THCB

Categories

Above the Fold

QUALITY: Appendix surgery, too often needless but inevitably so?

I am determined to get back to the conversation on evidence based medicine that I was having with Robert Cantor over at Medical Rants before the holidays. Sadly I’m too gummed up with other work to finish the thoughtful response his last reply to me deserves–although I have subsequently interviewed Michael Millenson, the bete noir of the EBM-deniers (if that’s a term!), who’s last piece The Silence took a pretty hard line with the IOM for not being as aggressive as it should be on the topic.  More to come on that later.

But I remind you that I started this by discussing why evidence-based medicine was so hard to achieve in real world  practice.  This balanced article from the Boston Globe shows that big city hospitals which do lots of procedures on kids do better on reducing the false positive rate for pediatric appendectomies than lower volume hospitals. It seems that it’s pretty hard to get the mistake rate of the big city med centers (still up at around 4.8%) at the local hospital where they don’t see so many and have twice the error rate. The key point in the Pediatrics abstract that’s not in the write up for the lay reader is that two thirds of these pediatric appendectomies are done at the lower volume hospitals, and therefore have the worse results. Yet how many parents want to drive an extra hour or so to a distant hospital when their child is in pain? Does the "centers of excellence" concept make sense for this relatively trivial level of surgery? Is an 8% error level acceptable when the cost is more likely to be financial than medical?  It’s still a tough subject. 

I shall vent later mostly about information use, and this study provides useful information on how we should be tackling this type of procedure.  But it’s a bigger system change to move this type of surgery than to get all the transplants, say,  to high-volume physicians.

HEALTH PLANS: Goldman analyst reads THCB, BusinessWord

OK the headline is bogus, but sometimes I should believe myself. Not too long ago I posted about health insurance and in the middle of that post I wrote this:

    How do health plans make their money?. …..it helps if you are at the top of the underwriting cycle. Sadly for plans we are now somewhere near the top. At least HSC also reports that, in the first half of 2003, health costs only went up 8.3% as opposed to 10% for the last half of 2002. Given that for health plans the last few years have mostly been "cost-plus" actors, there’s slightly less "cost" to "plus" onto.

So my gentle conclusion was the health plan stocks were at the top. Unfortunately I don’t work for Goldman Sachs and so no one noticed. (I know that Don Johnson at The Business Word agrees with me, note what he says about the Wellpoint-Anthem merger, story number 3 in his excellent year end roundup).  However, yesterday (Monday 4th Jan) Matthew Borsch, who does work for Goldman Sachs, figured out that the non-profit Blues were making loads of money and may be pressed to reduce rates next year–a rollback which will create price competition with the for-profit carriers. So the health plan stocks are down heavily, with for example United off 6% and Humana down 7%. And yet again I was too wussy to go short . . . . .

TECHNOLOGY: CSC, Accenture Win Regional Pacts for NHS System

The remaining contracts in the UK’s NHS Care Record Service are being awarded.  The latest contracts are for the east and northwest regions and the big winners are CSC and Accenture. These are huge contracts of over $1.6bn each. In the 1990s Accenture (then known as Andersen Consulting) developed a bit of a bad reputation for not delivering as promised on IT contracts developing claims systems for various Blues plans.  And to be fair they were by no means the only systems house that dissapointed their plan client (for instance EDS as noted in this article). But those expenditures were in the tens of millions not the billions that the NHS will be spending. Now to be fair these huge projects are very difficult to run and manage, so you can’t always expect perfect results.

The UK is not unaware of the risks they’re running and the contracts come complete with fairly aggressive penalty clauses. As it’s such a prominent contract dealing with the UK’s most sacred political cow, you can bet that the government will be paying close attention.  And for those of us on this side of the Atlantic, well, we’ll be looking for clues to see if there are lessons for slower development of clinical records infrastructure in the US.

Meanwhile the NHS story is Health-IT World‘s top story for 2003.  Here are the rest of the Top 10

PHARMA: Drug stocks low risk in the new year?

The AP reported on New Year’s Eve that the rough consensus of analysts is that 2004 will be a reasonable but not great year for the pharma stocks. Those stocks have of course underperformed the S&P over the last year but actually haven’t done too badly over the last 2 years compared to the S&P after their plunge 18 months ago. One potential major problem has been dodged, with a Medicare bill that’s as friendly to the pharmas as possible.  The longer term problem is the paucity of the pipelines, so I’d look for more deals in the biotech sector like the one Pfizer did with Esperion Therapeutics. But of course some time after 2006 when the Medicare coverage comes in, the likelihood of more governenment interference is a risk in the much longer term.

In the shorter term the most interesting stock remains Astra-Zeneca. Since its beautiful technical double bottom in February and March last year A-Z has rallied over 65%.  THCB has reported at length about the potential problems with both Crestor and its struggles with Lipitor. This past weekend the influential finance magazine Barrons essentially came out  warning that A-Z’s rally was overdone, but if you’d shorted A-Z a few months ago when this discussion started, you would be under water. Is it any different now?

HAPPY NEW YEAR

Welcome to 2004 at THCB.  I hope to do a revamp to the site in the next few weeks, but I don’t think you’ll see too much change to the way things are run. I don’t think I’ll be adding comments, but please keep those emails coming and please feel free to write pieces that fit into the spirit of THCB. I’ll keep posting them if they’re suitable, whether or not I agree with them. Also please let me know if there are other topics you’d like to see covered in the future.

And in the spirit of New Year Renewal for some years now I’ve written an end of year letter suggesting some charities and issues that I’m supporting. It has nothing to do with health care, but if you’ve got some time I’d be delighted if you took a look and supported some of the charities and causes I feature.

HAPPY NEW YEAR

Thanks for reading THCB in 2003. I’m off to see if my knee will hold up to a little gentle snowboarding.  See you next week and happy 2004.

INTERNATIONAL/INDUSTRY–British Surgeons’ Private Fees Highest in World, really?

And in a fun story at the end of the year, Reuters claims that in their private practice British Surgeons charge the Highest fees in the World.  Now I know a little about this given that my father was, until his retirement last year, one of those NHS surgeons who worked 20% time in the private sector.  No question that the private sector was where he made the majority of his income (usually more than double there what he made in his relatively paltry NHS income), and there’s always been some controversy over this arrangement.  But although private fees were high there I’m very surprised that they were really higher than in the US, and specialists there make overall nothing like what specialists here do.  Last year the surgeon fee alone for my serious knee operation was, list price including assistant,  $21,500, and after I negotiated it down to roughly UCR, it was still around $12,000, or $10,000 for the surgeon’s fees alone.  Of course this didn’t count the tissue graft acquisition which was another $5,000 which I’m sure the surgeon’s office made a pass thru on. That was a for a three hour major but relatively routine surgical procedure.

So I asked my dad if he made 6,000 GBP equivalent of $10,000 for the average 3hr period he spent on this private operations and here’s the transcript of his response. "No (bleep) (bleep) (bleep) (bleep)(bleep) (bleep)ing (bleep), and you can (bleep) (bleep) in your (bleep)ing (bleep) and if I did I’d have (bleep)(bleep) (bleep)ing Ferrari, (bleep)(bleep) yacht (bleep)(bleep) house in south of France (bleep)(bleep) private jet (bleep)ing too".  So as they say in the medical literature, perhaps more research is needed!

TECHNOLOGY: Paying for online consults

• 2

This fairly routine article about the very slow growth in online (email) consults had one line that made me sit up and pay attention.

    The payment obstacle may be lowered Jan. 1, when the American Medical Association creates a reimbursement code for online communication between doctors and patients.

At the least the more dubious online pharmacies can now double bill the insurers of the patients they’re already charging for the "consults" that get them prescriptions. OK that was just a wisecrack, but one day we may just wake up and find that the adoption of the online email visit as a compensated service just kind of happened– because of this new CPT code.

PHARMA: The Cholesterol Wars

This won’t be much new news for those of you who’ve been following the various commentators here on THCB about the war between Lipitor and Crestor, but The Motley Fool website has a good summary of the statin market called The Cholesterol Wars.

HEALTH PLANS: HSAs and Doctors Letting Patients Skip Co-Pays

In a bit of end of year silliness I got involved in the comments over at Robert Prather’s post  at Insults Unpunished about HSA’s in the new Medicare bill.  There’s no doubt that HSA’s have a greater chance of success than the MSA’s they replace but Robert and I disagree about how easy it is for doctors and pharmacists to be transparent enough about their pricing to allow a real market to develop.  The comments are worth reading though, particularly some of those from Don Johnson who as usual injects a serious and balanced view from the right into the discussion, and has some perceptive things to say about why managed competition has never gotten far in the policy world.

Meanwhile, The NY Times reports on the related issue of out-of-network doctors counteracting the attempts of what’s left of the managed care industry to restrict members to tight networks.  The Times found that in several states Some Doctors (are) Letting Patients Skip Co-Payments. Of course it’s those co-pays that are supposed to keep the managed care patients in network. If doctors are prepared to work for UCR fees minus the patient’s co-pay/co-insurance, then what’s left of the managed care plans’ efforts to control medical care using loose networks is doomed.