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2010 Potpourri XI

By April 3, 2010Commentary

The Wall Street Journal blog reports on a survey looking at what revenue a hospital receives from a doctor relationship.  (WSJ Blog) The answer appears to be about 3 to 5 times the physician’s annual salary or income.  This goes a long way to explaining why hospitals are so eager to employ doctors or otherwise control physician practices.  It allows them to capture a steady stream of referrals, admissions and diagnostic tests.  As recent research reported on here shows, it also allows them to charge more to private insurers and self-pay patients.

A federal district court has invalidated patents on genes which show a susceptibility to breast cancer.  (WSJ Article) The issue of gene patenting by biotech and diagnostic companies has been controversial.  Many researchers feel that such patents are inappropriate because they block the free growth of knowledge about human biochemistry.  Private companies view such patents as necessary to encourage research and development of products which improve health. The ruling does not appear to apply to all gene products but just to the actual DNA sequence and some uses of that sequence.  There will undoubtedly be appeals and ultimately the Supreme Court is likely to have to rule on this issue.  If upheld, it may allow more competitive therapeutics and diagnostics, which probably would save the system money in an area where costs have been high and rising.

A piece of research done by the Rand Organization for the AP suggests that under the recently enacted health reform premiums for young adults would likely rise substantially, as much as 17%.   (USA Today Story) Others have higher and likely more accurate estimates of the increase.  These increases would be on top of the hefty rises expected before the law even kicks in.  The primary cause is the limit on premium differentials between younger and older persons.  In other words young healthy people get to pay for the care of older, less healthy people.  Seems fair, or is it?  Does it create the right incentives?  It certainly validates the concern that many young people will just pay the much lower penalty rather than buy insurance.  That’s what was intended by the law, isn’t it?  In any event, we are shocked, just shocked that anyone could suggest that this law would raise premiums, weren’t we promised that it would lower everyone’s costs?  Get ready for more stories about the real consequences of this act.

Milliman, a leading health care actuary, released its thoughts on effects of the reform act.  (Milliman Release) Their primary strategic considerations are that there will be more regulation for health plans to address; comparative effectiveness will have an impact because of the need to control costs; Medicaid programs and the Medicaid managed care companies that serve them will be stressed because of budgetary constraints and inadequate funding for the new eligibles; Medicare Advantage will be less attractive, which will impact millions of seniors; and managing all these new risks and opportunities will be critical for all health care organizations.

Clinical trials are sometimes stopped early when positive, or negative, results seem certain.  The rationale is a desire to get the benefits to all eligible patients as soon as possible, or avoid harm to patients in the trials.  A disturbing article in the Journal of the American Medical Association suggests that trials that are stopped early because of the supposed great benefit being shown systematically overestimate the actual treatment effect.   (JAMA Article) This undermines confidence in the results of these trials and indicates that greater discipline is needed in deciding when to stop a trial because of supposed certainty of benefit.

Finally, Health Affairs has several articles on childhood obesity, its health implications and what solutions there might be.  One suggests more soda taxes and banning student access to vending machines at schools.  (Health Affairs Article) Here’s another idea–maybe expect families and individuals to take some responsibility for controlling their own behavior.  The constant efforts to improve health by restricting access to supposedly harmful substances–tobacco, alcohol, fats, sugar–have had very limited impact and the reason is that those restrictions do nothing to encourage actual behavior change and adoption of good health practices.  There is an ample body of research on how to help individuals be incented to make those changes and perhaps we should focus on helping people be responsible, which would lessen demand for items which may contribute to poor health, and spend less time trying to limit supply.

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