For those of you that still subscribe to this blog, I’m sharing my latest blog post on the Center for Health Solutions blog by Deloitte on digitization in the pharmacy industry.
For those of you that have followed me here, I thought I would share three things with you:
- I just had my first blog post published under the Deloitte brand on the Deloitte Center for Health Solutions blog.
- I recently helped lead the creation of a whitepaper on what topics health plans and payers should be working with their PBMs to address.
- I will be speaking on the topic of specialty pharmacy at the PCMA event in March. I hope to see some of you there.
As those that have followed the blog for a while know, I generally posted an average of one blog per day and did so for almost 8 years. With the new job, I’ve decided to look for ways to create content under the Deloitte brand either through white papers or on their blogs.
I will continue to share information through Twitter and on LinkedIn, but I’m going to keep this blog on hiatus for now.
It’s been a great outlet for me over the years. It’s helped me think through numerous ideas. I’ve used it to connect with people. I’ve used it to open doors and get press and speaking opportunities. And, within the start-up world, the ability to blog on my own has been widely accepted and embraced. As many of you know, that’s harder to do within a corporate environment.
For those of you that have followed the blog and read it continuously, I really appreciate it. I hope you will follow me on Twitter or connect with me so I can share new things as I create them in my new job.
In the September 8-15 edition of Time Magazine, they have a whole article about data and numbers. One of the pages is on which companies have the most cash. Apple is number one and the one you always hear about. As we’ve all seen, there are lots of rumors about Apple, Google, and Amazon and what they’re doing that is health related.
At the same time, I was intrigued to see all the health related companies on the list:
- Medtronic – $13.7B
- Abbott Labs – $8.1B
- Merck – $27.3B
- Pfizer – $48.8B
- Johnson & Johnson – $29.2B
- Abbvie – $9.9B
- Eli Lilly – $12.7B
- Amgen – $23.1B
- Bristol-Myers Squibb – $8.3B
You have several other non-healthcare companies which are doing things in healthcare that are also on the list:
- Walmart – $8.7B
- GE – $14B
- Procter & Gamble – $8.5B
- Qualcomm – $31.6B
If you look at the Rock Health recent report, you can imagine how these companies could leverage all this money to really change healthcare. They could fund companies. They could buy companies. They could invest in orphan drugs. They could create new technology standards. They could educate consumers. They could push technologies like the Internet of Things.
“A hospital bed is a parked taxi with the meter running.” Groucho Marx
While I was flying last week, I had the chance to read My Healthcare Is Killing Me. I could probably think of a few other titles for the book like:
- Don’t let healthcare bankrupt you
- Navigating the healthcare billing maze
- Negotiating to better health
- The $20 disenfranchisement fee
Those should give you a hint about the topic of the book. It’s written by Chris Parks, Katrina Welty, and Robert Hendrick who are all part of the founding team at Change Healthcare. If you’re not familiar with Change Healthcare, you should look at them and others in the transparency space. (You can look at Jane Sarasohn-Kahn’s series on cost transparency for more information.)
Here’s a few of my notes from the book:
- Hospitals and doctors view their patient’s bills as Days Sales Outstanding (which is why you can negotiate for prompt payment).
- 22% of people have been contacted by a collection service for a medical bill
- 60% of consumers that asked for discount on a medical bill were successful
- The bill is NOT what the provider will (or expects) to get paid…It is the most that they will get paid
- The chance of getting the right diagnosis and treatment on the first visit is 50% (scary)
The book has an interesting analogy from Patsy Kelly comparing healthcare to a restaurant:
“In healthcare, the patient does not order the service or have the primary responsibility for payment. Additionally, the person who pays for the service does not order it or consume it, and the person who orders it does not pay for it or consume it.”
Another quote from Unity Stoakes was:
“We must arm ourselves with knowledge, wisdom and information. Demand transparency in pricing by researching alternatives. Negotiate! Take control of your own healthcare now. The more you know, the more power you have.”
The authors do a good job of simplifying down some of the complexities of the healthcare payment system. Some things have changed with health reform, but the fundamentals are the same. For someone taking on a large, complex condition which is likely to result in lots of costs, its worth reading. For someone trying to change healthcare and understand the fundamentals, it’s also a great quick read which you can then follow-up on to see how this became the foundation for Change Healthcare.
I think many of are familiar with Google’s use of the term “Moon Shots” and to a lesser degree their Google X projects. I was inspired to see who in healthcare is using the term and think about a few moon shot ideas myself.
- MD Anderson is one company that talks about moon shots in terms of curing cancer.
- Google has their moon shot around the human body and their Calico project.
I didn’t find much else out there (although I’m sure there is).
So, here’s some of my thoughts:
- Curing cancer. But I think this is one many people think about.
- Creating a healthcare system that people actually understand. That would be great!
- Making healthcare a positive experience. Not easy, but it should be achievable in many settings.
- Preventing disease progression. Maybe too simple, but there has to be some stretch about using data to predict risk and trigger proactive, personalized engagements that successfully change behavior.
- Integrated data. The idea of interoperability of data across the care continuum with the ability to make it actionable would be great.
- Remote monitoring of people without them having to do anything. The Internet of Things will make this much easier (some day), but the idea of simply integrating technology into our lives to monitor us and look for ways to improve our life is a great goal.
- Integrated devices such that our decisions are improved would be great. A device that knows I’m getting hungry and that I’m about to pass a McDonalds could suggest a healthy alternative.
- Reducing global obesity by teaching kids about health. This is a great one with complexity like addressing food deserts, sleep patterns, food selection, and general attitudes about health.
- Eliminating negative stress in order to improve health. This is another tricky one as our lives become more and more stressful.
I’ll leave the list open…what would you add? I know there are some big stretch thinkers out there.
- Digital pills you can print in a 3D printer
- “Doc in a box” solutions that could be in every home where the physician can get your vitals and interact with you all virtually.
- Self-healing band-aids that turn into skin.
- A pill that you take once a year, and it doses you ever day.
- A machine that can actually diagnose you (like that mirror in the one cholesterol advertisement).
- A pill to cure addition to cigarettes and other addictive substances.
- Food that turns bad cholesterol into good cholesterol.
I finally had some time to read Dr. Bertalan Mesko’s book called Social Media in Clinical Practice. I’m a big fan of his blog and a lot of the information he puts out. I was intrigued to see what he thought was important for clinicians and then to compare that to what I know as someone active in the space.
Overall, I thought it was a good, quick read for someone who knows very little about social media and all the options out there. He quickly hits a lot of information:
- Search engines
- Second Life
- Videos and podcasts
He provided some reinforcing references and laid out some key reasons for physicians to get involved such as:
- Keeping up to date
- Sharing and collaborating with other physicians
- Improving patient care
I was glad that he brought up the concept of “Information Therapy” which is a term I use a lot, and I think is really important for how providers can direct patients to quality content.
While he spent a lot of time on Facebook and Google+, I personally would have expected more on Sermo or other physician specific networks.
I thought the section on e-patients was really important for physicians to understand how to engage and work with them and creating a difference between a “Googler” and an e-patient.
I knew it was possible, but it was good to see him provide the proper way of citing medical blogs and tweets in medical papers.
I was surprised to see a whole chapter on Second Life. I never hear anyone talk about that anymore. At the same time, there wasn’t any focus on LinkedIn or talk about tools like SlideShare. I think there’s also a need for much more on mobile applications and use of SMS with patients along with a discussion on connected devices ranging from FitBit to more sophisticated tools with feedback and integration into the clinical systems.
He did have some good suggestions on presentations such as looking at the Lessing Method, PechaKucha, and Guy Kawasaki’s 10/20/30 Rule.
My overall summary would be that:
- If you’re new to the space, it’s a good quick read.
- If you’re in the space, you’ll learn a few things, but it’s probably not for you.
Of course, with technology and social media, things change really fast so it’s going to need to be come a more interactive version to keep up with the changes.
After looking back on my time at my last turnaround, there are several clear takeaways:
- Demonstrate Incremental Benefits…All The Time.
- Taking on long-term projects is dangerous. Sponsors change. Markets change. New technology comes out. If you’re working on a multi-year transformation, you need to demonstrate incremental wins and have clear milestones. You should assume you don’t have the next round of funding and build for success at each point. I could say this is using an Agile approach, but it’s more than that.
- FOCUS, FOCUS, FOCUS.
- This one probably seems so obvious from the outside looking in, but it’s easy to get carried away with trying to take on too much. In this particular case, we thought we had a 3-year timeframe to build and deliver on the vision. We created a vision of care coordination that was really innovative, but we knew that no one had pulled it off before. We then tried to coordinate care coordination and cost management which also hadn’t been done. It would have been better to deliver one thing at a time and make ourselves incredibly sticky in that area.
- Know Your Customer…Really Well.
- When coming into a business, it’s so important to know the customer base and what they feel about the business. Do they love it? Do they engage regularly? Is it just a commodity? And why. In this case, clients seemed to love the business, but it was because it was a massively customized business doing all the wrong things. As we brought the business into compliance and created re-usable processes, it changed the relationship with the customers. The relationships weren’t sticky, and we didn’t have clear alignment of goals.
- Partner Well.
- When you’re in the early stages of growth, it’s tempting to try to partner with people bigger and leverage their brand. While that can help, it’s often a big distraction. Some times, you commit to something that you can’t achieve putting pressure on a key relationship. And, other times, you put so much at risk tied to the big company that when you realize that you’re not important to them then you have real challenges. This gets back to the traditional understanding of buy, build, or partner and understanding your core competencies.
- Have A Clear Value Proposition.
- You’ll always find early adopters especially when you have a compelling vision, good sales people, and good management. But, they won’t make your business for you if you can’t clearly demonstrate value. You have to have access to data. You have to be able to report on what you do and demonstrate how you’re creating a ROI. In today’s competitive market, companies without a clear value proposition don’t last long.
- Be Different.
- This is a tough one. We all watch the competition and see a path towards success, but as a younger company, trying to compete on price is a sure path to disaster. Like the Blue Ocean Strategy, you want to compete in a different area. Find your niche and do it better than anyone else in a way that is really different. Trying to build something to just catch up always puts you behind.
- Hire Slow and Fire Fast.
- This is something many people say, but they don’t always do. It’s important to get the right team. It’s important to hire in a logical sequence. For example, getting a great sales team before your solution is built is great for the pipeline but frustrating to everyone in between. On the flipside, in a smaller company, a toxic personality or someone that doesn’t fit can kill you. You need to realize that quickly and let them go. No one likes to do it, but you do a disservice to everyone else if you keep them.
The past few years have been really interesting as I learned more about case management, disease management, utilization management, oncology, kidney care, and many other parts of our healthcare system. The key is leveraging all of this as I move forward in my new role.
I think another related topic to think about here is some of the lessons around MVPs (minimum viable products).
I always use the Apple 1 as my case study for an MVP.
Cancer costs are expected to reach $174B in the US by 2020. Right now, it’s about 10-11% of total healthcare spend which makes it a big area of focus within the healthcare industry.
The question is how to manage this spend:
- Is it about site-of-care and where the care is provided? (community oncology; Centers of Excellence; outpatient clinics; inpatient)
- Is it about specialty drugs and how they are managed and charged? (Buy-and-bill; white-bagging; brown-bagging; on-site pharmacy; 340B)
- Is it about evidence-based care and following NCCN guidelines or clinical pathways?
- Is it about palliative care and managing spend in the last 3-6 months of life?
- Is it about personalized medicine?
One of the challenges is the survival of the community oncology practice (see ASCO report) that is an issue that physicians have struggled with in other specialties. Over the past few years, we’ve seen continued consolidation of practices with many of them being acquired by hospitals and hospital systems.
In some cases, oncologists have seen a reduction in their income tied to a reduction in buy-and-bill and are looking to be employed in order to continue to maintain their incomes. They are one of the few medical professions that have seen a reduction in income recently. At the same time, this trend is also driven by hospitals taking advantage of the 340B pricing which allows them to generate approximately $1M in profit for every oncologist they employ. And, the complexity of oncology treatment also is prompting the need for a more comprehensive care model which requires a broad set of services which is sometimes difficult for a small practice to provide.
Of course, this shift in care from community oncology to hospitals is driving up costs without a demonstrated improvement in outcomes. This is driving a lot of payer focus and driving discussions of payment reform whether that’s in the form of ACOs, PCMHs, or bundled payments. United Healthcare recently released some data from one of their pilots.
This seems like another classic example of misalignment across the industry. Hospitals clearly see an opportunity to buy up more oncology practices while payers and others are going to push for reform around 340B and payment differences. Oncologists are struggling to continue providing care but replace the income they were making of buy-and-bill of specialty medications.
I’ve talked to a lot of people about this struggle. It doesn’t seem clear whether community oncologists are destined for extinction or will payers will find a way to enable them to survive. The other question is how things like teleoncology, tumor boards, big data, and the focus on prevention and survivorship will ultimately change the care delivery approach to oncology which may impact the role of the community oncologist in the future.
In case you haven’t been tracking specialty drug costs for the past decade, the recent news with Gilead’s Sovaldi ($GILD) is finally making this topic a front page issue for everyone to be aware of. I think Dr. Brennan and Dr. Shrank’s viewpoint in JAMA this week did a good job of pointing that issue out. They make several points:
- Is this really an issue with Sovaldi or is this an issue with specialty drug prices?
- Would this really be an issue if it weren’t for the large patient population?
- Will this profit really continue or are they simply enjoying a small period of profitability before other products come to market?
- Based on QALY (quality adjusted life years) is this really quick comparable cost to other therapies?
If you haven’t paid attention, here’s a few articles on Sovaldi which did $5.7B in sales in the first half of 2014 and which Gilead claims has CURED 9,000 Hep C patients.
- Express Scripts Raises Pressure on Gilead
- Specialty Pharmacies Financial Win From Sovaldi
- A Poster Child For Predatory Pricing
- The Cost Of A Cure
But, don’t think of this as an isolated incident. Vertex has Kalydeco which is a $300,000 drug for a subset of Cystic Fibrosis patients. In general, I think this is where many people expected the large drug costs to be which is in orphan conditions or massively personalized drugs where there was a companion diagnostic or some other genetic marker to be used in prescribing the drug.
The rising costs of specialty medications has been a focus but has become the focus in the PBM and pharmacy world over the past few years. This has led to groups like the Campaign for Sustainable Rx Pricing. Here’s a few articles on the topic:
- AHIP Issue Brief
- Most Americans Worry About The Price Of Specialty Meds [even though they’ve never taken them]
- Prices Soaring on Specialty Meds
- Costly Cures
Of course, the one voice lost in all of this is that of the patient and the value of a cure to them. Many people don’t know they have Hepatitis C (HCV), but it can progress and lead to a liver transplant or even ESRD (end state renal disease) which are expensive. 15,000 people die each year in the US due to Hep C (see top reasons for death in the US). So, drugs like this can be literally and figuratively life savers. These can change the course of their life by actually curing a lifetime condition.
This topic of specialty drug pricing isn’t going away.
At the end of the day, I’m still left with several questions:
- What is the average weighted cost of a patient with chronic Hep C? Discounted to today’s dollars? Hard dollars and soft dollars? How does that compare to the cost of a cure?
- What’s the expected window of opportunity for Gilead? If they have to pay for the full cost of this drug in one year, that explains a lot. If they’re going to have a corner on the market for 10-years, that’s a different perspective. (Hard to know prospectively)
- For any condition, what’s the value of a cure? How is that value determined? (This is generally a new question for the industry.)
And, a few questions that won’t get answered soon, but that this issue highlights are:
- What is a reasonable ROI for pharma to keep investing in R&D?
- What can be done using technology to lower the costs of bringing a drug to market?
- For a life-saving treatment, are we ready to put a value on life and how will we do that?
- What percentage of R&D costs (and therefore relative costs per pill) should the US pay versus other countries?
The fact that there are 5,500 new users of prescription painkillers every day for non-medical purposes is a scary statistic, but the data gets even worse.
- 1/3 of people who begin using illegal drugs began with a prescription painkiller.
- Approximately 100 Americans die every day from opioids (including heroin)
- The majority of users get them from friends and family (with or without asking)
- 1.2M emergency department visits are due to prescription drug abuse (including dietary supplements)
I could go on and on. The reality is that we have a huge problem here in the US where we have 4.6% of the world’s population but we use 80% of the world’s opioids. This isn’t a new problem. We’ve been watching this get worse for the past decade. I feel like it’s finally getting some attention among all our other issues. The White House is focused on it. The CDC has put out several pieces on it.
One solution has been the creation of the PMP (prescription monitoring program) which all states except Missouri have. A good source for information on the PMPs or the PDMPs (prescription drug monitoring programs) is the Brandeis COE (center of excellence). But, there are challenges here. It requires physicians and pharmacists to register and access it, but it’s not part of their workflow. It’s typically not required.
I could list out dozens of great reports and sources, but here’s a few:
Several of you have read between my not so subtle hints on the blog. Several of you have helped me in my search. But, after 8 years of chasing that elusive start-up and turnaround bug, I’ve decided that going back into the corporate world is going to allow me to better contribute to transformation in healthcare.
I began my career in healthcare in 1999 when I was a manager at Ernst & Young and my mentor was running the managed care practice. I got to play an exciting initial role which was convincing health plans why the Internet was going to change their business model and why they should have a website focused on members.
That member focused role changed my career path in an exciting way. I went to a CRM start-up focused on helping health plans with product configuration. I then ended up going to Express Scripts which at the time acted more like an $8B start-up driving changes in the marketplace. There I worked on lots of consumer facing solutions. But, as the business grew and I enjoyed the thrill of new challenges, I left to work on my own idea – pharmacy kiosks. That was 2006.
Since then, I’ve worked on kiosks. I’ve worked on Business Process Management technology. I’ve worked on healthcare communications, and I’ve worked on a care management platform. They’ve all been great learning experiences. But, as the private equity guys decided to exit my last business, I decided it was time to do something different and stop having to worry about raising money every year. I actually want to focus on driving change in this very exciting time in the marketplace. While I went back and forth between line management and consulting, I’ve decided that consulting offers me more of what I want right now. I get to work across the industry. I get to work on really complex problems. I get opportunities to publish thought leadership. I get to be part of a constant learning environment. I get to work with great teams both internally and externally. In short, it feeds my need for constant, new challenges. And, it allows me to move the family back to St. Louis.
So, starting in August, I’m joining Deloitte Consulting where I’ll be part of their Strategy & Operations practice focused on payers and PBMs. I’m really excited about it. I’ve been excited by the people that I’ve met, the references I called about their work, and their approaches towards work-life balance and being part of the community.
I’ve always loved consulting and working with clients. I think this time rather than being the fresh-faced MBA graduate (that I was at E&Y) that I’m looking forward to bringing a broad set of experiences to the table to help think through the challenges. I’ll have to capture some of my lessons learned from this past role and share them in another post. They can build on the prior lessons learned that I’ve shared.
Forbes magazine, which has become a great source for healthcare articles, has a story about urgent care clinics in the July 21, 2014 issue called “McHealthcare”. It’s an interesting read saying that fast food is the model on which to reinvent the doctor’s office.
Let me layout a few key points:
- There is a lot of waste in the healthcare system with people mis-using the Emergency Room. (A report by NEHI estimated this waste at $38B a year.)
- Urgent care clinics and clinics in general (e.g., MinuteClinic) have become more easily accessible points of care for many people.
- Consumers want easier access and lower out-of-pocket costs.
- Telemedicine is growing with the recent support from the AMA likely to boost it significantly in the next few years.
The article gives some facts about the industry and talks about two structures being used in the urgent care growth – franchising and private equity consolidation.
Some of the facts from the article include:
- 10,000 urgent care clinics in the US
- 160M visits annually
- $16B industry
- $1.5M / year in avg sales per location
- $300,000 / year in avg profits per location
I also really liked the example they used of American Family Care simply following Walmart and Target to figure out locations. As we know, location is king.
The questions of course are:
- Will this industry grow at the forecasted pace? (12,000 by 2019)
- How will traditional physicians respond?
- Will the costs be less than the ER? (They are today per the chart from Forbes below)
- Will the costs be less than PCPs? Will they be less than other clinics? How will costs compare to telemedicine?
- Will the outcomes be better?
- Will they treat only acute or one-time visits? How will they manage chronic conditions and repeat patients? [One chain sees 20% of patients for chronic care and 75% are repeat customers.]
- Will their be an IT infrastructure to link all their data together to create a coordinated care strategy?
Some of the companies they list in this space include:
- Concentra (bought by Humana)
- US Healthworks (bought by Dignity Health)
- MedExpress (Sequoia Capital and General Atlantic)
- American Family Care (independently owned)
- NextCare (Enhanced Equity Funds)
If you think about The Triple Aim, clinics should be one of the first to really appeal to the consumer experience. Cost should be able to follow. It’s the third leg of the stool (clinical outcomes) that I think is still TBD.
Clinics as a proxy to fast food may work if you think about franchising, but I’m not sure about customer service. (And the term “McHealthcare” can’t help but make me think about the movie Super Size Me.) We don’t want the disconnected, unengaged worker treating us. We want more of a Nordstroms model where they know us and engage us. Can that happen in a clinic setting? Perhaps.
The idea of no appointments (see wait times), longer hours, weekend hours, technology savvy, comfortable wait rooms, free WiFi, and one-stop healthcare is appealing. This is just one of the macro trends which will help lead the transformation and change within healthcare.
On the surface, the “Holy Grail” of sophisticated wellness and incentives programs are based on outcomes. This means that the individual gets rewarded for achieving a goal. For example, you can structure your incentives different ways. You could have a reward for enrollment (i.e., I register for a program). You could have a reward for activity (i.e., I talk to a nurse or watch a video online). You could have a reward for an outcome (i.e., I lose 10 pounds).
But, those have different implications in terms of structure. [Note: I’m not a lawyer or an accountant so don’t take this as legal advice.] I think Andrea Davis at Employee Benefit News did a good job of touching on this in her article “No Good Deed“.
I did have a chance to implement a large outcomes-based rewards program for 1/1/14 where we had to address a lot of these changes from the ACA. One of the key terms that she hits on is this idea of “Reasonable Alternative Standards”. This basically means that if you implement an outcomes based incentive program that people have to be able to get the same incentive without achieving the outcome. This seems to defeat the purpose in my mind.
I always used to say that it was like having a guard dog with no teeth. We implemented a very interesting program with lots of expectations, but there was a huge gapping loop hole. Everyone could apply for a Reasonable Alternative Standard and achieve the same payout without really doing much. Of course, most people don’t realize this, but this is why I would argue that people that aren’t healthy or engaged with their health programs at work would rather have these outcomes based programs.
Do you ever hear someone talk about how great our healthcare system is because survival rates for a particular condition have gone up? Of course you have. Here’s one that says that cancer survival rates have doubled over the past 30 years.
This sounds great. We all get excited about this.
BUT…the key question that I have to ask is whether this is tied to better identification of cancer and early screening. If you screen more people and identify them earlier, you will have more survivors that live longer. That’s just a reality. For some people, the disease never will have progressed which is what leads us to this screening dilemma.
In the second article, they were looking for evidences of cancer in ancient societies to see what that might teach us about cancer. What I found most interesting was the comment about people believing that cancer was a modern disease attributed to our environment so that it didn’t exist long ago. I can see how all the articles about things leading to cancer could create that perception, but it seems like a big jump to me.
So, for those of you that are in healthcare, this is a great lesson about understanding the measures you use and how they drive actions. For those of you as consumers, this is a good reminder to understand the metrics that are thrown around and question them.
Ideally, we’d all get individualized or personalized healthcare, but we’re still years away from that happening. But, there are several basics about segmenting individuals which are relevant. One of them is that men and women are different in how they experience healthcare. Another one is that different plan designs drive different behaviors.
With those in mind, I found an article in the June 2014 Money magazine interesting. It pointed out that while both men and women reduce their use of the emergency room with high-deductible plans that it varies. As you can see from the table below, this is especially relevant for high-severity issues where men dramatically reduce their use of the ER which can lead to significant issues.
You can see a few studies on this topic here:
This is a great question…once you know what VUCA means?
In the April 7, 2014 issue of Fortune magazine, they have an article by General George W. Casey Jr (retired) who talks about giving a presentation at UNC about this. From his article, he mentions a few key things:
- It’s really difficult.
- Leaders need to “see around corners”
- You need a clear statement of what needs to be accomplished
I think it’s a great framework for start-ups and healthcare in general. We’re in a time of massive change in healthcare. It can lead to people being paralyzed by a lack of a clear future. Leaders need to help their team understand a future vision and give them a clear problem statement to solve. This will help drive action which is critical.
HBR had an article about VUCA also earlier this year with the following graphic:
If you’ve never watched a video about Parkour running (aka free running), take a look at this video.
As a runner, I find this very interesting. On the flipside as someone who can’t do a cartwheel, is afraid of heights, and has passed 40, this seems like a great way for me to hurt myself.
But, I find it really interesting that a TV show based on an obstacle course in Japan has really shined a light on this. American Ninja Warrior is a very interesting show about athletes. It’s like the Voice for sports. They share the backstory and then have people compete on very difficult obstacles. You see NFL players, Olympic athletes, trainers, stuntmen, and people from all walks of live. I personally find it a great show to run on the treadmill with. I feel very motivated.
I thought I’d share as this looks like a great type of program for kids to get them into obstacle course running and making exercise fun. I know a lot of gyms around the country have started to offer these programs.
Let me start by saying…DON’T read this book if you enjoy having your physician up on a pedestal. It will change your perceptions and skepticism of the system.
DO read this book if you’re frustrated by our US health care system and wonder why we spend so much money without necessarily seeing differences in mortality and outcomes compared to other developed countries.
“Proponents of science as a foundation for health care have not come together to form a grassroots movement, and until this happens, all of us will have to live with a system built on pseudoscience, greed, myths, lies, fraud, and looking the other way. Patients need to learn that more care is not better care, that doctors are not necessarily right, and that some doctors are not even truthful.”
(Quote from the book pg. 27)
Otis W. Brawley, M.D., F.A.C.P., chief medical officer for the American Cancer Society, is responsible for promoting the goals of cancer prevention, early detection, and quality treatment through cancer research and education.
Dr. Brawley currently serves as professor of hematology, oncology, medicine and epidemiology at Emory University. From April of 2001 to November of 2007, he was medical director of the Georgia Cancer Center for Excellence at Grady Memorial Hospital in Atlanta, and deputy director for cancer control at Winship Cancer Institute at Emory University. He has also previously served as a member of the Society’s Prostate Cancer Committee, co-chaired the U.S. Surgeon General’s Task Force on Cancer Health Disparities, and filled a variety of capacities at the National Cancer Institute (NCI), most recently serving as assistant director.
Dr. Brawley is a member of the Centers for Disease Control and Prevention Advisory Committee on Breast Cancer in Young Women. He was formerly a member of the Centers for Disease Control and Prevention Breast and Cervical Cancer Early Detection and Control Advisory Committee. He served as a member of the Food and Drug Administration Oncologic Drug Advisory Committee and chaired the National Institute of Health Consensus Panel on the Treatment of Sickle Cell Disease.
Dr. Brawley is a graduate of University of Chicago, Pritzker School of Medicine. He completed his internship at University Hospitals of Cleveland, Case-Western Reserve University, his residency at University Hospital of Cleveland, and his fellowship at the National Cancer Institute.
I would put this book on my must read list for anyone working in healthcare. I have two other books there:
Here are some things I highlighted as I read the book:
- People diagnosed with cancer who had no insurance or were insured through Medicaid were 1.6x more likely to die within 5 years than those with private insurance.
- “No incident in American medicine should be dismissed as an aberration. Failure is the system.”
- “Our medical system fails to provide care when care is needed and fails to stop expensive, often unnecessary, and frequently harmful interventions even in situations when science proves these interventions are wrongheaded.”
- He introduces the concept of the “wallet biopsy” as a term to describe the difference in care we get once it’s determined what type of insurance we have.
- While he points out and is clearly an advocate for health discrepancies and the issues of the un- and under-insured, he also points out that “wealth in America is no protection from getting lousy care”.
- He hits on a point that I agree with in medicine and everywhere else which is teaching people to say “I don’t know”. He later says “If you truly respect the patients you treat, you will not obscure the line where your knowledge stops and your opinion begins.”
- He makes a key comment “Can the health-care system make itself trustworthy, become accessible and driven by science?” (This reminds me of another book on trust in the healthcare system.)
- “In most cancers, the quality of the surgery is the most important factor in the ultimate outcome.”
- He talks a lot about the motivation of physicians in determining treatment and how that can be misguided over time. While some of this can be explained away with Defensive Medicine, he points out that many other times this is simply the business of healthcare with people making money off these treatments. Or, as he also points out, sometimes it’s simply unwillingness to challenge the status quo of over-treating the patient. [This is something that I’ve heard other oncologists who provide second opinions point out.]
- I learned about “gomers” which stands for get out of my emergency room which are patients who come to the emergency room just to interact with someone without any real symptoms. He also introduces several other terms apparently all derived from a book The House of God about an intership at Beth Israel Medical Center in the 70s.
- He brings up an important issue that us as Americans and many physicians believe to be true which is that “death is a failure of medicine”. I’ve talked with several physicians about this. I believe it’s one of the things that contributes to the enormous amount of money we spend on people in their last 90-days of life.
- He gives a great (but sad) story of the “moral hazard” scenario of a family trying to care for their parent in the last days of their life and all the “senseless acts of medical torture” that they put him through. This is one of his classic examples of where the physician knows better but is actually instructed to do harm.
- He talks about one of the physicians he was assigned to work with during a rotation. I thought this summary of his rules was great:
“You don’t deviate from the science. You don’t make it up as you are going along. You have to have a reason to give the drugs you are giving. You have to be able to quote literature that supports what you are doing. You have to tell patients the truth.”
- At one point, he says that he confirms a truth he learned as a kid which is scary – “Doctors try out things just to see whether they will work.”
- He gives a brief nod to companies using business rules to safeguard patients through technology that requires physicians to document what they are doing and comparing those to guidelines.
- He spends a lot of time on prevention and survivorship in terms of how people justify some of those numbers. It’s worthy of an entire post, but the key point is that early diagnosis by itself simply increases the years of survivorship. It doesn’t actually mean we did anything better. He also points out that due to all the treatments we give patients some of them die of other issues rather than cancer that “improves” the cancer death statistics.
- And, for all of my pharmacy friends, he doesn’t miss the opportunity to tell the Nexium story or to talk about Vioxx and what happened in both of those cases.
- His stories are amazingly similar to some of the physicians that I worked with for the past two years. He talks about the overuse of radiologic imaging. He talks about the da Vinci robot.
- He gives some unique insights into the politics of support groups and government funding which I’d never understood before.
- A great quote he uses from Willet Whitmore when talking about PSA testing and prostate cancer was:
“When cure is possible, is it necessary, and when cure is necessary, is it possible?”
- I also liked a quote he gave from another urologist which said:
“There is the kind of prostate cancer that can be cured, but does not need to be cured; there is the kind of prostate cancer that needs to be cured and cannot be. We all hope there is a kind of prostate cancer that needs to be cured and can be cured.”
- This leads up to his point that research shows that 1.3M American men were needlessly treated for localized prostate cancer from 1986-2005. Wow!
- He was very positive on the US Preventative Services Task Force (USPSTF) which I was glad to hear since that’s the group that several of my physician friends have used before for setting guidelines.
Hopefully, you get the point. It’s a quick read with a good mix of studies, patient stories, and the history of cancer with a focus on both historical and current issues that face us in this time of transformation in health care.
Here’s a few more articles about Dr. Brawley and his book:
As a random point of interest, Dr. Brawley uses several references to teachers and his Jesuit education at The University of Detroit Jesuit High School and Academy in Detroit which is where I also went to school and had some of the same teachers. Our school was featured a few years ago as the last Catholic college prep school still in the city.
After Aetna, Cigna, and Wellpoint all moved into different PBM relationships with CVS Caremark, CatamaranRx, and Express Scripts, it certainly marked the end of much of the debate on whether a captive PBM (i.e., owned and integrated with the managed care company) could compete with the standalone PBMs. There are really only a few big integrated models left including Humana, OptumRx (as part of UHG) and Kaiser with Prime Therapeutics having a mixed model of ownership by a group of Blues plans but run as a standalone entity. Regardless of where the latest Humana rumors take them, it made me think about what the market has become with these new relationships.
- Scale matters. All of these relationships and discussions show that there are clear efficiencies in the marketplace.
- Drug procurement (i.e., negotiating with the manufacturers (brand and generic) and the wholesalers)
- Pharmacy networks (i.e., getting the lowest price for reimbursement with the retail pharmacies)
- Rebating (i.e., negotiating with the brand and specialty drug manufacturers for rebates)
- Outcomes matter. If scale was all that mattered, there be no room for others in the marketplace. But, we continue to see people look at this market and try to make money. That means that “outcomes” matter in different ways:
- Clinical outcomes (i.e., does the PBM have clinical programs or intervention strategies that improve adherence and/or can demonstrate an ability to lower re-admissions or impact other healthcare costs?)
- Financial outcomes (i.e., does the PBM have innovative programs around utilization management (step therapy, prior authorization, quantity level limit) or other programs like academic detailing that impact costs?)
- Consumer experience (i.e., does the PBM’s mail order process or customer service process or member engagement (digital, call center, etc) drive a better experience which improves overall satisfaction and overall engagement…which drives outcomes?)
- Physician experience (i.e., does the PBM engage the physician community especially in specialty areas like oncology to work collaboratively to drive different outcomes?)
- Data (i.e., does the PBM use data in scientifically valid but creative ways to create new actionable insights into the population and the behavior to find new ways of saving money and improving outcomes?)
While I’ve been beating the drug of the risks of commoditization to the market for years, I’m going to make a nuanced shift in my discussions to say that there is still a risk of commoditization and driving down to the lowest cost, but we may be quickly approaching that point. What I’m realizing is that there can be a two tier strategy where you commoditize certain areas of the business and let the other areas be differentiated. And, that this can be a survival tactic where you either outsource the core transactional processes to one of these low cost providers or figure out how to be one of them while creating strategic differentiation in other areas.
Maybe you can eat your cake and have it too!
I was reading my AIS Health Business Daily e-mail this morning. Today’s quote of the day is below. It made me wonder. Think about any healthcare organization. We have a long way to go to get here.
It was good because I actually heard things that I’d never heard discussed around specialty pharmacy before. And, as he pointed out, specialty will represent 50% of the pharmacy spend and about $235B in total spend by 2018. This is where everyone is focused and the opportunity for differentiation exists.
- He talked about how to get to zero trend in specialty.
- He talked about the consumer experience in specialty.
- He talked about care coordination and its value in specialty.
- He talked about the need for a beyond the pill approach by the specialty pharmacy.
So, what does all this mean? Let me share some highlights:
- Specialty pricing is starting higher based on government pricing constraints. You can’t raise price. It’s easier to start high, discount, and/or come down over time.
- Pharma is beginning to price based on Quality Adjusted Life Year (QALY).
- 3.6% of patients drive 25% of costs (not a surprise)…but 43% of their total costs are not from the specialty condition but from their co-morbidities. (Why treating the patient not the condition is critical.)
- Site of care (which is the hot buzz today) can save you 17% or more.
- Developing an exclusion formulary is important to counteract copay cards and help reduce costs.
- They are moving from 12-month contracting with pharma to 2-3 month contracts to really keep on top of market conditions.
- Coordinated care can drive lower costs in terms of readmissions and other total medical costs.
- You can use generics to replace biologics. For example, he showed switching out an HIV biologic costing almost $3,000 / month with 3 generics costing $101 per month. (I’ve never heard anyone else talk about this.)
- He also reinforced the fact that today’s specialty benefits are not coordinated across medical and pharmacy. For example, he used the RA example where there are 9 drugs with 4 of them commonly used under the medical benefit and 5 under the pharmacy benefit.
But, the most important thing was their strategy to get clients to ZERO TREND for specialty pharmacy. (It reminded me of the program I developed at Express Scripts where we actually guaranteed a 3-year zero trend…if you followed our very aggressive recommendations.) He outlined the following:
- 1.5% savings from their formulary
- 0.5% savings from an exclusive specialty network
- 1.9% savings from an aggressive generic policy
- 1.0% savings from innovative pricing
- 3.6% savings from optimizing site of care
- 2.5% savings from medical claims editing and repricing
- 6.0% savings from enhanced prior authorization
He also went on to talk about the consumer experience. I think a lot of specialty pharmacies are thinking about the same things, but there were several things he shared that were new to me. It was exciting.
As I’ve said before, as specialty pharmacies really start to think about the patient and focus on the experience over time, we will start to see more coordination with pharma about going beyond the pill and driving lower total costs.
The Prime Therapeutics Drug Trend Report was released yesterday. Interestingly, they start out the report by making the point that what really should matter is net ingredient cost not trend. I’ve made the point before that trend isn’t a great number to focus on for many reasons. And, if you’re comparing trend numbers (which we all do), then you need to understand different methodologies. I think Adam Fein does a good job of summarizing that in his post. (BTW – This is a tough discussion to have especially when you’re getting spreadsheeted by consultants as part of an RFP.)
As comparisons, you can see my reviews of the other drug trend reports here:
Their report was short and to the point. Here’s some of the key data points:
- 25M members
- 80.6% generic fill rate
- 12.7 Rxs PMPY
- Overall drug trend = 3.3%
- Specialty drug trend = 19.5%
- Net ingredient cost trend = 2.2%
- The net ingredient cost per Rx = $58.99 (this is net of rebates and takes into account acquisition costs and network discounts)
- They state that this beats the competition by $6.00 per Rx
Of course, anything anyone really cares about these days is specialty. Specialty represents only 0.4% of the scripts they fill but 20.5% of the spend for a commercial account. (They point out that this is much less as a percentage of scripts than other PBMs which have closer to 1% of their scripts classified as specialty…which could influence trend numbers.) The chart below shows how some of the things we all did around traditional drugs apply to specialty drugs.
And, they make a few predictions going forward:
For some people running mail order pharmacies, this analysis is no big surprise. They’re running off to their boss to show them that it’s not just their mail order facility, but it’s an industry issue. To others, they’re left scratching their head trying to figure out why this is. If mail order is where all the money is, what does this mean to them? (The historical PBM model put most profit in generics filled at mail order.)
Per a statistic mentioned in Drug Benefit News from Pembroke Consulting (and discussed here by Adam Fein), mail order prescriptions from 2012 to 2013 (excluding Medicare) dropped 9.2% while retail prescriptions jumped 2.7%. (This is not new news, but this is a big drop.)
I’ve talked about the issues and challenges of mail order many times:
- Retail satisfaction seems to beat mail order satisfaction based on different studies, but at the same time, there are studies showing the exact opposite.
- Presentation on the challenges with improving mail order rates
- Why clients don’t always save using mail order
- Why consumers choose mail
At the end of the day, I simplify the mail order issue down to four major challenges:
- Savings are disappearing. Savings were primarily on brand drugs filled for 90-days. When you fill a generic at mail and your getting 15-30 days supply for “free” (i.e., no copay), that’s great, but the copay savings is $4-10 every 90-days. With generic utilization in or around 80%, this is a real issue.
- Transparency, coupons, and cash pay. With apps like GoodRx, it’s easy for consumers to find the lowest cost option for them to fill a prescription. That might be in a discount program. It might be to pay cash. It might be with a coupon. And, it might be mail order. They now can figure it out and optimize their spend easier. Mail isn’t the only option.
- High expectations. As a society, we continue to be more and more of a society that wants an instant response. Sending prescriptions off to a black box with a multiple day turnaround and difficulty tracking the prescription doesn’t meet our modern expectations. (A connected model of electronic prescribing may one day change this.)
- Cash flow. As I always point out to people, we (those working in the industry) don’t represent the average American. While it seems so logical to pay for a 90-day script in order to save money, that means you have to have the cash to pay for 3 months upfront. Not everyone can do that especially when they have multiple prescriptions…And, no mail order pharmacy that I know of wants to be in the credit business.
Will mail order disappear? Of course not, but PBMs need to continue to either find ways to improve the consumer experience and make it better or they need to recognize the issues that exist and continue to diversify. And, with more 90-day prescriptions at retail for the same copay (i.e., CVS Caremark), this will continue to shift expectations.
I think this is really interesting. Cleveland Clinic has opened a Chinese herbal-therapy ward. In the US, we’re very much a medicated society. There’s a pill for almost every ailment you have and some you didn’t even know you had. Even admitting that Western medicine might not have all the answers is a big step forward especially for such as prestigious hospital such as Cleveland Clinic.
So, what are they doing? According to what I’ve read, they see patients with chronic pain, fatigue, poor digestion, infertility, and sleep disorders. The clinic is run by a certified herbalist under the supervision of several classically trained physicians. Access to the clinic is only on a referral basis, and according to Ohio law, the physician has to continue to oversee the patient’s treatment for a year after their referral.
The clinic is a single room with bright pillows, a tapestry, candles, and a cot.
Compared to China, the herbal formulas here are all encapsulated versus sent home with them to brew.
Of course, one of the worries is drug-herb interactions which requires them to coordinate care using an EMR and have people that have the right training and work with a clinic that can provide them with the right herbs and still meet their safety standards.
A consultation costs $100 which is typically not covered by insurance. Additionally, follow-ups are $60 and a one-month supply of herbs will cost $100 (on average).
Here’s more on their clinic:
Back in March 2014 (yes I’m behind), Fast Company put out a report on the World’s Most Innovative Companies. I thought the list of 12 trends or lessons from their research was worth sharing.
- Exceptional is the Expected…Google is the case study here, but they make a point that for most companies, the best businesses focus on less not more.
- Innovation is Episodic…Innovation ebbs and flows so people don’t stay on the list every year. This is also known as regression to the mean or the Sports Illustrated curse (of being on the cover).
- Making Money Matters…This is very true for mHealth. I’ve seen so many really cool ideas, but if they’re not self-sustaining, that’s a problem.
- Sustainability Has Found A New Gear…”Green” is no longer a gimmick. Companies are innovating and using alternative fuels and recycling as part of that.
- Unlocking Global Talent Unlocks Possibility…I can’t believe companies still don’t get this. To innovate, you need diversity and a culture which allows those different opinions and perspectives to hash it solutions. (Just look at the graphic at the bottom of this post for Silicon Valley which makes that point.)
- Passion is Underrated…While crowdsourcing sounds like old news to many industries. I think there’s still a huge patient empowerment push that will happen in healthcare. (Just look at this article in the WSJ.)
- Conflict Isn’t Required…This is the perfect Blue Ocean example. You don’t always have to try to change the establishment but sometimes you have to figure out a whole new way.
- Happy Customers Make You Happy…Not much to say here. Healthcare is about to learn this lesson with exchanges, but we have a long way to go.
- Software Beats Hardware…YES! A great computer with a horrible data entry process which messes up the physician workflow and consumer experience is bad. We need outside-in design to develop user-friendly software that takes into account workflow and regulation but improves the overall experience and outcomes.
- “Made In China” Is A Compliment…I’d expand this point to say that while we’ve outsourced for years for cost that’s building up knowledge and a middle class abroad. As their expectations and experience rise, we’re going to see more innovation and quality from abroad.
- The Biggest Winner In The App Economy Remains Apple…And, now, Apple is taking it’s “moral obligation” and bringing it to healthcare.
- Dreaming Big Isn’t Folly; It’s Required…Eliminating cancer. Changing payment paradigms in healthcare. Getting patients to take action. Changing food at schools. We have to have some BHAGs in healthcare and make them happen. (Perhaps some of the HealthPeople 2020 initiatives will get us thinking.)
Curing Camden is a quick read on how different groups collaborated to change the healthcare cost curve in Camden, NJ. Here’s the official language from the Amazon site, but after reading it, I thought I’d highlight a few things that caught my attention.
As the federal health reform debate played out in the national media spotlight, author Christina Hernandez Sherwood was reporting on the American medical system from the street level. From 2010 to 2012, she wrote a half-dozen stories for thePhiladelphia Inquirer that focused on an innovative healthcare nonprofit: the Camden Coalition of Healthcare Providers. These stories centered on the nonprofit’s role in combating falls, violence, diabetes, and other issues in Camden, New Jersey, a city known nationally as one of the country’s poorest and most violent, but that is now making a name for itself as an innovation leader in the public health sector.
In Curing Camden, all of Sherwood’s articles have been collected into a single book, including the unpublished final installment profiling the nonprofit’s founder. This book takes readers from the living rooms of Camden residents to the halls of the New Jersey State House in Trenton and beyond. Sherwood highlights how Camden could be the first US city to bend the cost curve by lowering healthcare costs while improving care. The ideas revealed in this book could be translated into practice across the country, and Camden could become a national model of 21st century medicine and public health.
The book goes through several core chapters. The first one is on creating a citywide health record by working with the 3 primary health systems in the city. The core part of the success here is that they used the framework of opt-out not opt-in which would drive more participation at the consumer level. This behavioral economics framework called “active choice” has been used by several companies that I’ve worked with in the healthcare space to shift behavior patterns. This obviously has the opportunity to reduce duplicate testing and improve care coordination.
The second chapter is about create an ACO for Camden with a 3-year Medicare demonstration project. It’s an interesting discussion about how Dr. Jeffrey Brenner began using data to learn things about the Camden population. For example he found out that most of the population will vista a hospital at least once in a 2-year period (which is 2x the national rate). He also found that most of the top reasons for going to the emergency room were all primary care issues. He makes a great point in the book that while people think that complicated patients simply like going to emergency rooms the reality is that they don’t have better choices.
The third chapter was about protecting against the risk of falling. From 2002-2009, Camden residents made more than 17,000 trips to the hospital (the number one cause of hospital visits in Camden). This isn’t a localized issue either. Falls affect 1 in 3 seniors every year and drive $19B in costs according to the CDC. In the book, they make an interesting point about the “vicious cycle” of falling which leads to less activity which leads to weaker patients increasing the likelihood of another fall.
The fourth and fifth chapters are about diabetes. In Camden, almost 13% of adults have diabetes. These patients can be high utilizers which is something they talk about along with their focus on the 13% of patients that drive more than 80% of the costs in Camden with one patient having over $5M in charges over 5 years. Of course, people in dangerous communities are at higher risk of obesity due to lack of access to food and safe places to exercise which contributes to the diabetes issues.
The sixth chapter is about violence and helping victims. Camden’s 77,000 residents experience more than 13 aggravated assaults per 1,000 residents (which is 5x the national rate). This lead to 9,361 trips to the hospital from 2002-2009.
It’s an interesting read. They had a lot of grant money, but at the end of the day, it was about several things:
- Coordination and collaboration across the different systems
- Localized care – being in the apartment building with a clinic or going into people’s homes
- Using data to target the areas where they could make a difference
- Caring to make a change