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Discount retailers and grocers including Wal-Mart, Target, Kroger and Giant Food, have been making a push to offer cheaper prices on prescription drugs, especially generics. Does that have big pharmacy chains like Walgreen, which make big profit margins from generics, back on their heels?
During an earnings conference call with analysts this morning, Walgreen President Gregory Wasson noted that “the competitive environment has clearly changed” as the economy has been slowing and “discount retailers and grocery chains are pushing harder on promotional pricing, especially in the pharmacy, which they use to build foot traffic.”
Never fear. Wasson added, according to a transcript from Thomson Reuters: “Our advantages are that in addition to being price competitive, we’re better positioned with more convenient locations and enjoy a powerful brand reputation. I’d like to put it this way. While many of our competitors have a pharmacy department, Walgreens is a pharmacy.”
Later in the call, UBS analyst Neil Currie pressed the issue, asking what kind of impact Wal-Mart’s $4 generic drug program and others like it have had on Walgreen’s sales to the uninsured. Walgreen CEO Jeffrey Rein said that such competition is a reason Walgreen came out with its own prescription savings club card, which costs individuals $20 a year and families $35, entitling them to discounts including $12.99 for a three-month supply of more than 400 generics. Lots of people are signing up, he said.
But then he repeated a common refrain from Walgreen during the call: “When you come back to our convenience and the stores that we have opened and the hours we have opened, we will definitely win out.”
With primary-care doctors more frazzled than ever, the number of hospitalists — docs who provide general care to hospital patients — has been growing. Adding fuel was a recent NEJM study that suggested hospitalists’ care is similar to traditional care, but at a somewhat lower cost.
Though there are more than 20,000 hospitalists working in this country, there’s still some debate over their role in health care. Witness a pair of dueling opinion pieces in the current Archives of Internal Medicine.
Mark Williams, chief of the division of hospital medicine at Northwestern’s Feinberg School of Medicine, argues that hospitalists’ assets include their ready availability to patients at a time when their main doctors often can’t get to them as quickly.
Williams notes that hospitalists need to address any “disruption of the physician-patient relationship” by communicating well with primary care docs. But if communication is strong, “then the advantage of having a hospitalists readily available and rapidly responding to changes in a patient’s status, test results, and consultant recommendations more than offsets the shortcomings of physician discontinuity.”
Robert Centor, director of the general internal medicine division at the University of Alabama, is a skeptic. He lays out how many definitions there are of hospitalists, and how many different roles they play, in questioning how to be so sure of their benefit. He adds that a hospitalist’s role may cut costs in the hospital, but one possibility is that costs are being shifted to the outpatient setting.
Centor worries about what happens when hospitalists’ shifts begin or end or patients transfer from inpatient back to outpatient settings. “Transitions put patient care at risk,” he writes. “Transitions can lead to duplicative testing. Transitions can lead to problems with anyone really understanding what medications a patient should take.”
It seems like everyone has a hospital-ranking system these days. The federal government has Hospital Compare; Leapfrog and Health Grades market their own rankings. Consumer Reports just came online with a site measuring overtreatment and aggressive care.
Now another outfit is offering its own twist — combining many of the kinds of measures other groups use to come up with a Hospital Value Index. The idea is to measure not just quality, but also cost and efficiency to identify the best hospital bang for your buck. Launched today, the new index is the brainchild of Data Advantage, which normally markets information and analysis to hospitals.
It promises to rank more than 1,400 hospitals in markets covering 180 million people — roughly 42% of all hospital activity by its measure — and serve up lists of the top-value hospitals in the U.S., and in different markets. Another list shows “high value” hospitals ordinarily in the shadow of more famous neighbors.
Like most of the other systems out there, Data Advantage isn’t collecting new data, but crunching what’s available elsewhere. Much of it is from Medicare, which tracks hospital operations beyond just Medicare patients. Here’s how the group’s new index is calculated:
- Quality accounts for 45% of a hospital’s overall score. The company looks at the federal government’s public reporting, key patient-safety measures, and whether the hospital is accredited by the Joint Commission or included in the LeapFrog survey.
- Affordability and efficiency count for another 45%. Data Advantage measures affordability by looking at the hospital’s list prices for 103 different outpatient services, ranging from chest X-rays to diagnostic colonoscopies. Gauging efficiency means looking at the cost side of the equation — how much the hospital actually spent (using data reported to Medicare) to treat patients with certain diagnoses, adjusted for severity.
- Patient satisfaction makes up the final 10%. Like everyone else, Data Advantage uses survey data from discharged patients, which were recently made public through Medicare. It concentrates on two questions: an overall rating of the hospital from 0 to 10, and whether the patient would recommend the facility to family and friends.
In addition, within each market, the index compares the reputations of local hospitals with results from a widely used opinion survey. Checking out a hospital’s final score — and what helped or hurt its score — is free.
The creators emphasize that the goal isn’t to help you pick a facility for one-of-a-kind brain surgery. “We’re looking at the simple stuff,” says John Morrow, a senior adviser on the project and former executive at Health Grades and healthcare-data outfits.
One problem with the U.S. medical system, he says, is that care is delivered much like “building Bentleys — we do it one at a time; they’re great cars, very high quality, but who can really afford them?” If all the hospitals the company analyzed were as good, and as efficient, as those in the top 25%, the country could save $273 billion in a single year, Data Advantage estimates.
Hal Andrews, Data Advantage’s CEO, says the exercise is leading his family to make some changes, including in where his 13-year-old son, who has muscular dystrophy, goes for physical therapy. That’s partly because he uses a high-deductible health plan that leaves him paying much of his family’s medical costs out-of-pocket, albeit with primarily pre-tax dollars. “We’re changing some of the things we had done — frankly, based on reputation,” he says. “We’re going to make these decisions because we’re writing the checks.”
Still, like every rating system, the Hospital Value Index makes a lot of assumptions. Chief among them is the balance between quality and cost — most parents would pick a top-flight teaching hospital if their kid were really sick, if they could, even if the nearby community hospital is a good bargain; by contrast, low-income patients might not have the luxury of traveling a few more miles to seek treatment. Many people are still limited by the doctors and hospitals that belong to insurance networks. And, of course, the index relies heavily on measuring hospital processes rather than outcomes — whether a facility gives heart-attack patients aspirin, not whether the patients survive. Measuring outcomes consistently is still in its infancy.
Andrews doesn’t argue with the index’s limitations. “Value is different to different people,” he says. “We’re just trying to give them information to compare.”
Attempts to create popular alternatives to nursing homes have realized mixed results, but the Robert Wood Johnson Foundation is betting on an eight-year-old movement called “Green Houses,” a WSJ Page One story reports.
The foundation is investing $15 million over five years on Green Houses, which aim to replace large nursing homes with small, homelike facilities for 10 to 12 residents. The foundation hopes Green Houses will soon be in all 50 states, up from the 41 Green Houses now in 10 states.
“We want to transform a broken system of care,” says Jane Isaacs Lowe, who oversees the foundation’s Vulnerable Populations portfolio. “I don’t want to be in a wheelchair in a hallway when I am 85.”
The Green Houses face several obstacles, including regulatory issues. But some say they also face resistance from existing nursing homes, which are based on an economies-of-scale model — the larger the home, the cheaper it is to care for each individual resident.
While some nursing-home operators welcome the idea of Green Houses, others are reluctant to help pay for them, says Susan Reinhard, who heads the AARP’s Public Policy Institute. “You have owners who have their personal wealth invested in a model that was requested by society way back,” she says.
A significant challenge is convincing the nursing-home operators that Green Houses aren’t too expensive. “The biggest criticism I hear is, ‘How do you make it work financially?’” adds Larry Minnix, CEO of the American Association of Homes and Services for the Aging, which represents not-for-profits nursing homes as well as assisted-living and retirement communities.
The foundation says it’s studying the financial sustainability, but early indications do show it’s financially doable.
The FDA was supposed to decide this week whether to approve Eli Lilly’s blood thinner prasugrel, but the agency said yesterday that the decision would take another three months. It’s a complicated decision — in a big study, prasugrel was more effective than Plavix at preventing blood clots, but it also carried a greater risk of causing internal bleeding.
Blood thinners are tricky that way. Greater effectiveness is often tied to greater risk of side effects. Plavix, co-marketed by Bristol-Myers Squibb and Sanofi-Aventis, has grown to be an $8 billion a year drug as doctors have grown comfortable with the risks and benefits.
If prasugrel (brand name: Effient) wins approval, sales will be affected by doctors’ comfort level with the drug, as compared to Plavix. Getting docs to switch from Plavix to prasugrel (at least for some patients) could grow even tougher in 2011, when cheap, generic versions of Plavix are expected to become available in the U.S.
So Eli Lilly and its prasugrel partner Daiichi Sankyo must be eager to get the drug to market ASAP.
Anthony Ware, who is in charge of prasugrel for Lilly, told the WSJ that the FDA has “asked for additional analyses, not new data per se … They’ve asked for additional ways of slicing our data, and we’ve presented that to them in addition to a large application.”
In today’s tough FDA safety climate, a three-month delay seems pretty minor — less serious, for example, than an “approvable letter” that could have forced the company to gather more data or even conduct an entirely new study.
Congress is trying to figure out how to block the 10% Medicare pay cut to doctors set to go into effect on July 1. To do so, they may cut some funding from Medicare Advantage plans, which come through private insurers and cost the government more than traditional Medicare plans.
Scott Gottlieb (pictured), a doctor who is a former FDA official and current scholar at a free-market-oriented think tank, lands on the WSJ’s op-ed page this morning singing the praises of the plans. Central to his thesis is the notion that Medicare’s staff of clinically trained decision-makers is thin compared with private insurers.
Medicare has about 20 doctors and 40 total clinicians working in its coverage office, Gottlieb writes, and fewer than a dozen in the office that sets doctors’ reimbursement rates. Private insurers, on the other hand, employ thousands of doctors and nurses. That allows the private plans to make more nuanced and better informed decisions, he argues.
“The crucial question is where the controls should be – with patients working through private plans or with government agencies,” writes Gottlieb, who has advised private health plans. “While private health insurance is imperfect, there’s a misguided faith in Medicare’s superiority that rests on flawed assumptions.”
There are lots of drugs out there to treat high blood pressure — old and new, cheap and expensive, available in all sorts of combinations and permutations. But for about 25% of patients, drugs don’t seem to help. That’s a big problem, because lots of people have high blood pressure (aka hypertension), and it’s a key risk factor for heart attacks and strokes.
A scientific statement out this month from the American Heart Association says the problem is likely to grow as the nation becomes older and the rate of obesity rises.
“It’s becoming more difficult to treat and it’s requiring more and more medications to do so,” David A. Calhoun told the New York Times. Calhoun, a cardiologist at the University of Alabama at Birmingham, headed the panel that wrote the guidelines.
Resistant hypertension is different than uncontrolled hypertension. Plenty of people have uncontrolled hypertension, for example, because they don’t stick to their drug regimen. Resistant hypertension is when a patient is following a doctor’s directions and taking as many as three different drugs without getting blood pressure under control.
The AHA statement calls for more study of the phenomenon, but adds a list of reasons why such research is tough. It’s highly complicated to launch studies comparing various three- or four-drug combinations. And patients with resistant hypertension often have multiple health problems, such as diabetes and atherosclerosis, which can make it hard to interpret study results.
Radio-frequency identification — a system of using tiny tags to track all sorts of products — could be a smart way for hospitals to keep tabs on everything from surgical sponges to patient beds. Indeed, some hospitals have already started adopting the technology.
RFID tags. Photo: Associated Press
But a study out today in JAMA suggests RFID systems can cause “potentially hazardous incidents in medical devices.”
Researchers took two standard RFID systems and examined whether they interfered with 41 different medical devices. Each system comprised a tag (which attaches to the object being tracked) and a “reader” that communicates with tags.
Out of a total of 123 tests (there were multiple tests with each system on each device), there were 34 incidents of electromagnetic interference. The median distance at which the systems caused interference was 30 cm (about 12 inches).
A panel of medical specialists determined that 22 of these incidents were potentially hazardous; among other things, interference changed breathing machines’ ventilation rates and caused syringe pumps to stop.
The research was conducted by Dutch investigators as part of a broader project looking at using RFID to track blood and medical supplies.
In an editorial that accompanies the story, Donald Berwick of the Institute for Healthcare Improvement says hospitals should consider internal surveillance, especially in critical care units, for problems related to electrical interference. And he suggests that regulators should weigh in on whether they need to provide safety guidance.
The findings, Berwick continues, suggest a broader lesson for health-care technology: In a system as complicated as a hospital, technical innovations are bound to have surprising results.
“Safety is not a condition, it is a process,” he writes. “It can only emerge continually in a culture that is alert, cooperative, transparent, and resilient when the unexpected happens, as it always will.”
Correction: An earlier version of this post gave an incorrect centimeters-to-inches conversion.