Health Business Blog

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

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.

Seductiveness of brain imaging

Today’s Wall St. Journal reports that graphically appealing MRI and PET scan images of the brain seduce us into thinking we understand more than we do. We see the bright red spot on the cocaine user’s brain when he sees a pile of white powder. We see how a chess grandmaster activates certain regions when working on a complex strategy. But it doesn’t mean we understand the underlying activities any better.

In addition to the points made in the Journal, there are some other interesting aspects to this issue:

  • Expensive imaging modalities (MRI and PET in particular) get over used and over reimbursed because they seem to show us something particularly valuable. Sometimes they do and sometimes they don’t. Often there are other ways to get at the same information
  • Most of the studies featured in newspaper and journal articles are performed on very few subjects, and focus on very specific functions and regions rather than trying to understand the brain as a system. The field has not done a good job of building large scale databases that would enable more robust research and integration of results

I’ve been learning about these issues first hand with a client called the Brain Resource Company in Sydney, Australia. They are working to address these issues by forming an international, multi-disciplinary consortium to build a standardized, multi-modality database of the human brain along with tools to mine it. It’s exciting and challenging.

Medicare reform? Don’t hold your breath

Today’s USA Today has a good article on the coming Medicare budget crunch, pointing out the magnitude of the problem and the lack of political will to deal with it.

The steps Congress could take now to restrain Medicare’s growth are politically perilous. Deny end-of-life care? Restrict eligibility? Reduce treatments? Raise costs? No one in Congress is willing to take them on, and there are few options the public might accept.

“Social Security is merely the warm-up for a very big struggle over how to reform Medicare,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget. She laments that while the Social Security debate is in full throttle among policymakers, Medicare “is a discussion we haven’t even started.”

The article outlines a number of ideas that have been suggested, pointing out that not only would these steps be insufficient to restrain costs, they would also be unacceptable politically (for now).

  • Reducing payments to providers –this has been tried but is usually reversed
  • Increasing out of pocket expenses for seniors –unaffordable for many
  • Reducing the scope of coverage –but we seem to be going the other way with the drug benefit and coverage for expensive treatments such as PET scans for Alzheimer’s
  • Raise the eligibility age –but again we are heading in the opposite direction, with pressure to allow younger people into the program
  • Improve efficiency –by using technology. But this won’t reduce costs, only open up capacity for more billing