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Health Wonk Review Is Up

It is a drizzly gray day here in New York. The perfect weather for a good cup of coffee or cider and the Falling Leaves edition of the Health Wonk Review hosted by Louise at the Colorado Health Insurance Insider. Go grab that warm beverage and give it a read here.

 
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Posted by on October 23, 2014 in Uncategorized

 

8 Things CFOs Must Know About Health Reform

Whether a Chief Financial Officer is running the fiscal operations of a hospital system, an insurance company or a company that simply employs individuals with health coverage, the decision-making process for sustainability is changing at a rapid pace. However, after years of hearing about reformation in the health system, broad, sweeping and revolutionary changes are finally happening. Major shifts are also occurring in the population, as well as technological advances that will disrupt the entire premise of a four-walled institution for care and the very model we use for health delivery.

Health care in the US is a business – a multi-billion dollar business – and understanding the financial implications of health reform will make or break every CFO. Knowing that health access, demand, quality and payment changes are inevitable there is an immediate need for CFOs across the ecosystems to embrace and plan for transformation.

  1. You have too many beds.
    While many hospital leaders won’t accept this at face value due to lengthy wait times, surgical demands and desire to shift beds, the truth is there are too many beds in a lot of hospitals. Between transferals to the outpatient setting and telemedicine, the need for expensive inpatient beds is declining. Additionally, hospital leadership are increasingly finding that they face problems with state authorities when they apply to move beds. Most recently at the University of Chicago, where 338 beds were being used for a 304-person utilization pattern, the state rejected a University application to move surgical beds.
  2. Food, housing and transportation of patients is your problem.
    As Americans begin to define and attempt to tackle community and population-based care, the access individuals have to quality food, affordable housing and efficient transit matter.  No one living in a food desert will have the same health outcomes as someone living next door to a Whole Foods, just as an individual with a new car will always be more consistent in making appointments and picking up prescriptions than someone who has to access three public transit buses for the same activities. Real patient engagement and activation begins with understanding the environment of each patient.
  3. Your patient demographics are shifting, and so too should your leaderships. As the US continues to brown, hospital leadership must be representative of the population to understand and meet need. At a recent Modern Healthcare Top 25 Minority Executives session, an awardee remarked that the United States is now a country of minorities, and “our leadership as minorities is our future for health outcomes.” With this in mind, it is inevitable and paramount to success that the leadership of any organization resembles and represents those it serves, so it makes the financial investments and decisions that influence the community.
  4. More bodies in beds will never work again.
    Value-based purchasing means that a warm body in a bed not only drives costs higher for the payer, but that the longer a patient remains in the hospital – or the more often they return – the more penalties that accrue. Therefore, the goal should not be for more bodies, but for cost-effective bodies. Depending on the community serviced, this can mean desire for more Masters Athletesspecialized services or elective services. Additionally, as we shift to a world where technology enables more clinical procedures and recovery to be done in the outpatient setting, or at home, and expensive inpatient procedures decrease in volume and reimbursements, hoping to fill beds is futile.
  5. Alignment with physicians is nonnegotiable.
    No leader can effectively attain a goal without buy in from those who carry out the work.  However, it is important to be aware that “physician alignment” is a term that causes almost all physicians to turn and walk the other direction out of fear that this indicates buying their autonomy and dictating their day-to-day, moment-to-moment ability to practice. According to Healthcare Financial News the implications of physician behavior are so important in 2014 that more revenue than ever will be spent recruiting physicians who see the world the same way you do, which is not very different from how corporation CFOs think about their employee hires.
  6. As consumers take on more and more pay responsibility, unexpected payment shifts will keep occurring.
    Many experts estimate that defined contributionhealth insurance exchanges and the growing individual health insurance market means that patients will become more informed about spending their health care dollars, and therefore, more unwilling to spend. The future of reimbursements and pricing strategies is presently a puzzle wrapped in an enigma because of extreme uncertainty. However, it is general knowledge that Medicare and Medicaid reimbursements are going to continue decreasing, with the American Hospital Association and Moody’s already estimating an, “unequivocally negative” outlook for hospitals on the reimbursement fronts.
  7. Technology and data utilization can save you money.
    While the learning curve with new technology can be excruciating and the meaningful utilization of collected information seems daunting, everything from workflow to health activities and employee/patient engagement can be monitored – and altered in real time – using new technology. Moreover, the more information that is known today, the better predictive analytics and behavioral change that can be made tomorrow. However, as the amount of technology available to leadership continues to grow exponentially, the purchasing of new tech will be a balancing act between what is a passing fad versus what is sustainable and transferable.
  8. Your EHR is going to cost you. Big time.
    Now this seems obvious to most hospital CFOs, as they have already seen the initial price tags that come with implementing a “holistic” electronic system. However, the most costly elements may not yet be realized. As mergers and acquisitions continue, technology advances and EHR capabilities increase, the need to refresh systems will continue.  At present there is not one system that meets end-to-end patient or provider needs, leaving the ecosystem open for further disruption, which inherently includes more interoperability, more upgrades, more plugins and more costs.
 

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Health Insurance Benefits – Can You Have It Your Way?

As the percentage of large employers that consider a shift to defined contribution and/or private exchange increases, the number of options – and flexibility in those options – must also increase. Consideration for those options rose last year from 14% to 18% among large employers (500+ employees). Further, those who are considering the move to a private exchange want to because of their desire to offer more and better plan options, as well as realize cost-savings. Shifting to the defined contribution framework allows employers to moderate their subsidies to employees, and employees to make better trade-offs among plan options. Additionally, by increasing choices, defined contribution makes it easier for employers to integrate their health incentive and wellness programs by layering them “on top” of the defined contribution.

With this economic opportunity in the market, it is imperative that health plans and enrollment become more tailored to individual and company needs, in addition to the one-size-fits-all solutions of the past and present.

Private health exchanges, according to bswift, like their new Springboard Marketplace, could be the platform to give consumers that greater choice and increase individual decision-making. Given that most large employers who are considering a defined contribution will remain self-insured, bswift is taking a calculated gamble that employers will continue to invest in cost management solutions such as incentives, wellness programs, consumerism as opposed to simply shifting costs to employees under the “fix it and forget it” cost sharing approach suggested by some competitors.

Customize Your Cart

The Springboard Marketplace that bswift has created has the online functionality healthcare.gov could only have dreamed of, and the choice construction of a grocery store.  In fact, the terminology the company uses alludes to “Stocking the Shelves” with your benefit choices and “Shopping” for your ideal group of benefits. This is all done through the interactive benefits advisor, Emma, who walks employees through an online step-by-step process to fill their cart with health care options.

For those aware of bswift’s background as a tech company it may not be a surprise that the software and services offered are aimed at streamlining a very sophisticated system, and making the user experience easy. And for those that know the company’s Executive Director of Exchange Solutions Brad Wolfsen, the shopping experience and ease of transition into a new set of consumer options will easily resonate. Mr. Wolfsen, before joining the team, built and led Safeway’s wellness and retail strategy programs, and was the President of Safeway Health.

According to Mr. Wolfsen, the real benefit he sees to bswift’s products are that they, “allow employers to focus on equity for employees and shift to a retail view on providing health benefits.”  Or, as the Society for Human Resource Management labels it, From Parenting To Partnering.

New Plans Equal New Decisions

With a growing demand for health benefit options that resemble a choose your own adventure book, but with a set amount of money to spend, the development of software must also be functional for employers and employees. The Springboard Marketplace has been constructed so that functionality can simply be turned on and off, so that choices are simplified. Additionally, since there is not a standard approach to benefit choices and many legacy systems that have to be revamped due to mergers, acquisitions and partnerships, greater automation for employers means less paperwork for HR departments. By making workflow, reporting and administrative work more efficient through automation, cost-savings increase even further.

“The best and brightest clients are currently driving what is in the bswift system now,” says Mr. Wolfsen. “As we move towards expanding the suite of benefit options and meeting compliance standards, we are also investing in the shoppers experience.”

He, along with his colleagues at bswift, believe that their tech company is nimble in ways that others are not, and that with the help of their platform and Emma, more and more employers will begin the migration to defined contribution and private exchanges. If true, that growing shift could redefine how health benefit decision-making is done by employees in the future.

 

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Balance of Power

In researching a novel I am writing I have been reading about the history of the treatment of depression.  As often happens, I ran into an historical issue with echoes of the future.

Here’s an interesting paragraph from Howard Kushner’s book American Suicide.

“While asylum superintendents [in the 1840s] were as much captive of bourgeois ideology [the conviction that the insane could be reformed and that the suicidal could be cured] as were other social reformers, they were influenced on a daily basis by more parochial concerns.  Not least of all, these men sought stable employment in the medical profession at a time when, buffed by competing medical sects, medicine promised neither prestige nor a regular income.  A career as an asylum superintendent offered a solution to the contradictions between humanitarian desires to help others and a quest for economic security.  Like most professionals then and now, these asylum physicians saw no conflict between an increase in their professional power and the improvement of the condition of the patients they served.  Indeed, they viewed the former as essential for the latter.”  (Bold letters are my addition.)

Let’s look at that second-to-last sentence.  Professional physicians see no conflict between increases in power and the improvement of patient condition.  Conflict may not be quite the right word.  Maybe correlation is a better one.  Professional physicians see correlation between increases in power and improved patient condition.  Up to a point the statement is historically accurate.  There was no conflict in the eighteenth and early nineteenth centuries because as trained doctors from legitimate medical schools began to have more influence than the untrained barber-surgeons and apothecaries, patient health did get better.  Education and science eventually led to treatments that truly helped people.  This resulted in a medical profession which, unlike that of 1840, had great prestige and good income.

Since those early days of medical professionalization, however, power has shifted.  The turn away from paternalism toward autonomy has shifted the balance.  Regulation, legislation, and an omnipresent media have shifted it further.  Power, which used to be in the hands of doctors, for better or worse, is now in the hands of regulators, administrators, and the patients themselves.  The question is, does the decrease in physician power correlate with a change in the health of patients?

The answer, of course, depends on who you ask.

You could ask Timothy Quill and Howard Brody, who would tell you they doubt extremes of patient power increase the well-being of patients.  In 1996 they wrote the following in the Annals of Internal Medicine: (Ann Intern Med. 1996;125(9):763-769)

“At one extreme end of this [patient autonomy] spectrum is the “independent choice” model of decision making, in which physicians objectively present patients with options and odds but withhold their own experience and recommendations to avoid overly influencing patients. This model confuses the concepts of independence and autonomy and assumes that the physician’s exercise of power and influence inevitably diminishes the patient’s ability to choose freely.”

You could ask the Physician Regulatory Issues Team at CMS, which claims that the power of regulation, in the form of government money, improves the condition of patients:

“Physicians have a special role in our health care system, as they not only care for the health of individual patients, but also help to shape the broad health care delivery system. As the federal Medicare agency, CMS respects the bond of trust between physicians and their patients, and appreciates the need to support physicians in the leadership they provide in service delivery. The Medicare program and physicians share a common mission, the provision of high quality medical care for patients.” (http://www.cms.gov/Outreach-and-Education/Outreach/PRIT/index.html?redirect=/prit/)
You could ask Drs Bell, Wilkes, and Kravitz, who may say that the power of advertising is not improving anyone’s condition.  They found that “A sizable fraction of patients believed they would react negatively if their physician refused to provide a prescription for a drug advertised in the general media.”  The Journal of Family Practice [1999, 48(6):446-452]
You could ask Louis Goodman and Tim Norbeck of Forbes, who would probably say that regulations are not increasing patient health.   “…Physicians are already spending 22 percent of their time interacting with insurers on formularies, claims, billing, credentialing, pre-authorizations, and quality measure data.  The workload can only increase with the new [ICD-10] codes.” http://www.forbes.com/sites/physiciansfoundation/2013/11/05/healthcare-is-turing-into-an-industry-focused-on-compliance-regulation-rather-than-patient-care/

You could ask the people of Florida, where doctors abuse their power of the prescription pad.  They would say that absolutely, regulation has improved the condition of patients.  An article in the New York Times reported that “New laws are also cutting off distribution [of prescription painkillers]. As of July, Florida doctors are barred, with a few exceptions, from dispensing narcotics and addictive medicines in their offices or clinics. As a result, doctors’ purchases of Oxycodone, which reached 32.2 million doses in the first six months of 2010, fell by 97 percent in the same period this year.” http://www.nytimes.com/2011/09/01/us/01drugs.html

Balance of power is important in health care, just as it is in government and marriages.  No one will argue that giving physicians full power to do anything they want is a great idea.  But we need to be careful about how much power we take away.

 
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Posted by on October 9, 2014 in Debates, Legislation, Physicians

 

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Billy Wynne Hosts Latest Health Wonk Review

Billy Wynne of the Healthcare Lighthouse blog hosts the latest edition of the Health Wonk Review. And, in a new first–literally–a post from Wright on Health is batting in the leadoff spot–just in time for the baseball playoffs to get started!

 
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Posted by on September 25, 2014 in Uncategorized

 

The Most Interesting Man Revolutionizing The Health World

He wrote his first world-renowned book at the age of 26. On weekends he recites love poems (ghazals) on Voice of America. He casually – and humbly – references his more than 70 patents that range from aging wine to chewing gum to bioreactors to air scrubbing systems at his infamous Chicago wine parties. And his mustache rules his twitter feed. In 2013 he was awarded the Star of Distinction, the highest civil award by the Government of Pakistan, for his inventions that are making significant impact in developing countries. He has written over 50 books, well over 100 research papers, and hundreds more articles in the field of science, philosophy, rhetoric, poetry and religion, drawing thousands of hits per day on his blog. Dr. Sarfaraz Niazi might just be the most interesting man in the world, but he is certainly the most interesting man pursuing biosimilars in the United States.

Throughout his career his driving principle has been to make things simpler. He did this while at Abbott Labs, as a former tenured professor at the University of Illinois at Chicago (UIC), in developing countries, and presently in his independent career at Therapeutic Proteins International, LLC (TPI) where he is working on biosimilars – or “copies” of current biologic pharmaceuticals that are about to lose their patents. Although only 17 biosimilars have been approved to date worldwide, though none in US, Dr. Niazi and TPI have nine in the pipeline to transform the entire market.   According to photographer Steve Huff, Dr. Niazi is, “An amazing man, in fact the most interesting man in the world!”

Flexibility Is Key To Innovation

When asked his advice to other inventors in a recent interview, Dr. Niazi explained his philosophy that, “You should never get enamored by your thoughts. If the idea does not solve a problem or move the quality of life farther, there are many more things to be invented.” With that mentality, he is filing two products this year alone, similar to Amgen Inc.’s $6 billion molecule white blood count product, due to its expiring patent in the cancer market. Next year, the two molecules he plans to take to market are similar to AbbVie’s expiring $12 billion product Humira.

With movement like that, it’s no wonder Dr. Niazi claims that the U.S. Food and Drug Administration (FDA) is his “friend.”Nevertheless, he notes extreme complications with the rolling submission model, which can cost up to $4 million per submission in fees alone. Additionally, the four levels of the FDA’s “analytical similarity” benchmarking can be troublesome if one has a new biologic entity. This benchmarking, however, allows scientists and the FDA to work together in a predictable, step-wise fashion to move products to market quickly that have fingerprint-like similarity to existing US-licensed biologic products.

Dr. Niazi’s strategy is to create an analytical and clinical equivalent to biologics with expiring patents, which is preferred even over a Phase 3 clinical trial. By doing this, the cost of production is reduced drastically and the speed of development increases by 2-3 times. Dr. Niazi estimates an overall reduction in production costs for his biosimilars of up to 50% or higher compared to market competitors.

By being flexible, his products are proving to be bio-revolutionary.

Can The United States Catch Up?

Additionally, thanks to the Affordable Care Act (ACA), a shorter licensing path for lower-cost versions of cell-derived drugs is now possible, giving inventors like Dr. Niazi another pathway for approval and distribution.

While he claims that the ACA will not reduce health costs, he does believe that independent shocks to the health market will. By this, he believes that making biosimilars easier, faster, cheaper and better translates directly into his mission of making all things simpler. Further, cost-effectiveness in the US and European Union (EU) can directly convert into worldwide distribution and scalability that is safe.

Although a friend of the FDA, Dr. Niazi is not hesitant to note the tough decisions US-based companies face to stay in the states. Having FDA approval carries weight around the world, but the financial and regulatory burden can be great for inventors and business owners. In contrast, he asserts that the EU has moved ahead of the rest of the world, with the most established and advanced regulatory framework for the authorization and marketing of biosimilars, which has since been adopted by the World Health Organization (WHO).

Additionally, Dr. Niazi says that it is difficult to raise money in the US. Venture capitalists and corporate investors are less likely to take risk and have notoriously poor track records with the health sector

Investing In The Windy City

In 2003, the TPI founder committed that his work and company would stay in Chicago.  He believed that from creation to manufacturing and testing to going to market, that TPI would excel in the Midwest due to Chicago’s health care ecosystem, experts and manufacturers.

Through a focus on creating “generic equivalents,” Dr. Niazi is proving that TPI can be wildly successful in the Midwest, and further, that in the same way generics revolutionized how people access pharmaceuticals, biosimilars can revolutionize the way those around the world access lifesaving treatments.

As his biosimilars enter the market with FDA approval, the ability of Dr. Niazi to impact the entire health sector grows because his biosimilars can be substituted for its reference product without provider or patient intervention. However, the FDA has not yet finalized these guidelines, and only 17 biosimilars have been approved internationally to date, of which none are by the FDA.

Ultimately, with numerous billion-dollar biologics coming off patent over the next six years, and the exorbitant cost for specialty drugs, the nine biosimilars TPI has in the pipeline stand to make a huge impact in the health sector. While Dr. Niazi could be doing many interesting things these days as an international man of mystery, he has devoted his research, time and energy to bringing high quality, cost-effective treatments to the US, and beyond. So long as he maintains his wine parties and poetry readings, its certain no one will complain.

 

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Expanding Insurance May Not Mean Long Lines and Trouble Seeing the Doctor

When health reform made it on the agenda in 2008-9, it took almost no time to hear the old familiar line that government-run health care will mean rationing, with crowded waiting rooms and the dreaded prospect of it taking months or years to get seen by the doctor or have an important surgery performed. It didn’t matter when Brits and Canadians chimed in to say “Actually, it’s not like that here at all.” Americans succumbed to the combination of logic and fear. The logic is apparent: If more people have the ability to go to the doctor, and there isn’t suddenly a corresponding increase in doctors, then either doctors are going to have to see more patients in less time (potentially reducing quality), or patients are going to have to wait to be seen (and we don’t like to wait). Given my parenthetical explanations in the preceding sentence, do I even need to elaborate on the fear aspect?

There’s just one important question: Is that really what will happen? This is where the good folks at Harvard who do health policy and health services research are so lucky. In Massachusetts, which basically implemented ObamaCare at the state level years before ObamaCare came into being, we have a nice policy laboratory to investigate this question. That’s precisely what Karen Joynt and colleagues did, as they report in a recent article in Health Services Research.

The very short version of what they did is this: Using Medicare data, they looked to see if people with chronic diseases like diabetes and hypertension had fewer outpatient visits to the doctor after the Massachusetts health reform was enacted, compared to the number of visits they had before the reform. They also looked at some quality metrics in the same way. That is, did the patients get the treatments we know they are supposed to get? And they also looked at health care costs. The cool thing about this is that they were able to use patients in other New England states that didn’t have health reform as controls. That means that their study design is really able to attribute any changes they see in Massachusetts above and beyond what they see elsewhere in New England to the health reform in Massachusetts.

The very short version of what they found is this: There was no decrease in health care visits or health care quality in Massachusetts because of health reform, but there was an increase in costs. Now, there are some limitations to what they did, but the authors acknowledge these nicely. The biggest issue is that Massachusetts had a low rate of uninsured persons to begin with, so their health care system was less flooded with newly insured than other places–like Kentucky–might be thanks to the ACA. The other big issue is that the study only examined the Medicare population age 65 and up, so we have no idea if the under-65 disabled Medicare population and everyone else may have experienced issues getting seen by a doctor. Still, despite these limitations, the study offers a ray of hope that our health care delivery system is responsive enough to adapt to an increase in demand without making us suffer lengthy waits to be seen for outpatient care, and that the ACA may well end up doing more good than harm.

 
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Posted by on September 23, 2014 in "Rationing", Recent Research

 

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