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Weekend Potpourri II

By October 31, 2009November 2nd, 2009Commentary

A Health Affairs blog post authored by Arnold Milstein and others reports on a pilot project sponsored by Boeing to better manage the care of under-65 patients with severe chronic disease. (Health Affairs Blog)  The patients were enrolled in an intensive, team based management program.  As with similar projects, this one appears to have reduced costs, primarily by avoiding ER and hospital expense, and improved health status and patient satisfaction.  As the authors point out, it might reasonably be possible through widespread use of these programs for chronic disease patients to actually reduce national health expenditures by 5-10%, after including all costs of the care management effort.  That is as much as $100-200 billion dollars a year. 


Given the recent ado about revoking health insurers’ antitrust exemption, an article in Health Affairs makes the useful point that one of the biggest reasons for high costs in the US is the complete lack of payer leverage in price negotiations.  (Health Affairs Article)  The authors, relying in part on an extensive McKinsey study, point out that utilization of services in the US is not dramatically higher than in other countries; in fact is often lower, but our unit prices are quite a bit higher.  They note again the characteristics that make health care a poorly functioning market and conclude that we cannot rely on consumer empowerment to bring down prices.  They point to two alternatives, a single payer system or an all-payer system, recognizing that the former is more politically infeasible than the latter.  (An earlier commentary here noted the success that Maryland’s hospital all-payer system appears to have achieved.)  Payments to providers in this country have become highly politicized with the ever-increasing presence of Medicare and Medicaid.  Any new reform bill is likely to exacerbate that problem.  Based on this article, costs are unlikely to go down until payers and consumers utilize their political power to insist that unit prices are rationalized.

On a related note, the Boston Globe ran an article expressing concern that encouraging providers to band together to provide more effective care could lead to higher prices.  (Globe article)  The article cites a Rand study on the dramatic effect hospital mergers had on prices in the 1990s. 

On the other hand, the Wall Street Journal published a piece about more web sites that help patients find better prices for services, thereby encouraging provider competition.  With the spread of high-deductible plans, many consumers have become more price sensitive and there are a variety of resources to help them compare prices or negotiate price with providers.  (WSJ Article)

The University of New Hampshire Center for Venture Research released their most recent analysis of angel investing.  In the first half of 2009, about 27% fewer dollars were invested but more companies received funding as compared to first half 2008.  The total invested was $9.1 billion and health care was the largest sector accounting for 28% of dollars.  Angel investing is a critical capital source for health care startups, and they have been suffering over the last two years as capital has been very hard to come by.  Any rebound would help economic recovery as small firms account for much of job growth.  (UNH CVR Report)

The Wall Street Journal reports that IBM has decided to eliminate co-pays for preventive visits. (WSJ Article)  This is an extension of the notion of value-based benefit design, which began by limiting copays on many drugs for chronic diseases.  It is also a complement to wellness strategies that emphasize prevention and health maintenance.

Articles in the American Journal of Preventive Medicine review the effectiveness of employer-based physical activity interventions and find that they appear to improve health status and lower absenteeism.  (Abstracts available here)  The programs had varied characteristics and effects.  Further research would help identify what kinds of programs work best. 

The best article of the week has to be the news that Interleukin Genetics will sell genetic  tests through Amway.   (IG Press Release)  The tests include weight management, nutrition, heart and bone genetic panels.  Its hard to know what to say about the notion of genetic tests being sold door-t0-door or at little living room get-togethers.  Not sure its a good idea!  Maybe we do need some more regulation of direct-to-consumer testing.

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