Posts filed under ‘Evidence Plans’
U.S. Healthcare Costs: A Never-Ending Dilemma
It’s no secret that healthcare and its rising costs are a central focus for the United States these days. And it seems that every time it’s mentioned, there is a new idea or suggestion on how to solve the issue of continually growing costs. On April 4th 2012, an article was published in the New York Times about nine groups of medical specialty boards and their recommendation that doctors perform 45 relatively common tests and procedures less often. The article also states that patients should question these particular services when they are offered.
The reasoning behind using these “routine” procedures less often is that they unnecessarily increase healthcare costs with little benefit to patients. However, making such a claim brings forth so many questions and concerns it is almost mind boggling. Examples include debates over the motivation of doctors for ordering such frequent tests when they may be unnecessary, and whether patients feel that they are being robbed of thorough care without certain procedures and tests. There is an educational initiative also mentioned called “Choosing Wisely” promoted by the American Board of Internal Medicine Foundation which could help in altering the behavior of both doctors and patients. Should these recommendations be taken into effect, the current utilization of certain medical devices and drugs could change. Whether action would have positive or negative implications for pharmaceutical and medical device companies is hard to say, but it is certainly something to which those companies should pay close attention.
According to a report from the Kaiser Family Foundation1 some of the main drivers of health care spending are technology and prescription drugs. To add to that, they mention that 31% of health expenditures in 2010 resulted from hospital care and an additional 20% came from physician and clinical services. This proves that the types recommendations made may hold some merit, at least in the fact that they are a significant factor in additional spending. There is a careful balance that physicians face when making decisions on how to treat their patients that I cannot even imagine. Clearly, to run tests and procedures and rack up a hefty bill with little to show for is not the goal, but to decide against the same tests and procedures and potentially lower the quality of care is not desirable either. It seems like common sense to me that patients’ situations must be taken on a case-by-case basis, and all-or-nothing rules should not apply to healthcare. Although that is not to say that there could be some doctors that should put a little bit more thought into what their patients really need, and what they could do without.
Author: Jamie Notaro
Editor: Ken Chiang
1 http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx
EMR vs. EHR
Do you know the difference between an “electronic medical record” (EMR) and an “electronic health record” (EHR)? There is a common misconception that these terms are interchangeable, and many people today could not tell you if there is a difference between the two terms, let alone what that difference is.
An EMR is essentially the equivalent of a paper chart for a patient that is filled out by providers within an individual healthcare delivery organization (e.g. hospitals, physician’s offices), and is a legal record owned by that organization. EMR computer software is sold by enterprise vendors to hospitals, clinics, and other care delivery sites.
An EHR is a subset of EMRs that contains patient information from different healthcare delivery organizations. These records are owned by the patient or stakeholder, and the information can be shared through an EHR network. Unlike EMRs, electronic health records are interactive and the patient can access and supplement the information contained in the file. EHRs connect different healthcare organizations and may contain more detailed information about a patient’s demographics, medications, medical history, etc.
So, in order to utilize EHRs and for them to be effective, EMR software must be adopted by healthcare delivery organizations. Based on an HIMSS Analytics report published in 2006, the majority of hospitals have begun to implement EMRs, but at that point were not beyond the earliest stages. Since then both EMR systems and EHRs have grown in utilization and popularity, considering the potential for the easy sharing of patient information between healthcare organizations. A 2011 presentation by HIMSS shows that in 2011 more hospitals are developing their ability to use EHRs.
Both EMRs and EHRs are clearly an area of high potential for the healthcare industry. As the systems are more widely adopted and developed further at various organizations, the added ease of access and quality of health information will ideally help care provider organizations provide better treatment for patients. There are potential worries related to privacy and security with this type of information being transmitted electronically, however that is an entirely different issue that I will leave to be discussed at another time.
Author: Jamie Notaro
Edited by: Ken Chiang
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FDA Oversight Abroad
Like many products consumed in the United States, many drugs are developed and manufactured outside of our country’s borders. A New York Times article from August of last year reports that more than 80% of active ingredients for drugs sold here are made elsewhere1. In a recent House hearing, FDA Commissioner Dr. Margaret Hamburg stated that the FDA needs more resources in order to properly oversee the development and manufacturing of these types of products abroad. Modern Healthcare published an article describing these concerns the FDA has in regards to oversight of foreign-made drugs. Other issues such as drug shortages and pedigree are also mentioned.
FDA Deputy Commissioner for Global Regulatory Operations and Policy Deborah Autor is also mentioned in the article and states that action from Congress may be required to implement a national pedigree for drugs, which would track products from the manufacturer to the final buyer to ensure the integrity of the supply chain. Many states already have pedigree laws in effect, so the interaction of a federal clause and existing state statutes is something to be considered. This type of action from the Food and Drug Administration and Congress could also have great effects on those companies that do produce drugs overseas. It may or may not cause them to need to make some changes to their supply chains, which could in turn raise the cost to produce a given drug.
These problems discussed in the article and at the hearing bring up an interesting dilemma. It seems a fairly universally agreed upon concept that the FDA should have the capacity to oversee the manufacturing of the drugs that are sold here in the United States, regardless of where they are made. However, would actions to give the FDA the resources it needs to increase supervision abroad make it more difficult for drug companies to produce their products at the same rate and for the same price? Which is more important: allocating resources to ensure drugs are being produced at the proper quality, or making sure there is enough of a given drug to provide for the need that is present? Drug shortages have been an ongoing issue of late, which could continue to worsen if certain drug manufacturing supply chains are interfered with.
The safety of both prescription and non-prescription drugs is key, that is unquestionable. But will the FDA really ever be able to keep track of the quality of every drug produced outside of the United States? Before taking any action, both the FDA and Congress should consider the potential benefits of higher levels of oversight versus what complications may arise from it.
Written by: Jamie Notaro
Edited by: Ken Chiang
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1 http://www.nytimes.com/2011/08/13/science/13drug.html?pagewanted=all
Pharmaceutical Advertising
As consumers, we are by no means strangers to pharmaceutical advertisements. They are constantly in front of us, whether it is via TV commercials, magazine ads, or billboards along the highway. An article published on the New York Times (nytimes.com) website takes a look at how these direct to consumer advertisements have impacted Americans’ use of prescription drugs. It also discusses how doctors and patients now use checklists that can be found often times online to diagnose ailments and indicate the proper treatment.
The goal of pharmaceutical companies in regards to advertisements to consumers is clear; they want to raise awareness of their branded drug and want consumers to choose their prescription medication to take over others. It has been difficult to prove, however, that advertisements lead to any increase in direct sales as mentioned in the article. Are patients really any more likely to take a particular drug simply because they know of the brand, or do they simply listen to what their healthcare providers tell them to do? And is the information provided in these ads helping the consumer become more well-informed and knowledgeable with respect to what drugs they should be taking?
Many people, me included, seem to find drug advertisements to be a bit of a nuisance. Although I may be wrong, when the time comes for me to begin taking various prescription medications, I think I will let my doctor make the diagnosis and prescribe me whatever drug he or she thinks will work best—regardless of whether I’ve seen a commercial for it or not. Obviously this is not the case with every consumer; there are some that question their doctors on certain brand name drugs. My question is: is it really worth the time and money of pharmaceutical companies to heavily advertise their drugs to consumers? If there is no way to prove that they help sales and many consumers are annoyed by the ads, is the main reason to continue this heavy advertising to consumers simply to keep up with others in the industry?
I assume pharmaceutical companies could save a significant amount of money if they cut back on their advertising, and with little research to support that advertisements help sales, doing so may not have a negative impact. I know I would not be upset with the absence of prescription drug ads in my day to day life and I am sure I am not alone.
Author: Jamie Notaro
Edited by: Ken Chiang
Medicare & Baby Boomers
A key issue in this year’s upcoming presidential election is the future of Medicare. Nearly everywhere you turn (e.g., 2012 Medicare debate is all about the baby boomers- Yahoo! Finance) people are embracing different ideas to address the shortfalls in Medicare funding. These changes will have a significant effect on health care providers and manufacturers because it has the potential to change how these companies are paid. Impending changes to Medicare will decide whether providers will work with an increasing number of private insurance companies or if they continue to work with government payers to reimburse for the use of their products. As the number of baby boomers enrolling in Medicare continues to rapidly increase at a rate of over 1.5 million enrollees per year1, the issue becomes more and more prominent. Although not a baby boomer myself, I am a potential future Medicare beneficiary, making the future of the program a concern for me as well.
The indicator of Medicare’s financial health that receives the most attention is the Hospital Insurance (HI) Trust Fund. Since 2008, the payments made from the HI Trust Fund have exceeded its total income2. Any basic level of accounting knowledge will tell you, when expenses surpass income, there’s a problem. These deficits support the importance of implementing changes to Medicare, and unfortunately shortfalls like this are projected to continue and accumulate over the next several years.
Representatives of both major political parties agree on certain alterations to Medicare. Some examples of agreed upon alterations include limiting the future growth of federal spending on Medicare by maintaining the current percentage and limiting future growth of its percent of the federal budget, increasing the amount of money coming from upper and middle class retirees through higher out-of-pocket expenses for beneficiaries, and raising the age of eligibility from 65-673 over time
As I touched upon before, the HI Trust Fund is an important indicator of Medicare’s financial stability. This fund is predicted to run out by approximately 20294. Although this would not be an instant end to Medicare, that money is clearly an important factor to its functionality considering Medicare’s continued consumption on a year to year basis. Congress will compare the budget impact from reducing reimbursement advantages to those of others strategies, such as increases in payroll taxes and changing Medicare from a guaranteed benefit to a subsidy toward the purchase of private health insurance.
One of the biggest divides between political parties in this debate is on privatization of payment for care. Many Republicans would prefer to see increased privatization. Wisconsin Republican Representative and chairman of the House Budget Committee, Paul Ryan, introduced a proposal in April 2011 providing more competition to traditional Medicare by private insurance companies, while still keeping government-run Medicare as an option. Individuals enrolled in Medicare would receive a monthly payment to put toward whatever option they want, while those over 55 would not need to make any changes. Ryan’s plan has been supported by many other political figures such as Republican presidential candidate Mitt Romney as well as Democratic Senator Ron Wyden.
President Obama responded to Ryan’s plan with ideas of his own that involve slightly less savings, $4 trillion over 12 years opposed to Ryan’s $6 trillion over 105. However, these savings would be only partially achieved through cuts in spending, unlike Ryan’s proposal. About half of the savings in Obama’s plan would come from increases in taxes. President Obama has acknowledged privatization as a legitimate idea, but does not support it because he believes it will be too problematic6.
Increasing the number of private insurance companies assuming risk for Medicare beneficiaries, and the way in which they participate from a third-party administrator to covering the elderly as a subsidiary of the federal government changes where healthcare providers receive their payments from. Instead of the traditional government run fee-for-service program, private plans would make the payments, increasing their power in the Medicare system. This may also have an effect on MedSpan’s medical device clients and how their products are utilized. Certain drug therapies and procedures may not be covered or reimbursed in the same way or to the same extent under a private insurance plan as they are under Medicare’s government-run program, altering which devices are used. Privatization would help Medicare maintain a more consistent percentage of the federal government budget instead of continuing to grow. It would also increase the breadth of options beneficiaries would have, based on what different companies are willing to offer. Having more options will result in more personalized care to what each beneficiary wants and needs.
I believe Ryan’s proposal to be the best alternative that has been presented. The current system for Medicare has not proved to be sustainable, so I think making seemingly drastic changes to the structure will give the program the best shot of surviving. The federal government would have a simpler involvement in Medicare should Ryan’s plan be adopted. They will provide the necessary subsidies to beneficiaries, leaving those individuals to choose what is best for them from a broader pool of plans.
This is one of the most critical issues for our clients to keep an eye on, and they should analyze how different changes will affect their business. It is almost certain that some changes will be made, so beginning to prepare now will make for an easier adjustment in the near future.
Author: Jamie Notaro
Edited by: Robert Kaminsky & Ken Chiang
1,3Yahoo! Finance: http://finance.yahoo.com/news/2012-medicare-debate-baby-boomers-095929303.html
2,4Kaiser Family Foundation: http://www.kff.org/medicare/upload/7731-03.pdf
5LA Times: http://articles.latimes.com/2011/apr/14/opinion/la-ed-budget-20110414
6Talking Points Memo: http://tpmdc.talkingpointsmemo.com/2011/04/flashback-obama-calls-medicare-privatization-legitimate-but-problematic-proposal-video.php
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