Health Business Blog

Health care business consultant and policy expert David E. Williams share his views

From Beanie Babies to pacemakers

Four $6000 pacemakers were stolen from a Sacramento hospital and at least two were sold on eBay for about $200 each. One was implanted by a physician in Arizona, another was seized from his clinic, and two are missing. Beyond the original theft, it’s not clear if any laws were broken.

Taking it out on the uninsured

An article from The Morning News in Arkansas discusses the standard but outrageous practice of hospitals billing the uninsured at a rate that is a multiple of what insurance companies pay. Ironically, The American Hospital Association has contended that if it offers discounts to the uninsured it may fun afoul of Federal billing rules. Apparently someone has to pay the retail rate, and it’s those unfortunate people who don’t have insurance.

The article notes that this situation helps explain why such a high percentage of personal bankruptcies are due to medical bills, as reported in a recent Harvard study.

The newspaper suggests that patients demand a discount rather than paying their bills.

New book: Hope or Hype

Today’s Boston Globe includes a review of Hope or Hype, the Obsession with Medical Advances and the High Cost of False Promises, by Dr. Richard A. Deyo and Donald L. Patrick. I haven’t read the book but it sounds interesting.

The growth of modestly effective but costly treatments ”is the main reason why health insurance costs are rising so fast, with so little to show for it in terms of longevity or other public health statistics” in which other industrialized nations outdo us, according to the authors.

Healing the pharmaceutical industry

The March 19 edition of the Economist includes a special report and accompanying editorial about recent problems in the drug business. The authors note that risks and benefits are well assessed before a drug is approved, but they call for an increased emphasis on continued risk/benefit assessment post-approval.

On the risk side this would include collecting better information about side effects in real-world settings and possibly giving the FDA more leverage to influence how drugs are marketed.

On the benefits side, the Economist advocates a…

“…more systematic, rigorous and impartial assessment of the benefits of prescription medicines and a willingness to pay top dollar for those drugs which truly represent an advantage over existing treatments and less for those that do not.”

“In the long run, it is better for [the drug firms], as well as the public, to have pricing based on reliable evidence than on politicians currying political favor.”

Sounds reasonable to me.

Is the disease management business peaking?

Leading disease management company American Healthways reported an 83% earnings increase compared to the same quarter a year ago. The company reports expanding demand from health plans and payers to help coordinate and integrate the care of chronically ill patients. Most of the company’s services are provided by nurses who interact with patients by phone.

Disease management (DM) has gained acceptance in recent years. Almost all health plans and most employers have some sort of effort in place. However, the road ahead could be bumpy:

  • Most programs still address a single condition, such as CHF. Even when DM companies expand beyond one disease, they still can’t address certain co-morbidities such as mental health and cancer
  • Calculating return on investment is tricky. It’s not clear that DM provides a financial payback. Meanwhile, vendors have done a disservice to themselves by over-promising returns
  • There is some perceived conflict of interest as pharmaceutical companies have provided funding for a number of state initiatives. Some observers view these efforts as an attempt to sell more drugs
  • Customers are rarely satisfied with their vendors, and contracts are typically re-bid at the end of the term rather than being renewed automatically

Perhaps the biggest threat to disease management vendors is that hospitals, integrated delivery networks and physician groups will begin to provide disease management services themselves. The DM companies’ current customers would rather have providers coordinate care rather than having to pay a separate vendor. To the extent the providers pick up the ball, it will hurt the DM companies.