Above the Fold

Tenet quickie: another arrest!

A mid-level executive from a Tenet hospital in San Diego was indicted yesterday, joining her boss who’s already in hot water for setting up a $10 million kickback scheme to generate patient referrals. This reminds me a little of when the dark stuff hit the fan over at Columbia/HCA.  A bunch of local execs and hospital administrators went to jail. CEO Rick Scott never even got charged, although at the very least his management style created an atmosphere in which upcoding and Medicare fraud could flourish.  Whether Tenet can stem the bleeding from the recent scandals remains to be seen. However, ex-CEO Barbakow must be somewhat concerned that, as opposed to the good old days of 1997 when Scott was kicked out of Columbia, the American public and its DAs now know the words Enron, Adelphia and Global Crossing.

Quality Quickie: Better educated nurses make the hospital safer?

Linda Aitken has been the leading academic looking at nursing professionals in the US for several years. (Ed O’Neill has been her opposite number on the physician side).  Aitken’s latest research is going to put the cat amongst the pigeons and maybe have a major impact. Both the abstract and some more detailed press reports (like this one that interviews Aitken) suggest that hospitals that have a greater proportion of better educated nurses have better mortality rates.  And the differences are significant both statisitically and in real life; up to 5% improvement in 30 day mortality for a 10% increase in the number of nurses with bachelor degrees.  All other features of the hospitals were corrected for, so the only difference was whether the nurse had a 2 year degree or a 4+ year degree. While representatives of 2 year nursing courses criticized the methodology, Aitken is no dummy and JAMA is no throwaway mag, so it carries the burden of proof.

So if a shift from a ratio of 50-50 to 55-45 in nursing mix (based on education) leads to a 5% decrease in mortality, how long before the lawyers/quality advocates start coming after hospitals that employ a large proportion of nurses holding only Associates degrees? You know that if a drug came out that improved mortality in the inpatient setting by 5% over a competitor, it would be adopted like a shot. The proof is in the uptake of TPA over Streptokinase 10 years ago when TPA decreased mortality only 0.2% better (see this post).  And if such a  move is made, who will end up paying for it given that we have a nursing shortage already?

Technical Note: RSS Feed & thanks to other HC bloggers

With help from fellow Bloggers–and a slightly more aggressive effort at understanding Blogger’s not always crystal-clear help function– I think I have an RSS feed up and running here. There’s a little RSS icon in the right sidebar that links to it as well.  I’m not quite sure how it gets picked up by the RSS aggregators but hopefully someone will tell me what happens next!

The Bloggers who helped are  Steve Hoffman who runs Product Management for Medscape (now part of WebMD), Enoch Choi, a doc at the Palo Alto Medical Foundation and Graham Walker a very new medical student (3 Weeks into it!) at Stanford, who’s also been a policy wonk over at Physicians for a National Health Plan. All have interesting sites (linked to their names) so go check ’em out. Oh, and thanks guys!

Thanks also to Elke Cisco, who’s given me some template help after a cry for help I put out on craigslist and won’t let me pay her!  This being the Internet, 3 of these people live less than 30 miles from me, but of course we’ve never met!

Technical Note:RSS

I’ve been asked by a few readers to provide an RSS feed.  I’ve tried without success to do this using Blogger.  Can anyone who knows more about Blogger than me do me a favor and walk me through the steps? Please email me if you can help! Thanks.

Got the Blues? WellPoint keeps growing, so does Anthem

Yesterday the shareholders of the Wisconsin Blue Cross plan, Cobalt, OKed the WellPoint Merger originally announced back in June.  So Wellpoint keeps growing.  It now has Blue Cross of California, Missouri, Wisconsin and several other national products.  Anthem–originally Blue Cross of Indiana–now has Indiana, Ohio, Kentucky, much of the North-east including New Hampshire, Maine & Connecticut, Virginia (Trigon) and Colorado (which includes Nevada).  Meanwhile Regence in the northwest now has Utah, Oregon, Idaho, and one of the Washington Blues.  (Washington state is the Bosnia of the Blues with lots of little plans). 

Many of the rest of the big Blues have gone or are going for-profit, leaving them more open to takeovers such as Trigon’s by Anthem. For instance, Empire Blue Cross (in New York City) is now owned by Wellchoice, which operates plans in neighboring states like New Jersey. The process of these for-profit conversions (Wellpoint) or demutualizations (Anthem, Trigon), have not been without their problems. Carefirst (the nearly former Blues of Maryland & Washington DC) has experienced massive problems since the failure of its attempt to go for-profit and sell out to Wellpoint. Surprise, surprise the problems were associated with a too low price offered to the State/Foundation and sky high incentive payments to the Carefirst board. However, several smaller plans like Premera in Washington state, are still going for-profit.

The acquisition strategies of Anthem and Wellpoint demonstrate that health insurance is a local product. Instead of growing organically or trying to bring in new products, they’ve mostly been buying lookalike organizations that have big market share. Big market share equates to more power in negotiations with providers, although that’s less effective than it was a few years back (see this post).

Certainly Wellpoint’s historical stock performance shows a fourfold increase in market cap over 10 years–so financially it’s been a success even though much of that is due to health insurers being at the top of the underwriting cycle and will get worse in the next few years. Plus there are several very rich Foundations (such as California Endowment) which are doing good works with the money they made from the non-profit conversions.

I know this will produce squeals from the traditionalists, but I’ve always felt that  the non-profit Blues plans act just like for-profit plans. In fact at one meeting presenting to a senior management team at a very big non-profit Blue, I went around the table asking for people’s issues and interests. The CEO replied "Money".  So as the Foundations are spending far more money on good works than are the non-profit Blues, I don’t see a real reason why these accidents of history shouldn’t just become like other insurance companies.   However, given the complications of transition and the bad name of for-profit in health care (Anyone for Tenet?), the few remaining non-profit big guys (BS of California, Highmark in Pennsylvania, Illinois & Texas, and the biggest of all BC of Michigan) are probably staying that way.

Health care IT spend up sharply

iHealthbeat (reg rqd) put me onto this Information week article which says that health care organizations report that their spending on IT has gone from 2.7% of revenues to 3.3% in the past year. That’s a pretty big jump of over 20%.  Several of the interviewees in the article say their spending has gone up by more than 30%.  This includes some huge IDNs like Caregroups in Boston, and Sutter in California.  Although they’re not quoted in the article, a similar huge effort is underway at Kaiser. For many years it’s been trotted out by consultants like me that healthcare only spends 1-2% of its revenues on IT whereas financial service companies spend 5-10%.  So the question becomes, is this jump just brought upon by fear of HIPAA or is there a real transformation going on?

Medicaid–a bleak picture gets bleaker

It’s remarkable how badly most health care observers understand Medicaid. But once you understand Medicaid, it’s less remarkable, because it’s so darned complicated! Many people think that Medicaid covers the poor and uninsured.  In fact it covers some sub-segments of the poor, but most of the working poor are not covered, and access to Medicaid has become more difficult for those who have been moved off the welfare rolls in the  late 1990s. Nonetheless, the Kaiser FF Commission on Medicaid & the Uninsured reported this week that costs have gone up but benefits have gone down, mostly because of the fall off in revenues at the state level.  And this will get worse — we’ve noticed that particularly out here in California where the recent budget deal included a further 5% cut in rates to Medi-Cal providers which has caused anguish on the political left.

In the last 15 years Medicaid has been responsible for taking on many millions of poorer Americans who would otherwise have had no coverage.  So without Medicaid expansion in the 1990s uninsurance rates would be much higher today, mostly because of the fall-off in employer-provided insurance (see this post).  This expansion of the Medicaid rolls was mostly among the AFDC population (poor moms with kids) in the early 1990s and mostly children only in the late 1990s, as part of the SCHIP expansion of health insurance for kids.  It’s hard to work out how many people are on Medicaid because the numbers go up and down all the time, and there is double counting with Medicare.  When I was researching this in the late 1990s, my estimate was that roughly 10% of the population (28-30 million people) were using Medicaid as their primary insurer. (the disabled and elderly tend to end up in the Medicare numbers). That number held steady until the year 2000, but now some 35 million adults and kids are in Medicaid.  Most of this growth has come from the kids insurance programs created by SCHIP, but the number of adults in the program has also been growing at 10% annually.  These are adults who have been crammed back down into welfare-type poverty levels in the current recession, even though they may not be on welfare itself.

Medicaid also covers many of the disabled and seniors in nursing homes who have "spent down"–i.e. have no money left. Medicaid also pays into Medicare to cover part B premiums and drugs for a group called the "dual-eligibles".  In fact the fate of the dual-eligibles is one of the many wrinkles that’s holding up the Medicare bill in Congress now. There are about 4 million elderly and 7 million disabled getting benefits from Medicaid, although most of these are also in Medicare.

The final wrinkle in Medicaid is the disproportionate share (DSH–pronounced "DiSH") payments that go to hospitals with a high proportion of uncompensated care and/or Medicaid patients.  These are usually big inner city teaching hospitals or county hospitals, and this is one of a number of subsidies they get–direct support from Medicare for training residents is another. DSH is evidence of the political clout of these big facilities, and of the fact that it’s hard for Medicaid recipients and the uninsured to get care at other facilities.

The costs of the program, while rising for all, are mostly spent on the elderly ($61 bn) and the disabled ($84 bn). The kids are a bargain at $36bn and the adults are only $25 billion.  DHS payments were about $15 billion in 2002 . Altogether, this leaves a Medicaid program which in 2002 spent over $200 billion for the first time.  (Medicare is $254 bn).

Reforming Medicaid is a nightmare and always has been. No-one understands it, the states use it as a way to extract money from the Feds, and the covered population is transient, hard to manage, doesn’t vote and so has little political clout. For national scale providers and pharma companies there are 50 different programs to deal with.  Under any rational system the care for the elderly and disabled would be split off, and the moms and kids would be added to some kind of universal insurance scheme.  Well that’s not going to happen any time soon. With the Medicare bill stuck in Congress, no comprehensive Medicaid reform will happen this side of 2005. So expect more pain in the provider world and much more experimentation in the purchasing world, including expanding the power of the state to extract discounts like MaineRX, as the states try to get a handle on spending.

Cronkite sued: A view into the underbelly of drug marketing

The headline says Drug ads row snares Cronkite.  Walter Cronkite remains the most trusted source of news among senior Americans.  According to his version of events, he thought that he had signed a contract to make educational programs about new treatments, and later found out via the New York Times that the company he’d signed up for made promotional infomercials,  sponsored by drug companies. So Cronkite is being sued by the marketing company for pulling out.

However, this isn’t the first controversy about what’s educational promotion and what’s hucksterism.  Several articles like this one and this one examine celebrities not revealing that they are being paid to promote drugs in medical segments on shows like The Early Show, 48 Hours and CNN. Some networks actually produced a code of practice about this last year.

Of course there are similar controversies about the way that pharmaceutical companies promote to physicians. A Harris poll earlier this year showed that this isn’t  a big concern for too many patients yet, although 55% believe that drug company marketing to doctors is either "a little" or "much" "too aggressive." What is clear is that the very sophisticated and not always transparent ways that pharma companies use to market their product will be used as a weapon to bash them when they oppose re-importation, collective buying by state programs, or even (take a deep breath here, pharma folks) price controls.

Employer-based health insurance is dissolving quite fast

A newer study based on Bureau of Labor Statistics finds an acceleration in a trend that’s been going on for a long time.  Fewer employees are getting health insurance from their employer. The Boston Globe reports that:

The study found 45 percent of US employees have health insurance at work, down from 63 percent in 1993……Walter Marshall, a bureau economist in the Boston office, called the drop in nationwide coverage "dramatic." But he warned the data may overstate the trend, in part because of coverage shifts within two-income families. Well there are many families in which everyone gets covered via the one family member with health insurance at work, but frequently that means paying a big share towards that coverage.  This goes along with the trend from defined benefit to defined contribution . As we used to say at Harris, "get less, pay more." One other thing we used to notice at Harris–dissatisfaction with health plans and services was highly correlated with out-of-pocket costs.

The trend to lower health insurance rates used to be concentrated among the lower paid.  Back in 2001 the Commonwealth Fund reported that 45% of those without health insurance from their employers earned less than $10 an hour. But the emergence of health care as a political issue in 1991 came as regular middle-class Americans found that they were getting access to care that looked more like care for poorer people (i.e. less and more expensive access). Well watch this space.  Most people are paying more for less insurance and those losing coverage are being forced into the individual "market"–which often means no coverage.  At the same time the Commonwealth Fund also reports that drug coverage for new retirees fell in 1995-2000 from 45% to less than 40% (down from 49% to 40% for male retirees.)

Health care hasn’t raised its head as a national political issue yet aside from the Medicare drug coverage debate/bills.  But if the drug coverage issue gets connected with the overall mess of the insurance market, it could be a sleeper issue.