Health care costs

It occurred to me today that one of the reasons so many people want socialized medicine, is that they don’t want to have to pay the price of their own choices. Just like the bailout of sub-prime mortgages, because people bought more than they should have and could afford, life-choices the majority of Americans make incur higher health care costs. Just research the skyrocketing increase of adult-onset diabetes. If we had more self-control to eat fewer carbohydrates, we wouldn’t be gaining as much weight as a people, and diabetes wouldn’t be the problem it is.

One of my weaknesses is Cinnamon Toast Crunch. The product really should be banned.  🙂  I do have the self-control to only buy it now and then; I just don’t have the self-control to make the product last more than 24 hours. I’ve been working on my self-control over the past few months, and as a result I’ve lost weight. I’m down lower than I have been since 2004 – for only a few weeks – and prior to that, possibly 2000.

Because of this paragraph, “I know whereof what I speak.” I know how hard it is to push away from food we shouldn’t eat, and make wise decisions when it comes to finances, lifestyle, etc. But we as a nation must start to exercise self-control, or we will be in for a world of hurt before too long. The entire population will not be able to be supported by the “rich.” We can’t keep living beyond our means and expect some magic pill of the future to solve the problems we’ve been making. Or as Albert Einstein said, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”


Tom Davenport raises a good question in his post on the democratization of healthcare costs and whether physicians should be online. Democratization of knowledge is basically a fancy word that means the knowledge is out there for us to find and use, all we have to do is search. Witness WebMD. You can get fairly indepth coverage of virtually all illnesses and diseases on their site. If we arrive at the physicians office with a good idea of what is wrong with us, why should we have to go into the office anyway…with the caveat that the physician has a medical history on us and has “seen” us previously.

…since you only get about 7 minutes on average of face-to-face time with your doc, it’s not as if we are giving up an intimate, in-depth relationship. No muss, no fuss, no bricks-and-mortar, and the insurance company gets by very cheaply” (Davenport, 2008, ¶ 7).

This is so true in today’s medical community. The insurance companies are constantly squeezing physicians (as well as other health care practitioners) in reimbursement rates. This seems a logical next step for the practice of medicine, provided the physician has a good medical history on any patient that is treated in this manner. I don’t know enough about the makeup of a traditional family practitioners day to know how many of those visits could be accomplished online, but if a nurse practitioner oversees most visits anyway and prescribes medication, why not let some of that interaction happen online?

This also seems to be a very good argument for electronic health records (EHR’s) that have languished in most implementations.

— Davenport, Tom. (2008, August 19). “Is It Time for Your Doctor to Get Online?” Harvard Business.

Suppose your doctor gives you a prescription for a drug, say Motrin 400MG, you take it to your drug store, and they offer you a generic equivalent for a lot less money. Depending on your insurance, the drug, and the pharmacy, it could be a difference of $4 for the generic drug versus $40 (or more) for the brand. But there is a move afoot by pharmaceutical manufacturers to get legislatures around the country to mandate the use of brand drugs with certain steps required in order to dispense a generic. Here is the text of a Michigan law designed to do just that.

Sec. 17769. A pharmacist shall not interchange an antiepileptic drug or formulation of an antiepileptic drug that is prescribed for the treatment of epilepsy or the treatment or prevention of seizures without prior notification of and the signed informed consent to the interchange by the prescribing physician and patient or the patient’s parent, legal guardian, spouse, or other legal representative.” [Bold added by me]

“Interchange,” as used here, means to substitute a generic equivalent…a chemically equivalent formulation of a drug…THE SAME THING! The only difference is it costs us (and insurance companies) less. If I was epileptic and lived in Michigan, I would be seriously upset with the representatives who submitted this bill. And according to the friend who sent me the story, Tennessee has already passed a similar law and other states are considering a similar bill.

As my friend said, “This is the latest ploy by Pharma to try to offset the growing use of generics.  Not surprisingly, certain popular anti-convulsive drugs will soon go off patent, so this is clearly a sleazy strategy to prevent pharmacies from dispensing generics.”

If this bill passes in Michigan like it has in Tennessee, it’s likely to be tried by more pharmaceutical manufacturers for different classes of drugs, and in different states. So the time to stop it is now!

This article caught my eye because I used to work for CVS a few years ago, and being in technology the “Appleites” of the world wear on me at times. 🙂 (Don’t go getting the wrong impression, I think Apple makes a good product, it’s the cult-status that bothers me.) Scott’s article raises a good question, has Apple slipped into incremental growth mode, and Macbook Air isn’t the great innovation they described?

But beyond that, the CVS MinuteClinic caught my attention, and Scott’s description of its usefulness is right on! “When we describe MinuteClinic’s approach to the uninitiated, eyes immediately light up. Everyone has gone through the pain of sitting in the doctor’s office, surrounded by sick children, for two hours to confirm the condition they already know their child has” (¶ 6). We’ve all been there. But then my business juices got flowing, and I started thinking about how MinuteClinic could be taken to the next level.

How the MinuteClinic works is this: “MinuteClinic operates small kiosks in pharmacies. A nurse practitioner staffs the kiosk. The nurse practitioner can administer rules-based diagnostics for a range of everyday maladies like strep throat and pink eye. If the diagnostic shows you indeed have the malady, you get your prescription on the spot” (¶ 5).

When we visit a doctor’s office, we sit and describe the problem to the nurse, then again to the doctor. The doctor does a cursory examination (for those easy to diagnose and treat illnesses) and then gives us a prescription or a treatment regimen. What process took place at the doctor’s office that couldn’t be accomplished through the MinuteClinic? Suppose a nurse practitioner using a closed-circuit television or in person, talked with the patient, realized that the condition is beyond his or her normal diagnostic steps, and then transmitted the information gathered thus far to the patient’s regular physician (just like e-prescription requests are transmitted today). The physician then reviewed the nurse’s notes along with the complaint as described by the patient, and gave his or her diagnosis remotely. Why couldn’t, in certain circumstances, the physician prescribe a treatment or prescription without the need to actually see the patient? The physician could get paid a lesser fee since the amount of staff and personal time was reduced, the patient receives the prescription, treatment regimen as prescribed by the physician, or a message to come into the office, all while still in the pharmacy (assuming the staff at the physicians office are able to handle the requests in a timely manner). This allows the patient to deal with minor ailments more quickly, and cut down on the costs required to treat the patient.

Granted, the AMA and physicians will fight this as an encroachment on their doctor-patient relationship, but how many times do we just call a physician’s office, describe the symptoms to a nurse, and later that day pick up a prescription at the local pharmacy?

— Anthony, S. (2008, February 12). Is CVS Caremark Out-Innovating Apple? Harvard Business.

I was working recently with data from the company I work for and began studying the overall profitability of patients diagnosed with a specific disease and it got me to thinking. While to some extent, behavior is a cause of disease, the diseases my company specializes in are primarily life-choice driven. Take diabetes for example. The National Institute of Health has finally anointed obesity (i.e. overeating) as a significant cause of type 2 diabetes. I want to say “Thanks Captain Obvious!”, but I know that scientific research often lags behind anecdotal evidence, and the government moves even slower. I knew that diet and being overweight was a primary cause of type 2 diabetes back in the 1970’s thanks to Dr. Ray C. Wunderlich of St. Petersburg, FL. But this blog post isn’t about why the health care community seems to always be behind the times, I’ll save that for another day.

According to the NDIC, in 2005 the number of people in the United States afflicted with diabetes (type 1 & 2) was 20.7 million people, or about 7% of the population, and the total costs associated with the disease was $132 billion (with a “B”), or about $6,400 per person. Direct costs were $92 billion and indirect costs were $40 billion. The NDIC also states that type 1 diabetes (unpreventable) accounts for 5% to 10% of the diagnosed cases, which means the behavior of 18.6 million people cost $118.8 billion (taking the higher percentage). But what can be done to reverse the trend?

The government could impose a tax on companies and restaurants that produce unhealthy food. Sort of a “fat-tax”, so to speak. Borrowing from my economics education, theoretically that would shift the supply curve up, resulting in a higher price and reduced demand. But I doubt that aggregate demand would drop too much (although I could be wrong). But the politics of getting that tax passed are probably insurmountable, and of limited benefit at best. In my opinion, what is needed is a way to get everyone to understand why it’s in their best interests to eat healthy and remain healthy so as to avoid diabetes and other diseases associated with life-choices. But what would do that?

Maybe what is needed is a version of tough-love. Everyone is complaining about the rising costs of health care, but the continual rise in obesity proves they aren’t changing their lifestyle so as to reverse that trend. But how can the costs associated with bad life-choices be transferred to the person making those choices? I doubt anyone has a workable solution to that question.

So what can we as leaders and managers do, and what can companies do, to make a dent in the situation? If as my previous post says, we as leaders should be concerned about our employees and their personal (as appropriate) and professional lives, then we should come up with ways of promoting better health. After all, an employee who exercises regularly and eats healthy is arguably more productive, so it’s in our best interests to find a way to promote better health for our employees. No, I’m not promoting forced fat-camps or other similar measures, nor am I thinking of the pamphlets all health insurance companies send out on a regular basis. Since none of the current measures are helping, we need new “out of the box” thinking.

“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” — Albert Einstein.

What if companies were to offer bonus money to those employees who lose a certain percentage of their body weight (as measured by % body fat), and keep it off for at least 6 months. A $1,000 check for dropping 10% of the body weight for 6 or more months would mean the company isn’t at risk of incurring the health care costs related to disease, which can be ~$6,000/person/year, and that company gets a healthier, happier, and more productive employee. And the employees feel more self-confident, happier, and have a little extra money to help pay off debt or buy a new wardrobe.

We could motivate and support the employees through “The Biggest Loser” type contests and campaigns within the company. Done correctly, with open and honest communication, should keep people from feeling pressured or put down for their weight. And after all, a leader who has previously, and continually, shown an interest in a person should be able to approach that person in a non-threatening way about improving their life in a concrete and meaningful way. An added benefit of this is that employees will be more committed to the success of a company, and the manager/leader who helped motivate them, if the company has helped them succeed in losing weight, something most of us fight at least on a cyclical basis.

— National Institute of Health. Type 2 Diabetes Fact Sheet.

— National Diabetes Information Clearinghouse. (2005). National Diabetes Statistics.