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TECHNOLOGY: Quick clinics as part of the Walmartization of health care

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For some time various people in health care have been talking about the Walmartization of health care. What they are talking about (and you know who you are Mr. Singerman!) is the development of a low cost generic health care service that could deliver primary and walk-up care very cheaply. Well as iHealthbeat reported the other day, it looks like these quick clinics are indeed turning up in large mall stores, but the first ones are appearing in a Target and Club Foods…..although if they’re a success you know the Beast of Bentonville won’t be far behind. What do these clinics do?

Diagnose and treat several common ailments, provide vaccinations and offer cholesterol and blood pressure screenings. Staffed by nurse practitioners, these "MinuteClinics" use clinical guidelines software to help diagnose and treat patients. The $15 million software incorporates established clinical guidelines and notes patients who come to the clinic frequently with the same complaints so they can be referred to a doctor, said Catherine Wisner, director of national operations for MinuteClinic.

There have also been reports of more and more actual surgery happening overseas, particularly in India and Thailand,and the Brits have been sending patients overseas to buy cheap surgery in France and Spain (at a cheaper marginal cost than building more facilities at home).  So are we at the start of a globalization of surgery, in which the easy stuff will be delivered by low-paid staff backed up by smart computers, and the expensive staff will be contracted out to cheap but well-trained foreigners?  Probably not a reality any time soon, but a trend worth watching.

HEALTH PLANS: Wellpoint stock plummet insanity shock horror probe!

So I assume John Garimendi went short on Wellpoint stock last week. The market marked Wellpoint down 7% on the opening on Monday following Friday’s hiccup in the merger process, but it ended down only 4%. I nearly bought some yesterday, but luckily I did not as today it’s down another 7% from roughly $115 last week to $98 now.  So it’s on its way down to the $85 a share it was at when the takeover/merger was announced in November last year.

All of this sounds a little like a typical Wall Street overreaction.  BC Life & Health only accounts for 10% of the California business of Wellpoint. Wellpoint’s 2003 10K (warning: huge file) showed that it had 15 million members nationwide with 6 million of those in California.  So, back of the envelope, if BC Life and Health is 10% of 40%, it’s only 4% of the business.  So it seems to me that they have their day in court and if they lose they prepare to very quickly spin it off, take it out of the merger and sell it.  Business Word) have for a while said that health plan stocks were overvalued–although no one’s been listening to us!  But it’s clear from the Anthem and Wellpoint management team that this merger is going ahead whatever it takes. If Wellpoint was worth $115 a share last week, it’s not worth only $98 with the cash from a sale of BC Life & Health rather than the small business it gets from it.  That doesn’t make logical sense, but then again when die Wall Street ever make logical sense?

I (along with Don Johnson at the

HEALTH PLANS/PHARMA: Politics is all there is….

Sometimes you can sleep safe at night thinking that your elected representatives are going to leave some things alone.  But in the last couple of days it’s become apparent that political motivations are the only motivations left for those in government.  was as good as his word .  Now that’s not as bad as it sounds for the merger as a few years ago California set up a Department of Managed Health Care to regulate HMOs (which for some arcane reason had not been under the insurance commissioner but under the department of Corporations). The Department of Managed Health Care is part of the executive under Arnie the Guvornator, who is of course a Republican and in the pocket of state business interests (or at the least has taken a bunch out of their pockets– but as he says they’re "powerful interests" not "special interests"). So Managed Health Care’s approval, which OKs the sale of Blue Cross’ main health insurance businesses was a shoe-in, after a modest bit of back and forth.  Garimendi only has authority over the smaller Life and Health business which writes short-term indemnity policies and a few life insurance policies.  It can be easily jettisoned, but not before Wall Street had a fit about the ruling and knocked Wellpoint down 7% Monday morning. Given that Garimendi said his decision was final, expect this division to carved out and sold to someone else–there’s too much at stake for the Wellpoint and Anthem leaders to allow this to derail the whole thing. the front page of the New York Times. The Administration argument that has been actively pursued since 2002 is that essentially the FDA makes the best decision possible, hence you shouldn’t be able to sue a manufacturer for a product defect.

The first example is the Wellpoint Anthem merger.  There was a lot of fuss in California about the egregious package given to top executives at Wellpoint, and Democrat john Garimendi the insurance commissioner basically said he would not approve the merger unless Wellpoint paid out over $600m into public programs. And on Friday he

But you could tell exactly what was going to happen by who had power over what, and by what their political affiliation was.  But if you didn’t think that that ruling should have been so politicized (after all this is post-conversion and as part of its original conversion Blue Cross handed mega-billions over to the state for a couple of huge Foundations), you probably wouldn’t have thought that even this Administration would change the better part of a century’s practice and intervene in product liabiliy suits on behalf of big pharma.  But there it is on

Allowing consumers to sue manufacturers would "undermine public health" and interfere with federal regulation of drugs and devices, by encouraging "lay judges and juries to second-guess" experts at the F.D.A., the government said in siding with the maker of a heart pump sued by the widow of a Pennsylvania man. Moreover, it said, if such lawsuits succeed, some good products may be removed from the market, depriving patients of beneficial treatments.

Quite how that reconciles with the ability of the FDA to admit it made a mistake or didn’t have enough information when it first made a decision, I do not know. (Remember Rezulin perhaps?).  But it’s only the Administration’s politics (and the interests of its funders which amount to the same thing) taken to the extreme. And of course it’s not as if we’ve set up a rational system of Socratic dialogue to replace the legal system, we’re just now using the might of the Federal government to attempt to remove access to it from people attacking its friends.   It does make at least TCHB somewhat nostalgic for the days when apparently some decisions in government were made for vaguely commonsense reasons.  But I suppose that era has passed.

W,F&A: Bizarre big fraud in southern California

Totally wacky frauds often pop up in health care, and unnecessary surgery at the recently sold Redding Medical Center was the downfall of Tenet. But I can’t remember a case of healthy people voluntarily undergoing surgery for a bribe, as happened in one facility in Southern California. The surgery clinic’s operators were charged today with bilking more than $97m from insurance companies. Apparently over 5,000 people from all over the country were recruited, took the bribes (which were only between $300 and $1,000), had some surgery and then their insurers were billed through a series of shell companies. Apparently the state laws that demand that claims are paid within 45 days meant that many insurers who didn’t have pre-authorization just paid up when they got the bill.

Funnily enough, I had surgery in early April (also in California) and my insurer which also didn’t require pre-authorization, demanded information from me and from several of my providers several times before it would process the claims. After getting the insurer everything it needed, (including a form it told me it needed but had not yet sent me or asked for!) it started processing the claims last week — that’s nearly 120 days later. Given this fraud, perhaps they had a point?

Hatip to California Healthline for this one.

TECHNOLOGY: The Ten Year Plan — American health care IT goes Stalinist

So following in the footsteps of like-minded Lenninists Stalin and Mao, HHS secretary Tommy Thompson announced a 10 year plan for health technology on Wednesday. Speaking as a Lenninist (or at least someone who agrees that it’s usually better fewer but better) I can now say that I approve of something the Adminstration has done. For the guts of David Brailer’s (the new Health IT Czar–not such a Lenninist title I guess!) speech come several new initiatives–detailed in this article. The associated report has serveral overall reccomendations:

The report identifies four major collaborative goals. With these goals are 12 strategies for advancing and focusing future efforts:

Goal 1: Inform Clinical Practice. This goal centers largely around efforts to bring EHRs directly into clinical practice. Three strategies for realizing this goal are: Strategy 1. Provide incentives for EHR adoption. The transition to safe, more consumer-friendly and regionally integrated care delivery will require shared investments in information tools and changes to current clinical practice. Strategy 2. Reduce risk of EHR investment. Clinicians who purchase EHRs and who attempt to change their clinical practices and office operations face a variety of risks that make this decision unduly challenging. Low-cost support systems that reduce risk, failure, and partial use of EHRs are needed. Strategy 3. Promote EHR diffusion in rural and underserved areas. Practices and hospitals in rural and other underserved areas lag in EHR adoption. Technology transfer and other support efforts are needed to ensure widespread adoption. Strategy 1. Regional collaborations. Local oversight of health information exchange that reflects the needs and goals of a population should be developed. Strategy 2. Develop a national health information network. A set of common intercommunication tools such as mobile authentication, Web services architecture, and security technologies are needed to support data movement that is inexpensive and secure. A national health information network that can provide low-cost and secure data movement is needed, along with a public-private oversight or management function to ensure adherence to public policy objectives. Strategy 3. Coordinate federal health information systems. There is a need for federal health information systems to be interoperable and to exchange data so that federal care delivery, reimbursement, and oversight are more efficient and cost-effective. Federal health information systems will be interoperable and consistent with the national health information network.

Goal 2: Interconnect Clinicians. Interconnecting clinicians will allow information to be portable and to move with consumers from one point of care to another. This will require an interoperable infrastructure to help clinicians get access to critical health care information when their clinical and/or treatment decisions are being made. Three strategies for realizing this goal are:

Goal 3: Personalize Care. Consumer-centric information helps individuals manage their own wellness and assists with their personal health care decisions. Three strategies for realizing this goal are: Strategy 1. Encourage use of Personal Health Records. Consumers are increasingly seeking information about their care as a means of getting better control over their health care experience, and PHRs that provide customized facts and guidance to them are needed. Strategy 2. Enhance informed consumer choice. Consumers should have the ability to select clinicians and institutions based on what they value and the information to guide their choice, including the quality of care providers deliver. Strategy 3. Promote use of telehealth systems. The use of telehealth — remote communication technologies — can provide access to health services for consumers and clinicians in rural and underserved areas.

Goal 4: Improve Population Health. Population health improvement envisions improved capacity for public health monitoring, quality of care measurement and bringing research advances more quickly into medical practice. Three strategies for realizing this goal are: Strategy 1. Unify public health surveillance architectures. An interoperable public health surveillance system is needed that will allow exchange of information, consistent with privacy laws, to better protect against disease. Strategy 2. Streamline quality and health status monitoring. Many different state and local organizations collect subsets of data for specific purposes and use it in different ways. A streamlined quality-monitoring infrastructure that will allow a complete look at quality and other issues in real-time and at the point of care is needed. Strategy 3. Accelerate research and dissemination of evidence. Information tools are needed that can accelerate scientific discoveries and their translation into clinically useful products, applications, and knowledge.

While we can all agree that these are laudable goals, which should have been pushed by the government long ago, the obvious reaction is along the lines of "Show me the money!" In iHealthBeat’s excellent roundup George Isham, chief medical officer for Minnesota-based HealthPartners said the 10-year plan is "awfully ambitious" and will "take a lot of money and a lot of time," but is "needed. I hate to mention it here but the equivalent of what the Brits will spend on their 10 year Health IT plan in US dollars per population is about $100 billion and they are starting from 80% use of ambulatory EMRs by their GPs! And of course if you adjust that spending per capita spending on health care, you’d need to spend more like $250 billion or $25 billion a year. (Brief Editorial: My proposal is that we stop blowing the $25 billion a year we waste on the Drug War and spend it on this instead!)

Now that’s not exactly a fair comparison as American private sector spending on IT is going to be the driving force here, but there is still a need for government funding and pump priming. So what was the atmosphere in DC Wednesday, and are we likely to get that pump priming? For that here’s some comments from the ever wonderful Jane Sarasohn Kahn:

Carolyn Clancy’s (head of AHQR) assertion that, "The framework ROCKS!" was indicative of the level of excitement and passion around Dr. Brailer’s report that, in the words of Secretary Thompson, "launches the decade of health IT."  Dr. Brailer introduced the day by invoking the image of Neil Armstrong walking on the moon (as I was thinking good karma all the while for the other Armstrong of the day, Lance).  The day was full of gravitas lent by Senator Frist and Rep. Nancy Johnson, and Patrick Kennedy had a front-row seat waiting to introduce his legislation for comprehensive electronic health system in ten years’ time.  The morning had the key Federal health care leadership all committing to the plan, from the VA and DoD (both far ahead of the private sector, which you can do with scale and one large purchaser) to AHRQ, the FDA, and the eloquent Elias Zerhouni of NIH.    The afternoon was quite interesting: on the private sector vendor panel, Neal Patterson (Cerner) spoke about railroads and the Federal input on "gauge."  But it was Dan Garrett of CSC who made Mr. Patterson’s blood pressure boil as Garrett waxed lyrically about open standards, with our old friend Neil deCrescenzo of IBM echoing the same.  In fact, open standards are crucial to Dr. Brailer’s vision of interoperability and could be the friction point for moving forward.  But Tommy Thompson wants to take no prisoners in this effort and is very aggressive on the topic of the health IT decade.  Even Mark McClellan of CMS is pushing forward with a Medicare Internet portal in Indiana later this year to roll out nationally after they learn what they need to learn.  And he’s also pushing eRx sooner rather than the MMA mandate suggests.

So keep your eyes on this. After 40 years of activity towards electronic health records the Feds have finally called for the building of a Railroad, and the train may begin to leave the station sooner rather than later….

PBMs: Something old and something new

You may not know this (I admit I didn’t) but there’s a trade association for PBMs called the Pharmaceutical Care Management Association which yesterday was one of the first to come out and laud the Administration’s call for improving the Nation’s Health Care Information Infrastructure. That reminded me of something old and something much more recent about PBMs. I’ve written pretty widely about PBMs in THCB, with the much shorter version being that despite the fact that they have totally failed in their stated mission to keep the lid on drug prices, and for that matter haven’t really done much to advance care management (or "health improvement"), they have made a business out of being decent claims processors and by inserting themselves firmly in the financial dealings between their clients and their "partners" in the pharma world. filed Monday against Caremark:

  No wonder that the biggest PBM, Medco, is starting its first ever PR campaign. There’s no question in my mind that PBMs need to find what we consultants call a new value proposition–but then I’ve been thinking that for a while. What that new value prop is and whether they can get away with doing what they’ve been doing for a while longer while they figure it out is of course up in the air.

It’s interesting that the PBMs are now loudly backing the new health IT initiative (more on that from THCB tomorrow when I hear back from my spies in DC) as the data processing part of their business was indeed launched by the last major change to Medicare. That was the ill-fated Medicare Catastrophic Act which was passed in 1988 and repealed in 1989. One thing that its passage caused was the installation of what ended up being NDC and PCS’ pharma claims and editing transaction systems. So now when you go to the drug store, your claims and co-pay information is right there for the pharmacy tech to read off to you–no, you didn’t notice that happening in the doctor’s office! So it looks like PBMs have decided that the new Medicare "Modernization" Act with its somehow associated IT initiative will do something equally good for its business in the future.

They’d better hope so. Whatever the future holds, their present continues to come under increasing attack. THCB has mentioned before the attempt by large employers to go around the PBMs in negotiating rebates, and several of the bigger PBMs have been settling with trial lawyers and their customers over the extremely opaque nature of their rebate mechanisms. I thought that the plaintiff’s attorney put it rather well in a further lawsuit

The lawsuit says that Caremark keeps discounts from drug makers and pharmacies instead of sharing them with members of the Morrell benefit plan. It says Caremark secretly negotiates rebates for drugs and keeps that money. It also says that the company provides plan members with expensive drugs, instead of cheaper alternatives, to get rebates.

TECHNOLOGY: Are consumer health plan web sites finally taking off? Matt Quinn doubts it!

Interesting blurb on consumer use of health plan web sites from Manhattan Research. Matt Quinn writes:

I haven’t read the whole study, but I feel that it significantly overstates the case: 21.9 million Americans using health plan web sites for anything isn’t critical mass… and significant hurdles (specifically in the area of of organizing and providing access to information) still exist with the vast majority of plan web sites to make them useful for what most consumers want (the ability to make decisions on cost, among other things).

I feel that the principal difference between plan websites today and a couple of years ago is the amount of stuff that they provide for their members. There is a lot more of it on most sites. The jury is still out as to whether the stuff that they are providing is accomplishing any of the goals of e-health: making consumers loyal to their plans, achieving administrative efficiencies by reducing call center volume, making patients healthier, or attracting new employer customers through competitive differentiation (an employer chooses a plan based on its e-health offering vs. strictly on price). Although it’s a managed care organization and not a plan, per se, but Group Health Cooperative is doing many of the above and is actively differentiating with its e-health offering.

Maybe things have radically changed in the couple of months since I was knee deep in this stuff, but I don’t think so.

TECHNOLOGY: Buyer beware when biotech doesn’t live up to its promise

There have been many miracles from biotech but there have also been some rash promises made that haven’t panned out. One of these is featured in this Boston Globe story about Biopure.  Biopure is a company that has been trying to approve and market a substitute blood product. Given the problems with infections in the blood supply and the interest from the military in transportable blood with a long room temperature shelf life,  Biopure’s prospects looked good.   Back in 2001 I heard a stock analyst, who’s name–luckily for him–I’ve forgotten, pitching the stock at a pharma conference. The price was around $25 a share, and when the FDA approved its product Hemopure it was sure to go into the stratosphere.  But the approval never came, and the Street.com ran a series of articles (correctly) forecasting that the approval never would come and the company would run out of cash. Sadly for me, I’d listened to the analyst and bought in before I read the Bears’ version of events.   I keep the few hundred now almost worthless shares in my portfolio to remind me that a) analysts are there to sell stock trades and not tell you reality, and b) that it’s better to take a small loss than a big one! While my minor financial woes are good for a giggle at this distance, Biopure’s story is a salutary reminder that medical miracles are risky and demanding, and that the world of the genome and biotech which promise so much are not certain to deliver in every instance.

BLOGS: Apology to Brian Towell

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Last week I published an article from Industry Veteran responding to an article posted by Brian Towell. On re-reading the Veteran’s piece in a more grounded manner, he went over the line from being rude about Brian’s ideas to being rude about him personally. My aim in THCB is to provide a place where I and others can air strong opinions about the health care marketplace. I welcome contributions from the Veteran and others, and it’s in the nature of this blog that sometimes posts are more like a late night bar conversation than scholarly articles. But there’s enough really bad stuff going on in the world without adding more personal invective. So I apologize to Brian for publishing the Veteran’s piece. I’ll employ a slightly heavier use of my editorial discretion in future and hope that we can now get back to more constructive consideration of the issues.  By the way, Brian’s piece on what pharma has to do about its overall marketing strategy, which is long and thoughtful, is here, and the Veteran will be back doing what he does so well later.

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