The Health Care Blog – Page 1268 – Everything you always wanted to know about the Health Care system. But were afraid to ask.

Above the Fold

POLICY: Oh Canada

Nov 11, 2003• 23

This article is about Canada’s health system and its relationship to the US health policy debate. It is not meant to be an endorsement of Canada’s system, or an endorsement of single payer for the US. From my personal point of view, while I think serious health care reform is unlikely in the next few years in the US, some foreign models of health insurance are very useful for the US debate. But the combined local/employer insurance systems seen in Japan, Germany and Holland provide a more likely and familiar model for the US, than the Canadian or UK single-payer systems. However, this article isn’t about what might happen here or which system is better. This article is about the distortions that are frequently heard in the US, and in Canada for that matter, about the Canadian system. It’s also a lot longer than the average post, such as my recent post on Canada, Steffi and Ken, and you can download it as a separate document here if you want to print it out and savor/criticize it over a cup of coffee.

This article is dedicated to the amazing Medpundit. Despite the fact that I disagree with a huge percentage of what she says, Sydney Smith manages to cover virtually all of health care and medicine in her excellent blog, while writing book reviews, keeping up a full time solo family practice, and claiming that she’s not posting as much as she used to. Her article on Canadian physician emigration and the vigorous support she got from her commenters finally got me to get off the dime and put in my several cents worth.

Before I jump into this it’s worth noting that some of the differences between these health care systems are cultural. There have been several interesting descriptions of the international variations in medical practices. In one great book written in the 1980s, The Painful Prescription, Aaron and Schwartz describe rationing of hospital care in Europe and the UK compared to the US. For instance they pointed out that in the UK kidney dialysis was not used at nearly the levels among the elderly as it was in the US (or in fact in Europe). So they concluded that care was rationed and as a direct consequence people died. (If you have ESRD and don’t get treatment eventually your kidneys shut down and you die). However, many other commentators, including Lynn Payer in her book Medicine and Culture which is very well described by Humphrey Taylor from Harris, have shown fairly conclusively that many cultures just regard "care" in a different way. In that sense the dialysis-use figures could be seen as the aggrandizement of hundreds of decisions not to over-tax elderly patients with a long and difficult treatment that wouldn’t help their quality of life, even as it extended it slightly. Indeed, it’s equally cultural relative to accuse Americans of "over-care" by doing CABGs on 95 year olds who are soon going to die anyway. So while you’re reading the rest of this article you need to bear in mind that some of the differences that are ascribed to policy are due to culture. Having said that; many are not.

Before we start, recall that Canada has a single payer in each province that provides uniform health insurance to all its citizens. To provide that care it contracts directly and exclusively with physicians and hospitals, who remain largely autonomous but have no other customers. The US in contrast has a mixed-private-public system for which the government provides about half the money. Insurance is only universal for those over 65, and roughly 14% of the population has no insurance coverage, with very varying levels of coverage for the rest–mostly coming through employers. The latest comparable numbers have the US spending roughly 14% of GDP on health care while that number is around 11% in Canada. So at a macro level, the Canadians pay less as a share of their income to cover more of their people. (In fact as its GDP per capita is lower than America’s Canada spends considerably less per citizen). While single-payer advocates tout those numbers, many critics claim that Canada rations care, and that both patients and physicians are leaving Canada to give and receive care that’s not available at home.

Given that, it’s worth looking at two main aspects of the Canadian system that frequently come up for criticism. How are patients doing? What’s going on with physicians? And are they really all leaving the Great White North to escape its health care system?

The Patient Experience

It’s simplistic and true to say that Canadians have free access to basic health care. Americans have varied access based mostly on insurance. And it’s accepted that, as a corollary, all Canadians have less access to high-technology health care than do most Americans, However, googling around the web you’ll find indications that 18% of Canadians cannot get access to first contact care, (although only 10% have had trouble getting routine day time care). Still even 10% lacking access to care isn’t nothing, especially in a universal insurance system. Luckily the Commonwealth Fund has over the years funded my old colleagues at Harris and Harvard, led by Bob Blendon, to do several studies over the years about these issues. They asked consumers’ views in several countries, but we’ll concentrate on Canada and the US. (Note: When you open a link that is a powerpoint slide, hit the page down button as there might be 2 or 3 slides in that one link)

System satisfaction: Canadians were very happy with their system in the late 1980s but were much less happy by 1998 and also in 2001, after a period of funding reduction. But they are still happier than Americans, or at least only 18% want to completely rebuild the system, as opposed to over 28% of Americans. (The 2003 American number is over 30%–I don’t have the latest Canadian numbers, but they have been spending increasingly more and their incoming PM has promised to maintain that level. So as satisfaction went down due to less money you can expect that level to increase when there’s more. It’s also worth noting that the Canadians saved the rest of their economy some money, while during the large boom in the US in the 1990s, the health care sector stayed steady as a share of GDP.

Access to care: In terms of actually getting care and accessing doctors, both Americans and Canadians felt access was about the same. But in terms of access to care, by 2001 26% of Canadians thought it was getting worse, and only 6% getting better. 20% of Americans thought their access was getting worse too, but 17% thought it was getting better.

But then we get to some of the key issues. In Canada for elective surgery you have to wait; two thirds of Americans can get it within a month. Most Canadians have to wait more than a month and more than 25% have waited more than 4 months. No one waits that long in the US (presumably so long as they can qualify for coverage).

Costs matter: But in the US costs really matter. Over a quarter of Americans had out-of-pocket costs of over $1,000, compared to less than 5% of Canadians. Americans were two to five times more likely than Canadians to have an access problem due to cost, such as not getting a needed drug or not seeing a doctor. And when you look at those with below average incomes, in Canada only 9% failed to get recommended follow up care due to cost. In the US, over one third did not. More than a quarter of Americans (26%)–including 39% of those with below average incomes–didn’t fill a prescription because of costs, more than twice the number than in Canada. 21% of Americans have problems paying medical bills compared to only 5% in Canada, and that goes for 35% of Americans with below average incomes. So on a macro level it’s true that nationally Canadians sacrifice getting access to expensive resources (such as MRIs and surgeons). But in turn they don’t have to put up with the individual cost issues that are a problem for many Americans, especially the poorer ones.

If you look at the same type of indicators amongst those who are sick in similar study (also from Blendon’s group) they are virtually all the same, with problems of access to specialty care and hospitals in Canada matched by access problems due to cost being 2-3 times worse for the sick in the US. Here are the sources for the full charts for the "healthys" and the "sick".

The impatient inpatient: This is where the arguments get anecdotal, and little ridiculous. I never understand, for instance, why American small business owners who have to buy insurance in the world’s most dysfunctional market complain so much about the prospect of Canadian-style health care. In 1993 I talked to a Rotary Club where, before I even got my international comparisons slide out, the small business owners in the room came after me with the classic anti-Canadian argument that goes something like "When he needed care the Prime Minister of Alberta/Nova Scotia/Yukon Territory/Canada came down to the US". There has always been an extremely limited number of Canadians getting new high-tech care in the US that isn’t available in Canada, almost always paid for by their province. However this has been transposed into the argument that thousands of Canadians are flooding across the border to get care that is unavailable at home. There is even the very occasional and underfilled patient bus trip coming down to get prescriptions and treatments unavailable in Canada, of course massively outnumbered by the buses taking Americans to buy cheaper drugs up north.

While the argument about Canadians flooding south to get medical care withheld from them up north is widely heard, it’s bullshit. Yup, lots of Canadians get care in the US, but that’s because, due to the better weather, the higher incomes, going to college or that NAFTA thing, they eitherlive here, or are on vacation in Florida to escape that terrible winter. Work done by a team led by Steve Katz at University of Michigan with the Evans/Barer/Cardiff team at UBC which looked into this in obsessive detail found essentially no evidence of Canadians crossing the border to get care. (Incidentally plenty of Americans are still going up there for non-covered surgery like laser corrective eye surgery, which is cheaper and just as good up north). In fact according to Canadian insurers there appears to be no interest amongst Canadian consumers in commercial insurance products to cover care abroad, other than standard holiday cover. Note that this is not the case in the UK, where private insurance allows about 10% of Brits to jump the queue to get surgery in a private hospital. So it looks like the Canadians accept the fact that they have to wait for surgery, and not surprisingly don’t want to come down here to pay for it out of pocket.

The Grumpy Doctors

As mentioned earlier, I started working on this article partly because Sydney Smith over at Medpundit wrote a piece saying essentially that Canadian doctors felt that their system sucked, they all wanted to move to the US and that many of them already had–leading to a doctor shortage in Canada. She concluded:

And why are Canadian physicians leaving their patients in the lurch? Not for the money. They leave for better research opportunities, for greater professional and clinical autonomy, better job choices, and better medical facilities. They leave, in other words, for all the advantages conferred by a free-market healthcare system–the same advantages that we American physicians take for granted when we yearn for a Canadian-style system. We should look to Canada, all right, but not as a role model. We should look to them instead as a warning. There but for the grace of God–and a strong independent streak–go we.

Before we look more at the emigration factor, again it’s worth looking at a relatively recent study by the Harvard team. In 2000 they asked a set of questions to doctors in the same five (English-speaking nations) nations where they surveyed patients in 1998 and 2001. It was indeed true that doctors in Canada were pretty miserable, and you certainly can trawl the Internet and easily find grumpy Canadian doctors, and many anecdotal stories of them leaving for the good life in the US. In the Harvard study, Canadian doctors did believe that their ability to provide quality care had got worse in the last five years, but only slightly more Canadian doctors believed this (59% v 56% for generalists and 67% v 60% for specialists) than did Americans. And Canadians were only slightly more pessimistic that the quality of care would decline (61% v 54%) in the future. But when asked about major problems in their practice, compared to Americans they were one-third less likely to regard external review of clinical decisions to control costs as a problem (13% v 36%), and less than one-half as likely to see limitations on drugs they could prescribe (18% v 43%), or to be concerned that their patients couldn’t afford necessary prescription drugs (17% v 48%). These of course are the typical hassles that make up the drudgery of a physician’s daily practice. The real concerns of Canadian physicians compared to Americans were, of course, limitations on specialist referrals (66% v 29%) and access to hospital care (64% v 8%) for their patients.

Then things get really interesting. When asked, more directly if their actual patients often lacked access to newest drugs or medical technology only 26% of Canadian doctors said so–roughly the same as the 27% of Americans. And when asked if their patients get sicker because they are not able to get the health care they need, instead of the high numbers you might expect, only 12% of Canadian doctors said so, as opposed to 18% of Americans. So it appears that Canadian physicians think that by and large that Canadian patients do actually get the care they need, or if they don’t, it seems not to impact their health.

Then when asked about their satisfaction with their own practice 72% were very or somewhat satisfied compared to 68% of Americans. And when you ask the classic three Harris questions about satisfaction with the system and the need for reform, Canadian docs are much less likely to want "complete rebuilding" (4% vs 12%), and similarly much more likely (25% vs 16%) to think that their system "works well." Here is the full physician chart set.

There’s no question that Canadian doctors are less happy than they were, but that’s more to do with the funding (and pay) cuts they saw over the previous decade (which were a symptom of the Canadian government getting its health care spending under control) than anything fundamentally wrong with the system.

The dissatisfied disappearing physician. But what about all those Canadian doctors fleeing the country? Well let’s first look at why they are fleeing. There are several Canadian researchers or specialists in the US taking advantage of bigger budgets for their research, or training in something Canada leaves to its bigger, richer neighbor. A 1994 survey of Canadian physicians living in the United States found that postgraduate training in the United States was associated with subsequent emigration–in other words they went there, they liked it and stayed or went back later. Other reasons for staying in the US included professional/clinical autonomy, availability of medical facilities and jobs, and remuneration, although this last factor was curiously considered equally important by Canada-based docs as a reason for staying behind. (They clearly hadn’t asked their émigré colleagues what they were making!)

Now we’re starting to get somewhere. Just as Canada takes advantage of America’s over abundance of facilities to buy high-tech services for its patients on the margin (usually before it later adopts them in its own facilities) it also does the same for doctors who want to work in highly-specialized cutting edge technology areas. As in many other industries, the opportunities to do the coolest stuff tend to be here in the States. For an example, look to this somewhat tongue-in-cheek debate between Robert Califf, a Duke cardiologist and a Canadian colleague David Naylor which asked if American cardiac care is better than Canadian care?

By now you know the answer. If as a patient or a cardiologist you make it to Duke (or another high-end American institution), you find quicker access to more expensive technologies.

Califf noted that Americans experienced "differences in mortality over time largely because of the difference in the rate of revascularization between the countries" Conversely, "simply stated, for people with heart disease, the US offers greater access, better technology, and greater creativity in solving clinical problems," Califf said. "There’s no question when you look at the systems, the US has better access to cardiologists, better access to technology-not because as cardiologists you’re not smart enough to use it, you’re just not allowed to use it when you want to-and very rapid access to new technologies."

But then he admitted some more interesting nuggets

Yes, we cost more to the patient, and we have problems with prescription drugs, but in the category of respect for cardiovascular practitioners, there’s no question who gets more respect, and if you want to make more money, just move south"

His debating partner, Dr David Naylor responded that:

Revascularization may provide a mortality advantage. From a broader population perspective, though, these differences are unlikely to change the fact that in overall survival after the age of 65, Canadians come out ahead of the US. "The US does of course come out ahead in what is spent," he added, roughly double that spent in Canada on care of the elderly

In the last part of what was a pretty funny debate for a bunch of dry heart docs, Califf got rather serious and actually came over as a fan of the Canadian system but felt that it just needed more money:

"I would submit that the US is going to have to become more like Canada in terms of its healthcare system, because there’s no other solution in sight, but I would also submit that if you don’t ratchet up your expenditures on healthcare with the demographic that you and we share, you’re going to be facing an even more explosive situation than you currently have."

However part of what he said in jest is true. It is logical for Canadian doctors who need no additional qualifications to work in the US to go south for another reason. It pays better; much better! Canadian physician incomes averaged about C$135,000, and even surgical specialists get only about C$180,000. In the US specialists in groups averaged somewhere between $150,000 and $350,000, primary care around $150,000–and don’t forget that Canadian dollars are worth 1/3 less than their American namesakes! In fact this chart of international physician incomes shows that virtually any doctor would be better off moving to the US. (Actually FYI Japanese doctors make more than Americans). So when Medpundit says that Canadian doctors are coming here in droves, you can’t exactly blame them. Only one little thing is a bit strange; they are not!

The brave folks from UBC led again by my old colleagues Morris Barer and Bob Evans, as reported in this issue brief called The myth of Canadian physician emigration, show that although roughly 500 doctors a year are leaving to the US, somewhere between 250 and 300 were coming back the other way, and that the deficit was more than made up of other doctors immigrating to Canada–mostly Brits who thought that Canadian pay scales were pretty good compared to what they got at home! Even at its greatest extent Canada was losing 1.4% gross of its physicians and more than making it up through returning Canadians and importing foreigners. And even though Canada has fewer docs per head than the US (2.1 per 1,000 v 2.6) it has more than the UK or Japan (1.7 & 1.6) so these numbers are not significant either as a share of all doctors or proportionally to the population. It is worth pointing out that the other 99% of Canadian doctors didn’t believe that doubling their salary was enough to compensate for the associated unpleasantness of having to move to the US!

Conclusion: There are No Easy Answers

My primary objective in writing this piece is not to deride the good work done by those on all sides of this issue. Instead it’s to show that while looking at international comparisons is valuable, it’s not OK to look on the surface and ignore the many complexities underneath that surface. Worse it’s totally dishonest to take "facts" out of context or tell blatant lies–but there’s no tax on lying.

Health systems everywhere are under financial strain–always have been and always will be. Canada certainly limits access to high technology and specialists by limiting investment in them upstream. The US does not, but citizens living in Canada are very unlikely to run into severe financial trouble because of their health–not so here. Meanwhile, poorer Canadians have a roughly comparable experience with their medical system as do other Canadians. Poor Americans certainly do not enjoy the benefits of their system as much as their richer compatriots. You might also have a sneaking suspicion that as their health system is more popular with Canadians than with their doctors (while the opposite is true in the US) perhaps the Canadian system is actually run in favor of the consumers rather than the producers of health care!

There are certainly cultural differences between Americans and Canadians, as Michael Moore pointed out in Bowling For Columbine. But there are also structural ones that are creations of policy. We are heading into a period of policy discussion again, and inevitably the Canadian system will come up in the conversation. It would be nice if that conversation was based somewhat in reality.

POLICY: State budget crunches are real

Nov 10, 2003

Just in case you thought that state budget deficits caused by the ruinous Bush deficit/ending of the Clinton bubble (delete where applicable to suit your political taste) were somewhat academic, read this report on Colorado’s decision to remove legal immigrants from Medicaid eligibility.

I strive to be neutral in this blog, but on this issue I’m very biased. I’m a US citizen now, but I was a legal immigrant for many years. The only difference between being a green card holder and a citizen is that you can’t vote or do jury duty. Importantly you still pay the same taxes as every one else and presumably these Medicaid patients did too. It also looks that some workaround will be discovered to pay for their care, maybe. However, aside from the politics, the fact that the state is desperate enough to consider putting some 150 elderly nursing home residents out on the street, shows that this crisis in funding is real.

TECHNOLOGY: Patient-Physician email–Is it or is it not a “good thing”?

Nov 10, 2003

Two studies from Oregon, one from Kaiser Northwest and the other from Regence (Oregon Blues) contradict each other about patient physician email. You can see more either at iHealthbeat or from the Portland Business Journal (reg reqd for both). In the Regence case they found that the emails took longer than calls and increased follow up visits. At Kaiser they found that emails were shorter and averted some visits. More interestingly both studies showed that about 3 in 10 patients used email in these pilot programs. Although the reports say that’s small, I think it’s a big number that will get bigger. After all, think how email spread in other situations like in business and family settings.

However, the folks at Today in e-Health Business who have the good line into Forrester Research add that:

Forrester Research has found that 65% of patients who visited their physician’s Web site did so to use it to bypass the office receptionist, choosing to look up administrative details such as office hours. Additionally, one-third said they use the site as a credible source for researching general health and medication information, finds Forrester’s Consumer Technographics Q3 2003 North American Study. According to the study, 30% of physician Web site visitors renew prescriptions online. At more sophisticated physician Web sites, the study found, 13% of visitors report reviewing or paying bills, and 11% are viewing their medical records online.

No surprises here. At the moment people want to use email to get around phone tag more than they want to fundamentally change their relationship with their doctor. Online consultations, and other more advanced uses of asynchronous technology, will take a while–and of course for them to spread someone has to work out who pays!

Note: This is yet another of those topics where I have a larger post brewing in my "draft" folder. If anyone has examples or information about patient-physician email to add, please email me!

TECHNOLOGY: My, does Trizetto have a good PR firm!

Nov 10, 2003• 1

Jeff Margolis, the former wunderkind CIO of the HMO world, is now CEO of Trizetto. As this somewhat fawning piece in the business section of the NY Times explains, Trizetto has grown to be a $300m revenue company, providing administrative IT outsourcing for health plans. Far be it from me to suggest that there was anything missing from this piece, and I do have admiration for anyone who can grow that big a company in under ten years; however, it might not have tested the NYT’s Melinda Ligos’ investigative powers too much to do the odd Google search and let the casual reader know a few other things about Trizetto.

For instance, while Trizetto may have been growing its revenue since 1998, it’s still managed to lose huge amounts of money over that time, and only just made its first profit. It’s lost over $280m in the last three years alone. Now that includes some fake losses (presumably write-downs from acquisitions) but even so, stripping out those write-downs, it looks like Trizetto lost $30m on $90m revenue from operations in 2000, made less than $3m on $218m in 2001 and made $13m on $265m revenue in 2002. However, these numbers are indeterminate because so much was written off that it’s impossible to tell accurately what was going on. The past quarter they made an official profit in terms of GAAP of just under $1m, although they guided down their revenues for the future. Still, you’ve got to wonder how well they would have done over time if they hadn’t been lucky enough to get out in the eHealth IPO window of 2000, and have a big reserve of cash to sit on.

Even more interestingly, there was no mention of the huge spike in Trizetto’s stock price immediately after its IPO which priced at $9 in 1999 but was up at over $80 at the height of the bubble in March 2000. If you had bought in then (as one reader who did lamented to me) you’d have seen your money drop by over 95% over three years. OK that may not be Trizetto’s fault alone, but the event that started the plunge was a very wierd announcement that they were going to take over IMS Health, the much bigger health care data company. That may not have been the best strategic move that Margolis ever made, although they ended up getting the Erisco unit from IMS as part of the deal.

I assume that Trizetto’s customers are happy and that the company will go onto be a big player. But the average NYT reader might want to know a little more about its background than Jeff Margolis’ health problems and that he used to hold company meetings in a local phone booth.

POLICY: Medicare competition as a political football.

Nov 10, 2003

The New York Times points out a couple of things about the Medicare bill negotiations in this article, Competition Causes Widest Split Over Medicare. These issues won’t be strangers to those reading TheJeanneScottLetter, whether or not you were sent there by me.

Here’s the short-hand. The House bill introduces the notion that Medicare needs to compete with private plans, rather then allowing them as an option under Medicare+Choice as now. In order to give this some teeth, it looks like premium cost-sharing, based on income, is emerging from the current Senate-House negotiations. The Democrats led by Ted Kennedy see the long term outcome of this being Medicare as welfare, with only some people getting a flat payment (defined contribution) to spend as a voucher amongst competing plans. Unstated is the Democrats belief that the private plans would skim the healthier and wealthier from the public plan, which would be left with those who couldn’t "trade up" to join the private plans, and that traditional Medicare would be forced to cut services, and would eventually go broke.

That’s as maybe. When Medicare Risk plans were growing in the early 90s they were able to make money getting 95% of the average cost of a recipient in the local area for each member they signed up, and usually they got people to sign up by offering them free insurance for drugs with no extra premiums. Several reports at the time suggested that plans were signing up healthier patients than average, and thus were skimming (duh!). However, at some point even those patients got sick and more importantly payments were not put up in line with medical costs. The result was that benefits were cut within the Medicare Risk plans, and then many private plans pulled out of Medicare risk altogether. The percentage of Medicare enrollees in managed care plans went from 10% in 1995 to 18% 2000 but fell to 13% in 2003 (all January numbers, for more see the CMS site here).

What this tells me is that the government can pass regulations that can change health plan behavior in terms of its recruitment and profitability. So if a benevolent HIPAA administrator was sent down from Mars to run a neutral system in which there were private and public plans competing and incentives were designed to be even, it is possible that a mixed system could work. It might even improve the efficiency and quality of care delivery.

But this is politics and that’s not going to happen. Note that the House bill which includes the privatization thrust only passed by one vote, while the Senate bill had broader approval among Democrats. Bush will soon have to make a call as to whether it’s more important to shore up his support amongst conservative Republicans in the House, or whether it’s worth using his eroding political clout to have them cave on that, in order to be able to campaign as the President who passed Medicare drug coverage. If he does and if Medicare Reform passes including real competition between Medicare and private plans, watch out for a large battle in the years to come as this concept moves into reality. But realistically that’s looking less and less likely.

Up date: Harris Interactive’s latest poll shows that there’s a slight uptick in support for the Democrats on the health care issue with a plurality favoring the Dems 35% to 20%, although they don’t think it’s big enough for the Dems to be happy. Interestingly, among the over-65s who matter most in health care politics, it’s ony 36%-30% in favor of the Dems.

TECHNOLOGY: More on technology, handhelds and synchronization

Nov 7, 2003

I’m still under the cosh on some other projects, so while you are waiting on my pearls of wisdom you should check out the interesting articles in this compendium from Modern Physician/PWC’s survey on technology use among physicians. Then go look at iHealthbeat, where Robert Mittman has another interesting Technology Forecast on synchronization technology, which is an underlying background requirement for the mobile world we are heading into. Much more on physicians and PDA use coming from me, but not this week!

PHARMA: Is it Nature or Nurture?

Nov 6, 2003

Remember the movie Trading Places when two rich old men put Dan Akroyd into the gutter and take Eddie Murphy out of it to figure out whether it’s nature or nurture that affects people’s outcomes? Well there’s an equivalent going on in the Pharma industry right now. In this article, Fred Hassan’s Clean House, Forbes reports that almost all Schering-Plough’s management team have now followed him over from Pharmacia. You may recall that Hassan went to Schering when he had a bit of free time on his hands, having very successfully sold Pharmacia to Pfizer for $58 billion in 2001. But you might also recall that at Pharmacia, Hassan had good drugs like the blockbuster Celebrex, Bextra , and some strong therapeutic franchise’s elsewhere.

Now the whole team is over at Schering they’ll see whether they can make a success of going from the penthouse to the gutter (relatively speaking of course!). Schering isn’t quite out of revenue or products but it will be nowhere near as easy a management job for this team as they had at Pharmacia. It reminds me a little of the Dilbert cartoon when the pointy haired boss announces to Dilbert and colleagues that "We always say that people are our most valuable asset, but I just did an audit and found that money is our most valuable asset–people came in 9th." Now Hassan and his team can prove that it is people not blockbuster product that can move the stock price.

Oh, and in Trading Places Eddie Murphy shone in the penthouse and Dan Akroyd (initially) fell to pieces in the gutter, showing that nurture or environment or, in pharma terms, product was the determining factor!

INDUSTRY: New HealthSouth management blames Scrushy

Nov 6, 2003

I know that you’re tired of hearing about it and I promise that this will be the last article I ever write about Healthsouth–but I couldn’t let go the little fact that, surprise, surprise, the new management that’s been in charge of Healthsouth–since the scandal broke earlier this year and they kicked out newly-indicted Richard Scrushy–says that it’s all his fault.

(Lucky this isn’t a video-blog so you didn’t notice me typing this with one hand, as the other had my fingers crossed behind my back).

PHARMA: A little more info on Crestor

Nov 5, 2003• 1

There’s a little more info about the adverse events with Crestor, in a report called What’s the Matter with Crestor? from Friedman, Billings, Ramsey & Co Research. (I couldn’t find a way to get the report without opening a brokerage account!).

The research suggests so far that Crestor is not doing as well in the marketplace as was expected, and is being outpaced by Schering & Merck’s non-statin, LDL-lowering drug Zetia, which can be taken in addition to statins or by itself, and is useful for at least the 5% of population that cannot tolerate statins. The report says

Data indicate that thus far, Crestor’s launch has been significantly slower than that of Zetia, a non-statin cholesterol-lowering drug, comparing total script volumes at similar times after launch. This is underscored by the fact that two recent comparator weeks for Zetia include the Christmas and New Years holidays, weeks that are typically slow for prescription volumes, and surprisingly, Zetia is still exceeding Crestor on an absolute basis. Crestor also lags Zetia in NRx market share, according to prescription audit data, holding 2.22% NRx share compared to Zetia’s 2.65% at similar periods in the launch trajectory, a better comparison than total prescriptions in our view, because it is less dependent on the absolute size of the market.

Translation for non-pharma folks is that Crestor hasn’t taken up as well as it might have done. Meanwhile the report also goes onto to confirm some of the issues around safety. You’ll recall that Public Citizen, and The Lancet have been bringing this issue to the forefront.

According to the Medicines and Healthcare Products Regulatory Agency in the U.K., there have been 41 reports reflecting 45 muscular reactions associated with Crestor use. Of those reports, 35 were associated with the 10mg dose of the product, and notably, 3 of the reactions involved moderately increased levels of Creatine Phosphokinase (219-436 IU/L), according to data from the agency. Based on our research, normal Creatine Phosphokinase levels are in the 30-170 IU/L range and elevations associated with severe rhabdomyolysis are typically in the 35,000 IU/L range and up. The U.K. agency cautions that suspected adverse reactions are not necessarily caused by the drug and may relate to other factors such as underlying illnesses or other medicines; however, we believe that the early reports of muscle-related adverse events at the most common starting dose are notable.

I repeat that I am not a scientist or physician and have little understanding of the seriousness of these findings. However, 35 of 45 muscle problems were reported on the 10mg dose– 1/4 of the dose that concerned The Lancet, and there were three reports of increased Creatine Phosphokinase which is a precursor to rhabdomyolysis. The question is whether the medical community views this as minor or whether they perceive that these very initial results are indicators of more trouble to come.

DSM/TECHNOLOGY: Is DSM going the way of the PBM? (mostly) by Matt Quinn

Nov 5, 2003

From THCB’s disease management office, Matt Quinn passed this little morsel my way. Apparently disease management is now so effective that employers, payers and traditional providers are increasingly unwilling to pay extra for guarantees that DSM works. Traditionally DSM companies have charged extra to guarantee performance, and then have been prepared to share risk–paying back some of the cost if the services didn’t save money on care of those patients in the DSM program. Now they are so effective that they just don’t need that extra revenue any more. As Matt writes:

Essentially, LifeMasters and American Healthways (AH) are arguing that (in exchange for having no stake in whether their programs work or not) they can charge lower rates for their services. And managed care companies are so confident in the power of disease management that they’re willing to save a few dollars in exchange for alleviating disease management companies from any risk. AH’s three largest customers (representing about 70% of the company’s revenue) are all "essentially risk-free for AH from the standpoint of clinical and financial performance." That these contracts are all in excess of five years in length raises the possibility that a plan could pound money down the proverbial rathole for years – and get little or nothing in return.

Now Matt may be being overly cynical about this, but consider Lifemasters’ CEO Cristobel Selecky’s statement "I think what everybody has come to realize is that after several years of doing financial measures, there’s a recognition that it’s very hard to do, and you never end up with any one right answer". There seems to me to be a kernel of truth in her words, if not in her intent. Selecky could be interpreted as saying that, no-one knows what the heck DSM is supposed to be doing as part of the wider medical care process, so no-one can agree on whether it’s saving money or not, so customers are not prepared to pay extra to get rid of a risk that they can’t quantify or control. That’s more or less what happened with the few at-risk contracts that the PBMs signed in the 1990s. They are in general back in the business of processing claims for money. Matt thinks DSM will end up like "managed care"–looking like just another FFS plan–as a result, with a consequent (lack of) impact on costs:

Perhaps this represents the next step back from the risk-sharing philosophy (in financial contracting) that helped allow managed care companies to reduce the rate of increase of medical costs in the 90’s. I find it difficult to believe that–with little or no "skin" in the game–AH or LifeMasters (or your friendly neighborhood medical group for that matter) will work as hard to meet clinical or financial goals. And how much did premiums increase this year?

Maybe DSM works so well that it’s logically being "carved-in" to standard medical processes, and AH and Lifemasters and the rest are on their way to becoming extremely specialized call centers. However, this may all be a consequence of the fact that earlier this year AH had to pay a customer back $14m for not achieving goals in its DSM program–goals that AH later claimed couldn’t be verified anyway. (Interesting that they signed a contract to perform to goals that they knew they couldn’t measure!) Perhaps the DSM folks realize that its easier to just provide a service rather than be responsible for a defined piece of care, and that it’s called "going at risk" for a reason.