The Health Care Blog

MEMORIAL DAY OFF

I'll be taking Memorial Day off. If you are in DC for the holiday I highly reccomend the exhibit of WWII photos in Union station, where I passed a very pleasant hour wating for a train. Best wishes to all veterans of all wars (on all sides). Given that I just visited Turkey, I thought these words of Turkish leader Ataturk (who led the Turkish army at Gallipoli), written to a group of Australian parents visiting Gallipoli in 1934, are very appropriate:

Those heroes that shed their blood and lost their lives; You are now lying in the soil of a friendly country.Therefore rest in peace. There is no difference between the Johnnies and the Mehmets to us where they lie side by side here in this country of ours. You, the mothers, who sent their sons from far away countries, wipe away your tears;your sons are now lying in our bosom and are in peace. After having lost their lives on this land they have become our sons as well.

POLICY: It sucks to be sick and poor in America

While some of my fellow bloggers have seized on the opportunity afforded by the Canadian election to criticize the alleged "monstrosity" of the Canadian health care system, the true "stinking" is emanating from the system for care of the poor here at home. CHCF is out with two new studies which, while not exactly new news, confirm that access to care for uninsured Californians is terrible, access for those on Medi-Cal is not much better, and that those who receive their care at Federally Qualified Health Centers have enormous problems getting to specialist care.

I won't dwell on this here and you can go read the reports, but suffice it to say that the Fraser Institute's analysis of what's wrong with Canada continually omits to tell the truth about the relative difference between the systems. THCB analyzed the actual situation (rather than some Libertarian fantasy) in the "Oh Canada" post last year. The story from exhaustive studies is that all Canadians have to accept some limitations on getting to highly expensive care, but that has no discernable effect on their overall health or real access to necessary care, and no Canadians have real financial problems associated with getting that care. On this side of the border, well insured Americans have more or less immediate access to expensive care, but poorer and even lower-middle class Americans have much worse access than wealthier Americans (as borne out by the recent CHCF studies) and also than poor Canadians. And up to 25% of Americans have significant financial trouble due to health care expenses. If that means that the Canadian system is morally inferior to ours, let me just say that I have a hard time grokking the morality of those who think so.

TECHNOLOGY: Upping the ante on physician technology use

The Bridges to Excellence program, that the very careful THCB reader may have noted was discussed in the P4P piece by the HSC folks referenced in yesterday's post, is in the news today for offering to hand out cash to doctors. If it was sponsored by a bunch of pharma companies, Eliot Spitzer would probably be getting the handcuffs out now, but as it's sponsored by lots of big employers and run by the thoroughly worthy NCQA (and I really mean that) led by Peggy O'Kane, it's actually a good thing.

As, the HSC folks report, "Bridges to Excellence" makes incentive payments to physicians who show improvements in diabetic and cardiac care and invest in information systems and care management tools". The new story is that up to $50 per patient will be paid to doctors who are investing in the IT tools. Theoretically a GP with a panel of 3,000 patients that might amount to $150,000. In fact one practice got $40,000 already, almost real money, and certainly enough to get well up the IT curve. Of course a cynic (i.e. me) might say that this is a Johnny-come-lately attempt to copy the British government which gave its GPs enough money to get computerized in the 1990s and is now paying them based on their ability to manage patients to certain care process targets. But it's definitely a move in the right direction.

QUALITY: Pay for Performance, Care Management and the scribblings of defunct economists

Back in 1997 when IFTF was working on the 10 Year Forecast of Health and Healthcare, our chief economist Greg Schmidt vehemently decried capitation and FFS as unsustainable systems and said that a rational market would develop in paying for medical excellence. He convinced us all to put something called "Performance-based reimbursement" in our forecast, and our final forecast suggested that by 2010 some 20% of reimbursement for the health care system would be in some kind of pay for performance manner. Remember what Keynes said about us all being "slaves of some defunct economist"?

This week two different sets of leading health care luminaries have put the state of Pay for Performance and its related cousin of plan-based care management in their sights. Brad Strunk and Robert Hurley at HSC have an issue brief looking at the spread of "P4P" in several of the markets that HSC tracks. Their analysis is that P4P is plan driven and a response to try to tease out some of the "good effects" of capitation. (You remember the pre-Helen Hunt period when capitation was supposed to encourage long-term thinking in care management, and innovation in improving patient services?) It's obviously also a way for plans to try to establish some limited control over provider behavior during a period when visions of a return to 1973 and the "Golden Age" have been terrifying the plan medical directors trained at the temples of the prophets Enthoven and Berwick.

Berkeley's Jamie Robinson (the other Reggie Herzlinger fan) and CHCF's Jill Matthews Yegian have an online piece in Health Affairs which summarizes the plans dilemma nicely:

"Health insurers are under conflicting pressures to improve the quality and moderate the costs of health care yet to refrain from interfering with decision making by physicians and patients"

. That's really what health plans efforts to create better care for their members have evolved into.

Their article is an accurate parsing of the state of the art of DSM as managed by major health plans (or more accurately their data jockey and care management subsidiaries). They parse care management it into Identification (either data based, self-assessed by patients or more likely gained via notification from physicians that something bad is happening) and Intervention. Intervention tends to happen well when a nurse gets the patient on the phone (the American Healthways or Lifemasters model) and not so well when a medical director is trying to change physician behavior one doc at a time (the initial Active Health Management model).

Robinson and Yegian basically call the state of medical management out as being nothing more than a minor attempt to keep some level of quality improvement in the system while not upsetting providers or patients very much. They also doubt that there is much bang for the buck in these programs beyond a narrow segment:

"The health plans’ medical management programs are designed, packaged, and priced with modest expectations for what they can deliver. All programs assert that they generate a positive return on investment, with the benefits in lower medical costs exceeding the administrative costs of identification and intervention. The positive return on investment is predicated on the modest level of investment, however, and a major ramping up of medical management programs would not generate commensurately higher returns and slay the dragon of cost inflation and quality deficiency."

In other words they seem to think that Wennberg and the Dartmouth crowd's jobs are safe for now.

In a follow-up piece Victor Villagra notes that as health plans have developed DSM outside of the "traditional" provider system, no one has dealt with the complex question--"Can DM Organizations Support Small-Practice Adoption Of The Chronic Care Model?" It’s not hard to see Robinson and Yegian's answer as being "No".

I'm not quite so certain. Somewhere in the bowels of the malpractice debacle a reasonable debate about following evidence-based medicine is trying to get out. If you think about it care management is all about extending evidence-based medicine over the continuum of care. P4P is merely about trying to encourage that trend. While the defeat of managed care in the court of public opinion and in the boardrooms of insurers seems more or less final for now, there are two things leading me to believe that the war is not yet over. First, it's just the right thing to do, and you know what Churchill said about Americans doing the right thing. Secondly, and rather more known to motivate Americans, it's the money. If aggressive private sector negotiating doesn't work to restrain health care costs, something else will find its place. Stein's law says that if something's unsustainable in the long run it will end. At some point 15-20% rises in health care costs every year is unsustainable. The combination of EBM, care management and P4P has the kernel of a promise to reduce the care variation, the unnecessary care and the dumb care that is responsible for a big chunk of the $1.6bn spent every year.

So round one to the system, but I for one still believe that the question of Greg Schmidt's "defunctness" is still up in the air.

The IFTF Forecast from 1998

PHARMA: Formularies--penny-wise, pound foolish.

You may notice some slightly funky publishing schedules this week as I'm on the east coast confirming that Boston is cold in May, that the Big Dig is never-ending, and that Amtrak can make the trains run on time. Meanwhile in the better late than never category I wanted to make sure that THCB readers didn't miss (and of course you saw it elsewhere) the RAND report about pharmaceutical formularies and their impact on Rx consumption. In yet more proof that in my earlier life I hung around with intellectuals way above my station, this study was led by Dana Goldman, who was a mere Econ grad student when I was at Stanford, but has certainly moved on since then! (He's now head of Health Economics at RAND).

Goldman's team linked a huge dataset of Rx claims with pharmacy benefit design for over half a million lives from a wide variety of plans and employers. (Incidentally the brain and data crunching required for this study--given that these things are not usually correlated in that way--must have been immense and makes me glad that I didn't try to emulate his success!). The results mirror a study in the NEJM last year, which looked at 3-tier formularies. The bottom line in both studies is that if you increase the co-payment at point of dispensing, people take fewer drugs. RAND found that a doubling of the co-pay caused up to a 45% decrease in use of NSAIDs and antihistamines--presumably because cheaper OTC products were substituted. That's a win for the payer and probably not too much of a loss for the consumer. But at that point things get a little less clear. "Reductions in overall days supplied of antihyperlipidemics (34%), antiulcerants (33%), antiasthmatics (32%), antihypertensives (26%), antidepressants (26%), and antidiabetics (25%) were also observed." And even more disturbingly "patients with diabetes reduced their use of anti-diabetes drugs by 23%.".

Presumably having one in four diabetics reducing their maintenance drug use isn't the type of health promotion that all the PBMs' marketing materials claim they are aiming for. And of course as Harvard's Steve Soumerai showed years ago in looking at restrictions on schizophrenia drugs in Medicaid, a modest saving in one place often causes a much bigger loss in another. Although it's not in the abstract, the Modern Physician story about the report quotes author Geoffrey Joyce:

While the drop in usage is not nearly so high with drugs for chronic conditions, "we find significant price sensitivity in this population," Joyce said. "We think there are adverse health consequences." For patients with diabetes, asthma and gastric acid diseases, emergency room visits climbed 17% and hospital stays rose 10% as the use of prescription drugs dropped, according to the research.

What to do is a question of balance when creating a formulary, according to Joyce, who warned against using increase in copays as a "blunt tool." "I think there is this herd mentality to control drug costs without fully considering their overall healthcare costs," Joyce said. "You can design it to make people price-sensitive without creating adverse consequences."

Now bear in mind that not only are the health consequences of these serious, but the DCCT study over a decade ago proved that a combination of testing and drug use could maintain diabetics in a stable state, whereas poor compliance increased both the incidence of hospital visits and overall costs for the diabetic population. It seems that those lessons haven't been learnt. Of course having a drug budget separated out from the overall health budget doesn't easily allow a payer to make that connection. Consequently you have to be concerned about the way that Medicare is administratively separating off its drug coverage from its overall care system.

POLICY & HEALTH PLANS: Managed care costs Medicare more

This isn't new news, and has been disputed in a roundabout way in various other pieces, particularly one by Jeff Lemieux that I commented on last year. However, the Commonwealth Fund has a latest report showing that in terms of pure increase in payments, the enrollees in Medicare HMOs will exceed the cost of their equivalents in the FFS program by 8%. In some urban counties (such as Phoenix, AZ) the difference will be as much as $1,000 per year per member.

So the recent legislation designed to "level" the playing field between the public FFS program and the privately-run HMOs in Medicare+Choice has at the very least thrown the advantage back to the HMOs. Logically, if it believed that HMOs actually were cheaper you'd expect the government to get seniors into HMOs and then keep them there as they cut reimbursement rates later. That presumably would save money in the long run. However, we've seen this movie before, we know how it ends, and there are problems with the "bait and switch" scenario in which the senior is trapped in an ever-cheaper HMO. The problems are that neither the members nor the plans can at this stage be forced to stay in the market. In the late 1990s the private plans moved out as reimbursement fell, and their members were forced to move back to FFS.

That means that the short-term costs of pushing people into HMOs cannot be "made-up" later by ratcheting down rates so (as Commonwealth says), the increased Federal spending is merely a short-term subsidy to private HMOs and their members. Not exactly logical government policy. But then again, who said PDIMA was logical. Expect Senator Kerry to point this out in the run-up to November!

POLICY: Overview of HC system spending

The California Healthcare Foundation is out with more great reference work. This one is an overview of the whole health care system. They call it Health Care Costs 101 and it's a nice summary of some voluminous work done at CMS by Katherine Levit's team.

There's an easy to digest one page system overview PDF as well as a much larger version here.

Perhaps one of the most interesting views of what we already know is what share of which payers' expenditure goes on what.

For consumers, "Out of Pocket" expenditure on prescription drugs is 23% of all spending, dental/other professional 21% and other (such as nursing homes) is 18%. For Private Insurance the numbers are hospitals 30%, physician/clinical 30% and Rx 14%. For Medicare hospital care is 56%, physician/clinical Services 26% and nursing Home/Home Health 9%

So as you'd expect the relatively low amount overall paid out of pocket by consumers is concentrated on drugs (and is concentrated in a relatively few number of consumers by the way) with the political consequences we've been seeing in the past few years. Whereas private insurers are concerned mostly with hospitals and doctors, and Medicare of course is still fixated on hospitals 20 years after the introduction of DRGs.

All food for thought when you're considering who cares about what.

PHARMA: Bristol-Myers to Stop U.S. Sale of Serzone

BMS is pulling its poorly selling anti-depressant Serzone off the market. BMS blames poor sales for the move, but the drug has been blamed for liver problems and the folks at Public Citizen have been suing to force a full recall (rather than just stopping sales) and the cessation of sales of generics.

Overall this will have modest effect on BMS attempts at revival--the way the company deals with the patent expiry of Pravachol will be much more important. As mentioned last week in THCB, Forbes believes they'll do OK.

LIGHT RELIEF

If you are needing a break to get you to the weekend, the photos from the first half of my trip to the UK and Turkey are now up at my personal blog. But don't blame me if your boss gets grumpy with how you're spending your day!

HOSPITALS: CalPERS drops 36 hospitals

Here's the Sacramento Bee's report on CalPERS paring down the list of hospitals it will contract with in the Blue Shield HMO product. Although some big names like Cedars Sinai are on this list, the real deal is the fight between CalPERS and Sutter. Sutter operates 13 hospitals in the Sacramento-San Francisco region. However, it's not CalPERS denying access to hospitals that is the big deal. It's the issue with physicians affiliated with those hospitals.

While in the SF Bay Area many primary care physicians contract with either an umbrella group like Hill or Brown and Toland and as such CalPERS employees can get to their physicians another way, in Sacramento somewhere in the region of 50,000 CalPERS employees are likely to have to change primary care physicians to a non-Sutter affiliated doc. I suspect that the squealing from that will be fairly loud. The employees can opt for the PPO to keep their docs, but that will cost them more in premiums and co-pays. As a contrast SBC unionized phone employees (including those in the Sacramento are) about to strike because they face co-pays for the first time. The issue was the same in grocery workers strike that lasted most of the past 9 months.

So this one needs to be watched. CalPERs believes that there is still overcapacity of hospitals in the Sacramento region, or else it wouldn't have tried this. It's also staying away from the "all or nothing" tactics that Blue Cross tried on with Sutter in its losing contract dispute a few years back. But if Sutter has managed to keep prices 80% higher than everyone else (as CalPERS claims) their market power may be enough to see them through this. Whether CalPERS employees will go along is another matter.

HOSPITALS: Straight Outa' Compton, by MATT QUINN

St. John's Regional Medical Center <>, Oxnard's only hospital has filed a civil lawsuit seeking to impose an injunction against members of the Colonia Chiques gang. According to the injunction, gang members - who "frequently arrive at the hospital as victims of beatings, stabbings and shootings" could receive care at St. John's, but fellow gang members would not be able to congregate there.

The hospital claims that the "typical gang member emergency usually results in 20 to 30 people showing up at the emergency room," where gang members "are very loud, bang on doors, are rude to staff and disruptive, and have no regard for other patients or hospital property." In addition, the affidavit stated that the gang members "block off the entrance to the emergency room, obstructing the passage of those who need to use it"; "intimidate anyone who wants" to enter the emergency department; and "continually try to obtain information from the emergency room personnel in a way that obstructs staff's ability to do their job." Gang members also are responsible for "thousands of dollars worth of vandalism" at the hospital.

While this injunction might seem like a good idea, putting it into practice might be somewhat challenging: does it apply to only Colonia Chiques gang members or does it apply to other (more or less well-behaved) gangs; short of declaring that they're a Colonia Chiques, how does one know if someone in the E.R. waiting room is a member of that gang or not; what rights does a non-disruptive gang-member have to visit an injured family-member?....etc.

Like it or not, gang members represent part of the "community" that this hospital has a mandate to serve. Other than the vandalism (which should be addressed with better security), it sounds like, perhaps, more spacious waiting facilities and better communications - on both sides - would go a long way toward reducing problems. Too bad St. John's isn't seeking a constructive approach.

GENERAL: Round-up of few stories

So I've made it back from vacation. The last story (for a while) from Matt Quinn runs after this one, but I thought I'd give you a quick preview of what I've been seeing in news since I came back.

Forbes has an interesting article suggesting that Bristol-Myers Squibb may be emerging from its troubled last 3 years. The 'Buy' Case For Bristol-Myers

Via the BCBS Association site, the Wall Street Journal has an article suggesting that if physicians just say sorry, it will lower their risk of being sued for malpractice: More Doctors Apologizing to Patients To Avoid Lawsuits

A mere 4 years after we tried hard to sell Cigna the same thing for way less money (not that I'm bitter of course!), they have struck a deal with WebMD for a new consumer front-end to their web-site. CIGNA Teams with WebMD Health: Agreement to Offer New Online Help So Consumers May Get the Most From Their Health Care Plan

Manhattan Research has a new study out showing that more seniors are getting on line and as the younger seniors and "pre-seniors" are even more "wired", their use of online services for health care will be even more influential in the future. Why drive when you can surf?

USA Today has an article remarking about how far the gay rights movement has come in 30 years while the "uninsured rights" movement hasn't got far since 1948! USA Today: Advances in gay rights overtake health policy

There's also interesting stuff from Health Affairs about medical management, more about Sutter and CalPers, and some interesting stuff about formularies and drug utilization from RAND. All grist for my mill over the coming days.

BLOG NOTES:

I'm back from a great trip to the UK and Turkey, and of course have jetlag and so am up at 4 am writing this. Pics will be up at my other blog soon...

Meanwhile many, many thanks to Matt Quinn who produced a great set of postings while I was away. The latest one (today) on physician directed malpractice plans is indeed a gem!

I have a couple of stories from the UK waiting in the wings, and more or less normal service will be resumed tomorrow!

INSURANCE: Premiums Rising, by MATT QUINN

The Boston Globe reports that the largest malpractice insurer in Massachusetts will raise doctors' premiums 11 percent on July 1. The responses from "outraged" physicians (and insurance company executives) in Massachusetts echo the sentiments of those in Pennsylvania, New Jersey, and other states:

"Doctors and insurance company executives say premiums are rising because juries are awarding these and other patients more money, which also drives up settlement amounts. They are pushing legislation to limit the amount juries can award patients for pain and suffering. Massachusetts doctors want additional changes, including limiting the interest paid on awards. Doctors also want to establish standards for expert witnesses, such as requiring physicians to be actively practicing in the specialty on which they are testifying."

There is a push for federal and state legislation to limit jury awards because rising premiums are "becoming unaffordable" to some physicians and are driving some specialists to leave the state in search of greater compensation for their services. Combating rising malpractice premiums would be a top priority of the Bush administration if re-elected, according to Mark Breakstone, a Boston malpractice attorney:

"If George Bush is reelected and Republicans...control of the Senate, there will be a full-scale assault on many fronts...Bush has made it clear that medical malpractice is a top priority for him."

Meanwhile, premiums of another kind continue to rise at a double digit pace, but the response - and those impacted - by this crisis are quite different:

"Health spending is expected to rise well above inflation for years to come. Employers are increasingly passing on the additional costs to their insured workers, causing some workers to opt out, saying they can't afford it. And, at some workplaces, employers are dropping coverage altogether...If insurance premiums continue to rise about 10% a year, today's average premium could double in just over seven years. Wages, however, are only expected to grow at about 3% a year."

While cost shifting and employers who drop coverage because of rising premiums impact the working poor the greatest, more middle class citizens are also feeling pressure:

"19% of those whose household income is $25,000 to $50,000 are among the nation's 43 million uninsured. The percentage is even higher among those making less than that: 23%. Even those with household incomes exceeding $75,000 saw a rise in the percent uninsured in the last Census Bureau survey."

However, the Bush administration supports such cost-shifting because it makes consumers more responsible for the care that they receive:

"Such high-deductible policies also are supported by the Bush administration, which sees them as a way to help make consumers more judicious users of health care. Congress, too, gave a nod of approval in the Medicare bill, allowing consumers with certain high-deductible health insurance policies to open tax-free health savings accounts to be used for medical care."

While I certainly believe that elements of the malpractice system need reform to make it more reliable, any legislation that addresses malpractice should concurrently focus on holding physicians more responsible for the care that they provide. Recent studies have concluded that patients receive appropriate care only about half of the time. Some debatably merit less cases receive large jury awards. A far greater number of patients who receive inappropriate care - and are harmed by that care - never see a dime.

To be consistent, perhaps insurers should begin to develop (and the Bush administration should support) the development of high-deductible "physician-directed" malpractice products that allow physicians to choose "cafeteria-style" their coverage in exchange for lower premiums... or to even go without (as 43 million of their patients do) and pay full price for any charges that they incur.

HOSPITALS: Tenet Update, by MATT QUINN

In stark contrast to last week's placid shareholder meeting, Tenet's Shareholder Committee is outraged - OUTRAGED! - at the "endless cycle of scandal" at the hospital chain and has threatened to run an ads in the Wall Street Journal detailing the problems:"We feel that the executives and board members at Tenet who were responsible for these scandals should be held more accountable," said Shareholder Committee spokesman Paul Brickman.

While I'm not sure why these lingering concerns weren't aired at Tenet's Shareholder Meeting, it was encouraging to see demands for substantive change at Tenet.

But not so fast! It appears that the threatened negative PR campaign has less to do with actually fixing Tenet than the efforts of the head of the Shareholder Committee to take advantage of the hospital chain's weak state to enrich himself on a real-estate deal:

"According to Santa Barbara-based Tenet, (Dr. M. Lee) Pearce (Chairman of the Shareholder's Committee) had threatened to launch a negative publicity campaign unless Tenet agreed to either lease a medical building he owns at an inflated price or sell him an adjacent Tenet-owned hospital in Fort Lauderdale, Fla., at a discounted price. Tenet executives acknowledged that the Fort Lauderdale hospital could use the extra space, but said Pearce demanded too high a price for the lease and offered too little for the hospital."

And it appears that there was backstage wrangling at the publicly serene Shareholder's Meeting:

"Shortly before the company's annual shareholder meeting, Pearce showed Tenet representatives drafts of four ads disparaging the company and threatened to run them if the company refused to deal...But Tenet said before the annual meeting that Pearce threatened to "run a new series of attack advertisements" and "made it clear that the ads would not run and the Tenet Shareholder Committee would cease its activities if Tenet agreed to his demands."

But Pearce (through his lawyer Jeff Villwock) denies that this is a shakedown:

"They've tried very hard to cast this like this is some sort of extortion," he said. "But it simply ignores the fact that … they came to us, and we've been delaying being public [with criticism] at their request for a couple of months. At some point you have to say let's decide if you really want to do this. If not, great."

With shareholders like these, who needs competition!

PAYERS/HOSPITALS: The CalPERS and Sutter Saga Continues, by MATT QUINN

According to an article in the SF Chronicle, the epic battle over hospital charges between CalPERS and Sutter, the state's largest purchaser of health care and the biggest hospital chain in Northern California, respectively, is a conflict that demonstrates the major power shift that has taken place between those who pay for health care and those who provide it.

While in the past large purchasers held much clout in negotiating rates, even the largest have been unable to control costs. Despite reducing the number of HMOs it offers from 14 in 1997 to three,CalPERS' HMO premiums have still increased 57 percent during the past three years: "The pension fund's wrath used to be directed at health insurers. Now it has turned toward doctors and hospitals -and most specifically Sutter Health." It doesn't help that Sutter (CalPERS claims) has rates 60-80% higher than comparable hospitals.

But even Sean Harrigan, the president of CalPERS' 13-member board, CalPERS admits that - in the world after managed care - it has far less "hand" to negotiate successfully:

"We really don't have the kind of bargaining clout we once enjoyed...There's been so much consolidation on the provider side, especially among hospitals, that they are in many cases an oligopoly...They believe they don't have to seriously bargain over price."

And hospital leaders, in retribution for the tactics that big payers used in the past, aren't planning to slow the rising cost of care:

"Any schoolyard bully knows if you push somebody hard enough, they're going to go pump iron and come back and deck 'em."

So where does this leave employers who provide health coverage for their employees? In my guess, paying double digit annual premium increases indefinitely... until the system breaks and/or until consumers revolt as a result of their employers shifting a greater and greater share of expenses (in exchange for less and less coverage) to them.

Quick PS from Matthew: In 1994 (!) Ellen Morrison at IFTF and I had a big argument about whether payers would win out in this struggle or whether providers would face them down. Ignoring my clearly reasononed logic Ellen wrote a report called The Consolidation of Providers in the Six Americas which essentially forecast that provder consolidation would at least equal the power of managed care and purchasers within 5-7 years. Of course she was right and we're dealing with the failure of the last decade of purchaser "power".

HEALTH INSURANCE: ED Overcrowding - Addressing Supply & Demand, by MATT QUINN

A recent study from the Blue Cross and Blue Shield Foundation on Health Care and the Schneider Institute for Health Policy at Brandeis University has concluded that Emergency Rooms Overcrowded Due to Poor Contact With Doctors . It seems that, especially among folks with chronic conditions like congestive heart failure, pneumonia, chronic obstructive pulmonary disease, asthma, hypertension and diabetes, regular physician contact is a big factor in reducing ED utilization and costs. Imagine that!

But other study findings point to the difficulty that fully-insured plan members have in accessing their physicians:

"One in five ED visits were for selected low acuity conditions...such as sore throat and minor rashes. These are visits that can generally be safely treated in a physician's office. The single most important contributor to the overall ED cost per member is the increasing proportion of members (10 percent) using the ED at least once."

Added Blue Cross and Blue Shield Association Chief Medical Officer Allan Korn, M.D:

"Because the privately insured account for more than half of the recent growth in emergency department utilization, there may be ways to address the problem upstream and not just focus on the supply side...This new study provides a balance in understanding supply and demand issues and also sheds an important light on potential areas where insurers and physicians can work together to provide better patient care in more appropriate and less costly settings."

The opportunity for secure patient-physician email communication of the type that RelayHealth provides part of the solution to this problem. Perhaps a "potential area where insurers and physicians can work together" is by following the lead of Blue Shield of CA and others in establishing rules and reimbursement for such service .

HOSPITALS: Soothing Kool-Aid Served at Tenet Shareholder Meeting, by MATT QUINN

The LA Times reports that, in opposition to last year's meeting, the mood was "calm" at Tenet's annual shareholder meeting.

There were so few issues to discuss that, in sharp contract to last year's "raucous showdown" with shareholders, Tenet Chairman Edward Kangas adjourned the meeting in just under an hour after answering only two questions. It seems that Tenet's leadership is claiming that is has solved all of the company's myriad problems in the nine months since the last meeting:

"We were struggling in the aftermath of the company's failed pricing strategy and its many other problems," said Trevor Fetter, who at the time had been acting chief executive for less than two months. "It's remarkable isn't it?...There were a lot of people angry about a lot of things, and we, one by one, checked things off the list."

So...apart from two perfunctory questions (one about margins in comparison to HCA and another about the stock price), all of Tenet's problems have been "checked off the list".

Revenue to replace improper Medicare billing scheme - solved.

Culture of executive entitlement - solved.

Huge losses - solved.

New federal investigations - solved.

Hospital divestiture - solved

Allegations of unnecessary heart procedures - solved

I could go on, but what's the point. Everything is hunky-dory. (Reading from "talking points":) Problems all in past; turning corner; future bright. And - evidently - shareholders at the meeting were buying it. Or maybe they were just high at the time.

HOSPITALS: Gamesmanship to avert specialty hospital classification, By MATT QUINN

A new model of specialty hospital is emerging to cherry-pick the most profitable patients from community hospitals. A group of physicians and investors has proposed building a surgical hospital in Loma Linda, California, specializing in cardiovascular and orthopedic procedures, a move critics say is intended to "cherry-pick well-insured patients needing expensive procedures," the Los Angeles Times reports. But - by including a one bed emergency room - the proposed hospital will not be officially classified as a specialty hospital.

While the California Healthcare Association and community hospitals in the area view the motives behind the new hospital as deleterious to hospitals that must serve a broader segment of patients and procedures and "not serving the community... there to serve a segment of the community that will make their investors wealthy," the spokesman for the proposed hospital's investors holds a different view:

"We are not trying to be rebels. We are trying something new. This can be a model for the whole country" (Martin, Los Angeles Times, 4/26).

I assume that the country that this model of hospital will serve is one in which patients only need expensive heart and sports medicine procedures.... and hardly anyone shows up at the ER. Or perhaps the model he is referring to is one that is designed to maximize physician compensation at the detriment of public health and community access to care. You decide.

HOSPITALS: Fraud--Hospital CEO Goes to Jail, by MATT QUINN

After the - alleged - Medicare fraud at HealthSouth, Tenet, Medco, et. al... the government has held the CEO of an organization that defrauded Medicare personally responsible:

According to AIS Health, Guy Roland Seaton, the CEO of a California subacute hospital and nursing home was sentenced to 78 months in prison for bilking Medicare by overstating nursing salaries at his facility by almost $3 million.

It seems that the nursing home used fabricated time cards and phony payroll reports to inflate Medicare charges for nursing salaries:

"A St. Luke's employee created false time cards and payroll reports from 1996 to 1999. For example, Seaton allegedly told an employee to create phony nursing logs and nursing schedules for April 1996 and February 1997. When the Medicare fiscal intermediary, Mutual of Omaha, got a whiff that something was amiss in nursing salary reimbursement, it planned an audit. In anticipation of the 1999 audit, a St. Luke's employee assembled a binder full of false nursing schedules and then gave it to FI auditors, the indictment says."

While it is clear that the CEO of St. Luke's had a direct role in the fraud, it is heartening to see that prosecutors didn't accept the "I'm the CEO and didn't know about the actions of a few rogue employees" so commonly used in this day and age.

While the dollar amount in this case pales in comparison to the - alleged - amounts that the other companies have been accused of defrauding the government, one can only hope that prosecutors hold corporate heads responsible for the behavior of their low-level employees (versus the other way around). But I wouldn't hold my breath.

TECHNOLOGY: Healthcare IT--Staying the Course (or Not) by MATT QUINN

With rosy prognostications , encouragement from Leapfrog , the support of our Fearless Leader, and leading healthcare organizations pledging billions for Healthcare IT, the universal adoption of electronic medical records and CPOE seems like a done deal.

But debt and pressures on reimbursement margins could derail even the best-intentioned efforts. Baptist Health System Inc. is pulling the plug on its multimillion-dollar effort to install Siemens Medical Solutions Health Services Corp.'s Soarian software throughout its hospitals in favor of maintaining its 1989-era systems (). Hailed by then-CIO Charles Jones as a tool to" provide our clinicians with the best tools...to enhance care delivery and patient safety," Baptist has since changed direction.

"Given the substantial investment, resource and time commitment required to participate as a Soarian early adopter, BHS ... has decided to halt implementation of Soarian."

As Sutter announces ambitious plans to spend over $1 billion on IT systems, one wonders if it will be willing to make cuts elsewhere to maintain its plans in the face of reduced reimbursement from CalPers to maintain its decade-long IT vision.

The ever-reasonable Dr. Donald Berwick, president and CEO of the not-for-profit Institute for Healthcare Improvement, calls for the government to provide web-based, downloadable (and inexpensive) IT systems to overcome the high initial capital costs of the technology and cultural change barriers to the adoption of complex integrated systems:

"Berwick called for information standards for coding systems and interoperability among these systems. As a separate effort, the government should sponsor an electronic medical record...that anyone could download online... The record could act as a foundation if users wanted to build more expensive proprietary systems. He likened the free EMR model to the creation of the Internet, which was developed by the government and "essentially given to the public."

With the present healthcare IT funding proposal not expected to have much of an impact on adoption, perhaps $100 m toward Berwick's proposal would be better spent!

TECHNOLOGY: WebMD as victim of AMA activism? by MATT QUINN

There's a long article from CNET about the problems that WebMD is facing:

While the true scope of WebMD's "lost" or HIPAA non-compliant claims is hard to ascertain from this article, it appears that payers, providers and the AMA are taking the opportunity to shake down the company for more "hand" in negotiating rates on clearinghouse services:

According to Eric G. Brown, vice president and health care analyst at Forrester Research, "WebMD's problems with customers seem to stem more from attitude--the arrogance of a dominant player--than from technology failures. "They're perceived as the Microsoft of the health care sector."

Kimberly Grose, vice president of network services and operations for Harvard Pilgrim, based in Wellesley, Mass. adds that "Thirty-five cents may not seem like much, but it adds up quickly for Harvard Pilgrim because it handles 19 million transactions annually."

All of this portends bad news for WebMD's Envoy business:

Forty-eight percent of the plans already exchange claims directly with at least some providers.

"While large providers and payers can bypass middlemen, Envoy is becoming a clearinghouse 'for leftover claims' from small providers that don't want to be bothered by the effort of setting up direct connectivity with hundreds of payers, said Sean Wieland, a research analyst with W.R. Hambrecht."

At least WebMD has its online content business to drive profitability... right?