Enabling Healthy Decisions

I think a great parallel for healthcare consumerism is the shift to 401Ks. People had to take new responsibility. People had to begin to understand the markets. People had to think long-term. And, a certain percentage of those people failed. (At least that’s what I call it when I hear people are retiring with less than 2 years income in savings, no pension, and are therefore dependent on social security – see study from a few years ago.)

Obviously, we can risk a nation of people who fail at their healthcare and end up bankrupt, sick, and dependent on the government to bail them out.

So, I found a brief article in Money Magazine (Sept. 2007, pg 113) about Daniel Kahneman who won a Nobel Prize for explaining why people make the wrong decisions time after time about investing or spending money. He is a psychologist not an economist. Here were a few things from his interview (I paraphrased when not in quotes):

• It’s unrealistic to believe people are rational and use all available information to make consistent decisions.
• People respond to how things are positioned. (E.g., “An investment said to have a 80% chance of success sounds far more attractive than one with a 20% chance of failure.)
  • Reminds me of my previous points about loss avoidance versus savings.
• We need to make fewer decisions. He says there are two that matter: (1) “how much of your wealth you want to put at risk” and (2) “how much risk you want to take with it”.
  • I am sure there is a healthcare parallel here. What type of lifestyle do you want to have? And, how much work are you willing to put in to achieve that? (Not sure that’s it, but I think it can be simplified and a framework applied to let us make consistent decisions with long-term implications.)

Later, in the same magazine, Jason Zweig has an article titled “Your Money and Your Brain” which is excerpted from the book by the same name ©2007.

• “Your investing brain often drives you to do things that make no logical sense – but make perfect emotional sense.”
• “Scientists in the emerging field of ‘neuroeconomics’ – a hybrid of neuroscience, economics, and psychology – are making stunning discoveries about how the brain evaluates rewards, sizes up risks and calculates probabilities.”
• He talks about the thrill of the chase. Our mind is more excited anticipating a profit than when we get one. (Think about this in terms of the need for constant reinforcement and rewards to drive behavior over time.)
• He talks about the implications on long-term memory and an experiment showing that people were more likely to remember things that were associated with a reward than those that weren’t. (Think about this in terms of health education.)
• I think a great quote is “we tend to judge the probability of an event by the ease with which we can call it to mind.”
• He talks about the peer pressure impact on your brain. (We all saw this with the study last year on obesity linked to who your friends are.)

As you may know, Prime Therapeutics is a PBM headquartered in Minneapolis that is owned by a group of BCBS plans. I just had a chance to read their Drug Report this past week. As I have talked about Caremark, Express Scripts, and Medco, I thought I would share a few comments and highlights here.

First, I thought it was interesting in that it took a slightly broader perspective (perhaps the BCBS influence) on the industry dynamics. It mentioned the war and YouTube (for example). [I don’t think I have seen many other people in healthcare even acknowledging YouTube.]

I was surprised by a 2004 Rand and BCBSA study they quoted saying that “approximately 70 percent of survey respondents cited the Internet as their main source of health information” thereby supplanting the role of the personal physician as the primary source.

Given the focus on wellness across the industry, I found their list of common components and incentives that are used in creating a wellness program to be a good, quick checklist.

I couldn’t figure out two things that were either “corporate DNA” opportunities or something different about their pricing and plan designs.

1. They say that plans that transition to Prime from other PBMs save 4.5 percent. (Which is significant.)
2. They also said that their utilization was only 10.65 in 2006 which would be lower than most numbers that I have seen.

They do a good job of explaining some of the generic scenarios in the industry as people try to get that small advantage.

At-Risk Launches

Several generic companies launched their products ‘at-risk’, which means that the FDA has granted approval to their product prior to the expiration of a patent that is contested in court, but after all applicable exclusivity periods have ended. These ‘at risk’ generics, including generics of Biaxin®, Plavix®, Toprol XL® and Wellbutrin XL®, are subject to large penalties payable to the brand-name drug manufacturer if they lose pending lawsuits. Citizen Petitions Brand drug manufacturers, or their agents, frequently use Citizen Petitions in attempt to slow down the approval of generics. These are not legal proceedings in the typical sense, as they usually do not involve specific protection of a patent. The FDA must make a ruling on a Citizen Petition before it approves a generic, and this frequently takes a significant amount of time. These products are currently involved in Citizen Petitions: Lovenox®, Concerta®, Catapres TTS®, Skelaxin®, Vancocin®, Miacalcin® and Flovent®.

Authorized Generics

With authorized generics, the brand-name drug manufacturer makes its own generic version of its own brand-name drug. By doing this, they can reduce the profit a first-to-file generic company reaps during generic exclusivity periods, which could discourage generic companies from entering the market.

Agreements Between Brand and Generic Companies

Another pressing issue, which has also been around for several years, involves agreements between brand and generic companies. These agreements end litigation and keep generics off the market for a period of time, but still may allow generics on the market before all patents have expired. Sometimes these agreements involve payments to generic drug manufacturers in an effort to delay the release of the generic product.

The other thing that I thought was a good summary in their document was their predictions for 2007 and 2008.

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Although I agree with the book on Don’t Sweat The Small Stuff for your personal life, I would disagree from a patient communication perspective. I believe most healthcare people dislike the word marketing. They don’t want to think about communications as marketing (which of course has some HIPAA implications if they did). But, the fact is that you are competing for mindshare and trying to get the patient’s attention to do something (otherwise you are just communicating to fulfill some checkbox).

Let’s just think about a few key points in communications:

1. Choosing the right word. There are lots of examples of how industries and/or companies have reshaped a single word or phrase to have new meaning and new positioning. It matters. Telling stories that evoke emotion and create a call to action have power. There are the classic bad examples such as calling a car a Nova which when exported to Spanish speaking countries means “no go”. And, traditionally, a lot of our health care terms are more negative such as prior authorization or only mean something to someone in the industry such as network.
   • Used cars have become pre-owned vehicles.
   • Online forums have become communities.
   • Generics have become unadvertised brands.
   • Mail order has become home delivery.
   • Employees have become associates.
   • Members have become patients.
   • Is formulary better than preferred drug list?
2. Determining when to communicate. Depending on your family and your conditions, it is possible that you get at least one communication per month (if not more) from some entity within the healthcare process – managed care, hospital, primary care, specialist, retail pharmacy, mail pharmacy, specialty pharmacy, pharmacy benefit manager, employer, disease management company. The reality is that you are going to pay the most attention to a communication when it is timely. For example, telling me that some group of physicians will no longer be in my network doesn’t matter to me if I don’t go to them today. When I go to choose an allergist and find out that the best one in the state is no longer in network, then it matters, but I have long forgotten that communication.
3. Coordinating multiple channels. Thinking through a communication and where people will look for information – website, inbound IVR, live agents, employer. It is important (to optimize success) to think about how patients receive and digest information and coordinating information. Nothing is more frustrating than hearing one thing but getting a different answer in another mode of communication.
4. Using personalized preferences. You make yourself “sticky” and create loyalty by learning about your patients…and using that in how you interact with them. What do they do with information? How do they use information? How do they use healthcare? When do they respond to calls? Do they use the Internet?

It’s not easy, but it is essential. From a healthcare perspective, the industry continues to march down a path where differentiation is going to be in the way the company treats and interacts with the members and patients. Which brings me to the question of corporate DNA.

Are there things embedded into the culture of a company that all things being equal make the experience or outcomes with one company different from that with another? It is an important but difficult to prove question. We did a lot of analysis at Express Scripts to try and prove this. For example, if plan design and population was exactly the same, would a company have a different generic fill rate with us than another PBM?

This is where the small stuff matters. How people answer the phones at the call center. How patients perceive the company and the type of experience they have. How logic is coded in the system. Additionally, this is where I think you see the link between corporate culture and company results. Positive cultures where people love their work, enjoy coming to work, and want to make the company successful have a spillover effect on the customers.