Health Business Blog

A major reason US health care costs are so much higher than anywhere else while outcomes lag is that we waste so much money is wasted on end-of-life care. An article by Angela Maas in Health Plan Week provides a cogent, concise treatment of the topic. Some takeaways:

• Health plans cover palliative and hospice care but it is underutilized
  • Although palliative care discussions have a role early on, MDs don’t want patients to think they’re giving up on them
  • When terminal cancer patients come into hospice they may improve for a while –because they’re not coping with chemo effects– and such improvement may make them ineligible for reimbursement
• Patients receiving palliative care for non-small cell lung cancer from shortly after their diagnosis enjoy better quality of life and live longer (according to a NEJM study)
• High end-of-life costs are associated with worse quality of death in patients with advanced cancer (according to an Archives of Internal Medicine study)

One thing that’s not discussed directly in the article but that needs to be addressed: hopeless patients on their last legs can be highly profitable for providers and drugmakers, who in a fee for service environment can make money from the very high utilization. It would be interesting to break down an oncology practice’s profitability by stage of patient illness.

I understand that each case is different and am wary of a slippery slope leading to euthanasia. But I prefer a frank discussion of these topics and addressing the cost implications head on.

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The All Hallow’s Eve edition of the Health Wonk Review is posted on The New America Foundation’s New Health Dialogue Blog.

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Leading lab company Quest Diagnostics just released the Gazelle app for iPhone and Blackberry, which enables people to see, store, and share their Quest lab results. Quest will provide patients with access to their results 48 hours after releasing them to the ordering physician –at least in the 33 states and DC where it’s legal to do so. Patients who want to fax or email lab results to another doctor can do so from within Gazelle. They can also perform other typical personal health record tasks.

Quest hopes Gazelle will differentiate the company from other labs and advance its goals of patient centricity, quality of care, and transparency.

In this podcast interview, Quest Chief Medical Officer Dr. Jon Cohen provides the rationale for Gazelle and details on how it works.

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Quest Diagnostics CMO Jon Cohen discusses new Gazelle mobile app [ 14:05 ] Play Now | Play in Popup | Download

I’ve been watching the patient-clinician e-messaging field for 10 years. My firm helped webVisit pioneer Healinx (later renamed RelayHealth) develop its business model, and we’ve kept close tabs on other innovators such as American Well’s live consultation program and MinuteClinic’s in-store, nurse practitioner model.

RelayHealth has the advantage of connecting patients and doctors who have an established relationship. The service is asynchronous, meaning a patient provides information, then receives a response from a doctor within a day, sometimes sooner. That helps the doctor fit webVisits into their available time and doesn’t disrupt their workflow. Patients don’t have to skip work to come to the office. It took a decade but health plan reimbursement for webVisits is now fairly routine.

American Well represents an ambitious attempt at online health care. The idea is to make a physician available for an online consultation in real time. That’s a challenge to operationalize, however, because you need a lot of docs ready to sign on at any given moment.

MinuteClinic and other quick care clinics are good, too. They use nurse practitioners to diagnose and treat straightforward issues. They are convenient and cost effective but hard for their owners to profit from. They take selling space away from the front-store merchandisers at CVS and are hard to scale. Each site needs its own Nurse Practitioner, which is an expensive employee to sit idle. On the other hand, it defeats the purpose of MinuteClinic if it isn’t staffed up sufficiently to handle walk-in patients.

Now along comes Virtuwell from HealthPartners in Minnesota with a clever approach that addresses some of the weaknesses of each of the three models above. Patients answer a series of questions and their responses are sent to a HealthPartners Nurse Practitioner. Within 30 minutes the NP reviews the answers and responds to the patient. Thirty-one conditions –such as bladder infection, lice and yeast infection– are within the scope for Virtuwell.

Virtuwell uses a similar template to the RelayHealth webVisit. It provides answers reasonably fast (not quite as fast as American Well). And it utilizes NPs to handle routine conditions like MinuteClinic but without requiring a trip to the drugstore. This combination of attributes should make it quite compelling.

There’s still room for the other services, though. RelayHealth’s advantage is that it works within the existing doctor/patient relationship. American Well can bring a specialist up quicker. And MinuteClinic has the in-person touch and quick access to prescriptions if needed.

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This is a transcript of my recent podcast interview with AccessMED.

David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Scott Dulitz, VP and General Manager of AccessMED and Rick Ford, Director of Reimbursement Consulting. AccessMED is a patient access and drug reimbursement company owned by US Oncology.

Recently you held a patient access summit. How did it go?

Scott Dulitz: Yes, we held our first patient access summit here in Kansas City. AccessMED has been providing reimbursement support and patient assistant services to pharmaceutical manufacturers for 15 years. We felt the time was right to have a forum like this to provide pharmaceutical manufacturers and biotechnology companies with a good understanding of the market landscape as it applies to patient access.

We talked about the Affordable Care Act and implications for patient access. A key theme is that while patients will have more options as we move toward 2014, it’s unclear how those options translate into access. More patients may have insurance, but what type of insurance are they going to have?

We already see direct cost sharing assistance from pharmaceutical manufacturers for commercially insured patients. Due to the economic crisis we’re seeing more patients drop their Medicare supplemental coverage, which can put them at risk for 20 percent out-of-pocket cost share. On the commercial side we’re seeing more private payers mimicking what Medicare is doing from an ASP reimbursement perspective. That’s putting more pressure both on providers and patients.

Williams: Please explain Medicare’s ASP based reimbursement model and how commercial payers are mimicking it.

Dulitz: Prior to the MMA reform in 2003 most community-based oncology providers would ‘buy and bill.’ They would buy the product direct from manufacturers, administer it in the office, and bill the payer. In addition to their administration fees, oncologist would also receive a margin on top of the drug price that they paid the manufacturers. As we have moved to the average selling price (ASP) reimbursement model under Medicare, community based providers now receive ASP plus 6 percent.

This shift in reimbursement has caused a decrease in margin for providers. Large commercial payers are following suit. Many are moving to a similar model, which is putting a lot of pressure on providers in that buy and bill marketplace.

Williams: When that happens, is there a potential backlash in which some office-based patients get turfed over to a hospital setting and wind up costing payers more?

Dulitz: Yes, you’re absolutely right David. A lot of community-based practices have substantial credit pressure. There’s a lot of credit risk right now in that marketplace to the point where patients that are coming in that have Medicare coverage or Medicaid coverage are being referred out of those community based settings and into a hospital based setting. If we look at the oncology model specifically, that’s often making these elderly, sick patients travel long distances to obtain access to care.

Williams: How are pharma companies trying to help physician offices and patients navigate through these turbulent waters?

Dulitz: There’s substantial need for cost sharing assistance for these patients. For a number of years pharmaceutical manufacturers have been providing free drugs to the indigent uninsured but it’s time to take a step back and redefine ‘uninsured.’

There are a number of patients with insurance today that are significantly underinsured to the point where we may look at expanding patient assistance programs (PAPs) to offer some form of free drug assistance. On the commercial payer side what we see is manufacturers providing direct cost sharing assistance.

For example, Genentech was one of the companies at the conference. If you look at their product Avastin, they’re providing direct cost sharing assistance with co-pays and deductibles to commercially insured patients that are prescribed Avastin.

Williams: What role do affected specialists such as oncologists need to play over this time? I understand there’s assistance coming from the pharmaceutical companies but do such practices need to start doing things differently or adding different kinds of staff or approaching patients in different ways?

Dulitz: We had Dr. Marc Neubauer, a practicing oncologist in Kansas City weigh in with a provider perspective. One of the questions that we posed to Dr. Neubauer is whether the role of the financial counselors and social workers within his practice will change as health reform rolls out.

Dr. Neubauer said the changes are already there. His office has made changes to processes so that financial counseling discussions take place with patients prior to treatment. He also said it’s incumbent upon those financial counselors to be very familiar with the various services being provided by pharmaceutical manufacturers and also 501(c)(3) cost sharing assistance/co-pay assistance foundations that are available out in the marketplace.

Williams: What role do you see evidence based medicine and comparative effectiveness research to play as cost starts to factor into the insured oncology market for the first time?

Dulitz: We didn’t spend a lot of time on this topic during the conference, but there is a lot of discussion within the oncology space about comparative effectiveness. There is a concern from a branded products manufacturer standpoint about whether it is really comparative effectiveness or cost effectiveness.

There is an emphasis by manufacturers upfront to ensure that as they design their clinical studies they also look toward reimbursement implications.

Williams: Tell me more about AccessMED. What the services do you provide and how does it fit under the US Oncology umbrella?

Dulitz: We’ve been in business for 15 years. Four years ago we were purchased by US Oncology. It was a really good marriage. AccessMED was predominantly a patient assistance and reimbursement support services provider within the oncology marketplace. However lots of the lessons we’ve learned through providing patient assistance and reimbursement support assistance in oncology have translated over to other specialty therapeutic areas.

Beyond traditional call center services that we offer we also have a consulting arm. Much of the discussion today has focused on the cost of drugs and the ability for patients to afford their share of that cost. However another area that we touched on at the patient access summit was about the critical administrative tasks or barriers that are being put in place.

REMS (Risk Evaluation and Mitigation Strategies) have now become prevalent for products reaching the marketplace, in fact so prevalent that they’re looking at REMS for the entire opioid therapeutic class. Access encompasses many different things. Cost is one of the pieces of the equation but mitigation strategies are another.

Rick Ford: One of the important things to understand about REMS is not only does it encumber the process of providing that drug to the patient, but in all likelihood it also limits the willingness of physicians to prescribe those medications because of the overhead associated with that. So making those REMS programs smooth and efficient is a key strategy in patient access.

Williams: This has been very educational for me. Any other comments that you want to share?

Dulitz: This is our first attempt at a patient access summit. A lot of the feedback that we’ve received from the manufacturers coming out of it was very positive. The need for education and awareness around patient access is only going to increase.

As health care reform rolls out there are going to be more options for patients, but we need to see how options translate into access.

Williams: I’ve been speaking today with Scott Dulitz who is the Vice President and General Manager and Rick Ford, Director of Reimbursement Consulting at AccessMED. Thank you for your time today.

Dulitz: Thank you David.

Ford: Thank you.

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Pharmaceutical companies have always provided patient assistance programs for the uninsured. But as health care costs rise and patients are subjected to more cost-sharing, pharmaceutical companies are finding the pool of needy patients is growing. AccessMED, a US Oncology subsidiary that provides patient access and drug reimbursement solutions to the pharmaceutical industry, hosted a Patient Access Summit last month to explore health care reform’s impact on patient access and discuss other hot topics such as REMS.

In this podcast interview, AccessMED’s Scott Dulitz and Rick Ford discuss key themes emerging from the Summit and answered a variety of questions about patient access issues for expensive drugs.

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Drug assistance programs for insured patients? A conversation with AccessMED [ 12:07 ] Play Now | Play in Popup | Download

This month’s Narrative Matters in Health Affairs (Why I Don’t Get Mammograms) is among the best I’ve read. Author Veneta Mason is a late 50s nurse practitioner whose sister died from breast cancer. Yet she’s consciously decided not to get mammograms anymore because she doesn’t believe early detection makes successful treatment more likely or extends life. To summarize her arguments:

• Cancer is horrible but metastatic breast cancer is just as treatable and deadly whether or not a patient undergoes routine screening. Even though she accepts her risk may be significantly higher due to her sister’s illness, it doesn’t matter if screening doesn’t make her treatment better or life longer
• It’s important to have a primary care physician who accepts her reasoning about screening
• Breast self-exams aren’t worthwhile, but if she happens to discover something she’s not opposed to following up and having a diagnostic mammogram
• It’s important to get multiple opinions if one is told there’s a cancerous lump. A second opinion is good and a third is better
• It’s a good idea not to rush into treatment
• If there are changes in medicine that make early detection more worthwhile, she’ll change her view
• She expects to die of something –and it could be breast cancer
• She won’t think less of someone who gets screening, especially since most professional and public opinion support screening
• She relies on the Nordic Cochrane Centre for guidance

I’m not a clinician and make no judgment about the specific medical perspective she provides. However, I worry about the strong embrace of excessive screening and diagnostic testing because of the negative consequences it brings, such as unnecessary –and in some cases damaging– treatments and fear.

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Yesterday I interviewed Groupon about the company’s activities in health care. In short, they have gained the most traction with providers such as dentists and optometrists who can perform a routine service that is often paid for out of pocket. For these providers, Groupon looks like a strong alternative to the typical couponing they might otherwise do. Rather than writing a check to a marketer to distribute coupons the provider actually receives a check from Groupon that represents their revenue share from the Groupon deal of the day. In a typical example, a provider might give a 50 percent discount to Groupon buyers. Half the revenue goes to Groupon itself, which means that the provider receives 25 percent (50 percent of 50 percent) of their typical charge.

Most businesses I know aren’t making a profit at 25 percent of their normal prices. However there are some elements of Groupon that can make the deal pay off for a health care provider –or any other business. In particular:

• The provider receives income from every Groupon sold, but not all are redeemed. If only half are redeemed, it’s as though the provider is receiving 50 percent of their normal price rather than 25 percent
• There is an opportunity to upsell. For example if someone comes in for a cleaning there’s a chance to do some x-rays, fill a cavity or whatever. (In concept this is the same as an oil change deal I saw on Groupon this week, which included a cheap oil change and a 23 point inspection. No doubt they will find something wrong with the car.)
• There is the possibility of repeat business. Theoretically a new dental patient could come back every six months for many years. The cost of customer acquisition is amortized over that time
• The cash is received upfront, which is a big deal for small businesses worried about cashflow
• Appointments for Groupon members can be fit in when there is spare capacity, generating revenue that would otherwise be missed

Along with the positives are some potentially significant downsides for the providers themselves and for new and existing patients

• A patient who buys solely based on the deal is not that likely to become a loyal customer. For sure some other dentist will be promoted on Groupon within the next six months, and if not there then on one of the many Groupon copycats
• New patients should be wary about the upsell, especially in health care services. Do they really need those x-rays? Does that filling really need to be replaced? I’d be worried about an unknown dentist trying to generate an ROI on me
• If the deal is successful, existing patients may have a hard time getting convenient appointments in competition with all the Grouponers

There are certain things Groupon can do to mitigate these concerns, such as publishing reviews and checking on credentials. All in all Groupon seems to be on to a good thing.

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On a more amusing note, when I studied the Groupon site I found someone I know featured as a satisfied Groupon customer. What’s ironic is that this person is now running a Groupon competitor.

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Groupon is the leader in the oh-so-hot group buying business. It emails a deal a day to its subscribers in cities across the country. Many of the deals are big discounts on restaurants, bars and recreation aimed at young urban women. Not really my demographic. But then I saw a headline in the Baltimore Sun (HealthKey: Doctors experimenting with social media), which discussed the use of Groupon in health care. So I decided to call the company and learn more.

Here are excerpts from my discussion with Groupon spokesperson Julie Mossler. In tomorrow’s post I’ll give my take on what it all means.

David Williams:            I read that 15 percent of Groupon offers are for health care. What sort of providers do you feature?

Julie Mossler:            The model works best with providers who can resolve a health issue within one visit. It’s optometrists, chiropractors, and dental cleanings, not doctors. We also do some cosmetic medicine like Botox.

Williams:            What does a typical deal look like?

Mossler:            We approach businesses that we would like to see featured and businesses can also contact us. We structure a deal and provide support when a deal goes live.

A deal goes live and it’s up for 24 hours.   We offer customers discounts of 50 percent to 90 percent.

We ask businesses to specify the minimum number of customers they need to make it worthwhile. Sometimes it’s ten new patients; sometimes it’s fifty. That’s the minimum number of customers we need to get or else no one gets the deal.  That’s called the tipping point.

If we don’t reach that minimum number of customers then neither the business nor the customer is charged and we just start over the next day with a new deal.  If we do reach the minimum number then we take about half of the revenue of each Groupon sold and we give the rest to the business.

The customer just prints out the voucher and brings it in to the business whenever they make an appointment.

Williams:            Is the tipping point a real factor or is almost always reached?

Mossler:            The majority definitely reach the tipping point.  Less than 5 percent don’t and it’s usually in our newer cities or niche businesses. Even if you don’t reach the tipping point you’ve still been featured as the sole business on Groupon that day. In some markets we have hundreds of thousands of subscribers.

Williams:            How do subscribers interact with the site?

Mossler:            The customers have all opted in to get a daily e-mail. The people that you’re reaching with this advertising are people who want to spend money. They are a very motivated buying collective. If you get an e-mail in your inbox and you like the deal then you go to the site and you click “buy.”  Your credit card isn’t charged until we reach that minimum number of customers.

Williams:            Are bargain hunting patients who are just coming for one visit attractive for health care providers?

Mossler:            Yes. Our customers are college educated, making close to $100,000 a year on average. They are primarily female. A lot are single but we’re also starting to attract more moms and families.

I want to return to what I said about ‘resolved in one visit.’ With this approach you’re going to reach a much wider range of people who are interested in your deal because everybody needs teeth cleaning but not everyone needs a physician who works in a particular specialty.  But at the same time we structure the deal so that we’re promoting customers to come back in.  The deal may include a cleaning and then credit toward your next visit so that you’re encouraging them to come in twice.

Williams:            So it’s not just a simple 50 percent or 75 percent off of the first cleaning?  There might actually be a second part of it.

Mossler:            The value in Groupon is inherently the fact that we’re delivering the opportunity for repeat traffic. It’s up to us to structure the deal that way and then it’s up to you as the merchant to ensure a great experience and give them a reason to come back.  So yes, this is a very attractive customer base, but that’s half the story.  The other half is when they come in, what are you doing to make them fall in love with your business and want to only use you as their dental provider or their optometrist?

Williams:            Do you see Groupon spreading beyond the dental providers and optometrists to other medical areas?  Do you see primary care physicians participating at some point?

Mossler:            Collective buying can be applied to anything, so we never say never.  Who knows what could come down the pipe? It’s something that we’ve discussed because it’s interesting.

Williams:            Some of what you’re doing is selling entertainment and excitement. What percentage of the buyers ultimately redeem their Groupons and does it differ for health care compared to other categories?

Mossler:            Redemption is hard for us to track because we can’t force merchants to do it. But we do know from surveying 3,000 merchants that 96 percent want to be featured again or would recommend it to a fellow merchant. That is really powerful because if you weren’t getting people coming in through your doors and redeeming Groupons you wouldn’t want to do it again.

We’ve heard from many merchants who say that for appointment based businesses or physician businesses, 80 percent of Groupon purchasers were new customers.

Williams:            Does the business model depend on having a relatively low percentage of people redeem?  In other words, if someone sells Groupons at 50 percent off and receives 50 percent of that from Groupon they are only receiving 25 percent of the usual revenue, which is probably below cost for most businesses.  Do merchants want redemption rates to be low?

Mossler:            Breakage isn’t a selling point for us because the value in Groupon is the long term traffic.  The return on investment comes from getting a new patient who is going to be your patient for the next five years.  People not coming in the door and not redeeming the Groupon doesn’t really achieve that because they never meet your business.

The question really has to be posed to the merchant: Is it more valuable to you to get that $40 in your pocket from the purchase of the Groupon or would you rather get the value of a patient who is going to come back to you every six months over the next five years?

Williams:            In health care compared to other categories, are there any special issues that you have to deal with?  Anything that makes it more complicated than a traditional commercial relationship?

Mossler:            No. It’s just as easy to set up a deal for us in health care as it is in other categories.  Any time you’re dealing with someone’s health you have to make sure that the correct licenses are in place.  With any business in Groupon, whether it’s a restaurant or a pet store or an optometrist, we look for positive online reviews. They have to have a website with pricing and we’ll research things like their BBB rating or state licenses.  We’re doing everything we can.

We vet a hair salon just as thoroughly as we would a dentist because at the end of the day we don’t want to send our customers anywhere that isn’t just an awesome business.

Different things apply to different industries.  With massages for example, who would have known when we first started this business that we would have to check and make sure that they didn’t have any complaints for inappropriately dealing with a guest or for prostitution?

Williams:            Are there any major changes coming up in your model or is it just a matter of growth into new cities and adding new subscribers?

Mossler:            We are rolling out personalized deals.  Customers have the option to opt into personalized deals by providing their zip code, their sex and their previous buying history. Based on that we can connect them with the deal that’s best for them.

So for example if you you’re a mom we would be more likely to send you a family dental cleaning package.  It’s great news for merchants because it helps them reach the audience they want to reach. For someone with an appointment-based business with limited capacity for new patients we can limit the number of people we send your deal to or we can cap the amount of Groupons that are sold.

We can also work with a practice group that has three or four locations.  They can offer a Groupon and list all the locations on one page.

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The latest edition of the Cavalcade of Risk is hosted by Workers’ Comp Insider. Check out all the risky posts.

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