series on Medicare is softerning up the local audience (in the Congress) for greater use of P4P in Medicare–a train that is fast leaving the station (and one that I am in general on board).
She doesn’t like it. Go read her piece and assume that this will be the AMA response, cos it will be and more so when there’s real money on the line. And then we’ll see who really controls Medicare payment policy in this country.
