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Healthcare trends

by wchurchill Wed Feb 21st, 2007 at 01:14:03 PM EST

I've been stuck in my office working for the last couple of months.  But a couple of articles that I read recently motivate me to write a short diary on healthcare.  These trends are very clear in the US, but I believe will carry over to Western Europe and Japan, other developed countries as well.

  1.  We are in the midst of an explosion of innovation that will lead to better treatment of diseases--some of the breakthroughs are fabulous, and I'll just highlight one that I read, but the list is incredible.
  2.  For a lot of reasons healthcare has been slow to change in adopting new productivity tools that are used in other industries.  But some of those tools are being specifically tailored to healthcare, and will allow more productivity, and have impact on both the quality of care and the cost.
  3.  As the demographics lead to a much older population in the western world, society will choose to spend far more of its growing wealth on life enhancing and life saving products,,,,,,as opposed to, say, more video games.

Here is one of the new technologies,
"The new robotic catheter system has the potential to fundamentally change the way electrophysiology procedures are performed worldwide and make it possible for a broader group of physicians to perform complex cardiac procedures such as cardiac arrhythmia mapping," said Wyn Davies, M.D., FRCP, FHRS, consultant cardiologist, St. Mary's Hospital, London, and principal investigator of the clinical trial.

Currently, cardiac electrophysiology procedures are performed using a manual technique that requires physicians to perform a series of complex manipulations at one end of the catheter with inadequate assurance that the tip of the catheter will respond as desired while inside a patient's heart. As a result, achieving stable contact at every anatomic site within the heart necessary for successful mapping can be difficult. Insufficient contact between the catheter tip and the inside of the heart wall can lead to highly variable and less than optimal procedure outcomes.

"There is a medical need for broader use of catheter-based procedures for diseases where catheters are rarely used today, and we believe our robotic platform will enable more physicians to perform complex interventional procedures through greater ease of use, and possibly improve patient outcomes," said Frederic Moll, M.D., founder and chief executive officer of Hansen Medical.

Here is the article I read today regarding an example of new technologies that can lower cost and at the same time improve patient care,

 "Today technology comes to the aid of those who help others," said Intel president and CEO Paul Otellini. "This is a great example of putting innovative technology to work solving real needs."

    The University of California, San Francisco (UCSF) Medical Center, one of the leading hospitals in the United States and a frontrunner in healthcare innovation, collaborated with Motion Computing on the C5's development.

    The medical center is now conducting pilots to measure improvements in workflow and nursing satisfaction with regard to patient care.

    UCSF chief medical information officer Michael Blum said Tuesday 's announcement represents a new kind of collaboration between hardware and software companies and end-users, such as UCSF, to bring a solution to the market that better meets the needs of nurses and doctors.

And here is the article which forecasts that American's will choose to allocate funding to these new products at a rate that will double the cost of healthcare over the next 10 years,

U.S. spending on prescription drugs, hospital care and other health services is expected to double to $4.1 trillion over the next decade, up from $2.1 trillion in 2006, a government report released on Wednesday found.

<snip>

Lead author John Poisal told reporters a major factor was an aging population as the "leading edge of the baby boom generation becomes eligible for Medicare," the nation's insurance program for those age 65 and older.

Greater spending for prescription medications is expected to fuel much of the increase, Poisal and his team said, especially amid more aggressive treatment of diabetes, heart issues and conditions affecting the central nervous system.

<snip>

At the same time, the report found the cost of drugs, devices and services such as doctors visits are expected to continue the rise, increasing out-of-pocket costs for those with private insurance.

While growth in spending on hospital and doctor care is seen slowing in 2006, the researchers expect that to change this year and continue to increase.

"Despite rising costs, consumers continue to purchase costly existing and new health care technologies," they wrote.

IMHO, today's US healthcare model will change.  A more organized approach to giving access to a basic level of healthcare will be developed, along with other changes.  However, I don't think the changes will take away the ability of American's to choose to buy the healthcare that they want.  The model will allow the society as a whole to spend more on healthcare, but it will also allow individuals to choose the new technologies, and pay for them, if they desire.  


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Like all straight line projections this one is probably off too.

What is missed is all the trends that will make health care less expensive, for example:

  1. Better care earlier in life (the obvious one from history is vaccination)
  2. Improved technology (such as the one you cited or use of arthroscopic surgery instead of invasive procedures)
  3. In the US the end of the privatizing of what used to be non-profit providers (Blue Cross, etc). That is they will all have been converted so the hit they take when having to yield a profit will now be a constant
  4. New drug policies which will reduce the excessive profits from big pharma (this is a worldwide push back)
  5. Improvements in record keeping and other such functions.
  6. Less investment in high tech machines (MRI's and the like are now in general use and will become a replacement rather than a growth market - at least in developed countries)

So, it is possible that cost will continue to rise as the population ages, but the rate of increase is unlikely to remain as high as it has been in the past.  

Policies not Politics
---- Daily Landscape
by rdf (robert.feinman@gmail.com) on Wed Feb 21st, 2007 at 03:59:59 PM EST
All good points.  And as you point out, there have already been cost reducing, yet quality and outcome improving, technologies such as arthroscopy, other endoscopic procedures, etc.  And there is tons of room for improvement in the overall administration of the area, and broader application of existing technologies.  Ex. there have been a number of cases in the past few years where the physician did the case from 8,000 miles away--a number of the new technologies such the one above from electrophysiology, will allow highly skilled surgeons to operate in remote, or distant areas.
by wchurchill on Wed Feb 21st, 2007 at 07:24:52 PM EST
[ Parent ]
This may be along the lines of your first point, but a shift to preventive care must also happen.

As part of the healthcare insurance program I belong to through my company (in Japan), I am required to get a thorough medical examination once a year, which is conducted through a medical company that specializes in this one service.  I think it is a brilliant idea.  It forces people -- and the insurance companies who will pay for their -- to keep detailed tabs of their health on a yearly basis, and enables them to take proactive measures to minimize health risks... and to react to health problems in early stages, before they get very difficult -- and expensive to respond to.*

Contrast this with a check-up I had one year after starting my first job in the U.S.  I went to a doctor listed as a member in my insurance plan's network, and when I told him I would like a "full check-up" because it had been a while since I had had one, he looked at me dumbfounded, literally speechless:  DOES NOT COMPUTE DOES NOT COMPUTE was streaming across his uncomprehending eyeballs.  I was shocked by his shock.  Aren't check-ups normal?  Aren't they something I'm supposed to do?  Like dental check-ups?

*TMI ALERT:
As an example, two weeks ago I had my last examination, and it being my first after turning 35, it was an occasion to enjoy my first colorectal cancer screening.  Uncomfortable, yes.  But I would take a couple of minutes of discomfort over finding out late in the game that I had a serious disease.

Truth unfolds in time through a communal process.

by marco on Wed Feb 21st, 2007 at 07:45:30 PM EST
[ Parent ]
I hope they put you under with something like Versed for the TMI.  Then it's not so bad.  I had a sigmoidoscopy without that, and it was brutal (years ago, btw).
by wchurchill on Thu Feb 22nd, 2007 at 02:06:20 AM EST
[ Parent ]
Whoa.  Just looked that up.  No, nothing quite that thorough.  Very old school.  But thanks for the reality-check.

Speaking of reality-checks, after I posted that comment, I got to wondering: are there U.S. medical insurance programs that require subscribers to get yearly check-ups?  If so, how common are these?

Truth unfolds in time through a communal process.

by marco on Thu Feb 22nd, 2007 at 02:10:22 AM EST
[ Parent ]
Yeah, just wait till you turn 50 and they pull out the heavy machinery!  Gives me the creeps just thinking about it.  Never been a fan of southend medical exams, though prudent, I suppose.  One tried and true piece of advice for the younger crowd here though is that there is nothing like a woman's (MD or health pro of course) touch, if you (males) can stand the embarrassment! And I'm not discriminatory without reason, it's simply a matter of anatomy.

I have never heard of a health insurance program that required an exam, but have had employers that required them.  It is a good idea though.  At one time my insurance plan would pay 100% for a voluntary annual exam with no deductables or costs.  Not sure they will now.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Thu Feb 22nd, 2007 at 12:34:15 PM EST
[ Parent ]
I have never heard of a health insurance program that required an exam, but have had employers that required them.

Interesting that both you and wchurchill say that the employer sometimes required them.  I would have thought that it was the insurance company, not the individual employer/company, that would take the financial hit if one of the employees got some serious medical problem.  Or maybe the employer's fees go up if employees don't go for regular exams?

Truth unfolds in time through a communal process.

by marco on Thu Feb 22nd, 2007 at 10:27:44 PM EST
[ Parent ]
In my personal experience (not a big sample) the requirement came into place at 40 or 50 years of age.  The two companies felt they had an experienced employee at that point, and didn't want he/she keeling over from a heart attack, or someting else.  Experienced employees are important to a company and you just don't want to lose one to a health problem.  It didn't really have anything to do with saving on the insurance premiums.  Also from a morale standpoint, it's just a positive statement to employees.
by wchurchill on Fri Feb 23rd, 2007 at 02:19:04 AM EST
[ Parent ]
Actually, big boo boo on my part: I was wrong about where the requirement for these exams came from in Japan.

I just asked our CEO about it, and he said that it was the company's policy, not a requirement of the insurance group (not insurance company, he specified.)  And his take was similar to yours: "In Japanese society, the company considers it its responsibility to make sure its employees are healthy and well taken care of."  I was a little skeptical (I thought there must be some hard legal or financial requirement/incentive), but the point you made about losing good employees to health problems does make sense as well, too.

Truth unfolds in time through a communal process.

by marco on Fri Feb 23rd, 2007 at 02:28:56 AM EST
[ Parent ]
Yes, I believe the issue with companies is value of the employee.  Employees that are healthy miss fewer days to illness and work better.

Not sure why insurance companies don't offer exams as ways to reduce their costs.  However, look at their views on some other situations.  I've known lots of people that have had their hospital stays cut by their insurance provider and later had to be readmitted when the illness became worse due to lack of professional care. There also seems to be a disincentive for doctors to prescribe medicines because insurance companies reduce the amounts paid to doctors that "over prescribe."  I'm not sure how this works exactly, but several of our doctors have confirmed that there is a disincentive factor, and we certainly noticed its effect.  My daughter had several operations this past summer/fall and the first doctor failed to prescribe an antibiotic following the procedure.  As a result, she developed a severe infection and had to have the procedure repeated.  The second doctor (same firm) stated that she should have had an antibiotic to begin with and prescribed one following the second more successful procedure.

I want to say that such policies by insurance companies appear to me to be penny wise and pound foolish, but it may be that their overall profits are increased by these penny pinching techniques.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Sat Feb 24th, 2007 at 11:38:56 AM EST
[ Parent ]
I'm very sorry that you had that experience with your daughter.  That sounds like the first doctor made significant mistakes in judgement.  I'm not a physician, but I'm around physicians a lot.  There are standard protocols that have been developed (they have a buzz word for them but it slips my mind) that lay out the best pathway in treating various diseases, doing surgeries, etc.  My impresion is that the antibiotic treatment after surgery is pretty standard, and important from both a patient care standpoint, but in this case also cost.  As your experience shows, he was clearly penny wise and pound foolish on this one,,,but really the more important decision criteria is the care of your daughter, so the antibiotic regimen should have been followed.  Hopefully the hospital has an internal review procedure that would address all second surgeries, and this doc gets beat up and put on the right path.
by wchurchill on Sat Feb 24th, 2007 at 02:25:08 PM EST
[ Parent ]
Thank you for the kind and sensitive comments.  My family is highly concerned about medical care having endured quite a few cases of poor judgement on the part of doctors.  My spouse and daughter, unfortunately, have been most affected since my gender and good health to date have allowed me to steer clear of doctors for the most part. However, we are not strangers to the profession.  My father in law was a doctor for about 50 years before his death in 1993, and several of my wife's first cousins are also doctors.  She chats with one such cousin almost every night.  So, we don't have a vendetta against all doctors.  I think it's mostly the current state of health care in the US.    

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears
by Gringo (stargazing camel at aoldotcom) on Mon Feb 26th, 2007 at 09:34:14 PM EST
[ Parent ]
my experience is the same as Gringo's.  No requirement from insurance, sometimes from the employer--good idea to do it though.  cancers caught early can be a piece of cake to cure,,,,while caught late, the odds of cure can be very long indeed.
by wchurchill on Thu Feb 22nd, 2007 at 04:28:36 PM EST
[ Parent ]
Hola, wchurchill, good to see you around these parts.

BusinessWeek's cover story this week is about this topic as well, and corporations' movement towards "wellness" and promoting -- sometimes compelling -- their employees to adopt healthy lifestyles, and the concomitant dilemmas and controversies (because there always are some):

Get Healthy--Or Else

Getting health insurance from your employer is sometimes seen as an entitlement, but the benefit owes its existence to a quirk of history. During World War II, employers desperate to attract workers began offering health insurance. Providing coverage has been an increasing burden for companies ever since. As a result, businesses have been forcing employees to shoulder more and more of the cost.

Some theorized that higher co-payments and pricier premiums would get people to take better care of themselves. It's not happening. "We have this notion that you can gorge on hot dogs, be in a pie-eating contest, and drink every day, and society will take care of you," says Harvard Business School Professor Michael E. Porter, who co-authored Redefining Health Care. "We can't afford to let individuals drive up costs because they're not willing to address their health problems."

Hence the wellness fixation at companies as varied as IBM (IBM ), Microsoft (MSFT ), Harrah's Entertainment (HET ), and Scotts. Employees who voluntarily sign up for such programs often receive discounts on health-care premiums, free weight-loss and smoking-cessation programs, gratis gym memberships, counseling for emotional problems, and prizes like vacations or points that can be redeemed for gift cards.

Companies save money. Employees get healthier. What's not to like? But the wellness craze raises important issues. One is that people could start blaming unhealthy colleagues for helping push up premiums. Then there are the privacy and discrimination issues: How far should managers intrude into employees' lives? That's the essence of the Rodrigues lawsuit.



Truth unfolds in time through a communal process.
by marco on Wed Feb 21st, 2007 at 07:48:42 PM EST
Where ya been, wc?  Good to see you, even if it does look as though I'll owe you a pint.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Fri Feb 23rd, 2007 at 12:28:14 PM EST
Incredibly busy, Drew.  a lot of it work,,,,though I like my work so much it often seems more like a hobby.  I imagine you would like a lot of it.  For example I've been looking at some of the details behind demographics, and the impact they may have on the economy--which looks quite incredible--over the next several years.  I've always been interested in demographic impacts,,,Peter Drucker once said something like ,,,the is a paraphrase quote: "forecasting is very very difficult,,except for one area, and that is demographics.  you can forecast incredibly accurately how many people, for example, in the US will be in the 45 to 50 age group in 5 years, 10 years, etc.  but very few people do it."  but knowing this gives tremendous insight because age groups have such predictable spending patterns.  so that has been fun, and guided my investment philosophy, which, knock on wood!!, has been paying off the last several years.

In that same vein, Ken Fisher's latest book was very interesting, and I've added some new wrinkles and websites based on it.  it's a little bit of a hard read because he is a smart ass, and somewhat arrogant--but if you can put that aside he has some great points.  I'm now tracking a global yield curve, for example.  And have a simpler but straightforward investment benchmark to measure performance against.

Also have been involved in some exciting new healthcare technologies that can revolutionize several areas of therapy--putting some time and dollars into that.  really some fun stuff, because it will improve people's lives as well as make me a few bucks!  that's what I love about healthcare.

lots of family things going on, and taking time.  and then I read a lot spiritually,,,,zen and christian mystics right now.

so I haven't been able to comment at ET as much as in the past.  though I lurk as much as possible.

How about you?  I haven't seen as many economic diaries as I've seen from you in the past.  How are the studies coming?

I hope we get a chance to have that pint.  I was in London for a few weeks last summer, but the schedule was booked by the hour.  

by wchurchill on Fri Feb 23rd, 2007 at 01:51:45 PM EST
[ Parent ]
Sounds like an exciting time.  The joys of demographics.  What do you think the impact will be?

I am, for better or worse, no longer in Britain.  I dropped out of the program, primarily because I wasn't getting a lot out of it.  (Spending two weeks studying the Solow Growth Model was not what I had in mind when I thought of grad school, having already mastered it in my first weeks as an undergraduate at Florida State.)  So I'm back stateside.

Constructing a global yield curve sounds like a hell of a project.  How's that coming?

We'll have to get together for that pint at some point.  I think you may well win, given that things seem to be getting back on track, although those new inflation figures worry me a bit.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Feb 23rd, 2007 at 02:21:56 PM EST
[ Parent ]
I'm really sorry to hear the study in the UK wasn't what you had expected and hoped for.  I was really hoping you would have not only a good educational experience, but also enjoy the stimulation of a different culture.  I hope you can find a fine program here in the US.

The demographics show strong demand from the baby boomers for the rest of this decaade,,,and the trends in western Europe on demographics are similar.  However, as early as 2010 the the tail end of the boomers is moving through the peak spending years (45 years--50 years old), and the numbers in the following generation fall off pretty sharply.  So there is likely to be a fairly significant fall of in consumer demand, which of course is the backbone of our economy.  (It's interesting that Japan experienced this already, as their demographics turned sour much earlier than the US and western Europe, so to some extent it's a preview of coming events,,,<shudder>).  Since europe sees the same basic trend, this does not bode well for the next decade.  But the next few years look strong, with good demographics, good monetary policy in the States, strong consumer demand, new technologies rolling out in many segments of the economy--so I'm continuing to expect overall strong GDP growth (down somewhat last quarter,,,,the numbers for last quarter will be adjusted downward,,,,also weaker in q1 and maybe rolling into q2--but weak in the sense of 1.5--2.5% growth,,,,not a recession).  Then booming GDP for the balance of this year and the next couple of years.  Strong stock markets--I'm planning on 15% growth in equities this year, but I'm not going to be surprised if it's much stronger,,,,like 20--30%.  and the rest of the world following a similar pattern.  strongest growth in asia non-Japan.

I think inflation has to be monitored, and you're right it's a little too robust.  but the fed's doing the right thing in holding pat as the economy slows for several months,,,,and seeing what happens to the inflation numbers.  a small hike at year end may be needed, but I think they can do it without screwing things up.

I continue to think the overall ET tone of negativity on the world economy is way off base,,,I've thought that for over 1 1/2 years now,,and particularly their negativity on the US economy.  We'll continue to see,,,so far I've been right,,,<knocking on wood>

by wchurchill on Sat Feb 24th, 2007 at 02:49:48 PM EST
[ Parent ]


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