Commentary from Dave Durenberger

August 19 , 2008

A commentary on the most recent national and state policy/politics news will come your way on Friday.

READY TO RETIRE?
Today I begin the 75th year of my life. Also the second month of working part-time as Senior Health Policy Fellow at the University of St. Thomas. I am fortunate to be where I am in life. Family, friends, and faith are growing better each day. Dennis Dease and the learning environment at UST are special. St. John's has invited me back for a week next winter. Son Danny sent me an Oswald Chambers piece today on "Self Awareness" that made me ponder my role in the lives of others. Bob Sansevere in today's Pioneer Press interviewed St. John's famous 81-year old football coach John Gagliardi on "Does coaching ever get old?" To which John, the winningest football coach in America at 463 games, replied, "I figure it beats working." Then I received the e-mail announcing that another Johnnie died yesterday on his 70th birthday. John Brandl, a DFL State Senator, UMN professor, and retired Dean of the Humphrey Institute of Public Affairs, fought cancer for a long time, in and out of therapies and remissions, and finally succumbed to the inevitable.

PHYSICIAN INCOME RISES
Modern Healthcare magazine published its annual summary of physician compensation drawn from 14 professional association and consultant surveys. Of 21 specialties surveyed, 10 topped $400,000 a year on average. But more importantly, the survey showed that the system is finding many other ways to enhance income of docs. Life style adjustments have been important for some time as has additional compensation for special services such as on-call. Student loan forgiveness is now becoming a favorite recruiting and retention tool and doesn't show up on comp or comp surveys. Biggest pay increases went to plastic surgery.

Radiologists, orthopedists and invasive cardiologists top the income list again, mainly because they bring in patient and money for the systems they work with and because of the disparity in third party payment between their services and others. On the other hand, anesthesiology is an "underpaid" but critical specialty for which hospitals increasingly cough up money from their own pockets. Of course there are the primary care specialties at the low (or roughly one-half the procedural specialties on average) comp level and low increase year over year despite the perceived shortages. The hospitalist "fad" is over.

MEDICARE P4P PHYSICIANS in ten medical clinics around the country have finished two full years of piloting quality improvement for patients with CHF, coronary artery disease and diabetes. CMS reported quality improvement in all ten, and cost reduction as well in some. The four groups that lowered costs used EHR, team approaches and received performance payments totaling $13.8 million.

SAM'S CLUB HEALTH POLICY
Minnesota and its Governor are a good example of the learning curve for health system and policy change. Four years ago, an 18-person group of citizens asked their fellow Minnesotans how best to lower health care costs. The answer came up (1) stay healthy; (2) focus on the role of community not just insurance, and (3) get rid of the "this is not a bill" approach to health care financing. Thanks to a couple commissions authorized by the Democratic legislature and staffed by the Republican Governor's new health commissioner, the state hopes to achieve all three.

Governor Tim Pawlenty, like most Republican legislators, believed the key to improving value was getting working families to "put more financial skin in the game" by making them buy high deductible indemnity insurance outside the employer market. What he has apparently come to understand is that is putting the cart before the horse - making people pay for stuff they don't really understand.

That may work in cosmetic surgery, or lasik surgery for your golf game, or to create markets for retail clinics and urgi-centers. It doesn't for the 15% of the chronic or potentially terminally ill cases that currently generate 82% of the healthcare costs in Minnesota. That's where the legislature/governor deal is now heading the state. They call it "patient centered care" and you'll be seeing much more of it in our future.

IOWA HOSPITAL CHAMPION
Senator Chuck Grassley, who chairs the Senate Finance Committee when Republicans are in the majority, has a couple spendy solutions to the problem of health care access, cost and quality. On the access side, Chuck is not satisfied that enough has been done to keep small hospitals in small towns. He now wants to keep larger hospitals in medium sized towns by applying the charge-based reimbursement by Medicare to "tweener" hospitals that are larger than the already over-paid critical access hospitals, but not big enough to make money like every other hospital having to care for patients that need to be there not somewhere better. This is questionable cost and quality policy posing as access policy. Chuck, can't you leave "tweeners" to your "tween-age" granddaughters? This is questionable cost and quality policy posing as access improvement.

On the quality front he wants to make sure physicians can't refer to their owned hospitals. To the extent physicians have an interest in diagnostic centers they must so inform patients and give them a price list of alternatives before referrals. Another bad choice, Chuck. We don't know one radiologist from another and can't read results if we did. So bundle the diagnostics into the payment for the diagnosed treatment and make the physicians make the choice and live with justifying to patients and insurers both the quality and price result.

DAVID BRAILER a few short years ago was the No. 1 name in American healthcare according to the annual Modern Healthcare survey of important people in the field. His job then was to be President Bush's "Health Information Czar" to get the medical system moving toward automation and electronic information interchange.

Today he runs Health Evolution Partners out of San Francisco. He says HEP was founded to accelerate the best in the inevitable change taking place in the healthcare market. It will focus on redefining quality, efficiency and accountability of healthcare services to consumers and payers. He has developed a "Purchaser Value Initiative" as well, and raised nearly a billion dollars from CALPERS and from an additional four or five state public employees retirement funds (including Minnesota).

Susan and I enjoyed lunch with David recently at the Buckeye Roadhouse just off CA Highway 101 near Sausalito. David's no. 1 interest these days is in his family, especially his seven-year old son and year old daughter. I listened to much of a fascinating discussion over elementary education in San Francisco and the merits of various institutions before we got to passion no. 2. How health system entrepreneurs will use the cost-quality-access quandary we face in this country, to innovate our way to better health, medical care and health management services.

Listening to Brailer, you get the impression that there may have been a lot not to like in the Bush administration's approach to "consumer driven healthcare." On the other hand, it focused us on a critical reality. Everyone in America is a potential consumer of better health, more appropriate medical services and, someday, good judges of value in the healthcare system. Entrepreneur innovators are doing it right now, and Brailer's EHP team will help make sure they succeed.

©2008 Signe Wilkinson

MORE INNOVATION
Chen May Yee writes in the August 18 Star Tribune about Minnesota physicians who are striking out on their own to find niches in the community's medical services market place and in the non-insurance, pay for performance markets that exist in large cities. Tom Lee writes in the Star Tribune about Tony Miller, the Minneapolis venture capitalist who has been fueling a lot of consumer-directed health adventures since the success of his Definity. Within the "system," Maura Lerner of the Star Tribune writes of the two-year old experiment at the Minneapolis V.A. Medical Center to identify and help people in the earliest stages of Alzheimer's. Jeremy Olson in the St. Paul Pioneer Press tells us of efforts at the Allina Health System, largest in Minnesota, to experiment with alternative mental health therapies. A nice story, Minneapolis philanthropist Roberta Mann (theatres) challenged Dr. Paul Goering, Allina's executive medical director for mental health, to find out how alternative therapies might reshape traditional approaches. Stay tuned to see if it's wacky or wonderful.

HEART ATTACK HOT LINE
When the University of Minnesota Medical Center and Fairview Health System announced the launch of a 24/7 hotline (800-US-HEART) for people with chest pain, one might have expected the imitators to line up. Instead The American Heart Association and cardiologists in the community suggested that calling 911 works as well. Others suggested that the UMN's hot line is a well-meaning effort by a single system to suggest there's a better way which needs to be explored. Others suggested it is part of a competitive strategy to recruit more patients.

RETAIL CLINIC BOOM ENDING?
The Minneapolis Star Tribune suggested in a story last week that the bloom was off the retail clinic rose because of some closing in national markets. Not so, says former MinuteClinic CEO Linda Hall Whitman who, thanks to a recent marriage, is now Linda Hall Keller. "The right strategy will assure success and MinuteClinic, for one, has had it," says Linda. CVS acquired MinuteClinic and altered the strategy simply to drive traffic to their drug stores. Now they think they can expand the health-related services available in each store. MinuteClinic was built to put a very discrete set of services within 10 minutes of where people work and play and to get employer and insurer support for the economies it would achieve. "Our strategic model was small and defined and aimed at people who become acutely uncomfortable and need relief immediately. That's it, and there is still a huge market for it," she says.

The problem with Wal-Mart clinics - and others who think real estate not pain relief service - is clear. They build 450' spaces into every new big box (when 120' will do), they put the clinic-in-a- box in the middle of a huge parking lot, and then they contract with a local hospital or medical clinic to staff it and these guys can never make enough money off this kind of retailing. Another important insight from Hall Keller, "today's retail clinic customers are middle to upper income families who are health literate and value informed. The Wal-Mart and Target customers are predominately lower income, less well educated, not risk averse and not even good shoppers - like willing to take prescriptions for generic equivalent drugs.

STEVE KELMAR is a friend to many of us in the health policy business. He was Assistant Secretary of HHS in Bush 41 and the first executive health policy officer at Medtronic before leaving the device world for Novartis in Geneva. He left them for a return to the U.S. with Patti and family and a short stint at Merck. Today he has found his government relations place in the health insurance field at one of its better companies, Aetna in Hartford, Ct.

MORE MEDICAL SCHOOLS
People who believe there is a shortage of doctors in this country insist on building more medical schools and, hopefully, better education programs (as in family and community health professions aka primary care). The University of California, which hasn't opened a new medical school in 40 years, will be adding new schools in Merced and Riverside to the 5 existing medical schools that currently enroll 2,540 students . By 2013. The idea is to train California docs to work in California.

Massachusetts, which has the largest number of primary care doctors per capita, just enacted legislation to require its medical schools to increase primary care slots, improve education and training and provide some loan assistance to students. In addition it awards grants to doctors and hospitals improving access to computer technology in practice.

UNIVERSITY OF MINNESOTA ACADEMIC HEALTH CENTER maintains its silence on the allegations that two new professors have been double-dipping pay and expense reimbursement as employees of Georgia Tech and UMN. Francois Sainfort was recruited from Georgia Tech to head up the Division of Health Policy and Management in the AHC's School of Public Health. Sainfort and his wife, Julie Jacko, were signed to UMN employment contracts October 1, 2007 at $285,000 and $216,000 respectively or $99,000 over their GA Tech pay. Georgia Tech alleges they were still employed and paid there through the first of 2008.

After the story broke locally in April, Sainfort was pressed by his new faculty to go on leave from the directorship (for which $20,000 of his annual comp was allotted). In August, he informed faculty that he was asking Dean of Public Health John Finnegan to replace him as division director, the job the UMN went looking to fill 2 years ago. He calls the Georgia Tech charges "unexpected and unfair."

Sainfort is an industrial engineer who went to Georgia Tech from Wisconsin a few years ago as associate dean of its College of Engineering, as William George Chair Professor, and as head of a new Health Systems Institute designed to build capacity for Atlanta Children's Hospital in the research arena. His wife Julie was also on the Georgia Tech faculty in information technology. The UMN's price to get a new division head in public health was to take both Sainforts, creating a dual position in Nursing and in Health Policy and Management for Julie, and giving Francois their Mayo chair and authority to hire additional faculty. AHC head Dr. Frank Cerra was quoted then as saying, "This is all part of the 'medical arms race' for research talent among universities."

Two questions the University of Minnesota might want to answer to help us understand how "The Medical Arms Race" in academic healthcare works. First, was Sainfort actually leveraging the Minnesota job for money and a job for his spouse against other opportunities? Officials at Georgia Tech report that sometime after Sainfort and Jacko inked their UMN contracts, Sainfort made the three person "short list" of finalists for dean of Duke University's College of Engineering and Duke came checking up on him at Georgia Tech.

Second, if Sainfort is not the Division Director of Health Policy and Management at the U, who is? And what will it cost us to keep Sainfort-Jacko around the campus doing what? According to news reports Sainfort was coming with a high potential for garnering research grants, the financial lifeblood of the school. Under the circumstances it's hard to imagine the supposed 12 million dollars of GA Tech grants, much of which was designed for the Children's Hospital capacity building project, flying to UMN with Sainfort. The cloud which did accompany him here is also likely to make it difficult to secure new grants of any size to justify his employment.

DEMOCRATS COMMIT TO AFFORDABLE, COMPREHENSIVE HEALTH CARE
The Democratic Party's platform committee faced three health policy reform goal choices: (1) government single payer, (2) Hillarycare health insurance mandate, or (3) a guarantee "that every American, man woman and child must be guaranteed to have affordable, comprehensive health care." They chose (3). This is good. It's better than President Clinton's January 1994 goal to veto any bill that doesn't provide every American with health insurance or Hillary's current mandate to own an insurance policy. It is achievable and affordable whereas the single payer idea is not - without sacrificing quality, value and access for many.

This allows for community based programs that focus on health maintenance, employer-based programs on health management, community based approaches to mental and behavioral health and long term care that may be outside the traditional "insurance" approach the service access. It allows for reforming the rules that guide health insurance so as to guarantee real consumer choice and health plan competition. It suggests that a goal can be achieved one community or region at a time depending on how creative practitioners, people and policy-makers may be in "guaranteeing high quality comprehensive care at affordable prices and how creative national payers like Medicare are in changing their financing to encourage regional creativity.

Obama health policy advisers have apparently set a goal of reducing the average four-person family's cost of health insurance by $2,500 from what it might be eight years from now. The examples of how to get there may not be the best in the world, but if a President will commit to a measurable goal, and allow various parts of the country that are already half way to the goal to continue on their course not on a one-size-fits-all P4P scheme, we can do it.

HEALTHCARE, GUARANTEED
People in politics know and respect Rahm Emanuel. He worked for Bill Clinton, is serving his 4th term in the Congress from Chicago as a member of the Ways and Means Committee, and best set the tone for the 2006 Democratic election win. A Hillary for President advocate, he has as much influence as any on his Senator Barack Obama. He also has a very bright brother who chose to follow their pediatrician father into medicine, specializing in cancers of the breast from a research position at NIH. Ezechial Emanuel, M.D., PhD has been collaborating with noted Stanford health economist Victor Fuchs on a universal healthcare voucher proposal. He now calls it "A Simple Secure Solution for America" in his book Healthcare, Guaranteed.

Emanuel establishes the goals of health reform as guaranteed coverage for all, cost control, and improved quality. There are seven goals for his "The Guaranteed Healthcare Access Plan". Guaranteed coverage, effective cost controls, high quality coordinated care, choice, fair-funding, reasonable dispute resolution, and economic revitalization. Every American will have a choice of private health insurance plans each with a guaranteed set of benefits including what you might expect plus mental health, dental, therapy, preventive with limited co-pays and no deductible. He funds this with a national Value Added Tax (VAT), by the savings that come from administrative simplification and the elimination of most all other forms of public and private coverage including Medicaid and Medicare, and by income relating subsidies for poor and seriously ill persons.

There will be a National Institute for Technology Assessment and Outcomes, Centers for Patient Safety and Dispute Resolution, and a National Health Board with 12 regional boards to set the basic benefits and oversee the work of the health insurance plans in controlling costs and assuring care coordination and quality. The plan eliminates the current role of employers in the U.S. system "so they can focus on their core business." The gradual elimination of Medicaid means a shift of healthcare financing to the national government and to consumption taxes and will free up billions of dollars in medical expenditures that state governments can use for other purposes.

The strength of the proposal is in making the financial guarantee of access to health and medical services a national responsibility and ridding the system of hundreds of public and private financing programs. The weakness is in its reliance on private health insurance companies to do the work of assuring access, quality improvement and cost control. This will be much better done by re-aligning the financial incentives in payments to health care providers with the value outcomes we desire; and by retaining the involvement of employers in helping manage access to health, fitness, and productivity-enhancing services. It also needs to define insured access to supportive services for persons with disabilities which we call long term care.

ANOTHER IMPORTANT CONTRIBUTION to the future direction of healthcare reform is a new book Flatlined: Resuscitating American Medicine. It is due out in January 2009. This is a first book by one of the best emergency room neurosurgeons in America, Dr. Guy Clifton. He was founding chairman of the neurosurgery department and holder of the Runnells Distinguished Chair in Neurosurgery at the University of Texas Medical School in Houston. His major research contributions have come nationally and internationally in the treatment of severe brain injury including a specialty on hypothermia's impact. Clifton spent the last couple years working with Senator Orrin Hatch (R-UT) a Senate health policy leader, and with the New America Foundation.

Clifton argues that health policy must reduce costs by rewarding higher quality care. "All the information and standards of practice in the world won't reduce healthcare costs unless payment incentives are aligned to reward efficiency. If money is to be saved in medicine, doctors and other practitioners will have to figure out how, and they will have to be paid for it. After all insurers, hospitals, pharmaceutical companies, and medical device manufacturers do not practice medicine."

The book's take-away two points are (1) In the U.S. we can achieve our policy goals by focusing on how to reduce waste not focusing only on prices. Examples are regional variation, value for money, payment that rewards outcomes for episodes of illness, and overcoming the "lowest common denominator" policy of health professional and trade associations. (2) Rebalance medical practice so primary care is more prominent. Barriers today are medical school focus on bio-tech competition, retailing of primary care, and hospitals that fight for referrals.

MEDICARE DRUGS AND MEDICARE MODERNIZATION
Good news from CMS? The current estimate of the 10 year cost of the new Part D prescription drug coverage. Originally estimated as north of the $400 billion proposal in 2003, the current estimate says cost over 10 years will be $395 billion. The bad news remains the amount of Medicare money Congress spent in order to get Congress to pass the drug benefit. Part of the price of GOP support was paying private health plans to sell both drugs and alternatives to traditional Medicare. It's time that Part C Medicare Advantage drugs will cost $21 a month on average premium compared with $28 on average for stand-alone drug benefit. But the price paid to get private plans to see MA insurance far exceeds the nominal value in better benefits or prices to beneficiaries. The costs in some parts of the country are exorbitant compared to those in others creating unconscionable inequities. Add to that the estimated $65-$75 billion paid over 10 years to corporate employers to maintain retiree drug benefits, the costs of the new HSA-funded individual indemnity insurance.

Many will say this proves markets work in Medicare drugs. They work better than bad payment policy which was the prior drug situation. They don't work anywhere near as well as consumer-driven markets for other products in which wholesalers, group purchasing organizations, or "big box" buyers can purchase with the power of millions of customers behind them This is an alternative way to construct Medicare purchasing for drugs whose actual retail price will never be known without it. Democrats in Congress and some Republicans in the Senate tried this move in April of 2007 only to be thwarted by a GOP filibuster.

Former HHS Inspector General senior policy analyst, Madeline Carpinelli, testified about her work at Prime Institute of the UMN before Joint Economic Committee of the Congress July 24th. She testified that 200-300 commonly used brand name drugs have experienced an average 7.4% price increase from 2006 to 2007. "This rate of inflation is not necessarily acceptable, or even reflective of efficient pharmaceutical market, but it has come to be expected in recent years."

Her research showed there are other drugs called "extraordinary drugs" because they all had one characteristic. Their prices had more than doubled during the past year. One in 20 brand single source drug products has had one or more extraordinary price increases. Most were brand, single source drugs. Six had price increases of more than 1,000% in the year and one was 3,436%. Besides the amount of increase, it's the growing number of such products whose manufacturers are withholding from market pressures. Intellectual property and exclusivity status was one characteristic. Others were more troublesome. Old drugs with a patent for a new use, or drugs prepared in a new dosage form.

"Senior Leadership Perspectives: An interactive panel discussion on the future of healthcare"
August 21, 2008
5:00 p.m.
University of St. Thomas, Minneapolis Campus
The MN Chapter of the American College of Healthcare Executives and the Center for Health & Medical Affairs at the University of St. Thomas invite you to a special panel discussion. This panel of influential leaders will reflect on past challenges and offer their observations and suggestions regarding the future of healthcare. All are welcome to attend this free event. Visit the St. Thomas website for more information and registration.

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