So I’ve made it back from vacation. The last story (for a while) from Matt Quinn runs after this one, but I thought I’d give you a quick preview of what I’ve been seeing in news since I came back.

Forbes has an interesting article suggesting that Bristol-Myers Squibb may be emerging from its troubled last 3 years. The ‘Buy’ Case For Bristol-Myers

Via the BCBS Association site, the Wall Street Journal has an article suggesting that if physicians just say sorry, it will lower their risk of being sued for malpractice: More Doctors Apologizing to Patients To Avoid Lawsuits

A mere 4 years after we tried hard to sell Cigna the same thing for way less money (not that I’m bitter of course!), they have struck a deal with WebMD for a new consumer front-end to their web-site. CIGNA Teams with WebMD Health: Agreement to Offer New Online Help So Consumers May Get the Most From Their Health Care Plan

Manhattan Research has a new study out showing that more seniors are getting on line and as the younger seniors and “pre-seniors” are even more “wired”, their use of online services for health care will be even more influential in the future. Why drive when you can surf?

USA Today has an article remarking about how far the gay rights movement has come in 30 years while the “uninsured rights” movement hasn’t got far since 1948! USA Today: Advances in gay rights overtake health policy

There’s also interesting stuff from Health Affairs about medical management, more about Sutter and CalPers, and some interesting stuff about formularies and drug utilization from RAND. All grist for my mill over the coming days.

I’m back from a great trip to the UK and Turkey, and of course have jetlag and so am up at 4 am writing this. Pics will be up at my other blog soon…

Meanwhile many, many thanks to Matt Quinn who produced a great set of postings while I was away. The latest one (today) on physician directed malpractice plans is indeed a gem!

I have a couple of stories from the UK waiting in the wings, and more or less normal service will be resumed tomorrow!

The Boston Globe reports that the largest malpractice insurer in Massachusetts will raise doctors’ premiums 11 percent on July 1. The responses from “outraged” physicians (and insurance company executives) in Massachusetts echo the sentiments of those in Pennsylvania, New Jersey, and other states:

“Doctors and insurance company executives say premiums are rising because juries are awarding these and other patients more money, which also drives up settlement amounts. They are pushing legislation to limit the amount juries can award patients for pain and suffering. Massachusetts doctors want additional changes, including limiting the interest paid on awards. Doctors also want to establish standards for expert witnesses, such as requiring physicians to be actively practicing in the specialty on which they are testifying.”

There is a push for federal and state legislation to limit jury awards because rising premiums are “becoming unaffordable” to some physicians and are driving some specialists to leave the state in search of greater compensation for their services. Combating rising malpractice premiums would be a top priority of the Bush administration if re-elected, according to Mark Breakstone, a Boston malpractice attorney:

“If George Bush is reelected and Republicans…control of the Senate, there will be a full-scale assault on many fronts…Bush has made it clear that medical malpractice is a top priority for him.”

Meanwhile, premiums of another kind continue to rise at a double digit pace, but the response – and those impacted – by this crisis are quite different:

“Health spending is expected to rise well above inflation for years to come. Employers are increasingly passing on the additional costs to their insured workers, causing some workers to opt out, saying they can’t afford it. And, at some workplaces, employers are dropping coverage altogether…If insurance premiums continue to rise about 10% a year, today’s average premium could double in just over seven years. Wages, however, are only expected to grow at about 3% a year.”

While cost shifting and employers who drop coverage because of rising premiums impact the working poor the greatest, more middle class citizens are also feeling pressure:

“19% of those whose household income is $25,000 to $50,000 are among the nation’s 43 million uninsured. The percentage is even higher among those making less than that: 23%. Even those with household incomes exceeding $75,000 saw a rise in the percent uninsured in the last Census Bureau survey.”

However, the Bush administration supports such cost-shifting because it makes consumers more responsible for the care that they receive:

“Such high-deductible policies also are supported by the Bush administration, which sees them as a way to help make consumers more judicious users of health care. Congress, too, gave a nod of approval in the Medicare bill, allowing consumers with certain high-deductible health insurance policies to open tax-free health savings accounts to be used for medical care.”

While I certainly believe that elements of the malpractice system need reform to make it more reliable, any legislation that addresses malpractice should concurrently focus on holding physicians more responsible for the care that they provide. Recent studies have concluded that patients receive appropriate care only about half of the time. Some debatably merit less cases receive large jury awards. A far greater number of patients who receive inappropriate care – and are harmed by that care – never see a dime.

To be consistent, perhaps insurers should begin to develop (and the Bush administration should support) the development of high-deductible “physician-directed” malpractice products that allow physicians to choose “cafeteria-style” their coverage in exchange for lower premiums… or to even go without (as 43 million of their patients do) and pay full price for any charges that they incur.

In stark contrast to last week’s placid shareholder meeting, Tenet’s Shareholder Committee is outraged – OUTRAGED! – at the “endless cycle of scandal” at the hospital chain and has threatened to run an ads in the Wall Street Journal detailing the problems:”We feel that the executives and board members at Tenet who were responsible for these scandals should be held more accountable,” said Shareholder Committee spokesman Paul Brickman.

While I’m not sure why these lingering concerns weren’t aired at Tenet’s Shareholder Meeting, it was encouraging to see demands for substantive change at Tenet.

But not so fast! It appears that the threatened negative PR campaign has less to do with actually fixing Tenet than the efforts of the head of the Shareholder Committee to take advantage of the hospital chain’s weak state to enrich himself on a real-estate deal:

“According to Santa Barbara-based Tenet, (Dr. M. Lee) Pearce (Chairman of the Shareholder’s Committee) had threatened to launch a negative publicity campaign unless Tenet agreed to either lease a medical building he owns at an inflated price or sell him an adjacent Tenet-owned hospital in Fort Lauderdale, Fla., at a discounted price. Tenet executives acknowledged that the Fort Lauderdale hospital could use the extra space, but said Pearce demanded too high a price for the lease and offered too little for the hospital.”

And it appears that there was backstage wrangling at the publicly serene Shareholder’s Meeting:

“Shortly before the company’s annual shareholder meeting, Pearce showed Tenet representatives drafts of four ads disparaging the company and threatened to run them if the company refused to deal…But Tenet said before the annual meeting that Pearce threatened to “run a new series of attack advertisements” and “made it clear that the ads would not run and the Tenet Shareholder Committee would cease its activities if Tenet agreed to his demands.”

But Pearce (through his lawyer Jeff Villwock) denies that this is a shakedown:

“They’ve tried very hard to cast this like this is some sort of extortion,” he said. “But it simply ignores the fact that … they came to us, and we’ve been delaying being public [with criticism] at their request for a couple of months. At some point you have to say let’s decide if you really want to do this. If not, great.”

With shareholders like these, who needs competition!

According to an article in the SF Chronicle, the epic battle over hospital charges between CalPERS and Sutter, the state’s largest purchaser of health care and the biggest hospital chain in Northern California, respectively, is a conflict that demonstrates the major power shift that has taken place between those who pay for health care and those who provide it.

While in the past large purchasers held much clout in negotiating rates, even the largest have been unable to control costs. Despite reducing the number of HMOs it offers from 14 in 1997 to three,CalPERS’ HMO premiums have still increased 57 percent during the past three years: “The pension fund’s wrath used to be directed at health insurers. Now it has turned toward doctors and hospitals -and most specifically Sutter Health.” It doesn’t help that Sutter (CalPERS claims) has rates 60-80% higher than comparable hospitals.

But even Sean Harrigan, the president of CalPERS’ 13-member board, CalPERS admits that – in the world after managed care – it has far less “hand” to negotiate successfully:

“We really don’t have the kind of bargaining clout we once enjoyed…There’s been so much consolidation on the provider side, especially among hospitals, that they are in many cases an oligopoly…They believe they don’t have to seriously bargain over price.”

And hospital leaders, in retribution for the tactics that big payers used in the past, aren’t planning to slow the rising cost of care:

“Any schoolyard bully knows if you push somebody hard enough, they’re going to go pump iron and come back and deck ’em.”

So where does this leave employers who provide health coverage for their employees? In my guess, paying double digit annual premium increases indefinitely… until the system breaks and/or until consumers revolt as a result of their employers shifting a greater and greater share of expenses (in exchange for less and less coverage) to them.

Quick PS from Matthew: In 1994 (!) Ellen Morrison at IFTF and I had a big argument about whether payers would win out in this struggle or whether providers would face them down. Ignoring my clearly reasononed logic Ellen wrote a report called The Consolidation of Providers in the Six Americas which essentially forecast that provder consolidation would at least equal the power of managed care and purchasers within 5-7 years. Of course she was right and we’re dealing with the failure of the last decade of purchaser “power”.

The LA Times reports that, in opposition to last year’s meeting, the mood was “calm” at Tenet’s annual shareholder meeting.

There were so few issues to discuss that, in sharp contract to last year’s “raucous showdown” with shareholders, Tenet Chairman Edward Kangas adjourned the meeting in just under an hour after answering only two questions. It seems that Tenet’s leadership is claiming that is has solved all of the company’s myriad problems in the nine months since the last meeting:

“We were struggling in the aftermath of the company’s failed pricing strategy and its many other problems,” said Trevor Fetter, who at the time had been acting chief executive for less than two months. “It’s remarkable isn’t it?…There were a lot of people angry about a lot of things, and we, one by one, checked things off the list.”

So…apart from two perfunctory questions (one about margins in comparison to HCA and another about the stock price), all of Tenet’s problems have been “checked off the list”.

Revenue to replace improper Medicare billing scheme – solved.

Culture of executive entitlement – solved.

Huge losses – solved.

New federal investigations – solved.

Hospital divestiture – solved

Allegations of unnecessary heart procedures – solved

I could go on, but what’s the point. Everything is hunky-dory. (Reading from “talking points”:) Problems all in past; turning corner; future bright. And – evidently – shareholders at the meeting were buying it. Or maybe they were just high at the time.

A new model of specialty hospital is emerging to cherry-pick the most profitable patients from community hospitals. A group of physicians and investors has proposed building a surgical hospital in Loma Linda, California, specializing in cardiovascular and orthopedic procedures, a move critics say is intended to “cherry-pick well-insured patients needing expensive procedures,” the Los Angeles Times reports. But – by including a one bed emergency room – the proposed hospital will not be officially classified as a specialty hospital.

While the California Healthcare Association and community hospitals in the area view the motives behind the new hospital as deleterious to hospitals that must serve a broader segment of patients and procedures and “not serving the community… there to serve a segment of the community that will make their investors wealthy,” the spokesman for the proposed hospital’s investors holds a different view:

“We are not trying to be rebels. We are trying something new. This can be a model for the whole country” (Martin, Los Angeles Times, 4/26).

I assume that the country that this model of hospital will serve is one in which patients only need expensive heart and sports medicine procedures…. and hardly anyone shows up at the ER. Or perhaps the model he is referring to is one that is designed to maximize physician compensation at the detriment of public health and community access to care. You decide.

After the – alleged – Medicare fraud at HealthSouth, Tenet, Medco, et. al… the government has held the CEO of an organization that defrauded Medicare personally responsible:

According to AIS Health, Guy Roland Seaton, the CEO of a California subacute hospital and nursing home was sentenced to 78 months in prison for bilking Medicare by overstating nursing salaries at his facility by almost $3 million.

It seems that the nursing home used fabricated time cards and phony payroll reports to inflate Medicare charges for nursing salaries:

“A St. Luke’s employee created false time cards and payroll reports from 1996 to 1999. For example, Seaton allegedly told an employee to create phony nursing logs and nursing schedules for April 1996 and February 1997. When the Medicare fiscal intermediary, Mutual of Omaha, got a whiff that something was amiss in nursing salary reimbursement, it planned an audit. In anticipation of the 1999 audit, a St. Luke’s employee assembled a binder full of false nursing schedules and then gave it to FI auditors, the indictment says.”

While it is clear that the CEO of St. Luke’s had a direct role in the fraud, it is heartening to see that prosecutors didn’t accept the “I’m the CEO and didn’t know about the actions of a few rogue employees” so commonly used in this day and age.

While the dollar amount in this case pales in comparison to the – alleged – amounts that the other companies have been accused of defrauding the government, one can only hope that prosecutors hold corporate heads responsible for the behavior of their low-level employees (versus the other way around). But I wouldn’t hold my breath.