Posts filed under ‘Preventive Care’

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


April 12, 2012 at 10:29 AM Leave a comment


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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March 21, 2012 at 11:02 AM 1 comment

Self Powered Pacemaker

The advances in medical device technology over the past several decades have been exponential, much like technological advances in other fields.  These medical devices have helped people live longer, more independent, and better fulfilled lives. A popular example of such a device is a cardiac pacemaker, where future improvements continue to develop.  Recently, researchers at the University of Michigan have designed a device where pacemakers will be powered by heartbeat vibrations, eliminating the need for a battery. An article on describes more details of the design and how the device works.

The advantage of self-powered pacemakers for patients and for the healthcare system overall is the elimination of follow-up surgery currently required to replace batteries every 5-10 years. Patients need not go through invasive procedures in order to maintain their standard of living. This would also lower the cost for patients with cardiac problems that result in the need for a pacemaker.  Should the pacemaker powered by heartbeats end up costing more to produce than current battery-powered models, the overall costs in the long run without additional surgeries would certainly still make for a more economical device.

If the pacemaker being developed at the University of Michigan is successful, the potential for this technology to be applied to other medical devices is high. An article on states the power source could be applied to implantable cardioverter defibrillators as well for patients who are at risk for sudden cardiac death. Who knows what other devices that now rely on battery power could eventually be powered by the human body’s endogenous vibrations? It is inspiring to see such innovation still occurring within the healthcare arena, and hopefully the advances will continue to help increase cost effectiveness and improve the benefits to patients.

Author: Jamie Notaro

Editor: Ken Chiang

March 14, 2012 at 10:57 AM Leave a comment

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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March 6, 2012 at 10:38 AM Leave a comment

Pioneer ACO Model

On Monday, December 19, 2011 the Department of Health and Human Services announced 32 organizations that will take part in the Pioneer ACO model. As you can read in this article linked here ( there was a competitive selection process to see which organizations would participate in the project to be monitored by the CMS Innovation Center.

This model was started in January 2011 and is meant to show how particular ACO payment arrangements can best improve care and generate savings for Medicare. It also tests alternative program designs for future rules that are developed for the Medicare Shared Savings Program. Organizations that partake in this model should have experience operating as ACOs.

The first two years of the Pioneer ACO model are shared savings payment arrangements with higher levels of savings and risk than in the Shared Savings Program and other ACO initiatives. Year three, organizations showing a certain minimum of savings since starting the program will be able to transition away from a fee-for-service model to a population-based arrangement. Pioneer ACOs must negotiate outcomes-based arrangements with payers by the end of year two and are typically responsible for at least 15,000 beneficiaries.

The evolution of healthcare delivery could have an effect on MedSpan’s clients, no matter what segment of the healthcare system within which they function. Improving care while managing costs is a common goal among most businesses involved in healthcare, so staying informed on a potential process that will help accomplish this is of great interest to many.

The 32 organizations adopting Pioneer ACO structures will test various payment arrangements in aims of providing higher quality care at a lower cost. The project hopes to produce $1.1 billion in savings over five years and improve care for approximately 860,000 Medicare beneficiaries by ensuring that each healthcare dollar is spent more wisely. The goal is that patients, especially those that are chronically ill, receive the right care at the right time and unnecessary duplication of services is avoided.

The ideal result of the Pioneer model is to offer more coordinated, patient-centered care. Patients with multiple doctors will have an easier time communicating with each one. Pioneer ACOs aim to decrease the level of fragmented or disconnected care by providing better information to doctors about patients’ medical history and making it easy for them to communicate with their patients’ other doctors. Eventually this mindset will expand to all healthcare organizations, but changing the methods of delivery that have been practiced for so long will certainly not be easy.

Developing adjustments like this to the healthcare industry may bring forward new challenges for everyone. The near future will be an important time for these participants and their potential achievements with the model will affect other healthcare providers and consumers. If they succeed in providing higher quality care at lower costs, others will want to do the same. The results will be closely watched as changes are implemented. Although future success is uncertain, this program could lead to a significant shift in the industry which could hold increased benefits for all.

Primary care providers and other healthcare providers are the decision makers when it comes to participating in an ACO. Data manufacturers will benefit from this model because of the importance that patients and doctors place on the information available from ACOs.  But the organizational information must be well organized and easily accessible to all parties within a particular Pioneer ACO.  If the Pioneer ACOs model is successful, these organizations are likely to be well-accepted throughout the entire country.

Please share your thoughts.


Author: Jamie Notaro

Editors: Robert Kaminsky & Ken Chiang

February 3, 2012 at 11:44 AM Leave a comment

HHA Workers get OT and Minimum Wage

I recently came across an interesting article regarding proposed regulations for home health workers. Sometimes, it is the little things that are not dramatic that can affect our clients’ plans.

As described in more detail in the article below, On Thursday December 11, the Obama administration proposed regulations to give the nation’s nearly two million home care workers minimum wage and overtime protections. Those workers have long been exempted from coverage.  Home healthcare aides are not protected under the Fair Labor Standards Act.  Therefore, their employers are not subject to minimum wage or overtime regulations.

NY Times Article

As home healthcare aides are a rapidly growing work force, raising their wages and providing for overtime could represent a significant increase in financial responsibility for their employers.  One result might be that home health agencies may be forced to cut hours for their workers.  Also, the agencies may not have the financial resources to hire additional aides. In a slowly recovering economy, this would be an unfortunate result for both home healthcare agencies and their workers.

Another result might be that fewer patients may receive home health services or patients may not receive all of the care they need.  Patients might be required to pay more for the home health services they do receive.  Another result might be that home health workers might not be able to make as much as they do now as overtime hours are cut.

            Requiring an increase in wages could slow the growth of the industry, despite the projected significant increase in the need for home healthcare over the next 15-20 years. Slowing the growth of the home healthcare industry could lead to a decelerating rate of growth in the demand for many home healthcare products. If the availability of home healthcare services is curtailed, might that lead to an increase in direct and indirect healthcare costs?  For example, limiting access to home healthcare could encourage the use of more costly providers or an increase in negative outcomes as patients go without the care they need.

Now, what are your thoughts? 

December 20, 2011 at 2:56 PM Leave a comment

Woes of a Disjointed Healthcare System

As we all know, the cost of healthcare in the United States is high and growing.  Expenditures surpassed $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and consumers increasingly struggle to keep up with health care costs. (Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Care Expenditures Data, January 2010.)

The healthcare industry, patient advocates and governmental bodies are pursuing many solutions.  These include, but are not limited to:

  • Investment in information technology
  • Improving quality and efficiency (e.g., encouraging evidence-based medicine, reducing unnecessary variations in care) – Some experts estimate that up to 30% of health care is unnecessary, emphasizing the need to streamline the health care system and eliminate this needless spending.
  • Adjusting provider compensation (e.g., sharing cost savings)
  • Government regulation (e.g., recent Medicare initiatives to control costs)
  • Encouraging prevention
  • Increasing consumer involvement in purchasing
  • Altering the tax preference for employer-sponsored insurance

One of the strengths of our current healthcare system, as well as one of its weaknesses, is that it is a market-based system.  We have multiple providers competing against each other.  The strength is that competition leads to innovation if not the low cost we might expect.  However, a market-based, competitive system also leads to a system that can make it difficult for providers to work together.  The resulting lack of coordination can have a negative impact on patient care and lost opportunities for reducing costs.

For example, MedSpan has a client that provides patient care in all 50 states.  They considered developing a unique program that could extend the reach of physicians’ care between visits, enhance patient-physician relationships, encourage therapy compliance and afford the opportunity for earlier identification of disease progression.  However, one of the challenges the program faces is that without coverage of the program by all health plans in a geographic region, physicians do not easily know which patients they can refer to the program.

Assume that only a few health plans provided coverage for our client’s program.  A physician would need to 1) determine that a patient would benefit from the program, 2) determine if the patient’s health plan provides coverage for the program and 3) refer the patient to the provider (my client), 4) develop a relationship with the provider and 5) exchange information to monitor progress, thereby ensuring a benefit for the patient and physician.

That’s a lot of work for physicians who, typically, do not have the time available.  This is especially true if only 5 or 10 patients might benefit from the program and only a few might have coverage.  As a result, a potentially beneficial program falls through the cracks due to a disjointed healthcare system.

A system integrated through better information systems would address some of the challenges the above program faces, but not all.  An extreme solution would be a single-payer system.  While facilitating coordination of care, a single payer system would engender a host of other issues.  For example, the innovation that competition generates may diminish.  Therefore, the question to address is how close should we move to a single payer system while maintaining the competitive, free market that is the foundation of the American economy?

That’s an issue we’ll address in a future entry into our blog.

November 14, 2011 at 8:27 AM Leave a comment

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