August 12th, 2009

August 12 – Cost of Health Care

By ldw06

1. New visions for fixing health care – Simplifying a complex process

(CNN profiled six health care entrepreneurs including Renaissance Health.)  As a young internist working his way through rounds nearly a decade ago, Pranav Kothari grappled with what he saw as a broken delivery system. "When someone has a rash or strep throat, we do a pretty good job, the system works," he says. "But we tend to under serve those who need it most - those who are sick with chronic conditions. The frustration of the slow process of evolution and health care continued to nag at me."  After working as a reform-minded health care policy consultant, Kothari in 2004 joined with a colleague, Dr. Rushika Fernandopulle, and opened a new type of primary-care practice outside of Boston. Their first marketable idea: The Ambulatory Intensive Care Unit (AICU), a more affordable approach to serving the 20% of patients who fall into the highest-risk segment of the population.  Today Kothari and Fernandopulle act as consultants - their clinic was absorbed into Massachusetts General Hospital several years ago - and have launched AICU pilot programs in six cities, working with hospitals, clinics, and large employers such as Boeing to deliver a more streamlined version of primary care.

CNN Money June 18, 2009

2. Rare-disease patients priced out of drugs market

The fact remains that rare diseases are still mostly overlooked by pharmaceutical companies because of the small patient population and lack of financial incentives.  Drug companies tend to focus on the more lucrative "blockbuster drugs" for common diseases, at the expense of cures for rare conditions. The term "orphan drug" was originally coined because the pharmaceutical industry took little or no interest in discovery, development and marketing of drugs for rare diseases.  According to the European Organization for Rare Diseases, rare diseases affect between three and five percent of the population in developed countries. Many countries, such as the United States, Japan and the United Kingdom, have therefore attempted to encourage pharmaceutical companies to invest in orphan diseases by giving them tax incentives, fee reductions and extensions of patent rights.  The United States was the first country to develop an orphan drug law in 1983, followed by Japan and Australia. In 1997, the Australian Orphan Drugs policy was set up to help manufacturers overcome the high cost of marketing drugs which have not proved to be commercially viable.  But even when treatments are developed, they generally remain extremely expensive.

 

CNN by Anouk Lorie June 4, 2009

3. Many business leaders don’t think employer-based coverage is sustainable

More than 60% of 300 business leaders at companies providing health insurance to their employees say the employer-based health insurance model is unsustainable in the long run, and more than one-third of them support a single-payer health plan, according to a new Zogby International poll.  "When over 60% of respondents believe the employer-based system is not sustainable, that is a clear signal that the time for reform is now," said Charles Kolb, president of the nonprofit, nonpartisan Committee for Economic Development, an organization of more than 200 business leaders and university presidents, which sponsored the poll. "This poll reveals that business leaders are open to comprehensive healthcare reforms that move away from employer-based coverage.

HealthLeaders Media by John Commins June 25, 2009

 4. Bundling services could be key to cutting care costs

As Washington policymakers focus on ways to squeeze unnecessary costs out of America's healthcare system, much of the talks are about fundamental changes in the way providers are paid. Hospitals and doctors profit from each bandage used, every aspirin dispensed, every office visit, each test. Under the proposed system, care would be bundled, so providers get paid for treating an illness in an integrated system of care. Such bundled services are often easiest to handle in an integrated delivery system, such as Kaiser Permanente in California or the Mayo Clinic in Minnesota, where doctors work for the organization that includes a continuum of care from primary care clinics to full-service hospitals. One change that may come quickly is Medicare refusing to pay for patients with chronic diseases readmitted to hospitals within 30 days for the same problem they had before. That means home healthcare agencies and doctors must follow up after the patient is discharged. In this system, the doctors maintain their practices, but work together to provide comprehensive care to patients -- splitting the pay and the risks.

 The Miami Herald by John Dorschner June 28, 2009

 5. Redefining competition in health care

The U.S. health care system has registered unsatisfactory performance in both costs and quality over many years. While this might be expected in a state-controlled sector, it is nearly unimaginable in a competitive market—and in the United States, health care is largely private and subject to more competition than virtually anyplace else in the world.  In healthy competition, relentless improvements in processes and methods drive down costs. Product and service quality rise steadily. Innovation leads to new and better approaches, which diffuse widely and rapidly. Uncompetitive providers are restructured or go out of business. Value-adjusted prices fall, and the market expands. This is the trajectory common to all well-functioning industries—computers, mobile communications, banking, and many others.  Health care could not be more different. Costs are high and rising, despite efforts to reduce them, and these rising costs cannot be explained by improvements in quality. Quite the opposite: Medical services are restricted or rationed, many patients receive care that lags currently accepted procedures or standards, and high rates of preventable medical error persist. There are wide and inexplicable differences in costs and quality among providers and across geographic areas.  We believe that competition is the root of the problem with U.S. health care performance. But this does not mean we advocate a state-controlled system or a single-payer system; those approaches would only make matters worse. On the contrary, competition is also the solution, but the nature of competition in health care must change. Our research shows that competition in the health care system occurs at the wrong level, over the wrong things, in the wrong geographic markets, and at the wrong time. Competition has actually been all but eliminated just where and when it is most important.  Health care competition, by contrast, has become zero sum: The system participants divide value instead of increasing it. In some cases, they may even erode value by creating unnecessary costs. Zero-sum competition in health care is manifested in several ways: First, it takes the form of cost shifting rather than fundamental cost reduction. Costs are shifted from the payer to the patient, from the health plan to the hospital, from the hospital to the physician, from the insured to the uninsured, and so on. Passing costs from one player to another, like a hot potato, creates no net value. Instead, gains for one participant come at the expense of others—and frequently with added administrative costs.

Harvard Business Review by Michael E. Porter and Elizabeth Olmsted Teisberg June 2004

 

 

6. Midwestern town the anti-McAllen, TX, for Medicare costs

 Doctors in McAllen, TX, became part of the growing national furor over rising healthcare costs. As you may recall, a June New Yorker magazine article, paraded McAllen before the public as "one of the most expensive health-care markets in the country"—second only to Miami—costing the government $15,000 per Medicare beneficiary in 2006.  In recent weeks, the President also has singled out high spenders like McAllen, while praising the efficiency and care coordination in places like the Cleveland Clinic and the Mayo Clinic in Rochester, MN. He might also want to take a look at the town of Winona, MN, where Medicare costs are about two-thirds less than those in McAllen, says Mike Allen, CFO of Winona Health, a nonprofit integrated system that includes a 100-bed hospital, 50 physicians, a nursing home, and two assisted living facilities. In addition to having the distinction of being named Most Wired-Small and Rural Hospital by Hospitals & Health Networks magazine for the last several years, Winona Health is in a region that boasts the state's lowest Medicare beneficiary rates. Allen believes the region's coordinated care approach is a significant driver in lowering costs. He credits the Mayo Clinic, just 50 miles down the road from Winona, as a major cultural influence on providers in the state and across the Midwest. Many providers in the state and area are integrated, he says, pointing to Gundersen Lutheran Health System in LaCrosse, MN, and the Marshfield (WI) Clinic. Still, for all the outrage over McAllen and all the talk about bending the Medicare cost curve, Allen is skeptical that anything meaningful will come out of a healthcare reform bill that rewards low cost, high quality providers, mainly because of politics.

HealthLeaders Media by Michelle Ponte July 27, 2009

7. Sicker patients seeking emergency care

More patients who sought medical care at a declining number of California emergency rooms are a lot sicker, and slightly more of them required admission in 2007 than they did five years earlier, according to an analysis of facility discharge data from 10 of the state's largest counties. The July report from the California HealthCare Foundation found that patients classified in the two most serious categories of illness rose from 25% to 34%. "California's EDs are facing a changing patient mix that may be putting pressure on their resources," the report's authors wrote. Not only are the patients requiring more emergency room evaluation and services, more of them need to be admitted. Contrary to common belief that the bulk of people coming to hospital emergency rooms are uninsured, the report found that in 2007, private-pay patients with insurance used the emergency department the most. The study reported that 34% of all ED visits were by privately insured patients, while Medicaid (Medi-Cal) patients accounted for 24%, and Medicare 19%. Self-pay patients used the smallest proportion of ED visits, 16%. Another finding is the steep increase in emergency room visits by people who did not have true emergencies, the report said. "Hospital EDs are becoming a source of primary care for a growing share of the population, leading to an increase in non-emergency ED visits from 578,000 in 2002 to 891,000 by 2007," the report said. Also, more patients are leaving the ED without treatment "often after long waits."

HealthLeaders Media by Cheryl Clark July 29, 2009

 

 

8. Prevention and Health promotion could save Medicare $1.4 trillion over 10 years

Government health promotion and prevention programs for pre-Medicare and Medicare populations could save the country as much as $1.4 trillion over 10 years—and add on average as many as 6 years on Medicare beneficiaries' lives, according to a new Center for Health Research at Healthways report. Today's report, Potential Medicare Savings Through Prevention & Health Risk Reduction, found that focusing on programs that keep people healthy and reduce health risk factors, and manage chronic conditions—before and during Medicare eligibility—can have long-term cost savings. In fact, though these programs could extend beneficiaries' lives, the researchers found the cost savings associated with keeping people healthier would offset the extra years of life and coverage expenses that the federal government would have to pay for under Medicare.

HC Pro by Les Masterson July 30, 2009

9. Americans spend $34 billion a year on alternative medicine

While Americans may complain about the high cost of health care, they're still willing to shell out roughly $34 billion a year out-of-pocket on alternative therapies that aren't covered by insurance, a new study shows.  That's a growth of more than 25% in the past decade, says an in-person survey of 23,000 Americans from the Centers for Disease Control and Prevention and National Institutes of Health.  Alternative therapies, which range from herbs to yoga classes, now account for 11% of the total amount that Americans spend out-of-pocket on all health care.  These unconventional approaches are popular with people of all ages: 38% of adults and 12% of children have used them in the past year, the study says.  But Americans don't always use these treatments under a doctor's guidance. The bulk of these expenses, $22 billion, go to "self care," or treatments such as homeopathic medications and fish oil capsules that people buy without a health practitioner's advice, the study says.

USA Today by Liz Szabo June 30, 2009

 

 

 

 

 

 

 

Tags: Cost, Health Care, Uncategorized

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