Commentary

The tort lawyer lobby errand boys in Congress just don’t know when to stop.  Even after Senator Rockefeller got his hand slapped for questioning CBOs analysis of potential savings from tort reform, Congressman Bruce Baley decided to go back for more.  And sure enough, CBO gave him an even more detailed justification of the savings numbers.  (CBO Letter) The CBO detailed its reasons for relying on recent studies clearly showing a link between tort reform and lower health care costs, presumably due to less defensive medicine.  It also explained its understanding of research on whether tort reform created more health risk for patients.  It is clear that a great deal of money could be saved by adopting a national tort reform.  But the tort lawyers have nothing to worry about, they have clearly bought off enough Congresspeople to ensure that that won’t happen, at least this time around.

The New York Times ran a story on health care in Richmond, Virginia.  (NY Times Story) Virginia has a certificate of need law, which is portrayed as limiting the supply of health care resources, contributing to lower costs, at least for Medicare, while preserving quality.  The author portrays this as care rationing, which he appears to want to justify, but it obviously has nothing to do with how patients are cared for, just how much resource is available in a geographic area.  While supply appears to have some relation to geographic variations in spending, the relationship is tenuous and there are many other potential factors which must be considered.

The health insurance industry continually is portrayed as the villain by health reform proponents and is particularly excoriated for being focused on “profits over patients”.  A recent survey showed, as most knowledgeable people are aware, that this is not a particularly profitable industry and those profits have gone down in recent years.  Overall profits were about $8.2 billion, or 2.4% of revenues, according to the study.  (Article) Others in the health care sector have much higher profits, including drug companies, device and equipment makers, and many providers, including “not-for-profit” hospitals.  And most industries have much greater margins.  Of course, it should be kept in mind that return on capital probably is a better indicator from an investment perspective.  Health insurance is a relatively low capital business and therefore tends to have very good returns on capital.

The ink isn’t even dry on the not-yet-passed health reform bill to be paid for in large part by Medicare cuts in provider payments and the Mayo Clinic, a health care hero to many reform proponents for its low-cost, high quality care, says it won’t take more Medicare patients in an Arizona clinic because it can’t afford to keep losing money on them.  (Mayo Story) Just demonstrates how bogus the notion is that Medicare payments can be reduced without significant provider, and ultimately Medicare enrollee, discontent and how fraudulent the supposed budget deficit reduction in the current reform bills is.

Consumer genomics testing company 23andme received some additional funding.  (Story) The company last year retrenched, lost its CEO and laid off staff.  Receipt of the additional funding suggests investors have faith that the firm has a workable business model.  The direct-to-consumer model of genetic testing arose in part because payers won’t reimburse for these tests in most cases.  While consumers may be interested or curious, they need help figuring out how to use test results and the tests themselves have a number of accuracy and reliability issues.  The FDA or HHS is likely to issue some greater restrictions on the marketing and performance of these tests in the near future.

The New York Times has an article about the use of telemedicine.  (NY Times Story) It refers to the study on use of remote monitoring in ICU units that we commented on earlier this week.  The story focuses on the impact of physicians reluctance to accept this form of telemedicine as potentially undermining its benefits.  Some doctors view the remote monitoring as constant looking-over-the-shoulder or second-guessing as opposed to assistance in ensuring the best care for patients.  Changing these attitudes may be necessary to see greater and more beneficial use of telemedicine and ehealth.

Philips is one of a number of large companies which are looking at the health care market for a significant part of their future growth.  Most of these companies, GE, IBM, Intel and Cisco, for example, are focusing on use of technology and in particular various aspects of telemedicine.  Philips is conducting a large trial with the United Kingdom’s health service, using Philips remote monitoring technology to care for chronically ill patients in their homes.   (London Times Story) The theory is that such careful tracking of patient biometrics in the home can allow for timely intervention and avoid hospital and emergency room visits.