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TCHB NOTICE: Vacation time a-coming

Over the next two weeks I’ll be visiting my folks in the UK, and sunning myself on the beaches of Turkey, with hopefully the opportunity to get in a little ruin visiting and paragliding at Olu Deniz. I’ll be checking in very occasionally but in my absence you should see a lot from regular contributor Matt Quinn, who has very kindly offered to carry the load. Several other of my regular correspondents who you may know and love (or in some cases know and hate!) have also graciously offered to pen a piece now and again. So I’m very hopeful that this mostly solo effort will be very interesting in my absence. If you are interested in contributing a piece please email Angela Kang, who is shouldering the admin load of THCB.

And of course, while I’m gone please continue to check out the great med and health care bloggers whom I recognize in the listing to the right.

Take care and try to behave while I’m not watching! And if you really are bored, my vacation snaps should be appearing over at my personal blog.

QUALITY/MALPRACTICE: Change malpractice system to patient safety system, say Pfizer doc

It’s not that often that I agree with Mike Magee, the doctor who’s Health Politics is funded by Pfizer and tends to reflect big pharma’s viewpoints. But in his latest piece called The Road from Medical Malpractice to Safety: You Can’t Get There from Here, he lays out a convincing argument that the malpractice system directly impedes the goals of the patient safety movement. He states the core of this problem very succintly here:

    The American malpractice system, embedded in personal injury law, fundamentally undermines the patient safety movement. A head-to-head comparison tells the story. The tort system uses litigation as its lever for change. The safety movement uses quality improvement analysis. Tort law focuses on the individual. Safety focuses on the process. The tort system’s punitive and adversarial style drives information down, encouraging secrecy. The safety movement uses a non-punitive and collaborative approach, which encourages openness, transparency, and continuous improvement. With tort law, exposing oneself can end one’s career and harm one’s mental health. In the safety movement, contributing is career-enhancing and therapeutic. It may seem counterintuitive, but for medical malpractice to achieve its stated social purpose it must abandon the emphasis on a tort-based approach and embrace safety.

This has the massive implication that organized medicine’s proposed reforms to the medical malpractice system, particularly their desire for limits on pain and suffering awards, are irrelevant and counter-productive. Instead, the system needs to be replaced with a regulatory structure focused on patient safety. And by no means would that be a difficult transition for just the lawyers. It would be even more of a challenge for doctors, who would have to end what Mike Millenson has called “The Silence” of professional courtesy and expose themselves and their colleagues’ decisions to public review.

The AMA and the rest of organized medicine need to take the lead here, get off their high horse about the malpractice issue, and while they have a very sympathetic (i.e. Republican) Congress, develop some real bipartisan consensus on replacing the current tort system with a legally mandated patient safety system. That system will need real teeth to assure the public that it’s not biased in favor of physicians and providers. And of course we need a neutral public education campaign about why such a system is required; reason number one being that most malpractice currently goes on unimpeded, and this system will stop that.

HEALTH PLANS: As you may have guessed CDHP = Cost shifting

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So when I told TCHB readers about Harris’ forecast for the year a few months back, it sounded like employers were confused by the consumer-directed health plan (CDHP) hype but somehow believed that it gave them a way out of paying for first dollar coverage, and was, following the death of managed care, the next big thing in terms of saving them money. My suspicion was that employers would try to slowly move employees to HRA/HSA based high-deductible health plans, and then gradually over time–particularly if the CHDPs didn’t produce their initially savings– gradually stop funding the HRA/HSA. This would be same thing as essentially only covering catastrophic insurance for their employees. Of course that essentially means reducing their benefits.

Well the latest KFF/Mercer poll, as reported in USA Today (hat tip to Don Mccane) suggests that in forecasting that this might be a gradual phenomenon, I actually gave employers too much credit (or too little depending on your viewpoint). The report says:

    Mercer’s survey of 991 employers found that 61% would set the individual annual deductible for an HSA plan at $1,000. But 17% chose $1,500, 11% said $2,000 and 10% were above $2,000. Don’t expect employers to pay that deductible: The Mercer study also found that 39% would not put any money into the savings accounts for workers, while 24% would put in $500 a year, leaving it up to the workers to fund the rest.

In other words, the CDHP translates into direct cost shifting. When you parse the press release from Mercer (access to the survey itself is coming later), it looks like the employers, who are interested in CHDPs with a high deductible plan, are looking at it as an alternative to asking employees to pay up to 50% of the premium for a normal plan. (There’s also a lot of high-fallooting rhetoric about providing a savings plan vehicle for employees to use for health spending in their retirement years, but I don’t think any employees are really buying the notion that employers will care about them in their retirement).

    Nearly half of large employers (48%) say that a likely motivation for offering an HSA would be to provide a savings vehicle for post-retirement medical coverage. Interestingly, significant portions of both those employers who currently offer retiree medical coverage and those who do not say they are interested in this use of HSAs (53% of retiree plan sponsors and 40% of non-sponsors). More than one-fourth of employers (26%) say they would offer the plan to provide a more affordable medical plan option for employees.

In fact, I think that Mercer (which is after all selling something) is a little too gung-ho about the ability that employers will have to force CDHP and their associated costs easily onto employees. The John Gabel study in Health Affairs a few weeks back suggested that the CDHP would have a modest impact. However, it’s clear that the cost-shifting direction is set, and that health care as an automatic employee benefit is at risk in the future.

The “free-marketers” behind the HSA movement, and their opponents who believe in some kind of community-rated tax-based social insurance system, will both take cheer from the apparent demise of the employer-based health insurance system. Both sides of that argument would like to see greater visibility to the tax-payer and/or the consumer as to what all this health care they are consuming actually costs. Employer-funded third party payment (of which Medicare is an extension, by the way) has been the cause of both healthcare cost inflation, the continued existence of the uninsured and all kinds of ridiculous anomalies and inefficiencies in the market-place. When health care is regarded as a freebie provided as a part of employment, all kind of bad things result. So theoretically the employee should be happy because they have for 50 years been giving up income in lieu of their health benefits–one reason that real wages in the US have been flat for 30 years.

But, and this is a major but, there is one set of actors here who severely disagree. To repeat a poll taken last year which I described here, when offered the choice 71% of employees wanted a combination of “health coverage & lower salary” compared to only 24% wanting a “higher salary & no health coverage”. In other words, health benefits as a part of employment are very popular amongst employees.

So if employers are going to try to cut benefits severely (and let’s face it they are unlikely to be adding increased wages in their stead) you can expect to see some very grumpy employees over the coming years. And even American corporations don’t necessarily want to make their employees that unhappy when it only saves them a modest amount of their payroll costs. So I think that Gabel is right and that the way this trend will play out is by no means automatic.

QUALITY/PHARMA: A response to the obesity question

Leonard Soloniuk, MD had this to say about my recent post on the obesity issue:

    I have seen the assertion that obesity is not a health problem in several different contexts, but Paul Campos appears to be quite flamboyant in his arguments. There seem to be several issues here including the utility of BMI is categorizing people at risk. The whole question of the efficacy of interventions is also subject to question.

    One of the reasons Campos’s arguments are worth considering is the recent history of the abuse of science and epidemiology in the pursuit of political goals. Examples would be the HIV epidemic and the medicalization of handgun restrictions. In these cases, interpretations of data have been distorted to fit predetermined policy goals. Thus,
    when the usual suspects (e.g. the CDC, JAMA, etc.) declare a new health crisis, skepticism is in order.

    There are a number of issues that need clarification in this debate: What is the role of BMI? Is body fat a better predictor and a better secondary outcome to follow? What are the true risks for mildly overweight patients? Which interventions lead to improved outcomes.

    However, it is difficult to take seriously an attack on Americans, ascribing to them the need to discriminate. This seriously lessens his credibility for all of his arguments. And that’s unfortunate, because a reasoned analysis of this issue would be quite welcome

I’m inclined to agree with with Leonard that the generic attack on Americans as “wanting to discriminate” is simply not helpful to serious discsussion of this topic, even if there is 200+ years of history showing way more discrimination in the US than we’d like. However, you can make an argument that handgun wounds showing up in emergency rooms constitute, or at least cause, a health crisis (morbidity and mortality in young inner-city men) even if the initial study of the article was clearly politically motivated. So we should not be ready as Leonard to dismiss the CDC/JAMA “establishment” and their views on obesity just because (for instance) as NRA members we didn’t like their views on gun control. (I’m more confused by Leonard’s critique of the CDC’s actions around HIV, but maybe he’ll enlighten me).

However, Leonard does get to the right set of questions, when he asks whether BMI, body fat percentage or anything else really matters, and what the outcomes for overweight people truly are. These clearly require more study with real data rather than emotion amongst the medical community, and I suspect there is emotion on both sides–as there clearly is in Campos’ views.

As a non-medical healthcare blogger, I’m though asking a slightly different question which is, “will these opinions become mainstream” and if so “will that change the way healthcare services (including drugs) are used?” And if you don’t think that psycho-social changes in attitudes to health can change service provisions in health care you might want to take a look at this article about how the Atkins low-carb diet fad has revolutionized the restuarant and food business. (Arrgghh. Can”t find the NY Times article I read last night so here’s one about the chain Ruby Tuesday’s profit rise on the back of their low carb menu).

HOPSITALS: Market shrugs off $117m Tenet loss

Well it looks like Sheryl Skolnick, an analyst with Fulcrum Global Partners, who decided that Tenet was worth a break-up value of $9.40 a share was about half-right. That number was the bottom a few months back when various suckers (i.e. me) threw in their hands too early. Yesterday Tenet said that it would lose $117M in the first quarter. Wall Street has decided that with around $9 as a base for the stock price, it’s more likely than not that Tenet will get over its legal problems, have only better quarters from now on, and have enough cash to survive this current crisis. The stock is back up close to $12. Obvioulsy you be the judge and caveat emptor.

There’s much more in this article in AMA News, including this quote blaming Wall Street for expecting too much from hospitals, again from Sheryl Skolnick:

    “The hospitals simply can’t generate the year-after-year earnings that Wall Street wants,” she said. “I think Wall Street has to realize that these are real estate based, highly regulated businesses.”

The quote reminds me of one of the first (and what I immodestly think is one of the best) articles I wrote at TCHB, called Why Wall Street Hates Health Care Services, But Doesn’t Know It.

PBMs: Medco settles state complaints, but pretty cheaply

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Medco today settled its ongoing lawsuit with several state attorneys-general at the relatively modest cost of $30m. The stock rose slightly on the news, although there is an another ongoing Federal lawsuit, that TCHB has covered before. While this looks like a kind of business as usual story of “company gests caught with hand in taxpayer cookie jar, company pays fine, stock goes up as investors are happy fine isn’t bigger”, some of my more jaded readers have been poking into the details. Matt Quinn writes about a different Medco settlement with Massachusetts:

    Maybe I’m missing something, but it appears that Medco only had to pay back part of what it stole from the state of Mass:

    “Medco Health Solutions will pay Massachusetts $5.5 million to settle allegations that the company cheated the state while it managed prescription drug benefits for nearly 200,000 state employees and retirees, according to documents expected to be filed in US District Court today.”

    “Over the course of the contract, Medco passed along about $9 million in rebates, but kept another $10 million, the state alleges.” So, steal $10, pay back $5.5… Not a bad deal.

    And, of course, this plot to make Medco millions of dollars was dreamt up and executed by a few “rogue employees”:
    “Medco officials have acknowledged that the company had isolated problems with “rogue employees” at a mail-order pharmacy in Tampa, but said those problems were quickly corrected and did not affect drug costs.”

Of course this is nothing to the “business opportunities” those PBMs and their rogue employees will be looking at when they get to run the Medicare drug program after 2006.

I suspect the lawyers, state AGs and the DOJ have jobs for life.

HEALTH PLANS: UnitedHealth to buy Oxford for $4.9 Bln

So three days after Wellchoice (the Old Empire BCBS) decides that it won’t buy Oxford Health plans, a bigger fish steps in. UnitedHealth decided to buy it instead for $4.9 Bln, which is roughly the price Wellchoice had agreed to pay. In some ways this make more sense and in some ways it makes less, and it reflects how the game has changed for health plans . Oxford gives United greater presence in the north-east and it gives it greater access to the Medicare HMO market, which was Oxford’s original strength. Now that the PDIMA Act is funneling more money to Medicare plans, it makes sense for United to want to grab its share. However, back in the day (i.e. before 2001) the goal of managed care plans was regional market concetration, so that they could grind local providers down on price by developing what Ian Morrison used to call “virtual single payer” capability in each market. It looked like Wellchoice was still going that route when it decided to buy Oxford , but decided that it was about to adopt a 90s strategy in a Zero’s world, and thought better of it. This encouraged analysts at Bank of America who gave Oxford a sell rating, based on its likely poor profit outlook. They won’t look quite so smart today to any of their clients who took them up on their advice!

As an aside. It’s good to see that the sanctity of Wall Street remains inviolate. Reuters reported at 4.11pm that United was going to buy Oxford, but looking at the day’s chart, you figure that the word got out about 40 minutes earlier! I wonder how that was possible?

TECHNOLOGY: A hint that not all is well with Boston Scientific’s Taxus stent

I’ve noted the incredible new success of Boston Scientific’s Taxus stent several times in THCB. Taxus is moving from factory to artery as fast as it can be pushed off the production line. However, the New York Times reports that the FDA is looking into some stories of problems with the stent in its first month. The lead quote criticizing Taxus is from Dr William Campbell at Borgess Medical Center in Kalamazoo. While I’m sure the problems they have seen with Taxus are real, it’s worth noting that Campbell’s colleague Dr. Tim Fischell basically invented the rival Cypher stent (see the last line of this press release)and their program is funded by its manufacturer, J&J’s Cordis unit.

The number of problems with Taxus quoted thus far are very small and probably not indicative of anything, as the NY Times quoted one cardiologist:

    “I would not be alarmed by a few reports,” Dr. Hodgson said. “Those same things have happened with previous generations of stents and balloons.”

But do not doubt that there is a huge battle for supremacy here in a very large and growing market , and the impact of these reports will be felt as the marketing machines pushing these rivals go to work.

QUALITY/PHARMA: Is the anti-obesity movement a con job?

Fascinating article extracted in The Guardian from a new book from Paul Campos suggests that obesity is not a health problem. Well worth reading the article, but basically he suggests that while fitness and excercise have some impact on health outcomes, in general people with a Body-Mass Index (BMI) in the “recommended range” don’t do any better and in some cases do worse than those who are above that range. In fact it’s better to be overweight by several pounds than underweight by a few. Additionally the desire to reduce BMI suggests that people who become thinner have the same health outcomes as those who were thin all along, and although there have never been studies to support this (because you can’t get fat people to stay thin long enough) the evidence suggests that it’s not true. Further, the “propaganda” causes health problems by encouraging yo-yo dieting and poor body image, particularly amongst young white women. This leads of course to the serious medical and psychological consequences of eating disorders.

I’m not sure I know enough to be convinced of his arguments, but of course the treament of obesity is big business and getting bigger for the pharmaceutical industry. Campos lays at least some of the blame for the acceptance of the argument that “obesity is a disease that needs treatment” at their door. The rest he ascribes to the desires of Americans to discriminate, and now that civil rights and political correctness have taken away the ability to aim that discrimination at ethnic minorities, obese people are an easy target.

So basically I can have that bacon sandwich so long as I go to the gym. But on an industry level this conversation about what to do about obesity has serious implications for physicians and pharmaceutical manufacturers. And if the answer is not to worry about reducing obesity per se, that has some profound implications for how we may treat some of our biggest disease classes–diabetes and cardio-vascular disease–in the future. We are very quick to go to the pill when “diet and excercise” hasn’t worked. But what if, even if the pill works in reducing obesity, it doesn’t in improving outcomes?

HEALTH PLANS/HOSPITALS: Quick left-coast round-up

The California Health Care Foundation released a report a few weeks back showing that medical groups are losing their clout to hospitals. Meanwhile, over the last few years hospitals have been exercising their new found clout against the plans, and now it appears that the end-payers (such as CalPERS) are not going to take it lying down. Matt Quinn wrote about the battle between CalPERS and Sutter (the big N. Cal Chain) in TCHB last week. This week legislation was introduced in the California assembly to stop provider systems from being allowed to force health plans to contract with every hospital in their network. Whether this meddling in the market will stand up to further legal scrutiny is open to question, or at least it should put some fear into WalMart (or anyone else who uses market clout to get a better deal)!

By the end of the week it appears that CalPERS is stepping back from the brink, but the market power of hospitals is only increasing as we head into the baby-boom golden age in the next decade, so don’t expect this story to be over too soon.