Health Business Blog

Yesterday’s Wall Street Journal (When Your Doctor Sells Credit Cards) documented the growth in credit cards issued to finance elective procedures such as LASIK, plastic surgery and dental implants. The article covered the usual points but missed one important but little-known aspect of the industry.

Briefly, physicians offer the cards for procedures not covered by insurance. The cards have a zero percent interest rate and no fees, usually for the first 12 months. After that the interest rates spike and to make matters worse customers are also charged retroactive interest on their first year’s balance. Ouch! The article details the pitfalls you’d expect from cards like these, and of course there have been some abuses.

A card company spokesman quoted in the article says, “the vast majority of account holders pay off their balances before the promotion ends.” That statement doesn’t surprise me, because most people who have these elective procedures are relatively well off.

I used to think that the card issuers lost money on patients who paid off their balance during the first 12 months but more than made it up on those who took longer to pay. In fact, I once told an executive at a credit card company that they must have lost money on me, because I once had a card like this. I had been prepared to pay cash for a procedure, but decided to take the no interest offer and keep the money to invest. However, the credit card executive smiled and told me that I had still been a money maker, because the credit card issuer charged fees to the doctor for issuing the card.

A major reason doctors were willing to pay the credit care company was because it gave them a way to offer a discount without having to negotiate with the patient explicitly. That insight also helps explain why the cards charge zero interest rather than just a low interest rate. For most cardholders the credit card company really isn’t trying to make money from the financing. Rather the objective is to serve the physician by facilitating price realization and volume.

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“How Facebook Saved My Son’s Life” -it’s hard to think of a more dramatic headline than that one from Slate. Last week a mother posted an article about her experience. In brief, her son got sick, son’s doctor suspected strep, son got worse, mom posted a photo of her son on Facebook, three dozen people commented on it, and one –a film actress and former neighbor– called to say,

“I hope you’ll excuse me for butting in,” she said, “But you have to get to the hospital. Now.” Her son Max had had the exact same symptoms, and was hospitalized for Kawasaki disease, a rare and sometimes fatal auto-immune disorder that attacks the coronary arteries surrounding the heart. “The longer you wait,” she said, “the worse the damage.”

Other comments by doctor friends and relatives persuaded mom to zip son to the hospital. Eventually Kawaski disease was diagnosed and son began treatment. Son is doing better now, but still recovering and may not get back to 100 percent. Mom has become a big fan of Facebook based on this episode and subsequent success using the service as a support network.

This is a nice story with a fairly happy ending but it makes me nervous to think this is somehow what a parent needs to do to keep their kid safe. What about all those Facebook users out there who don’t have the kinds of networks that this mom did? (It reminded me when I went on a tour of FBI headquarters in the 1970s. The tour guide showed us pictures of the 10 most wanted and said tour group members had identified several suspects over the years. My father told me that if this was the best tool the FBI had to find fugitives we were in worse shape than he thought.)

I asked SimulConsult founder and pediatric neurologist Michael Segal MD PhD for his opinion about this phenomenon.

It is hit-or-miss doing social network diagnosis with laypeople, but of course this story is a triumph of signal over noise.  Social network diagnosis works really well, though, with doctors involved, whose experience is orders of magnitude larger than that of non-clinician parents.  This is the sort of things doctors do on rounds, what we do on doctor listservs, and the sort of thing we make computable in SimulConsult (we don’t currently cover this group of diseases but are gearing up to do so).

As a pediatric resident I remember Kawasaki disease being one of those diseases that was stressed as one that could get much worse if not dealt with promptly. However, if a disease is rare and the message is not reinforced often, one can forget the details.   For this reason it is crucial to build in systems that remember the details.

The prior probability for suspecting strep goes a long way to explain how the doctors got sidetracked, but playing the odds and focusing on the horse instead of the zebra often works.  SimulConsult has a blended approach that tries to get the best of both these approaches.  It looks harder for disease in which intervention makes a huge difference, so even if such a disease is not ranked as #1, SimulConsult might focus suggested workup more on this disease than on diseases for which rapid intervention is not so important.

I’m hopeful stories like these will hasten physician use of systematic, computerized approaches to speed up correct diagnosis of rare disorders.

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The US definitely seems to have weakened itself in the international sphere over the past decade. One could argue that the real damage to the US from the September 11 terrorist attacks was caused by the US overextending itself into Iraq and Afghanistan and getting paranoid about security and immigration on the home front. But those decisions were generally popular among Democrats and Republicans, and it’s still hard to say exactly what the right moves were.

The current debt ceiling debate is another matter entirely. We are at serious risk of applying a self-inflicted wound that will be difficult to recover from. I remember in finance class being taught about the “risk free” rate, which was the foundation for all assumptions and calculations related to other assets and derivatives. That rate of course, was what was paid on US government securities. By even contemplating not raising the debt ceiling Congress –and the Tea Party caucus in particular– are in danger of erasing that assumption, driving up long-term borrowing costs, and undermining the role of the US dollar in the international system. Looking back a couple years from now I can’t imagine anyone in Congress who will be happy about causing that kind of damage, yet many appear to be in denial today.

There’s talk of $1.5 or $1.7 trillion in spending cuts over 10 years, of which $300 billion or so is from Medicare and Medicaid. These cuts are pretty much a yawn, since they are not about structural reform, but rather just shifting costs around. I am in favor of cost shifts to wealthy individuals in Medicare, but that doesn’t do much to address the underlying drivers of costs. And by cutting Medicaid as well as Medicare, the cuts don’t do much if anything to improve inter-generational equity.

I hope we can get through this debt ceiling crisis relatively unscathed and then move on to a real debate about health care cost control before Medicare swallows us up.

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Just returned from an eye exam with my pupils dilated wide enough that I can’t read. Luckily, I’m able to crank the font size way up on my computer monitor so that I can see well enough to write this. When I left the eye doctor I commented to the receptionist that my $25 co-pay was kind of a lot, but that next time I saw her it would probably be up to $50. She said she saw quite a few at $50 and the highest she’d personally dealt with was $60.

Once I got back to my office I found the dreaded annual renewal letter from Blue Cross Blue Shield of Massachusetts for my small business. I recognized the envelope but had to have someone else read it to me. The current premium for fairly dumbed down family HMO coverage is right around $18,000 per year (more than a minimum wage worker would gross if they worked full time). Next year’s rate is just above $20,000, an increase of almost 12 percent.

I’ve been dealing with percentage increases of about this magnitude every year for the 10 years since I started my business. (Of course, with the compounding effect what used to be a $1000 increase has turned into $2000.) Massachusetts and Federal health care reform haven’t slowed down the rate of increase, but it doesn’t appear to have increased it either.

These increases have to stop sometime, but it’s still not clear when and how it will occur. They say revolutions usually occur when there’s discontent among the middle classes. At $20,000 per year you’d think the revolution would already have occurred (never mind the co-pays, deductibles, coinsurance and coverage limitations) and yet there’s been relatively little foment. That’s probably because most middle class folks get their coverage through their employer and don’t feel the sting the way I do, even though rising insurance costs absolutely contribute to wage stagnation.

Once health care costs come under control maybe we can turn to the cost of higher education…

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This isn’t a personal health and wellness blog, but as a light-skinned, blue-eyed, bald redhead I feel compelled to post the occasional piece about sun exposure. I’ve  been careful about the sun since childhood, and a lot of people laugh at my broad brimmed hat, sunglasses, long-sleeve Sun Precautions swimshirt, and sneakers at the beach.  But the evidence seems to back me up. From HealthDay (Flip-Flops, Baseball Caps May Raise Risk of Skin Cancer)

Wearing flip-flops and baseball caps can increase your risk of skin cancer, an expert warns.

“Most skin cancers occur on the parts of the body that are repeatedly exposed to the sun,” Dr. Rebecca Tung, director of the dermatology division at Loyola University Medical Center in Maywood, Ill., said in a Loyola news release.

“The problem with flip-flops and baseball caps is that they leave the tips of the ears and the tops of the feet dangerously exposed to sun damage. The potential for skin cancers in those areas are real, especially on the tips of the ears,” she explained.

Before flip-flops and baseball caps became so popular, people generally wore broad-brimmed hats and sneakers or shoes that protected the tips of their ears and the tops of their feet.

The Centers for Disease Control and Prevention has a good site on skin cancer prevention. Key recommendations are fairly obvious but good to remember in any case:

• Seek shade, especially during midday hours.
• Wear clothing to protect exposed skin.
• Wear a hat with a wide brim to shade the face, head, ears, and neck.
• Wear sunglasses that wrap around and block as close to 100% of both UVA and UVB rays as possible.
• Use sunscreen with sun protective factor (SPF) 15 or higher, and both UVA and UVB protection.

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The CEOs of two academic hospitals are upset that Congress may reduce the funding for Graduate Medical Education (GME) paid through Medicare. To fight back, they’ve written a scare story for the Wall Street Journal Op-Ed page (We Can’t Afford to Train Fewer Doctors) that’s full of omissions and misleading statements.

To summarize their arguments:

• A cut in GME funding “could dramatically limit the ability of patients to see physicians, even for critical illnesses” by limiting the number of new physicians trained
• Hospitals have been buying up physician practices and as a result now provide most primary care, outpatient care, and care for the indigent. Reducing funding in one area (e.g., GME) “will impact all services that hospitals provide to the community”
• We need 90,000 more doctors by 2020 to meet increased demand and to replace doctors who retire

The authors make it sound like a cut in GME funding will doom the country to a dire doctor shortage. I think they’re being over dramatic:

• There is serious overutilization of medical services in this country today. Reduce that and we won’t need so much physician capacity. Conversely, supply creates its own demand. Train more doctors and overall utilization and costs will rise
• I don’t see why a reduction in GME funding will automatically lead to cuts in other programs. If their funding is fungible as the authors imply, maybe hospitals should just find other revenue sources to substitute for lost Medicare GME. Or maybe GME cuts can be offset by reductions in overhead expenses such as administrator salaries?
• Technology and process improvement should make physicians more productive. The number of farmers has dropped dramatically as agricultural methods have improved. To get costs under control we’ll need to see some of the same effect in health care
• Plenty of well-trained physicians from overseas are interested in working in the US. We could make up for some of the expected shortage by encouraging more immigration
• Physicians aren’t the only medical providers out there. Nurse Practitioners and Physician Assistants are an important, growing component of the clinical work force and can continue to take up some of the slack

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InsureBlog hosts the newest edition of Grand Rounds. The theme is “personal responsibility” –broad enough to allow a wide array of posts but focused enough to provide coherence.

Well done, Hank!

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I first heard about MyHealthDIRECT a year ago when the director of an emergency department in a major urban hospital told me how his staff used the system to guide patients to follow-up care at community health centers and clinics, or in some cases to redirect patients who were arriving with non-emergent conditions. So I was happy when I was offered the opportunity to speak with CEO Jay Mason to learn more.

In this podcast interview, Jay describes MyHealthDIRECT as “OpenTable for health care” and touts the utility of the system to providers, patients and payers. He claims that patients in the system have a 65-75 percent show rate for appointments compared with a 3 to 5 percent rate when patients are simply directed to follow up at a clinic. The company’s offering is in sync with the imperative in health care delivery to improve access and reduce cost. MyHealthDIRECT can work in standalone mode or in conjunction with other health information initiatives such as the Wisconsin Health Information Exchange (WHIE).

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David Williams interviews MyHealthDIRECT CEO Jay Mason [ 14:56 ] Play Now | Play in Popup | Download

On vacation today so keeping things brief.

Bloomberg (Three Steps Toward a Grand Bargain on the Federal Budget: View) includes some smart thinking on what a deal to raise the federal debt limit should look like. Two ideas that have a lot of merit are health-care related:

• Ending the tax-deductibility of employer-funded health insurance is a $260 billion per year item that should go by the wayside (even if phased out)
• Another item –not quantified in the editorial, but clearly substantive– is means testing for Medicare. This would mean requiring senior citizens with high incomes or wealth to pay more for Medicare

The direct financial impact of each of these ideas is significant, but there are other benefits. Reducing or eliminating deductibility of health insurance costs will cause employers and employees to focus more directly on controlling health care costs, and it will make the linkage between wage stagnation and the growth of health care costs a lot clearer.

Means testing for Medicare won’t necessarily reduce the program’s overall price tag –it may just transfer costs from government to individuals. However, it is an important first step in recognizing and correcting the lack of inter-generational equity in US government spending.

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I decided to take a break from my 24×7 health care life, heading to Cape Cod for a day at the beach. I was relaxing, enjoying the sun (taking sun care precautions proper for a bald redhead) but couldn’t help but overhear two women nearby chatting about health care.

One had just moved to the Cape and was asking the other for advice on how to find a primary care physician. They’re in short supply more or less everywhere, and the Cape is no exception. In fact, the Cape is a tough place to make a living for a physician or to run a hospital because there are few people with commercial insurance.

The established resident suggested that the newcomer check out a new community health center on the Cape, where it’s easy to make an appointment and where “they take all insurances,” including MassHealth, i.e., Medicaid. The newcomer was a little skeptical because she has primary biliary cirrhosis, and was unsure about whether the health center would be able to serve her needs.

She didn’t say what kind of insurance she has, but this is one of those cases where I’d be a lot more comfortable with a generous commercial plan that made me an attractive patient to a gastroenterologist to co-manage along with a primary care physician from the community health center or wherever.

Anyway, I hope tomorrow the beach will be back to the more traditional small talk.

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