Health Wonk Review: Happy 10th anniversary edition

10 years old and still hitting the mark

10 years old and still hitting the mark

The Health Business Blog turns 10 years old this weekend, so I thought I’d celebrate by hosting the Health Wonk Review. And some fine submissions have come in.

Is that the best you could do? I’m no lawyer, but King v. Burwell, which could overturn ObamaCare subsidies in states that lack their own exchanges, is ridiculous on its face. Of course Congress didn’t intend to deprive people of subsidies based on whether their exchange was state or federal. Managed Care Matters does a nice job of laying out just how lame the plaintiffs are. If they were harmed by ObamaCare it’s hard to see how, and they are ignorant of the law to boot.

Insurance Co-Ops were a late-in-the-day add to the Affordable Care Act, a sop to those who wanted but did not get a so-called public option. It’s awfully hard to start up an insurance company as some of the Co-Ops are demonstrating. InsureBlog says we told you so.

Pricey, pricey, pricey. High cost regions tend to stay that way for a long time, even when controlling for factors such as health status and price variation. Healthcare Economist says that means there are real differences in practice patterns.

Sell to the masses and dine with the classes. A Catholic Health Care CEO sues for defamation after a union advertises his $2.2 million compensation package. Health Care Renewal struggles to understand how an organization that focuses on serving the poor could be comfortable with how the CEO is behaving.

Risk and uncertainty will replace measurement and outcomes as the basis for future healthcare reform. So says the Population Health Blog as it examines the links between the Information Age, health IT, biology, statistics and quantum mechanics.

Speaking of the future, Workers’ Comp Insider suggests a seismic shift in the century-old workers comp system but notes that workers comp has not exactly been a trailblazer.

It’s nice to find an optimistic wonk, but we’ve got one right here at Health System Ed, which marvels about the ONC’s national meeting and its progress on interoperability. But don’t worry, the post includes a dose of skepticism as well.

Some people will do anything to avoid taxes, gain frequent flyer miles and now, avoid ObamaCare. But Colorado Health Insurance Insider shows us why the “easy” ways to game ObamaCare may just turn out to be complex and costly after all.

It says something when a blogger apologizes for a submission that is especially wonky, but if you can make it through Health Affairs Blog’s three-part series on the CMS final 2016 Notice of Benefit and Payment Parameters rule and final 2016 Letter to Issuers in the federal exchange you can’t help but learn something.

Like most providers, The Hospital Leader is dismissive of patient experience scores, confident that patients only respond to big TVs, tasty food and swanky lobbies. And yet a well designed study shows that this quite common opinion is unjustified.

What’s the highest margin activity in the hospital? Becker’s Hospital CFO blog by Copley Raff has the answer: fundraising.  Ka-ching!

Last and likely least, here’s one from my own Health Business Blog. The Pfizer acquisition of Hospira –explained by most observers as Pfizer’s way to get into generics– is really about Pfizer getting back into the “me-too” drug business that was the foundation of its glory days.

Thanks for reading!

Image courtesy of Stuart Miles at

By healthcare business consultant David E. Williams, president of Health Business Group.

Thomas Jefferson embraces telehealth

Just slightly ahead of their time

Just slightly ahead of their time

Thomas Jefferson was an innovative guy, so I guess it should come as no surprise that his namesake university in Philadelphia is embracing telehealth in a big way. Thomas Jefferson University Hospitals CEO Dr. Stephen Klasko is in a hurry to transform healthcare delivery, and sees telehealth as a key enabler. TJ has gone so far as to invest in American Well, the telehealth platform company I’ve profiled in the past.

Klasko is focused on keeping patients out of the hospital and especially the emergency department. He also sees the potential to make better use of specialists’ time –letting them quickly dispatch patients with minor issues and provide greater access for those with serious concerns.

Fifteen years after eVisits were commercialized, virtual care seems to be coming into vogue. Why now? As usual with major changes, there is a convergence of various factors.

  • Everyone –patients as well as doctors– has a high-powered smartphone in their pocket, which is capable of amazing things like full motion video. No need to go to a specialized facility or even to a computer
  • Patients have financial incentives to avoid costly care
  • Providers are facing overwhelming demand from newly insured patients along with new  value-based payment models that encourage efficiency
  • Consumers are coming to expect online interaction with healthcare that feels like how they interact in every other aspect of their lives. Doctors and nurses feel the same way

The next few years will be monumental for digital health. I can’t wait to see how it all unfolds.

photo credit: Declaration Drafting Committee, after Jean Leon Gerome Ferris via photopin (license)

By healthcare business consultant David E. Williams, president of Health Business Group.


par8o CEO Daniel Palestrant on matching healthcare supply and demand

par8o CEO Daniel Palestrant

par8o CEO Daniel Palestrant

While running Sermo, an online physician community he cofounded, Dr. Daniel Palestrant came up with the idea for a healthcare operating system, using the Pareto principle to match supply and demand. After selling Sermo, he turned his attention to applying these concepts in a new company, par8o.

par8o has recently raised a Series A financing round and is beginning to publicize its work. In this podcast interview, Palestrant answers my questions about the company’s origins, progress to date, and future plans:

  • What is the meaning of the company’s name? (0:11)
  • Why is Pareto optimization an issue for healthcare? (1:00)
  • What do you mean by the term, “healthcare operating system?” (2:20)
  • Which customer segments are you addressing? (6:33)
  • You started a few years ago. Why are you just raising funding now? (8:46)
  • How has the concept evolved since you came up with it at Sermo? (10:58)
  • What can we expect next? (13:02)
  • How does par8o enable better benefit designs for health plans? (14:54)

By healthcare business consultant David E. Williams, president of Health Business Group.


Nursing shortage or nursing surplus?

I’ve been a bit of a broken record about the so-called nursing shortage since at least 2009. (See here, here, here, here, here and here.) The conventional wisdom has been that we are facing a looming, massive shortage of nurses –in the hundreds of thousands in 10 or 15 years. I’ve always looked at those numbers with raised eyebrows, especially since they are often pushed by those with a vested interest in boosting the number of nursing students.

Of course there are variations by region, specialty, and level of expertise but in general the idea of a big nursing shortage just didn’t make sense to me.

So I was gratified to receive the following note from a researcher at Staffing Industry Analysts:

Hey David,

I ran across your article in 2013 about the nursing shortage rhetoric being hootzpah. Good article, and turns out you were right on the money. Not sure if you’ve seen, but the HRSA just updated its projections and now projects a nursing surplus of 340,000 nurses by 2025 (given current conditions continue).

Wrote an article on it here if you’re interested.

Sure enough, the government’s estimate of the balance between supply and demand has shifted radically. In 2002 HRSA predicted a shortage of 800,000 RNSs by 2020. The latest estimate shows a surplus of 340,000 by 2025. The biggest reason? A huge increase in nursing graduates.

I think the long-term outlook for nursing demand may be even more dire, because forecasters tend to neglect the long-term substitution of capital for labor. There will still be a lot of nursing jobs, but nurse productivity will increase as technology improves, and some tasks done by humans today will be done by robots in the future.


Pfizer and Hospira: It’s not about generics

Did somebody say generic?

Did somebody say generic?

Leading newspapers, including the Wall St. Journal and New York Times, misunderstand the strategy behind Pfizer’s proposed purchase of Hospira. Here’s what the Journal had to say:

Pfizer Inc. said Thursday it would buy smaller rival Hospira Inc. in a $16 billion deal that would transform the New York pharmaceutical company into a leading player in the emerging market for lower-priced knockoffs of costly biotech drugs. …[B]ig drug companies like Pfizer are now borrowing from the playbooks of generic makers and developing copycat versions of each other’s biotech drugs.

Actually, no. What Pfizer is really doing is returning to the strategy that led to its Lipitor heyday: making “me-too” versions of existing drugs and differentiating them through marketing backed up by clinical research. This is not about intensive competition on pricing.

Generic drugs are considered equivalent to the brand name product. Pharmacists can and do substitute generic drugs for the branded original and for one another at will. A patient who receives a prescription for an off-patent drug like ZOCOR will find that the pharmacy automatically substitutes generic simvastatin from any one of the many manufacturers. When the patient goes back to refill the prescription they are likely to get simvastatin from a totally different manufacturer. Undifferentiated markets like this are driven by price competition, and prices are typically 90 to 99% less than the original.

Copies of biotech drugs –which are just starting to become available– are very different. They can not be substituted interchangeably by pharmacists because they differ at least subtly from the original product. An unsophisticated marketer might try to compete purely on price, offering a discount from the price of the original. That may happen –but we’re probably only talking about a 10-25% discount, not 90-99%.

A clever marketer like Pfizer is likely to take a much different approach. Lipitor wasn’t the first statin in the market. It wasn’t the second, third or fourth either. When it launched in 1997 there were already three blockbuster statins on the market. Payers liked the idea of having multiple parties with similar products to negotiate with, and they tried with a certain amount of success to generate competition based on price.

Yet Pfizer came in with an aggressive campaign to differentiate its product from the others and ended up being the biggest seller by far. To me the difference between the various biosimilar versions of a product is akin to the difference among the various statins.

Products that come later to market don’t have to compete on price if they can differentiate in some other way. I’d be shocked if Pfizer isn’t thinking this way about the Hospira deal.

photo credit: Sorry… what exactly is in this can again? via photopin (license)

By healthcare business consultant David E. Williams, president of Health Business Group.