Category Archives: Economics

Take a deep breath: Marijuana product placement is on the way

Coming soon

Coming soon

Paid product placements for cigarettes are back on the big screen. The tobacco industry agreed in 1998 not to pay for product placement in movies. But electronic cigarettes weren’t around then and aren’t included in the ban. Some brands are now pushing the envelope, according to the Wall Street Journal:

Throughout the movie [Cymbeline], actress Milla Jovovich puffs away on an e-cigarette called a SmokeStik. In one scene, signs for the brand hang in a convenience store next to condoms and calling cards.

The product’s cameo appearance comes courtesy of Canada-based SmokeStik International Inc.—in just the kind of paid-product placement that has been off-limits to traditional tobacco companies in Hollywood for nearly two decades.

The cynicism of the cigarette (or nicotine) business is on full display:

“I don’t see a problem with glamorizing something that saves lives,” says SmokeStik’s chief executive, Bill Marangos. Like others in his business, he considers e-cigarettes to be a less-harmful alternative to traditional smokes…

Mr. Marangos wouldn’t say how much the company paid for the placements, but he does allow: “They know we pay well.”

This got me thinking, how long until we see paid product placement for recreational marijuana brands? The weed is now legal for recreational use in Colorado and Washington, and it seems a wave is building that will lead to legalization in other states and perhaps nationally. I think it’s a really bad idea for public health, but the tide is moving against me.

Once the business goes mainstream, I expect to see the development of national brands and the pursuit of a vigorous marketing push via whatever means are not declared illegal. Product placement in movies will be a no brainer to get some buzz for the brand and the film. And as with any sort of drug dealing, it’s a lucrative business that can pony up the cash.

It’s quite possible that we’ll see marijuana “edibles” promoted in films rather than smokes. Ironically that could take us back to the early days of product placement in the movies, to the famous Reese’s Pieces placement in ET. Candies for kids once again.

I hope we don’t see dope promoted with paid product placement, but I think we will.

photo credit: Cannabis Culture via photopin cc

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

China syndrome: Rich flee mainland for medical care abroad

Coming for radiation treatment in the US?

Coming for radiation treatment in the US?

I feel bad for the patients profiled in Desperate Chinese Seek Medical Care Abroad in the Wall Street Journal. I’ll note upfront that I’m no expert in the Chinese system. But from what I’ve read here and elsewhere it’s not uncommon for hospitals and physicians to push profitable, expensive services and products that are not in the patients’ best interests.

As a result, those with means are looking abroad for relief. Some are winging it to the US, and the article paints a flattering –albeit anecdotal portrait– of better diagnoses and effective treatments here.

In the comments section, several readers assert that the article provides proof about how great the US healthcare system is. That’s not the conclusion I draw.

The article mentions one patient who paid $70,000 out of pocket to UCSF, and another at MGH who’s out $270,000 so far after using up her savings, selling her apartment and borrowing money.

I’ll assume that the patients are getting first rate care, but I’ll also assume that they are being billed “charges,” the ridiculously high rack rates that are used to set fees for those who lack the protection of a big insurance company. Are patients really being treated better financially than in China? I doubt it.

And it’s not as though US providers always have their patients’ best interests in mind when recommending treatments. It might not be as overt or widespread as in China, but it’s still a problem.

On a separate point, the article mentions Chinese coming to the US to give birth, lumping that phenomenon into the same category as cancer patients. That’s a totally different situation. The typical reason for giving birth in the US is to gain US citizenship for the child.

photo credit: Profound Whatever via photopin cc

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


Is medical inflation coming back to bite us?

PWC made a pretty big splash yesterday with its projection that medical costs will rise at a faster rate next year than they have in the recent past. The story was picked up by major media and I was on TV last night to discuss it on Al Jazeera’s Real Money with Ali Velshi.

In truth, the story is not so dramatic. The PWC report focuses only on larger employers. Costs are expected to rise around 6.8 percent (versus 6.5 percent in 2014) and most employers are responding similarly to how they have for the past several years: shifting more costs to employees, implementing high deductible health plans, and spending money on wellness programs. These approaches are surprisingly unimaginative and not likely to be terribly effective.

High deductible plans cause patients to be conscious about the first couple or few thousand dollars of costs. After that, they don’t really care since they’ve reached their out-of-pocket max. And high deductible plans are harsh on lower income employees who have a hard time paying the first dollars out of pocket. Upper income employees barely notice the difference.

And wellness programs? PWC didn’t go so far as to endorse this strategy, which is a smart move to preserve their credibility. Some of these programs are nice benefits but it’s awfully hard to find one that is going to reduce medical costs.

What would work better? How about offering employees plans that reward them financially for choosing lower cost, high quality providers?

Even if employers are paying more, things are not necessarily so dire for those buying insurance in the individual market. Average premiums are likely to rise for 2015, and the plans with the biggest market share are raising premiums the most. But thanks to the Affordable Care Act consumers are now dealing with a competitive market in insurance. As long as they are willing to switch plans, in many cases they’ll actually be able to reduce premiums. We’ll see in a few months just how savvy exchange shoppers are.


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

The ACA and part-time employment

Is Lady Liberty coming to kill your job?

Is Lady Liberty coming to kill your job?

The Affordable Care Act requires employers to provide coverage for full-time employees but not part-timers. That sounds like a straightforward and reasonable provision, but as usual the devil is in the details. ACA opponents have taken up the argument that this provision is a “job killer” because it will cause employers to limit employees’ hours, thereby pushing people into part-time roles to deprive them of benefits. That view strikes me as simplistic, since in my experience companies are in business to make money, not to hammer their employees.

I had an opportunity recently to chat with some HR heads from big employers –retailers and restaurants—that employee many part timers as well as full timers. I asked them for their take on the controversy. Unsurprisingly they provided a pragmatic, non-political view of the situation.

Here are the main takeaways:

  • Prior to the ACA, each company had its own definition of full and part time. As a rule they knew who they intended to pay benefits to and who not
  • The ACA is causing them to track hours of part-timers closely, with the goal of not inadvertently having to pay benefits to someone they don’t consider full time
  • The result is that work hours are being spread around more evenly among part-time workers whereas in the past some part-time workers got a lot of hours while others had fewer
  • From the standpoint of corporate HR, this is a good result, because part-timers who are assigned more consistent hours are more likely to stay. This increase in retention is good for productivity and profits. In this case the ACA is reinforcing an HR best practice that companies have started to implement in any case
  • Companies have not been trying to take away benefits from those who had them prior to ACA implementation

It’s arguable that the losers here are the few part-time employees who used to get lots of hours because their managers preferred them. Some of those are likely to make the jump to full time. Others may seek opportunities elsewhere.

These discussions are about the short term. Longer term it’s possible that employers will take the ACA into account when designing the structure of their workforce. Still, it’s just one factor among many.

photo credit: dullhunk via photopin cc

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

Return of the house call

Dodo 2.0

Dodo 2.0

House calls by physicians have gone the way of the dodo bird. It used to be the norm for doctors to visit their ailing patients at home, but that model gave way long ago to office based practices, a setting which enables a physician to see many more patients than would be possible in the old time model. If anything it would seem like house calls by physicians would be even less tenable in an era of team-based care, which seeks to leverage the scarce physician resource with mid-level providers, nurses, and administrators.

And yet at least a few solo physicians are making house calls again, and a column in HealthLeaders argues that it could even make sense for hospitals to offer house calls as a new service line.

I like the logic.

The office setting is convenient for the physician, but it’s inconvenient for patients, especially the sickest ones, for whom getting out of the house and into the office is a major ordeal, especially for those who require help with transportation and logistics.  In an era where prevention of hospital admissions and readmissions is seen as a key strategy to reduce healthcare costs, and where accountable care organizations are focused on outcomes rather than volume, there may be a new role for doctors in the home. And indeed, a doctor featured in the HealthLeaders article discusses his ability to keep even quite sick patients out of the hospital.

Diagnostic and information technology is evolving, too, in ways that help physicians be productive on the road. In fact the “Bring Your Own Device” phenomenon of doctors bringing their own iPads into the hospital demonstrates that physicians don’t have to make any information technology tradeoffs when they leave the office. New portable ultrasound machines are another example of technology that can easily be brought into the home.

When a physician visits a patient at home he or she can gain a much better sense of the overall context for the patient’s health. An empathetic, astute, holistically oriented physician should be able to turn that information into a better care plan and prevent unneeded escalation to an acute setting.

Another potential benefit is that patients can avoid sitting in a germy waiting room and potentially being exposed to dangerous infections as a byproduct of their doctor visit.

Of course, much of the same logic that applies to house calls for doctors applies to nurses as well. But it’s reassuring that the economics support the reintroduction of such highly trained professionals into the home.


photo credit: Bibi via photopin cc

By healthcare consultant David E. Williams of the Health Business Group


North Adams hospital to close: Here’s how it fits into the bigger picture

I’m quoted in the Springfield Republican today about the closure of North Adams Hospital and the implications for healthcare in Massachusetts more broadly. The article draws heavily on a report we contributed to about the challenges facing lower and middle income communities as a result of how healthcare is financed in this state.


By healthcare consultant David E. Williams of the Health Business Group