Enabling Healthy Decisions

Whenever I get a cold or have to go to the physician’s office, I always complain about how busy I am or what else has to be done. We schedule our lives so tightly that there is rarely time for acute health needs much less preventative measures. (Or else I’m the exception.)

But, I was thinking about this when I read the Walgreen’s study the other day on the impact of the flu. It takes survey data and projects it forward, but I think it makes a big point about why to get a flu shot. You don’t want to be miss out on life’s events such as the estimated:

• More than 600,000 graduations missed
• More than 1 million weddings not attended
• More than 3 million vacations canceled or interrupted
• Nearly 5 million holiday celebrations missed
• More than 5 million sporting events missed

And, the rest of us that are healthy don’t want the sick people coming and getting us sick!

“In addition to holidays and planned vacations, there may be other engagements and important dates that fall when flu is widely circulating. There’s no planning for an ill-timed illness, and these findings from last year’s typical flu season reinforce the importance of getting a flu shot each year.” (Dr. Cheryl Pegus, Chief Medical Officer, Walgreens in press release)

We all are looking for better ways to innovate and improve our product offerings. I found an example from 37signals in Inc Magazine (October 2011) to give an interesting example.

They put a cross-functional group together and walked through one of their software products. Everyone was encouraged to rip on the product in roast style. From this article, it sounds like they were able to accomplish this with no hard feelings and coming up with some productive next steps.

It made me wonder:

• How would your adherence product survive a review?
• What would people say about your benefit materials?
• What about mail order or 90-day retail? How would people think about these offerings?

Of course, if you went down this path, I would suggest getting some clients (e.g., employers, payers) and some consumers involved. You need to create a “safe” place for them to criticize without people being defensive.

It makes me think of one adherence product I saw lately. I stopped by a company booth at a conference. I asked them how they addressed adherence. They showed me this pad of forms. They explained how patients could self-administer the form after picking it up in the physician’s office. They could then share it with the physician for which they had prepared a book on how to interpret the results. They shared some research with me to support the findings. I was dumbfounded.

• I asked them if it was online…No.
• I asked them if they called patients to administer it using automated calls…No.
• I asked them if they really thought patients and physicians used this…Yes.

Somehow, I doubt it.

In a resurgent of an old discussion, there are talks under Medicare of requiring the PBMs to disclose their spread made on pharmacy claims.

Let’s look at this in two different ways:

1. PBM spread on non-owned pharmacies. PBMs create network contracts for their clients. They contract with pharmacies to dispense drugs at agreed upon rates. In many cases, they make spread (profit) on these transactions. They may charge Medicare $40 for a drug and pay the pharmacy $39 leading to $1 in spread. (The pharmacy is then making profit on the drug based on their payment by the PBM versus their acquisition cost of the drug.) Should the PBM profit be disclosed? IMHO…no. But, I could see disclosing average profit made from the network (which I think is disclosed in the PBM financials if you look at COGS).
2. PBM spread at owned pharmacies. In the majority of cases, PBMs own mail order and specialty pharmacies that consumers are encouraged to use through plan design or other educational campaigns. They may charge Medicare $40 for the drug and buy the drug for $35 dollars leading to $5 in spread (profit). But, in these cases, the PBM is acting like the pharmacy. Rather than showing the $1 in spread from scenario one above, they are making that plus the difference in acquisition cost. Should the PBM profit relative to acquisition cost be disclosed? IMHO…no way! Is CMS asking every retail pharmacy to share their acquisition costs?

This gets to the heart of the American business model. People should be able to make money (yes…even in healthcare). Should government have the right (or any other buyer) to understand the costs for raw materials? I don’t see the government asking Ford to disclose the costs of each car component when they buy a police car to understand Ford’s profit. I don’t see the government requiring hospitals to disclose physician’s salaries when looking at the costs associated with billing codes.

Looking at averages and understanding the basic market dynamics is fine. But, requiring PBMs or pharmacies or any other entity to provide full transparency around their acquisition costs of raw materials is ridiculous to me.

I guess ultimately the PBMs could create separate “businesses” to have a wall between them and their owned pharmacies so that each business unit made its own profit, but I’m not sure if that would get around this.

Traditionally, I think of on-site medical clinics as something reserved for large employers who have centralized campuses. This morning, I read about one for an employer with 100 employees. And, the numbers shared in the article in Inc Magazine (Oct 2011) were compelling looking at the year before and after they put the clinic on-site in 2009:

So, what did the clinic look like:

1. The clinic was part-time (2 days per week).

1. The clinic had a pharmacy, an MD, and a staff of 4 nurses and PAs.
2. Visits , prescriptions, and lab work had no cost to the employees.
3. The clinic cost the company $144K / year through WeCare TLC Onsite Clinics.
4. Employees pay $50-$100 a week for coverage; copays for visits outside the clinic are $25; and copays for Rxs outside the clinic are $60.

BUT, ultimately, the key was soliciting other groups to co-share the clinic. They initially did it with the city and are now looking at another company.

Talk about leveraging a big-company idea for a small company. Assuming this approach could be duplicated, could this create a new model for physicians where they are splitting their time between multiple onsite facilities? Or would this type of model just exasperate the physician shortage?

Ultimately, one thing is for sure…this type of model will require better connectivity and access to information across multiple sites. But, it should leverage personalization and engagement and ultimately could be a huge opportunity for addressing preventative care.