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                    Thanks to Ali J for permission to use this Photo.

Health 2.0, like its’ older cousin Web 2.0 and uncle Web 3.0, is getting more and more attention. My colleague Bonnie Andersen pointed out the December 11 Modern Healthcare article, in which the magazine describes the three most important principles of what a Health 2.0 company or application is. 
 
The first principle is the software of a Web 2.0 company has to be Web-based, has to provide a service and that service has to be structured  so that the more people use it, the better it becomes. An example is eBay; as more and more buyers and sellers participate, the broader the eBay  market becomes, which creates more value to the customer. 
 
The second key principle is “harnessing collective intelligence,” which  also is referred to by others as “the wisdom of crowds.” To avail  themselves of this wisdom, Web 2.0 developers must create applications that  are dynamic, with user participation designed into the systems, so that  participation itself becomes an integral part of making the underlying  database more valuable. 
 
The third principle, “Data is the next ‘Intel inside,’  notes that  specialized data, enhanced through analysis performed by the service  provider as well as by the contributions of service users, becomes the core  asset of a Web 2.0 company. Amazon wish lists, for example, are aggregated by Amazon and used as buyer’s guides.
 
Matthew Holt of the Healthcare Blog and co-founder of the Health 2.0 conference is looser in his definition, placing the qualifying emphasis on whether the service or application promotes the healthcare experience as an “ongoing process” rather than a “series of episodic events.”

(more…)

                 Thanks to Gianni for permission to use this Photo.

Daniel Carlat, of the Carlat Report, has an article in the New York Times Magazine.  It’s six pages long, and decidedly anti-Pharma.  But Daniel Carlat isn’t from New York– so why would he have an article published there?

You say: well, where he’s from has nothing to do with it, the New York Times is publishing it because of what he says.

Exactly.

His article, well written and persuasive, stands as is, undisputed because there is no forum in which to dispute it.  I guess it would be nice if the Times would allow me to write an op-ed– you know, in op to the ed– but I guess this blog will have to do.

Carlat is wrong, very wrong, not because he is factually incorrect about his target, but because his target is a straw man.  The problem isn’t Pharma.  It’s doctors.

The article, called Dr. Drug Rep, chronicles his introduction into the world of lecturing for drug companies– a company hires you to give a talk about a topic or drug to a bunch of doctors– and the effects of the lecturing on doctors and himself, and then his pulling out.  For context, Carlat is a fairly famous psychiatrist blogger who is both a sort of watchdog of Pharma, as well as a source of information about psychiatric drugs. 

The general message is that Pharma softly manipulates doctors to act as proxy drug reps, which in turn lends credibility/celebrity endorsement to the Pharma message, and thus influences other doctors to prescribe the medicine.  Ok, I hear you.  I have no beef with Carlat, his point is not unique.

But break it down:

So we don’t want doctors lecturing about the drugs.  Okay.  Well, who do we want?  More reps?  Here’s where it all falls apart, and I defy anyone to contradict me: doctors aren’t studying these drugs on their own. (more…)

 
                Thanks to supergiball for permission to use this Photo.

On the surface, it seems that American voters have made their will clear.  Poll after poll shows that they are calling for a major overhaul of our health care system.  But when you look closer, their responses bristle with contradictions, contradictions that I think the reform-minded presidential candidates will have to consider when deciding how to approach health care reform. 

In a poll reported in Health Affairs at the end of last year, sixty-nine percent of respondents rated the US system as “fair” or “poor.” Yet in the same survey, when asked about their own experience with receiving medical services or with their own physician, 80 percent who had received care in the last year ranked their care as “excellent” or ”good.”  Other polls reveal the same pattern.

According to a survey released by Greenberg Quinlan Rosner in July, voters express doubts about the quality of the American health care system (with 49 percent dissatisfied), while 74 percent were dissatisfied with the cost.   Yet, “at another, more personal level,” the pollsters note, “a slightly different picture emerges. Fully eight in ten (82 percent) describe themselves as satisfied with the quality of the health care they receive personally. This number jumps to 90 percent among seniors (64 percent very satisfied), but includes impressive majorities of nearly all groups…”

Nevertheless, when the pollsters asked the same group about health care reform, three-quarters called for “major changes” or “completely rebuilding” the system.  If they are satisfied with the care they are receiving, why would they want radical change? Because they don’t feel secure that they will be able to keep what they have:  “There’s a precariousness to Americans’ contentment with their own health insurance coverage,” the Kaiser Family Foundation reported after looking at a number of polls at the end of last year.  “Among the insured, six in ten are at least somewhat worried about being able to afford the cost of their health insurance over the next few years, and nearly as many (56 percent) said they worry that by losing a job, they or their family might be left without coverage.”

This, then, is why so many Americans want universal health care: it would guarantee that they and their families would always be covered. (more…)

As any policy-maker knows, catering to public opinion, ensuring the public interest, and managing costs can seem an impossible task–especially when what the public thinks it wants is at loggerheads with what it needs. But in the case of health care, there may be an opportunity to do all three at once according to a proposal in the September/October Health Affairs.

The proposal argues for cost-effectiveness analysis (CEA) “to set priorities for Medicare coverage of new or costly interventions” through a citizens’ council made up of “a cross-section of users” who can provide leadership with “well-considered social-value judgments.” This citizens’ council model is borrowed from the UK, where a group of 30 men and women advise the National Institute for Health and Clinical Excellence (NICE) on behalf of the public.

The British experience shows that there are likely to be practical complications with implementing a citizens’ council, but it’s still an idea that’s on the right track. We need to turn “cost-effectiveness” from a bad word into a public interest issue in the US.

The authors of the proposal, Dr. Marthe Gold from CUNY, Shoshanna Sofaer from Baruch College, and Taryn Siegelberg from CUNY, envision the American citizens council as being an advisor to the Medicare Evidence Development Coverage Advisory Committee. The council would advise on the criteria for CEA—in other words, how to decide whether the effectiveness of a new intervention justifies its cost, and thus warrants coverage under Medicare. Issues to be deliberated would include: How should we assess weigh factors such as a patient’s level of suffering or disadvantage, behavioral choices, and age when making a decision? How effective must a treatment be to warrant coverage? Should we give a higher priority to preventions or cures?

These are profoundly difficult questions to answer definitively, particularly for members of the general public who lack medical expertise. As the authors note, information is a major concern—the council needs to know enough to function effectively. 

Unfortunately, striking the right balance between information/education on the one hand and deliberation/ autonomy on the other has proven difficult. A 2005 study from the Open University showed that the UK citizens council has “struggled less than successfully with understanding its role…and understanding the questions set.”

The council, caught between being the voice of the people and needing to understand complex health care issues, often lacks the right mix of “knowledge base, role, authority, and the design of the social situation.” It’s not always clear where the council fits into the decision-making process, in part because the council is expected to simultaneously learn about issues and comment on them.

                   Thanks to Jim for permission to use this Photo.

Because of these difficulties, NICE pays “more attention to the process than the product [i.e. citizens’ advice] and the way in which that product would be used.” Procedure trumps output. As a result, the citizens council is sometimes relegated to “abstract core tasks”—such as issuing general declarations rather than providing substantive guidance—a pattern that incurred the wrath of patient advocates who called the council a “toothless tiger.”

Anyone who wants to understand 21st century health care faces a steep learning curve. Balancing public input with the expertise and nuance needed to provide meaningful guidance is a tricky business, and the challenge of doing so should not be underestimated.

Still, the UK citizens council has only been around since 2002, and the Open University report notes that with every installment of the council, more and more kinks are worked out. And even if public input in health priorities represents a challenge, it’s by no means a fool’s errand.

Conventional wisdom assumes—without proof, as Gold et al. note—that Americans do not want to discuss health care costs because they view cost-cutting as a synonym for quality-reduction. But the absence of CEA in the US is due more to a lack of conversation rather than to resistance.

Polling data shows that Americans are ready to talk about cost. Indeed, it’s hard to argue that cost is a non-starter when the public views it as the nation’s most important health care problem. Back in 1999, Americans thought AIDS and cancer were bigger concerns, but today it’s the cost of health care that keeps Americans up at night. The average American is just as worried about cost as is the policy wonk, making now the perfect time to institutionalize a role for the public in cost management.

Requesting public inputs while setting health priorities can begin to demolish the misconception of “more care is better care” that conflates cost-effectiveness with stinginess. By opening the insular world of cost management to public priorities, we defuse the possibility of Americans viewing CEA as a means to “cheat” them out of care.

Will it be a bumpy ride? Maybe. But if democratizing cost-effectiveness helps the US move toward smarter, more sustainable health coverage, then it’s worth the effort.

Maggie Mahar
Creator of Health Beat
Ashworth University Contributing Blogger

*Maggie Mahar is a fellow at The Century Foundation and the author of Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper/Collins 2006) and Bull! A History of the Boom, 1982–1999 (Harper/Collins, 2003), a book that Warren Buffett recommended in Berkshire Hathaway’s annual report.  We would like offer our gratitude to Maggie Mahar for granting us the opportunity to share her brilliant perspectives with the AU student community.  Visit’s Maggie’s blog, Health Beat, for some of the best healthcare analyses on the Web.

So once again I’m in the weird position of having to defend something I’m actually against. 

The latest is from John Edwards, et al. Here’s the headline: Edwards unveils plan to control drug advertising.  Read that sentence, and decide what you think the intent of the plan is.  Is he talking about controlling the colors of the ads?

Most likely, you think it’s the effect the ads have on drug prices.  “The excessive costs of prescription drugs are straining family budgets and contributing to runaway health care costs…”

Let’s temporarily grant that that this statement is true.  What is the link between advertising and prescription drug costs?  Is he saying that spending on ads increases the price of drugs?  That would be wrong, and I have to believe he knows it.

First, Pharma spends about $4b on DTC ads.  It has yearly sales of about $200b, so even if every penny spent on ads was instead used to lower the price of the drugs, no one would actually notice.  Additionally, prices of branded drugs rise about 6%/year, regardless of how much they spend on ads.

Second, we should probably define “drug prices.”  If I roll into a pharmacy with a prescription and choose to pay cash, how much will it be?  The answer, as it turns out, depends on the pharmacy.  These are retail prices, that pharmacies charge no-insurance cash payers; on average, 15% more than insurance rates. But let’s be honest here: cash payers can’t afford a lot of these medications at any price.  If you’re one of the unfortunate working poor who don’t have a prescription plan, you can’t afford the medication at full price, 20% off, even 50% off. The price is irrelevant; what matters is whether you have a prescription plan, or a doctor who can provide samples forever.

So for everyone else, “prices” really means prices to insurance companies, or Medicaid/Medicare, all who  negotiate a price that has almost nothing to do with the actual patient demand for a drug.  A  price which is considerably lower than retail.  Medicaid apparently gets a 20% discount, the VA 40%. (1) 

So DTC advertising doesn’t affect the price because the consumer isn’t paying it.  The price was set in negotiation.  Certainly the price Pharma asks from wholesalers and insurers takes into account their costs, including advertising; and more ads (hopefully) means more scripts which means higher profits. But increases in advertising don’t translate directly to higher prices, they reduce the profits.  Higher prices are the result of  negotiations between parties that are immune to the effects of advertising.  That’s the problem.  

Third: perhaps what we really mean is that DTC ads raise the overall Medicaid/Medicare expenditures because more scripts are being written that would otherwise not have been written without the DTC ads.  Well, if this is what we’re saying, we should just say this; let’s not use factually inaccurate soundbites that play to the hearts of superficial idiots. 

But if we are saying this, then the problem isn’t the prices of the drugs, it’s doctors prescribing drugs they shouldn’t be prescribing.  The solution isn’t, therefore, to reduce drug prices; in fact, that’s the opposite of what you want, because it makes it even easier for doctors to prescribe what they shouldn’t be prescribing.  The actual solution would either be to raise drug costs (bad idea), controlling doctors’ prescribing (bad idea), or giving them a medication budget they have to stay within, but preserving prescribing freedom.

It should bring us pause that even the AMA refused to recommend banning DTC ads.  If Edwards plan was specifically about protecting the patients from half-truths or seductive graphics that compel patients to request medications that they don’t need or might compromise their health, then I’m behind him 100%. I already think DTC should be banned. But like all political soundbites, this isn’t about content but about ambiance, creating a feeling that he’s all about cutting costs— that’s he’s more than Hillary. Unfortunately, empty rhetoric like this distracts us from real problems, like Iraq, Iran, wealth divergence, recession, etc.

——

1.  As a horrifying diversion into drug pricing, let’s look at Medicaid.  Medicaid, by law, will pay (to a pharmacy who dispenses the drug) a percentage of the average wholesale price, plus a dispensing fee.  Both the percentage and the dispensing fee vary from state to state, but it’s on the order of 85% of average wholesale price, and $5 dispensing fee.  On average, Medicaid pays about $61 per prescription: $14 goes to the pharmacy, $47 to Pharma.   If anyone can tell me how DTC ads affect that, I’m listening.  So pharmacies don’t make a lot on this, and it’s a far cry from the markup the pharmacy can impose on a cash payer.  And pharmacies aren’t obligated to participate in Medicaid.

In practice, wholesale price is anything Pharma says it is, including some bizarrely inflated price.  But whatever it is, I hope it is clear that it has nothing to do with ads.

And then there are the rebates. I hope you’re sitting down.

In gratitude for this excellent reimbursement, Pharma agrees to rebate Medicaid about 15% or the manufacturer’s price, plus an additional rebate every year for the amount of price increase that exceeds inflation.  In 2003, the average rebate was 31%.

There’s another rebate.  Many insurances have pharmacy business managers (PBMs) who make preferred drug lists.  How does a drug get on that list?  It isn’t by being cheap; ask Illinois Medicaid in 2005, when they wouldn’t cover Seroquel, arguably the most demanded but hardly the most expensive.  What it takes is, as they say in Big Pharma, “our willingness to play ball.”  Another “rebate.”That money stays in the managed Medicaid’s pocket. The savings aren’t passed on to the patient, either directly or indirectly.   If you want an analogy, it’s the parking authority; revenue from tickets doubles, triples, but the amount they pay to the cities doesn’t change.   The extra “profits” goes back into the authority, to hire more people, pay more salaries. It’s a self-propagating bureaucracy.  I should also mention that, consistent with bureaucracies, it can’t even collect those rebates very well.

The Last Psychiatrist
Ashworth University Contributing Blogger

*”The Last Psychiatrist” is an academic psychiatrist specializing in forensics, a respected author, and an award winning blogger.  Selected as one of the “Best Doctors In America”, The Last Psychiatrist prefers to remain anonymous in cyberspace and allow his/her work speak for itself through their acclaimed blog.  We would like to express our gratitude to this very talented professional for providing us with the opportunity to share his/her exemplary work with the Ashworth University  student community.  We encourage you to visit The Last Psychiatrist blog for additional insights.  Thanks Doc! 

From Telegraph.co.uk (my commentary follows…) 

Thousands of “health tourists” are going as far as India, Malaysia and South Africa for major operations – such is their despair over the quality of health services. The first survey of Britons opting for treatment overseas shows that fears of hospital infections and frustration with NHS waiting lists are fuelling the increasing trend.

More than 70,000 Britons will have treatment abroad this year – a figure that is forecast to rise to almost 200,000 by the end of the decade. Patients needing major heart surgery, hip operations and cataracts are using the internet to book operations to be carried out thousands of miles away. India is the most popular destination for surgery, followed by Hungary, Turkey, Germany, Malaysia, Poland and Spain. But dozens more countries are attracting custom. Research by the Treatment Abroad website shows that Britons have traveled to 112 foreign hospitals, based in 48 countries, to find safe, affordable treatment.

My guess is that traveling for health care is going to increase greatly in the future. Health costs in the USA are enormous. Costs in Europe are different - often in wait time (or costs to avoid waiting) but another option is available - travel. Countries would be very wise to focus on building up this industry in my opinion. The economic benefits could be huge. The market is huge and growing. And the rich countries do not appear to be doing very well - especially the USA. The country needs to invest in a rigorous quality assurance system.

          Thanks to David Zellaby for permission to use this Photo.

It is almost certain the first attack will be attempts to frighten customers by saying your country is unsafe. And those tactics will be used to try and get the governments of rich countries to impose restraints on the ability of their citizens to seek health care in your country. So if you want to be one of the really big winners you will seek high quality first (don’t be drawn into price wars to see which country can be cheapest). That market will be there but will be much less profitable. The huge rewards will go to those countries that provide world class care at prices much cheaper than the inflated prices in the USA.

John Hunter
Creator of Curious Cat
Ashworth University Contributing Blogger 

*John Hunter is a web development, management improvement, and organizational business consultant with a track record for improving business performance.  Through his respected investing and economics blog, Curious Cat, Mr. Hunter as built a reputation for providing sound analyses of contemporary economic trends.  We’d like to thank John for the opportunity to share his perspectives with the AU Business community.  Visit John’s website and/or his blog for more information on his life and work. Thanks John!

Thanks to jclpat for permission to use this photo.

Today’s New York Times article on outsourcing by the State Department should be no surprise. Outsourcing, business process outsourcing, smart sourcing - whatever you want to call it, contracting out services is a business mainstay and fundamental. 

Healthcare is no different, though of course few people like to talk about. Privacy concerns abound. The reality is there’s not much privacy to begin with and outsourcing will continue to grow.

In healthcare, offshore outsourcing is commonly used for claims processing, customer service, medical transcription and billing services. However, as certain clinical areas experience talent shortages amidst rising demand, healthcare providers are looking for more outsourcing solutions.

According to research firm IDC, nearly $322 million was spent on offshore healthcare services in 2005. They project a 79% increase to $575 million in 2008.

According to public data, among those managed care organizations that do offshore outsourcing are Aetna, BCBS Michigan, BC of N. PA, Cigna, Coventry, Horizon BCBS, Humana, Kaiser Permanente, Regence Group, United Health, WellCare, Wellpoint/Anthem and others.

According to U.S. Government Accountability Office (GAO) reports, 19 percent of Medicare Advantage contractors do offshore data transfers as part of outsourcing. Four percent of Medicare FFS contractors do so, and 2 percent of state Medicaid agency contractor vendors do so.

Shawn Whalen
Contributing Blogger
Ashworth University

*Shawn Whalen is the Senior Vice President of Schwartz Communications, where he manages a variety of clients in healthcare IT and communications.  Mr. Whalen is nationally recognized as one of the leading experts in the healthcare technology industry.  We would like to thank Shawn Whalen for giving us the opportunity to share his vast knowledge and experience with the AU student community.  Visit Shawn’s Schwartz Healthcare IT Blog for additional insights.  Thanks Shawn!