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Kaiser Health News published a longer-than-usual piece on how companies are not always able to parlay success in improving patient health into financial rewards. How medical systems are compensated can greatly affect whether products are adopted.

Kaiser Health News published a longer-than-usual piece on how companies are not always able to parlay success in improving patient health into financial rewards. How medical systems are compensated can greatly affect whether products are adopted.

Wellsmith, one of the companies highlighted in the article, demonstrated increasing physical exercise and decreasing A1c levels among diabetic patients. Exercise and A1c levels are metrics that providers are often glad to see diabetic patients improve in. The problem that the company encountered, however, is that Wellsmith's major investor, Cone, a healthcare network, was primarily paid on procedure volume (fee-for-service), and not on the general health of its patients (value-based care). Hence, simply improving the patients' health might have actually resulted in reducing necessary procedures, leading to decreased revenue for Cone, making it difficult to financially justify continuing the investment. If a much greater percentage of Cone's patients were on a value-based care model, then their requiring fewer procedures could have financially benefited Cone, and Wellsmith's offering would have been more compelling. Over the last several years, there has been a push for value-based care so that healthcare providers actually benefit when patients are healthier (and require less treatment). Perhaps we will see more viable technology products and services as the industry moves more towards value-based care. Another option would be for payers (insurance companies) to pay for these products directly, if they are shown to reduce treatment costs.

The Washington Post published a piece about how government agencies relied on outside expertise in times of crisis. About half of the article is in regards to the current governor of California (facing a recall election) and his decision to award no-bid contracts to Blue Shield ($15 million) and to McKinsey ($13 million). Other parts of the article talk about the federal government, as well as some states that did not rely on outside consultants.

The Washington Post published a piece about how government agencies relied on outside expertise in times of crisis. About half of the article is in regards to the current governor of California (facing a recall election) and his decision to award no-bid contracts to Blue Shield ($15 million) and to McKinsey ($13 million). Other parts of the article talk about the federal government, as well as some states that did not rely on outside consultants.

Apparently, the primary reason for the current governor of California to rely on consultants was "equity" (to deliver vaccine doses to communities of color). At least one critic has pointed out a lower percentages of Black and Latino residents are fully vaccinated in California. The lower percentage in and of itself might not be adequate reason to indicate that the consultants were not effective (for example, the percentages could have been even lower without the consultants); the problem is that there is no way of measuring what would have happened without the consultants, so no one really knows how valuable (if at all) the consultants' work was. A bigger problem is that the governor's decision to rely on outside consultants expresses a lack of confidence in the state's public health agency, which seems to have received $214 million from the state's General Fund for the 2020-2021 fiscal year. Is it reasonable to expect that a public agency with that annual budget might be in a better position to respond to a public health crisis than private consultants? If not, why is that?

At the federal level, some employees seem to report that the government paid expensive consultants to take notes and organize the information in presentations, and that even still, consultants made mistakes that were caught by public officials. Perhaps most surprising is that the state of Ohio paid McKinsey almost $9 million to "help us tell our stories" -- apparently not to actually accelerate vaccine distribution. Perhaps this general reliance on private consultants for a public function speaks to a more systemic problem with our governments.

JAMA published an article looking at the potential impact of private equity investments on the quality of health care that is delivered. The concern is that as private equity funds buy hospitals and clinics, they might be more motivated by profit than say, traditional non-profit organizations, and might not adequately protect patient health. There seems to be particular concern about private equity funds exploiting unintended consequences of the more recent model of compensation (value-based care).

JAMA published an article looking at the potential impact of private equity investments on the quality of health care that is delivered. The concern is that as private equity funds buy hospitals and clinics, they might be more motivated by profit than say, traditional non-profit organizations, and might not adequately protect patient health. There seems to be particular concern about private equity funds exploiting unintended consequences of the more recent model of compensation (value-based care).

The article looked at two delivery systems that are owned by private equity firms, and found positive results from both. For example, screening increased for one institution while fewer hospital admissions were reported for the other. The article noted that both institutions were oriented around primary care (as opposed to the more lucrative specialty care organizations), and that in both cases, substantial investments were made to grow the customer base. The article also pointed out that the organizations did not seem to be cherry-picking wealthier and healthier patients.

Overall, the initial review seems positive, although these are only two examples, and behavior could change as the private equity firms prepare these business for a sale. An important point is that the private equity firms seem to respond to incentives (e.g. under the older fee-for-service model, observers might expect a higher prevalence of procedures), which means that choosing a good model of compensation is very important in driving behavior.

Kaiser Health News reported on inaction with regards to medications that the federal government pays for but are thrown away. Against the backdrop of rising drug costs, policymakers realized that valuable drugs were being discarded because of packaging constraints. The issue is that different patients need different amounts of medication (for example, some prescription amounts might vary with body weight), and that once opened, the packaging cannot be resealed to save the drug for future use. Medicare pays for each dose, so extra medication is discarded. That might not sound like a big deal, but when a single dose can cost thousands of dollars, the value of the extra medication can add up -- one 2016 study estimated about $2.8 billion of drug waste annually.

Kaiser Health News reported on inaction with regards to drugs that the federal government pays for but are thrown away. Against the backdrop of rising drug costs, policymakers realized that valuable drugs were being discarded because of packaging constraints. The issue is that different patients need different amounts of medication (for example, some prescription amounts might vary with body weight), and that once opened, the packaging cannot be resealed to save the drug for future use. Medicare pays for each dose, so extra medication is discarded. That might not sound like a big deal, but when a single dose can cost thousands of dollars, the value of the extra medication can add up -- one 2016 study estimated about $2.8 billion of drug waste annually.

Drug manufacturers could address the challenge in a number of ways. For example, manufacturers could sell a variety of vial sizes so that a more appropriate dose could be selected per patient. Alternatively, manufacturers could simply sell small doses (perhaps a fourth of the current size, adjusting the price accordingly), and some patients could receive multiple vials' worth of medication as a "dose." More work would be to research how the medication could be preserved across multiple openings of the packaging. For now, manufacturers seem to have chosen the path that is easiest (and probably most profitable) for them: sell larger vials that can serve the vast majority of patients. Their strategy could also make sense if they take the position that the marginal cost of the incremental amount of medication is negligible and that their costs are really fixed costs (e.g. research and development) or per vial (e.g. packaging). In that case, Medicare could perhaps save money if it were able to order large vats of medication and repackage them into smaller vials in an appropriate environment (e.g. sterile and inert).

What Kaiser Health News highlights in its article is mostly about the lack of disclosure of financial conflicts of interest among the researchers who were paid by the federal government to study the issue. One report generated suggested a "whole of government" approach which seems to suggest a larger effort from the government to facilitate the development of medications for reusable packaging, which seems like it would take much longer to develop than to negotiate other solutions. Indeed, it seems suspicious that the report apparently discourages the tracking of waste, which is a position that drug manufacturers -- which have other financial relationships with the researchers -- would prefer (less visibility into the issue). One researcher defended that particular point by suggesting that Medicare's efforts to reduce drug waste might be nullified if drug manufacturers simply raised prices. That leads into a separate discussion of Medicare's inability to negotiate with drug manufacturers regarding pricing. Regardless, Kaiser Health News' point stands: researchers and their institutions (in this case, The National Academy of Science) should clearly disclose financial conflicts of interest, especially on papers that might affect policy.

Earlier, critics of surprise medical billing (where patients can be billed for an out-of-network provider's services despite going to a facility that is considered in-network) celebrated a victory as Congress passed legislation that banned surprise medical billing leading to exorbitant patient bills. It turns out that the ban was for the practice at emergency rooms. Kaiser Health News reported on the practice being employed at urgent care centers, which are meant to be more responsive than most private practices, but less equipped than an emergency department. Perhaps legislation will be updated to include urgent care centers as well.

Earlier, critics of surprise medical billing (where patients can be billed for an out-of-network provider's services despite going to a facility that is considered in-network) celebrated a victory as Congress passed legislation that banned surprise medical billing leading to exorbitant patient bills. It turns out that the ban was for the practice at emergency rooms. Kaiser Health News reported on the practice being employed at urgent care centers, which are meant to be more responsive than most private practices, but less equipped than an emergency department. Perhaps legislation will be updated to include urgent care centers as well.

One of the problems is that it is difficult or time-consuming to tell whether a physician's services are covered by insurance. In the account reported by Kaiser Health News, the patient asked whether the physician's services would be covered by his insurance and received a reassuring but noncommittal response: "they should be covered." While bleeding and recovering from a bike crash, the patient would need to decide whether to stop the procedure to await confirmation or allow the procedure to continue and hope for the best. At a minimum, clinics should be able to tell patients quickly whether a provider accepts the patients' insurance plans. What would be nicer from a patient perspective would be for a facility that accepts certain plans to guarantee that all providers at that facility will accept those plans. Under current arrangements, providers seem to benefit from the ambiguity of whether they accept the patients' insurance.