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Wednesday, January 9, 2013

Health Care Reform Articles - January 9, 2013


Health Care and Profits, a Poor Mix

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Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.
Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.
Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”
This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.
A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.
These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?
From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.
Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.
We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

Growth of Health Spending Stays Low


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WASHINGTON — National health spending climbed to $2.7 trillion in 2011, or an average of $8,700 for every person in the country, but as a share of the economy, it remained stable for the third consecutive year, the Obama administration said Monday.
The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.
Federal officials could not say for sure whether the low growth in health spending represented the start of a trend or reflected the continuing effects of the recession, which crimped the economy from December 2007 to June 2009.
Kathleen Sebelius, the secretary of health and human services, said that “the statistics show how the Affordable Care Act is already making a difference,” saving money for consumers. But a report issued by the Centers for Medicare and Medicaid Services, in her department, said that the law had so far had “no discernible impact” on overall health spending.
Although some provisions of the law have taken effect, the report said, “their influence on overall health spending through 2011 was minimal.”
The recession increased unemployment, reduced the number of people with private health insurance, lowered household income and assets and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services.

Meals for medical clients back on the table

Drug companies are once again taking medical clients out for meals, a move that pleases restaurants and worries health advocates

By Sarah Shemkus

Bill Brady said he lost 20 percent of his restaurant sales four years ago after Massachusetts put in place stringent new rules preventing drug companies from taking doctors out for meals.
“It definitely had a major impact on our business,” said Brady, who owns Sonoma Restaurant in Princeton. “And the servers — it took a substantial amount of money out of their pockets.”
Last fall, however, the state relaxed the restrictions, and Brady, along with other restaurateurs, is counting on a return of the lucrative drug company business.
The ban, among the most restrictive in the country, took effect in 2008 and prohibited pharmaceutical companies and medical-device makers from buying physicians meals outside their workplaces. The goal was to prevent manufacturers from unduly influencing doctors’ decisions about what drug brands they prescribe.
But for some restaurants, the result was a drop in revenue, according to Stephen Clark, the Massachusetts Restaurant Association’s director of government affairs, who based his assessment on members’ anecdotes. Affected businesses, he said, ranged from upscale bistros to casual sandwich shops.
At Aquitaine Group, which owns seven restaurants in and around Boston, including Aquitaine and Cinquecento, the impact of the regulations was not immediately apparent, partner Jeffrey Gates said. A drop in business caused by the financial crisis initially masked the effect of the meal ban, he said. But when the regular diners started coming back, the medical meals did not.

Athenahealth to acquire app-maker Epocrates for $293 million

By Peter Burrows and Alex Nussbaum, Bloomberg
Posted Jan. 07, 2013, at 7:49 p.m.
WATERTOWN, Mass. — Athenahealth Inc., a provider of online services to doctors and hospitals, said it is acquiring Epocrates Inc. for about $293 million to gain a leading iPhone app and expand in electronic records.
Athenahealth is based in Watertown, Mass., but has an office in Belfast.
Athenahealth will pay $11.75 a share for San Mateo, Calif.,-based Epocrates. The cash offer, which exceeded Epocrates’ Jan. 4 closing price by 22 percent, was approved by both companies’ boards, the company said.
The purchase will help Athenahealth, which processes insurance claims and patient payments, expand a newer business for software used to prescribe drugs and keep patient records. It may benefit from name recognition for the Epocrates app, which as of August was used by 338,000 U.S. physicians to call up summaries on drugs, including side effects and interactions. Athenahealth estimates about 90 percent of doctors had heard of Epocrates, three times the recognition of Athenahealth itself.
“Capturing mindshare has been an uphill battle for Athena for years, and the addition of Epocrates to the platform is a step in the right direction,” Greg Bolan, an analyst with Sterne Agee & Leach Inc. in Nashville, Tenn., said in an email.
Athenahealth expanded its operations to Belfast in November 2007, claiming it could employ as many as 700 people. It moved into the 130,000-square-foot complex originally built by MBNA.
As of March 2012, the company employed 400 in Belfast, but was looking to hire 80 more. At the time, the company was growing its Belfast workforce by 100 people a year, a company spokesperson told the Bangor Daily News.
Shares of Athenahealth rose 2.2 percent to $77.99 at the close of New York trading Monday. Epocrates surged 21 percent to $11.68.
The deal will add to Athenahealth’s earnings in 2013, said Chief Financial Officer Tim Adams. The company expects “limited growth, but respectable synergies” from combining the two, he said, declining to be more specific.


Many doctors prescribe pricier drugs than needed, study finds

By John Fauber, Milwaukee Journal Sentinel
Posted Jan. 08, 2013, at 10:12 a.m.
MILWAUKEE — More than a third of doctors said they prescribe brand name drugs simply because patients ask for them even when cheaper generics would be appropriate, according to a new study.
The practice, which can contribute to higher health care costs, was found to be more likely among doctors who received free drug samples or free food from drug companies or who had financial relationships with drug companies.
“It is a classic measure of waste in medicine,” said lead author Eric Campbell, an associate professor of medicine at Harvard Medical School.
The paper, published online Monday in JAMA Internal Medicine, involved a national survey of about 1,900 doctors from a variety of specialties.
A total of 37 percent of doctors said they sometimes or often prescribed brand name drugs if patients asked even if an equivalent generic was available.
If drug companies provided food or beverages at the workplace, 39 percent of doctors prescribed brand name drugs when patients asked, compared with 33 percent of doctors who did not get free food. If drug companies provided free drug samples, 40 percent of doctors prescribed brand name drugs, compared with 31 percent among those who did not get free samples.
Also, 40 percent of doctors who said they stayed up to date by meeting with drug company representatives prescribed brand name drugs vs. generics, compared with 34 percent of doctors who rarely or never met with drug reps.
The findings confirm what many people suspected, said Eric Cohen, a kidney specialist at the Medical College of Wisconsin and Froedtert Hospital.
“It makes perfect sense,” said Cohen, who was not a part of the study. “Even the smallest gift will sway someone’s opinion. They (drug companies) don’t do it out of the goodness of their heart.”


Feds approve LePage cuts to health care for low-income Mainers

The federal government's split decision preserves health coverage for some, but will reduce or eliminate coverage for up to 20,000 low-income Mainers.

AUGUSTA — More than 20,000 low-income Mainers will lose health care coverage on March 1 because of Medicaid cuts sought by Gov. Paul LePage and approved this week by the federal government.
The U.S. Department of Health and Human Services issued a split decision on the LePage administration’s plan to eliminate health insurance for about 37,000Medicaid recipients and save more than $20 million in state spending.
In letters sent Monday to Maine’s Health and Human Services Commissioner Mary Mayhew, the Obama administration approved a request to eliminate coverage for 12,592 working parents whose earnings are 133 percent to 200 percent of the federal poverty level – $30,657 to $46,100 a year for a family of four.
It also allowed the state to deny or reduce Medicaid health care and prescription drug coverage for 8,250 elderly and disabled adults in the Medicare Savings Plan. About 2,600 of those people will lose all coverage under the Medicare Savings Plan and Drugs for the Elderly programs, Mayhew said.
The federal waivers are considered unusual, if not unprecedented.

Health care expert may run for Mass. governor

By Noah Bierman and Michael Levenson

A former Obama administration official whose nomination to a powerful health care post was derailed by Senate Republicans said Tuesday that he is strongly considering a run for governor in 2014.
If he decides to run, Dr. Donald M. Berwick would follow a path charted by Elizabeth Warren, who began her term as senator this week, two years after her nomination to lead a federal consumer protection agency was shelved amid Republican opposition.
Berwick ran the Centers for Medicare & Medicaid Services and is one of the nation’s leading ­experts on health cost and quality. Obama installed him using a ­recess appointment in 2010, but Berwick resigned in late 2011 when Republicans made clear they would strongly oppose his confirmation. At the time, the height of the national debate over Obama’s health care overhaul, Republicans accused ­Berwick of wanting to ration services, a charge he called a mischaracterization.




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