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Analysis: Aetna Jumps into HIE Market Acquiring Medicity

Dec 9, 2010• 2

By JOHN MOORE

First it was United Health Group’s (UHG) Ingenix Division’s acquisition of leading HIE vendor (and top competitor to Medicity) Axolotl. Then this morning Aetna counters by acquiring Medicity. In just a few short months these two payers have completely changed the landscape of the HIE market by acquiring the two leading HIE vendors in the market today. Now that both of these vendors are in the hands of payers what are the implications both to the HIE market and more broadly the healthcare sector? Following is our assessment based on our continuing research of the HIE market and a number of interviews today, not only with the Aetna and Medicity, but also several other active participants in the HIE market.

The Deal:
Aetna acquired Medicity for a King’s ransom of $500M, a handsome multiple of Medicity’s 2010 gross revenue. Medicity will operate as a separate entity under the Aetna brand maintaining its current headquarters in Utah. According to Medicity, initial conversations began in late October/early November and quickly accelerated to the deal announced today. Aetna plans to close the deal before the end of year. As part of the deal, the senior management team of Medicity has agreed to stay in place for the next few years.

The Motivation:
While some may argue that Aetna was simply looking to counter the move by UHG or Aetna’s new CEO was looking to make a mark, Chilmark sees a more thoughtful and strategic move at play here which in the end may justify the price paid.

Healthy People 2020 Participates in the Health 2.0 Developer Challenge

Dec 8, 2010• 2

Health2challenge

Health 2.0 is excited to announce the first challenge for the 2011 cycle of the Health 2.0 Developer Challenge that will be live through the New Year!

Healthy People 2020, launched on December 2, 2010, is the Nation’s leading health promotion and disease prevention agenda for the decade, including goals, 40 plus topic areas, and 100s of data-driven objectives and targets. HP2020 is primarily aimed at achieving the goal of longer, healthier lives for all Americans. Now that they have launched, they’ve submitted the myHealthyPeople Challenge to the Health 2.0 Developer Challenge.

The myHealthyPeople Challenge is asking entrepreneurs, developers, health educators, public and clinical service providers to develop an engaging and empowering customized. Features could include mash-ups, easy-to-use data visualizations, analytics, reporting, and other novel combinations of national, state and community level health data. Applications should enable users to tailor their areas of interest and enable myHealthyPeople to be accessible on desktops and/ or mobile devices.

Is My Canadian Online Pharmacy Really in Canada?

Dec 7, 2010• 8

By ED PULLEN, MD

Maybe Not.

I practice in Washington State, and have a number of patients who travel to Canada to purchase their medications. Why drugs are so much less expensive in Canada than in the US is primarily related to the single payer system in Canada, where drug companies have to negotiate prices with the Canadian health plan.

In the US with so many different insurers none have the where-with-all to negotiate steeply discounted prices because to remain competitive they have to offer all the popular drugs or risk losing patients to plans that do offer those drugs. This leads to a situation where many patients simply cannot afford some of the expensive branded drugs that they are prescribed. Admittedly we have a nice variety of inexpensive generic medications for most conditions, but in some situations there is no good alternative to expensive drugs. Don’t think the Discount Drug Coupons are going to save you in the long run.

Of my patients who get drugs from Canada, many of them see a physician there who does a brief evaluation and re-prescribes the medications prescribed for them by me or other US physicians. Others find pharmacists who will fill prescriptions written by US doctors. At the border crossing coming home rarely patients are searched and have their prescriptions confiscated, but the prices in Canada are enough less than US drug prices that it is worth the trip and risk of confiscation that patients using expensive branded meds find the trip worthwhile. I don’t have a big concern for these patients. I have no reason to believe that the drugs dispensed in Canada by pharmacists to visiting Americans are not the same medications they get in the US.

HIT Trends Summary for November 2010

Dec 7, 2010• 1

By MICHAEL LAKE

This is a summary of the HIT Trends Report for November 2010. You can get the current issue or subscribe here.

Hospitals continue to drive HIT dynamics. According to a report by SK&K, more than half the physicians in health system- or hospital-owned practices are using EMRs, a jump of more than 10% over last year. This is further validation of the importance of hospitals and systems in the current adoption dynamics. The relaxation of Stark rules, the influence of provider incentives and potential hospital participation in medical home and accountable care may be driving interest. KLAS reports that smaller hospitals are ignoring typical suppliers in favor of more traditionally large hospital vendors. They likely feel the companies serving bigger organizations will be getting the best experience in helping clients meet federal criteria to get the incentives. And according to an executive of a firm providing lab technology writing in Becker’s, all this hospital EMR activity presents new opportunities for hospital laboratories. They may be able to leverage new connections with community physicians into increased business opportunities.

McAllen and El Paso Redux: New Evidence from the Insured Under-65 Population

Dec 7, 2010• 24

By JON SKINNER, PhD

Last year, Atul Gawande wrote in the New Yorker about the remarkable differences in health care spending for two Texas cities: McAllen and El Paso. In 1992, according to the Dartmouth Atlas, the two cities were essentially identical with respect to per capita Medicare expenditures. By 2007, McAllen’s spending had surged, with overall expenditures nearly twice as high as in El Paso. Dr. Gawande visited the two communities, and brilliantly documented a culture of entrepreneurship among McAllen physicians that seemed to explain their elevated rates of hospital admissions, end-of-life care, and home health care.

But what about the under-65 population? Dr. Gawande spoke with two independent firms about their measures of under-65 utilization, and found generally higher rates in McAllen. My colleague Thomas Bubolz studies the under-65 Medicare population – primarily people on Social Security Disability Insurance — and his preliminary results also point to much higher utilization in McAllen compared to El Paso. Another study using national data by Michael Chernew and colleagues (here) found a strong positive correlation between utilization rates for Medicare and the under-65 population insured by large firms. (That they also found a negative correlation between Medicare spending and the negotiated price per procedure in the under-65 population points to another source of regional variation: market concentration.)

So when Luisa Franzini and Osama Mikhail, professors at the University of Texas School of Public Health, first offered me the opportunity to work with them using Blue Cross-Blue Shield data on under-65 spending in Hildago (McAllen) and El Paso Counties, I had strong expectations that we’d end up with pretty much the same result.

I was wrong. In a recent Health Affairs article, we found that, on average, overall spending per patient in McAllen was about 7 percent below that in El Paso. Granted, we found the familiar Medicare utilization patterns among people over age 50: McAllen admission rates were 89 percent higher than those in El Paso, and overall expenditures 23 percent higher. But outpatient visits and spending were lower across the board in McAllen, as was total spending for those under age 50. What was going on?

American Healthcare X

Dec 6, 2010• 29

By RONALD PIES, MD

“A decent provision for the poor is the true test of civilization.”
~Samuel Johnson

“Joe” has been on the streets now for two months. He’s 35, unmarried, and diagnosed with chronic schizophrenia since age 19. His illness is difficult to manage, even with regular medication, and Joe is subject to hallucinations telling him to “fight off the evil ones”. Like most people with psychiatric disorders, Joe has never been violent—but when his illness is not well-controlled, he can become loud and belligerent.

Despite his many tries at holding down a job, the economic downturn and his worsening psychosis have left Joe jobless and homeless. Joe’s family thinks he is “faking” his symptoms and they are “fed up” with him. They have refused to take him in or help him with his medical care. Joe has no friends willing to help him and survives on the streets by panhandling and dropping in at soup kitchens. The local shelters won’t accept Joe, because he is “too agitated.” Joe sleeps in alleyways, or, when lucky, in ATM stations. In the past month, he’s been beaten up twice by members of youth gangs. Recently, Joe was diagnosed with type 2 diabetes, requiring daily medication and monitoring. Joe says he doesn’t want “charity”, and would like to work again, but doesn’t see how he can.

“Joe” represents many patients I’ve cared for during nearly 30 years of medical practice, and typifies thousands of Americans with severe mental illness. In my previous blog entitled, “The Libertarian Mind”, I posed this question: what is the moral responsibility of federal and state government to help care for people like Joe? I argued that the Libertarian Party platform—calling for the abolition of “the entire social welfare system”, including food stamps—is neither humane nor compassionate.

The Problem with Free Market Healthcare

Dec 6, 2010• 23

By JOE FLOWER

The right payment structure keeps patients healthy while saving money.

We want healthcare to be abundant, effective, easy, and cheap; for too many of us too much of the time it is scarce, ineffective, and maddeningly difficult. For all of us it is far too expensive. Why? How did we get in this mess? How do we end up paying so much for healthcare and not getting what we want?

It’s a big question, and it’s at the core of the mess we are in. The convoluted way we pay for healthcare in the United States gives too many patients treatments that they don’t need, or treats them for conditions that could have been prevented with much cheaper care, or denies patients services that they actually need. How does this happen? To answer this question, we have to dig into the actual structures of healthcare, and some of the basics of economics. And in that answer we can begin to see how we need to rebuild those very structures in order to survive and thrive beyond reform.

The Wrongologist

Dec 5, 2010• 3

By PAUL LEVY

Header-jacket

Author Kathryn Schulz recently provided a newspaper exposition of some of the themes of her new book, Being Wrong, Adventures in the Margin of Error. As noted on her website, Kathryn has “a credible (if not necessarily enviable) claim to being the world’s leading wrongologist.”

She finds fault in the way we find fault in ourselves. “Misunderstanding our mistakes . . . — seeing them as evidence of flaws and an indictment of our overall worth — exacts a steep toll on us. . . . [I]t impedes our efforts to prevent errors in domains, such as medicine and aviation, where we truly cannot afford to get things wrong.”

The book is engaging and thought-provoking.

Kathryn uses our wrong-side surgery experience at BIDMC as an uncommon example of using error to improve things, particularly when an aggressive target for error reduction has been established and when a commitment to transparency has been adopted.

She notes, “If you really want to be right (or at least improve the odds of being right) you have to start by acknowledging your fallibility, deliberately seeking out your mistakes, and figuring out what caused you to make them.”

(Bostonians can hear Kathryn in a reading this Friday evening at the Harvard Book Store.)

Paul Levy is the President and CEO of Beth Israel Deconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

Slow Medicine

Dec 5, 2010• 37

By KENT BOTTLES, MD

I have been thinking about the difference between slow medicine and UCLA medicine. It has made me realize how complex and difficult it is to transform American health care so that we lower per-capita cost and increase the quality of our lives. And yet we must achieve these two goals.

Slow medicine is practiced by a small, but growing subculture whose pioneer and spokesperson is Dr. Dennis McCullough, author of the book My Mother, Your Mother: Embracing “Slow Medicine,” The Compassionate Approach to Caring for Your Aging Loved Ones. Slow medicine is a philosophy and set of practices that believes in a conservative medical approach to both acute and chronic care.

McCullough describes slow medicine as “care that is more measured and reflective, and that actually stands back from rushed, in-hospital interventions and slows down to balance thoughtfully the separate, multiple and complex issues of late life.” Shared decision-making, community and family involvement, and sophisticated knowledge of the American health care system are some of the slow medicine practices that sharply contrast with UCLA medicine.

UCLA medicine is the status quo where the hospital is the center of the medical universe; where care is often uncoordinated and hurried, and where cure is the only acceptable outcome for both patient and physician. I call it UCLA medicine because the CEO of that well-regarded medical center was quoted in a New York Times Sunday Magazine article as saying, “If you come into this hospital, we’re not going to let you die.” This is a statement that puzzles me as an old time anatomic pathologist.

The Cost of Care

Dec 5, 2010• 3

By NEEL SHAH, MD

On Labor Day Costs of Care asked doctors and patients to send us anecdotes that illustrate the importance of cost-awareness in medicine, as part of a $1000 essay contest aiming to shine a national spotlight on a big problem: doctors and patients have to make decisions in a vacuum, without any information on how those decisions impact what patients pay for care.

Two months later we received 115 submissions from all over the country – New York to California, Texas to North Dakota, Alaska to Oklahoma. We feel these stories are poignant because they put a face on some of the known shortcomings of our system, but also because they unveil how commonplace and pervasive these types of stories are. According to essay contest judge Dr. Atul Gawande, a surgeon and staff writer at the New Yorker, “These [stories] are powerful just for the sheer volume of unrecognized misery alone.” The following story from Brad Wright is one of the finalist submissions in our contest …