Year: 2006

Jul
13

HSAs won’t reduce spending.

Posted by Joe Paduda on Thursday, July 13th, 2006 | Comments

Well, duh.
My pejorative use of the playgound expression is not directed at Health Affairs or the authors of the excellent study that is the cause of my use of the childish expression, but rather at those who actually think HSAs (health savings accounts, aka health spending accounts) will reduce spending by making consumers, well, better consumers.
The central finding of the study (authored by Dahlia Remler of CUNY and Sherry Gilead of Columbia University) is this “fully half of (health care) spending is for those who face reduced cost sharing on average (under an HSA plan as opposed to a more traditional health benefit design). Thus, when considering the plans in existence today and comparing them with the types of plans associated with the new (HSA) legislation it is not clear that HSAs live up to their advertised increase in cost sharing.”
I’d go further – it is clear that HSAs will have little to no impact on health care spending by the high spenders. This blows a very large hole in HSA advocates’ arguments that consumerism is the solution to our health care crisis.

Continue reading HSAs won’t reduce spending.

Jul
13

HWR 11 is up

Posted by Joe Paduda on Thursday, July 13th, 2006 | Comments

Jason Shafrin at Healthcare Economist has posted the latest edition of HWR for your reading pleasure. Contrasting opinions on quality, consumer directed care, and technology are featured in Jason’s edition.

Jul
12

How many docs is too many docs?

Posted by Joe Paduda on Wednesday, July 12th, 2006 | Comments

Kevin at Kevin MD posted a quick piece on the contention by researchers at Dartmouth College that there are too many providers, and he struck a nerve or three. And one appears to be the sciatic, for the amount of pain it has created amongst Kevin’s readers.
The study, which was published in my-favorite-journal Health Affairs, contends that there are presently enough physicians in the US to provide all of us with adequate care. Moreover, the lead researcher opines that spending additional money to increase the number of physicians will divert funds from more critical needs.
If you agree w the study’s results, it looks like we will soon have too many docs. And the more docs we have, the more procedures are performed, and the more bills generated. I’m also dubious about a return on that investment, as the health status of the average American will likely remain unchanged..

Jul
11

More docs does not equal better rankings

Posted by Joe Paduda on Tuesday, July 11th, 2006 | Comments

Dartmouth’s study on the number of physicians required to treat Americans includes an observation which bears directly on the USNews report on the nation’s best hospitals. One of the top ten, the Mayo Clinic,needs one-third as many physicians to treat patients in the last six months of life as an unranked facility, New York University Medical Center (also a teaching institution).
That being the case, it is clear that being the best does not require having a lot of docs. And that has significant implications for the type and volume of procedures performed and the cost of care.

Jul
11

Genetic testing and health insurers

Posted by Joe Paduda on Tuesday, July 11th, 2006 | Comments

Health insurers are reluctant to pay for experimental or unproven medical procedures and drugs. And in most cases that makes sense; whether its apricot pits for cancer or artifical cartilage, until there is proof that the treatment will positively impact the condition, obtaining that care could harm the patient, or provide no benefit, while costing the insurance company (and therefore its policyholders) lots of money.
That long standing norm has required insurers to staff medical committees , also known as P&T committees, whose function is to assess new procedures and determine the insurer’s coverage policy. These committees determine if the treatment is covered in all instances, for specific diagnoses, only after other therapies have been tried, or not at all. And in my experience the committees have done their jobs well, diligently, and fairly.
Personalized medicine, aka gene-based therapy, has long stood just outside the committees’ meeting rooms, rarely poking its nose in but nonetheless a very real, and very shadowy presence. The door is about to open, forever altering the size, role, staffing, and reach of these committees. The knock is coming from a beta blocker, Bucindolol, which appears to work quite well for a few people and not at all for others. Early trials were terminated when it seemed the drug did not work nearly as well as others. Now, evidence is emerging that the drug is effective for a segment of the population with a slightly different genetic makeup.
This is the kind of information that will lead to a transformation of the P&T committee, benefit design, medical ethics and likely utilization review. Committees will become larger, require deeper knowledge of genetic medicine, and likely become even more tightly integrated with the medical management department.
And that’s a good thing.

Jul
11

CIGNA gets it

Posted by Joe Paduda on Tuesday, July 11th, 2006 | Comments

In a presentation to the Global Six Sigma Summit, CIGNA (health plan) CEO Ed Hanway made the link between good health and economic viability. This is one of the few times I have seen a health plan exec directly address the real reason employers should be concerned about health care – its impact on their workers’ productivity and therefore the employers’ success.
Considering that over 50 million workdays were lost due to a failure to receive needed care, and that this information has been out for years, it’s encouraging that a health plan CEO has recognized the role of health care in economic success.
Here’s a quote from Hanway’s speech…
“By improving the health and well-being of individuals, we create a more productive work force…By supporting a more productive work force, we contribute to a more competitive business community. By improving business competitiveness, we create a stronger economy. And by strengthening the economy, we build a stronger nation.”
Hallelujah.

Jul
10

Insurers are starting to “get” the web…sort of

Posted by Joe Paduda on Monday, July 10th, 2006 | Comments

A rather interesting report from Vox Inc. reviews the websites of a dozen major insurers, revealing the good, the bad, and some pretty ugly as well. As more and more consumers are getting their quotes over the internet, the usability of web sites is getting more and more important. If you’ve been near a TV any time over the last few months, you’ve probably seen the ubiquitous Progressive guy talking about their site. Well, he and his fellow pitchpeople have been very effective in driving traffic; 68% of consumers are now getting quotes over the web; 55% over the phone.
That’s a remarkable statistic.
One really interesting takeaway (mine, not their’s) is that compared to user-specific needs such as finding an agent and accessing a policy, way too much space is devoted to institutional image.
There is some very useful information in the report, info that all marketing, sales, PR, and exec staff would be well-advised to spend some quality time reviewing.
And don’t complain you don’t have time – this is how people are buying your stuff, so it is the most important thing you could be doing.

Jul
9

Is rating the “best” hospitals “good”?

Posted by Joe Paduda on Sunday, July 9th, 2006 | Comments

US News’ annual rankings of the nation’s “best” hospitals by specialty is out, and hospital execs and PR staff around the country are either studiously ignoring the release or aggressively trumpeting their selection. Expect to see more billboards, especially around Baltimore, where Johns Hopkins got the top rank, Rochester MN (Mayo Clinic), Florida and Ohio (Cleveland Clinic).
There are several good things about this highly public presentation of “quality”. First, it gets people’s attention. Second, it gets hospital execs’ attention. Third, it provides a somewhat objective review of providers’ quality. Any time the industry is forced to focus on quality, however defined, that is a good thing. While we can, and I will, argue that one set of criteria is flawed, or another is somehow unfair or biased, in the larger scheme the attention paid to “quality” is just as, if not more, important than the actual criteria used. I’m sure I’ll get some heated email on this, but the point is we do not pay enough attention to “quality”, so any device, however cumbersome, that increases focus on quality is good.

Continue reading Is rating the “best” hospitals “good”?

Jun
29

Surgical implants – who’s paying?

Posted by Joe Paduda on Thursday, June 29th, 2006 | Comments

Physicians choose surgical implants and devices, hospitals order and pay for them, patients get whatever the docs choose, device manufacturers make lots of profits, and payers foot the bill. A process that is seemingly designed to completely avoid any price sensitivity, and the results to date have shown that there is remarkably little concern about cost on the part of the doc or patient, and at least to date, little ability to reduce costs on the part of the hospital, or payer.
A column in today’s New York Times describes the results of an analysis performed by investment firm Sanford Bernstein (registration required) which compared the costs of surgical implants (artificial hips, knees, etc) at 100 hospitals. Many of these institutions thought they were getting preferential pricing, but the results of the study show that their costs may have been substantially higher than other hospitals’.
The net of the article is that the days of price opacity in surgical implants is likely coming to an end; the research, combined with inquiries by regulators and the US Justice Dept. will shine a blinding light on the arcane world of implant pricing, likely bringing to an end the annual 8% price increases.
There is a subtlety missed in the article, which pertains to the small but important role of the workers comp payer. Sources indicate that a substantial portion of surgical implants are covered by workers comp, a portion much greater than the miniscule overall market share of comp (about 2% of all medical dollars are spent on comp, but figures indicate over a third of surgical implants are paid for under workers comp).
In comp, specifically in DRG states like New York, the cost of the implant is added to the DRG cost, which can increase the cost of the care by 50-70%. Therefore, the wounded parties in comp are not the hospitals (who typically price these procedures on a bundled basis in the group health and Medicare worlds and thereby absorb the cost) but the WC insurers.
What does this mean for you?
More light shining on the murky world of medical costs and procedures is always welcome; be sure to make sure you understand how the bundling and unbundling applies to your contracts and reimbursement.