Exploring Human Potential

What Uwe Reinhardt (or Angus Deaton) Would Say About HC Costs.

Posted on | March 19, 2018 | No Comments

Mike Magee

A March 13, 2018 article written by scholars from the London School of Economics and published in JAMA focused on an all too familiar subject – comparative health care costs in America. That article was accompanied by a number of editorial reaction pieces including the one written by Zeke Emanuel who generated the comparative pricing chart below.

In general, most all agree that the facts suggest that in four areas – drugs, high volume/high margin interventional procedures, radiologic imaging tests, and administrative costs – the U.S. is financially out of whack. Other commentators placed a spotlight on our encouragement of “monopolists” in pursuit of “innovation”, and our reckless spending priorities at the beginning and end of life.

In return we have the dubious distinction of generating 57% of new chemical entities, at least some of which add little extra and have been advanced through DTC ad-driven market expansion with the tacit support of remarkably gullible over-prescribing physicians. And of course those new “Right-to-Try” policy shifts advocated by Trump should just add to our “American exceptionalism” in health.

One editorial written by two JAMA editors was entitled “What Uwe Reinhardt Might Have Said.” The much revered Princeton health economist who recently died was known for not pulling punches. In one analysis of our private health insurers, he documented that 18 cents on every insurer’s dollar was spent on “operations” which included “marketing, determining eligibility, utilization controls (eg, prior authorization of particular procedures), claims processing, and negotiating fees with each and every physician, hospital, and other health care workers and facilities.” All of this, he charged, proceeds within a “shroud of secrecy.”

Were he to be alive, the JAMA editors predicted he might have commented on “the many self-interested parties, including professional societies, patient groups, hospitals, drug and device manufacturers, and insurance companies, that profit from high health care spending.” Noting that Reinhardt often would initiate a comment with the phrase, “You Americans”, the editors offered two probing questions he might have posed:

1. “How can the US health care system and health care spending be recalibrated to ensure basic care for all US residents, particularly the less fortunate?”

2. “How is it possible to overcome the shortchanging of many other important sectors of society, including education, infrastructure, and the environment, because of the high cost of health care?”

Such comments only gently scratch the surface of the Medical-Industrial Complex’s full culpability. Were Reinhardt still alive, he would have done well to illustrate his legitimate points with the case study first exposed by his Princeton colleague, Angus Deaton. The still raging opioid epidemic demonstrates how far astray a health care system can wander when based on profit and greed rather than on planning and prevention; and how the leaders of Medicine, including those who own JAMA, played a critical role in igniting this disaster which continues to divert precious resources as it claims more and more American lives.

To my knowledge, they have never acknowledged or apologized for their institutional role in legitimizing Purdue-Pharma funded specialty pain societies; provided an advertising vehicle for their product, Oxycontin; and willingly enabled Purdue Pharma’s soft target, data driven physician prescription profiling through sales of their physician masterfile database.

How Trump May Help Us Liberalize American Health.

Posted on | March 17, 2018 | No Comments

Mike Magee

In this week’s The New Yorker, David Remnick reflects on “Trump’s illiberalism” and its’ test of the resilience of  “sturdy-seeming American values” and the endurance of  “institutions that the President has scorned and threatened.”

He sees active turnout in the 2018 midterm elections as part of the test, but also suggests that any victory here will require more to follow, namely “an honest, complex, open-minded debate on immigration, income disparity, distrust of government, guns, race, gender, speech, social media, and the environment.”

And what of health? That was my first reaction to his list, followed instanteously by my mind’s response, “Well, health underpins them all, doesn’t it?” And of course, the answer is yes. A decade ago, I laid out seven principles that attempted to respond to the question, “How do we make America healthy again?”

The seven visions were:

1. Health is political.

2. Reconnecting the family.

3. Lifespan Planning.

4. Home-centered health care.

5. Integrating health databases.

6. Techmanity: Humanizing technology.

7. Caring for the “planetary patient.”

Since then, Health Commentary has touched on these “liberal arts” themes again and again, reinforcing principles and tracking our evolution, often proceeding at a slower pace than I had predicted. Hcom has highlighted the economic perspective as well, which only adds to the sense of national urgency.

Remnick’s point is that the Trumpian crisis has liberal benefits – to test, to challenge, to motivate, to activate, and to accelerate. A healthy America welcomes new entrants, embraces diversity, leads in the public sphere, exposes and addresses prejudice wherever and whenever it occurs, limits guns and violence, encourages respectful communications, and rises to the environmental challenge.

A healthy America requires healthy Americans. We need to get on with it. Enough time has passed for us to rise to the challenge. #2018 Election.

Hospital Obsolescence or Hospital Reinvention?

Posted on | March 8, 2018 | No Comments

Mike Magee

Two weeks ago Zeke Emanuel asked the question “Are hospitals becoming obsolete?” In his New York Times Op-Ed he flagged the high water mark for the industry as 1981, a year when 6,933 hospitals nationwide admitted 39 million patients or 171 for every 1000 Americans. Thirty five years later, our population has grown 40%, and numbers of hospitals have declined by 20%, with those remaining functioning at 65% occupancy rates.

The industry consumes roughly a third of our national health care spend at $1.1 trillion. And all the while we’re treated to scandalous stories like the one in the Washington Post this past October titled “A hospital threw a still born out with dirty laundry.” The 98,000 deaths attributed to hospital error in 1999 have now grown by some estimates to 440,000. And as whipsawed hospital CEO’s like Geisinger’s David Fineberg recently proclaimed, “We should be investing in people and processes, not hospitals.”

Having spent a few years running hospitals myself, I understand the challenges and complexity. They play a critical stabilizing role in their communities, have a mixed governance model that can be confusing, struggle with continuously aging brick and mortar, support 24/7 coverage expectations, deal with incessant demands for expensive technology, and maintain complex, diverse workforces.

Health care is the largest employer in America, and labor accounts for half the total cost of health service delivery in the U.S. But increasingly the workforce is clerical with 16 positions for every one physician, and half of those 16 being non-clinical. They are also flowing outpatient and home-based where, according to Johns Hopkins geriatrician, Bruce Leff, care for some conditions normally treated in hospitals can now be accomplished at home with a 30% to 50% savings and many fewer complications.

Leff predicts hospitals like his will soon morph into “large intensive care units” or (like Columbia Presbyterian) become indistinguishable from corporate research enterprises on the prowl for NIH grants and pots of patent gold. Of course, training primary care doctors in academic centers like these has been recognized as problematic for some time. So as care moves outpatient, primary care training will need to as well.

Hospitals like New York’s Mount Sinai have moved vertically downstream establishing their own hospital-at-home product called “HaH-plus”. Their mobile acute care team thinks they can save Medicare money, and that as many as a half million Medicare patients could qualify at a savings of 20% for Medicare.

Other hospitals are done with massive edifices and instead are building two or three story “healthplex” complexes following the lead of the hotel industry that has gone boutique and in a short two decades created easy to use, low cost lodging options with a skinny labor profile.  The new skinny hospital menu of services will likely include emergency care, labor&delivery, some surgery, lab and radiology.

Repurposing old hospitals with their wide hallways and broad walled rooms has been problematic all along. Not only are they difficult to redesign, but their outmoded HVAC, poor access, and disintegrating construction often beg for dismantling. Some – like the old factories they resemble – do survive for mental health services, addiction services, and a range of local governmental uses.

But in the end form must follow function. And demographic changes, technologic progress, and the proven risks of being a traditional hospital in-patient in the modern age suggest evolving functionality with more mobile, segregated, targeted and personalized forms of care will dominate the immediate hospital horizon.

The Basics of Pharma Kickbacks – Opaque & Complex

Posted on | March 7, 2018 | 2 Comments

Mike Magee

With great fanfare, the New York Times announced this week that UnitedHealthcare   “would stop keeping millions of dollars in discounts it gets from drug companies and share them with its customers.” For awhile, pharma, insurers, pharmacies and PBMs have been pointing fingers at each other over escalating costs. That’s become more difficult of late with vertical integration moves from the likes of CVS and United Healthcare which not only own PBMs, but are also providing direct health services.

Former Lilly exec and new head of HHS, Alex Azar, applauded the move as “a prime example of the type of movement toward transparency and lower drug prices for millions of patients that the Trump administration is championing.” But in reality the move was defensive and will benefit only a small number of UnitedHealth Group patients.

The system outlined above in quick scribble is a complex exercise in backscratching, legal pay off’s, and inefficiency that proves the old adage that “one man’s waste is another man’s wealth.”

The flow of pills depicted above is pretty straight forward: From manufacturer to wholesale middlemen to pharmacies to us. But the flow of money is anything but straightforward. Three decades ago Merck purchased the Pharmacy Benefit Manager Medco which eventually became so profitable it overshadowed Merck.

PBMs are now the Grand Central Station of legal drug money and data transfers. They negotiate the deals for each and every drug with pharma, placement of those drugs on insurers tiered insurer lists, and integrate the data with pharmacies and insurers nationwide. Their cut-outs and give-backs are non-transparent, and nearly everyone is in on the deal – except you.

After you chose your pharmacy plan and pay your bill, money flows from you (in the form of deductibles and co-pays), to the pharmacy, who paid the wholesaler, who paid the drug company. But the payments don’t end there. The insurer gets kick-backs from the drug companies and PBM’s in thanks for choosing the preferred product, and the PBM keeps track of your insurance profile and money transfers to your pharmacy as efficently as Western Union – for a price, of course.

It’s confusing – and its big, very big. Here are a few numbers:

  1. Quantity: 4 1/2 billion prescriptions filled each year – 90% generic.


  1. Consumption: 50% filled 1 prescription in the past 30 days – 10% on 5+ prescription drugs.


  1. Construction: Majority of raw materials produced overseas by a $46 billion dollar manufacturing conclave.


  1. First stop – Wholesalers: 85% go through one of three middlemen – AmerisourceBergen, Cardinal Health, and McKesson – a $400 billion + cost to Americans.


  1. Retail: 60,000 pharmacies collect about $365 billion in revenue a year. Chains control 74% of all retail income – 62% in person and 38% by mail order.


  1. Who Pays?: Ultimately, we do! Along the way, almost everybody, but us,  gets a kickback.


  1. What about Insurers? 86% of drug bill is paid by insurers – but they are paying with your premium dollars, and kickback dollars from drug companies and PBMs.


  1. Cost Control: Insurers use PBMs to hold down their costs. They create the tiered drug coverage plans, negotiate prices with drug companies, and manage the computer payment systems. The top three are owned by CVS (CVS Caremark), UnitedHealth Group (UnitedHealthOptum), and a mail order pharmacy (Express Scripts).

Free enterprise loves complexity. Why? It’s hard to read, harder to dismantle, and adds profit every step along the way. Case in point – Cigna’s $67 billion dollar offer this week to buy ExpressScripts, the nation’s largest PBM. Cigna CEO David Cordani laid out his reasoning in black and white.

“When we think about Express Scripts, it has PBM capabilities, but it has 27,000 individuals and a significant number of consumer touchpoints around health and well being. It expands our service portfolio beyond that of a PBM. Having the capabilities to serve an individual whether they are healthy, healthy at risk, chronic or acute is important.”


How Long Will You Live? Check Your Zip Code.

Posted on | March 6, 2018 | No Comments

RWJF has created this interactive tool which looks at life expectancy by Zip Code. Check it out HERE.

The Simplification Movement in American Healthcare

Posted on | March 5, 2018 | No Comments

CDC Obesity Map

Mike Magee

As the debate over health care in America rages on, the great lie oft repeated but never defended is that our system is exceptional and too complex to wrestle to the ground. That is the breech, reinforced over half a century that has left our citizens and now our entire economy at risk. The truth is, the solution is rather clear, the resources available, and the liability of continued inaction of mounting concern.

How do we make America healthy? Before we address this critical baseline question, let’s first tackle another, “Why should we make America healthy?” The answer to this question could go on for pages but the short-hand response is that healthy citizens maximize human productivity and societal stability. If the idea is to make America as great as it can be, then healthy citizens are the starting point.

So, how do we make America (and Americans) healthy? Whatever we decide to create and provide in pursuit of this fundamental goal, it must be universally and simply available to all citizens. This is because we are an inter-dependent species. We are only as well, or as productive, effective and mutually supportive as the weakest link in our chain. Insecurity breeds insecurity. Fear and dislocation breeds fear and dislocation. Despair undermines our collective futures. So whatever we offer to promote and assure a healthy America must be available at the outset, and with certainty and simplicity, to each and every one of our citizens.

Logic dictates that the execution and management of this offering should be designed to consume as few resources as is humanly possible. The more we consume in the offering and financial management of universal basic health coverage the less will remain for actual services. This simple reality is why most nations have centralized the primary back room functionings of coverage and financial administration. Where most industrial nations (and our own Medicare) consume 5% to 10% of total health resources on this first step, our complex free-enterprise and employer dependent approach to the offering consumes as much as  25% of total resources while failing to ensure universal coverage.

If all must be covered, and the administration of the offering must be a public and centralized responsibility to assure accountability, uniformity, and cost-effectiveness, that leaves the definition of services and the actual delivery of services. These need not, and some would argue should not, be centralized. A basic package of services should be required of all, and not all services are affordable or even desirable. For example, Canadians universal health plan covers on average 70% of the total cost of health care for Canadians. The plan does not cover pharmaceuticals, optical needs or dentistry. Citizens who wish to can purchase private supplemental plans to cover these costs. Furthermore, plans total offerings vary from province to province, as defined by budgets and priorities set by provincial governments year to year. Hospitals are funded by the provinces, and doctors (who on average make more than American doctors) are largely reimbursed fee-for-service. Ample leeway, state to state, as we see with Medicaid, could be offered to allow a reasonable amount of experimentation and choice.

This combination of central control and management of insurance coverage and local responsibility for budgeting, prioritization, and quality assurance has consistently outperformed America’s purposefully complex free-enterprise health sector free-for-all for over a half century. Our complex approach under performs by almost every health measure, costs nearly twice as much, and has patient satisfaction ratings of only 25% in the latest polls. We have paid dearly for our complexity in funding an astonishing array of “non-real work”. We support nearly a half million individuals selling and managing health insurance in the US, and and equal number of hospital and physician office coders and billers on the other side working diligently to get payments from the mostly for-profit insurance companies.

But our fundamental error or conceit dates backs to 1947, as we exited WWII and considered how best to manage an enormous chronic burden of disease. Lead by Vannevar Bush, whose military approach to scientific collaboration had provided new blood products, penicillin, and the atomic bomb, our leaders concluded that a similar unencumbered collaborative free-enterprise approach could defeat disease as it had defeated the Nazis. By omission, their definition of health was the absense of disease. Defeat disease and health would be left in its wake. Fund the effort on the backs of employers and unions as a benefit, and ignite collaboration and a collusive integrated career pathways with federal dollars and enabling patent legislation and victory was assured.

In contrast, Canada took the time to earnestly ask “How do we make Canada (and all Canadians) healthy?” In response, they created universal coversal and continuously refined their answer to this basic question. By 2010, prevention, not intervention, surfaced as mission central. In their words: “Health promotion is everyone’s business. While it is clear that health services are a determinant of health, they are just one among many. Others include: environmental, social and economic conditions; access to education; the quality of the places where people live, learn, work and play; and community resilience and capacity.”

It really matters little whether Republicans prevail in their regressive efforts to reinforce over a half century of failed health care policy. The die has been cast. As Warren Buffett recently stated,  “Medical costs are the tapeworm of American economic competitiveness.” The cost and inefficiencies have been well documented including:  High administrative costs with 850 health insurance companies selling to millions of employers; high costs passed on to employees in rising contributions and lost wages with the burden weighing more heavily on low income employees; employees of small firms and the unemployed/underemployed left out of coverage; employment based insurance the major contributor to bankruptcies and poor labor relations; and finally a coverage system that discourages worker mobility and advancement. Together, these fatal flaws in a single sector of our society are bringing us to our economic knees.

Whether now or in the future, we will be forced to ask that simple question, “How do we make America (and Americans) healthy?” In responding, we will not be limited by resources. More than ample resources, currently misapplied, have already been dedicated to these services. We need only to recognize that health is not the absense of disease, and mirror Canada’s simple 2005 proclamation:  “As a nation, we aspire to a Canada in which every person is as healthy as they can be—physically, mentally, emotionally and spiritually.”

Parkland Teens Teach “Positive Leadership”!

Posted on | February 28, 2018 | No Comments

Mike Magee

At this time of year my wife and I always try to see the movies nominated for an Academy Award. Recently  we saw Darkest Hour, up for Best Picture as well as a Best Actor nod to Gary Oldman in his role as Winston Churchill. The film begins with Dunkirk and the historic private flotilla evacuation which Churchill directed as his advisers were defining the move as a hopeless cause and insisting that Britain’s only option was to surrender to the overwhelming German forces.







As I viewed those opening scenes, I couldn’t help but be reminded of a the maritime evacuation of Manhattan Island on 9/11 – 300,000 evacuated by mostly private vessels responding to a Coast Guard call for “All Available Boats” – documented in a book by the same name. But it was not only the vessels and rescues that drew the comparison but Oldman’s performance itself which reminded me that in times of crisis, such as the recent Parkland shootings, leaders must emerge who are unafraid and determined to guide us through to safer shores.

We are currently being challenged by destructive change and negative predatory leadership. Change is one of the few human conditions that can simultaneously support two diametrically opposed human emotions, fear and exploration.  Change is the critical lever in leadership.  Pull it one way and you create a positive leader.  Pull it the other and you create a negative leader. 

Negative leaders are short-term thinkers who use fear as a currency to herd people together and move them in whatever direction suits their needs.  It is a short term, successful strategy, but suffers from a critical weakness, and that is that heightening fear causes people to retrench, reinforcing old beliefs and behaviors, naturally segregating segments of society, reinforcing silos and resisting change.  In the short and medium term, fear can hold a population in place, even as the world around them continues to change.  But the inability to evolve, to stay in step with or ahead of a changing world, insures that negative leaders will eventually fail.

In contrast, positive leaders like the Parkland high school students view change as exploration, and lead with vision rather than fear.  Their view is longer term and they reach out across the divide.  Rather than segregate, they congregate.  Rather than build walls and silos they build islands of common stewardship.

As the Parkland shooting and its aftermath well illustrated this week, Americans currently live in fear. Why should this level of fear concern us?  Well first, fear is the currency of negative leaders, and they are more likely to emerge and succeed in a fearful environment.  Second, fear undermines trust, and trust is the fabric of a civic society.  Third, fear clearly has short and long term mental health implications.  Fourth, fear accumulates, especially in those who are already fearful.  Post 9/11 studies showed clearly that fear biased women and minorities.  Finally, fear obstructs vision, actively discouraging imagination, innovation and hopefulness.  In compromising our wonder and inventiveness, fear fundamentally alters our collective future.

The Parkland teens, with their family’s support, and the coalescent of high schoolers across the nation this week have taught us all a thing or two about how to manage fear.  First, they have identified, nurtured, and advanced individuals with the values and temperament to become tomorrow’s positive leaders.  Second, they have incorporated fear management into their academic curriculum.  Third, they reinforced the value that human beings should never remain silent in the face of evil.  Forth, they have honored the ties between individual, family, community, and society; and in the process personalized and individualized their efforts in a manner that honors diversity and respects cultures.  Fifth, in confronting the NRA, they have embodied the belief that judgment is at least as important as decisiveness, and that militarizing America is a poor judgment which ensures faulty decisions under stress.

People are basically good, but they are not perfect.  People are basically kind, but when afraid they may act unpredictably.  People are basically loving, but when misled respond with hatred and contempt.  People are people.  That is why we must continue to devote as much time and energy to the preparation for peace as you do for the preparation for war.  For our homeland will never be secure if fear has so weakened the fabric of our society that we lose the capacity to be human and humane toward each.

#2018 Election.

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