Healthcare In Crisis

Insurers Profit From Health Law They Fought Against

2012-01-26T10:01:00.002-05:00

Insurance companies spent millions of dollars trying to defeat the U.S. health-care overhaul, saying it would raise costs and disrupt coverage. Instead, profit margins at the companies widened to levels not seen since before the recession, a Bloomberg Government study shows.

Insurers led by WellPoint Inc. (WLP), the biggest by membership, recorded their highest combined quarterly net income of the past decade after the law was signed in 2010, said Peter Gosselin, the study author and senior health-care analyst for Bloomberg Government. The Standard & Poor’s 500 Managed Health-Care Index rose 36 percent in the period, four times more than the S&P 500.

“The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived,” Gosselin said. “There is a shift to government work under way that is going to represent a fundamental change in their business model.”

Health insurers contributed $86.2 million to the U.S. Chamber of Commerce to oppose the law after Obama administration officials criticized the plans for enriching themselves by raising customer premiums.

“We remain very concerned that major health-care reform provisions that go into effect on Jan. 1, 2014 will raise costs and disrupt coverage for individuals, families, seniors and small businesses,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s Washington lobbyist, said after reading the study.

Profit Margins

Still, the companies saw their average operating profit margins expand to 8.24 percent in the six quarters since the overhaul became law, compared with 6.88 percent for the 18 months before it was passed.

Quarterly earnings per share from continuing operations between the third quarters of 2008 and 2011 jumped 29 percent, and the results have on average beaten analyst estimates since the first quarter of 2009. WellPoint, based in Indianapolis, raised its 2011 earnings forecast in October after third-quarter earnings of $1.77 a share beat by 10 cents, the average estimate of 20 analysts surveyed by Bloomberg.

At the same time, companies are changing their business focus to gain from provisions in the law that will expand the size of Medicaid, the $401 billion government health plan for the poor. “Only by substantially reshaping their businesses can they profit,” the study says.

Health-Care Overhaul

The report compares the 18 months before and after the overhaul became law, Gosselin said. The companies studied are WellPoint; UnitedHealth Group Inc. (UNH), of Minnetonka, Minnesota; Aetna Inc. (AET), of Hartford, Connecticut; Humana Inc. (HUM), in Louisville, Kentucky; and Philadelphia-based Cigna Corp. (CI)

The managed care index (S5MANH), which includes all of the companies studied plus Coventry Health Care, rose less than 1 percent at the close in New York. WellPoint also increased less than 1 percent to $68.51.

Cynthia Michener of Aetna wouldn’t comment before reading the complete study. Declining to comment were Tyler Mason, a UnitedHealth spokesman and Phil Mann from Cigna, while WellPoint’s Jill Becher referred questions to AHIP. Humana’s Jim Turner said he wouldn’t speculate on the law’s effects ahead of a Feb. 6 earnings call.

Commercial business now accounts for less than half of the companies’ combined revenue for the first time in at least two decades, according to the study. That’s partly a result of the companies’ growing investments in plans that provide services to Medicare and Medicaid patients, the report said.

Medicare Revenue

At the same time, quarterly revenue from Medicare, the $525 billion federal health program for the elderly and disabled, increased by one third, to $16.39 billion, for the four insurers that reported figures, the study shows. Medicaid revenue more than doubled to $4.11 billion.

The companies run managed-care plans for Medicare that may see revenue rise by $10 billion by 2015 as more baby boomers retire, industry analysts have said. The insurers also administer benefits for Medicaid, which is being expanded under the health-care law starting in 2014 to cover more uninsured people. States have turned to private plans to manage Medicaid caseloads and help control health spending.

Health plans will be able to bid on an estimated $40 billion in state Medicaid contracts from now to 2014, the study found.

The top five insurers have completed at least 10 deals to add Medicare HMO’s or programs dealing with the chronically ill, which usually involve Medicare or Medicaid enrollees. The deals include UnitedHealth’s $2 billion purchase of XL Health Corp. and Cigna’s $3.8 billion for HealthSpring Inc. (HS)

The push toward government programs may prove to be a risky wager, Gosselin said in an interview.

The Supreme Court will rule on the law’s constitutionality this year and opponents of the law in Congress may target individual provisions in the overhaul for budget cuts, he said, Additionally, states may devise onerous rules for the way coverage is sold to uninsured Americans, he said.

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Health Reform Explained

2012-01-24T16:06:00.001-05:00

US Consumer Spending as a Proportion of GDP

2012-01-22T08:55:00.001-05:00

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U.S. healthcare spending rises 3.9% in 2010

2012-01-12T11:18:00.003-05:00

The increase represents the second-lowest rate on record as consumers avoided going to the doctor, taking expensive prescription drugs and undergoing costly elective procedures.

U.S. healthcare spending grew at the second-lowest rate on record in 2010 as recession-spooked consumers avoided going to the doctor, taking expensive prescription drugs and undergoing costly elective procedures.

Public and private healthcare spending totaled $2.6 trillion, representing 17.9% of the U.S. economy, the same proportion as in 2009, according to a government report released Monday. That was a sharp departure from previous years, when healthcare consumed ever-larger shares of the economic pie.

But analysts said spending was likely to pick up as the economy improved and the healthcare law passed under President Obama begins to expand coverage to millions of people now uninsured.

Healthcare spending rose 3.8% in 2009, the smallest rise in the 51 years that the federal Centers for Medicare & Medicaid Services has been tracking the data. It rose 3.9% in 2010.

The figures reflected the "extraordinary" slow growth in consumption of medical services and products, said Anne Martin, one of the government economists who wrote the study published in the journal Health Affairs.

"Persistently high unemployment, continued loss of private health insurance coverage and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used," the report said.

The growth in health insurance premiums, while slowing slightly in 2010, exceeded the growth in insurers' spending on health benefits, according to the study. Insurers' spending rose 1.6%, compared with 3.7% the year before.

The report showed that the federal government footed 29% of the nation's healthcare bill in 2010, up from 23% in 2007. Part of that increase reflects a temporary increase in federal aid to states to enroll more uninsured people in Medicaid, which covers medical costs for the poor and disabled. The percentage of spending by private businesses and state and local governments declined.

Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group, said the report didn't address the biggest question: "When the economy gets strong again, do we just return to the old business as usual?"

"Probably," he said. "But there's a chance that the experience of people economizing may have longer-lasting effects."

Ginsburg said he believed healthcare spending remained slow last year, reflecting the lingering effects of the recession and sluggish recovehttp://www.blogger.com/img/blank.gifry.

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Drugmakers get more time to record gifts to doctors

2011-12-19T11:57:00.000-05:00

U.S. drugmakers and device companies got an extension on the deadline to record all payments and gifts to doctors because of a delay in a proposed rule from health officials.

The Physician Payment Sunshine Act, part of President Barack Obama's healthcare overhaul last year, requires manufacturers to report all payments to doctors above $10 and pay penalties if they fail to do so.

The Centers for Medicare and Medicaid Services (CMS) on Wednesday posted draft regulations that outline procedures for companies to report the information and share it with the public.

The rules were supposed to be finished by October 1 and would have required companies such as pharmaceutical giant Pfizer and devicemaker Medtronic to start collecting information on payments from January 1.

But CMS said because the rules were late, manufacturers now have until the final rule is published sometime in 2012 before they must start recording payments to doctors.

CMS said it needed extra time to draft the proposed rule in order to determine the most efficient and cost-effective way to implement the provision, and also make sure its Office of Information Systems had enough resources to make it work.

The new requirements are meant to shine light on the industry's ties to physicians, which can include pricey dinners,

golf vacations, and consulting and speaking fees.

Critics of such gifts say the perks may skew doctors' decision-making when prescribing treatments.

CMS said it would post the payment information on a public website that would be easily searchable and aggregated - a key issue for consumer groups that fought for the rule's passage.

"When people are faced with the difficult task of choosing the right doctor, they need all the information they can gather," said Dr. Peter Budetti, CMS deputy administrator for Program Integrity.

"If your doctor is taking money from manufacturers of prescription drugs, suppliers of wheelchairs or other devices, you deserve to know about it," he said in a statement.

The proposed rule would fine manufacturers $150,000 for failing to report such payments, and $1 million for knowingly failing to report them.

Companies, as well as group purchasing organizations (GPOs), would also have to report any ownership or investment stakes held by doctors. GPOs negotiate lower drug prices from manufacturers in return for guaranteed contracts from a range of hospitals and pharmacies in their system.

The rules came one day before a planned hearing in the Senate Special Committee on Aging, chaired by Wisconsin Democrat Herb Kohl, to discuss the delay in the regulations. The hearing has now been postponed.

The gifts-reporting measure was originally proposed in 2009 by Kohl and Iowa Republican Charles Grassley, and then became part of Presihttp://www.blogger.com/img/blank.gifdent Obama's healthcare law in 2010 as a way of reducing healthcare costs through greater transparency.

Both senators have sent several letters to CMS in past months, urging it to act on the rule.

"The completion of the guidance is good news," Grassley said in a statement. "It came after a lot of follow-up from Sen. Kohl and me to find out the status and to press for results from CMS.

"It shows Congress has a responsibility not just to make laws but also to see that they're carried out as intended."

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U.S. Health Care Spending: Where Is the Waste?

2011-11-18T10:12:00.010-05:00

by Stephen Kemble

Many still assume universal health care must mean higher costs, but other countries prove this assumption false. The US spends about twice as much per capita on health care as other industrialized countries, yet others are able to cover everyone and have better health outcomes. If we are to succeed in health care reform, we must ask the question, "What are we spending on health care that other countries are not, and that does not add value to health care?" We are now spending about 18% of our gross domestic product on health care and rising. If we do not correctly identify wasted spending and take steps to reduce it, health care spending will continue to break the budget. Contrary to what some assume, all evidence indicates that government financing in health care is actually far more efficient than the private insurance industry. The "Patient Protection and Affordable Care Act" (PPACA) is built around the private insurance model with government subsidies to fill in some of the gaps. It will not reduce total national health spending or waste, and we will face escalating pressure to restrict necessary care.1,2

This Pie Chart is based on evidence from comparison with other countries that have well functioning national health plans, 3,4 from cost analyses of various national and state level health reform proposals, including the PPACA, done by The Lewin Group,2 the Congressional Budget Office (CBO), and Centers for Medicare and Medicaid Services (CMS),1 and from studies on regional variations in health care spending in the US. 5 The percentages are estimates, but based on available evidence they are "in the ballpark." The data is much firmer for administrative costs than for unnecessary and inappropriate care.

Administrative Waste (est. 24%)

Administrative waste is the difference between what the U.S. spends on health care administration and what countries with efficient universal systems spend.3,4 Administrative costs include health insurance administration (premiums collected minus payments to health care providers), and administrative costs for doctors, hospitals, employers, and the public.
The "waste" includes marketing and advertising, underwriting, multiple private bureaucracies, highly paid executives, managed care costs, pharmacy benefit manager costs, maintenance of insurance reserves, profit, lobbying and "government relations," employer and broker costs, costs to doctors and hospitals to deal with billing and insurance, and physician time lost to dealing with prior authorizations and formulary restrictions.

All of these are directly attributable to use of competing private insurance plans, and especially for-profit insurance companies, to finance health care. None add any measurable value to health care.

Unnecessary and Inappropriate Care (est. 20%)

Unnecessary and inappropriate care is due to inadequate access to necessary care (under-treatment), or to various forms of over-treatment. There is actually far more under-treatment than over-treatment in the U.S.,6 but much of it is in the form of unnecessary suffering and death due to lack of access to care that does not show up in cost figures.

Under-treatment results from lack of insurance, under-insurance, and inadequate access to primary care, leading to excessive use of emergency services and delay in disease treatment resulting in expensive complications and preventable hospitalizations. It also includes medical errors and inefficient care due to pressure on physicians to spend inadequate time with patients, leading to failure to listen and think through problems to provide the best care.

Over-treatment includes procedures and services driven by provider profit motive, rather than the best interest of the patient, and irrational reimbursement policies and misallocation of health care resources according to profit incentives rather than health care needs of the population. It includes direct to consumer advertising leading to inappropriate patient demand for care, especially for drugs. It includes defensive medicine due to fear of lawsuits. It also includes provider fraud.

All of these are much more difficult or impossible to address in a fragmented health care market. In health care, the evidence shows that competition among insurance companies and fragmentation of health care financing add administrative costs, drive up health care prices, impede access to necessary care, fail to reduce unnecessary care, impede detection of errors and fraud, and do not provide fiscal efficiency or add value to health care.7 The insurance exchanges in the PPACA may increase coverage, but add substantial administrative costs and cannot solve our cost problems.8,9

Other proposals to control costs, including health information technology, prevention, and comparative effectiveness research, may improve health care but are likely to cost as much as they save and will not "bend the curve" of escalating health care costs.10 Reorganization of doctors and hospitals into "accountable care organizations" and pay for performance schemes that shift insurance risk onto providers may reduce over-treatment, but bring an equally problematic and costly incentive for providers to under-treat and avoid taking on sicker and more complex patients. Reforms that target unnecessary care but rely on new layers of administration or use blunt strategies that restrict necessary as well as unnecessary care cannot make health care more cost-effective. Neither can reforms that push increasingly unaffordable costs onto those needing care, deterring more necessary than unnecessary care.

According to the CBO, malpractice costs are less than 3% of the US health care dollar. Tort reform proposals touted by the AMA are not likely to save more than 1% of health care costs at best.11

Only a universal publicly financed healthcare system could actually provide comprehensive coverage to all, free choice of doctors and hospitals, and reduced cost. Administrative waste could be eliminated off the top, and access to necessary care would improve substantially. The experience of other countries shows that a universal system would reduce or eliminate many of our perverse incentives for over-treatment, even if doctors are paid with fee-for-service. A system-wide quality improvement program with physician leadership could reduce unnecessary care more effectively than strategies now employed by insurance companies or proposed under the PPACA. Health care prices could be reduced in proportion to administrative savings without harming providers of care, and eliminating fiscal waste would greatly reduce pressure to limit benefits and deny and ration care. With a universal system, health care could be removed from injury litigation, markedly reducing both the size of judgments and the necessity to sue for access to injury related health care, eliminating more than half the cost of medical malpractice, worker's compensation, and automobile insurance.

We are told that universal publicly financed health care is "off the table." We need to get it back on.

(article with footnotes)

States Cutting Medicaid Coverage for Hospital Stays, Other Care

2011-10-25T09:31:00.001-04:00

While the weak economy pushes more people into Medicaid, the government health insurance program for the poor and disabled, a growing number of financially squeezed states are moving to cut back the coverage.

As a story by Kaiser Health News and USA Today points out, one focus of the cost-cutters has been hospital stays.

Arizona, which last year stopped coverage of certain transplants for several months, hopes to start limiting adult Medicaid recipients to 25 days of hospital coverage a year beginning the end of this month. In April, Hawaii plans to cut its Medicaid hospital coverage to 10 days a year, the fewest of any state.

Both efforts await federal approval — Medicaid is operated with both state and federal money — but Arizona and Hawaii officials expect to get the green light because several other states already restrict hospital coverage. They include Alabama (a 16-day limit), Massachusetts (20 days), Arkansas (24 days), Mississippi (30 days) and Florida (45 days).

Critics say the moves will reduce or delay care for some people who can’t afford it, while also leading to higher charges for privately insured patients and imposing more costs on hospitals.

While the hospital stay limits should affect only a small percentage of Medicaid patients, they often are the sickest. About 4,000 of Arizona’s 1.3 million Medicaid recipients were in hospitals for more than 25 days from July, 2009 to July, 2010.

However, a spokesman for the Arizona Hospital and Healthcare Association, an industry group, said that medical centers in the state won’t turn away patients who need to be there. “Hospitals will get stuck with the bill,” he said.

The federal health care overhaul legislation passed last year requires states to maintain Medicaid eligibility and enrollment standards until 2014, when the program is to begin covering millions of uninsured Americans. Still, this year many states, to hold down their costs, have reduced benefits considered optional by the federal government.

Just this month, North Carolina ended vision coverage for adults on Medicaid and Nebraska began limiting the number of adult diapers it pays for to 180 a month. In July, Colorado stopped covering circumcisions and Tennessee ended coverage of adult acne medicine.

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Measuring quality improves doctors' care, study finds

2011-10-24T17:01:00.003-04:00

Wisconsin collaborative says disclosing rankings pushes doctors to try harder

The Wisconsin Collaborative for Healthcare Quality was founded on a simple premise: To improve the quality of health care, you must be able to measure it.

It is one of the underlying principles in the efforts to provide better care to patients.

Yet the premise that tracking the quality of care truly prods physicians to change the way they practice medicine has been more accepted than studied.

The Wisconsin Collaborative for Healthcare Quality, started by a group of large physician practices and health care systems in 2003, now can be cited as an example that it does.

A study led by Geoffrey Lamb, a professor at the Medical College of Wisconsin, compared the care given to diabetic patients by physician practices that belong to the collaborative with the care given by physicians in Iowa and South Dakota as well as national performance measures.

The study found that the collaborative's members improved overall in every measure, such as monitoring a diabetes patient's kidney function, which was tracked for more than two years.

"These were changes that really impacted a lot of people," said Lamb, associate director of the Joint Quality Office of the Medical College of Wisconsin and Froedtert Hospital.

"The thing that really impressed me is the people who performed the lowest when they started had the greatest improvement," he said. "They cared where they were in ranking."

That gives additional credence to the long-standing contention that publicly disclosing how doctors perform on various measures of health care quality can result in better care.

"Transparency matters," said Christopher Queram, president and chief executive of the collaborative.

The study was funded by a $295,889 grant from the Commonwealth Fund, a private foundation that supports independent research on health care and health policy.

Numerous studies have been done on the quality measures and outcomes now tracked and reported by hospitals. The amount of information available on the Hospital Compare website, www.hospitalcompare.hhs.gov, which can be found on Medicare's website, has grown each year.

Examining the physicians

But relatively little information is available about the quality of care provided by doctors in their offices.

"Depending on where you live in the country, it's hard to get good data," said Anne Marie Audet, a physician and vice president for health system quality and efficiency at the Commonwealth Fund.

The collaborative was one of the few organizations with quality information for physician practices.

The group, which has drawn national attention for its work, now tracks more than 30 quality measures for physician practices. And one of the goals of the study was to show the value in gathering and disclosing the information.

"Our hope is this will help accelerate the acceptance by physicians," Queram said.

One challenge is that few accepted quality measures exist for specialty care, with the exception of cardiology. Better measures also need to be developed to track the coordination of care, an area where the health system often falls short.

"It is a work in progress," Audet said.

Quality of care

That work will be essential, though, if the country is to get more value from the money it spends on health care.

Federal health care reform allocates $10 billion over 10 years to test new ways of paying doctors and hospitals and delivering care. Broad support exists for moving toward paying doctors and hospitals for the quality of care they provide rather than for specific services. But that will require developing better ways to gauge the quality of care.

The National Quality Forum has endorsed more than 500 standards for tracking health care quality and performance over the past decade. But significant gaps still exist, including such thorny tasks as measuring the accuracy of diagnoses, surgical success rates and the appropriateness of diagnostic tests and procedures. And in some cases, some measures may not result in better outcomes.

Developing better and more standard measures will take time, Audet said. "But it's important to have a strategy," she said.

Disclosure matters

The study on the collaborative also suggests that each new measure can lead to better care.

Lamb and the other investigators in the study found that doctors were more likely to follow guidelines and to contact patients due for tests once their performance was publicly reported.

The study's other investigators were Maureen Smith, a physician and professor at the University of Wisconsin School of Medicine and Public Health; Williams Weeks, a physician at the Dartmouth Institute for Health Policy and Clinical Practice; and Queram.

Taking action

The study isn't flawless. For one thing, the physician practices that belong to the collaborative may not be representative. Nearly all of them, for example, now have electronic health records. That enabled the practices to track patients due for visits and eased the task of following their performance.

The study included a survey on what steps the physician practices took once the information on their performance was published.

Lamb saw that firsthand at the Medical College of Wisconsin.

When the medical school first provided information to the collaborative on how its physicians cared for diabetes patients, Lamb had a new position and only had a few weeks to pull together the information.

The information wasn't gathered properly, he said, and the results were less than stellar.

"The effort that went into improving their performance over the coming year really was quite dramatic," Lamb said. "They didn't like looking bad."

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Interactive Uninsured Mapping

2011-10-14T09:36:00.001-04:00

SAHIE has provided an interactive map of health insurance coverage estimates for the United States. Selections of income and race are available and can be mapped by state or county. Data can be viewed for 2008 or 2009.

Click map for full size

Click for Interactive Mapping

Health Insurance Coverage in the US - 2008-9 Census

2011-10-13T16:42:00.003-04:00

The U.S. Census Bureau today released 2008 and 2009 estimates of health insurance coverage for each of the nation's roughly 3,140 countieshttp://www.blogger.com/img/blank.gif. Area Health Insurance Estimates (SAHIE) are currently the only source for estimates of health insurance coverage status for every county in the nation.

2009 Health Insurance Coverage Status for States (% Uninsured)

Also available by county

Hospital Advertising Contributes to Runaway Health Care Costs

2011-10-12T10:58:00.001-04:00

Health care is big business in the U.S. and growing rapidly. The Department of Health and Human Services reports that in 2009 the health care industry accounted for 17.3 percent of the domestic economy.

That year $2.47 trillion was spent on medical services, up from $2.34 trillion in 2008. The trajectory of costs has escalated since then and is projected to reach $4.5 trillion in 2019.

In fact, the U.S. leads the developed world in health care expenditures. In 2010 we spent $7,538 per capita compared to our closest rival, Norway, which spent $5,003. Japan leads the world in life expectancy yet spends only $2,729 per capita.

Given the reality of a health care system devouring its nation’s resources, medical cost containment is imperative. One small, yet meaningful, piece of health care expense is hospital advertising. The New York Times (May 3, 2009) reported that hospital advertising in 2008 amounted to $1.23 billion, an amount that doubled in only seven years.

Hospital advertising, be it television, radio or print, tracks the same inflationary trajectory as health care budgets in general. A 2010 survey of the nation’s hospitals by The American Hospital Association found the average annual advertising budget of all responding health care institutions was $883,000. Large hospitals spent disproportionately more for advertising. The typical stand-alone hospital with more than 400 beds allocated $2.18 million for advertising.

Requests for information about advertising budgets of local health care systems were denied

Runaway medical costs take a toll on families, industry and governments. According to the Towers Perrin Health Care Cost Survey, the average yearly premium for an employer-sponsored family health insurance plan in 2010 was a hefty $15,084. Of this total the benefiting family paid $3,492.

From 2000 to 2009 family paid premiums for employer sponsored health care plans escalated by 149 percent. In the same period salaries increased 37 percent. Your tax dollars are also tapped. The U.S. Department of Health and Human Services reports that in 2009 the federal government spent about $500 billion on Medicare while federal and state governments spent $380 billion on Medicaid.

In fact, 20 percent of the federal budget is allocated to Medicare and Medicaid. Taken together, data concerning the escalation of health care costs paints our current system as unsustainable.

Arguments against hospital advertising and its impact on health-care costs are many. Hospital advertising relies on simplistic appeals of we’re better, we’re faster, we’re more caring, we have the most expertise, etc. In fact, hospitals are more alike than they are different.

Often diagnoses and treatment procedures are directed by protocols generally followed across hospitals. Furthermore, it is not unusual to find a physician providing services in more than one health care institution. If indeed one hospital is meaningfully superior to another, would not physicians be ethically obligated to inform their patients of this information?

Advocates of hospital advertising claim that the practice educates the public to make sound choices concerning medical services. Yet how can a lay public be meaningfully informed about complex medical procedures in a minute or less of TV ad time?

Furthermore, advertising becomes a necessary expense when one hospital heralds itself as superior to others. Competing hospitals must allocate health care resources to advertising to maintain an even playing field in the court of public opinion. Advertising begets more advertising, as is evidenced by the rapid increase in the practice across the last decade.

In many businesses advertising makes sense. Persuasion increases demand for a product thus increasing sales and profits. Sales of candy bars can be increased by depicting an irresistible combination of chocolate and chttp://www.blogger.com/img/blank.gifaramel. This principle hardly applies to broken arms, however, where demand is necessarily fixed by the incidence of accidents in a day. Applying the business model to medical care just doesn’t fit.

Clearly the runaway cost of medical care requires emergency treatment. Eliminating hospital advertising is one small step in containing the meteoric rise in health care expense. Perhaps hospitals should just rely on a free and more spontaneous form of marketing, word of mouth as transmitted through the social media.

John M. Seaman is a retired school psychologist and currently an adjunct professor of psychology at Salt Lake Community College.

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Deputies pass further healthcare reform bills - Prague

2011-09-12T12:08:00.001-04:00

Prague, Sept 7 - The Czech Chamber of Deputies yesterday passed a bill adjusting the rules for artificial fertilisation, women' sterilisation, men's castration and a change of sex that also bans cloning and sets conditions for testing new methods of treatment on people.

Representatives of health workers' unions and the Doctors' Chamber, however, say they do not expect the new legislation to improve the conditions for patients and the situation in the health sector.

Artificial fertilisation will only by available to women no older than 49. Anonymous female donors may only be aged 18 to 35 and male donors 18 to 40.

The bill allows for sterilisation also for other than health reasons, but only for women over 21 and on the basis of their application.

Therapeutical castration will only be allowed for men over 25 who committed a violent sexual crime or who are sexual deviants.

The health care provider testing new methods of treatment on people will have to be insured for the damage that the patient may possibly incur.

The bill also embeds schools' duty to organise and pay preventive checks for pupils of secondary and higher vocational schools which will cost them an estimated 30 million crowns annually.

The Chamber of Deputies also passed a bill on the emergency services that extends the time of rescuers' arrival to the patient by five to 20 minutes maximally.

The current 15 minute deadline cannot be kept in areas with a total of 1.3 million inhabitants. Some 200,000 people will still be outside the 20 minute deadline.

The Chamber of Deputies also passed a draft amendment to the bill on health insurance under which health insurance companies will be obliged to ensure available paid services both in place and time for patients.

The bill also provides for patients having the right to choose the variant of treatment if there is also extra care. They will have to pay the difference in the cost of the two treatments.

All three bills that are part of the government health care reform were passed by the votes of the centre-right government coalition parties, the Civic Democrats (ODS), TOP 09 and Public Affairs (VV).

They will now go to the left-dominated Senate that is likely to send them back to the Chamber of Deputies. The Chamber of Deputies, however, has the strength to override the Senate veto.

The unions and the Doctors' Chamber's representatives say the bills were prepared hurriedly without being properly discussed.
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"They will not increase quality but will rather step up chaos in the health sector," health care workers' union chairwoman Dagmar Zitnikova told CTK.

She pointed to a number of modifications to the government's bill which deputies pushed through during the debate in parliament. As a result, the bills are difficult to comprehend, even for lawyers, Zitnikova said.

Similarly, CLK vice president Zdenek Mrozek described the bills as created in a hurry and modified in the last minute without a proper debate.

Some provisions are ambiguous, which may lead to court disputes, Mrozek said. Zitnikova shares the view, she told CTK.

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State Challenging Hospitals’ Tax Exemptions

2011-09-12T12:03:00.001-04:00

Facing a budget deficit exceeding $11 billion, the State of Illinois in recent weeks has begun challenging the property tax exemptions of some of its best-known hospitals, saying they should pay more because they are not providing enough charity care.

The Illinois Department of Revenue moved last month to strip property tax exemptions from Prentice Women’s Hospital, a sparkling new medical center in Chicago’s tony Streeterville neighborhood; Edward Hospital, a rapidly expanding medical center in the western suburb of Naperville, and Decatur Memorial Hospital in central Illinois.

If successful with those three, the state is expected to look for other not-for-profit hospitals with low percentages of charity care, with an eye toward challenging their property tax exemptions, too. A Department of Revenue spokesman said the agency was reviewing parcels owned by 15 hospital systems, but declined to say if the tax exemptions would be challenged in each case.

All three of the hospitals the state is focusing on provided free and discounted medical care that ranged from 0.96 percent to 1.85 percent of patient-care revenue, according to the revenue department. The state also said that each one had been operating as a “for profit” business when the state’s Constitution says that “only charities are entitled to a tax exemption.”

In anticipation of new tax challenges, hospitals in Illinois are preparing a lobbying push that would seek to redefine the qualifications for tax exemptions. The new definition would go beyond just charity care and expand to include patients’ unpaid debts, costs of medical care not covered by Medicare health insurance for the elderly, Medicaid coverage for the poor, as well as direct costs that teaching hospitals pay to train doctors and conduct research.

In interviews, executives of the Illinois Hospital Association told the Chicago News Cooperative that they had discussed with state policy makers a plan to draft a broader legal definition for hospital tax exemptions. The lobbying group — which is adding staff members to bolster its effort — would also figure into a hospital’s tax exemption the cost of subsidizing money-losing services like emergency care, trauma care, burn units and neonatal intensive care units.

“We strongly believe that charity care should not be the sole determining factor for a hospital’s nonprofit, tax-exempt status and respectfully suggest the legislature establish clear standards for tax exemption,” Dean Harrison, chief executive of Northwestern Memorial HealthCare, the parent company of Prentice Women’s Hospital, said in a statement.

The hospital industry’s push is at odds with the changes under way at the Department of Revenue, which is acting in the wake of the State Supreme Court ruling last year upholding the revocation of the property tax exemption for Catholic-owned Provena Covenant Medical Center in downstate Urbana, in Champaign County. For that hospital, the value of care provided to indigent patients amounted to less than 1 percent of its revenue in 2002.

The Department of Revenue cites the state’s Constitution that allows tax exemption only on property used exclusively for charitable purposes. In the Provena case, the state had argued the hospital should lose its tax exemption because only 302 patients received charity care worth $832,000, or just 0.7 percent of the hospital’s $113 million in revenue that year, state records show. In the Supreme Court ruling, justices noted that 13 percent of Champaign County’s more than 185,000 residents had incomes below the federal poverty guidelines.

Since the revenue department moved to strip the three hospital tax exemptions, State Senator Iris Y. Martinez, Democrat of Chicago, has intensified her effort to pass a bill that she and others introduced earlier this year requiring hospitals to provide 3.5 percent of their annual revenue in charity care. The level advocated by Ms. Martinez would still be far less than the 8 percent that the Illinois attorney general, Lisa Madigan, proposed five years ago.

“Hospitals think they should get tax exemptions for merely what they do in the community,” said John Colombo, a professor of law at the University of Illinois at Urbana-Champaign who has followed the issue of nonprofit hospital tax exemptions nationally. “It’s problematic: The overall number that each of these hospitals is reporting is abysmally low. Given the state of the economy, one would expect the charity services going up.”

Services like prenatal care may be expensive for hospitals, Professor Colombo said. “But in reality the prenatal care can be a mint to them once it results in women coming into the delivery room to have their babies.”

For the year 2007, Northwestern Memorial HealthCare showed charity cases as 1.85 percent of its $1.18 billion in net patient revenue. Edward Hospital showed charity care at 1.04 percent of its $448 million in net patient revenues that year. Decatur Memorial reported costs of charity care at 0.96 percent of its $252 million in net patient revenues in 2006, the year revenue department officials evaluated the hospital’s recent ownership change.

The hospitals argue that their contributions are significant, even though charity care is a small percentage of their business. Community benefit provided by Northwestern’s flagship, Northwestern Memorial Hospital on Chicago’s Gold Coast, has increased more than 10 percent since 2005, to $255 million, according to Mr. Harrison. And Edward Hospital said it treated patients “24 hours a day, 7 days a week, regardless of their ability to pay.”

Mark Deaton, the Illinois Hospital Association’s general counsel, said hospitals “in some fashion relieve the burden of government” because of the community benefit they provide.

But analysts say hospitals that pay taxes provide community benefit in other ways. Provena’s Urbana hospital now pays about $1.2 million annually in taxes.

“A million dollars in revenue will fix pot holes, help schools and infrastructure and make the city safer,” Professor Colombo said. “Those tax dollars are a pretty big community benefit.”

The Chicago area has seen a rising number of for-profit hospitals that serve the poor while still paying taxes on their property. For example, Vanguard Health Systems , the for-profit hospital operator, has bought five former nonprofit hospitals in the Chicago area, two of them former nonprofit hospitals near the poor Austin neighborhood on the West Side. Vanguard pays taxes on the properties.

“The relative amounts of charity care provided by not-for-profit tax-exempts are not materially different from the amount provided by for-profit hospitals,” said Jim Unland, a longtime analyst of Illinois’ health care industry and president of the Health Capital Group, a consulting firm in Chicago. “This raises the issue of whether the tax-exempts are getting prejudicially favorable treatment.”

The battle comes during a period of high unemployment and related loss in health benefits by hundreds of thousands of Americans that analysts say are in greater need for discounted and free medical care.

Hospitals say they will challenge the Department of Revenue in court. They intend to respond by mid-October to the denial of their tax exemptions by the agency’s director, Brian Hamer.

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Mayo, Cleveland clinics seek affiliations with doctors nationwide

2011-09-01T11:07:00.006-04:00

The well-known health systems are extending their reach as hospitals compete to buy or team up with practices.

Two powerful competitors are declaring their intentions to affiliate with outside physician practices: Mayo Clinic and Cleveland Clinic.

They and other large, brand-name health systems have affiliated with local hospitals in recent years as one way to expand their reach and names. Despite their prominence, Mayo and Cleveland separately are seeking physician practices because they don't want to be left behind as hospitals and physicians furiously ally as health system reform rolls out.

"There's a lot of consolidation among health care groups as people try to predict what health care reform will mean," said David L. Hayes, MD, a cardiologist and medical director of Mayo's affiliated practice network. "The whole point for us is to grow strong relationships with other health care groups, other health care systems, that are of a similar mindset in terms of caring for the patient. We can help support them with clinical expertise and help the local practices stay strong."

Neither Mayo nor Cleveland is interested in acquiring practices. Instead, they are seeking practices to pay subscription fees that will vary according to the terms of the deal and to meet clinical criteria. In exchange, the practices get to use the Mayo or Cleveland resources and name.

The organizations said they're open to groups of all sizes but that they are more likely to affiliate with medium or large single-specialty groups. These groups already may be affiliated with other institutions in some way. As of yet, Mayo and Cleveland have not signed any partners or said when they will announce their first deals.

Mayo and Cleveland said their goals are not explicitly to create referral streams to their own facilities. Mayo has 3,700 staff physicians and scientists at its hub in Rochester, Minn., and at campuses in Scottsdale, Ariz., and Jacksonville, Fla. Cleveland has 1,841 physicians and dentists in Ohio; Weston, Fla.; Elko, Nev.; Toronto; and Abu Dhabi, United Arab Emirates.

"We hope they think of us first, but we don't require that," said Joseph Cacchione, MD, chair of business operations at Cleveland Clinic.

Neither Cleveland nor Mayo has announced that any affiliated practices will be part of an accountable care organization, a health reform-born model that gives hospitals and physicians a chance to earn bonuses for quality care.

"This is not being thought of as definitely part of an ACO, but it might in the future lend itself to that," Dr. Hayes said.

New avenues of alignment

Health industry experts say such affiliation programs are creative ways for Mayo and Cleveland to respond to overall trends of consolidation and alignment in the health system. The most rapidly growing part of health care mergers and acquisitions is physician practices, according to a report issued July 14 by Irving Levin Associates, a Norwalk, Conn.-based health care publishing firm. Several surveys have noted that the number of physicians in solo and small practices is declining.

These affiliations are a way for Mayo and Cleveland to continue to broaden their reach into outpatient care when hospitalizations are declining and inpatient revenue is flattening or even shrinking, analysts said. For instance, a statistical brief issued Feb. 17, 2010, by the Agency for Healthcare Research and Quality found that 58% of surgeries were performed on an outpatient basis in 2007 compared with 16% in 1980.

Some experts theorize that these institutions are responding to changing referral patterns linked to the emergence of the hospitalist as a medical specialty during the past couple of decades. Physicians providing only outpatient care may have a greater number of options for referring patients.

"Hospitals have to be more strategic in terms of working referrals," said Kenneth Cohn, MD, a general surgeon and editor of Getting it Done, a book about how health care leaders have handled change. "Now that we have hospitalists, we have outpatient doctors and inpatient doctors. Physicians can refer patients to anybody they want. And referral patterns are not just local. They're becoming statewide and national. We're recognizing that referral networks eventually may have to be global."

Mayo Clinic launched its hospital affiliate program on May 18 with Altru Health System, based in Grand Forks, N.D. The Mayo Clinic label will be on Altru's signs, and its physicians will be able to access Mayo's evidence-based disease management protocols, clinical care guidelines and treatment recommendations. Altru, which includes a hospital and more than a dozen clinics, has long collaborated with Mayo, but this contract formalizes the arrangement.

"While others quickly consolidate to address health care reform and an uncertain reimbursement environment, at Mayo we are focused on further developing our integrated model of practice, education and research, as well as a range of external affiliations and relationships, to give more people seamless access to the knowledge and expertise of Mayo Clinic," said John Noseworthy, MD, Mayo Clinic's president and CEO.

Other industries have had a tradition of deals that involve applying a well-recognized name to another company's product, and they are increasingly common in the health setting. Cleveland Clinic launched such a program seven years ago and has about a half-dozen affiliates. MD Anderson Cancer Center in Houston and Geisinger Health System in Danville, Pa., also operate affiliate programs.

Branding experts say the key to maintaining the value of such an arrangement is having an appropriate vetting process on both sides. Affiliated institutions must exercise caution in how the nature of the relationship is communicated to patients to avoid misunderstandings about who is providing care.

"They need to protect the value of that brand," said Jeffrey Nemetz, founder and CEO of HBG Health in Chicago, which specializes in developing brands in the health care industry. "It can be a bit of a slippery slope from a brand point of view, and it can be confusing to the public. It has to be a partnership that's capable of producing better outcomes with them than without them. You need to do some very careful analysis."

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Drug Prices Soar as Hospital Suppliers are Forced into 'Gray Market'

2011-09-01T11:00:00.001-04:00

Michael O'Neal buys drugs for a living -- and too often these days, he's forced to do it on the "Gray Market."

Like most pharmacists charged with stocking an entire hospital, O'Neal prefers to conduct his official business for Vanderbilt University Medical Center through big-name distributors.

But there are days when his "back's against the wall," O'Neal said -- when official supply chains run dry for all kinds of drugs -- from the "bread-and-butter variety" used every day in hospitals to specialty medication for cancer treatment. On those days, O'Neal resorts to haggling on the little-known sector of the health care economy that's only a slight shade more legal than the black market.

The gray market is an expanding world fueled by a deepening drug-shortage crisis in which secondary retailers buy up medication outside of the normal, tightly controlled pharmaceutical distribution channels and then sell their stockpiled supplies to desperate pharmacists and hospitals at exorbitant mark-ups.

High blood pressure medication that normally costs $25.90, for example, can go for $1,200 -- a mark-up of 4,533 percent.

"The whole thing's squirrely, but this is always our last-ditch effort. It only happens when the manufacturer has already told us there's none in the supply chain, and we've turned to as many other sources as we possibly can," O'Neal said. "The concern that this is suspicious is overshadowed by the much larger concern of being able to get medication for a patient."

Suspicious or not, the gray market is legal.

Most drugs pass seamlessly from manufacturer to wholesaler to a pharmacy or hospital -- then on to patients. But secondary wholesalers can buy bulk drugs from the big-name distributors to supply smaller hospitals, clinics and pharmacies that don't have enough purchasing power to buy directly from the big wholesalers.

After that, medication can be traded between distributors, sometimes traveling back from these smaller distributors and pharmacies to major wholesalers through sales or returns, according to a recent report from the Pew Health Group.

Dizzy yet?

That's just the beginning -- gray-market drugs often change hands multiple times across state lines, moving in whole or partial lots that can obscure tracking information. Sometimes they're even repackaged or relabeled.

There is no national system for monitoring the path of these drugs -- that's all left to the states, which have a hodgepodge system of rules that are inconsistent and sparsely regulated.

Simply raising the price on something in short supply is only a violation of Federal Trade Commission law if companies agree to create a shortage and raise the price or if they monopolize a market by buying up a product and creating an artificial shortage. Most gray market vendors aren't large enough to do anything close.

The Food and Drug Administration's Office of Criminal Investigations looks into complaints about blatant safety concerns in the gray market but the agency defers to the states to do the bulk of regulation, said Valerie Jensen, associate director of the FDA's Drug Shortage Program.

For a pharmacist, trying to determine a product's supply source in such a web -- let alone its origins or authenticity -- can be extremely difficult.

Even if many secondary vendors in the gray market are legitimate, the whole set-up is one asking for unethical practices and outright exploitation, O'Neal said.

Most of the major manufacturers now force their distributors to sign contracts that keep them from manipulating a drug's price. But gray market vendors still manage to get their hands on these scarce drugs by other means -- and then proceed to cold-call hospitals and pharmacists at times of acute shortage with a vastly inflated sale price.

It's under these circumstances that O'Neal's office is bombarded with a steady stream of phone calls, emails, and faxes from gray market vendors looking to buy and sell.

"Overall, I tell them, 'Please don't call us, we'll call you,'" he said. "If we didn't monitor that and shut it down, it would be a constant buzz."

Those prepared to hand over a pedigree -- or a detailed record of a products' custody -- occasionally hear from O'Neal when there's no other choice.

If the drug he's trying to find typically costs $30 per case, O'Neal might send an email to his gray market contacts and receive several sales pitches -- one for $289, another for $322, and one more for $150.

"It's like just walking into a flea market and trying to argue the price down," he said. "But the crazy thing is -- these are drugs we're talking about. When you take a step back, it doesn't make any sense that this can go on."

Choose your hospital and the scene is much the same. To measure the depth of the problem, Premier healthcare alliance, a North Carolina-based quality improvement and group-purchasing organization, sent its hospital membership a request for examples of unsolicited sales offers made by gray market vendors.

The results were startling. Over a two-week period in spring 2011, 1,745 examples of gray market offers were recorded from 42 acute care hospitals. The average mark-up for shortage drugs was 650 percent. A full 96 percent were at least double the normal price, while 45 percent were 10 times more expensive and 27 percent were 20 times more.

Of the 416 separate drugs offered for sale, the highest mark-ups were for those needed to treat critically ill patients in four categories: emergency care; critical care sedation and surgery; chemotherapy; and fighting infectious disease.

Such dramatically inflated prices are forcing hospitals nationwide to collectively shell out $400 to $500 million more per year, said Blair Childs, Premier's senior vice president. And that's driving up prices across the health care industry.

But even more importantly, "it's creating safety challenges for a physician trying to ensure a patient is going to get the right drug, at the right time and that it's safe," he said. "There have been a lot of situations where there have been close calls."

Many drugs become ineffective or harmful if they haven't been stored in the right environment and at precise temperatures. While official supply chains are tightly controlled to guarantee safety, the crisscrossing nature of the gray market can throw the safety of a drug into serious doubt.

In 2009, the FDA reported several cases in which diabetic patients complained that their insulin wasn't working. It turned out the drug had been stolen and that improper handling in the gray market had caused it to lose its potency.

Gray market vendors have also been known to sell counterfeit or diluted medication, Childs said. He's even read reports of vendors buying scarce drugs from Medicaid patients in hospital parking lots.

When Bill Woodward, senior director at the Texas-based health care supply company Novation, decided to investigate some suspicious-looking pedigrees from local "distributors," he discovered that one was paying an office tower in Dallas to maintain the guise of a work space and the other was located in the false storefront of a warehouse.

"It had a 'For Lease' sign in front of it and when we looked through the window, it was just a table, a chair and a phone. They're not distributors at all," Woodward said. "The whole thing is an open door for allowing counterfeit, stolen, tainted drugs into our health care system. They could be easily inspected to see if they're actually legitimate, but no single federal agency is charged with tracking this so no one is doing that."

That's why organizations like the American Society of Health-System Pharmacists have issued strict warnings to their members, urging them to take matters into their own hands -- to demand an authentic pedigree and to ensure the vendor is authorized by the state to distribute medication, said Joseph Hill, the group's director of federal legislative affairs.

But sometimes even that's not enough to provide peace of mind, O'Neal said. He remembers one case in which the pedigree for a batch cancer medication was provided but it was still unclear whether the drug was safe, he said.

"We were in dire straights, so we still had to use it," he said. "We did as much investigation as we could. But even though you know where it came from, you don't know what the particular product has been through when it's moved through so many different hands."

Mike Cohen of the Institute for Safe Medication Practices qualifies that as "a massive concern." According to Cohen, the gray market should be more tightly regulated by the federal government.

After all, he said, this phenomenon has been around for decades -- though it's steadily increased to epic proportions in the last few years due to the toxic situation brought on by the drug shortage.

"Hospitals have patients that are sick, they need the drug, and gray is legal," he said. "So on balance, hospitals are making the decision to buy it."

A national pedigree law with legislative teeth might not solve the whole issue, he said, but it could go a long way toward making the entire market a little less gray.

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Medicare testing new way to distribute funds to providers

2011-09-01T10:48:00.001-04:00

In an effort to nudge the health care industry toward more cost cutting and efficiency, Medicare is testing a new way of reimbursing doctors, hospitals, therapists and other providers through bundled payments intended to prompt more coordinated care.

Unlike the current fee-for-service method, health care providers accepted into the pilot program will receive a lump payment for the various treatments given during an “episode” of care, such as a heart bypass or hip replacement.

Officials hope bundling payments will fix some of the problems with the fee-for-service method, which emphasizes individual procedures instead of the spectrum of health care services patients often need. Because providers lack incentive to coordinate care with each other, patients can receive services that are unneeded or are available at less cost.

“The hospitals are paid in one payment category, the physicians are paid in one payment category, everybody’s got their own payment silo,” said Blair Childs, spokesperson for Premier Healthcare Alliance, a North Carolina-based association of hospitals. “Everyone is in their own cocoon.”

Last week, Health and Human Services Secretary Kathleen Sebelius announced the pilot program, which was mandated under President Obama’s health care law and may be expanded in 2016. HHS conducted a smaller-scale test on bundled payments for heart bypass surgery 20 years ago and saved about 10 percent in expected costs.

“Patients don’t get care from just one person, it takes a team, and this initiative will help ensure the team is working together,” Ms. Sebelius said. “The bundled payments initiative will encourage doctors, nurses and specialists to coordinate care. It is a key part of our efforts to give patients better health, better care, and lower costs.”

Providers may participate in four different types of “episodes.” One model includes all services provided during a hospital stay, a second model includes a hospital stay plus follow-up services, and a third model consists of follow-up services only. Using the fourth model, Medicare would make a single payment for all services furnished by the hospital, physicians and other practitioners during an in-patient stay.

Hospitals, which would collect the bundled payments and distribute them among the various providers, applauded the program. Mr. Childs said he has high hopes the new method will correct the “insanity” of the present system. Providers will use supplies more efficiently, communicate better when handing patients off to each other, and conduct more patient follow-up, he said.

“If they’re bundling their payment together, they’re going to sit down and say: ‘How can we deliver the highest quality care for the patient at the lowest cost possible,’ ” Mr. Childs said.

Nancy Foster, vice president of the American Hospital Association, offered as an example a patient undergoing knee replacement. The procedure would require both a surgeon and an anesthesiologist, after which the patient would remain in the hospital a few more days. After being discharged, they would visit a therapist. Under fee-for-service, each of these providers would bill Medicare separately, she said.

In contrast, providers would be encouraged to cut costs under a bundled payment system, which also offers a bonus to providers who stay below the target price.

“This model tends to create a financial incentive for them to coordinate…if they can, through better coordination reduce the cost of what they’re otherwise getting paid, give Medicare some savings and also achieve further savings off what they’re being paid,” Ms. Foster said.

Physicians, who tend to regard hospitals with some suspicion, are more wary of bundled payments. Glen Stream, president of the American Academy of Family Physicians, fears hospitals may not treat doctors fairly when distributing reimbursements.

“It creates some challenges,” he said. “Obviously you’d have to have a good working relationship between the hospitals and physicians. But even that working relationship can be challenged when you’re dividing up that payment.”

Because bundled payments are based in part on how much a provider has historically spent, it would be difficult for those who are already efficient to obtain the extra bonus for spending below target, Mr. Stream said.

Another concern is that providers could be tempted to cut back on services that should be provided, in order to keep more of the bundled payment and obtain the extra bonus. “My hope is the professional ethics of both hospitals and physicians are such that they wouldn’t let economic issues get in the way of good patient care,” Mr. Stream said.

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Ex-Senate leader: Health care reform law is here to stay

2011-08-26T12:28:00.001-04:00

Repeal unlikely, Bill Frist tells Avera crowd

The health care reform law will survive even if the Supreme Court declares the individual mandate unconstitutional, former Senate Majority Leader Bill Frist said Wednesday in Sioux Falls.

"It's going to survive. It's not going to be repealed," Frist said.

Frist, a heart surgeon and Republican from Tennessee, spoke to 500 people at an Avera Health conference at the Convention Center.

Congress passed the Affordable Care Act last year with a provision requiring all citizens to buy health insurance by 2014. Several states, including South Dakota, have challenged that in court.

Frist agrees that the mandate violates the Constitution. But unlike others on both sides of the debate, he thinks parts of the law will inject enough money into health care to make the end result workable even without the mandate.

He said the law benefits from growing public support and that its long phase-in period will allow Congress, passing through several election cycles, to amend it without killing it.

"I think the individual mandate is unconstitutional. It's not the bill I would have written," Frist said. "But it's not going to fall. The law will be shaped by these elections."

Sam Wilson, associate state director for advocacy for South Dakota AARP, an agency that supports the reform act, called the individual mandate "absolutely essential" two weeks ago after an appeals court ruled against it. That ruling was one of several that probably will push the issue to the Supreme Court.

"We don't single out any part as the keystone," Wilson said Wednesday. "But it's essential if you're going to bring down the costs in the insurance market. You've got to have a way to spread the risk."

But Frist said state insurance exchanges and a mandate on businesses to provide employee health coverage will bring in substantial revenue to build on the foundation that already has 150 million Americans carrying group insurance through their employers.

A penalty of $2,000 per uninsured employee will not be adequate incentive for businesses that often spend $5,000 or more to insure workers, but a future Congress can fix that with a stiffer penalty, he said.

He called the reform law 70 percent good and 30 percent bad. He had been out of Congress for three years when the law came up for a vote last year, but he urged Republicans to support it.

Deb Fischer-Clemens, vice president of the Avera Center for Public Policy, said she is confident insurance will be competitive because of the exchanges that states, including South Dakota, are setting up. She agreed with Frist that the current system is unsustainable because of rising demands on Medicare.

"Is it the right fix? Not 100 percent. But the fix had to occur," Fischer-Clemens said.

Frist, 59, was a Republican senator from 1995 to 2007 and majority leader the last four of those years. He once was on a GOP short list of possible presidential nominees, but he said in an interview Wednesday that he is glad to be done with politics.

He spoke at the annual conference in which Avera honors health care employees from five states for initiative and quality work.

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Most US employers to keep health plans: survey

2011-08-26T12:15:00.001-04:00

Almost three-quarters of medium to big companies will keep offering healthcare benefits to employees once state-based insurance exchanges kick off in 2014, according to a survey by a prominent benefits consulting group.

The study adds to a growing body of research tracking the effect of President Barack Obama's healthcare overhaul on employers, where most working-age Americans get their health coverage.

Less than a third of the surveyed employers felt confident that the exchanges would offer a viable alternative to coverage sponsored by the company, according to the voluntary survey conducted in July by Towers Watson and released on Wednesday.

Only nine percent of U.S. mid- to large-sized companies plan to end their healthcare benefits after state-based insurance exchanges launch in 2014, and six percent may do so without fully compensating their employees.

Twenty percent are unsure what they will do, according to the survey.

The U.S. healthcare overhaul passed last year requires all states by 2014 to have insurance exchanges, open marketplaces of competing insurance plans. In the first few years, the exchanges will only be open to individuals and small businesses -- those with at most 50 or 100 employees.

For employers, the exchanges could offer a chance to do away with hefty healthcare benefits costs as individual employees get a new venue to receive presumably attractive coverage.

To prevent an exodus, the healthcare reform law includes penalties that would hit bigger employers that offer no coverage if their workers end up receiving federal premium tax credits.

"The penalty in pretty much all cases is going to be a lesser amount than what they'd have to pay to subsidize employees' premiums," said Sabrina Corlette, who studies exchanges as a research professor at the Georgetown Health Policy Institute.

"But you're going to find out that these kinds of decisions, they're not just pure dollars-and-cents decisions for employers."

The Towers Watson findings align with Congressional Budget Office estimates but contradict a controversial study from consulting firm McKinsey, which found at least 30 percent of employers are like to stop offering health insurance in 2014.

Various industries and sectors will react differently when the exchanges do roll out, depending on factors such as corporate culture, employee demographics or how much money they have on hand, said Ron Fontanetta, senior health care consulting leader at Towers Watson.

"The penalty in and of itself is not likely to drive the decision; it's a combination of looking at that and the alternatives that their employees will have available through the exchanges," he said.

Fontanetta said more employers are likely to eliminate their plans for retired employees than for active ones.

The survey found most companies were actively preparing for the rollout of the healthcare reform -- even though almost half said they were not confident it would happen in the planned timeline -- as well as planning for steadily rising healthcare costs.

As part of that preparation, Fontanetta said companies are increasingly looking at ways to encourage their workers to stay healthy.

In a big increase from the current 8 percent, 57 percent of employers said that in the coming years they would consider rewarding or penalizing workers based on health measures such as blood pressure or cholesterol.

The annual Towers Watson Health Care Trend Survey collected voluntary responses from 368 U.S. employers, or about 12 percent of those that received the questions.

Almost 40 percent of the respondents had more than 10,000 employees. A quarter were in the manufacturing industry and about a third were from the Midwest.

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Raising Awareness of Corporate Influence on Health Care Delivery

2011-08-26T12:03:00.001-04:00

Nestled in the emerging Affordable Care Act is a groundbreaking provision that will require pharmaceutical companies and other medical industries to report all direct payments or gifts over $10 that are made to physicians. It's called the Sunshine Provision, and will take effect in January of 2012.

Physicians have always had a complex relationship with the health care industries. It requires careful collaboration and communication to bring the latest innovations to our patients. And who doesn't enjoy a free steak dinner in the process? But in business, collaboration often involves payment, and communication is marketing. Physicians as a group have been a slow to acknowledge that we are as susceptible to corporate marketing as everyone else on this planet, and this hubris/naïveté has allowed us to be manipulated in ways that can influence our clinical decisions.

As doctors are learning, being the recipient of a gift -- even one as seemingly benign as doughnuts for the office staff -- can confer a sense of obligation on the recipient. Over the past decade, significant data has accumulated to show that all manners of gifts shape the prescribing practices and clinical decisions of conscientious physicians in ways they may be completely unaware of. Doctors who receive gifts tend to choose the marketed product more frequently and rapidly, and acquire them for the hospital formularies at a greater rate, while their prescribing of generic drugs declines.

Free drug samples are probably the most widespread form of "gifts" to doctors. Those over-packaged samples sitting in a doctor's cabinet represent the latest and priciest versions of pharmaceutical products. The doctor may be well intentioned in passing them out -- the patient may not have insurance, or the pharmacy may be closed -- but they often cost the patient much more in the long run when the actual prescription is filled. And the fact that in the short term they were free does not mean they were the best choice of medication in that instance; they may have simply been the most convenient to reach for, or the first to come to mind thanks to that five minute chat with the very likeable drug rep earlier that day over a free bagel and cup of coffee.

Non-medically-related gifts to physicians -- tickets to an NFL game for example -- have largely become a thing of the past, as pharmaceutical companies have taken voluntary steps to restrict such overt attempts to gain favor. On the other hand, medical device industries are still famous for wining and dining specialists in exotic locations. There's nothing like an all expenses-paid vacation to a five-star resort to make an artificial hip look interesting -- especially when you are honestly convinced that palm trees and Mojitas would never cloud your objectivity about hip replacements. Clinical influence aside, there is no such thing as a free lunch. Consumers, aka patients, ultimately pick up the tab.

One of the thorniest issues around physician gifts concerns medical conferences. Doctors want to, and in most states are required to, participate in many hours of expensive continuing education. Grants from the health care industry help defray that cost. The industry has voluntarily taken measures to remove overt marketing influences from these settings, but more nuanced strategy remains. For instance, speakers (or "thought-leaders" as they are known in the industry) may offer presentations that, while factually accurate and useful, weigh much more heavily towards treatment than diagnosis and prevention. To justify industry insertion into the medical education process because educating doctors ultimately benefits the patient is like allowing soft drink vendors into schools because that will help fund after-school sports. The means shouldn't run counter to the end.

Over the past decade many of our professional organizations, like the American Academy of Pediatrics, have been working hard at raising physician awareness on these matters and providing explicit guidelines.Ethical discussions on these issues are prevalent in our professional journals. The Institute of Medicine has published recommendations on limiting the role of industry in medical education. The AMA has had a shakier role here, enraging doctors a few years ago by selling physician databases to pharmaceutical manufacturers for the express purpose of providing them marketing tools. On the other hand, landmark articles have appeared in JAMA, the AMA's journal, urging stringent restrictions on physician/industry relationships.

Meanwhile, individual doctors and practices are becoming more aware, active and vocal in the way they manage these encounters. Growing numbers of private practices limit access to sales representatives, and refuse gifts or samples from them. Some teaching hospitals now restrict the financial relationships their faculty can have with industry. The Sunshine Provision only provides a reporting system. It does not, in itself, change the way we do business in health care. But it is one more indication that doctors and society at large are coming to terms with the complex role that the health care industry plays in shaping medical practice. We will never achieve meaningful, cost-effective health care reform that puts the patient's interests first until we understand just what it is that needs reforming. For that we need transparency, and this provision of the Affordable Care Act appears to be a step in the right direction.

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Three-Quarters of U.S. Jobless Can't Afford Health Care: Report

2011-08-25T15:01:00.004-04:00

Affordable Care Act will give newly unemployed more choices for coverage in 2014, authors contend

Nearly three-quarters of jobless Americans say they can't afford needed health care or prescription drugs, and about half say they're struggling with medical bills or medical debt, a new report reveals.

Sixty percent of working Americans rely on employer-based health insurance, so when 15 million working-age adults lost their jobs between 2008 and 2010, an estimated 9 million also lost their health insurance, according to the Commonwealth Fund report.

The authors of the report also concluded that when the major provisions of the Obama Administration's health care reform law are implemented in 2014, newly unemployed people will have many more health insurance choices.

But the current lack of options have led to a health and financial crisis for many Americans who lose their health insurance benefits along with their jobs.

For the new report, researchers analyzed data from the 2010 Commonwealth Fund Biennial Health Insurance Survey. Of the respondents who lost their health insurance when they lost their jobs:

- 72 percent said they couldn't afford to: fill a prescription; get a recommended test, treatment or follow-up; go to a doctor or clinic for a medical problem, or get specialist care.

- 72 percent said they had problems with medical bills, including: an inability to pay; having to make payments over time to clear up medical debt; being contacted by collections agencies over unpaid bills; and changing their way of life to pay medical bills.

- 40 percent said medical bills forced them into difficult financial tradeoffs in the past year, such as: 32 percent had used up all their savings; 27 percent couldn't pay for basic necessities such as food, heat or rent; 14 percent accumulated credit card debt; and 9 percent took out a home loan.

"It's clear from this report that losing a job and health insurance simultaneously is a serious threat to a family's health and financial stability," Commonwealth Fund President Karen Davis said in a fund news release.

But she added that "the Affordable Care Act will assure that families already struggling with the devastation of unemployment will still be able to get the health care they need and will be protected if they become seriously ill."

In 2014, Medicaid will be expanded to cover single adults earning up to $14,484 a year and families of four making up to $29,726 a year. There will also be sliding scale premium tax credits for single adults earning up to $43,560 a year and families of four making up to $89,400 a year to obtain private policies through new state insurance exchanges.

People who buy health insurance through the exchanges will be protected against high premiums and won't be able to get turned down due to existing health issues, the authors of the report pointed out in the news release.

The Commonwealth Fund is a private foundation supporting independent research on health policy reform and a high performance health system.

More information

The U.S. Department of Labor outlines health insurance options for people who've lost their jobs.

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WHH seeks ties with not-for-profit hospitals

2011-08-24T10:09:00.002-04:00

Winter Haven Hospital is reaching out to other not-for-profit hospitals, including Lakeland Regional Medical Center, about new ways of working together for their mutual health.

"We are talking to some not-for-profit organizations about relationships and we have been approached by others," WHH President Lance Anastasio said.

He and LRMC President Elaine Thompson have discussed "things we might do jointly," Anastasio said.

It's an exercise many independent hospitals are going through in reaction to cuts in government revenue, a delayed backlash from the economy's slow recovery and uncertainty about the impact of health care reform.

For-profit companies also have expressed interest in Winter Haven Hospital, but Anastasio said last week he and the WHH board are "restricting our discussion to looking at not-for-profits only."

They're interested in ways of strengthening the hospital, he said, not selling it.

WHH and LRMC, the county's two not-for-profit hospitals, both could find themselves under more pressure from for-profit companies -- which own the county's three smaller hospitals -- than they have been in more than a decade.

Nationwide, mergers and acquisitions accelerated during the past couple of years, linked to economic problems at some hospitals and a desire to ensure market share by health systems in better financial circumstances.

For-profit organizations are expanding into markets previously dominated by not-for-profits, Moody's Investors Service reported in spring 2010, warning of "a significant shift underway in the hospital sector toward increased competition and consolidation."

Polk County went through a version of that scenario in the 1990s and into 2002 as the Bartow, Haines City and Lake Wales hospitals became for profit.

During the past two years, Central Florida and Tampa Bay had attempted sales, mergers and acquisitions among not-for-profit hospitals and hospital systems. Those include:

Adventist Health System, nonprofit parent company of Florida Hospital in Orlando, added Bert Fish Medical Center in New Smyrna Beach to its system in 2010. That merger fell apart with a legal ruling that the merger occurred as a result of meetings illegally closed to the public by Bert Fish, a public hospital.

University Community Hospital in Tampa, however, became a member of non-profit Adventist Health System in 2010. Its other hospitals in the Tampa Bay area include University Community Hospital-Carrollwood, Pepin Heart Hospital & Dr. Kiran C. Patel Research Institute and Florida Hospital Zephyrhills.

Orlando Health and Health Central in Ocoee announced merger plans in February 2011.

Winter Haven Hospital already has agreements with Shands at the University of Florida for its emergency room physicians and its on-staff urologists. The hospital is continuing to talk with Shands about other arrangements.

WHH has spoken with Orlando Regional Medical Center and BayCare Health System also, Anastasio said. BayCare has a network of not-for-profit hospitals in Pinellas and Hillsborough counties that includes South Florida Baptist Hospital in Plant City.

Doctors and patients of WHH and other Polk hospitals have a stake in what happens at WHH, the county's second-largest hospital.

"It's so fluid right now, with big clinics struggling a little bit financially and hospitals looking to protect themselves," said Dr. Stuart Patterson, an orthopedic surgeon. "I don't know how it's going to end."

Patterson, who does surgeries at WHH and Bartow Regional Medical Center, is chief of the medical staff at Bartow Regional.

Agreements and mergers can put hospitals in a better financial situation, enabling them to reduce interest payments on loans, buy in bulk and have more clout in negotiating managed care contracts.

If the same company or group owns multiple hospitals, however, there's a danger smaller hospitals could become feeder hospitals to larger ones, Patterson said.

Polk County's high number of uninsured residents and a growing number of people whose health insurance has high deductibles they can't pay are one of the factors affecting hospitals.

"We have so many people seeking primary care in our emergency department right now," LRMC's Thompson said in a meeting with The Ledger earlier this summer. "We'll probably have to do something (for basic primary care) on site."

State budget cuts hit hospitals with a 12 percent reduction in Medicaid funding on July 1, which she said "hurts the not-for-profit hospitals more" than the for-profit hospitals.

"We're seeing it in our family health centers, more cancellations," Anastasio said. "People think 'If I've gotten better with the medication I don't want to come back and pay for another visit.'"

The health of patients who can't afford outpatient follohttp://www.blogger.com/img/blank.gifw-up care will have an increasing impact on hospital finances, Anastasio said.

Part of the new health care reform law aims at penalizing hospitals for repeat admissions considered unnecessary or greater than would be expected.

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Medicare costs rise at slowest pace in 6 years-S&P

2011-08-19T19:49:00.002-04:00

* Medicare costs up 2.5 pct vs private insurers 7.5 pct

* Hospitals may shift more costs to private insurers -S&P

* Medicare funding in focus with U.S. budget deficit

Growth in hospital revenue from Medicare patients was roughly one-third the rate seen from patients on private health insurance during the past year, according to data from Standard & Poor's.

Medicare revenue rose 2.5 percent per patient in the year before June, the slowest rate since S&P started keeping track in January 2005, the S&P Healthcare Economic Index showed on Thursday. Revenue for patients on commercial insurance rose 7.48 percent in the year ending in June.

The S&P Healthcare Economic Indices measure the revenue hospitals and other healthcare providers receive for treating each patient under Medicare and commercial insurance programs.

Medicare is the federal health insurance program for the elderly and disabled, with most patients 65 years or older. It has come under heightened public scrutiny as Congress seeks ways to cut government spending, with healthcare costs being one of the biggest contributors.

Defenders of programs like Medicare note that it has done a better job at negotiating down costs with hospitals and other providers than insurance companies, and Thursday's data may bolster that argument.

"In Medicare, the government sets the rules. It's a single payer, which means it's a single market structure," driving costs lower, said David Blitzer, chairman of S&P's Index Committee.

However, Blitzer could not say why Medicare costs were so much lower than those in the private sector this year, and it could depend on how hospitals and physicians calculate costs.

For example, in times of economic downturn, hospitals may have a greater incentive to seek reimbursement for general costs, such as heating and rent, through private insurers rather than through Medicare, since Medicare rates are lower, he said.

"There may also be some downward rate pressure that may be generated by the government pushing down Medicare costs," Blitzer said.

S&P's Hospital Commercial Index, which calculates hospitals' revenue from private insurers, rose 8.4 percent, versus 1 percent for hospitals' revenue from Medicare.

As a whole, health care revenue rose 5.6 percent in the year ending in June, almost 2 percent slower than the prior year.

Left unreformed, Medicare, along with Social Security and Medicaid, will devour 100 percent of all tax revenue by 2047, according to the nonpartisan Goverhttp://www.blogger.com/img/blank.gifnment Accountability Office.http://www.blogger.com/img/blank.gif

Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities think-tank who specializes in Medicare and health coverage issues, said the S&P figures are a reminder that high healthcare costs are not just a problem for government.

"In fact, Medicare may be doing better than the private healthcare sector (in limiting costs)," he said.

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Illinois Department of Revenue denies tax exemptions for 3 hospitals

2011-08-19T10:23:00.001-04:00

Ruling on Northwestern Memorial Hospital's Prentice Women's Hospital, Edward Hospital in Naperville and Decatur Memorial Hospital based on charity care

The question of how much charity care a not-for-profit hospital must provide to qualify for a pass on property taxes surfaced again Tuesday when the state denied exemptions for three hospitals, including Northwestern Memorial Hospital's Prentice Women's Hospital.

The decision follows in the wake of an Illinois Supreme Court ruling last year that the state revenue department was correct in withdrawing Provena Covenant Medical Center's property tax exemption in 2004. The court found the Urbana hospital failed to justify its exemption by providing charity care to just 302 patients, or less than one-half of 1 percent of the patients it served in 2002.

Provena, however, said it provided more than $38 million in "free care and other community benefits."

The other two hospitals denied exemptions by the Illinois Department of Revenue on Tuesday were Edward Hospital in Naperville and Decatur Memorial Hospital. More decisions are expected and could affect about 15 other health care systems.

While property taxes do not provide revenue to the state, they are the lifeblood of many cash-strapped cities, school districts, park systems and libraries.

"The Illinois Supreme Court provided guidance in the Provena case. … We are applying that interpretation of the law," the revenue department said in a statement. "The fundamental question is whether hospitals operate as businesses or as charities."

Hospitals' tax-exempt status is reviewed whenever there is a change in property use, such as an expansion, or a change in ownership. And the hospitals can appeal within 60 days to an administrative law judge.

Northwestern Memorial said it disagrees with the department's decision on Prentice and will review its options.

"As part of an academic medical center, our tax exemption permits us to reinvest in the health of our community and to continue to provide life-saving diagnostics and treatments," as well as to conduct research and teaching, Northwestern said in a statement.

In 2010, community benefit contributions totaled $276.7 million, of which $44 million was for charity care, Northwestern said.

Charity care was reported at 1.85 percent of $1.18 billion in net patient revenue on its 2007 application related to the hospital's new construction, according to the state Department of Revenue.

Edward Hospital told Reuters it plans to "mount a vigorous defense."

The facility "has one of the most generous charity care policies in Illinois, and contributed $77 million in charity care and community benefit programs last year," the hospital said in a statement. "We treat patients 24 hours a day, seven days a week, regardless of their ability to pay."

The Naperville hospital reported unreimbursed charity care as 1.04 percent of $448 million in net patient revenue in its 2007 application for tax exemption, filed after it subdivided its property, according to the state Revenue Department.

Decatur Memorial reported its cost of charity care as 0.96 percent of its $252 million in revenue from net patient care when it applied http://www.blogger.com/img/blank.giffor tax-exempt status in 2006 after an ownership change. Hospital officials could not be reached for comment.

The Illinois Hospital Association said it was "deeply concerned" that taxing hospitals would add stress at a time when they already are feeling financial pressure stemming from the economic downturn, the federal health care overhaul and reduced Medicaid and workers' compensation payments from the state.

"Losing an exemption could be devastating to an individual hospital — potentially wiping out thin margins and triggering cuts in the workforce and in health care services for the community," the association said in a statement.

One in three Illinois hospitals are losing money, the association said.

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Insurers' income swells as hospitals, docs lower prices

2011-08-17T10:28:00.002-04:00

Insurers say successful negotiations with health care providers to reduce reimbursement prices boosted bottom lines for the most recent quarter. They also say diminished demand from patients, due to the weak economy, is helping to brighten health plans’ financial pictures.

Blue Cross and Blue Shield of Massachusetts, Inc. and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. reported combined net income of $56.5 million on revenue of $1.6 billion for the second quarter of 2011, compared with a net loss of $14.3 million, on the same revenue, in the year-ago period. Claims declined slightly to $1.4 billion from $1.5 billion in the second quarter of 2011 versus the same period last year.

“We’re committed to working with physicians and hospitals in a spirit of shared responsibility to reach contract agreements that allow caregivers to cover their reasonable costs while also meeting the community’s expectations about affordability,” BSBCMA CFO Allen Maltz said in a statement.

Maltz said individual and small business customers renewing in the fourth quarter of this year will see average base rate increases of less than 7.5 percent. However, rates can include up to an additional 15 percent due to demographic factors, such as the age of workers. Blue Cross reported it had 2.8 million members as of June 30, 2011.

Harvard Pilgrim Health Care reported net income of $13.5 million on revenue of $696.3 million for the second quarter of 2011, versus net income of $6.5 million on revenue of $735.6 for the corresponding period last year. Harvard Pilgrim also credited a moderation in health care provider prices, along with lower utilization, for the gains.

“Much of Harvard Pilgrim’s favorable result is due to a series of provider and consumer cost-containment programs that modify behavior in the areas of inefficient or unnecessary medical services, as well as ongoing efforts to control administrative costs,” Harvard Pilgrim CFO James DuCharme, said in a statement. “In addition, the weakened economy continues the industry trend of reduced utilization of discretionary medical services.”

As of June 30, 2011, total membership for Harvard Pilgrim was 1,155,000.

Tufts Health Plan reported that its net income grew to $35.9 million for the second quarter of 2011, up from net income of $11.5 million in the year-ago period. Tufts executives said the health plan is seeing increased adoption of tiered health plans that provide incentives for patients to choose lower cost health care providers.

“We continue to invest in and strengthen our core business by launching the “Your Choice” suite of tiered products, a central element of our Coordinated Care Model (CCM) strategy,” Tufts CFO Umesh Kurpad said in a statement. “Quite simply, this model is based on our belief that to improve health care quality and reduce escalating health care costs, we must appropriately align incentives for our members and network providers, and support effective decision making by both parties.”

Tufts Health Plan’s membership was 756,843 at the end of the quarter.

The state’s fourth largest insurer, Fallon Community Health Plan, also reported that its finances improved year over year. FCHP reported net income of $13.6 million on revenue of $289 million for the second quarter. For the same quarter last year, FCHP posted a net loss of $12.8 million on revenue of $283.8 mihttp://www.blogger.com/img/blank.gifllion. Membership was 207,791 as of June 30, 2011.

In addition to Blue Cross's average increases of less than 7.5 percent for business customers, the other insurers said their average increases would be:

• At Harvard Pilgrim, a 3-to-5.9 percent average increase.

• At Tufts, a 5.9 percent average increase.

• At Fallon, a 5.3-to-5.4 percent average increase.

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note: all reported increases exceed the rate of inflation.

Health Care Prognosis Better With Digital Law: Peter Orszag

2011-08-17T10:22:00.000-04:00

Even with the all-too- depressing illustrations of political paralysis we’ve seen recently, government can still act to improve our lives. A good case in point: The U.S. health sector is rapidly digitizing, and federal legislation from early 2009, passed well before the health-care reform act, is an important reason why.

Just five years ago, only 12 percent of doctors and 11 percent of hospitals had comprehensive information- technology systems in place. With no digital records to measure patient progress and guide doctors on best practices, it’s not surprising that cost and quality of care have varied wildly, not only across the U.S. but even within a single hospital.

The Health Information Technology for Economic and Clinical Health (HITECH) Act, a little-noticed component of the 2009 economic-stimulus bill, is helping to change all that. As a result, over the next five years we will experience a substantial expansion in health IT. That digital revolution, in turn, is central to improving value in health care.

Consider the experience of Partners HealthCare System Inc., an early adopter of health IT at Brigham and Women’s Hospital and Massachusetts General Hospital in Boston. In 2006, more than two-thirds of its doctors used electronic health records and, by 2009, all of them did. The system includes integrated clinical-decision support, which gives doctors computerized help in assessing the best tests and treatments for their patients. (Can you imagine how difficult it would be for a doctor to keep up with the increasing complexity of modern medicine without such tools?)

Partners HealthCare has used its health IT to be more selective about which patients should have diagnostic imaging tests, such as MRIs and CT scans. The cost to Medicare for imaging tests nationwide roughly doubled from 2001 to 2009. And such tests are not only expensive but potentially dangerous. Frequently imaged patients face an increased risk of cancer because of exposure to excessive radiation.

Doctors at Partners now order imaging scans through the computer system and are automatically queried about the patients’ characteristics. For each case, the software then provides an “appropriateness” score, reflecting evidence- based protocols for the image requested. And in some cases, the program suggests an alternative to imaging.
Comparing Doctors

The system is also used to compare doctors to one another, so they know if they use imaging tests more or less than their peers do.

From 2006 to 2009, imaging rates at Partners flattened, and in some specialties even started to decline, sometimes significantly. The number of outpatient images per patient, for example, fell 25 percent in that period, even after adjusting for patient characteristics such as age, ethnicity, gender, medical history and medications.

The Partners HealthCare data suggest that doctors who use imaging a lot in one year will tend to do the same in subsequent years. They also indicate that imaging rates vary by doctor. In 2006, a doctor at the 90th percentile (meaning he ordered more images per patient than 90 percent of doctors) ordered about 28 images for every 100 patients, almost four times as many as a doctor with rates at the 10th percentile. To make a meaningful dent in the use of imaging tests, the doctors who use them the most need to change their behavior.

The IT interventions appear to have been effective at reducing imaging rates across the board, including among the doctors who ordered the tests most. By 2009, that doctor at the 90th percentile ordered 20 images per 100 patients, a decline of almost 10. This one doctor’s net decrease in scans was larger than the total number of scans ordered by the doctor at the 10th percentile even in 2006. And the low-use doctor reduced his rate, too, by about two images per 100 patients.

The experience has likewise been encouraging at other health-care centers, even some that are much smaller than Partners HealthCare. Stellaris Health, for example, a four- hospital network based in Armonk, New York, has used its IT system to reduce instances of venous thromboembolism. This cardiovascular condition is a precursor to pulmonary embolism -- a blockage of an artery in the lungs -- which is the most common preventable cause of hospital deaths.

Stellaris coded into its electronic medical-record system the risk factors for venous thromboembolism, and taught its doctors evidence-based practices to minimize those risks. Today, 99 percent of Stellaris doctors follow the practices, up from about 80 percent in 2007.
Better Health Care

More broadly, health IT is a necessary but not by itself sufficient step toward improving value in health care. A review of the health IT studies by the Congressional Budget Office, published in 2008, while I was the director of that agency, concluded that it “has the potential to significantly increase the efficiency of the health sector by helping providers manage information.” The CBO also found, however, that health IT couldn’t realize this potential without a supportive health-care delivery system that uses it aggressively. The most auspicious examples of IT use were in relatively integrated systems, such as Veterans Affairs, Partners HealthCare, Kaiser Permanente and Group Health Cooperative in Seattle.

In places where the technology is used to compare doctors’ practices, bolster adherence to evidence-based medicine, examine what techniques are working best and reduce error rates, it can be quite beneficial.

So what has changed to increase the use of health IT? First, like all computer technology, health IT keeps advancing, so that it has become somewhat less intrusive to the practice of medicine. Many doctors find tablet computers, for example, more convenient than laptops or desktops in the examination room.

Just as important, and perhaps more so, under the first stage of the HITECH Act, doctors who adopt electronic health records can receive incentive payments of as much as $44,000 from Medicare or $63,750 from Medicaid; hospitals can qualify for payments of $2 million or more. As of early August, Medicare providers had received $400 million in incentive payments for health IT, and much more is in the pipeline. Surveys suggest that while the first-stage incentives are available, at least two-thirds of American hospitals will adopt new systems.http://www.blogger.com/img/blank.gif

Starting in 2015, the Medicare subsidies for adopting health IT systems are to be replaced by penalties for not doing so.

To be sure, investments in information technology are only part of what’s needed to improve value in U.S. health care. Still, in this summer of despair over politics in Washington, the early success of the HITECH Act is a refreshing reminder of what sensible policy can accomplish.

(Peter Orszag is vice chairman of global banking at Citigroup and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

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Ontario's going broke on health care

2011-08-15T10:43:00.000-04:00

TORONTO - If history is any guide, Ontario voters should not expect meaningful discussion of health policy during the upcoming provincial election campaign.

Indeed, none of the party leaders have so far offered any feasible solutions to one of the province’s most pressing challenges — the unsustainable growth of government health care spending.

Ontario’s provincial government cannot continue to ignore the simple fact that health care spending in the province is reaching a tipping point.

According to provincial data, from 2001 to 2010, total provincial revenue from all sources (including federal transfers) grew at an average annual rate of only 5.1%. Over the same period, government health expenditures grew at an annual average rate of 7.0%; while the economy grew by 3.5%.

Projecting those numbers into the future, half of the province’s total available revenue will be consumed by health by the end of 2011.

Clearly, Ontario cannot continue paying for health care the way it currently does.

Under a single-payer public health insurance monopoly, governments only have two blunt policy instruments at their disposal to deal with this problem; they can either raise taxes or cut medical services — both of which are not feasible in the long-run.

Redistributive tax

Raising taxes is detrimental for economic growth, especially in times of economic uncertainty, and rationing necessary services is harmful for patients.

Recent history shows us that increasing taxes does nothing to reduce the growth in unsustainable health care spending. In 2004, Dalton McGuinty’s government introduced the Ontario Health Premium with the objective of boosting health care funds in the province.

Although the province dubbed it a premium, in reality it’s a redistributive tax because the assessment is scaled to income, not linked to usage.

While the health tax added approximately $2.5 billion to Ontario’s revenue base and temporarily increased the growth rate of provincial revenues from 6.8% in 2004 to 13.6% in 2005; the annual growth rate in total available revenue returned to normal levels of 4.7% by 2006.

The empirical fact is that Ontario’s health tax has done nothing to control the ongoing growth of government health expenditures.

This should not come as a surprise.

Ontario’s health tax does not lead to a more efficient way of allocating medical resources because it is not tied to the demand for, or use of, health care services.

Some argue that increasing federal transfers to the provinces is a solution, yet recent increases in federal health transfers through the 10-year plan have not slowed the growth in health spending.

Over the past five years, from 2005/2006 to 2009/2010, Ontario has received more than $42 billion in federal health transfers — yet it is still on pace to consume half of its total provincial revenues on health by the end of this year.

Notably, this crisis is happening despite significant government efforts to restrict spending on health, which has resulted in long waits for necessary medical goods and services.

The Fraser Institute’s annual survey of Canadian physicians shows that in 2010, the average wait between referral from a general practitioner to treatment in Ontario was 14 weeks.

Although Ontario has the shortest average wait times compared to other provinces, patients in Ontario are still waiting more than three months on average before they receive treatment.

There’s no mystery why funding increases through federal transfers and Ontario’s health tax have not slowed the growth of government health spending.

Take responsibility

As long as the province publicly subsidizes 100% of the cost of health care, demands for health spending will outpace the ability to fund it through the public system.

Under provincial medicare, people are not directly responsible for any part of the health care that they consume and thus are not faced with the appropriate incentives to use the system more efficiently.

This phenomenon is unique to Canada, as almost every country in the developed world has some form of patient cost-sharing for medical services.

Requiring people to take some responsibility for their health care costs through a small percentage-based co-payment or allowing people the option to purchase private health insurance for medically necessary services does not mean that Canada has to give up its principle of universality.

Low expectations of meaningful policy reforms have become the norm in provincial elections, but the consequences of doing nothing are now too serious to ignore. There is a tsunami of health spending swallowing the provincial budget.

Government rationing is jeopardizing the health of patients.

It’s time to experiment with user fees and private insurance options.

(Mark Rovere is Associate Director of Health Policy Studies at the Fraser Institute.)

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Nonprofit Hospitals Face Downgrades As Revenues Fall: Moody's

2011-08-11T10:32:00.002-04:00

A dwindling number of patients, combined with oncoming Medicare and Medicaid cuts, are making more likely the prospect of nonprofit hospitals being issued credit rating downgrades, according to a report released Wednesday.

Hospital revenues grew at an average rate of only 4 percent in 2010, a 20-year low, according to the rating agency Moody’s, which issued the report. Moreover, the rate of revenue growth is expected to keep dropping. Federal cuts in Medicare, and state efforts to save money in Medicaid spending, will hurt hospitals’ bottom line. Medicare represents about 43 percent of hospital revenues, while Medicaid accounts for another 11 percent.

Nonprofit hospitals, including facilities owned by state and local governments, account for about 80 percent of acute-care hospitals in the U.S., according to the Wall Street Journal.

In addition to government cuts, hospitals must contend with a fall-off in the number of patients seeking treatment. Patient volume has declined since 2009, a drop that Moody’s attributes to the struggling economy. More people might be deciding to forgo elective surgeries, given the high unemployment and underemployment rates.

When patients do visit the hospital, they’re more likely to stay for an observation period of 24 to 48 hours, rather than seek inpatient care. Observation stays require the patient to pay much less than inpatient treatment, but they cost the hospital about the same amount to provide.

Last month, Moody’s announced that it had downgraded 12 nonprofit hospitals in the second quarter of 2011, compared with only three upgrades for the same time period. Those numbers are trending in a direction hospitals don't want them to: In the first quarter of 2011, Moody’s downgraded just six nonprofit hospitals and upgraded five.

When a hospital's rating is downgraded, it can make it more difficult for the hospital to get access to the capital it needs to function.

Overall, Moody’s has maintained a negative outlook on the nonprofit health care sector since November 2008, and expects to maintain it at least through the rest of 2011.

Fitch and Standard & Poor’s, the other two major credit rating agencies, have both given the nonprofit health care sector a stable outlook for the year.

With more and more nonprofit hospitals feeling financial pressure, an increasing number are merging with larger outfits or selling themselves to for-profit companies, the Journal reports. There were 72 deals of this kind last year, the most since 2001, and already there have been another 55 transactions in 2011.

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RMH seeks change to not-for-profit status

2011-08-11T10:28:00.001-04:00

Robinson Memorial Hospital officials want to change the Ravenna hospital’s status from county-owned to not-for-profit to give the hospital more flexibility in a restrictive health care economy.

Speaking with county commissioners Tuesday afternoon, Robinson Memorial Board President Gordon L. Ober and hospital President and CEO Stephen Colecchi said the hospital board has reviewed the available options and believes a change of status is in order.

“The board has chewed on this several times over the years and the board believes the timing is right” to make the change, Ober said.

Cuts in reimbursement for Medicare and Medicaid mean “it’s going to be difficult to continue to do business as a small, publicly-owned hospital,” Ober said.

The status change would allow greater investment flexibility, more opportunities for partnerships and a chance to lower employee costs, Colecchi said. All of that is needed to compete at a time when the population is aging and hospitals are seeing cuts in reimbursement from federal Medicare and state Medicaid programs.

With some 1,350 employees, representing 1,000 full-time equivalent jobs, Robinson Memorial is the second largest employer in the county. Another 200 people, representing 150 full-time equivalent jobs, are employed by Robinson Health Affiliates.

The change would lower Robinson Memorial’s employee costs, which run about 6 percent higher than not-for-profit hospitals, Colecchi said. He said the hospital’s payroll is about $80 million annually, about $4.5 to $5 million more than a comparable not-for-profit.

Colecchi said employees who participate in the Ohio Public Employee Retirement System sill would be eligible to stay in PERS, but the hospital also would establish another retirement plan that would mirror PERS but at lower cost. All employees hired after the conversion would participate in that new plan. Also, all current employees would have to pay into Social Security, Colecchi said.

“We still have to stay competitive in pay and benefits,” Colecchi said.

Colecchi noted the number of publicly-owned hospitals has been decreasing in Ohio and across the country. The number of hospitals owned by state or local governments declined by nearly 800 in the past 30 years, representing a 40 percent decline nationally.

There are only nine county-owned hospitals in Ohio currently, and Robinson Memorial and MetroHealth Medical Center in Cleveland are the only two county-owned hospitals with more than 100 beds.

The Ohio Constitution restricts how county-owned hospitals can invest and who they can partner with, Colecchi said.http://www.blogger.com/img/blank.gif

He said Robinson Memorial “cannot engage in partnerships with for-profit entities.” That makes it difficult for the hospital to cooperate with doctors who are in private for-profit practices.

Colecchi said the change “would provide the hospital with the best opportunity to maintain its long-term financial viability while continuing to meet the health care needs of the Portage County and surrounding communities.”

He noted that “55 percent of our business is Medicare and Medicaid and we lose (money) on every case.”

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NH GOP’s budget off to shaky start

2011-08-05T11:59:00.002-04:00

If you visit the Web site of the New Hampshire House Republicans (http://nhhousegop.com), featured prominently under the heading “House 2011 Session Accomplishments” is a brief statement that summarizes its achievements and links to a detailed list inside.

That statement reads in full: “The House has passed legislation that accomplishes our campaign pledge of reforming government, living within our means, moving our economy forward, keeping New Hampshire safe, increasing transperency (sic) …”

Today, we want to focus on two of those “accomplishments” – balancing the budget (“living within our means”) and creating jobs (“moving our economy forward”).

For in the first 29 days since the Republican-controlled Legislature’s two-year budget became law without the governor’s signature, the choices made to achieve the first already have had a direct impact on the second.

And not in a good way.

On Monday, 10 New Hampshire hospitals – including the two in Nashua – filed suit against the state in U.S. District Court over the Legislature’s decision to withhold roughly $230 million in Medicaid money from the state’s hospitals to balance the budget.

The hospitals contend the state’s decision violates federal law and threatens the hospitals’ ability to adequately serve the needs of patients covered by Medicaid.

The next day, Elliot Health System announced it had laid off 182 employees at Elliot Hospital in Manchester – 4 percent of its work force – in response to what it said was a $17 million deficit created by the state’s action. It also froze contributions to its employees’ retirement accounts and ended its 24-hour hotline.

That was followed a day later by a similar announcement from Southern New Hampshire Medical Center in Nashua that it was in the process of laying off 100 employees, or 6 percent of its work force, to help offset a $10 million deficit created by the state’s decision.

And across town, St. Joseph Hospital intends to release its own budget-cutting measures within the next few weeks, which are expected to include layoffs, according to a spokeswoman.

So in less than a month, the Republicans’ “moving our economy forward budget” has resulted in nearly 300 layoffs at two of the largest hospitals with possibly hundreds more on the way.

And should the hospitals prevail in their suit, lawmakers would have to go back to the drawing board and come up with another $230 million in cuts, since we presume any revenue options would be off the table.

Earlier this month, House Speaker William O’Brien wrote an op-ed – titled “Republicans improved NH’s economic situation, as promised” – that ended with these words:

“The people wanted representatives in Concord who work to allow the economy to grow, cut spending and end the regime of out-of-control government expansion and numerous tax hikes. Today, we can see this Legislature has delivered results for the people of New Hampshire.

“The good news is that jobs are coming, and we’re just getting started.”

We can only hope this isn’t what he had in mind at the time.

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How Much Will Health Reform Cost? Not Much, Study Finds

2011-08-05T11:46:00.002-04:00

The government may be picking up the tab for nearly half of the nation's health care expenses by the end of the decade, but very little of the increase will be due to the health care reform law, according to a report published Thursday in the journal Health Affairs.

Analysis from government number crunchers at the Centers for Medicare and Medicaid Services concluded that the law will help insure 30 million Americans who currently lack coverage, while increasing health costs by 0.1 percent more than what would have been expected without the overhaul.

The report from the CMS Office of the Actuary projected that health expenses will rise 5.8 percent annually over the next decade -- 1.1 percent higher than anticipated economic growth.

That kind of growth will mean the nation's total health tab will come close to $4.6 trillion in 2020, accounting for about one-fifth of the U.S. gross domestic product.

According to the report, the federal government's share of the bill is likely to increase from 27 percent in 2009 to 31 percent by 2020. Add to that expenses incurred by local governments and states, and the overall government portion of health care comes in at 49 percent, according to the report.

Even so, the study found that last year's national health spending grew at 3.9 percent -- the slowest rate ever recorded, and one that was probably due to the lingering effects of the recession. When millions of Americans lost their jobs and health insurance, they were forced to skip pricey but needed medical procedures and drugs. As the economy recovers, that rate is expected to bounce back.

In 2014, when the major coverage expansions take effect, health spending will probably surge to 8.3 percent as 30 million additional Americans gain coverage through Medicaid and private insurance plans, the report concludes. But the rate is expected to drop back to 6.2 percent in the second half of the decade as cost-control mechanisms of the reform law begin to take hold.

America's continually expanding health care costs can generally be traced to a variety of factors, including a growing and aging population, increased Medicare enrollment and expensive medical innovations.

But many of those forced to sign up for coverage under the reform law will be younger, healthy Americans who don't need the high-dollar treatments. For that reason, health insurance coverage, prescription drugs, and physician visits will likely grow in the next 10 years at a faster pace than hospital costs. Spending on prescription drugs alone is expected to increase by about 5 percentage points in 2014, to 10.7 percent. And with better access to needed drugs for preventive care, costs for expensive emergency treatments are also expected to dip.

The glowing findings surprised many, especially because CMS chief actuary Rick Foster has often questioned long-range spending projections in the past, saying that overly optimistic assumptions could prove troublesome. But at a Health Affairs briefing Wednesday, Foster told reporters, "We like to think that the reality in 2014 will be much closer to the projections."

Democrats and liberal groups warmly embraced that view Thursday.

Ron Pollack, executive director of Families USA, said he was "absolutely delighted" with the findings.

"The new report provides clear and convincing proof of the extraordinary effectiveness projected for the Affordable Care Act," he said. "When you're talking about 30 million more people receiving coverage with barely any change in health care costs, that's an extraordinary thing."

In an official White House blog post, Deputy Chief of Staff Nancy-Ann DeParle echoed the sentiment: "The bottom line from the report is clear: More Americans will get coverage and save money, and health expenditure growth will remain virtually the same."

She added that other provisions of the health reform law -- such as Accountable Care Organizations, which will aim to bring down costs by getting doctors and hospitals to coordinate care -- were not considered in the report.

"We know these new provisions will save money for the health care system, even if today's report doesn't credit these strategies with reducing costs," she wrote.

Kathryn Nix, a policy analyst with the conservative Heritage Foundation, interpreted the numbers much differently. She noted that the same CMS actuaries behind Thursday's report have warned that the cost-cutting measures embedded in the health care reform law may turn out to be unsustainable if the reform law does not move ahead as written. If planned cuts to providers go forward, for example, many doctors may stop accepting Medicare and Medicaid, and that might force lawmakers to reverse course, she said.

"This report clearly shows we're on an unsustainable trajectory in health care spending, and the health care bill didn't really do anything to change that," she said. "Once you factor in the reality that some of these cost-cutting mechanisms are unsustainable, I think you'll see that spending will increase dramatically."

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Medicaid cuts force hospitals onto auction block Struggling economy squeezes health-care providers, forces mergers

2011-08-05T11:07:00.003-04:00

LOS ANGELES (MarketWatch) — In Tennessee, a state where health care is king, hospital operator Catholic Health Partners has found that it can’t do business there anymore.

Tennessee is home to such giant hospital chains as HCA Holdings (NYSE:HCA), Community Health Systems (NYSE:CYH) and LifePoint Hospitals (NASDAQ:LPNT). But aggressive Medicaid cuts by state politicians are eating into the bottom line at six Catholic Health Partners medical centers in Knoxville. So it’s selling the group of hospitals, says James Gravell, Cincinnati-based Catholic’s chief financial officer.

Catholic’s net margin already stands at a tenuous 2% to 2.5%, leaving little wiggle room, Gravell says. Most of its hospitals are centered in Ohio and serve such depressed Rust Belt cities as Youngstown and Toledo. Low Medicaid reimbursements already put a crimp in profits; its hospitals won’t make back costs on roughly 22% of its patients on average, and up to 30% in regions such as Toledo.

“When you’re a business and you see that, it’s a real challenge,” Gravell said. “We were not making money in Tennessee. We were losing money.”

Stories similar to Catholic’s are cropping up throughout the nation, and could lead to a drastic makeover for the hospital business landscape. Many small operators are fleeing for the exits and getting absorbed by bigger, more resilient chains.

Larger, more risk-averse facilities substituting for the homegrown community hospital.

Cutbacks in federal reimbursements on Medicaid programs initiated in recent years are hitting nonprofits like Catholic Health Partners the hardest, especially community hospital companies that operate only one or two facilities and can’t spread out the risk.

Cuts in federal matching dollars

States such as Georgia are seeing massive reductions in federal matching funds. Other states like California — which face massive budget shortfalls year in and year out — or others especially troubled in a down economy have cut back on their Medicaid reimbursements.

There are 23 states over budget on Medicaid. And in 13 states, Medicaid budgets are being slashed. Those states are: Colorado, Connecticut, Florida, Nebraska, New Hampshire, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington.

Moody’s Investors Service recently issued a study examining the issues for nonprofit hospitals. It says Medicaid funding pressures could put stress on hospital credit ratings for at least the next several years.

“We do see an increasing trend in M&A activity,” said Lisa Martin, Moody’s senior vice president and analyst. It’s not just troubled hospitals that seek partners, she adds. Healthy facilities with an eye toward possible trouble on the horizon are on the prowl for prospective mates as well.

Relief may come from the 2009 Affordable Care Act, when coverage is expected to extend to indigent patients who have up to now been uninsured. That should help cut down on what is known as “bad debt” for many hospitals, or the cost to treat charity cases.

But those provisions won’t take effect until after 2013, leaving a funding chasm for many hospitals. Plus, there’s no guarantee that the ACA will cure hospitals’ Medicaid ills. So many are taking refuge.

“I think it’s starting to drain on people,” said Rick Kneipper, chief strategy officer for Anthelio Health Solutions, a Dallas-based health-care consultant. “If you ever did have a sustainable model in the health-care provider world, you really don’t anymore.”

Taking action

Bigger hospital chains with an eye toward acquisitions have already taken notice — and action in some cases. Community Health Systems, based in the health-care industry hub of Nashville, has announced 13 purchases in the past three years.

It tried in vain to buy the Tenet Healthcare Corp. (NYSE:THC) system earlier this year, but a contentious battle between the two hospital companies ended with Community withdrawing its hostile bid.

That didn’t scare the company off, though. In Community’s most recent earnings call on July 29, Chairman and Chief Executive Wayne T. Smith noted two transactions involving five hospitals the company made in Pennsylvania during the second quarter. Three of the facilities are in Scranton, Pa., and are owned by Catholic Health Partners.

“We continue to look for opportunities, and have a very strong and active pipeline,” Smith told analysts on the call. Smith declined to comment further.

But Community isn’t the only player. LifePoint Hospitals, also based in Nashville, is looking to bulk up as well, said Jone Koford, president of the company’s strategic growth division.

Koford said the company has just expanded into its 18th state with a deal in North Carolina, and LifePoint expects to move into other states.

“I think we’re certainly seeing the pressures of the industry, the stress the industry’s facing,” Koford said in an interview, adding many are forced to seek partnerships.

“I certainly see there will be a lot of consolidation in this industry. That’s one of the things I feel very certain about,” she said. “I think we are at the beginnings of the changes we are going to see. I think you’ll see it over a sustained period of time.”

Dire situation

Lex Reddy, chief executive of Prime Healthcare Services in Ontario, Calif., says the situation for community hospitals is dire. Most will have to consolidate if they are to retain any hope of survival.

Prime has acquired 14 hospitals in the Los Angeles metro region over the past decade, three nonprofits and 11 for-profit facilities. Virtually all were distressed and turned around to be more profit-minded.

“Everybody thinks health care is a right, not a privilege,” Reddy said. “These community hospitals won’t survive in the long run.”

Another problem facing community hospitals, in addition to Medicaid cuts, is a weak economy cutting into contributions made to their cause, he added.

“When communities were rich, they could get endowments,” Reddy said. “Those days are gone. The communities are not rich anymore.”

Still, there is a reluctance on the part of some hospitals to consolidate even just some of their operations.

Kneipper, the health-care consultant, tells of one community hospital’s chief executive facing a $21 million shortfall in his budget. But he remains reluctant to consolidate back-office operations with neighboring hospitals because his facility is one of the town’s primary employers.

That sentiment was echoed by Gravell of Catholic Health http://www.blogger.com/img/blank.gifPartners, which has cut its hospital count from 31 to 24.

“In many cases, we are the largest employer in town,” he shttp://www.blogger.com/img/blank.gifaid. Selling to another hospital company ohttp://www.blogger.com/img/blank.gifften means he and his colleagues have to persuade local stakeholders that the deal not only makes financial sense, but may be the only means of survival.

In any case, most hospitals will have to consider at least some form of consolidating operations, either partially or fully, in order to keep going, Gravell says.

“I think it’s going to happen everywhere,” he said. “It needs to happen everywhere.”

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Note: Information on Prem Rex Reddy of Prime Healthcare from an earlier post. (click)

Opposing the Health Law, Florida Refuses Millions

2011-08-05T10:17:00.002-04:00

When it comes to pursuing federal largess, most of the states that oppose the 2010 health care law have refused to let either principle or politics block their paths to the trough. If Washington is doling out dollars, Republican governors and legislators typically figure they might as well get their share.

Then there is Florida. Despite having the country’s fourth-highest unemployment rate, its second-highest rate of people without insurance and a $3.7 billion budget gap this year, the state has turned away scores of millions of dollars in grants made available under the Affordable Care Act. And it is not pursuing grants worth many millions more.

In recent months, either Gov. Rick Scott’s administration or the state’s Republican-controlled Legislature has rejected grants aimed at moving long-term care patients into their homes, curbing child abuse through in-home counseling and strengthening state regulation of health premiums. They have shunned money to help sign up eligible recipients for Medicare, educate teenagers on preventing pregnancy and plan for the health insurance exchanges that the law requires by 2014.

While 36 states shared $27 million to counsel health insurance consumers, Florida did not apply for the grants. And in drafting this year’s budget, the Legislature failed to authorize an $8.3 million federal grant won by a county health department to expand community health centers.

In interviews, Mr. Scott, a Republican, and state legislative leaders were clear about their rationale. They said they detested everything about the federal health law, which was declared unconstitutional by a federal judge in a case filed by the state. Unless ordered to do otherwise by an appellate court, they said, they had no intention of putting it in place, even if that meant leaving money on the table.

“There are a lot of programs that the federal government would like to give you that don’t fit your state, don’t fit your needs and ultimately create obligations that our taxpayers can’t afford,” said Mr. Scott, a former hospital company executive who rose to political prominence by financing an advertising campaign against the health care legislation.

State Representative Matt Hudson, the chairman of the Health Care Appropriations Subcommittee, said his chamber’s leadership felt the same way.

“I do not believe that act is the right thing for the country or the right thing for Florida,” Mr. Hudson said, “and I am not going to start implementing things that I don’t believe in.” Asked whether states had the authority to stymie federal law, Mr. Hudson answered, “We’re not required to accept a grant.”

Florida is by no means the only state hostile to the health care law. A majority of those states have gone to federal court to challenge the law’s central requirement that most Americans obtain health insurance. Alaska, Oklahoma and Wisconsin, among others, have turned away grants, some of them substantial.

But many of the states challenging the law have taken a posture more like that of Idaho, where Gov. C. L. Otter, a Republican, made a show this spring of ordering his agencies not to pursue Affordable Care Act grants and then quickly issued 10 exceptions to that rule.

Florida has had few peers in subverting the law’s provisions since Mr. Scott took office in January. After a federal district judge in Pensacola invalidated the entire act later that month, Mr. Scott quickly put the brakes on planning for the insurance exchanges and started rejecting grants pursued by his predecessor, Charlie Crist, a more moderate Republican. The state maintained its stance even though the judge, Roger Vinson, suspended his ruling pending appellate review.

“I don’t want to waste either federal money or state money on something that’s unconstitutional,” Mr. Scott said in a 30-minute interview in his office on Friday.

The governor, sporting black cowboy boots embossed with the state seal, said his subordinates had made case-by-case decisions about whether particular grants advanced the state’s efforts to remake its Medicaid program. This year, Mr. Scott and the Legislature enacted Florida’s own law directing most recipients into managed care plans.

But Mr. Scott deflected requests to explain where the line was drawn, other than to say that competition, personal choice and quality incentives should drive the health care market.

“I’d have to go through each program to look at it,” Mr. Scott said. “We have a Medicaid plan, so if it fits with that plan, then we’re interested, and if it doesn’t, we’re not.”

In distancing itself from the law, Florida declined to participate in a Medicaid pilot program that would have authorized up to $2 million in reimbursement to providers using a new hospice model for severely ill children. The state insurance commissioner applied to the Obama administration for a waiver from this year’s requirement that health insurers spend at least 80 percent of premium revenue on medical care. Only at the last minute did the State Health Department agree to provide required letters of support for community groups applying for federal wellness and prevention grants.

Critics say the state’s Republican leadership has carried its opposition to the health care law too far. The grants being shunned by the state, they point out, have little connection to the provisions that Florida is challenging in court, namely the insurance mandate and the expansion of Medicaid eligibility.

“It’s simply unconscionable that they’re turning back federal tax dollars that our citizens and businesses pay and sending those tax dollars to other states,” said Representative Kathy Castor, a Democrat who represents the Tampa Bay area. “Florida’s economy has been hit very hard, and we need every dollar and every job in our state.”

Health care advocates scoff at the assertion by Mr. Scott and the Legislature that some of the rejected grants would duplicate existing state programs (a few of the grants require a state contribution).

“Residents will suffer if the grants are turned away,” said Elizabeth M. Rugg, the director of the Suncoast Health Council in St. Petersburg. “There’s a lot of need in Florida, as everywhere else.”

Although Florida is the fourth most populous state, it ranks 12th in the amount of money received from health care act grants, according to the government’s grant-tracking Web site. The law has directed $46.4 million to the state out of $1.98 billion awarded nationally. Much of the money has gone directly to local governments, community groups and medical providers.

Three of four grants to expand community health clinics in Florida went to medical centers that are beyond the reach of the governor and the Legislature. The fourth was to the Osceola County Health Department, which under Florida law is effectively a unit of state government. The Legislature used its power to not authorize a grant won by the county to expand two health centers and build a third.

“The speaker had a policy that we weren’t going to be implementing any part of health care reform, so those grants were not included in our budget,” said Katherine Betta, a spokeswoman for Dean Cannon, a Republican and speaker of the State House.

Some of the forsaken grants were for small amounts, but others, over time, would have infused state programs with substantial sums. As long as the state makes no moves toward setting up an insurance exchange, it will not compete for grants worth tens of millions of dollars to help establish them and invest in needed technology. If Florida does not demonstrate adequate progress by early 2013, the federal government can take over the state’s exchange.

Although many conservative governors consider that the worst scenario, Mr. Scott said his antipathy toward the exchanges was so strong that he would oppose running it. “I’d rather nobody run it,” Mr. Scott said. “I don’t think there’s any way the state can do it where it’s good for health care policy.”

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HARI: Cuts to Medicare, Medicaid would put R.I. hospitals at risk

2011-07-22T11:01:00.001-04:00

Providence Business News, By Richard Asinof - July 21, 2011

CRANSTON – Proposed cuts to Medicare and Medicaid federal spending, now under discussion in Congress as part of the deficit reduction plans, could cost hospitals in Rhode Island as much as $550 million over the next 10 years, according to the Hospital Association of Rhode Island.

The proposed reductions would “exacerbate health care workforce shortages, jeopardize access to care by undermining financially fragile hospital and health systems [in Rhode Island]," the HARI Tracking Trends study, released on July 19, reported.

One of the proposals now under consideration, to cut Medicare indirect medical education payments to teaching hospitals by 60 percent, would cost the U.S. economy an estimated $10.9 billion and nearly 73,000 jobs, HARI said citing information from the American Association of Medical Colleges.

The study ranked Rhode Island 20th in the country in total economic impact, with a loss of $131 million, a loss of 873 jobs, and $7.9 million in lost tax revenue.

The cuts under discussion include: reductions in federal support for Medicaid by implementing block grants, eliminating Medicaid provider taxes, and restructuring the formula used to provide states with funds to support Medicaid, it said.

Hospital Errors Occur 10 Times More Than Reported, Study Finds

2011-07-22T10:42:00.002-04:00

Bloomberg News, By Jeffrey Young - Apr 7, 2011

Hospitals and U.S. regulators fail to record at least 90 percent of patient injuries, infections and other safety issues, a study found.

A review uncovered 354 so-called adverse events, such as pressure sores, bloodstream infections and medication errors, at three U.S. teaching hospitals. A system designed by the federal Agency for Healthcare Research and Quality identified 35 cases at the same facilities while the hospitals’ voluntary reporting programs found four, according to the study, published in the journal Health Affairs.

An incomplete picture of how often patients are harmed undermines public and private efforts to improve the quality of medical services in the U.S., David Classen, a professor at the University of Utah School of Medicine in Salt Lake City, and his co-authors conclude.

“Hospitals that use such methods alone to measure their overall performance on patient safety may be seriously misjudging actual performance,” the researchers wrote. “Reliance on such methods could produce misleading conclusions about safety in the U.S. health-care system and could misdirect patient-safety improvement efforts.”

Voluntary reporting by hospital operators and the U.S.- sanctioned method for tracking adverse events failed to provide accurate insights into the safety of U.S. hospitals, the study found. The report doesn’t disclose the names of the hospitals because of confidentiality agreements.

Adverse Events

Adverse events occurred during one-third of admissions at the hospitals, according to the researchers. Classen and his colleagues studied 795 patient records using the Cambridge, Massachusetts-based Institute for Healthcare Improvement’s Global Trigger Tool. The institute’s method involves reviews of patient charts by nurses, pharmacists and physicians. The researchers didn’t try to establish whether the harm could have been prevented.

The U.S. Agency for Healthcare Research and Quality’s Patient Safety Indicators uses administrative data collected by hospitals to detect medical errors. The Centers for Medicare and Medicaid Services uses these standards to evaluate safety at hospitals, the researchers wrote. Donald Berwick, the agency’s administrator, founded the Institute for Healthcare Improvement.

Efforts to track patient safety intensified after a 1999 report by the U.S. Institute of Medicine found that medical errors caused as many as 98,000 deaths and more than 1 million injuries each year.

Injured by Care

A six-year study of hospital admissions in North Carolina published in November in the New England Journal of Medicine found almost one in five patients were injured by their care.

Medical errors that caused harm to patients cost the U.S. $17.1 billion in 2008, according a review by the Seattle consulting firm Milliman Inc. of medical claims from 2001 through 2008 that also was published in the current issue of Health Affairs. Jill Van Den Bos, a Milliman health-care consultant, is the lead author.

The study identified about 564,000 injuries to patients admitted to U.S. hospitals and 1.8 million injuries to people using outpatient services. The most common and most expensive injuries were pressure sores and infections following surgery, Van Den Bos and her colleagues conclude.

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For Hospitals, a Value Judgment

2011-07-19T09:55:00.002-04:00

Healthcare reform means hospitals must focus on outcomes and not volume

Imagine running a heavily regulated business where the pressure is on improving the quality of your service while lowering prices, but your largest payers don’t even cover your costs—and they promise to pinch you even more. Add to the mix the overwhelming pressure to change your entire business model, even though it doesn’t make financial sense to do so today. And that’s only half of it. Welcome to the hospital business.

“It’s like straddling a fence and the fence is barbed wire,“ notes John Bluford, president and CEO of Truman Medical Centers, a Kansas City, Mo., hospital that provides care to a significant number of poor and uninsured patients. “You can’t afford to slip.”

The nation’s roughly 5,000 hospitals vary widely in shape, size, and mission. But front and center for hospital executives today is improving quality of patient care while simultaneously lowering costs. “It’s changing from one business model, based on volume, to a value-based one,” says Malcolm Isley, vice president for strategic services at Greenville (S.C.) Hospital System.

That is the new mantra in healthcare, one encouraged by the health reform law enacted last year. Reform reduces Medicare and Medicaid payments to hospitals—accounting for 56 percent of hospital revenues—by $155 billion this decade. In return, some 32 million people gain coverage in 2014—easing hospitals’ significant charity care loads. Reform also sets in place incentives for hospitals to coordinate patient care to keep people out of the hospital and those treated from returning to it. For hospitals, changing business models—and mind-sets—from rewarding costly, episodic hospital care to a system in which hospitals have a stake and say in what patients do before and after visiting the hospital requires having “one foot on the dock and one foot on the boat,” says Rich Umbdenstock, president and CEO of the American Hospital Association. Even with new Medicare payments that penalize hospitals when certain patients get readmitted, volume still remains the top payment method for the foreseeable future.

Nonetheless, hospitals are moving to change organizational culture, improve care quality and safety, develop care coordination acumen, and make investments in costly electronic medical records and other information technology to support value-based care. They are also partnering, working, and improving relations with physicians. Positioning for tomorrow requires dealing with the financial realities today. This includes lower patient volumes and higher levels of charity care, thanks to the economy and stubborn job market, and difficulties accessing capital.

“The big question is, can we make it to 2014?” says Bluford, who also serves as AHA chairman. That is a central question for nine of 10 hospital executives surveyed by U.S. News and Fidelity Investments (see. X). More than 90 percent of executives are concerned or extremely concerned with being able to align hospitals’ operating costs with post-reform reimbursement in the next three years. To appreciate the issues hospital executives face, one needs to look in the rear-view mirror while simultaneously peering into a crystal ball.

Moving from a volume- to value-based business model “is hard work and it became harder with the recession and its issues,” Isley says. With high unemployment, “self-pay and bad debt has increased,” he adds. While some large hospitals and health systems weathered the recession, many institutions saw revenues drop and charity care costs rise. Well after the recession ended, seven of 10 hospitals reported lower overall patient volumes and depressed volumes of elective procedures, according to the AHA.

Meanwhile, hospitals have seen privately insured patients struggle to pay their growing out-of-pocket costs, switch to public health programs with lower reimbursement, or simply lose coverage, according to the Center for Studying Health System Change. Industry operating margins ran 2 percent to 4 percent in the last decade; nearly one third of hospitals in 2009 had negative operating margins.

Hospitals responded by cutting services and overhead, reducing staff, and deferring capital projects and investments in technology, says Umbdenstock. Hospital leaders support healthcare reform but note that the law creates many challenges.

Besides health reform’s already deep Medicare and Medicaid hospital cuts, the industry is bracing for more with this summer’s deficit reduction negotiations. Meanwhile, half of the newly insured in 2014 will be on Medicaid, which covers only 89 percent of hospital costs. Reform also included Medicare’s value-based purchasing, a carrot-and-stick initiative where hospitals can earn or forfeit 1 percent of their Medicare revenues starting late next year, and 2 percent later this decade, based on each hospital’s ability to improve quality and contain costs.

A seemingly small incentive, it nonetheless has gotten the attention of hospital leaders, as a 2 percent differential from a dominant payer can mean a good or bad year. “We strive to have a 2 percent margin,” says Bluford. Commercial insurers also are likely to follow Medicare’s lead.

The movement from sickness to wellness has sparked hospital activity around so-called accountable care organizations, bundled payments, and patient-centered medical homes, concepts built on care coordination, says Steven Valentine, president of the Camden Group, a Los Angeles-based healthcare consultancy. Hospitals are racing to put in place the pieces to support a move to value, including aligning with physicians and investing in information technology.

But hospitals have no roadmap in adopting a value-based care business model. “There is no transition plan,” notes Susan Davis, president and CEO of St. Vincent’s Medical Center in Bridgeport, Conn. To prepare St. Vincent’s, Davis is cultivating a culture focused on delivering safe and reliable care. The Catholic hospital also is looking to improve care delivery and coordinating patients’ care outside the hospital by better integrating physician and hospital interests and spending $10 million on a hospital electronic medical records (or EMR) system and investing $4 million in getting medical staff technology up to par. Later this year, hospitals can earn millions of Medicare dollars based on their ability to have in place a functioning EMR that can manage, track, and coordinate patient care. “IT is critical to safety of patients and continuum of care,” Davis says.

“Doctors are the key” to value-based care, says Isley. Greenville Hospital System “transitioned to a physician-led system,” putting doctors in governance and leadership positions. GHS also is employing many of the physicians caring for its patients, which is a trend nationally. The system’s 600 employed physicians deliver 85 percent of hospital and outpatient care. Having physician and health system interests financially aligned, says Isley, should give GHS a leg up in its ability to deliver value.

Some hospitals are ahead of others. Sinai Health System in Chicago, for example, began focusing on improving community health 20 years ago. “It’s not just acute care,” says Sinai President and CEO Alan Channing, “it’s housing, education, chronic disease.” Investments and initiatives outside the hospital have helped Sinai become a top hospital nationally, based on federal quality and performance measures. “We’ve been a low-cost provider for a while,” says Channing.

Still, commercial insurers have been slow to take notice of Sinai’s ability to reduce costs and improve health. For every $1 Sinai has invested in reducing asthma-related hospital admissions—largely by improving educatihttp://www.blogger.com/img/blank.gifon in the community—it has prevented $15.57 in costs. Sixty percent of Sinai’s revenues come from Medicaid and only 5 percent from commercial carriers. “The payment mechanisms are still encounter-based,” Channing laments, worrying about “Sinai being able to make that transition while struggling to make payroll.”

Consultant Valentine says value and volume are intertwined. “To demonstrate value, you have to have volume,” he notes. Hospital consolidation will pick up, Valentine says, as providers strive to reduce per-unit costs and make investments to improve quality. One third of executives surveyed by U.S. News and Fidelity expect their hospitals will be absorbed or will absorb another in the next five years. “We believe in reform,” says Isley. “I’m optimistic on it, but there are head winds.”

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Bigger problem than US debt ceiling: Health care

2011-07-15T12:52:00.003-04:00

Investors are nervously watching Congress for signs that the debt ceiling will be raised. But the budget problem won't be solved unless runaway health care costs are addressed.

All that seems to matter to the stock market these days is what's happening with the U.S. Treasury's debt ceiling. Will it be raised? Will America default on its debt? Can President Barack Obama and the Republicans actually come to an agreement?

So far, despite all the political posturing, a short-term solution still seems to be in the cards. Failure to act simply isn't an option. Obama knows that. The Republicans know that. The corporate lobbyists have done their job. And Wall Street has already sounded the alarm, with credit analysts at Moody's and Standard & Poor's casting doubt on the nation's creditworthiness.

For all the talk of spending cuts, tax hikes and short-term solutions versus big fixes, there is one fundamental truth that isn't getting a lot of play: Runaway health care costs are bankrupting the country. And while that's been great news for investors in the health care sector in recent months, with the Health Care SPDR (XLV) outperforming the broad market by more than 11% since February, it jeopardizes the debt ceiling debate, the fate of the economy and the very future of the country.

Any real, lasting solution, which is what Obama wants, needs to tackle this problem, come hell, high water or "death panels." Why?

First some quick background. As I discussed in a column about the budget deficit a few months ago, ("Pulling the plug on the economy?"), much of the current deficit is being caused by the lousy economy and should improve as growth re-accelerates as I expect. Tax revenues will improve as people get back to work and make more money. And expenditures should fall as spending on things like unemployment benefits, food stamps and other assistance programs drops.

That leaves us with the long-term "structural" deficit problem -- which is being driven by entitlements like Social Security and Medicare. But of the two, health care spending is overwhelmingly the bigger problem. Citigroup economist Steven Wieting outlines the problem in the chart above.

The really irritating thing is that all of this spending isn't getting us very much, according to Wieting's research: America spends nearly $8,000 per person on health care, versus $2,878 in Japan, but life expectancy here is just 78 years, versus 83 in Japan. Other measures of care quality, such as infant mortality, tell the same story.

If Obama and the Republicans are going to really put this country back on the path of fiscal sustainability, they must address this problem. Otherwise, even if the debt ceiling is raised and the Treasury avoids defaulting on its debt this summer, the problem won't go away. It will only get worse. And one day, we may have no choice but to renege on our promises to our creditors to pay for the promises we've made to seniors and the less fortunate.

For investors, it's been a great ride. Health care's share of profits has been rising for decades, enjoying big spikes during recessions but continuing a steady upward path. That's what makes the sector so attractive during times of market turmoil like now. But it's also the cause of that turmoil right now.

Citigroup equity strategist Tobias Levkovich recommends avoiding health care stocks for now. Not only should the group underperform as the economy revs up again, but it will likely come under fire as politicians on both sides of the aisle look for long-term solutions to the fiscal nightmare we're in. There are no other options.

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Mass psychosis in the US How Big Pharma got Americans hooked on anti-psychotic drugs.

2011-07-15T10:02:00.000-04:00

Has America become a nation of psychotics? You would certainly think so, based on the explosion in the use of antipsychotic medications. In 2008, with over $14 billion in sales, antipsychotics became the single top-selling therapeutic class of prescription drugs in the United States, surpassing drugs used to treat high cholesterol and acid reflux.

Once upon a time, antipsychotics were reserved for a relatively small number of patients with hard-core psychiatric diagnoses - primarily schizophrenia and bipolar disorder - to treat such symptoms as delusions, hallucinations, or formal thought disorder. Today, it seems, everyone is taking antipsychotics. Parents are told that their unruly kids are in fact bipolar, and in need of anti-psychotics, while old people with dementia are dosed, in large numbers, with drugs once reserved largely for schizophrenics. Americans with symptoms ranging from chronic depression to anxiety to insomnia are now being prescribed anti-psychotics at rates that seem to indicate a national mass psychosis.

It is anything but a coincidence that the explosion in antipsychotic use coincides with the pharmaceutical industry's development of a new class of medications known as "atypical antipsychotics." Beginning with Zyprexa, Risperdal, and Seroquel in the 1990s, followed by Abilify in the early 2000s, these drugs were touted as being more effective than older antipsychotics like Haldol and Thorazine. More importantly, they lacked the most noxious side effects of the older drugs - in particular, the tremors and other motor control problems.

The atypical anti-psychotics were the bright new stars in the pharmaceutical industry's roster of psychotropic drugs - costly, patented medications that made people feel and behave better without any shaking or drooling. Sales grew steadily, until by 2009 Seroquel and Abilify numbered fifth and sixth in annual drug sales, and prescriptions written for the top three atypical antipsychotics totaled more than 20 million. Suddenly, antipsychotics weren't just for psychotics any more.

Not just for psychotics anymore

By now, just about everyone knows how the drug industry works to influence the minds of American doctors, plying them with gifts, junkets, ego-tripping awards, and research funding in exchange for endorsing or prescribing the latest and most lucrative drugs. "Psychiatrists are particularly targeted by Big Pharma because psychiatric diagnoses are very subjective," says Dr. Adriane Fugh-Berman, whose PharmedOut project tracks the industry's influence on American medicine, and who last month hosted a conference on the subject at Georgetown. A shrink can't give you a blood test or an MRI to figure out precisely what's wrong with you. So it's often a case of diagnosis by prescription. (If you feel better after you take an anti-depressant, it's assumed that you were depressed.) As the researchers in one study of the drug industry's influence put it, "the lack of biological tests for mental disorders renders psychiatry especially vulnerable to industry influence." For this reason, they argue, it's particularly important that the guidelines for diagnosing and treating mental illness be compiled "on the basis of an objective review of the scientific evidence" - and not on whether the doctors writing them got a big grant from Merck or own stock in AstraZeneca.

Marcia Angell, former editor of the New England Journal of Medicine and a leading critic of the Big Pharma, puts it more bluntly: "Psychiatrists are in the pocket of industry." Angell has pointed out that most of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the bible of mental health clinicians, have ties to the drug industry. Likewise, a 2009 study showed that 18 out of 20 of the shrinks who wrote the American Psychiatric Association's most recent clinical guidelines for treating depression, bipolar disorders, and schizophrenia had financial ties to drug companies.

In a recent article in The New York Review of Books, Angell deconstructs what she calls an apparent "raging epidemic of mental illness" among Americans. The use of psychoactive drugs—including both antidepressants and antipsychotics—has exploded, and if the new drugs are so effective, Angell points out, we should "expect the prevalence of mental illness to be declining, not rising." Instead, "the tally of those who are so disabled by mental disorders that they qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) increased nearly two and a half times between 1987 and 2007 - from one in 184 Americans to one in seventy-six. For children, the rise is even more startling - a thirty-five-fold increase in the same two decades. Mental illness is now the leading cause of disability in children." Under the tutelage of Big Pharma, we are "simply expanding the criteria for mental illness so that nearly everyone has one." Fugh-Berman agrees: In the age of aggressive drug marketing, she says, "Psychiatric diagnoses have expanded to include many perfectly normal people."

Cost benefit analysis

What's especially troubling about the over-prescription of the new antipsychotics is its prevalence among the very young and the very old - vulnerable groups who often do not make their own choices when it comes to what medications they take. Investigations into antipsychotic use suggests that their purpose, in these cases, may be to subdue and tranquilize rather than to treat any genuine psychosis.

Carl Elliott reports in Mother Jones magazine: "Once bipolar disorder could be treated with atypicals, rates of diagnoses rose dramatically, especially in children. According to a recent Columbia University study, the number of children and adolescents treated for bipolar disorder rose 40-fold between 1994 and 2003." And according to another study, "one in five children who visited a psychiatrist came away with a prescription for an antipsychotic drug."

A remarkable series published in the Palm Beach Post in May true revealed that the state of Florida's juvenile justice department has literally been pouring these drugs into juvenile facilities, "routinely" doling them out "for reasons that never were approved by federal regulators." The numbers are staggering: "In 2007, for example, the Department of Juvenile Justice bought more than twice as much Seroquel as ibuprofen. Overall, in 24 months, the department bought 326,081 tablets of Seroquel, Abilify, Risperdal and other antipsychotic drugs for use in state-operated jails and homes for children…That's enough to hand out 446 pills a day, seven days a week, for two years in a row, to kids in jails and programs that can hold no more than 2,300 boys and girls on a given day." Further, the paper discovered that "One in three of the psychiatrists who have contracted with the state Department of Juvenile Justice in the past five years has taken speaker fees or gifts from companies that make antipsychotic medications."

In addition to expanding the diagnoses of serious mental illness, drug companies have encouraged doctors to prescribe atypical anti-psychotics for a host of off-label uses. In one particularly notorious episode, the drugmaker Eli Lilly pushed Zyprexa on the caregivers of old people with Alzheimer's and other forms of dementia, as well as agitation, anxiety, and insomnia. In selling to nursing home doctors, sales reps reportedly used the slogan "five at five"—meaning that five milligrams of Zyprexa at 5 pm would sedate their more difficult charges. The practice persisted even after FDA had warned Lilly that the drug was not approved for such uses, and that it could lead to obesity and even diabetes in elderly patients.

In a video interview conducted in 2006, Sharham Ahari, who sold Zyprexa for two years at the beginning of the decade, described to me how the sales people would wangle the doctors into prescribing it. At the time, he recalled, his doctor clients were giving him a lot of grief over patients who were "flipping out" over the weight gain associated with the drug, along with the diabetes. "We were instructed to downplay side effects and focus on the efficacy of drug…to recommend the patient drink a glass a water before taking a pill before the meal and then after the meal in hopes the stomach would expand" and provide an easy way out of this obstacle to increased sales. When docs complained, he recalled, "I told them, ‘Our drug is state of the art. What's more important? You want them to get better or do you want them to stay the same--a thin psychotic patient or a fat stable patient.'"

For the drug companies, Shahrman says, the decision to continue pushing the drug despite side effects is matter of cost benefit analysis: Whether you will make more money by continuing to market the drug for off-label use, and perhaps defending against lawsuits, than you would otherwise. In the case of Zyprexa, in January 2009, Lilly settled a lawsuit brought by with the US Justice Department, agreeing to pay $1.4 billion, including "a criminal fine of $515 million, the largest ever in a health care case, and the largest criminal fine for an individual corporation ever imposed in a United States criminal prosecution of any kind,''the Department of Justice said in announcing the settlement." But Lilly's sale of Zyprexa in that year alone were over $1.8 billion.

Turning people into zombies

As it turns out, the atypical antipsychotics may not even be the best choice for people with genuine, undisputed psychosis.

A growing number of health professionals have come to think these drugs are not really as effective as older less expensive medicines which they have replaced, that they themselves produce side effects that cause other sorts of diseases such as diabetes and plunge the patient deeper into the gloomy world of serious mental disorder. Along with stories of success comes reports of people turned into virtual zombies.

Elliott reports in Mother Jones: "After another large analysis in The Lancet found that most atypicals actually performed worse than older drugs, two senior British psychiatrists penned a damning editorial that ran in the same issue. Dr. Peter Tyrer, the editor of the British Journal of Psychiatry, and Dr. Tim Kendall of the Royal College of Psychiatrists wrote: "The spurious invention of the atypicals can now be regarded as invention only, cleverly manipulated by the drug industry for marketing purposes and only now being exposed."

Bottom line:Stop Big Pharma and the parasitic shrink community from wantonly pushing these pills across the population.

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A Medical Malady: Where Are New Jersey's Primary Care Physicians?

2011-07-08T11:58:00.002-04:00

Demographics and public policy changes are expected to increase the workload on family doctors in the years to come

It’s shortly after 2 p.m. on a sunny Thursday in June and nearly all the waiting- room chairs at Forest Hills Family Health Associates are full: Senior citizens with their hands resting on canes or walkers, twenty-somethings in bright, t-shirts, mothers trying to corral giggling toddlers, and a very pregnant couple, whispering nervously in the corner.

Today is actually a slow day for Dr. Thomas Ortiz, who founded the practice nearly three decades ago on the same site in Newark’s North Ward. But there are still two-dozen patients waiting to see one of the four family physicians -- including Dr. Ortiz -- who make up the practice. The office is open seven days a week, from 9 a.m. to 9 p.m., and the staff tries to accommodate as many as 30 walk-ins daily, on top of a full slate of appointments.

This is what the primary care physician shortage looks like for many New Jersey residents, and experts fear the situation will only get worse. In urban areas, even patients with insurance can struggle to find a family doctor who can see them quickly. Rural residents end up traveling for miles, sometimes to another county, for routine care.

On the Front Lines

And for primary care providers like Dr. Ortiz, who are left manning the front lines, demographics and public policy changes are expected to increase their workload in the years to come. There may be some relief in the federal healthcare reform bill, which includes several provisions to grow the primary care workforce. But between the large Baby Boomer cohort that will require more healthcare and the flood of new patients who will receive insurance through the federal reform in 2014, healthcare experts predict that there will not be enough doctors and nurses to go around.

"It’s not clear where all those millions of people are going to go” to see a doctor, said Dr. Robert L. Johnson, Dean of New Jersey Medical School, the University of Medicine and Dentistry of New Jersey’s program in Newark, at a recent forum on the reform law. In the next 25 years, he said, "there’s going to be a serious deficit in the availability of providers of healthcare."

According to a physician workforce report by the New Jersey Council of Teaching Hospitals, whose members hospitals educate about 1,500 residents each year, the state currently needs more primary care physicians to cover basic practice areas like family medicine, geriatrics and obstetrics. There is also a need for more doctors in the majority of pediatric fields. But the council also predicts a "significant future shortage," with a deficit of nearly 3,000 physicians by the year 2020.

The problem is not new, but it seems to be getting worse. According to a report from the Center for State Health Policy, at Rutgers University, for each year between 2001 and 2006 the ratio of family practice doctors to patients in New Jersey ranked below the national average -- the only specialty to fall short for all five years studied.

The researchers also found that while the total supply of doctors in the Garden State grew by 1.4 percent a year, the number of physicians doing family practice, obstetrics and preventative medicine declined at an even faster pace. In general, the shortages were most pronounced in rural and highly urban areas, including Cape May, Salem, Sussex and Hudson counties.

Few Family Physicians

"The shortage has been forever," said Dr. Ortiz, who is chairman of the New Jersey Academy of Family Physicians. Ortiz said he is one of only a handful of family physicians left in Newark who is not associated with a hospital or larger health clinic. Over the years his practice has grown; he’s added space for a rotation of 14 sub-specialists who can treat issues like heart disease and epilepsy on site; together the group cares for some 35,000 patients, he said.

"But the question is, 'What happens in the next four years?'" Dr. Ortiz asked, taking a short break from patient visits. "Will primary care become stronger? Will our work finally be valued?"

He, for one, believes there is hope in the federal reform law, technically called the Patient Protection and Affordable Care Act (PPACA). "I’m an 'Obamacare Apostle'," he said, with a smile. "There’s a lot in there for [family physicians]. It’s one of the best things to happen to healthcare in this country.”

The ACA is designed on the premise that providing people with basic, preventative care will keep them healthier and save money over time. It includes a number of provisions to help to primary care providers, as well as funding to train more doctors and nurses. Perhaps most important, it includes a measure that would nearly triple the Medicaid rates for doctors -- rates that are so low today that most doctors say they can only afford to treat a limited number of Medicaid patients.

On the flip side, the ACA is also slated to add more than 30 million Americans to the insurance rolls. Some will receive tax credits to buy private insurance through state-run marketplaces, but most will be covered through an expansion of Medicaid. Experts believe that altogether in New Jersey the reform could eventually insure more than 600,000 additional residents -- nearly half the state’s current uninsured population. And once enrolled, these new patients are expected to put additional pressure on the state’s limited family practice resources.

A Rough Patch

"It’s wonderful to have an insurance card, but you still need to see a doctor,” said Assemblyman Herb Conaway (D-Camden), who is also a physician, at a recent healthcare forum. "There is going to be a rough patch" when the changes first take effect, he predicted, and new patients flood the system.

To address this supply-and-demand problem, Conaway and others say medical schools need to do more to promote primary care fields to their students. Other proposals include providing state funding to help those who do choose to go into family medicine to pay for their medical education.

Conaway has also sponsored legislation that would provide income tax breaks for up to seven years for certain primary care physicians who set up shop in New Jersey after graduation. The Assembly bill, introduced over a year ago, has yet to get a hearing; a Senate version submitted at the same time has cleared the health committee and awaits action by the budget committee.

“Primary care is not sexy, but it’s valuable,” said Sen. Joseph Vitale (D-Middlesex), who sponsored the Senate version. “And at the end of the day, it’s the front line of health care.”

But the larger problem, according to Dr. Ortiz and others, is that society places more value on risky surgical procedures or specialty fields like cardiology and neurology, than on family medicine. And this difference is reflected in the salary structure, which rewards such specialists far more than primary care providers. Despite the long hours and high patient volume, Dr. Ortiz said his practice in Newark basically breaks even (although he personally makes additional money from consulting work.)

"There’s no investment in primary care, even though everybody knows you can save money in the end," Dr. Ortiz said, explaining that the reimbursement rates set by insurance companies pay specialists much more for their work than primary care providers can get for doing preventative health care -- regardless of whose efforts do more to reduce medical costs down the road..

Insurance companies "could change the face of healthcare just by bringing their fees up," he said.

Those within the insurance industry disputed that statement, saying there are a number of complex factors feeding the primary care shortage. Pay rates for physicians are determined by a variety of forces, which have changed over the years, they said, but doctors with highly specialized skills have traditionally commanded more money than those who treat more common conditions, like asthma or obesity. In addition, physicians in larger groups or connected with hospitals can sometimes work together to secure better rates than doctors at small, independent practices.

"I don’t think the shortage of primary care doctors is solely because of insurance payments," said Ward Sanders, president of the New Jersey Association of Health Plans, which represents managed-care companies. In fact, as the ACA is rolled out, he said more carriers are looking at alternative systems that pay doctors for the quality of patient outcomes, not the quantity of visits.

"I think there is a growing sense that primary care doctors can and should play a larger role in coordinating care and should be compensated for doing so," Sanders said.

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We can't get education reform without health care reform

2011-07-08T10:11:00.003-04:00

As the Oregon legislature winds down, most of the late-session drama has centered on the passage of various education reforms. Perhaps the most interesting part about this debate is that for the first time in recent history, discussion has centered around substantive education policy, not just how we finance our schools. However you feel about this development, it continues the misdiagnosis of the greatest challenge facing public education in Oregon: the runaway cost of American health care.

The cost of providing the same level of education services increases every year by a rate greater than inflation (the exact costs vary by district and institution, but at least two times inflation is a minimum estimate for K-12 education). The vast majority of this increase stems from the rising cost of health care for education professionals. The budgetary pressure is nothing new, but this recession has forced school districts to confront it with decreased revenue. Although some respond to this crisis by arguing that school districts should reduce health care benefits, this approach ignores both the fact that these were bargained-for benefits and the reality that health care costs squeeze small businesses as much as schools.

While I served in the Oregon Legislature, I found that Democrats often focused on inadequate investment in vital services, particularly education. By contrast, Republicans often bemoaned the spiraling costs of those services, including education. The math reveals that both perspectives are essentially correct: we face increasing costs to provide a decreasing quality of services. But this opportunity for agreement gets lost amid partisan bickering, a pattern manifest in the recent debate over education reform.

The education crisis facing Oregon and other states will continue as long as the cost of health care rises at a level significantly beyond inflation. Until this economic calculus changes, the Legislature’s efforts to reform education amounts to little more than rearranging deck chairs on the Titanic. Parent, teachers and advocacy groups must recognize this reality and demand health care reform as an education issue.

Brent Barton is an attorney who formerly represented East Clackamas County in the Oregon House of Representatives.

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Court won't halt Medicaid cuts

2011-07-07T10:18:00.003-04:00

Advocates for low-income Arizonans vow to request an injunction

Without explanation, the Arizona Supreme Court on Friday declined to stop proposed Medicaid cuts from taking effect next week or rule on whether the enrollment freeze is constitutional.

Attorneys for three public-interest law firms, representing low-income Arizonans at risk of losing coverage under the Arizona Health Care Cost Containment System, already were preparing a separate case to be filed in Maricopa County Superior Court.

That's likely the last chance for opponents of the AHCCCS cuts to stop them. Tim Hogan of the Arizona Center for Law in the Public Interest said a request for an injunction could be filed in Superior Court as early as Monday.

Gov. Jan Brewer and state legislators approved wide-ranging reductions in AHCCCS, Arizona's version of Medicaid, to save the state an estimated $500 million and help balance the fiscal 2012 budget. But nearly half of the savings comes from capping programs that serve childless adults and parents earning above 75 percent of the federal poverty level, groups covered under a voter-approved expansion of AHCCCS.

If federal health officials approve the state's plan, which appears likely, enrollment for the childless-adult program would be frozen Friday. AHCCCS has estimated that about 135,000 people would lose coverage in the first year, either because they miss re-enrollment deadlines or their income goes up.

Hogan argues that the AHCCCS freeze effectively repeals Proposition 204 in violation of the state Constitution, which voters amended in 1998 to forbid lawmakers from tinkering with ballot measures. But the governor's lawyers say a reference in Prop. 204 to "available funds" gives them authority to cut programs.

Hogan said the Supreme Court's action says nothing about the case's merit. He filed the action in May and asked the court last week for an injunction and to act quickly after it scheduled a September hearing.

"It's unclear whether the court thinks any of (the state's) arguments have any validity or whether it just wants a lower court to decide this first," Hogan said. "We just needed to get an answer."

Attorneys for Brewer and AHCCCS Director Tom Betlach argued that the plaintiffs could not claim harm since they would lose Medicaid coverage if they failed to re-enroll or increased their earnings. Although acknowledging federal health officials were likely to approve the AHCCCS cuts, they said a ruling before then would be premature. But Hogan said a judge should not allow people to lose their health care before taking action.

"All you need for an injunction is the possibility of harm, and the possibility here is high," Hogan said.

In a statement, Brewer said she was grateful for the high court's stance on what was a "serious and difficult budget decision."

"The court's rejection of an injunction in this case will save the state tens of millions of dollars in the next few months alone," she said.

Roughly 250,000 people are covered under Prop. 204, including about 5,200 people with serious mental illness, 1,200 with HIV/AIDS and 1,500 young adults poised to age out of the AHCCCS program for children. Those three groups would be largely exempted from the enrollment freeze.

Advocates for the poor are particularly concerned because the cuts are combined with a host of other proposals, including one to require AHCCCS recipients to re-enroll every six months instead of annually, saving an estimated $15 million.

Most at risk are the homeless, mentally ill, people who move frequently and those with sporadic employment who may have become accustomed to churning off and on the AHCCCS rolls.

Dr. Jonathan Cartsonis, medical director for Maricopa County Health Care for the Homeless, said without regular health care his patients are likely to forego treatment and let problems worsen until they become emergencies.

"I expect large number of patients will drop off," Cartsonis said. "It could create more misery for the patients and chaos in the emergency rooms."

In addition to Hogan and the Center for Law, the plaintiffs are represented by the Arizona Center for Disability Law and the William E. Morris Institute for Justice. Last month, federal health officials approved the first piece of the governor's budget-balancing plan, allowing AHCCCS to freeze a program for people who earn too much to qualify for AHCCCS but spend down well below the poverty line because of catastrophic health-care problems. Enrollment in the "spend-down" program ended May 1, and it will be eliminated Oct. 1, saving the state $70 million.

The rest of the AHCCCS cuts awaits approval from the Center for Medicare & Medicaid Services. CMS officials did not respond to requests for comment. Health and Human Services Secretary Kathleen Sebelius said Brewer could eliminate the 250,000 childless adults from the rolls without losing federal matching funds because their coverage

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The ObamneyCare Crystal Ball

2011-06-30T14:51:00.002-04:00

"Republicans are convinced healthcare reform in Massachusetts failed. They're wrong.

States and Health Care Reform

2011-06-28T15:34:00.002-04:00

Alan Katz, Founder, The Alan Katz Group LLC

Health insurance has long been a state affair in the USA. Insurance companies were even exempt from many aspects of federal anti-trust law to better enable state regulators to oversee their activities. Yes, there were federal laws that standardized certain aspects of the business—think HIPAA and COBRA. Think about Medicaid, Medicare and SCHIP while you’re at it. But when it came to health insurance regulation the states reigned supreme.

Enter Congress and President Barack Obama stage left. With the passage of the Patient Protection and Affordable Care Act the federal role in shaping and regulating health insurance shifted significantly to Washington, DC. The Secretary of the Department of Health and Human Services is now arguably the most important health insurance regulator in the country. The Department of Labor and Internal Revenue Service will also play significant roles in determining the future of the nation’s health insurance market and the choices (or lack of choices) Americans have to meet their health care coverage needs. No wonder critics of the PPACA condemn the law as a “federal takeover.”

That the nexus of health plan oversight has shifted to the federal government is beyond argument. The new health care reform law touches everything from how medical plans are designed, priced, offered, maintained and purchased. To conclude that state insurance regulators are shunted to the sideline, however, dangerously overstates the case. In fact, the PPACA invests tremendous flexibility in the states, allowing them to implement the federal requirements in what will likely be very divergent ways.

Rebecca Vesely, writing in Business Insurance, makes this clear in her article describing how two states, Vermont and Florida, are taking strikingly different paths in addressing health care reform. Vermont has taken the first step toward creating a single payer system by 2017. Legislation to set up a five member board to move the state in this direction has already been enacted. And while many details need to be worked out (funding, to name one) and Vermont will need to obtain a waiver from the Centers for Medicare and Medicaid Services to put the package together, the state is further down the road to single payer than any other.

Then there’s Florida where the move is in the opposite direction. That state is seeking to shift virtually all of its Medicaid population from government coverage into private plans starting in July 2012. These private managed care plans would be offered through large health care networks with health plan profits above five percent shared with the state. Whether this approach will achieve the $1.1 billion in first year savings promised by the Governor or not, it has brought new participants into the Medicaid marketplace such as Blue Cross and Blue Shield of Florida.

The Business Insurance article includes a prediction by Boston University law professor Kevin Outterson that the Obama administration will sign off on the waivers Vermont and Florida need to move forward.

What the starkly different approaches to reigning in skyrocketing health care costs being taken by Florida and Vermont demonstrates is the broad flexibility states retain in shaping their own health care destiny. Yes, federal waivers are required, but that would be the case even if the PPACA had never passed—Medicaid is a federal program after all. The CMS web site lists 451 state waivers or demonstration projects in place today. The concept of allowing experimentations and exceptions is ingrained in the Medicaid program just as they are in the Patient Protection and Affordable Care Act. There’s nothing wrong with this any more than having shock absorbers on a car is an indictment of an automobile’s chassis or tires.

The marked variation in approaches being taken by Vermont and Florida are extreme examples of what we’ll see as states implement exchanges and other aspects of the Patient Protection and Affordable Care Act. Of course, whether this is good news or bad news depends a great deal on the state in which you live and work. States that are heavily tilted toward one party or the other (I’m looking at you California and Wisconsin) could make some of their residents yearn for the federal government to step in and keep things in perspective. Given the way the PPACA preserves state powers, however, they are going to be disappointed.

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Fitch: Corporate Issuers in Holding Pattern Over Status of Healthcare Reform

2011-06-27T12:19:00.002-04:00

Uncertainties over the new regulations and the future status of the Patient Protection and Affordable Care Act (ACA) are making it more challenging for corporate issuers to plan for final implementation of the law, according to Fitch Ratings. As a result, issuers may need to adjust their operations and strategic focus as things develop.

It is unclear whether the Centers for Medicare & Medicaid Services' (CMS) Proposed Rule for ACOs will provide a sufficient incentives to entice a large number of providers to sign up for the program. Fitch believes there are meaningful setup costs and ongoing incremental costs to operate as an ACO. Ultimately, Fitch believes the final writing of the Rule will not affect the credit ratings of the For-Profit Hospital Providers.

Fitch agrees with the consensus opinion that the U.S. Supreme Court will ultimately decide whether the ACA is constitutional. As the timing of the decision and the Court's finding are uncertain, Fitch believes that industry stakeholders will need to allow for meaningful variance in their strategic and operational planning processes.

Fitch did not change the Outlooks or ratings on any issuers in its healthcare portfolio following ACA's enactment. Similarly, Fitch does not expect a ruling that sides with the challenge to ACA's constitutionality will change the current outlook or ratings of these issuers.

The full 'U.S. Healthcare Sector Legislative and Regulatory Register - Summer 2011' is available at 'www.fitchratings.com'.

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Economy drives ER visit influx

2011-06-27T12:15:00.001-04:00

Local hospital officials say use of their emergency rooms has risen. The reason could be that more people put off primary care doctor visits because they don’t have health insurance or they can’t afford them.

Increasing ER visits is a national trend, West Valley Medical Center CEO Julie Taylor said. ER visits from patients without health insurance lead to a shift in costs to people with insurance — helping drive up the overall cost of health care.

“People that aren’t insured that come in and use the service are using a more expensive type of care,” Saint Alphonsus Medical Center-Nampa CEO Karl Keeler said, “which only increases the burden of the insured.”

The struggling economy likely causes more people to rely on ERs for medical treatment because those departments must treat all patients.

West Valley Medical Center has seen a 7 percent increase in emergency room visits compared to last year and Saint Alphonsus-Nampa a 5 percent increase. Those hospitals also have experienced an influx in the number of patients who are uninsured and/or qualify for charity.

When people put off medical care because they can’t afford it or don’t want to pay for it, often their health problems become worse and more expensive to treat. ER visits, even for nonserious medical conditions, cost more than visits to primary care doctors’ offices.

“People are calling 911 because the cold that they had has now settled in the chest, and it’s full-blown pneumonia,” Caldwell Fire Chief Mark Wendelsdorf said. “They’re pushed to the end where they feel like that’s their only recourse.”

The Caldwell Fire Department had about a 5 percent increase in medical calls last year, Wendelsdorf said. He expects about the same this year.

Wendelsdorf also said he thinks more people have accidents requiring emergency medical service when they take on home repair or maintenance jobs that they may have paid professionals to do in the past.

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Healthcare Reform: Solving the Medical Student Debt Crisis Through Human Capital Contracts

2011-06-14T09:45:00.002-04:00

Despite the enactment of healthcare reform by the United States Congress in 2010, organized medicine has yet to successfully tackle the issue of medical student debt. More than 86% of physicians graduate with educational debt averaging more than $155,000. The perception of medical school debt encourages students to choose careers as highly paid specialists over less compensated primary care practitioners. And who can blame them? The current insurance reimbursement scheme incentivizes specialists with higher compensation to perform expensive diagnostic and therapeutic procedures. Unfortunately, the present system is contributing to the rising costs of healthcare in the United States. This unsustainable healthcare model warrants encouragement of more cost-effective interventions that focus on preventive medicine, such as those provided by primary care physicians.

Medical student debt, however, has emerged as a barrier to students pursuing a career in primary care. Peter Bach and Robert Kocher's May 29 Op-Ed in The New York Times, "Why Medical School Should be Free," argue that waiving medical school tuition will encourage more students to pursue primary care in lieu of higher income medical specialties. To pay for their proposal, estimated to cost $2.5 billion per year, Bach and Kocher would eliminate the training stipend provided during residency and fellowship to physicians pursuing non-primary care specialties. The Bach and Kocher proposal has several flaws that, if implemented, would adversely impact organized medicine.

First is the issue of equity. Is it fair or realistic to force specialists to forgo any form of compensation during the most financially vulnerable period of their early professional training?

Secondly, and maybe more importantly, the Bach and Kocher proposal does not address the income disparity between primary care doctors and specialists, which studies demonstrate is the major contributing factor to the rapidly declining number of primary care physicians. A study in the journal Health Affairs demonstrates the income gap is a significant factor contributing to medical students choosing specialty training in lieu of primary care practices. Narrowing the substantial income gap would require, according to Vaughn et al., "substantial reductions in specialists' practice income or increases in primary care physicians' practice income, or both, of more than $100,000 a year." The Bach-Kocher proposal would do little to lessen the payment gap between primary care physicians and specialists.

We propose an alternative plan: eliminating medical school tuition through "human capital contracts." Our initiative builds on a proposal initially put forth by Louis Weinstein and Honor Wolf in the American Journal of Obstetrics & Gynecology.

Human capital contracts to finance medical education

It works like this: an investor, such as the federal government, will cover the initial cost of a student's medical training. In exchange, the student will promise to repay a percentage of their gross compensation over the first 10 years of their medical career. By requiring a lower percentage of repayment for primary care physicians, our model will encourage more students towards this career path. For example, assuming a 2.5% payback model for primary care versus a 5% rate for specialists, a family doctor earning $200,000 would pay back $5,000 per year for 10 years whereas a specialist earning an annual salary of $400,000 would pay back a total of $20,000 per year for 10 years. By coupling the amount of money repaid to income earned and therefore alleviating the concerns associated with the income to debt ratio, medical students would be encouraged towards a career in primary care.

Our proposal also has the potential to decrease the salary difference between primary care physicians and specialists by mitigating the issue of medical student debt as a factor in compensation differentials. However a more targeted solution, such as an overhaul of the entire medical reimbursement model that favors specialists with higher salaries, is ultimately required to resolve the income gap.

Additionally, even with the shift toward more primary care practitioners that our proposal would create, the reality is that the United States faces a shortage of both primary care physicians and specialists. The Association of American Medical Colleges (AAMC) reports that by 2020 "demand is set to outstrip supply" in several non-primary care specialties including general surgery, ophthalmology, orthopedics, urology, psychiatry, and radiology. A permanent solution would require admitting more students to medical school as well as increasing the number of Medicare-supported residency slots (currently frozen as a result of the Balanced Budget Act of 1997).

While Bach and Kocher should be saluted for bringing the medical school tuition crisis into the national discourse, we believe our proposal is more practical and would be more widely accepted by the medical education community. Organized medicine and government should study the feasibility of human capital contracts as a mechanism to fund U.S. medical education. A resolution exploring our proposal is before the upcoming June American Medical Association's House of Delegates 2011 Annual Meeting in Chicago, Illinois.

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Massachusetts health reform didn't cut ER visits

2011-06-03T09:24:00.003-04:00

(Reuters Health) - Health care reform in Massachusetts only had a small impact on the number of trips residents took to the emergency room, according to a new study.

Contrary to expectations that easier access to primary care would reduce ER use, the total number of ER visits at 11 hospitals increased slightly after reform was implemented -- a pattern similar to that seen in other states.

"There was perhaps a perception that if we could just get people insurance they won't need the ER anymore," said Dr. Peter Smulowitz, the study's lead author from Harvard Medical School in Boston. But, "you cannot ever redirect every visitor, perhaps even the majority of visitors, away from the ER," he told Reuters Health.

Estimates have shown that the state's reform was successful in cutting its number of uninsured people by about three quarters.

Supporters of the reforms hoped that insurance would allow people to see a primary care doctor before health problems get serious enough to warrant an ER trip, with the added bonus of easing pressure on crowded emergency departments.

To assume that insuring more people will drastically cut down on the need for emergency care "is a dangerous policy choice," Smulowitz said, partly because there are many different factors that influence statewide use of ERs.

Massachusetts' health care reform required everyone in the state to have health insurance and made subsidized insurance available to residents who were uninsured or had limited coverage.

The legislation was enacted in 2006, when Mitt Romney -- now an opponent of current national health reform legislation -- was governor, and fully implemented by 2008.

Smulowitz and his colleagues used hospital billing data to compare the number of ER visits at 11 Massachusetts hospitals during nine-month periods before and after the state's individual insurance mandate was implemented in January 2008.

Total visits increased from about 425,000 in the first nine months of 2006 to 442,000 over the same period in 2008 -- a four-percent rise.

When the researchers focused in on the visits that should have been most affected by reform -- visits they classified as "low severity" in people previously uninsured or underinsured -- they found a slight dip of 2.6 percent, from 186,000 visits in 2006 to 182,000 in 2008.

By definition, most people with "low severity" visits could have been treated by a primary care doctor.

The authors note in Annals of Emergency Medicine that even with insurance, some people may have trouble accessing primary care -- for example, if they work during the day and can only get medical help at night or on the weekend. Also, primary care doctors are in limited supply, and people may have trouble booking appointments, Smulowitz added.

"Access to health care is dependent on really more than switching you over to being insured," he said.

Kathy Fuda, a former state health worker who researched emergency room use but was not involved in the current study, said policymakers may have been "overly optimistic" about health care reform's impact on ER visits.

People with insurance are the ones driving increases in ER use, she said - mainly because there are many more insured than uninsured people, at least in Massachusetts.

Fuda, now at Abt Associates, a health and policy research organization in Cambridge, Massachusetts, added that it's possible people who were previously uninsured might even use the ER more after they get insurance, if they couldn't afford to pay out-of-pocket for an ER visit before. "There are really conflicting trends there," she told Reuters Health. "It's not a completely simple picture."

The authors said that longer-term studies will be needed to see if patterns in ER use change over the years after reform. They also note that the current study couldn't look at patterns in all Massachusetts hospitals.

In terms of extrapolating to national health care reform, Smulowitz said that "the only message that one can really conclude...is that increasing access to health insurance is not going to make major changes in utilization of the emergency department."

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Note: It might be difficult to measure the financial impact of previously uninsured being able to access care before small problems worsen and require lengthy hospital stays, but a study of the economic impact of increased reimbursements for emergency room visits on the economic health of hospitals and cost for care would help in understanding the overall picture. Another relevant statistic would be a change in the number of deaths resulting from lack of health insurance prior to reform.

Accountable Care Organizations in Health Reform Decoded

2011-05-04T10:03:00.002-04:00

Anybody who's got more than one medical condition knows the drill. You go to the cardiologist with a heart problem. You go to the orthopedic surgeon if your back hurts. You find an oncologist if you need chemotherapy.

They all get paid by an insurance company or the government (if you're on Medicare or Medicaid) or by you. But it's rare when all three doctors talk to each other and they almost never compare notes. You see each one of them in a kind of vacuum. And you, the patient, are left to figure out what each piece of your medical puzzle means to the other.

Meanwhile, the chances are good that all three doctors have ordered expensive tests that may duplicate each other.

It could be that the back problem has something to do with your heart problem or the cancer is causing one of the other two conditions to get worse. But the only way you'll ever find out is if you take all of your doctors out to dinner, sit them down at the table and lock the restaurant door.

Fragmentation and unnecessary testing are two of the hallmarks of medical care in the United States. They're also a major factor in what's driving the cost of health care through the roof. The Kaiser Family Foundation has just released its annual report on health care spending in the United States and found that $7,538 a year is now spent on each American. That's at least $2,535 more or 51 percent higher than Norway, the next largest per capita spender.

The rate of growth in health care spending is also going up faster than any other industrialized nation. If this trend keeps up it won't be many years before health care accounts for more than a quarter of the nation's gross domestic product.

Enter a new idea: The Accountable Care Organization (ACO), a key provision in the new federal healthcare law.

One of it's promoters is Dr. Eliott Fisher who for 30 years has headed the Dartmouth Atlas which painstakingly has documented the discrepancies in American health care, and although questions have been raised in some quarters about the research, most health policy professionals rely on the work.

Dartmouth found that a person who lives in one county could have health care costs of more than $15,000 a year, while his neighbor one county over with the same condition costs $5,000 a year. And the guy who has the $15,000 tab is no better off health wise than the neighbor who cost the system $5,000.

So Fisher suggests that doctors, hospitals and other providers get together and coordinate care for their patients. The idea is that these ACOs would improve medical care to patients and save money.

Theoretically, these health care providers would get together and decide what the average cost per year is to treat people who live in that part of the country, and stick to that amount. At the end of the year, providers who can prove their patients got better care and didn't spend all of the pre-set amount of money would get to pocket the savings.

Dartmouth found that a person who lives in one county could have health care costs of more than $15,000 a year, while his neighbor one county over with the same condition costs $5,000 a year.

That would mean you would no longer have to go one place for your heart, another for your back and still another to get chemotherapy. You would get one stop shopping all within this group of doctors. And guess what? The doctors would all TALK to each other about your various medical conditions.

Some so called integrated health systems have been practicing this kind of medicine for years. The Cleveland and Mayo Clinics come to mind, along with the Geisinger Health System in western Pennsylvania. But they are hospital systems where the doctors are on salary, not paid for each service they provide like most of the rest of the country. That's called fee for service.

Under the new ACO concept doctors would still be paid on a fee for service basis. But Fisher and other supporters of this idea believe better coordinated care would spell less expense because there would not be so many duplicative tests performed. And another point, these ACOs would all have electronic medical records so the computers could talk to each other.

Rules from the federal government on how to do these Accountable Health Organizations recently were made public after months of anticipation in health policy circles.

Basically, they say there should be at least 5,000 patients in each ACO. Groups of doctors would form networks where patient information was shared. There would be doctors, health care providers and Medicare recipients on each ACOs board of directors. And the population of each ACO would consist entirely of Medicare patients at the outset.

When the rules were announced, Health and Human Services chief Kathleen Sebelius said Accountable Care Organizations will "improve the quality of care patients receive and help lower costs."

Another major figure in the movement to ACOs is Dr. Mark McClellan who heads the Engelberg Center for Health Care Reform at the Brookings Institution. He also knows his way around the federal government, having served as both Commissioner of the Food and Drug Administration and head of the Centers for Medicare and Medicaid Services.

Dr. McClellan told the PBS NewsHour online that ACOs will "enable care providers to get paid more when they do what they really want to do for patients--provide better care at a lower cost."

"It's not a silver bullet," he said, but "done right it can be an important new resource for health care providers."

Dr. Jay Goldsmith, who's an associate professor of Health Science at the University of Virginia is not so sure. He is not a fan of ACOs. He thinks the new networks will be nothing more than "a cost containment compact between ad hoc care providers and Medicare," and he says "this is going to be something that is done to patients, not WITH them."

After reading 102 pages of the new regulations which cover 472 pages, Dr. Goldsmith said: "I have this huge headache. I'm going to get up at 5:30 tomorrow morning, drink three cups of coffee and see how much farther I make it before I get another headache."

Goldsmith doesn't see that much difference between Accountable Care Organizations and Managed Care plans run by Health Maintenance Organizations in the 1980's, which were a flop because they were a "value system" which made doctors make choice to compromise care.

Some members of the American Medical Association are also skeptical of ACOs. Dr. Jeremy Lazarus, speaker of the AMA's House of Delegates, told American Medical News ACOs will only work is doctors want to participate. "For http://www.blogger.com/img/blank.gifthis to happen," he said, "significant barriers must be addressed, including the large capital requirements to fund an ACO and to make required changes to an individual physician's practice."

Michael Cannon, director of health policy studies at the libertarian CATO Institute was more blunt. He said he gives the concept of ACOs "zero percent" chance of making significant savings and he doubts doctors will want to join because they "will get paid less."

So the verdict is out. But it doesn't take rocket science to understand the U.S. must do something about the amount of money it's spending on everyone's health care. Experts on both sides of this ACO argument agree on that -- so starting soon the Accountable Care Organization will get its day in court.

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Report: Healthcare law 'devastating' for insurance agents

2011-05-04T09:53:00.000-04:00

The healthcare reform law has had a "devastating" impact on insurance agents and brokers, according to a new survey from the National Association of Insurance and Financial Advisers. The group said 75 percent of its members have seen a drop in their commissions since the new law capped the amount of money that insurers can spend on administrative expenses and profits.http://www.blogger.com/img/blank.gif

Agents and brokers have been lobbying for a bill that would exempt their commissions from the definition of insurers' administrative expenses, fearing that the new limits will lead insurance companies to cut commissions and direct that money elsewhere. The National Association of Insurance Commissioners is studying the issue and has voiced strong support for brokers. Many consumer advocates argue that commissions were dropping before healthcare reform took effect.

According to the data the brokers group released Friday, more than half of the brokers surveyed have seen their commissions drop by at least 25 percent. In addition to the 75 percent who have already seen a cut, 13 percent have been told to expect cuts in the near future, according to the survey.

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Vermont's Senate Passes Bill for Single-Payer Health Care

2011-04-28T09:56:00.002-04:00

Vermont is on the fast track to becoming the first state with universal health care with the passage of a single-payer health care bill on Tuesday.

The Vermont Senate approved the bill 21-9 to offer government-funded health insurance to all state residents. The bill will now go to a conference committee, where the House and Senate will hash out the differences in the bill before sending it to Gov. Peter Shumlin, a Democrat.

Shumlin will have to obtain approval from the Obama administration before he could begin to implement the single-payer system, which would begin in 2013. President Obama offered waivers to states to implement their own health care systems if the state's plan covers as many people as the federal overhauhttp://www.blogger.com/img/blank.gifl at the same level of coverage, and if it doesn’t add to the federal deficit.

In an interview with MSNBC’s Rachel Maddow, Shumlin said he was confident the state’s plan would be approved.

“What we’re trying to do is have an affordable system that applies to all Vermonters, gives us all quality health care, but spends our dollars on health care and not on insurance company profits,” he said. “I’m convinced if we can create that system, we can get the waivers from Washington, and we will.”

When he ran for governor in 2010, Shumlin promised to bring a publicly financed health care system to the state.

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Industry criticises Obama’s call for cheaper drugs

2011-04-27T10:26:00.001-04:00

The US pharmaceutical industry hit back against Barack Obama’s deficit reduction plan, warning that his proposals would stymie medical advances and hurt drug companies. One top executive said the president’s speech raised fundamental questions about the industry’s outlook in the US.

The reaction signalled that a de facto truce established between the powerful drug industry and the White House during negotiations to pass healthcare legislation last year was officially over.

Mr Obama said in a speech on Wednesday that the “purchasing power” of Medicare, the government-sponsored insurance programme for the elderly, should be used to cut prescription drug spending and accelerate the introduction of cheaper generic brands on to the market.

The remark – just one sentence in an hour-long speech that focused on deficit reduction – sounded like fighting talk to the pharmaceutical industry, which supported Mr Obama’s healthcare initiative last year.

“Unfortunately, the president’s approach to reducing our deficit fails to consider the impact on the entire policy tapestry – local and federal – that influence our industry’s current and future health,” said John Castellani, chairman of Phrma, the industry trade group. “Specifically, proposals to expand rebates, saddle seniors with higher premiums and slash data protection for biologics are bad for patients and are bad for innovation.”

Phrma said plans to impose “price controls” would slow the pace of drug innovation and spending on research and development and that better drugs would reduce hospitalisations and lower healthcare costs.

Drug companies took Mr Obama’s comments as a threat to the “non-interference” clause in the Medicare drug scheme, which restricts the government from manipulating prices in the industry.

David Brennan, chief executive of AstraZeneca, told CNBC television on Thursday that he was optimistic about the US pharmaceutical market until Mr Obama’s speech.

“Some of the comments that were made yesterday don’t really provide the kind of policy framework for integration there that we’re looking for, so we’re just more concerned about it,” he said.

As part of a deal agreed behind closed doors in 2010, industry negotiators agreed to offer $80bn in drug discounts to elderly patients and actively lobbied for the healthcare overhaul. In exchange, proposals supported by some Democrats that would have dented the industry’s profits were taken off the tahttp://www.blogger.com/img/blank.gifble.

The White House has already faced a tough political opponent in the insurance industry, which steadfastly lobbied against the healthcare bill. The possibility that it could now also face similar pushback from Big Pharma raises further political challenges for the administration.

Mr Obama’s proposal also called for strengthening the Independent Payment Advisory Board, which was created during last year’s reform act to curb Medicare spending growth, and banning brand-name drug companies from making so-called “pay for delay” deals with generic companies to keep their products off the market. The plan estimates savings of $200bn over 10 years.

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The Republican Medicare Reshuffle

2011-04-27T09:45:00.001-04:00

Representative Paul Ryan and the House Republicans are portraying their budget proposal for the next fiscal year as a courageous effort to finally bring federal spending on Medicare under control. An analysis issued last week by the nonpartisan Congressional Budget Office finds that the Ryan proposal would sharply reduce federal spending — but at the price of shifting more of Medicare’s costs onto beneficiaries and their families.

How much more? Calculations derived from the C.B.O. analysis show that in 2022, when the Ryan plan would kick in, the typical 65-year-old would pay $6,400 to $7,000 more per year than would be paid for comparable coverage under traditional Medicare.

Mr. Ryan’s proposal would change Medicare from an entitlement program in which the government pays for a defined set of medical services into a “premium support” program in which the government would give beneficiaries money to help them buy private insurance. He contends that competition among health care plans and more judicious use of health care services by beneficiaries can help bring down the cost of health care and reduce the federal government’s burden.

But the C.B.O. says a private plan offering comparable benefits would be a lot more expensive than traditional Medicare because the private insurer would have higher administrative costs, would need to make a profit and, in an extrapolation of current trends, would pay hospitals, doctors and other providers substantially more than Medicare does. Beneficiaries would have to pay higher out-of-pocket costs or buy skimpier policies.

The Ryan plan has no chance of becoming law while the Democrats still control the Senate and the White House. But if health care becomes a defining issue in the 2012 elections — as it should — everyone under the age of 55 is on notice that Mr. Ryan’s plan would impose heavy costs on them when they reach age 65.

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US healthcare: Obama talks to curb medical tourism to India

2011-04-21T09:39:00.005-04:00

US President Barack Obama on Tuesday said his aim was to change the US healthcare system to discourage Americans from seeking medical treatment in India and Mexico. His healthcare reforms - called Obamacare by critics - is being opposed by Republicans on the ground that it will add up to the country's expenses, thereby worsening the debt situation.

"My preference would be that you don't have to travel to Mexico or India for cheap healthcare," he said in response to a question about why US health insurance won't cover medical expenses incurred abroad.

"I'd like you to be able to get it right here in the United States of America that's high quality."

Obama also said that prices of prescription drugs must be brought down "so that you don't feel like you're getting cheated because you're paying 30% more or 20% more than prescription drugs in Canada or Mexico."

In the run up to the elections in November, Obama had repeatedly brought up off-shoring to India and how he intended to change rules to keep US jobs from going to India.

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Indian hospitals say Obama prescription won’t work

US president Barack Obama’s appeal to his Americans not to visit India for cheaper medical treatment is seen by the healthcare industry here as restrictive. But big hospital chains like Apollo, Fortis and Medanta are not perturbed.

The Obama prescription came on Tuesday in Virginia hours ahead of India’s commerce minister Ana-nd Sharma’s talks with a group of US Senators to explore ways to improve trade and investment ties between two countries.

Addressing students of Northen Virginia Community College, president Obama said, “My preference would be that you don't have to travel to Mexico or India to get cheap healthcare." He said so while trying to hardsell his administration’s new healthcare plan that had many critics.

Captains of the Indian healthcare industry, which does Rs 70,000 crore business a year, were expectedly critical but not unduly worried.

"For the president of a country to admit that healthcare is cheaper elsewhere shows the deficiency of that country. But India is not about cheap healthcare but affordable high quality healthcare. The success rate of heart surgeries in some top Indian hospitals is 99.8 per cent. Indian doctors are skilled," said Dr Naresh Trehan, chairman & MD of Medanta - The Medicity.

He gave examples of how Indian healthcare was much cheaper than in the US. For instance, a joint replacement costs $11,000 in India but $50,000 in the US. Similarly, a cardiac surgery costs about a seventh of US costs which range from $65,000 to $100,000. This is why private hospitals employ world-class doctors – a draw for American patients.

Assocham in 2009 estimated that over 1,80,000 foreigners visited Indian medical centres in the first eight months of 2008. Currently, only 5 to 10 per cent of all overseas patients treated in India are Americans. The numbers coming from West Asia and Africa are much more. What has come to be known as medical tourism is worth $330 million in India.

Gautam Mahajan, president of Indo-American Chamber of Commerce and Industry, played down the impact of Obama’s statement. “People who are well aware of the availability of high-class medical facilities in India at comparatively lower prices will certainly avail of the services despite all such advice,” Mahajan said.

Fortis hospitals which receive over 20,000 overseas patients every year, did not officially comment but a senior official said Obama would not dare impose any restriction on travel to India for medical treatment. "This will not earn him any goodwill," the official said.

Data with the US Centers for Disease Control and Prevention showed that 46.3 million Americans, or about 15.4 per cent of the country’s population, did not have health insurance in 2009. The new US healthcare reform bill is being marketed to cover more Americans under this new plan.

Rajeev Boudhankar, vice-president of Kohinoor Hospital, said, "The major issue during US presidential elections was healthcare reforms. Till Tuesday, all Americans were saying that healthcare was very expensive in the US."

Sangita Reddy, executive director of operations at Apollo Hospitals, said insurance agencies in the US themselves recommend some patients for treatment in India. "Healthcare costs have not come down in the US and Obama’s statement may not have much impact out here,” she said. Delhi’s Apollo Hospital alone treated over 10,000 foreigners in the past two years.

While India's medical tourism revenues are not heavily dependent on the US market, the biggest number of patients from Asia and Africa will be unaffected by Obama's protectionist moves, industry players maintained.

"Without doubt, India is more cost-effective and this has helped us cater mainly to patients from Asia, Africa and Latin America and a huge part of our medical services revenue is contributed by patients from these regions. The US is nowhere near the top revenue generator," Rajesh Sharma, director general of the Services Export Promotion Council, said. “India is at par with the European Union and the US in terms of medical facilities, but the costs are 40 per cent cheaper here,” he said.

Dr Ramakanta Panda of Mumbai’s Asian Heart Institute did not see a drop in the number of American patients coming to India following the Obama exhortions.

This is not an isolated instance of Obama administration pursuing protectionist trade agenda though it has been a signatory to G-20 Pittsburgh resolution rejecting such measures by member countries. Last year, US had proposed the Foreign Manufacturers Legal Accountability Act under which an Indian exporter would have to shell out anywhere between $15,000 and $20,000 to retain a legal agent in the US. Prior to this US had, under the Emergency Border Security Supplemental Appropriations Act, 2010 hiked the fee for certain categories of H-1B and L1 visas by at least $2,000 for five years — hitting Indian export-oriented sectors.

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Neediest and sickest would pay the price under GOP budget plan

2011-04-20T09:58:00.003-04:00

Rep. Paul Ryan (R-Wis.) speaks at a news conference in Washington. With him is House Majority Leader Eric Cantor (R-Va.). (Brendan Hoffman, Bloomberg / April 13, 2011)

Rep. Paul D. Ryan's proposals would relieve the government of much of the responsibility for paying for healthcare, but if the result is that individuals carry a heavier burden, is that really a 'path to prosperity'?

By Michael Hiltzik - April 17, 2011 - LATimes

If consensus-building is a hallmark of effective governing, a rule you can probably find in a civics textbook or two, then I suppose it's an achievement that everyone agrees that unending federal deficits will lead us to perdition.

But the unresolved question is what to do about it.

That question is bound to be hashed out among the contestants for the 2012 presidential sweepstakes, whether they represent the Democratic Party, the Republican Party or the You-Gotta-Be-Kidding-Me Party (chairman of the board: Donald Trump).

The two political bookends of the deficit debate were established over the last two weeks, first in a long-term budget road map issued April 5 by Rep. Paul D. Ryan (R-Wis.), chairman of the House Budget Committee, and passed by the Republican majority of the House on Friday, and then by President Obama in his budget speech Wednesday.

If there was any doubt that the debate over deficits is not about numbers but philosophies of government — it just exploits the vocabulary of fiscal policy — these two events should lay it to rest.

The principal target of Ryan's plan is government healthcare spending — Medicare, Medicaid and the healthcare reform plan. That's a reasonable place to aim any deficit-reduction plan, because that's the area where costs are rising most sharply.

But his solutions are the antithesis of reasonable. They involve almost entirely throwing the neediest and sickest Americans out from under the government umbrella to fend for themselves. Medicare as we know it would be eradicated, the cost of Medicaid shifted largely to already hard-pressed state government, and a reform program designed to give tens of millions more Americans the protection of health insurance canceled outright.

Is this really the only path to deficit reduction?

Obama, to his credit, drew a philosophical line in the sand that his progressive supporters have been waiting to see for two years. Ryan's vision, he said last week, "says America can't afford to keep the promise we've made to care for our seniors…. It's a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit."

Obama connected the dots between the House Republican majority's proposed spending cuts and its determination to preserve tax cuts for the wealthiest taxpayers — proposals to cut out not only government healthcare but a host of programs that directly benefit the middle and working class while indirectly helping to build the American economy for the future.

That's "a vision that says even though Americans can't afford to invest in education at current levels, or clean energy, even though we can't afford to maintain our commitment on Medicare or Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy," he said.

Indeed, as the bipartisan Congressional Budget Office found in its analysis of the plan (done at Ryan's request), until the Medicare and Medicaid cuts kick in starting in 2022, the red ink of its tax cuts overwhelms the savings from other program reductions. Ryan's plan actually increases federal public debt compared with what it would be under current law: to 70% of gross domestic product under the Ryan plan compared with 67% under current law. Nevertheless, it passed by a party-line vote Friday, just before the nation's lawmakers high-tailed it out of Washington for a two-week vacation.

As for the health programs, the House passed Ryan's proposal to extinguish Medicare as a guaranteed coverage program and substitute healthcare vouchers, allowing seniors to buy private health insurance with a government subsidy.

The vouchers would rise in value with the consumer price index, but as medical expenses have been rising much faster than general inflation, the value of the government subsidy would erode over time. The CBO calculated that the share of standardized medical expenses paid out-of-pocket by the typical 65-year-old in 2030 would be 68% under Ryan's plan, compared with 25% under current law.

The delivery of health benefits would be much less cost-effective under this giveaway to the private insurance industry than it is under Medicare, as seniors would be paying for the private insurers' much higher administrative costs, including profits. And don't forget that the elderly are sicker than the general population, so the premiums charged for this standard plan may well rise faster than overall medical inflation, putting the seniors further behind the curve.

There are other flaws in this arrangement. For example, because traditional Medicare would remain in place for today's retirees and near-retired, the difference between their health program and that of younger retirees after 2022 could generate political pressure for Congress to increase the latter's benefits. The proposal assumes that raising patients' out-of-pocket costs leads to more cost-efficient care, a notion that is unproven at best and has been questioned by some experts.

The proposal overlooks the fact that the cost of healthcare for the elderly can't easily be wished away. The CBO observes that some elders unable to pay for their care might end up in the government's disability or Supplemental Security Income (SSI) programs, both of which are already overstressed.

Others may require help from their children, which would only cut into the next generation's economic resources; alleviating exactly such an intrafamilial burden was a founding principle of both Medicare and Social Security.

Ryan is right when he suggests that his plan would "fix" Medicare; it's the same way that the Mafia "fixes" an informer. In both cases the solution guarantees that the target won't be around to create trouble anymore, and as long as you don't feel remorse about collateral damage you're home free.

As for Medicaid, Ryan proposes to shift much of the federal burden of this program for the poor and infirm to the states, while reducing its overall scope and eliminating some federal mandates. This is plainly a threat to the well-being of our most unfortunate citizens. Can you think of any states that, confronted with fiscal problems and relieved of the federal mandate and federal dollars, might decide to take a hatchet to their Medicaid budgets? I can think of about 50.

Finally, repealing healthcare reform simply reinstates the system of coverage dominated by private profit-seeking companies that has failed to stem rising medical costs for decades, while leaving some 47 million American residents uninsured.

There's no reason to believe that Ryan's proposals will do anything to reduce healthcare costs in the U.S., and reason to believe they would do the opposite. They would relieve the government of responsibility for paying much of the price of care, but if the result is that individuals carry a heavier burden — and the neediest individuals the heaviest — is that really a "path to prosperity," as the Ryan plan was titled?

As always, it's instructive to summon up the words of the dean of progressive social policy, Franklin Roosevelt. In 1935 he was asked his opinion of the platform of the American Liberty League, which, like the Ryan cabal, aimed to dismantle the New Deal under the guise of preserving individual rights and free enterprise. (Its principal backers were the Du Pont family, conservative Democrats who might be thought of as the Koch brothers of that era.)

"The two particular tenets of this new organization," FDR told reporters, "say you shall love God and then forget your neighbor. For people who want to keep themselves free from starvation, keep a roof over their heads, lead decent lives, have proper educational standards, those are the concerns of governmenhttp://www.blogger.com/img/blank.gift besides these two points." He threw in "the protection of the life and the liberty of the individual against elements in the community that seek to enrich and advance themselves at the expense of their fellow-citizens."

Those are still the concerns of government, and to say we can't afford them is an affront to the working people who build America today. But let's give the House GOP majority the last word. In the introduction to the GOP budget resolution passed by the House, Ryan declared: "Americans face a monumental choice about the future of their country."

No kidding.

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States Rushing to Create Their Own Insurance Exchanges, Pass on Federal Exchange

2011-04-20T09:19:00.001-04:00

Several states are rushing to establish their respective health insurance exchanges by 2014, according to various news reports.

Under the new healthcare reform law, states are required to set up insurance exchanges that would allow individuals and businesses to shop and compare various health plans. If these exchanges are not implemented by the 2014 deadline, the federal government will require tardy states to implement a federally established exchange.

According to a Star Tribune news report, the Minnesota Chamber of Commerce is hoping the state will pass a law that would create an exchange funded by taxpayer dollars. "It doesn't mean we're for Obamacare," said Minnesota Chamber President David Olson. "Our bigger paranoia is that we don't want the federal government imposing its will on us. ... We think the best outcome is for us to design this ourselves."

Bills have been introduced to the Minnesota Senate and House, but neither body has scheduled a hearing of the bills, according to the news report. In Oregon, however, The Senate has already passed Senate Bill 99, which would allow a public corporation to set up standards for commercial health plans, according to a Statesman Journal news report.

The proposed public corporation would incorporate seven governor- and Senate-approved board members, including members of the Oregon Health Authority and the Department of Consumer and Business Services. "I urge the legislature to quickly approve Senate Bill 99 so we can build a strong health insurance exchange that works for Oregon, rather than wait for the federal government to create one for our state that would meet minimum national standards," said Gov. John Kitzhaber.

Read other coverage about health insurance exchanges:

- Insurance Plans Offered on Health Exchanges Could Carry Sihttp://www.blogger.com/img/blank.gifgnificant Deductibles

- Bureau Releases Data to Define Benefits Under Reform Law

- Oklahoma Governor Turns Down $54M From HHS for Insurance Exchange

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New Health Care Advocacy Group Launches With $5 Million In The Bank

2011-04-15T10:10:00.002-04:00

The newest health care advocacy campaign already has millions of dollars in the bank. Launched by Democratic lawmakers and reform proponents, the two-part program is meant to frame the debate around the law during the 2012 election cycle.

On Thursday, Gov. Deval Patrick (D-Mass.), former Gov. Jim Doyle (D-Wis.) and several Democratic operatives launched the latest variation of a pro-health care, non-governmental organization. The project has a dual track: a 501c(3) group, called “Know Your Care,” to promote the Affordable Care Act, and a 501c(4) group, “Protect Your Care,” to lobby on the law's behalf.

The project already has a healthy fundraising stream, a source familiar with the campaign told The Huffington Post.

The $5 million launch figure gives an early indication that the organization will succeed where other health care advocacy groups have failed: primarily, in turning the tide of public and political opinion in the law’s favor.

In addition to the money, Know Your Care brings some high-profile names to its staff: Patrick and Doyle will serve on the board. Neera Tanden, who worked on President Obama’s health care task force team, will be on the board as well; Paul Tewes, Obama’s state director for the Iowa caucuses, will serve as senior adviser; Tanya Bjork, a former top adviser to Doyle, will serve as campaign manager; Jim Margolis, a top ranking communications consultant, will serve as the group’s media adviser; Eddie Vale, a former top hand at the AFL-CIO, will be communications director; and John Anzalone, a major Democratic pollster, will do the polling.

“Our efforts here are to really to make sure that this is a factual debate and that the facts are out there,” said Doyle. “It is critical that people understand what the benefits of this act are, and I look forward to making sure those facts are known across the country.”

How the organizations will structure their operations or spend their money isn’t entirely clear. Officials at the launch were coy with strategy and plans, stressing only that Know Your Care and Protect Your Care will be informative in nature, will be active in races and will work through the 2012 election until the major components of the law are implemented in 2014.

Only the 501c(4) organization can engage in lobbying -- so long as it pertains to the organizational mission -- but neither side of the operation has to disclose its donor names.

“The rules are the rules,” said David Donnelly of Public Campaign Action Fund, a group that promotes ethics in government. “We want to change them. There some groups who feel like they have to disclose their donors, [...] there are others that choose not to. The problem comes if they start pushing the boundaries on tax law, spending more money on electoral work than issue advocacy.”

The new campaign has the luxury of working on an issue that seems likely to remain firmly in the political spotlight. The president’s health care reform is already a fault line in the 2012 Republican presidential primary.

Obama advisers insist the legislation passed by in Massachusetts by former governor -- and potential GOP candidate -- Mitt Romney (R) was the intellectual foundation for the Obama administration’s own law. Fellow Republicans have insisted that Romney will end up having to either apologize or better explain his role in the Massachusetts legislation. But for now, he provides Know Your Care and Protect Your Care with the type of hook that they can use to make their campaign a bi-partisan one.

“If people are attacking Mitt Romney for his health care plan,” said the source familiar with the group’s efforts, “we would defend Mitt Romney and his health care plan.”

On Thursday, Patrick previewed the type of line that could inevitably come from his new organization.

“I give Governor Romney genuine and sincere credit for his role in working with a Democratic legislature, a Democratic U.S. Senate, a Republican White House, a broad coalition of business and labor leaders and patients’ advocates and experts in the medical field who came together to invent our health care reform,” said the current Massachusetts governor. “And, frankly, that broad coalition -- I guess with the exception of Governor Romney -- has stuck together to refine it.”

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UK nurses pass vote of no confidence in health secretary ‎

2011-04-15T09:46:00.006-04:00

The Independent Newspaper - UK

Nurses voted overwhelmingly in favour of a motion of no confidence in Andrew Lansley’s management of NHS reforms on Wednesday.

Delegates at the Royal College of Nursing conference in Liverpool voted 99 per cent in favour of the motion, to 1 per cent against, after angry delegates said Mr Lansley’s plans would ruin the NHS and lead to worse patient care.

Steep Cuts Pushed for Hospitals; Trims From Medically Needy, Medicaid Spending plan OK'd by Fla. Senate trims from Medically Needy, Medicaid.

2011-04-13T10:45:00.002-04:00

POLK FACILITIES WOULD LOSE $43.2 MIL.

LAKELAND FL | Polk County hospitals would lose just less than $43.2 million in Medicaid and Medically Needy payments, with Lakeland Regional Medical Center taking more than half of that hit, under the budget approved Thursday by the Florida Senate.

LRMC's loss in funding — from lower Medicaid payments, elimination of adult hospital services through the Medically Needy program and elimination of Medicaid for the Aged and Disabled – would be $23.7 million.

Winter Haven Hospital stands to lose $9.4 million; followed by $6.5 million for Heart of Florida Regional Medical Center, $2 million for Lake Wales Medical Center and $1.6 million for Bartow Regional Medical Center.

The Safety Net Hospital Alliance of Florida released that hospital-by-hospital analysis Thursday. Elimination of the medically needy and the aged-disabled Medicaid programs wouldn't occur until April 2012, but the figures are annualized to show a year's impact.

Both the Florida Senate and the Florida House are proposing cuts to deal with a multibillion-dollar state budget deficit, but the Senate's budget takes more from hospitals and from programs for people who need treatment for substance abuse and severe mental illnesses.

Officials at local hospitals are alarmed at the extent of the Senate cuts.

"That would drastically affect all hospitals' ability to care for the state's neediest," said Josh Putter, division director for Health Management Associates, which owns Heart of Florida and Bartow regionals.

"These proposed cuts are unprecedented and place a disproportionate burden on Florida's hospitals," said Elaine Thompson, president and chief executive officer of Lakeland Regional.

"Reductions of this magnitude will have a significant impact on the provision of services to the most vulnerable members of our population – our sick and elderly — as well as have a ripple effect on our economy as health care jobs will be lost."

Putter also mentioned the effect of reduced hospital income on the economy.

"It will definitely have a negative impact on the number of people we are able to hire," he said.

Scott Smith, chief executive officer at Lake Wales Medical Center, said hospitals will need to look for new ways to reduce expenses while continuing to serve their patients and communities.

"Hospital emergency departments will face increased pressures as they are often the safety net for service gaps in the larger community," he said.

Despite cuts, Thompson said, "the need for care and our obligation to provide it will not be reduced."

Statewide, cuts proposed by the Senate would eliminate $1.6 billion to hospitals, the alliance said.

"Hospitals are one of Florida's leading economic drivers," said Tony Carvalho, alliance president. "To force hospitals to carry a disproportionate amount of cuts is totally unrealistic."

The proposed House budget would cut hospitals by a more modest $297.7 million. The five Polk hospitals' combined loss under the proposed Florida House budget would be $6.8 million, which is $36.4 million less than the Senate budget would cut, according to the safety-net alliance.

Under the Senate proposal, some of its members would lose more than Lakeland Regional's $23.7 million.

For example, Jackson Health Systems in Miami faces $177.5 million in proposed cuts. Orlando Health would lose $75.6 million and Tampa General Hospital's loss is $62.5 million.

Hospitals' emergency departments also are likely to have a great influx of patients in mental health crises if Senate cuts to mental health and substance abuse programs statewide are in the final budget agreement reached by the House and Senate.

The Senate cuts would "dismantle local adult mental health and substance abuse treatment systems that have taken decades to develop, leaving in place only emergency crisis services," according to an email Thursday from Tri-County Human Services in Polk County.

The Senate proposal would take about $186 million from adulthttp://www.blogger.com/img/blank.gif mental health services, eliminating their capacity to serve more than 180,000 adults. Adult substance abuse treatment services will be cut $43 million, leaving 35,660 adults without access to services, said Adam O'Connor, Circuit 10 adult transformation specialist, using statistics from the Florida Council for Community Mental Health and the Florida Alcohol and Drug Abuse Association.

They said as many as 12,000 people in those treatment areas would lose their jobs if the Senate cuts took place.

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With health costs rising, Vermont moves toward a single-payer system

2011-04-13T10:21:00.002-04:00

Faced with rising costs and residents still without health insurance, Vermont lawmakers are poised to pass a single-payer healthcare plan, which would reshape how the state's doctors are paid and become the first of its type in the US.

The plan, approved last month by the Vermont House of Representatives, was designed by William Hsiao, an economics professor at the Harvard School of Public Health. Hsiao also designed the single-payer system in Taiwan, and consulted on healthcare reform in seven other countries.

With many states looking for a way to cope with spiraling health care costs, we asked Hsiao to explain how his prescription for Vermont would work.

When Vermont asked you to devise this plan, what were the state’s goals?
Vermont made clear what goals they wanted to achieve: namely, universal coverage. Because under the [Obama healthcare reform] there are still going to be 5 percent of people not covered. Second, they wanted to bring the under-insured up to some common standard benefit package. In Vermont, 15 percent of the people who have insurance have very shallow insurance. Third, they wanted to have a plan that can control cost escalation. And finally, their goal is to move healthcare delivery into an integrated delivery system. That entails integrating prevention, primary care, secondary care, and tertiary care into a vertically integrated healthcare delivery system. That's what just about every state wants to do. This is what often is referred to by the Madison Avenue term, value-based health care.

One of the goals was to cut costs. How does this plan cut costs?
By introducing a single-payer system you remove the administrative expense, so you can get a one-time savings. Over the long run, the savings come from changing the payment system to providers. Right now we pay on a fee-for service basis — in other words, the more you do, the more you get paid. That encouraged doctors to do more — including more tests, more examinations, so forth. We could change the economic incentives for physicians to reward them for healing patients rather than how many services they provide. Second, the savings come from vertical integration of healthcare delivery. That would remove the duplication of tests, reduce drug complications, improve the continuity of care for patients. That would simplify administration, such as recordkeeping. You could share the same records. This is where the savings come from.

Massachusetts was hailed for its health care reform law. How does Vermont’s plan differ from what we have in Massachusetts?
It’s different from Massachusetts. One is, it decouples insurance from employment. The insurance is based on your residency in Vermont. So that means everyone will be covered, every resident of Vermont. Secondly, single-payer removes the administrative hassle confronting hospitals, doctors, nursing homes, and all providers. Massachusetts doesn’t have that. Massachusetts does not have a single-payer plan. That can reduce the cost of health insurance cost by probably 10 percent.

How would this plan affect individual consumers? Would they see any difference in their day-to-day medical care?
There is one standard insurance plan for everyone, and if you want more you could buy the wraparound. Patients would get better coordination and continuity of health services. The other difference is, instead of paying a premium, the premium now would be transformed into a payroll contribution. An employer pays roughly 70 percent of this cost, through a payroll contribution; employees also pay a portion of it. We use modeling methods to show that employers in Vermont would pay less than what they pay under the current system. So would employees. They are going to see health insurance costs reduced.

What will happen to private insurers in Vermont?
Insurance companies in Vermont will have two roles. We propose that the role of the single payer get contracted out by competitive bidding to one company. So it's possible a private insurance company still can operate in Vermont, but they have to win a competitive bid. Second, private insurance companies can provide the wraparound plans.

How does this differ from the Obama health reforms?
President Obama’s plan really does not address the cost-escalation issue. His plan only argues for experimentation. Vermont’s plan says, single payer is the most effective way to get universal coverage as well as control the health care cost escalation.

A survey recently indicated that a quarter of the state's doctors say they would leave if Vermont adopted this plan. What incentive do they have to stay?
We promise that doctors and hospitals will not see an overall reduction in their income. However, we said some highly paid specialists may see their income get reduced some, while the primary care doctors will see their income get increased. Right now, in Vermont as in the whole United States, primary care doctors are underpaid. Some super-specialties like radiology, dermatology, and cardiovascular surgery — they earn three times as much as a primary care doctor. These doctors may see their income get reduced some, and they are the ones threatening to leave, but I feel that is just a fear tactic, because Vermont has very attractive working conditions. These highly paid specialists work at the University of Vermont, or at Dartmouth-Hitchcock Center on the border with New Hampshire and Vermont. These doctors are working in these medical centers not only for money but for other opportunities, including research and prestige. So yes, they may threaten to leave. One, I doubt that, and two, I do not think these medical centers will have trouble recruiting replacements.

Do you think this is something that can be replicated elsewhere?
That is a hard question. Vermont has certain conditions that may make single-payer possible. It is a very progressive state and the grassroots organizations are strong rather than dominated by large organizations. However, some essential elements of single-payer could be slightly modified to make it suitable for other states, depending on other states’ political institutions.

Compared to other countries you’ve worked in, what are the challenges in the US?
There is a commonality among all nations as what they are confronted with. Namely, most countries I had been engaged with found health care costs escalating too rapidly, and they can't sustain their current systems. Some other countries like Taiwan, China, Cyprus, and South Africa, they were like the http://www.blogger.com/img/blank.gifUS — lack of universal coverage and rapid health cost escalation.

What's unique about the US is that the we spend so much for health care that it has built up very powerful special-interest groups — including the insurance industry, hospital industry, medical associations, pharmaceutical industry. These industries receive so much money, if they only spend one-tenth of one percent of it to fight you, that would amount to more than two billion dollars. You can imagine how many political campaigns they can support. You can imagine how much advertising they can put out on television and radio. That's the difference in the United States. We've let the problem drag on for twenty years and built up such powerful, moneyed special-interest groups.

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Hospital errors are costing $17 billion a year

2011-04-07T21:59:00.002-04:00

A new study reveals that hospital errors are occurring 10 times the rate previously measured, and are costing billions of dollars a year.

Steve Chiotakis: There's a study out today in the journal Health Affairs that finds the rate of hospital errors is ten times what's been measured in the past. And a third of all admissions lead to a complication caused by medical care.

Marketplace's Mitchell Hartman reports, it's a multi-billion-dollar problem.

Mitchell Hartman: Dr. David Classen is at the University of Utah. His team analyzed individual patient records at three large hospitals, looking for medical mistakes.

David Classen: These are significant events, because it's not: 'They gave me a pill and I got a stomach ache. They gave me a pill and I started throwing up blood and they had to treat me.

It's a more rigorous method than most hospitals use -- they typically rely on voluntary reporting by medical staff, or on insurance claims.

Dr. John Santa of Consumer Reports says the problem costs at least $17 billion a year.

John Santa: We have an expensive system, and increasingly we know it's expensive because there's many mistakes.

According to another study in Health Affairs, the most expensive hospital-caused complications come from incorrect medication, post-operative infections and bedsores.

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Baucus stands by health care reform despite criticism

2011-04-04T09:23:00.001-04:00

The one-year-old Affordable Care Act will prove over time to be a "major benefit to Montanans and it will be appreciated," but it will take time, said Sen. Max Baucus, as objections to the law continue to make state and national headlines.

Montana lawmakers have tried to repeal the law, Rep. Denny Rehberg always refers to it as "Obamacare" and during a speech in Helena last month, Republican presidential hopeful Michelle Bachmann said a top priority for Republicans nationally is to repeal the federal health care overhaul.

But Consumers Union, the nonprofit organization that publishes Consumer Reports, said the law is "a bold move toward better access, affordability and reliability."

The legislation established health insurance as a right and a responsibility for every American and is on pace to reduce the rate of health care costs for individuals and businesses, Baucus said.

So, why the criticism?

"They don't understand it," Baucus said in a telephone interview. "People are confused. People really don't know what this bill does. Most of the benefits won't accrue immediately. ... There's a lot of misinformation about it."

Baucus, a lead architect of the law, remains a supporter, despite his plummeting approval ratings. In a recent Lee Newspapers State Bureau poll, Montanans gave Baucus a 38 percent job approval rating. His performance rating dropped from 67 percent in the last Lee poll in May 2009, when he led the pack of politicians scored.

Polls by other groups also have shown Baucus' job performance scores have dropped since his role in passage of the law.

Baucus called the results "interesting" but doesn't waver in his support.

"It's confusing," Baucus said. "There's just a lot here, and in the meantime, we need to keep working on it to make it better. It was appropriate legislation. It was the right thing to do. Of course, it's not perfect and, of course, we'll keep working on it to make it even better. We need to keep talking about it and keep listening."

Polls show that one in eight people believe they have been helped by the law, long before it fully takes effect in 2014.

***

Kim Wombolt, 52, of Laurel has had bone marrow cancer for five years and has received two stem cell transplants. The first was $85,000; the second, $125,000.

Throughout her illness, she has been hospitalized at least 100 days. She remains in the care of physicians and fills eight prescriptions a month.

The Wombolts were quickly reaching - and fearful of surpassing - the $1 million cap on Wombolt's husband Leonard's insurance.

Kim contemplated leaving her husband of 34 years. She thought it was the only solution to keep the hospitals, physicians and bill collectors from seizing their assets once they maxed out their coverage. She also thought that as a single woman she might be eligible for Medicare.

"I didn't think he deserved to lose everything he's worked so hard for because I got sick," Kim said.

On Jan. 1, the Affordable Care Act banned insurance companies from imposing lifetime dollar limits on health benefits.

"If it were not for health reform, I would most certainly die," Kim said.

***

Kelli and Steve Carlson's baby was born on May 21 - five weeks premature. Baby Rowan had respiratory distress and was treated for pneumonia. She was in neonatal intensive care for 21 days, accruing bills exceeding $85,000.

Though Kelli, 31, and Steve, 32, had insurance through her job at Colstrip Public Schools, they had not added their infant to their coverage within 31 days, and claims for her care were denied.

"At no point as she was fighting for her little life did I think, ‘Oh, I need to read our insurance booklet and enroll her in our insurance plan,'" Kelli said. "These insurance companies should not be allowed to treat us like that. It was probably the worst summer of my life, having the stress of all that looming over your head. I was scared we would have to sell the house."

Because of a provision in the Affordable Care Act, the Montana Insurance Commissioner's office intervened, enrolled Rowan and got the insurance company to pay.

***

John Tooke, a certified public accountant in Miles City, employs two people. When President Barack Obama signed the Affordable Care Act, small businesses became eligible for tax credits up to 35 percent of their premium contributions for employee coverage, making insurance more affordable.

Tooke said offering employees health care is one of biggest benefits employers can offer, yet he knows many small businesses that have been forced to drop it because of cost.

"Hopefully there will be a much wider array of businesses offering health care insurance because the costs will be mitigated," Tooke said. "It hasn't directly helped me yet because I haven't taken full advantage of it in my office, but it will. This whole issue is the first shot across the bow. Yes, there are some things that need to be fixed ... but at least now we're talking and arguing about it."

By 2014, small businesses with up to 100 employees will have access to state-based Small Business Health Options Program exchanges, where they may purchase affordable, quality insurance and may qualify for tax credits up to 50 percent of employer premium contributions.

***

Sue Bailey of Billings said her family has benefited from the law.

Bailey's 27-year-old daughter, whose employer does not provide health insurance for part-time workers, has been able to secure health coverage from the expanded "high-risk" insurance pool from Montana Comprehensive Health Association using money provided by the Affordable Care Act.

Bailey said her family no longer will face the possibility of losing its health insurance because they have maxed out their "lifetime limits."

***

One of the biggest misconceptions about the bill, Baucus said, is that it is costing taxpayers money when they can least afford it.

"This bill does not cost one thin dime," Baucus said. "It's all paid for. It does not put additional burden on Montana businesses or taxpayers."

The Congressional Budget Office reported that health reform will reduce the federal budget deficit by about $210 billion in the next decade and more than $1 trillion over the next 20 years.

"No legislation that Congress has passed in modern times will have such a dramatic effect on lowering the federal budget deficit than the health care legislation that was passed," Baucus said. "That is not recognized and, of course, people have a hard time seeing that, but it's a fact."

***

Some critics fear the Affordable Care Act will cost jobs.

The fact is that the national unemployment rate has gone down since health care reform became law. Nationwide, more than 1 million private-sector jobs have been created since the health care law was enacted and 243,000 have been in health care. The independent chief actuary at the Centers for Medicare and Medicaid Services and the Congressional Budget Office said the health care law strengthens the economy by lowering the rate of health care costs and reducing the deficit.

The Congressional Budget Office, the independent Joint Committee on Taxation and other economists agree that lower health care costs would free up resources for employers and result in higher wages for workers. Lower costs also mean more money to hire workers.

Before the law, Medicare was forecast to be bankrupt in seven years, according to a Senate hearing with U.S. Secretary of Health and Human Services Kathleen Sebelius earlier this month. According to the Centers for Medicare and Medicaid Services, the law extends the life of Medicare for 12 more years.http://www.blogger.com/img/blank.gif

The major purpose of the law is to reduce health care costs, Baucus said. Americans spend about 53 percent more per person on health care than the next most expensive country and we're not 53 percent per person healthier.

The United States spends $7,290 per person per year, or 16 percent of the gross domestic product on health care. The next-closest is Norway, which spends $4,763 per person, accounting for only 8.9 percent of its GDP, according to the Organization for Economic Cooperation and Development.

"We can't go on like that," Baucus said.

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Ukraine Debating Health Insurance Reform

2011-03-15T15:31:00.000-04:00

Several prominent Ukrainian based private insurance companies have disclosed that a state health insurance scheme could be introduced to the Ukraine as early as 2014. The discussion on healthcare and insurance reform has been brought forth following Deputy Parliament Speaker Tetiana Bakhteeva’s prediction that the Ukranian health system will be ready for a comprehensive health insurance option by 2014.

Since independence from the former Soviet Union, Ukraine has undergone a dramatic demographic decline and health crisis. The central European nation has the fastest rate of depopulation on the continent, with a third of all Ukrainians dieing prematurely before the age of 65 years. Political flux, including frequent changes in the Ukrainian government and the leadership of the Ministry of Health have led to protracted delays in institutional change in the health system and the reorganization of ambulatory health care. Ukraine’s development into a more modern insurance driven health care sector has been further maligned by the financial crisis of 2007 – 2010 which has seen the value of their currency, the Hyrvina, fall when utility costs across the board are rising.

Voluntary health insurance presently plays a very insignificant role in Ukrainian healthcare financing; voluntary health insurance serves to supplement government provided health services within the country. Mrs. Bakhteeva, who chairs the parliamentary committee on health, has advocated for a state-sponsored insurance medical system.

Olena Tarovska, the Director of the Department of Sales for Personal Insurance at Oranta Incorporated, revealed that “compulsory health insurance in Ukraine may be introduced in Ukraine in 2014. I think that the leading insurance companies in Ukraine will participate in organization and implementation of this project.”

Mrs. Tarovska further believes that health insurance in Ukraine should be mandatory for emergency services, and for providing time-sensitive ambulatory aid. Voluntary health insurance plans would be offered for additional medical operations. “Because a sort of tandem between compulsory and voluntary health insurance will be created if compulsory state insurance is introduced,” she said.

The administration and financing of the proposed compulsory health care services could in fact be provided by accredited private insurance companies. If private firms do take on this burden, only the model of insurance payments would need be adjusted. A unified regulatory agency for compulsory medical insurance could be created to monitor finance, distribute cash flows, and oversee the quality of services.

According to INGO, one of Ukraine’s major private health insurance providers, the introduction of a compulsory health insurance scheme could be possible in 2014 or 2015. Hennadii Mysnik, a Deputy Board Member of INGO Ukraine, has stated that “the prospect for introduction of compulsory health insurance in Ukraine will become a reality no earlier than three or four years,” he said.

Mr. Mysnik, maintains that the persistent under-funding of the health care sector has been the catalyst for the introduction of a compulsory health insurance scheme in Ukraine. The factors now preventing its implementation involve financial management and responsibility issues, and are not about what would change for the patients and practitioners in the Ukrainian health care sector. Whether the public itself is ready for introduction of compulsory health insurance is another issue entirely.

NATSA, a Russian health insurance company and subsidiary of Zurich Financial Services, has reportedly been involved in discussions with the Ukrainian government regarding healthcare reform for the past 15 years, according to Halyna Bobyr, NASTA Insurance’s Deputy Director for the Department of Underwriting and Methodology of Personal Insurance. During this period dozens of preliminary draft laws on compulsory health insurance have been discussed, many of which have been registered in the parliament.

Mrs Bobyr is of the opinion that drastic reforms are needed within the Ukrainian healthcare sector, stating that she believed “that Ukraine is at least 10 years late in terms of introduction of compulsory health insurance.”.

Ineffective protection of the Ukrainian population against health expenditure risks, and health finance inefficiency are core problems for health sector development. All respondents intimated that reform was long overdue. However, there remain strong institutional obstacles present in the system. Continued inaction could present the Ukranian health care industry with further problems in the future.

Insurance Companies mentioned:

Oranta Incorporated: Oranta Incorporated provides Ukraine health insurance services. The company offers a wide range of insurance options for legal entities and individuals. Oranta was originally named Ukrderzhstrakh at its founding in 1921 and later changed its name to ‘Oranta Incorporated’ during 1933. The company is headquartered in Kiev, Ukraine. As of January 2009, Oranta Incorporated operates as a subsidiary of Universalna Insurance Company OJSC.

INGO Ukraine: INGO Ukraine provides wide array of both compulsory and voluntary insurance service options to corporate and retail clients within The Ukraine. INGO Ukraine has an administrative network of 26 branches and over 100 customer service offices throughout the country. The company was founded in 1994. It is a member of INGO International Insurance Group and an affiliated company of Ingosstrakh.

NASTA Insurance: Founded in Moscow in1993, NASTA Insurance was a leading insurance provider for both individuals and legal entities in Russia. As of April 4, 2007, NASTA Insurance Group is a subsidiary of Zurich Financial Services. The company, now operating under the name Zurich Insurance Company Ltd., has more than 3,000 employees and 3,500 tied agents as well as an extensive network, with 67 branches and over 300 representative offices across Russia

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Say Farewell to the Family Doctor

2011-03-15T12:45:00.007-04:00

On tourist maps, it might get eclipsed by the nearby Abraham Lincoln Presidential Library. But St. John's Hospital, a tan, 11-story building, is beginning to cast a long shadow in Springfield, Ill. For several years most of the physicians in this town of 120,000 have been split into teams like kids in a summer-camp color war: SIU HealthCare and The Springfield Clinic, huge medical groups employing 450 doctors between them, have dominated the market for years. But recently, the Franciscan nuns and executives behind St. John's have been trying to put together their own dream team and have bought up some of the few independent medical practices left in this pocket of the Midwest.

The effort is all being laid out in a cramped off-site conference room, where Kelly Ford and a dozen other executives huddle in a buzz of conversation, plotting the next steps in the expansion of Hospital Sisters Health System Medical Group, the network St. John's belongs to. A mosaic of pastel pink, yellow and blue Post-it notes covers one wall, each inscribed with an item from what looks like the world's longest medical shopping list ("Order lab coats/business cards"; "Update insurance contracts"). It adds up to a lot of work for executives like Ford, the director of medical-staff affairs for Hospital Sisters. But the mood in the room is upbeat, and with good reason. In less than two years, the group has grown from just a handful of executives to become a squad of almost 200 doctors and nurse practitioners, recruiting the likes of a pulmonologist from Joliet, Ill., and an internist with hundreds of patients at a big, independent practice across town. "We like to think of ourselves as a fast-moving start-up," says Ford.

Remember the solo family doctor? In places like Springfield, it has become increasingly likely that she's collecting a paycheck from a large regional hospital—and practicing medicine according to the hospital's strict playbook. The experience in Springfield is just a needle prick compared with what's going on nationwide. At least one in six doctors—more than 150,000 nationwide—now works as an employee of a hospital system. And with about half of recent medical school graduates deciding to work for hospitals and many established doctors looking to unload their practices amid the tough economic climate, what was a trickle of change has turned into a torrent. Jim Pizzo, a Chicago-area hospital consultant, says the blistering pace of these mergers is leading some colleagues to joke that there are two types of physicians today: "Those employed by hospitals and those about to be."

Whether they wear suits or scrubs, many medical pros think they're doing the right thing. Hospital executives say they're adapting to the rapid evolution of the health care business, while physicians, fed up with running businesses during the recession, are drawn to the safety of a salary and regular hours. What's less clear is how the fever to buy up local doctors' offices will affect the paper-gowned patients caught in the middle, with many saying they've already seen costs rise or treatment choices dwindle. Consumer advocates say the demise of the neighborhood doctor could turn out to be as big a change for medicine as anything happening at the national level with health care reform. "The story of how well these collaborations will actually work, day after day, hasn't been written yet," says Roland Goertz, president of the American Academy of Family Physicians.

The University of Washington is one of a few fast-growing hospital groups in the Seattle area. Frustrated consumers have raised objections about facility fees added to their bills by the expanding hospital chains; in some cases, those fees raised the cost by 65% or more. (The University declined to comment.)

Ruth Taylor, a 44-year-old woman in Bozeman, Mont., started seeing Robert Hathaway as her doctor during college, and she stuck with him through everything from routine blood tests to a kidney transplant. Taylor, a professional nurse with warm blue eyes, describes Hathaway as a "classic small-town doctor" who knew all his patients by name and socialized with them at local basketball games; he was accessible and thorough—even catching a health problem of hers that other doctors had missed. But after Hathaway sold his practice to the local hospital, Taylor says, things began to sour. She was more likely to be assigned to see the physician assistant rather than Hathaway himself. And when she went in for a comprehensive physical (also run by the assistant) in late 2008, she was charged $360, more than double what she'd paid for a workup in previous years. Her insurance covered very little of the higher tab; now, fearful of the cost, Taylor is putting off a mammogram. "When a nurse is skipping out on care she knows she needs," Taylor says, "you know there are problems."

Stories like Taylor's aren't uncommon in Bozeman, a funky, college-kid and retiree paradise surrounded by soaring mountains. Bozeman Deaconess Hospital sits high on a hill outside town, cross-country ski trails circling it like lassos. Five years ago Deaconess, the lone hospital here, didn't own any medical practices. Since then it has gone on such a buying binge that more than half the doctors in town are on its payroll. Hathaway says the arrangement was eventually a godsend for him, letting him avoid the evening ritual of wondering whether his office could eke out enough funds to pay its overhead, and he disputes the notion that he saw his patients less. He acknowledges, however, that rising costs for patients were a troubling side effect. "It was the one thing I lost control of," Hathaway says wistfully.

With only 65 independent practices remaining in the area, doctors are being heavily wooed. One high-profile signing by UNC subsidiary Rex Healthcare: a 23-doctor cardiology practice. Rex executive director Bob Ricker says the expansion will save consumers money by creating efficiencies, like having doctos share billing staff.

Gordon Davidson, chief financial officer at Bozeman Deaconess, says that some price increases have been related to Medicare billing rules; he also says that the hospital's pricing has helped keep doctors from leaving Bozeman. While this isn't the first time that hospitals have tried to buy up doctors' offices, Boze-man's merger drama sheds some light on why the trend is picking up again now. Davidson says that Deaconess first started buying practices when cash-strapped doctors turned to the hospital for help; they did so largely because of Medicare, whose payments have been criticized by doctors for not keeping up with medical inflation. With the 2010 health care reform law aiming to trim $500 billion from projected Medicare spending levels, many doctors' economic anxiety is increasing.

But hospital executives also believe that buying doctors' practices could yield a big payday, thanks to a different provision in the health care law. The law will encourage doctors and hospitals to share some payments when treating each patient; as collaborative teams, they could earn bonuses for holding down costs and meeting quality markers. "The real question for everyone is how that pie—that money—is going to get split up," Goertz says; hospitals think they'll have the upper hand if they employ the doctors that they're sharing their banana crème with. And that's touched off a flurry of mergers everywhere—from Seattle to Roanoke, Va.

Hospitals are also scrambling to get a bigger share of one of the most lucrative arenas of medicine: outpatient surgeries. These options have become popular with patients because they're often cheaper and faster than hospital surgeries and boast lower infection rates (and often, better parking). Timothy Eckels, vice president for government relations at Hospital Sisters in Springfield, says the outpatient-care trend is one factor that jump-started his institution's acquisition boom: "We really could see the writing on the wall." One recent study by health care consultancy Sg2 predicted demand for outpatient surgeries will grow by 22 percent from 2010 to 2019, while growth for hospital-based surgeries will remain flat; another study showed profit margins at outpatient centers are five or six times as high as at hospitals.

Aurora is one of a few health systems that provide most of the health care in Milwaukee. According to independent research, insurers pay doctors here about double what they pay for the same care in Miami or Los Angeles, where large health groups aren't as prominent. Aurora says the system ultimately saves money by coordinating care.

Now that the acquisition spree is in full swing, some experts worry that price increases could become the dominant narrative for patients. When hospitals run medical practices, federal law allows them to add substantial "facility fees" to patients' bills to cover overhead expenses. The new bosses also often rip equipment like X-ray machines and MRIs out of the physician's office, preferring to have patients get those tests from radiologists at the hospital. That, too, can cost patients. A consumer with a high-deductible Aetna plan, for instance, would pay up to $1,400 for an MRI of her back at the University Medical Center at Princeton, N.J., according to data that the insurer makes available to its members. The same scan would cost about a third as much at nearby Radiology Affiliates of New Jersey, a nonhospital facility. Based on a review of insurance databases and state regulatory records, that's a fairly typical price gap. (Barry Rabner, president and CEO of the Princeton system, says the hospital's fees cover expenses like 24-hour staffing and caring for uninsured patients.)

Price increases also have the potential to bleed outward—affecting not only the patients of the absorbed doctor, but also the cost of health care citywide. That's because when hospitals sit down at the bargaining table with insurers, they're almost always able to negotiate higher payment rates for their big groups of doctors than a lone physician with little bargaining power. Fast-growing hospital systems, including Hospital Sisters and Bozeman Deaconess, say that their growth will eventually make care more efficient and bring costs back down, since they'll be able to cut back on unnecessary care and duplicate tests. But Robert Berenson, a fellow with the Urban Institute, a think tank, says the new relationship sets up a vicious cycle: Hospitals become emboldened to ask for 60 or 75 percent price increases one year, and then insurers have to step up premiums to cover costs. "Unless something major changes in how we pay for care," Berenson says, "this could be the Achilles' heel of our health care system."

For some patients, there may be an even bigger headache that comes from all of this consolidation—potentially much less choice in which doctors they see. By their own admission, most hospitals are eager to keep patient referrals under the same corporate umbrella, to save on costs and share medical records but also to boost revenue. The hospitals say they wouldn't force an internist, for example, to refer a patient with heart problems to their own cardiologists, but critics say there's certainly financial pressure. Under a little-noticed regulation that took effect in 2007, hospitals are allowed to pay doctors less if they don't do enough internal referrals.

Doctors in Bozeman and Springfield who granted interviews said they didn't feel pressure to be "team players" with referrals. But some of those who've left large health systems tell a different story, including Mark Callenberger, an orthopedist in Merritt Island, Fla. Callenberger says that the hospital group where he used to work urged him to direct more patients to the MRI machine owned by the hospital. The doctor preferred a more advanced machine at a private practice that he says offered clearer pictures. But after he ignored the recommendations, Callenberger says, the hospital told his office manager to schedule patients at the hospital's MRI anyway, leaving him to perform surgery using "crummy images." (The hospital declined to comment on Callenberger's case but says its doctors can use whatever facilities they choose.) Patients may never know about these power struggles, because doctors aren't required to disclose how they choose specialists. And while patients who ask can always see a specialist outside the network, in practice few are likely to challenge their doctors' judgment, says Bruce A. Johnson, a Denver health care lawyer. "Face it, when we're really sick," says Johnson, "if the doctor tells us to jump off a roof, we'll probably consider doing it."

This eight-hospital chain has recently gotten involved in contract tangles with major insurers in the area over its attempts to negotiate higher fees. A hospital spokesperson attributed the sleep-study discrepancy to the higher overall costs of impatient care; the hospital declined to comment further.

Sometimes the hospital and its doctor jump ship on the patient. As hospital groups get more clout and demand more money in negotiations with insurers, some employers and insurers are now showing a willingness to ax them out of their networks. When Kaiser Permanente went through contract negotiations for 2010, it couldn't reach an agreement with one hospital-owned, 400-doctor network in the Atlanta area, so it dropped them. For Stephannie Owen, a 42-year-old mother of two, that meant losing access to all her family's doctors. Owen, who was being treated for suspected breast cancer, says her primary-care doctor and breast-care clinic refused to keep seeing her, fearful that she'd be unable to pay her higher, out-of-network bills. "It was like they cut ties altogether," she says. "I was really upset and scared." Kaiser Permanente says it opened more clinics in the Atlanta area so consumers could see Kaiser physicians instead, but for Owen, that created some awkward moments. At one point, she says, she wound up being treated in an office in a strip mall.

As more patients face such disruptions, regulators are taking notice. In October, the Federal Trade Commission and the Department of Health and Human Services met with doctors, insurers and other health officials to discuss the referral and pricing problems that could arise from "accountable-care organizations"— those new groups of hospitals and doctors that will share financial incentives. The Federal Trade Commission will offer guidelines on what's permissible by midyear. But hospitals are already lobbying for accountable-care groups to be exempt from antitrust and antifraud rules, even as they scoop up more and more medical practices. Under current regulations, officials in Washington must green-light all mergers involving companies valued at more than $63 million. But by buying up tiny medical practices one at a time, critics say, hospitals stay below the threshold and avoid getting much attention. And by the time regulators settle on more-formal legal guidelines, those mergers may be hard to undo, says Cory Capps, a Washington economist specializing in health care antitrust issues.

With their expansion a sensitive topic, many hospitals have kept a low profile, declining to discuss their plans and encouraging their doctors to do the same. But in Springfield, the Hospital Sisters system is willing to give us a long, if somewhat stage-managed, tour. A brisk young executive who manages PR is glued to our side as we visit the office of Michael Nenaber, a primary-care doctor who made the switch a year ago. After he signed on, Hospital Sisters quickly moved Nenaber to this new facility. Outside, we find a giant blue sign that identifies the clinic as St. John's Health Center: Prairie Crossing—without mentioning Nenaber's name. Inside, the office is gleaming new, with a TV playing the History Channel in one corner of the waiting area and a crucifix in another. "I'd follow Dr. Nenaber anywhere," says Hazel Jenne, a 90-year-old patient waiting for her husband to be called in for an appointment. In a few months Jenne will get to test that theory again. Across the street a green and white construction trailer and a torn-up plot mark the clinic where Nenaber will be moving in March. Designed by the same architect, the PR manager tells us, it'll be a lot like this office—"but bigger!"

It's clear that transitions like these are sometimes rocky. Last spring Hospital Sisters tried to shift all of its Springfield medical offices to electronic medical records simultaneously. But there wasn't enough tech support to deal with all the problems physicians ran into on day one, and wait times spiked at the system's walk-in locations. Nenaber, a soft-spoken 64-year-old with wire-rim glasses, sounds acquiescent about the situation. "We're getting the hang of these things," he says slowly, sitting at his desk overlooking a gas station and a strip-mall parking lot. But his practice is still waiting for its electronic payoff: While other Hospital Sisters' doctors enthusiastically show off the iPads and iPhones they can use to access and share patient files, Nenaber has a sign tacked to the back of each exam room door urging visitors to "be patient" while he upgrades technology.

At Hospital Sisters, the role model everyone wants to emulate is the Advocate Health Care System in Chicago, a four-hour drive north of here on Interstate 55. That 13-hospital behemoth has been buying doctors' practices for more than a decade, and today it says its patients are healthier, thanks in part to efforts to get doctors to follow uniform guidelines when treating common ailments. Frank Mikell, chief physician executive for Hospital Sisters, says standardization can "make the patient experience dramatically better" through collaboration and a plethora of checklists. Executives here are also hoping to push the needle further—standardizing everything from how long patients wait on hold to the ease of parking at the doctor's office (valets, luxury-restaurant style, are one solution under consideration).

Still, Mikell acknowledges, "doctors don't want follow-the-directions, cookbook medicine." And for many physicians, the idea of following new rules triggers a much larger unease at giving up their independence—a feeling of loss, both for the businesses they built and for their patients. Back in Bozeman, Blair Erb, the sole cardiologist in town, is a picture of resignation as he prepares to sign a contract with Deaconess. "I feel defeated," Erb says, looking around at the office furniture he and his wife, Liz, chose from a catalog years ago. The weathered ranchers and bundled-up women that come through his door mostly express disbelief when they hear that this frank-talking Tennessee native will sell his practice. His staffers say they're not looking forward to the questions the hospital's medical records system will soon prompt them to ask patients. (Do you wear a bike helmet regularly? Do you have a smoke detector?) "We'll try to retain as much professional independence as possible," Erb says, gazing at the hospital building, whose bulk he can see through his window. "But the fact of the matter is, we'll have a new master."

Sutter Health, which recently absorbed a 900-doctor practice in San Francisco, holds considerable bargaining power: One study found that a stay at a Sutter hospital costs 37% more than the state average. A spokesperson says Sutter's prices reflect "other obligations and commitments," like building facilities to withstand earthquakes.

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US government sends healthcare funds to worried states

2011-02-25T09:57:00.002-05:00

* Grants will help states evaluate insurance rate hikes

* Other grants to help end smoking, increase exercise

* Kaiser Foundation finds some savings under plan

WASHINGTON, Feb 24 (Reuters) - The federal government on Thursday announced funding to help U.S. states evaluate health insurance rates and run preventive medicine programs, just as many state officials worry they cannot afford to carry out reforms included in the massive healthcare law.

Starting in August, states can apply for three-year grants worth $3 million to create or enhance their reviews of the premiums health insurance companies charge, said Steve Larsen, director of the Health and Human Services Center for Consumer Information and Insurance Oversight.

A year later, they can apply for a second round of two-year grants worth $2 million, Larsen told a conference call with reporters.

The federal government is also offering about $50 million of grants to help states with the extra workload that comes with increased rate evaluations and to reward states that have authority to block unjustified insurance rate hikes.

The healthcare reform law passed past year aimed to make the health insurance market more transparent. But surges in insurance rates caused the federal government to call for more scrutiny on how rates are set and for stronger oversight by states, which regulate insurance.

Many states could not afford to beef up their oversight or make information about insurance accessible, said Larsen.

"We are confident that states will have effective review processes. This absolutely helps them to get there," he said of the new grants.

They were announced on the same day the federal government said it will put $100 million into state efforts to prevent chronic health problems, with the hope of driving down the costs of covering those problems.

States can use the money to encourage those enrolled in the Medicaid program for the poor to quit smoking, eat better or exercise more, the agency said.

States are charged with carrying out numerous provisions in the plan President Barack Obama championed to help Americans afford healthcare. They also must establish insurance exchanges and expand the Medicaid program to include more people.

After the financial crisis and 2007-2009 economic recession caused historic revenue collapses in almost all states, many officials are worried they cannot cover costs of the reforms.

"States are concerned about the new costs that accompany their enhanced responsibilities, particularly as their revenues are only now beginning to to recover from very troubled fiscal times," the Kaiser Family Foundation said in a report released on Thursday.

"While all estimates show some new costs for states associated with the large expansion of Medicaid, the [healthcare law] also creates new savings and revenues for all states, along with opportunities for states to achieve further, often longer-term savings," it added.

The grant announcements come just days after the federal government said it would send states money to provide home healthcare to Medicaid enrollees.

Still, not all states believe they should have to carry out the reforms. More than half are challenging the law in federal court, saying it threatens individuals' and states' rights.

The Republican majority in the House of Representatives is also questioning costs put on states as members seek to repeal all or part of the healthcare law. The House Energy and Commerce Committee will hold a hearing next week on the law's impact on Medicaid and the states.

Kaiser said there were many areas where states can realize substantial savings and gains under the healthcare reforms.

For example, some individuals who have relied on Medicaid will instead buy their insurance from private companies through the exchanges and states will not have to pay for their healthcare.

At the same time, because many states tax insurance premiums, their revenues will rise as more people purchase insurance, it said.

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U.S. Retail Clinics Expected to Double by 2015, Could Partner With Health Systems

2011-02-18T10:21:00.001-05:00

The number of retail medical clinics in the United States could double by 2015, according to The ConvUrgentCare Market Report by Merchant Medicine.

There are currently 1,200 retail clinics in the United States and that number is projected to reach 2,000 to 2,500 by 2015 as health consumers seeks out lower-cost, more convenient primary and urgent care services.

Growth in the overall urgent care industry is expected to be only moderate. Today's 4,500 clinics are anticipated to grow to around 5,500 by 2015.

The future of retail clinics is expected to be greatly shaped by their relationships with hospitals and their role in accountable care organizations. CVS' Minute Clinic, which currently has the largest market share of all retail clinics, has recently announced partnerships with Cleveland Clinic, Minneapolis-based Allina Health and Catholic Healthcare West.

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Introducing…Massachusetts Health Care Reform, Part Two

2011-02-18T10:05:00.001-05:00

Let the history books record: On Feb. 17, 2011, Massachusetts officially launched Health Care Reform II, seeking to go where no state had gone before and stem the relentless growth in medical costs by transforming the system of health care.

Amid a sea of dark business suits this morning, Gov. Deval Patrick presented his plan to the Greater Boston Chamber of Commerce at the InterContinental Hotel (the proposed legislation is here). Speaking so emphatically that at one point his voice broke to a high note, he told the gathering:

“Universal health care in Massachusetts has been a resounding success, and rightly serves as a model for what’s possible for the rest of the nation, but it costs too much. Health care in Massachusetts is now universally accessible but it is not universally affordable.”

The governor will file a bill on containing health costs and transforming the system of payment today, he said, and also hold his first meeting with a “working group” of health care, business and other leaders on his plan. The bill was not yet available this morning but is expected to become public later today.

Patrick said his bill consists of four main pieces:

1. It proposes to provide a set of standards and benchmarks for the formation of Accountable Care Organizations and other alternative payment methodologies. (That is, ways to shift the system from “fee for service,” in which providers are paid for each procedure,” to a system of “global” or “bundled” payments that put a provider on a budget for a patient’s overall care.)

2. It empowers the commissioner of insurance to consider a wider array of factors when deciding whether to approve premium increases, including the underlying provider rates and how they compare to medical cost inflation. (Read: the state has more power to crack down on high premiums and costs.)

3. It creates an advisory council of stakeholders and consumers to monitor how payment reform is implemented.

4. The bill seeks to redirect the system of medical malpractice in favor of apology and prompt resolution, to deemphasize so-called defensive medicine.

An additional point: It sets up a new state office to act as a “one-stop shopping” point to help “innovators in the medical community” with pilots and other experiments. And the aim is for new-style health care organizations with incentives for healthier patient outcomes to predominate by 2015.

Overall reaction among attendees in the hubbub after the speech appeared largely positive, but this phrase kept popping up: “The devil is in the details” and the details aren’t clear yet. You can listen to some initial thoughts from health care leaders who were there this morning here, here, here and here.

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