Category: Economics

You’ve come a long way baby! And thanks to Ovia, your mom’s employer knows all about it

published date
April 25th, 2019 by
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There’s an app for that

The Denver Post (Tracking your pregnancy on an app may be more public than you think) has published an interesting and disturbing article about the rise of Ovia, an app that collects detailed and personal data from pregnant women and those hoping to conceive. I’m not surprised that the business model is to provide data to employers about their workforce in order to save on medical costs and reduce time away from work. But I am a little surprised at how much data employees are willing to enter on topics like their sex life, color of cervical fluid, miscarriages and so on, while the app also track things like what medical conditions they looked up.

“Maybe I’m naive, but I thought of it as positive reinforcement: They’re trying to help me take care of myself,” said [Diana] Diller, 39, an event planner in Los Angeles for the video-game company Activision Blizzard. The decision to track her pregnancy had been made easier by the $1 a day in gift cards the company paid her to use the app: That’s “diaper and formula money,” she said.

As I remind people using “free” apps –or ones they are paid to use– you’re not the customer, you’re the product. There’s plenty written on this topic so I won’t bother to rehash it here, but it’s worth remembering that the data provided by Diller and others can be combined with tons of other data from their use of Google, Facebook, Waze, exercise trackers, and more to create incredibly detailed and personal profiles.

In 2008 I wrote a brief blog post called Baby formula in the mailbox. “Honey, is there something I should know?” I was puzzled to see that it still gets a lot of hits in 2019 and that readers are still commenting about their own experiences. Back then, an au pair who worked for us had received baby formula from Abbott Nutrition. Somehow, some marketer thought she was pregnant. It was kind of embarrassing and of course could be problematic for a family relationship or if the pregnancy had ended prematurely.

Online data gathering has come a long way in the past decade. If Abbott once guessed you were pregnant, imagine how much more they –or many others– knows about you now. Maybe the users of these apps aren’t naive, just fatalistic about the idea that everyone knows everything anyway, so why not just take the formula and diaper money and run?

In a few years, Diller’s child will probably find the Denver Post article or maybe even this blog post. If that person is you, I’d be interested to know how you feel about it.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Partners opens lucrative outpatient clinics. I’m quoted in the Boston Globe

published date
December 10th, 2018 by

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An under-appreciated consequence of the BI-Lahey merger is that Partners now feels it can act with impunity. Until recently, Partners HealthCare dominated the Eastern Massachusetts market. As such it was the focus of government and public sector scrutiny and was somewhat constrained in its ability to act.

But now, Beth Israel Deaconess Medical Center and Lahey Clinic have received approval to consummate their merger. BI-Lahey and Partners are similar size, so now the pressure is off Partners to show restraint. In fact, it is taking the opportunity to catch up in some areas where’s it been lacking.

The Boston Globe (Partners HealthCare plans new outpatient clinics) documents one way Partners is taking advantage of the new market reality:

Partners chief financial officer Peter K. Markell said the merger didn’t trigger Partners’ plans to open new clinics. “I think we would have done it anyways — but it doesn’t hurt,” he said in an interview.

Partners and other hospital systems often charge facility fees at their outpatient locations.

“People like to talk about how big we are, but if you look at us geographically, we’re not well-rounded,” Markell said.

“We’re going to put a lot more focus on ambulatory growth,” he added.“That’s where we think the marketplace is going.”

I’m quoted in the middle of the article

“Partners is expanding in the most lucrative lines of business that they can — putting outpatient facilities in high-income suburbs,” said David E. Williams, president of the Boston consulting firm Health Business Group. “This is a very good way to make money. Previously, Partners might have faced more scrutiny for making these kinds of expansions, but now with BI-Lahey, they won’t get as much pushback as they might have gotten before.”

Partners is quite happy with the BI-Lahey merger. Those paying insurance premiums and healthcare bills are going to be a little less enthusiastic.


 

By healthcare business consultant David E. Williams, president of Health Business Group.

CVS Aetna merger goes through. I’m quoted in Chief Executive

published date
October 11th, 2018 by
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Hand it over!

The combination of CVS and Aetna will work out great for the investment bankers and members of senior management who are able to cash out. Beyond that I’m skeptical about what value this colossus will add to the health care equation.

When the deal was announced I expressed skepticism about the rationale (CVS + Aetna. Are we sure this adds up?)

If the idea is to get health insurers to offer plans that favor retail clinics, why not just contract with those plans? Aetna is a big company but as a national plan its market share in many geographies is relatively modest. Often –like here in Massachusetts– the local Blue Cross has the biggest market share. If CVS is big and powerful enough to actually buy Aetna, surely it can get that company and others to come to terms on retail clinics.

Now that the deal is done, Chief Executive asked me for my take. (CVS-Aetna merger approved by DOJ: What CEOs should know). They put me, quite rightly, in the “skeptical” category and quoted some of my concerns.


By healthcare business consultant David E. Williams, president of Health Business Group.

Partners and Harvard Pilgrim aren’t really going to merge, are they?

published date
May 7th, 2018 by

Friday’s news was full of stories about merger discussions between Partners HealthCare and Harvard Pilgrim Health Care. No one denied the reports, so we can assume there’s some truth to the rumors. But why would these organizations contemplate a merger and how likely is it to happen?

From Partners’ perspective:

  • After growing for decades by taking over other providers, Partners has run out of options for major acquisitions. The state blocked Partners’ attempt to buy South Shore Hospital, for example. Meanwhile, Partners’ biggest rival, Beth Israel is becoming more formidable as it combines with Lahey. In some ways a Partners/Harvard Pilgrim merger would be analogous to the proposed Aetna/CVS combination, which was pursued only after Aetna’s planned purchase of Humana was rejected on antitrust grounds.
  • After buying Neighborhood Health, Partners is comfortable with the idea of owning an insurer. But they want one that’s bigger and focused on the commercial market rather than Medicaid.
  • The shift to value based care means providers need more of the capabilities typically found within health plans. This becomes a buy v. build decision.

From Harvard Pilgrim’s perspective:

  • Even though it’s not the number one player in the market, it too may be too big to get away with acquiring a significant competitor, e.g., Tufts Health Plan.
  • The Partners account itself actually has about 100,000 members. Shifting that business away from Blue Cross could be significant even on its own. (Although it kind of reminds me of the Cheech and Chong sketch where Chong proclaims himself a “good customer” –of himself).
  • Possibly, Harvard Pilgrim could gain an exclusive relationship with Partners, where the only way to get care at Partners is by purchasing a Harvard Pilgrim plan. That doesn’t seem likely, but who knows?

Overall

It’s not unusual for health plans and providers to consider tying up. Remember, Harvard Pilgrim’s predecessor, Harvard Community Health Care was a staff model HMO with its own physicians and care facilities. More recently, you see combined payers and providers (“payviders”) emerging in the Medicare Advantage space. There is a certain appeal to combining health insurance and delivery in one entity–Kaiser is Exhibit A– but ultimately it’s not such a superior model.

I don’t think a merger of Harvard Pilgrim and Partners has a compelling rationale and I don’t see it happening. More likely is some kind of limited alliance or joint venture.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

What Amazon can’t do

published date
February 13th, 2018 by
Watch out below!

Now that Amazon and its partners JP Morgan Chase and Berkshire Hathaway have decided to tackle healthcare for their employees, everyone  is tossing out ideas for what they might do to solve the system’s myriad problems.  I count myself among those lobbing in suggestions, with my emphasis on making the system more patient-oriented.

Two letter writers in the Wall Street Journal have interesting ideas about what the partnership should do, but ultimately they are misguided.

Fred Hyde, MD, JD, MBA thinks the team should take advantage of association health plan (AHP) rules to beat up providers over pricing, pointing the finger at “monopoly pricing by larger health systems” and prescribing reference pricing or a Dutch auction for the procurement of hospital care. He points to ERISA as a great liberator for larger companies and thinks  AHPs could be the answer for smaller businesses.

Well, all three partners already can take advantage of ERISA and that hasn’t really helped them. There’s also no particular reason to think providers are going to give the companies lower prices just for the heck of it.

Robert E. Mittelstaedt Jr., Emeritus Dean from Arizona State University, thinks full price transparency is going to be the answer, “forcing patients to make economic decisions” and pushing government to allow providers to compete on price. In my experience providers don’t want to compete on price and sick patients and their families are not well positioned to shop for most healthcare, especially the expensive and emergency stuff like cancer treatment and trauma care.

The writer says the partnership is “no different” than the history of Kaiser Permanente. In that case why not have all employees join Kaiser? After all there is already Kaiser Permanente Washington, based near Amazon’s headquarters, the former Group Health Cooperative. These plans are no panacea.

I’ve heard people quip that the best thing this group of companies could do for their employees is advocate for a single payer system in the US. I think they can do better than that, but it’s actually a better idea than a lot of what’s being discussed.

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By healthcare business consultant David E. Williams, president of Health Business Group.