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POLICY: California docs ambivalent about SB2

The poor CMA apparently can’t get it right. It finally gets a quasi-universal insurance bill passed in California that should reduce the number of uninsured showing up at the doctor’s office and yet a bunch of its members (like the LA and San Diego Medical Societies) have noticed that they might have to buy insurance for their employees when the bill becomes law.  So of course the squawking has begun. 

But the math skills of the southern Cal docs may be lacking. Lets say that 25% of their patients are uninsured (which is about the ratio down there). Presumably if that number fell dramamtically, many of the uninsured they are treating will now be insured, and so will be paying so revenues will go up–presumably by up to 25%.  Costs may rise as the office staff need insurance, but insurance does not cost more than 10-12% of payroll. So they should come out ahead. 

And of course if they bothered to read the fine print they might notice that SB2 doesn’t apply to employers with less than 50 employees, and not many solo or small group practices have that many.

PHARMA: Price controls and foreign imports–European style

Although drug prices are generally set by the government in Europe, there is significant price variation between different countries.  Savvy European entrepreneurs have therefore gone to wholesalers in the cheapers countries (like Greece) and imported drugs to be resold to pharmacists. As you might expect the drug companies are not happy about this importing of cheaper drugs (sound familiar to my North American readers?) and have successfully gone to court to enable themselves to limit their sales to wholesalers in any country to enough for that country only. Now the EU is calling on national licensing associations to make it easier for these traders that exploit price differences to buy and sell in new markets.  To American pharmas and patients dismayed (for different reasons) at the overall lower prices outside the US, this might all seem like a storm in a teacup, but it does go to show that these days maintaining high prices for drugs is not easy.

POLICY: France faces health budget crunch

Just to follow up on the news from the UK last week, there’s a report out from the French government suggesting that they might both charge more for prescriptions and increase the payroll tax that supports health care.  The government’s fear is that it may end up with a yearly deficit of 29 billion Euros (apprx. $35 bill) by 2010.  France is supposed to be keeping its budget deficit to a specified amount as part of a wider EU agreement (although neither it nor Germany has managed that so far!) and health care accounts for 20% of the overall deficit. 

In France drugs account for more than 20% of health care spending (compared to less than 10% in the US) and so reducing Rx consumption is a likely target of cost cutting.  Incidentally the only place that uses more prescription drugs per capita than France is Japan, where doctors traditionally make most of their incomes dispensing drugs–a little like oncologists in the US, who are now finding that source of income being switched off.

TECHNOLOGY: Pew reports on wired Californians

(…and I don’t mean because of too many espressos)

Pew reports that poorer Californians use the Internet at high rates. For households with less than $30,000 in annual income 45% of Californians have Internet access versus 36% nationally, and  of those, 83% have searched for online health info versus 77% nationally.  This gives backing to some private data I have from Harris that indicates that poorer Americans who have Internet access are substituting looking online for physician visits.

If you have an online strategy you might think about what you can do for this underserved group.

QUALITY QUICKIE: Letter from England, (with UPDATE Tues)

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UPDATE: Don Johnson and I are having a friendly spat about the real cost of health care in Europe and another about the uninsured in the new comments section of The Business Word.  I hope that Don keeps support for his comments section up and that you’ll join me in commenting there. (I’m barely able to keep my blogging up, so no comments here for a while yet).

I’ve been in the UK for a few days and thought that it would be appropriate to give you some impressions of what I’ve been hearing about the state of health care over here. One of the most noticeable factors is that we’re not in France. The BBC reported last night that the French health service was about to have a doctors’ and pharmacists’ strike because of threats to reduce government finance of the system there.  The BBC reported with some incredulity that any French person can get any operation they like any time for free, but did point out that the French pay 30% more overall for their system, and that (stop me if you’ve heard this tune before) costs were going up faster than the economy can afford it, etc, etc.

The UK is also increasing its rate of health expenditure from what used to be a very miserly 5.5% of GDP on the way to 7-ish%.  In some ways they are having capacity constraints, with the result that some GP positions in London are vacant, and some patients are being sent to France for surgery to reduce waiting lists.  That’s possible because these days funding for primary (including Rx) and secondary care is organized via Primary Care Trusts (PCTs) which buy (or "commission" in New Labour-speak) hospital services from Trust Hospitals.  Although this might seem like the basis of a competitive market, in fact a PCT tends to cover virtually all the residents of one town, and the hospitals they purchase from usually have a catchment area that’s about the same size as the PCT.  In other words there’s more or less a single buyer (that looks something like a staff-model HMO) and a single seller (the local tertiary care hospital) — and there’s not real money flowing between them. Within the PCTs, the primary care is delivered by notionally independent GP practices, who behave much as they always did — although the minority which were "fundholders" under the previous reform environment probably have less control over hospital purchasing than the used to.

The most interesting development is the move towards what might be called intermediate risk sharing for chronic disease management. Starting in April 2004, GP practices will be putting up to one third of their revenues at risk, and be able to earn 1050 points by hitting a number of targets in certain therapeutic areas.  Each point will start off being worth up to 75GBP but will go up to 120GBP.  In other words each GP may have up to 120,000 GBP at risk for their practice, which may wind up to 30-40,000 GBP per doctor in real money. There are ten chronic disease states being targeted, many of them surrounding cardiac care, with some 75 metrics being measured. The measurement of the interventions, which are all the standard things of keeping the heart patients on the right drugs, making sure the diabetics get their eye exams, etc, etc, are being done from the information systems of the GPs themselves.  But this isn’t the gong show it would be in the US as by now the vast majority of GP practices have got primary care EMRs, and most GPs are taking electronic notes during consultations.

To this point, many GPs have just been coding office visits with electronic diagnoses that are the easiest to input rather than the most accurate (i.e. coding all visits from diabetics the same).  They don’t get paid any differently for different codes (unlike the US) so convenience had been the driving factor. Most of the GPs I talked with are fairly confident that the add-ons required, such as alerts to contact patients to make sure they’ve come in for an annual exam, or alerts to remind the GP in the middle of the consult that the hypertensive patient hasn’t had a blood pressure test, can be (or already have been) added to their systems – and that’s where they’re focusing the most effort. There’s also a presumption that some of the smaller one or two doctor GP practices with only a couple of thousand patients will merge to get better IT IT and admin support. Overall there’s some optimism about the system, as reflected in this American assesment from UCLA’s Paul Shekelle.

It’s also interesting to note that in the absence of the completion of the huge EMR in the sky projects that the government just awarded contracts for, the UK is already far ahead of the US in primary care IT.  However, this doesn’t really spread over to the hospital side.  In fact frequently the communication between GP and Hospital specialist breaks down (does this sound familiar?) and a patient may be put on a drug in the hospital and the GP either not be informed about it, or take them off it when they come for the follow up visit. As the GPs currently control their own drug budget they’ve been somewhat incented to under-prescribe – any savings there can be used in the rest of the practice to buy new computers, nicer chairs for the waiting room, etc. Additionally the end points that GPs are going to be rewarded on are based on intermediate outcomes, not on hospital measures.  So for example, getting the % of at-risk patients on statins up above a certain number will be rewarded and it’s just assumed that this will reduce costs down the line and in the hospital.  But at present no one’s counting and the information systems aren’t really able to talk to each other about it. However within the PCTs there are already guidelines that many GPs (are at least trying to) follow willingly, even though they’re paper based, and there is a system of clinical consultation over local guidelines at the PCT level itself.  As well as the NICE (national institute for clinical excellence) which creates national guidelines for technology and drugs based on cost-effectiveness analysis.

Additionally there was great familiarity with the Kaiser system, and the NHS has done a series of comparisons between the two, which in part inspired the new contracting system by showing that the lower use of hospital care and greater emphasis on overall patient management at Kaiser led to better and more cost-effective care.  But many people I talked to were aghast when I described the state of IT in the typical American doctors office – they just assumed that the rich Yanks must be well ahead of them!

TECHNOLOGY: IT for EBM

Occasional contributor Matt Quinn has been on a tear this week.  He notes the following gem from a recent iHealthbeat story about the use of IT in evidence based medicine.

    According to Dr. Bob Williams, principal of Cap Gemini Ernst & Young’s health consulting division, "most physicians want to include data collection in their clinical systems, but they don’t want the guidelines that come from the data to interfere with the care they provide."

Some time back I had a blogging conversation with Robert Centor over at DB’s Medical Rants about evidence-based medicine. He said:

    Having physicians enter data on their patients is not an intelligent use of their skills and time. In order to understand quality we would need such a large and broad database that data entry would take longer than patient encounters.

I still have a longer reply to Robert stored up, but the gist of my argument is, just because systems for recording data are not perfect doesn’t mean that we should give up the prospect of using (and improving) them. The lack of the "perfect" in recording clinical data has been allowed too many physicians to drive out the "good" of recording what data they can and using it to guide their care. Regarding Bob Williams’ comments Matt asks:

    Does this mean that:
    – physicians don’t trust that the data that they’re recording (in clinical as opposed to billing/financial information systems) accurately reflects the care that they’re providing?
    – they don’t feel that they should learn (i.e. change behavior) based on what works and what doesn’t work for them and their colleagues (i.e. evidence-based guidelines are so valid/established that one should not deviate from them even based on personal/group evidence)? or that
    – it’s OK to collect data but it’s not OK to measure their performance against it (and other docs)?

Like Matt I’m a little puzzled by what Bob means but I suspect it’s the inverse of Matt’s second point in that many physicians don’t want to know about the guidelines because, for want of a better term, "they know better". That’s OK in one of the three methods that Michael Millenson told me are how physicians practise medicine . Millenson’s three ways are:

a) Follow the best evidence based guidelines
b) Innovate by doing something different and record that innovation so that it can be compared to the guideline. Then you can see whether it was worse than the guideline, or better than the guideline and should thus be used to change the guideline, or
c) Ignore the guideline because you just "know" that your way is better.

Millenson tends to think that way too many physicians are in category c), and I suspect that Bob Williams agrees with him. As I’ve posted about before, following the EBM guidelines is not easy, but it should be second nature amongst physicians to figure out what they are, ensure that they are widely understood by the clinicians and patients they are working with, and to check their own practice patterns against them.  With no information systems to record what was done, the last part is almost impossible.  It seems that the physicians Bob Williams was talking about are not so interested in completing that piece of the puzzle.  As I commented earlier this week, this is one area where physicians have a real opportunity to show great leadership. Millenson doesn’t think that they have done so far.

But there is hope and activity here. Fellow blogger Alwin Hawkins sent me an example from his hospital Providence in Oregon (Thanks Al!)

    One project was the tracking of myocardial infarction patients. A nurse goes through all charts on the telemetry and coronary care units, checking to see whether patients are being started on the medications recommended by the American College of Cardiology. We placed on all the pre-printed admission order sheets spaces for beta blockers, ACE-I’s, statins, and aspirin, along with. Just that little reminder alone got the docs improved compliance in writing the orders, along with the parameters for holding the medications.

So there you have it. A little hint of the guideline via the information system (in this case a paper order sheet) and the guideline begins to get followed. Similar examples are all over the country, and have been for some time.  But the question is when does the tipping point occur?

INDUSTRY: Healthsouth soap opera reaches ridiculous stage

And just when you thought the Healthsouth mess couldnt get any more bizarre, the new management have decided that the fraud was worse than they were letting on, $4Bn rather than $2.5Bn.  One "victim" is ex-child actor, star of the Wonder Years, Jason Hervey who was hired as a PR slack by Scrushy, in a more than bizarre move.  He was given a 3 year deal in 2002 at a mere $300,000 a year and then fired last March. He was offered either a lump sum buy-out or could keep collecting every two weeks which he did.  Well funnily enough last November the checks stopped coming and now he’s gone to court to get them to resume. 

For you soccer fans this reminds me of the obscure tale of Winston Bogarde, a one time Dutch international who’s been on the payroll at Chelsea FC in London at a mere $2.5 million a year and has not featured in any first team or even reserve team game in 3 years.  No one at the club remembers why they signed him, and the coach and general manager at the time both claim the other one signed him without their knowledge, but so long as he clocks into training once a week, there’d nothing they can do other than hand over the cash…..

Perhaps the only way either Chelsea or Healthsouth can get out of their obligations is to declare Chapter 11.  Chelsea was bought by Russian billionaire Roman Abramovitch last summer and has been spending money like a drunken sailor on new players ever since, so their chances of fooling a judge are limited.  Healthsouth? Well I’m not so sure…….

PBMs: More litigation attacks on PBM behavior, leads to longer term doubts.

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I’ve reported before on the suits against Caremark and Medco for all kinds of alleged shenanigans in drug pricing, rebates and other activities kept away from their clients’ eyes.  There’s a bumper crop of news this week about the same topics.  The latest version of Government Health News reports that the attorney general of Ohio has jumped in with his own suit accusing Medco of slanting drug purchases towards its (former) corporate parent, Merck. Meanwhile 2 unions in New York State are accusing Express Scripts of keeping rebates that it didn’t tell them about. Finally another study in the Journal of the American Pharmacists Association reports that PBMs have been overcharging on the spread between wholesale and customer prices for generic drugs.

It’s been fairly common knowledge around the drug industry for many years that not only are PBMs getting rebates to influence which drugs end up on their formulary, but that much if not most of the rebate money doesn’t go all the way back to the clients, and in fact is a fairly substantial chunk of the PBMs’ bottom lines. As I’ve opined before, whether or not it’s a legitimate business practice as the PBMs claim, when Medicare becomes the client that type of behavior is not going to survive the scrutiny of any even half-hearted Congressional investigation.  At that point I find it hard to see how PBMs become little more than claims processors, and I’d expect their PE ratios to fall to match.  The question is whether they can increase their revenues enough by adding the volume from Medicare clients to allow their stock prices at least to tread water.  I doubt it, but it’ll be an interesting subtext in the implementation of NAIM.