Category Archives: Health Economics

Understanding the Problem Physicians Have With Retail Clinics

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Two articles highlight the upside and downside of retail clinics.

  • Iglehart JK. NEJM 2015; 301-3
  • Chang JE et al. NEJM 2015; 382-8

Currently, there are ~1900 retail clinics with four main ‘players:’ CVS, Walgreens, Kroger, and Target.  However, Target has recently made a deal with CVS and Walmart is expanding into retail clinics as well.  Almost all of these clinics accept private insurance and medicare; growing numbers accept medicaid too.

Retail clinics offer a limited scope of care and typically are staffed by midlevel providers (nurse practitioners or physician assistants).  In contrast, urgent cares offer more complex services and typically are staffed by physicians.

Upside:

  • For consumers, the key advantages of retail clinics: lower costs with transparent pricing, convenience due to extended hours and locations, and often short wait times.

Downside:

  • Potential disruption in longitudinal care (“medical home”)

What about quality?

  • “Research has not found that retail clinics deliver poor quality care, overprescribe antibiotics, or adversely impact delivery of preventive care.”

Do Retail Clinics Enhance Access?

  • Yes but these clinics are disproportionately located in areas with relatively high income.  Nevertheless, “approximately 61% of retail-clinic visits and 37% of urgent care visits involve patients without a primary care provider.”

Patient navigation:

  • “One study …showed that patients did properly self-triage, with more than 88% of retail-clinic episodes resolved in one visit. Another study showed that 2.3% of retail-clinic patients were triaged to an emergency department or physician’s office.”

Why Would Physicians Oppose These Retail Clinics?

  • While primary care organizations have raised concerns about quality and continuity of care, a basic economic issue is likely at work as well.  “The current reimbursement system renders simple acute health problems high-margin work that can offset losses from treating more complex problems.“

Bottomline: Retail clinics are filling a need for many patients in terms of cost and convenience for simple acute problems.

Related blog post: AAP -Behind the Scenes (Part 1)

Leek's Marina, Grand Tetons

Leek’s Marina, Grand Tetons

Dollars for Doctors

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A recent NPR report, Industry Payments To Doctors Are Ingrained, Federal Data Show, provides a link detailing payments by drug and device companies to U.S. doctors and teaching hospitals.  Doctors may be paid for promotional speaking, consulting, travel expenses, and meals.

If you want to see how much is reported for each doctor, check out the ProPublica Dollars for Doctors database.

Here’s a screenshot:

Screen Shot 2015-07-02 at 8.24.03 AM

The article notes that the a close relationship between doctors and pharmaceutical companies is important.  “Collaboration between physicians and biopharmaceutical professionals is critical to improving the health and quality of life of patients.”

Take-home point: Some financial relationships between doctors and pharmaceutical companies lead to important improvements in drug (or device) development; other relationships may alter prescribing habits without apparent patient benefit. Will this information empower patients to ask why their physicians has close ties to the pharmaceutical industry?

Related blog post:

Point of Care -Mobile, Anywhere, Cheap EKGs

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Note:  This blog and author do not have any financial disclosures or receive any support from any companies.

Using a smartphone app, AliveCor has developed the technology to obtain a limited EKG (ECG) for a minimal cost; after an initial investment of $74.99, this technology can function similar to a standard EKG machine but only provides one lead (V1).

From the AliveCor website (thanks to Larry Saripkin for showing me this):

The FDA-cleared AliveCor Mobile ECG wirelessly communicates with the free AliveECG app, available in the U.S. App Store and Google Play Store. ECGs are stored in the app and on secure, encrypted servers that can be viewed anytime, anywhere. ECGs can also be printed or e-mailed directly from your smartphone or tablet, and you can grant access to your physician.

Do I have to attach the Mobile ECG to my smartphone or tablet? That is our recommendation, however, you may use the Mobile ECG within 12 inches of your smartphone or tablet if you’d like….

Simply rest it on your fingers or chest to record an ECG in just 30 seconds. Know right away when your ECG is normal and if atrial fibrillation is detected.

Potential Uses:

  • Detect atrial fibrillation
  • Correlate symptoms like palpitations and shortness of breath
  • Accurately assess heart rate
  • ?Assess for QT interval -this could be particularly useful to pediatric gastroenterologists

While many of the uses may be self-evident, the website offers ECG review by a U.S. board-certified Cardiologist, with an average turnaround time of 24 hours. The current price of this service is $12.

Bottomline: This is another example of how new technology improves clinical information and at the same time should be less expensive and more timely.

Related blog posts:

Disclaimer: These blog posts are for educational purposes only. Specific dosing of medications/diets (along with potential adverse effects) and use of new technology should be confirmed by prescribing physician/nutritionist.  This content is not a substitute for medical advice, diagnosis or treatment provided by a qualified healthcare provider. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a condition.

Sign at Children's Healthcare of Atlanta

Sign at Children’s Healthcare of Atlanta

Critique of the 21st Century Cures Act

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The most compelling article (Avorn J, Kesselheim AS. NEJM 2015; 372: 2473-5) in a recent edition of the NEJM delved into the 21st Century Cures Act which was recently introduced in the U.S. House of Representatives; it was approved 51 to 0 in committee but continues to be debated.

One of the underlying premises of the bill is accelerate approval for new products. Key features:

  1. Increase in National Institutes of Health (NIH) of about 3% per year for 3 years. And, additional $2 billion per year for 5 years to create an “NIH Innovation Fund”
  2. Instructs FDA to consider nontraditional study designs for clinical trials.  This is aimed at shorter, smaller and less expensive studies.  This could allow FDA to rely on “observational studies” and “clinical experience.”
  3. The bill encourages the FDA to rely more on surrogate end points
  4. The bill would allow informed consent to be bypassed if the “proposed testing poses no more than minimal risk.”

Critiques for each point, point by point:

1. The funding increases largely counterbalance stagnating funds at the NIH secondary to sequestration and budget cuts.

2.  The premise that the FDA is inefficient is not accurate.

  • “A third of new drugs are currently approved on the basis of a single pivotal trial” with a median of 760 patients.
  • Most drugs are approved based on studies with a duration of 6 months or less, even medications taken for a lifetime.
  • Evaluation of nearly all new drug applications is completed within 6 to 10 months.

3.  Surrogate markers often overestimate the potential benefit of medications.  The FDA “already uses surrogate end points in about half of new drug approvals.” Specific examples:

  • Bevacizumab has been shown to delay tumor progression in breast cancer “but was shown not to benefit patients.
  • Rosiglitazone “lowered glycated hemoglobin levels in patients with diabetes even as it increased their risk of myocardial infarction.”
  • One new tuberculosis drug improved bacterial counts in the sputum but “the treatment group had a death rate four times that in the comparison group.”

4.  Informed consent has been “sacrosanct, with exceptions made only when consent is impossible or contrary to a patient’s best interests.”  With this new proposal, “it is not clear who gets to determine whether a given trial of a new drug poses “minimal risk.”

Bottomline (from authors): The 21st Century Cures Act’s call for increased NIH funding may prove to be its most useful component.  But political forces…could lead to the approval of drugs and devices that are less safe or effective than existing criteria would permit.”

Audio interview with Jerry Avorn: nej.md/1TPy6Ta

Some pictures from yesterday’s Peachtree Road Race:

Coveted T-shirt -2015 Edition

Coveted T-shirt -2015 Edition

Screen Shot 2015-07-04 at 6.34.03 PM

Rainy Day for a 10K

Largest 10K in U.S

Largest 10K in the World

“Some Hospitals Marking Up Treatments By as Much as 1000%”

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Why is it that I don’t find the title of a recent NBC report surprising?

NBC Summary of Recent Study: “Some Hospitals Marking Up Treatments By as Much as 1000%”

Here is an excerpt:

Twenty of the hospitals in the top 50 when it comes to marking up charges are in Florida, the researchers write in the journal Health Affairs. And three-quarters of them are operated by two Tennessee-based for-profit hospital systems: Community Health Systems and Hospital Corporation of America…

Hospitals negotiate different rates with different payers.

Screen Shot 2015-06-08 at 5.02.52 PM

Then there are in-network and out-of-network rates. And patients often don’t know until after they’ve received a treatment whether their insurance will pay for it, or for the doctors who delivered it…

States can and should regulate what hospitals charge. Maryland sets hospital rates but is the only state that does. West Virginia regulates rates, while only California and New Jersey have state legislation that requires for-profit hospitals to offer discounts to eligible uninsured patients.

My personal experience

Recently, a hospital on the northside charged my family in excess of $3000 for handling/processing an outpatient biopsy specimen (not pathologist interpretation) which was at least 10-fold what an independent pathology lab charged for the same service.  When I received the bill, I was quite upset.  The physician who sent out the specimen did not inform me that he intended to send the specimen to this hospital and seemed to have no idea about the costs.

I am certain that if I were given the choice of several pathology labs for processing that I would not have been convinced that there was added value in the specimen going to the hospital.

As a physician, when families ask me how much a procedure is going to cost, it is usually not an easy question and often requires a fair amount of research, particularly if the something involves a procedure at the hospital.

Take-home message: How is it that in this information era that medical costs are not transparent?

Unfortunately, you really do not know how good your medical coverage is until you find out through personal experience.

Related blog posts:

Sandy Springs

Sandy Springs

 

Less Litigation: Better Communication, Not More Testing

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A recent NY Times articles sums up articles over more than two decades which show that better communication, rather than more testing, reduce malpractice lawsuits.

To Be Sued Less, Doctors Should Consider Talking to Patients More

An excerpt:

As far back as 1989, a study of obstetricians in Florida found that about 6 percent of obstetricians accounted for more than 70 percent of all malpractice-related expenses over a five-year period… Doctors who are sued are different in some way from those who aren’t…Some doctors were more likely to be sued, regardless of whether the cases against them were eventually found to have merit…

Doctors sued most often were complained about by patients twice as much as those who were not, and poor communication was the most common complaint…

At the University of Michigan about 15 years ago, a program was begun to improve communication around medical errors. When errors occurred, the program encouraged physicians to tell patients about them, how they happened, and what would be done to make them less likely to occur in the future. Doctors were also encouraged to apologize, and offer compensation for harm if it occurred.

A study of the program published in 2010 found that in the years after it began claims dropped 36 percent, and lawsuits dropped 65 percent. The monthly cost of total liability and patient compensation dropped 59 percent, and legal costs dropped by 61 percent.

A later study, published last year, looked at how the program affected gastroenterology claims and costs. It found that despite a 72 percent increase in clinical activity, the rate of claims per patient encounters dropped 58 percent…The total cost to the health care system of malpractice in gastroenterology decreased by 64 percent.

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From Hammock

From Hammock

Healthcare Transition: Why Being the Best May Not Work

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According to a commentary, “Why Strategy Matters Now,” (NEJM 2015; 372: 1681-4), successful health care organizations are going to need to develop a strategy to provide better value as the key goal.

They note that previous approaches to develop scale and market presence will be trumped by patients choosing insurance products with narrowed provider networks and high deductibles.  With reimbursement decreases and resistance from private insurance companies to ‘cross-subsidize care’ for publicly-insured or noninsured patients, that change is inevitable. Key points:

  • “Having a good brand is no longer enough: patients and payers are looking for good value, service by service.”
  • “Providers that organize themselves to improve outcomes and become more efficient in doing so will be rewarded.”

The authors then detail several questions that healthcare organizations need to answer to develop their strategy for being successful.

My take: While there is an effort to transform health care, a big stumbling block is the ability to measure value and quality.  Until this becomes easier, this transformation will be slow-going.

Related blog posts:

 

Does it really cost $2.6 billion to bring a new drug to market?

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A recent editorial (Avorn J. NEJM 2015; 372: 1877-79) helps provide some perspective on a recent unpublished study that “it costs pharmaceutical companies $2.6 billion to develop a new drug.”  (http://csdd.tufts.edu/files/uploads/cost_study_backgrounder.pdf)

Dr. Avorn notes that when this study is published scrutiny over the methods is needed; however, the authors of the study note that their methods are unchanged from a previous 2003 study (NEJM 2015; 372: 1972). Apparently the analysis was based on data from 10 drug makers regarding compounds that they had ‘self-originated.’

Some preliminary criticisms:

  • Nearly half the costs were attributed to the cost of capitol rather than direct spending. This cost indicates that the money being used for drug development was not available for other purposes (“opportunity costs”); however, the capital costs were assessed at a very generous 10.6% per year, compounded.
  • The analysis did not include the large public subsidies provided to pharmaceutical companies in the form of research-and-development tax credits.
  • Pharmaceutical companies remain highly profitable and only spend a small fraction of their revenues on truly innovative research.
  • Many of the drugs brought to market are not “self-originated.”
  • Many drug costs are borne by the public via research at university-affiliated centers with the pharmaceutical companies taking the new discovery the last mile.  “Gilead Sciences did not invent its blockbuster treatment for hepatitis C, sofosbuvir (Sovaldi)…it acquired the product from a small company founded by the drug’s inventor, a faculty member at Emory University, much of whose work on the usefulness of nucleoside viral inhibitors was federally-funded.”

Bottomline: While pharmaceutical companies invest heavily in new drug development, the huge numbers often attributed to research costs may be overestimates; these type of analysis likely underestimate how much taxpayers have paid in subsidizing the foundation for new treatments.

Related blog post: The Difficulty with Drug Development | gutsandgrowth

 

The Costs of Unnecessary Care –What’s Wrong with “I want everything ruled out?”

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A great article for understanding a lot of what needs to be improved in our health care system –“America’s Epidemic of Unnecessary Care” from Atul Gawande & The New Yorker (Thanks to Kayla Lewis for this reference).  Here are some excerpts:

Well, as a doctor, I am far more concerned about doing too little than doing too much. It’s the scan, the test, the operation that I should have done that sticks with me—sometimes for years…It is different, however, when I think about my experience as a patient or a family member.

 

Dr. Gawande describes several anecdotes:

  • He relates how his mother had unnecessary testing done and only afterwards was a history and physical completed that would have obviated the need for any testing.
  • He relates a story about his friend Bruce. Bruce’s father had a stroke during cardiac surgery. However, the likelihood of that surgery helping Bruce’s father was much lower than the risk of surgery.
  • Ray from Car Talk: Even reputable professionals with the best intentions tend toward overkill, he said. To illustrate the point, he, too, had a medical story to tell. Eight months earlier, he’d torn a meniscus in his knee doing lunges…Ray went for a second opinion, to a physical therapist, who, of course, favored physical therapy, just as the surgeon favored surgery. Ray chose physical therapy.  What Ray recommended to his car-owning listeners was the approach that he adopted as a patient—caveat emptor. He did his research. He made informed choices. He tried to be a virtuous patient.

Other Important Points:

  • The virtuous patient is up against long odds, however. One major problem is what economists call information asymmetry. In 1963, Kenneth Arrow, who went on to win the Nobel Prize in Economics, demonstrated the severe disadvantages that buyers have when they know less about a good than the seller does.
  • The United States is a country of three hundred million people who annually undergo around fifteen million nuclear medicine scans, a hundred million CT and MRI scans, and almost ten billion laboratory tests. Often, these are fishing expeditions, and since no one is perfectly normal you tend to find a lot of fish.
  • What’s more, the value of any test depends on how likely you are to be having a significant problem in the first place…Experts recommend against doing electrocardiograms on healthy people, but millions are done each year, anyway.
  • Overtesting has also created a new, unanticipated problem: overdiagnosis. This isn’t misdiagnosis—the erroneous diagnosis of a disease. This is the correct diagnosis of a disease that is never going to bother you in your lifetime. 

Dr. Gawande explains how some conditions (including cancers) are more like turtles and some are more like rabbits. Diagnosing a turtle results in increased risk, increased cost and little likelihood of benefit.

  • With regard to cost, he updates the situation in McAllen, Tx: Six years ago, in “The Cost Conundrum,” I compared McAllen with another Texas border town, El Paso. They had the same demographics—the same levels of severe poverty, poor health, illegal immigration—but El Paso had half the per-capita Medicare costs and the same or better results…McAllen, in large part because of changes led by primary-care doctors, has gone from a cautionary tale to something more hopeful.

Take-home point (from article): Right now, we’re so wildly over the boundary line in the other direction that it’s hard to see how we could accept leaving health care the way it is. Waste is not just consuming a third of health-care spending; it’s costing people’s lives. As long as a more thoughtful, more measured style of medicine keeps improving outcomes, change should be easy to cheer for. Still, when it’s your turn to sit across from a doctor, in the white glare of a clinic, with your back aching, or your head throbbing, or a scan showing some small possible abnormality, what are you going to fear more—the prospect of doing too little or of doing too much?

Related blog posts:

Behavioral Economics and Insurance Exchanges

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A recent commentary (NEJM 2015; 372: 695-98) explains how information provided on healthcare exchanges influences choices on coverage and what types of modifications could help improve these decisions.

Current plans are categorized as Bronze, Silver and Gold based on monthly premiums and out-of-pocket expenses (Related link: Understanding Plans on Healthcare.gov).  Gold plans are characterized by higher monthly premiums and lower out-of-pocket expenses.  However, the authors sampled a group of people.  They found that plans that are labeled as “gold” were preferred by the majority whether the plans had higher monthly premiums and lower out-of-pocket expenses or the reverse (low monthly premiums and higher out-of-pocket expenses).  Rather than using “gold,'” “silver,” or “bronze,” their recommendation would be to provide more practical information by providing estimates of annual costs with best-case and worst-case scenarios.

On many exchanges, the plans are listed by order of lowest monthly premiums to highest monthly premiums.  “When people make choices, they often settle for options at the top of a menu…for example, all else being equal, politicians listed at the top of ballots receive more votes than those whose names appear lower on the list.” Also, using monthly premium differences rather than weekly premium differences also influences choices. Thus, even the innocuous design of a website, could adversely influence the selection of the best plan for a given participant.

Bottomline: If the affordable care act and health exchanges are not eliminated, improving the presentation of information could help many participants get the health coverage that actually meets their needs.

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