Jan
18

Why hospital costs are going up

Because they can.

Healthcare  – and more specifically facility-based healthcare – is a very mature industry and – with one huge exception – exhibits all the hallmarks of such…continued widespread consolidation, shuttering of marginal locations and elimination of unprofitable business lines and centralization of core services.

The “huge exception” is margin compression and price reduction. When any other sector matures, competition becomes fierce and prices come down.

Not so in healthcare, where pricing is opaque at best, and more often opportunistic if not downright predatory.

Over the last 70 years, the percentage of hospitals in health systems has grown by a factor of ten. Unusual indeed is the standalone facility.

That decades-long trend continued in the 2010s, although the pace slackened somewhat as there were fewer hospitals to acquire.

The net is this – most healthcare markets are pretty consolidated, which means one or two systems have pricing power.

Those systems use that power to force ever-higher reimbursement from commercial payers – and workers’ comp.

What does this mean for you?

Facility costs are going up.

 


Dec
20

Congress actually gets good stuff done!

I know – who woulda believed it?

Nothing like an end-of-the-year deadline and a looming change of power in the House of Representatives to motivate elected officials.

Here are the big items and what it means for you. Hint – work comp stuff is at the end…

  • a bipartisan bill to greatly increase our ability to prepare for and deal with future pandemics will become law this week.  The Prevent Pandemics Act was pushed by Democratic and Republican Senators…details at the link above.
    This means – the Feds will be much better prepared, activities will be better coordinated, and (hopefully) fewer of us will be affected by the next pandemic.
  • Improvements to Medicaid are great news for new moms and infants, (quoting WaPo) including:
    • allowing states to permanently extend postpartum Medicaid coverage for 12 months and
    • barring children from getting kicked off Medicaid or the Children’s Health Insurance Program for a continuous 12 months
      This means – kids will be healthier and off to a better start  – with big time implications for their future (and ours)
  • and good news for our fellow citizens in Puerto Rico...federal funding for Medicaid in the territory has been extended for 5 years, welcome news for an island that has been devastated by hurricanes and other weather-related disasters.

But all is not good news…the really dumb way we pay providers treating Medicare patients leads to unnecessary, counter-productive, and completely waste-of-time fist fights pretty much every year. Physicians face a 4.5% cut in Medicare reimbursement starting January 1st, and boy are they mad.

I doubt the entire 4.5% cut will go into effect…and the latest news indicates the cut will be 2% in 2023 with a smaller reduction in 2024.

What this means…

Work comp fee schedules tend to be driven or at least affected by Medicare’s fee schedule. States such as California will see an almost-immediate impact.


Dec
16

Friday catch-up

Lots happened this week while I was hunting, driving, and finishing up the annual survey of pharmacy management in work comp.

A quick update on pharmacy data points…

  • across the 30 respondents we have so far (a few more to come), drug spend was down one percent...however
  • there’s a ton of variation between respondents with some seeing big jumps and others steep drops in spend.
  • 91% of all scripts are generic…that’s a big increase from a few years back
  • pharmacy is viewed as being just a bit more important than other medical categories such as facilities, surgery, E&M.
  • and opioid spend is down again (YAY!!)

From HBR comes this trenchant observationIn Supplier Negotiations, Lying Is Contagious

“Lying once can be contagious. It can pave the way for lying again in other interactions or negotiations with people at other companies.”

The brief article is intended to provide guidance to buyers, but sellers would do well to internalize the researchers’ observations.

Health spending in the US is almost twice (as a percentage of GDP) as high as other developed countries’.

The graph is here if the pic above is hard to read.

Which means far fewer dollars to spend on wages, R&D, IT investment, and stock dividends – and much higher taxes to pay for civil servants’ health benefits.

Oh, and costs zoomed up in 2020 and 2021 due to COVID…due in large part to staffing shortages and concomitant labor costs.

What does this mean for you?

Next time someone starts comparing US healthcare to those with national systems, ask them if they have any idea how much more money we spend than those “socialists” do.


Nov
4

19 years ago

I wrote my first post on opioids and workers’ comp. Almost two decades later, the post – which was really an excerpt from a Workers’ Comp Insider blog post – is terrifyingly prescient.

Interesting item from Workers Comp Insider today:
There is an interesting convergence of issues concerning the pain killer, Oxycontin. Originally developed to combat cancer pain, Oxycontin has been aggressively marketed over the past three years by its manufacturer Purdue, to the point where the drug is now the pain-killer of preference for work related injuries. This drug is twice as powerful as morphine and, while not technically addicting, it can create withdrawal symptoms when a person stops taking it. According to a study by NCCI, Oxycontin is prescribed for pain in 69% of permanent partial disability cases. This same study also points out that 49% of these prescriptions go to people with back injuries. When you combine that with the next interesting piece of data – Oxycontin is almost always dispensed in 50 day supplies (100 tablets) — you have a potentially volatile mix.

Kudos to Tom Lynch and Julie Ferguson for their early warning.

Dr Steve Feinberg sent me a note re the CDC’s just-released update to opioid guidelines; there’s a lot to unpack here. A couple of key takeaways.

  • the guidelines were just that – guidelines. In far too many instances they were used to define hard limits, which was wildly inappropriate and completely inconsistent with CDC’s guidance.
  • this from Christopher Jones, acting head of the CDC’s National Center for Injury Prevention and Control and a co-author of the updated guidelines:
    • “The guideline recommendations are voluntary and meant to guide shared decision-making between a clinician and patient…It’s not meant to be implemented as absolute limits of policy or practice by clinicians, health systems, insurance companies, governmental entities.”

What does this mean for you?

Pay attention to early warning signs and don’t over-react.


Nov
3

Republicans planning to force Medicare cuts

House Republicans are planning to impose massive cuts to Medicare, raise Medicare’s eligibility age, and withhold payments to early retirees and retirees earning more than a certain limit.

News sources indicate the GOP will use the upcoming debt limit to try and force Medicare cuts, a reprise of earlier efforts supported by 175 House Republicans to slash Medicare spending. The effort is also gaining traction among Senate Republicans, with Senator Lindsey Graham planning to use the Republicans’ leverage in Congress to cut Social Security and Medicare.

Sen. Rick Scott’s 11 point plan goes a lot further; it would end Social Security and Medicare if Congress doesn’t take specific action to renew those programs every few years (see Scott responding to Fox News question at 1:09 of the video here.)

You may well recall that Scott was sued for Medicare fraud back when he ran Columbia/HCA. Columbia/HCA was ordered to pay the Feds $1.7 billion in fines and penalties.

What does this mean for you?

If you and/or your parents are on Medicare, this means a lot. 

 


Nov
2

Employee and customer trust = loyalty = success

with “success” defined as;

  • more revenue,
  • sticky customer relationships, and
  • more new business driven in large part by referrals from happy customers.

So, how do you measure “trust”?

Well,  you can use lengthy surveys, have long conversations, or track measures such as additional revenue, referrals, and added services.

All of which don’t tell you much about loyalty and are vulnerable to interpretation and confirmation bias.

Or you can take an objective, reproducible approach that can help you determine what really matters to customers, where you’re falling short and what you need to do going forward.

Why do this?

According to an analysis by the Economist, lost trust has financial consequences. Volkswagen, Wells Fargo, and six other corporations lost 30% of their value when they lost trust, at least in the short term.

From Harvard Business Review:

customers who trust a brand are 88% more likely to buy again, and 79% of employees who trust their employer are more motivated to work and less likely to leave…

Customers who give a brand high trust scores are three times more likely to stick with it through a mistake. Eighty-eight percent say they’re more likely to buy from that brand again, and 62% will buy almost exclusively from the brand.

The HBR piece outlines a pretty simple yet powerful way to assess trust and loyalty – which is built on a foundation of trust – and to identify specific factors that will affect customer and employee trust and loyalty.

Briefly, there are four components, each scored on a 7 point scale.

  • Humanity: The company/brand demonstrates empathy and kindness toward me and treats everyone fairly.
  • Transparency: The company/brand openly shares information, motives, and choices in straightforward and plain language.
  • Capability: The company/brand creates quality products, services, and/or experiences.
  • Reliability: The company/brand consistently and dependably delivers on its promises.

Different customers may give your organization the same net promoter score, but for different reasons. A brief survey can unpack key drivers and enable you to focus on specific areas that will improve employee and customer trust.

What does this mean for you?

Nothing is more important to business success than employee and customer trust.

The survey tool is here. Use it.


Oct
17

Defining health plan value – what’s really important

If your health plan could show it:

  • reduced the days kids stayed home from school due to illness;
  • helped members with mental health conditions maintain a high level of functionality and engagement;
  • reduced workdays lost due to illness;
  • sped recovery from illness and injury; and
  • helped amateur athletes avoid injury and recover quickly;

would that be important?

Heck yes.

So…why don’t healthplans do that?

It’s doable – if they stopped focusing on and worrying so much about star ratings and patient experience and net promoter scores – which research shows consumers don’t really pay attention to or care about

(conclusion – no.)

and focused on what consumers really care about – staying healthy and able to do the things we want to do:

  • play with our kids and grandkids
  • do chores around the home
  • do our sports
  • shovel our walks, rake leaves, coach youth sports
  • lift stuff and move it around
  • got to the bathroom without help
  • dress and undress without help
  • go for a walk
  • oh, and work.

What’s even more puzzling is why employers don’t demand health plans complete on the basis of delivering fully functional, engaged workers.

What does this mean for you?

The most important component of any organization is its workers.

No employers hold their health plans accountable for ensuring those workers can actually, you know, work.

And that is why our healthcare system is so dysfunctional, ineffective, and expensive.


Oct
11

The problem with primary care?

It doesn’t generate profits for the medical-industrial complex.

From a societal perspective primary care is wildly undervalued – and wildly under-appreciated – because primary care doesn’t make money for anyone, especially primary care providers.

Which makes no sense on every front but the profit one. If everyone had good primary care,

  • they’d be healthier,
  • their health risks would be identified early and a plan developed to address them,
  • they’d have a provider who treats them as a whole person, who understands that we are a bunch of tightly-interrelated organ systems that have to be considered as a whole, not as individual organs,
  • they’d understand non-physical issues can be just as impactful as physical ones,
  • there’d be a lot less need for specialists, and
  • healthcare costs would likely be a lot lower.

Healthier people don’t need as many medications, devices, treatments, injections, therapies, surgeries, rehab, inpatient beds or surgical centers as unhealthy people.

And that’s where the money is.

Kaiser Permanente has generally excellent primary care – yet it can’t/hasn’t been able to translate that excellence into a sustainable competitive advantage.

I believe that’s because KP – and pretty much everyone else – is thinking about the “value” of healthcare the wrong way.

Tomorrow – how we define value today – and why that is wrong.


Sep
26

Watch out for gabapentin…

The CDC recently reported gabapentin was involved in one out of every ten fatal overdose deaths in reporting states.

Similar to opioids, gabapentin can cause severe breathing difficulties  – which are exacerbated when the drug is combined with other central nervous system depressants (CNS) (e.g. opioids, antidepressants, antianxiety meds).

Illicit use of gabapentin appears to be on the rise…from JAMA:

Gabapentin can produce feelings of euphoria and intoxication and can potentiate opioids’ effects. Individuals who misused the drug reported multiple reasons in a 2019 study, including a desire to enhance the effects of opioids; to achieve a “high” when preferred substances were unavailable, such as when they were living in a treatment facility or were incarcerated; or to self-treat withdrawal or pain. [emphasis added]

Gabapentin is a non-scheduled drug which became much more widely prescribed as opioid scripts declined.  Back in 2018 one out of five chronic pain patients were prescribed gabapentin (or its cousin, pregabalin). There’s some evidence that misuse of gabapentin – which is almost always prescribed off-label – often occurs after the consumer had a prescription for the drug.

And, Parke-Davis, manufacturer of Neurontin – the brand name version of gabapentin – pleaded guilty to promoting off-label use and paid a $430 million fine.

So, what to do?

First – learn more.  Start here – myMatrixx’ Shanea McKinney, PharmD penned an excellent overview way back in 2019.

Then…

  • Dig into your data – what’s been happening with gabapentin?
  • When and where possible, require prior authorization for gabapentin and similar drugs.
  • Educate patients and caregivers about potential risks of the drug.
  • Pay special attention to patients prescribed gabapentin off-label and in combination of other CNS depressants.
  • Consider recommending urine drug testing for gabapentin patients and include it in  the drug test panel.

What does this mean for you?

This looks awfully familiar. 

 


Sep
22

The hospital shakeout

Is well underway.  Likely impacts include:

  • more hospitals shutting down their inpatient operations
  • a decline (!!) in hospital employment
  • even more aggressive land-grab efforts by rival health systems seeking highly profitable commercially insured patients (that’s you, dear reader)
  • doubling down on “revenue maximization” (that’s you, work comp payor)

(Kudos to the estimable Merrill Goozner for his cogent discussion of the issue)

What’s happening…

  • hospital admissions dropped precipitously last year – despite the major impact of COVID admissions. As I noted a while back, COVID patients aren’t very profitable; they rarely get surgeries or other procedures which generate big dollars for hospitals…
  • meanwhile expenses are climbing – driven mostly by labor costs (up $86 billion this year)
  • more than half of all hospitals are going to lose money…before COVID, the money-losing facilities amounted to only a third of the total.

Why this is happening…

  • states that didn’t expand Medicaid are getting hammered as the other safety net payment programs mostly stopped helping hospitals make up revenue shortfalls.
  • care has largely shifted to outpatient facilities which are way less costly – and generate way less revenue per admit – than inpatient stays
  • it’s really hard to find staff – many are way past burnout, driven by overwork and abusive patients.

What does this mean for you?

Facility costs will go up.

Quality likely won’t.