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HOSPITALS/POLICY: Hospitals and the uninsured–a discount’s OK

Hospitals that have been complaining that Medicare won’t let them discount to the uninsured have been told that by the Bush Administration they are wrong and that they can. Last year I wrote about how providers have been charging cash payers more than the insured’s wholesale price and that they come after you for the money.

In a related story, those hospitals who were chasing down patients and putting them in jail for non-payment are finding out that collecting on the "body attachments" will be very expensive. The WSJ reports:

    In an unusual move that is sending shock waves across the hospital industry, Illinois authorities have revoked the tax-exempt status of a prominent Catholic hospital. Their decision follows a determination by local tax authorities that the hospital wasn’t a charitable institution, in part because of the way it treated needy patients.

    As a result, Provena Covenant Medical Center, a hospital in Urbana with 270 licensed beds, will have to pay $1 million in property taxes, though the hospital says it plans to appeal. More worrisome to hospital-industry officials is the possibility that not-for-profit hospitals nationwide could find their tax-free status as charitable institutions challenged on similar grounds.

Last year at Bard Parker’s request I wrote some comments in his medical and Georgia Bulldog football blog A Chance to Cut to respond to his post about it. I basically said that the bad publicity would outweigh the benefits for these hospitals (scroll down to the very bottom of this page for my comments published over there). I’m obviously getting prophetic in my old age!

TECHNOLOGY: CHW goes with Cerner

Having been rebuffed in the UK, Cerner is making up for lost time and getting religion–snapping up its second big deal with a big Catholic chain in as many months. It already has a deal with the big mid-western Catholic chain Ascension.  Now it’s announced a $137m deal with Catholic Healthcare West.  The stock has more or less tripled in the last 8 months following a mauling after missing numbers last May, although it’s some way below its 2000 highs.

I assume their party at HIMSS this week will be serving the expensive brand of champagne.

PHARMA: Prescription drug sales over $216 billion in 2003

Just in case you were overly concerned about all the problems that pharma companies were having, (yes, I thought you were!), you might need reminding what a strong overall business this is.  IMS reports that US prescription drug sales were over $216 billion in 2003.  That’s up over 11% from the previous year and continues a run of strong double-digit growth since the mid-1990s. The biggest single class, the statins reached $13 billion. Imports from Canada were only around $1 billion.

POLICY: Quick update to the Policy Wonk‘s Medicaid piece from Ross the Bloviator

Ross at The Bloviator is on a high and rightly so!  He has great news about a new baby boy, and new job and a guaranteed lottery win (well maybe not the last one, but then he probably failed stats 101!)  Congrats, Ross!

Meanwhile Ross reminds me that even back in those dark days before there was a THCB, he was writing about the fact that the Medicaid games in his home state of Illinois were likely to draw the Federal scrutiny that the Wonk wrote about and the NY Times picked up on. And his last line has the question "if every state did this, would the Feds allow such maneuvers?". If we go to block grants the answer is clearly no.

PHARMA: Big Pharma influencing formulary decision makers

The Pharma Veteran points me towards this story surrounding some slightly tawdry business in creation of the Pennsylvania state formulary.  The Veteran says:

    This furthers the conviction that healthcare is either tragedy or farce.  It reinforces several conclusions we’d already  developed.  First of all, it illustrates how the function of "greasing" healthcare providers has moved from office/hospital reps to higher positions within the companies.  It also shows that while the industry grapevine places one of the companies mentioned below (Pfizer) as reputedly the most aggressive transgressor, even a self-proclaimed good corporate citizen (high science Janssen, a part of Harvard-case-study-on-Tylenol-recall-J&J) swims in the same water.

    The third thing this article suggests is the increasing, chain-of-influence approach that companies are adopting with respect to greasing organizational decision makers.  Many office reps perceive their companies are paying less attention to office-based practitioners and are more aggressively targeting government, MCO and PBM decision makers whose choices, the companies hope, will trickle down to the offices.  The potential for this trickle down marketing, some believe, can increase enormously when the Medicare legislation goes into effect in 2006.

    The fourth lesson here appears at the bottom of the article.  A director of a mental health policy association makes the point that at least at the state level, decision makers are so dependent upon Big Pharma for vital information that there is a complete asymmetry of knowledge and power in the relationship.

My only comment here is that these numbers are so relatively small ($14,000 over a few years), and were clearly not used as straight bribes.  So shouldn’t the state find some way to pay for the educational trips and information that its officials need, without shortchanging them to the point that a few thousand from a pharma makes a difference?

PHARMA: Headline news–Seniors with better drug coverage use more, and more expensive drugs

Health Affairs has a new study on the web that confirms the blindingly obvious. People with better insurance coverage will use more health services than those without insurance.  What’s interesting about this study is that it looked at the difference by comparing those with drug coverage to those without in Cox-2 Inhibitor use (that’s Celebrex and Vioxx to you) in the Medicare population.

As you may know Cox-2s are painkillers that are supposed to kill pain without the adverse side effects to the GI tract that some 35% of the population gets from NSAIDs and ibuprofen.  But they don’t do more to end pain and they cost a whole lot more than NSAIDS, so theoretically the health care spending wonks think that their use should be limited to those patients with demonstrated GI problems from using alternatives.  But of course real life isn’t like that, and as a study from Express Scripts showed last year, patients are getting prescribed Cox-2 inhibitors whether or not they have GI problems.  There’s also been contention that Celebrex isn’t as safe for the GI as it’s been made out to be, but that’s another story.

The new study shows that although GI problems are a pretty good predictor of increased COX-2 use among the senior population, good drug insurance coverage is twice as good a predictor. And then, noting that even more seniors are going to be getting a drug benefit soon, in my favorite part the authors conclude in academic-ese:

    Our study suggests that policymakers should be concerned with potential overuse of drug therapy by Medicare beneficiaries once the benefit is implemented.

All together now, "Duh!".  That’s what the legislation was supposed to create, although the authors might find that they and PhRMA have a different definition of the word "overuse"!

PBMs: Zero sum big swings in the PBM world

If you’ve been reading THCB for a while you’ll know that I’m not overall bullish on PBMs. But of course in any market if you win an account from your competitor that’s responsible for over 14% of the competitors’ earnings, your stock will go up and theirs will go down! So when Caremark won the Blue Cross Blue Shield Federal Employees’ contract away from Medco, forcing Medco to lower its 2004 outlook, Caremark stock went up 5%, while Medco’s stock is down 10%.

PHARMA : Big investor unloads some AstraZeneca shares

The Wallenberg family of Sweden own some 5% of Astra-Zeneca via their Investor AB fund.  Last week they sold some 30% of their holdings. As you’ll recall A-Z’s future performance and the performance of its new statin Crestor have been the subject of several posts on THCB. The Dow Jones story (can’t find link but it was on Feb 11) reported that

    Investor decided to reduce the holding in order to strengthen its finances, company spokesman Fredrik Lindgren said.

    "We have decided to reduce our leverage and strengthen our financial flexibility. We continue to believe strongly in AstraZeneca and the company is still our largest holding," Investor President Marcus Wallenberg said in a statement. With the sale, Investor’s holding in AstraZeneca falls to 3.75% of the voting rights and share capital. The stake amounted to 5% of the votes and shares at the end of December.

    Lindgren said Investor is constantly looking at its holdings and the risk profile of its portfolio. He declined to comment on widespread speculation the proceeds from the sale would be used to fund the acquisition of a larger stake in truck maker Scania AB (SCV-A.SK).

While the speculation concentrates on the Wallenbergs’ need for the money elsewhere, a new correspondent for THCB, PharmaWatcher, has some speculation about the motives for this sale. He writes:

    What is actually driving Investor to sell its stake in AstraZeneca?  If it truly seeks to "strengthen its finances," why is it selling AZ?  His suspicion is that someone at Investor AB/Wallenberg must be looking at:
    a) The stock run-up in ’03;
    b) The analysts’ downgrades during January;
    c) The sales decline in the US, both yr/yr and Q4/Q4;
    d) The questionable prospects going forward for 2 of the 4 alleged saviors, Nexium and Crestor (never mind Iressa) and;
    e) Perhaps someone at Investor/Wallenberg knows something about (anti-coagulant) Exanta, or at least may have caught wind of the views at the EMEA/French regulatory authorities.

This is of course all pure speculation.  But the stock trader in me thinks that  A-Z’s stock has had a pretty nice run over the last 18 months, and the prudent money might just be looking for safer waters right now.

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