Health Business Blog

A new JAMA article (Relationship Between Occurrence of Surgical Complications and Hospital Finances) by a variety of health care wonks including some of my former Boston Consulting Group colleagues demonstrates that hospitals make more money when surgical patients have complications. The article is useful in that it documents the extent of the situation but the situation is actually pretty obvious and well understood.

An author described work at a hospital to reduce surgical complications. According to the New York Times, “the team was stunned to realize that lowering the complication rates would actually cost the hospital money.”

Stunned?

In a fee-for-service model, hospitals get paid for what they do, not what outcomes are achieved. So if something goes wrong in surgery the hospital usually gets to bill for the ICU, another surgery, extra days in the hospital, etc. Unless those services are unprofitable then of course the hospital will make more money from cases where those resources are used.

If a factory screws up its production process, it has to spend more money to rework the product, but it can’t sell the final goods for more money. If it messes up badly the work in process may need to be scrapped and the product can’t be sold at all. But a hospital can often charge for its rework (avoidable complications) and the scrap (deaths caused by errors).

I described the situation last year in Reducing surgical complications: How to make it happen faster.

By David E. Williams of the Health Business Group.

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Like most people, I was never a fan of the old-fashioned hand dryers in public bathrooms. Unless you had 10 minutes to stand around, the machines never got your hands dry. I used paper towels whenever they were offered.

In recent years more powerful hand dryers have been popping up and now fewer bathrooms offer paper towels.

Of the new dryers, my personal favorite is the Dyson airblade. It’s powerful, quiet and has a clever design.

But I’m not so fond of the Excel Xlerator. Sure it’s powerful, but it’s also incredibly noisy. I have sensitive ears, and I’m not embarrassed to admit that when I’m exposed to a loud sound I cover my ears with my hands. But of course if I’m drying my hands I can’t use them to protect from the noise.

The Xlerator is loud enough that I suspect it’s a threat to hearing. At the very least it’s so annoying that I bet some people skip hand washing to avoid using it. My gym has one of these beasts and after being bothered by it for a while I decided to research the noise level.

I found a paper on the subject by Jeffrey Fullerton and Gladys Unger from the acoustical consulting firm Acentech. Sure enough, the Xlerator is a real noisemaker. Apparently the company has also developed a noise reduction nozzle, but I don’t think I’ve ever seen one in operation.

I followed up with the authors, who told me that OSHA does not find the level of noise generated by the Xlerator to be a danger to hearing. It’s not loud enough to cause immediate hearing loss and since it’s used for only about 15 seconds at a time it’s not likely to cause permanent damage.

They did advise me to put my hands a foot or so below the nozzle rather than a couple of inches, because hands in the airstream is a major factor in the noise level. 

So today I gave it a shot. If anyone was watching me they probably wondered why I was stooping down to use the dryer. But it actually worked. By keeping my hands lower the noise level was cut to an acceptable level. It took a little longer to dry my hands, but it wasn’t bad.

By David E. Williams of the Health Business Group 

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In Europe, reimbursement decisions for drugs often include explicit consideration of cost effectiveness and a comparison of the efficacy of the new drug with products that are already available. In the US, such considerations are excluded, at least for Medicare, which is the biggest payer. In the latest Health Affairs, Joshua Cohen, Ashley Malins and Zainab Shahpurwala conclude that the European approach leads to lower costs, better access to therapy for patients, and better outcomes –at least in some cases.

I asked Cohen –a senior research fellow at the Tufts Center for the Study of Drug Development– to comment on some of the findings.

Why did you base your research on patient access rather than market availability?

I’ve been studying patient access for over 10 years. I try to distinguish between key dimensions of patient access. Broadly, patient access is a function of: i. market availability (off-label uses are an exception to the rule); ii. coverage by payers; iii. patient out-of-pocket costs. Market availability captures one element of access. It is a necessary, but insufficient condition of access given that the vast majority of cancer drugs are paid for by third party payers.

From the patient standpoint, what are the advantages and disadvantages of the US v. European approaches?

The biggest advantage in the U.S. versus Europe with respect to cancer drugs is faster market availability of a greater number of drugs. Two rather stunning facts stood out: 1. None of the common subset of 29 drugs were approved in Europe before the U.S. And in most instances the lag was at least 4 months. 2. At the same time, for drugs licensed by the EMA and approved for reimbursement by the national health authorities there were hardly any out-of-pocket costs for patients in Europe. Contrast this with co-insurance percentages of as high as 40% for some drugs in the US. There are medications with annual price tags of over $20,000 –and 40 percent of  $20,000 is a lot of money to shell out, especially for those on fixed incomes.

The comparative outcomes information you cite in the article is very old and excludes drugs approved since 2002. Why is this the case? Is there any way to look at more recent information?

The articles themselves are not old. They are recent publications (2009, 2010, 2011). However, if one looks carefully at the time period during which survival data were being measured it becomes clear that the newer vintage drugs were not included in the studies. Hence, one cannot conclude that better survival statistics for a number of cancers in the U.S. are due to better access to newer cancer drugs. Until we have data showing survival that can indeed be attributed to better access to newer drugs, we are left to speculate. My hunch is that better access in the U.S. to newer cancer drugs (i.e., faster and greater numbers of approvals, as well as fewer coverage restrictions) has been beneficial to some patients, as has improved screening and earlier diagnostic work-up.

In the timeframe you considered, 41 oncology drugs were introduced in the US but only 31 in Europe. Are there clinically significant products that make it to market in the US but not elsewhere? Can you provide an example?

Provenge (sipuleucel-T) comes to mind as a drug with a lot of fanfare in the U.S. It was approved in 2010 by the FDA, yet still not approved in Europe. At the same time, it should be said that there are certain differences in regulatory mechanisms that have benefited market uptake of a number of drugs in Europe, including Iressa (gefinitib). Iressa has led practically a moribund existence in the U.S., while in Europe, as a result of EMA approved of a companion diagnostic in 2009 – an EGFR mutation test kit – sales have increased steadily.

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By David E. Williams of the Health Business Group 

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When I saw the MedPage Today headline, “Study: Docs in dark about complementary therapies” I assumed it meant that doctors didn’t understand these therapies. But the story described patients withholding information about what they were doing from their physicians. That’s not exactly a new or surprising finding.

The study advises physicians to ask about what else patients are taking or doing, which is probably a good idea. But I’d like to see more attention paid to how physicians react when they hear about other therapies and the extent to which they are willing or able to engage with the large percentage of patients that seek relief or cure outside the medical setting at the same time they are working with their doctors.

Some of these therapies are herbs or other substances that may interact with prescribed drugs. Doctors definitely need to know about that and deal with it. Other approaches, such as massage, meditation and reflexology may be helpful for some patients –and it may or may not matter if the physician is involved.

The best physicians take a personalized, holistic approach to their patients, and do so in ways that do not conflict with the evidence based mantra.  One physician I know has a medicine man (who’s also his patient) perform a ceremony blessing the statin he prescribes to another member of the same tribe. I’m willing to bet his patients are more adherent as a result of this approach.

I’m not a major proponent of alternative and complementary medicine, but I do find it revealing to see how physicians relate to other approaches, especially for diseases they can’t cure. Do they insist that other approaches are invalid and consider them an affront? Do they balance a healthy skepticism with open mindedness to the idea that they don’t know everything? Do they vary their approach depending on the individual patients and their situations?

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From FierceHealth IT (Stroke patient makes gains in speech, physical therapy with robot)

Researchers at the University of Massachusetts-Amherst are touting success in the case of a robot that delivered speech and physical therapy to a 72-year-old male stroke patient.

“It’s clear from our study … that a personal humanoid robot can help people recover by delivering therapy such as word-retrieval games and arm movement tasks in an enjoyable and engaging way,” speech language pathologist and study leader Yu-kyong Choe said in an announcement.

While the child-sized robot might not be the ideal therapist, it could help ease the shortage of workers, especially in rural areas. 

“A personal robot could save billions of dollars in elder care while letting people stay in their own homes and communities,” the authors wrote in a study published in the journal Aphasiology.

To me it’s a no brainer to use robots for rehab. Take the phrase “arm movement” tasks. Robots can be much better than human therapists at doing boring, repetitive arm movement tasks over long periods of time. And of course if the robot can be the patient’s home it makes access all the easier.

In 10 years we’ll look back at these early results and it will be totally obvious the direction things were moving.

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