Cigarbutt Posted June 26, 2018 Share Posted June 26, 2018 Also, why is a 200 mg one time only dose of Doxycycline costing you $150? Doesn't sound right. I'd assume the $150 cost is the cost of the doctor visit. That's correct (including both the basic medical visit and the phone consultation according to rates in my jurisdiction). Also, certain specific aspects of Lyme disease are very controversial and anecdotal evidence may be considered insufficient to judge an entire subset of a population. Respectfully submitted: https://www.amjmed.com/article/S0002-9343(17)30138-9/fulltext?code=ajm-site Link to comment Share on other sites More sharing options...
Jurgis Posted June 26, 2018 Share Posted June 26, 2018 https://www.newyorker.com/magazine/2009/06/01/the-cost-conundrum I liked "The Cost Conundrum" article - though I did not send the author $20K check. 8) But based on the article I am not sure there are easy solutions. Yeah, change doctors' incentives, so they don't overtest/overprescribe/overoperate. Easier said than done. The right incentive would be "pay for great long term health results with low costs". But this is not trivial to measure and optimize for. You cannot pay the doctor 10 years after they saw the patient based on the outcome and tests/meds/operations prescribed or not prescribed. And once you try to adjust this to short term rules, either results or costs will likely suffer or there will be incentives to game the system. Yeah, someone will bring up Canada or Europe as counterexample. Maybe. I'm not sure incentives are great there. Perhaps some - most? - doctors do their best within the imperfect rules. Like he mentions Mayo Clinic culture, which is all nice and well. But it's something that's possible in couple locations driven by non-monetary incentives (culture), which is IMO almost impossible to spread across majority of doctors and hospitals. Especially doctors/hospitals that have previously run on monetary incentives of overtest/overprescribe/overoperate (sometimes somewhat subconsciously). I'm somewhat in the camp that there are not many low hanging fruit unless you socialize large swaths - which he cannot do and which would have its own issues. But maybe he has ideas that will work on large scale. Maybe he'll go for things that seem to work like Kaiser model. Good luck to him. Link to comment Share on other sites More sharing options...
Jurgis Posted June 26, 2018 Share Posted June 26, 2018 The dark side of trying to control overtest/overprescribe/overoperate via blunt instrument: https://www.nytimes.com/2018/06/21/well/the-strategic-lies-of-oncologists.html Link to comment Share on other sites More sharing options...
DeepSouth Posted June 26, 2018 Share Posted June 26, 2018 I can`t really see how taking out a middleman (that operates at full scale) like CVS or a health insurance with a 3-4% net profit margin changes anything. To me it looks like the pure costs that doctors/hospitals and the pharma industry charge in the US are extraordinary high compared to other countries. The new venture looks like additional costs for BRK/JPM/AMZN to the benefit of its workers, at least until they operate at full scale. Am i missing something? What you are missing is the role of the PBMs and others that inflate the costs to CVS, Walgreens, etc. so there is savings there. There is also savings of what Americans pay for prescriptions vs the rest of the world. I used to live in a neighborhood where everybody worked for a Pharma company. As described to me they view the US as their sales engine and accept what the other countries pay. That would be a major change. That said, I saw a graph of global spending on healthcare going back to the 50s or 60s (before nationalized medicine was common in Europe) and what was surprising was that the US even back then was paying 2x European countries. Nobody wants to discuss it anymore but tort reform or some change in the legal US system would probably reduce costs by 10-15%. Have several friends who are family practicioners and they all tell me that they over test everybody because you don't want to be sued for the 1-100/1000 chance you are wrong. Add in the issues where the doctors own the labs that they refer patients to and its a screwed up system. If you simply removed the PBMs, the drug companies would still charge extremely inflated charges to Americans. Medicaid and Medicare pay much higher prices for drugs than foreign countries. The American government cares more about drug companies than it does about taxpayers. The big PBMs have tons of perverse incentives and don't do a very good job at their stated purpose, but the US government simply isn't willing to lower drug prices for Americans. Doctors like to say that they overtest due to fear of lawsuits, but that's really just a nice excuse. The key reason is greed (from a mostly fee for service system) and laziness. States are shifting their Medicaid programs to insurers because insurers can run them more efficiently. Seniors are increasingly choosing to move off Medicare to Managed Medicare because insurers can run Medicare more efficiently, leaving extra dollars to increase secondary benefits for seniors. Local/regional integrated healthcare systems with capitated risk is the best shot the US has for its healthcare system. Link to comment Share on other sites More sharing options...
Cigarbutt Posted June 26, 2018 Share Posted June 26, 2018 The dark side of trying to control overtest/overprescribe/overoperate via blunt instrument: https://www.nytimes.com/2018/06/21/well/the-strategic-lies-of-oncologists.html For those with no access to the NYT or who can't stand it: https://abetternc.org/the-strategic-lies-of-oncologists/ Jurgis, Your assessment about the absence of easy solutions is quite reasonable and the article dealing with cancer treatment underlines the difficulties in changing cultures. In terms of low hanging fruits, ER visits resulting in disproportionate bills to average Americans is an interesting area. An opinion (not fact) is that the care given in the last months of life is terrible overall in terms of quality of life. The reasons for this are many but, like most substance of recent posts in this thread suggests, sometimes incrementally added poor incentives result in a very deplorable (is this still a controversial word?) situation. In 2015, in my province (equivalent of a state for you, you know the region of a country you're in a trade war with for national security reasons), legislation was passed concerning end-of-life care (including euthanasia or assisted suicide in selected circumstances, although those words were not used in the legal texts). Some people were against and some people are unhappy with it, but the result came from open and transparent discussions and resulted in a reasonable compromise (IMO). Economic reasons had to be part of the discussions but the bottom line had to do with quality of life. Cultures can evolve and change for the better, even when dealing with tough topics. Contrary to what you suggest, paradoxically, I think that many significant solutions will come from the US even if the system is fragmented and poorly coordinated because socialized systems (despite many advantages) lack the the underlying capacity for innovators to recuperate the value that they produce from creative destruction. Like somebody mentioned before, sensible capitation may become more popular, especially for chronic care which is spreading. Greed was mentioned along the way. I would say that market participants simply react to price signals. I think we can do better in defining rewards and incentives (carrot and stick). http://www.milliman.com/uploadedFiles/insight/2017/capitation-arrangements-nhs-stps.pdf https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/why-understanding-medical-risk-is-key-to-us-health-reform Link to comment Share on other sites More sharing options...
DocSnowball Posted June 28, 2018 Share Posted June 28, 2018 I have a pretty intimate understanding about healthcare from a provider level in orthopedics. To add a couple points to the discussion that certainly add to healthcare costs. 1. Malpractice fears. I myself as well as many others who work in the healthcare field over order tests/admit more then we should, give more meds then we should etc because its not worth getting sued. Id much rather order a CT scan of the head on every patient that walks in the door at the ER that hits their head then have the pt end up with a "bad outcome" If it happens and I didnt do it Im fucked. I then have 2 options, settle for limits of my policy or go to a jury trial and be liable for any amount they see fit. Dont let the BS you hear from politicians fool you. EVERY PHYSICIAN/PA/NP/NURSING HOME/REHAB FACILITY/HOSPITAL over orders tests for this reason. Every day all day long. 2. Compliance. How do we make healthcare better if the pt doesn't comply? Very difficult to do. Sicker non compliant pts means more costs, and usually more expensive costs. Agree. This is why Gawande is a good choice to lead the new initiative - the "bottleneck" or key in solving the cost and quality puzzle is understanding what all drives the decisions that healthcare providers and nurses make. Financial incentives, loss aversion, waste, emphasis on individual productivity rather than outcomes for the patient are all part of the root causes. Burnout of providers is happening like the "frog slowly being boiled in the pond" as Munger states - if so many good providers are cutting back/ moving to other fields, the problem is being compounded further every day. Link to comment Share on other sites More sharing options...
mrholty Posted June 28, 2018 Share Posted June 28, 2018 In terms of low hanging fruits, ER visits resulting in disproportionate bills to average Americans is an interesting area. An opinion (not fact) is that the care given in the last months of life is terrible overall in terms of quality of life. The reasons for this are many but, like most substance of recent posts in this thread suggests, sometimes incrementally added poor incentives result in a very deplorable (is this still a controversial word?) situation. The hard part of healthcare is that everybody knows there is not one solution. Its going to take many solutions from overtesting, to price differences in drug to a real discussion of our lifestyle and the outcomes that come from it. One of the strangest things that I have seen as I have gotten older is how much we spend on end of care and yet how many people don't get decent end of life care. I grew up near LaCrosse Wi and I remember everytime going to the doctor they always asked my Mom is she had her End of Life Directives done. It simply was a question right after can we see your ID and insurance card. It wasn't unique to me until I went to college, moved away and started my own family that I realized I didn't get those questions. https://www.npr.org/sections/money/2014/03/05/286126451/living-wills-are-the-talk-of-the-town-in-la-crosse-wis Hopefully, having these conversations with not just your health care provider but also your family leads to less issues, less costs for society and a more peaceful process. I volunteer my time at a local Hospice facility. What has struck me is the the variance of how people and families deal with this. One of the things I do is I try to help some people get their financial records in order. I've been thanked numerous times by both the people and the families and its real. Link to comment Share on other sites More sharing options...
Cigarbutt Posted June 28, 2018 Share Posted June 28, 2018 I grew up near LaCrosse Wi and I remember everytime going to the doctor they always asked my Mom is she had her End of Life Directives done. It simply was a question right after can we see your ID and insurance card. It wasn't unique to me until I went to college, moved away and started my own family that I realized I didn't get those questions. https://www.npr.org/sections/money/2014/03/05/286126451/living-wills-are-the-talk-of-the-town-in-la-crosse-wis Hopefully, having these conversations with not just your health care provider but also your family leads to less issues, less costs for society and a more peaceful process. I volunteer my time at a local Hospice facility. What has struck me is the the variance of how people and families deal with this. One of the things I do is I try to help some people get their financial records in order. I've been thanked numerous times by both the people and the families and its real. In terms of low-hanging fruits, interesting to note that the La Crosse significantly improved experience for end-of-life care arose from a simple local initiative (1991) that required the systemic utilization of a simple form including four basic questions. Technology, which actually compounds the problem now, may become a useful tool in the future but, as you may have realized from your noble work, a pair of ears may be the most important piece of equipment. Link to comment Share on other sites More sharing options...
Jurgis Posted June 28, 2018 Share Posted June 28, 2018 In terms of low hanging fruits, ER visits resulting in disproportionate bills to average Americans is an interesting area. An opinion (not fact) is that the care given in the last months of life is terrible overall in terms of quality of life. The reasons for this are many but, like most substance of recent posts in this thread suggests, sometimes incrementally added poor incentives result in a very deplorable (is this still a controversial word?) situation. The hard part of healthcare is that everybody knows there is not one solution. Its going to take many solutions from overtesting, to price differences in drug to a real discussion of our lifestyle and the outcomes that come from it. One of the strangest things that I have seen as I have gotten older is how much we spend on end of care and yet how many people don't get decent end of life care. I grew up near LaCrosse Wi and I remember everytime going to the doctor they always asked my Mom is she had her End of Life Directives done. It simply was a question right after can we see your ID and insurance card. It wasn't unique to me until I went to college, moved away and started my own family that I realized I didn't get those questions. https://www.npr.org/sections/money/2014/03/05/286126451/living-wills-are-the-talk-of-the-town-in-la-crosse-wis Hopefully, having these conversations with not just your health care provider but also your family leads to less issues, less costs for society and a more peaceful process. I volunteer my time at a local Hospice facility. What has struck me is the the variance of how people and families deal with this. One of the things I do is I try to help some people get their financial records in order. I've been thanked numerous times by both the people and the families and its real. Great post. 8) I'd send you $20K, but I'm not Charlie Munger. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted August 28, 2018 Share Posted August 28, 2018 https://khn.org/news/a-jolt-to-the-jugular-youre-insured-but-still-owe-109k-for-your-heart-attack/ A Jolt To The Jugular! You’re Insured But Still Owe $109K For Your Heart Attack Link to comment Share on other sites More sharing options...
Cigarbutt Posted August 28, 2018 Share Posted August 28, 2018 Thank you for the article. -First reflex: This must be fake news. It's not: surprise medical bills (out-of-network MDs working in the network and out-of-network hospitals) are frequent and often (because of size and unexpected nature of the bill) a tipping point to financial hardship. -Second reflex: Let's put surprise bill laws into effect. This seems to be in the air but IMO unlikely to prevent self-sustaining unintended consequences coming from the foundations. -Many problems described here but I submit that the basic essential problem is the following: In a study published in 2014 by Wilson and Cutler (referenced below), it was found that hospitals had profit margins of 39.6% for privately insured patients treated in emergency departments, whereas the profit margin for patients covered by Medicare and Medicaid, and those uninsured were: -15.6%, -35.9% and -54.4% respectively. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4285369/ If you're an MD, what is your incentive to sign a contract with the network if you can avoid it and charge 150 to 300% of Medicare rates in order to provide the exact same services? If you're a for-profit hospital, what is your incentive to become part of a network if you can avoid it and charge sky is the limit rates? This thing will be a huge challenge and I would say that this file is either one for bipartisan wise men or for the deranged with a "your margin is my opportunity" attitude. Link to comment Share on other sites More sharing options...
Cigarbutt Posted September 5, 2018 Share Posted September 5, 2018 https://www.reuters.com/article/us-berkshire-buffett-healthcare/amazon-berkshire-jpmorgans-healthcare-venture-names-coo-idUSKCN1LK2JX Mr. Stoddard was with Comcast but was also involved before in strategy with Accolade for many years. Accolade has shown it is possible to lower costs, improve results and patient satisfaction simultaneously (!). The idea is to introduce patient-centered technology tools with "concierge health assistants" using guidelines and data to help patients navigate through the "system". https://d10j0m6hqftivr.cloudfront.net/Whitepaper_PopulationHealth_July2018.pdf https://d10j0m6hqftivr.cloudfront.net/Paper_CFO_Accolade_Impact-of-Healthcare-Waste_July2018.pdf https://d10j0m6hqftivr.cloudfront.net/Accolade-Maya-One-Sheet-May2018-.pdf What's the point? At this point, an incredibly high proportion of people are not getting the right services, at the right time and by the right people. Still early in the game. Some will decide to compete, some to collaborate and some to ignore. Interesting parallel development with "Oscar": https://www.cnbc.com/2018/03/27/oscar-health-raises-165-million-at-3-point-2-billion-alphabet-founders.html Link to comment Share on other sites More sharing options...
meiroy Posted September 5, 2018 Share Posted September 5, 2018 Every universal healthcare system I've read of, even those countries whose military budget is almost zero because it leaches its neighbors or NATO's protections, is a healthcare system far worse than what I had available to me 8 years ago. I understand the dilemma with the poor and pre-existing with job loss but I think that should be resolved with Medicaid or SS, even as busted as the two are. What we once had was fine though. MAGA Singaporeans live 3 years longer than Americans, spend less than 1/3rd of what Americans spend on healthcare and express very high levels of satisfaction with their healthcare. Wait times in Singapore are also vastly superior to the US. BTW, Singaporeans spend as much on their military in proportion to GDP as the US and also force their young into mandatory service where some of them actually die in training (they run themselves to death). Healthcare is an input. HEALTH IS AN OUTPUT. You are confusing the two. You can have a space age healthcare system and yet because you order needless tests, over treat, over medicate and don't wash your hands (poor operational effectiveness)...actually make peoples health worse. Well, I just spent a few minutes seeking a downside to Singapore but can't. 3rd richest country in world tax rate of 0-22% corp tax 17% minute # of poor apparently, a pretty damn good healthcare system No clue. Good for you, Singapore! Singapore like Hong Kong is an Entrepôt. It does not make much sense to compare the U.S. to an Entrepôt... And it's not necessary as there are plenty of other examples of superior health systems around the world that cost far less than the states'. The reason the U.S. does not have a decent healthcare system is due to ideological/religious beliefs and that is extremely hard to change. Link to comment Share on other sites More sharing options...
rb Posted September 5, 2018 Share Posted September 5, 2018 Thank you, it's true that places like Singapore and Hong Kong are not good comparables. In general small, urbanized, advanced places are not comparable to larger, more diverse countries. They tend to be very wealthy and efficiencies work really well. In addition to enrepot places like HK and Singapore, i'd add others like Switzerland and Luxembourg, but the list doesn't stop there. As for other healthcare systems let me add an anecdote. Last year I traveled to Italy with a female. While on the plane she picked up an infection. It manifested as something that may look like a rash/inflammation. We didn't think much of it because stuff like that happened to her before and was always some benign thing. But within a couple of days it got so bad that she could barely walk. So we went to an emergency room in Florence. Now keep in mind that while this was very unpleasant from the patient's point of view, it was far from any life threatening situation. Nonetheless, she saw a doctor within an hour (the doctor spoke English). Got accurately diagnosed etc. We were charged for the visit. I can't remember what the bill was... something like the equivalent of 40 CAD or 60 CAD. Something low enough that we didn't actually file the insurance forms to get it back. Oh and when we got the prescribed antibiotic, the total cost was less than 50% of what the dispensing fee alone would have been in Canada. I'd go ahead and say based on that experience that it's a pretty good system. And it costs less than half of what the US system costs. Upon further research i've found that it has 25% more doctors per capita than the OECD average and 50% more than the US. So that probably helps a lot with wait times and such. Therefore I say, put Italy up on the board as well. Link to comment Share on other sites More sharing options...
Cigarbutt Posted September 5, 2018 Share Posted September 5, 2018 I'd go ahead and say based on that experience that it's a pretty good system. And it costs less than half of what the US system costs. Upon further research i've found that it has 25% more doctors per capita than the OECD average and 50% more than the US. So that probably helps a lot with wait times and such. Therefore I say, put Italy up on the board as well. Another "side effect" of high #MDs per capita is the possibility (for visitors and locals) of obtaining affordable house calls (or hotel, Airbnb etc). Indeed Italy scores well overall in healthcare costs/outcomes but fiscal constraints may change that. They also have regional disparities (North-South) to deal with. Other secondary considerations include the need to pay cash for certain out-of-pocket expenses and related party nominations at regional agencies. Link to comment Share on other sites More sharing options...
Spekulatius Posted December 20, 2019 Share Posted December 20, 2019 The best illustration of the failure of the US health care system I have seen: https://www.healthcostinstitute.org/blog/entry/international-comparisons-of-health-care-prices-2017-ifhp-survey Link to comment Share on other sites More sharing options...
Castanza Posted December 20, 2019 Share Posted December 20, 2019 HMO Act of 1973 was one of the most detrimental policies to healthcare in the US. The tax code only allowed businesses to deduct healthcare premiums instead of allowing individuals to do so. This is the foundation that cemented this insurance relationship between employer and employee in the US. Before this policy pretty much everyone could pay for routine visits in cash. Healthcare was centered around reducing cost and insurance was viewed as a need to protect against catastrophic incidents. There is essentially no incentive to reduce healthcare costs with the current handcuffs on the healthcare system. This tethering of healthcare to employers is probably harmful in other ways as well as companies are forced to deal with this expense and individuals are choosing jobs based on the healthcare. Link to comment Share on other sites More sharing options...
Cigarbutt Posted December 20, 2019 Share Posted December 20, 2019 HMO Act of 1973 was one of the most detrimental policies to healthcare in the US. The tax code only allowed businesses to deduct healthcare premiums instead of allowing individuals to do so. This is the foundation that cemented this insurance relationship between employer and employee in the US. Before this policy pretty much everyone could pay for routine visits in cash. Healthcare was centered around reducing cost and insurance was viewed as a need to protect against catastrophic incidents. There is essentially no incentive to reduce healthcare costs with the current handcuffs on the healthcare system. This tethering of healthcare to employers is probably harmful in other ways as well as companies are forced to deal with this expense and individuals are choosing jobs based on the healthcare. An interesting aspect is that all attempts aiming for cost containment that have been tried have not been successful so far. A strategy would be to try more of the same with an expected different result, another strategy would be to reframe the foundations which is basically not possible. Still, using the heart stent example below, it appears that the system may be ready for some significant (and constructive) changes. If you play with the link provided by Spekulatius, you can find that the cost to insert heart stents (cost of procedure and estimated cost of stent) is a large multiple compared to other countries. Because of innovation, it is understandable that the cost may be superior but clearly not enough to be a multiple. Also, it is becoming increasingly clear (evidence-based, multiple references available upon request including a large international study just published last November) that stents mostly do not result in significant benefits in chronic and stable heart disease. Despite this, in all countries but especially in the US (by a large margin), stents continue to be inserted without any restraint. Finally, some groups, who are aligning incentives, are designing ingenious protocols to replace invasive procedures and expensive drugs. We are only at the forefront of this wave but it is coming. If I'm right, you may want to adjust sales and profitability for those involved in the stent market: Medtronic (MDT), Cardinal Health (CAH), Abbott (ABT), Boston Scientific (BSX), Becton Dickinson (BDX), Terumo and MicroPort Scientific on the OTC market. https://www.eurekalert.org/pub_releases/2019-08/kp-kpr082719.php Link to comment Share on other sites More sharing options...
Castanza Posted December 20, 2019 Share Posted December 20, 2019 HMO Act of 1973 was one of the most detrimental policies to healthcare in the US. The tax code only allowed businesses to deduct healthcare premiums instead of allowing individuals to do so. This is the foundation that cemented this insurance relationship between employer and employee in the US. Before this policy pretty much everyone could pay for routine visits in cash. Healthcare was centered around reducing cost and insurance was viewed as a need to protect against catastrophic incidents. There is essentially no incentive to reduce healthcare costs with the current handcuffs on the healthcare system. This tethering of healthcare to employers is probably harmful in other ways as well as companies are forced to deal with this expense and individuals are choosing jobs based on the healthcare. An interesting aspect is that all attempts aiming for cost containment that have been tried have not been successful so far. A strategy would be to try more of the same with an expected different result, another strategy would be to reframe the foundations which is basically not possible. Still, using the heart stent example below, it appears that the system may be ready for some significant (and constructive) changes. If you play with the link provided by Spekulatius, you can find that the cost to insert heart stents (cost of procedure and estimated cost of stent) is a large multiple compared to other countries. Because of innovation, it is understandable that the cost may be superior but clearly not enough to be a multiple. Also, it is becoming increasingly clear (evidence-based, multiple references available upon request including a large international study just published last November) that stents mostly do not result in significant benefits in chronic and stable heart disease. Despite this, in all countries but especially in the US (by a large margin), stents continue to be inserted without any restraint. Finally, some groups, who are aligning incentives, are designing ingenious protocols to replace invasive procedures and expensive drugs. We are only at the forefront of this wave but it is coming. If I'm right, you may want to adjust sales and profitability for those involved in the stent market: Medtronic (MDT), Cardinal Health (CAH), Abbott (ABT), Boston Scientific (BSX), Becton Dickinson (BDX), Terumo and MicroPort Scientific on the OTC market. https://www.eurekalert.org/pub_releases/2019-08/kp-kpr082719.php Someone highlighted this in the very early part of this thread. But the legal aspects or threat of legal action in the US really has a large impact on overall medical costs. My wife who works in the medical field concurs that there is constant fear of malpractice lawsuits. This undoubtedly has to have an impact on procedure, device, and prescription costs. This type of legal action has had an impact on every industry (for better or for worse?). Curious if you have done any study in this area? Link to comment Share on other sites More sharing options...
Cigarbutt Posted December 20, 2019 Share Posted December 20, 2019 ...{defensive medicine and}... Someone highlighted this in the very early part of this thread. But the legal aspects or threat of legal action in the US really has a large impact on overall medical costs. My wife who works in the medical field concurs that there is constant fear of malpractice lawsuits. This undoubtedly has to have an impact on procedure, device, and prescription costs. This type of legal action has had an impact on every industry (for better or for worse?). Curious if you have done any study in this area? The topic is interesting. I could ramble in many directions but decided to take it from the following angle. There are specific risk factors for defensive medicine from the provider's point of view and health preservation/restoration has significant intimate value but my opinion (and this somewhat validated) is that, outside of basic competence, basic physical skills and exposure to idiosyncratic risk, the most significant factor is the quality of the human interaction. In the last two years, I moved to the other side of the mirror and accompanied my in-laws into the meanders of the health care system. This confirmed my view that ordering tests in a defensive way does not really protect from litigation. Avoiding eye contact with the 'client' and focusing on a computer screen as well as the complete absence of physical contact (I don't even mean the absence of any physical exam, which was frequent but the actual absence of any physical contact {ie basic human interaction skills}) in fact constitute significant risk factors for litigation and, unfortunately, the recent experience confirmed a previously held assumption that medical staff who had poor human skills tended to be the ones ordering unnecessary tests the most. Atul Gawande has talked about this, if you're interested. This is a huge question but basically the underlying work implies aligning the incentives. I could give you many examples but let's go back to the heart stent example. Warning: I'm comfortable with the assumptions mentioned but cardiology is not my forte and I could possibly be ridiculed. Given that everything looks like a nail if you hold a hammer, given the human tendency to follow the path of least resistance (and the path leading to higher earnings) and given the information asymmetry, it is easy to understand why heart stents would be recommended and performed. And defensive medicine is not even a major factor in this specific equation (stable patients). The amount of potential savings only in this segment is huge and this can be reproduced in other areas where the defensive aspect plays a larger role. Now you'll say that the poor incentives are deeply woven into the complex web of interactions build over decades. The simple answer is that people respond to incentives (both good and poor). To align incentives, you need data, good analysis and some kind of leadership. I think this is coming to fruition and perhaps (forced) realization with a crisis would help. As I've mentioned elsewhere on this Board at some point, as part of a self-regulatory effort, I was part of a committee establishing tariffs for various procedures. For a rarely performed act, after a revision, an error (a typing error) was introduced (resulting in a much higher tariff) and, the following year, billing for that specific procedure increased considerably (are you surprised?). The billing statistic came back to normal after the error was corrected (!) and, recently, I've been told that the price of the act had been reduced because it needed to reflect its real clinical 'value'. So, how to make money here? If I were 22 or something, I would drop out of university, move to the US and start a venture going along a third-party handling of claims formula and would not worry too much about the deeply needed tort litigation reform that your country needs at it is part of its charm. Because I've become lazy, I'll watch from the sidelines and try to pick the winners. The exercise may also help to spot losers in the overburdened supply chain. I think the only fear you'll have to fear is fear itself. Espouse reform! Link to comment Share on other sites More sharing options...
Castanza Posted December 20, 2019 Share Posted December 20, 2019 ...{defensive medicine and}... Someone highlighted this in the very early part of this thread. But the legal aspects or threat of legal action in the US really has a large impact on overall medical costs. My wife who works in the medical field concurs that there is constant fear of malpractice lawsuits. This undoubtedly has to have an impact on procedure, device, and prescription costs. This type of legal action has had an impact on every industry (for better or for worse?). Curious if you have done any study in this area? The topic is interesting. I could ramble in many directions but decided to take it from the following angle. There are specific risk factors for defensive medicine from the provider's point of view and health preservation/restoration has significant intimate value but my opinion (and this somewhat validated) is that, outside of basic competence, basic physical skills and exposure to idiosyncratic risk, the most significant factor is the quality of the human interaction. In the last two years, I moved to the other side of the mirror and accompanied my in-laws into the meanders of the health care system. This confirmed my view that ordering tests in a defensive way does not really protect from litigation. Avoiding eye contact with the 'client' and focusing on a computer screen as well as the complete absence of physical contact (I don't even mean the absence of any physical exam, which was frequent but the actual absence of any physical contact {ie basic human interaction skills}) in fact constitute significant risk factors for litigation and, unfortunately, the recent experience confirmed a previously held assumption that medical staff who had poor human skills tended to be the ones ordering unnecessary tests the most. Atul Gawande has talked about this, if you're interested. This is a huge question but basically the underlying work implies aligning the incentives. I could give you many examples but let's go back to the heart stent example. Warning: I'm comfortable with the assumptions mentioned but cardiology is not my forte and I could possibly be ridiculed. Given that everything looks like a nail if you hold a hammer, given the human tendency to follow the path of least resistance (and the path leading to higher earnings) and given the information asymmetry, it is easy to understand why heart stents would be recommended and performed. And defensive medicine is not even a major factor in this specific equation (stable patients). The amount of potential savings only in this segment is huge and this can be reproduced in other areas where the defensive aspect plays a larger role. Now you'll say that the poor incentives are deeply woven into the complex web of interactions build over decades. The simple answer is that people respond to incentives (both good and poor). To align incentives, you need data, good analysis and some kind of leadership. I think this is coming to fruition and perhaps (forced) realization with a crisis would help. As I've mentioned elsewhere on this Board at some point, as part of a self-regulatory effort, I was part of a committee establishing tariffs for various procedures. For a rarely performed act, after a revision, an error (a typing error) was introduced (resulting in a much higher tariff) and, the following year, billing for that specific procedure increased considerably (are you surprised?). The billing statistic came back to normal after the error was corrected (!) and, recently, I've been told that the price of the act had been reduced because it needed to reflect its real clinical 'value'. So, how to make money here? If I were 22 or something, I would drop out of university, move to the US and start a venture going along a third-party handling of claims formula and would not worry too much about the deeply needed tort litigation reform that your country needs at it is part of its charm. Because I've become lazy, I'll watch from the sidelines and try to pick the winners. The exercise may also help to spot losers in the overburdened supply chain. I think the only fear you'll have to fear is fear itself. Espouse reform! Thanks for sharing your thoughts. Link to comment Share on other sites More sharing options...
DooDiligence Posted December 21, 2019 Share Posted December 21, 2019 HMO Act of 1973 was one of the most detrimental policies to healthcare in the US. The tax code only allowed businesses to deduct healthcare premiums instead of allowing individuals to do so. This is the foundation that cemented this insurance relationship between employer and employee in the US. Before this policy pretty much everyone could pay for routine visits in cash. Healthcare was centered around reducing cost and insurance was viewed as a need to protect against catastrophic incidents. There is essentially no incentive to reduce healthcare costs with the current handcuffs on the healthcare system. This tethering of healthcare to employers is probably harmful in other ways as well as companies are forced to deal with this expense and individuals are choosing jobs based on the healthcare. An interesting aspect is that all attempts aiming for cost containment that have been tried have not been successful so far. A strategy would be to try more of the same with an expected different result, another strategy would be to reframe the foundations which is basically not possible. Still, using the heart stent example below, it appears that the system may be ready for some significant (and constructive) changes. If you play with the link provided by Spekulatius, you can find that the cost to insert heart stents (cost of procedure and estimated cost of stent) is a large multiple compared to other countries. Because of innovation, it is understandable that the cost may be superior but clearly not enough to be a multiple. Also, it is becoming increasingly clear (evidence-based, multiple references available upon request including a large international study just published last November) that stents mostly do not result in significant benefits in chronic and stable heart disease. Despite this, in all countries but especially in the US (by a large margin), stents continue to be inserted without any restraint. Finally, some groups, who are aligning incentives, are designing ingenious protocols to replace invasive procedures and expensive drugs. We are only at the forefront of this wave but it is coming. If I'm right, you may want to adjust sales and profitability for those involved in the stent market: Medtronic (MDT), Cardinal Health (CAH), Abbott (ABT), Boston Scientific (BSX), Becton Dickinson (BDX), Terumo and MicroPort Scientific on the OTC market. https://www.eurekalert.org/pub_releases/2019-08/kp-kpr082719.php I thought you had left Edwards Lifesciences out in order to spare me any angst, so I did some digging & when I couldn't find anything conclusive, I sent an email to investor relations asking if they were still producing the LifeStent line. I was told that they sold that line to Bard in 2007 & do not have any material revenue from stents. That reinforces my opinion of EW management. I look forward to owning this indefinitely. Link to comment Share on other sites More sharing options...
Cigarbutt Posted December 21, 2019 Share Posted December 21, 2019 ... I thought you had left Edwards Lifesciences out in order to spare me any angst, so I did some digging & when I couldn't find anything conclusive, I sent an email to investor relations asking if they were still producing the LifeStent line. I was told that they sold that line to Bard in 2007 & do not have any material revenue from stents. That reinforces my opinion of EW management. I look forward to owning this indefinitely. -----)side note vs above I've looked briefly at EW a few times (including after some comments of yours). It makes sense that this company has done very well over the long term (that's easy to say now) and it is reasonable to expect that the future will look like the past. The Fogarty and the Swan Ganz catheters were landmarks and they seem to be a the right place with their newer valves (really fascinating stuff). I understand that they had developed peripheral blood vessel stent technology which they sold to Bard and that ended up eventually in BDX's portfolio. It seems that management felt that they had not achieved sufficient scale for profitability. Some could say that this looks now like a nifty-fifty stock after such growth and such recognition of growth. Obviously, the best time to buy these kinds of stocks is during downturns but that's obvious mostly in hindsight. If you have a long term mindset, if your return objectives are relatively reasonable and if the future ends up similar to the past, a PE of 61.1 can make sense. https://www.macrotrends.net/stocks/charts/EW/edwards-lifesciences/pe-ratio http://csinvesting.org/wp-content/uploads/2015/03/valuing-growth-stocks-revisiting-the-nifty-fifty.pdf Congratulations for this pick and good luck for the future. -----)Back to a better health... Link to comment Share on other sites More sharing options...
DooDiligence Posted December 21, 2019 Share Posted December 21, 2019 ... I thought you had left Edwards Lifesciences out in order to spare me any angst, so I did some digging & when I couldn't find anything conclusive, I sent an email to investor relations asking if they were still producing the LifeStent line. I was told that they sold that line to Bard in 2007 & do not have any material revenue from stents. That reinforces my opinion of EW management. I look forward to owning this indefinitely. -----)side note vs above I've looked briefly at EW a few times (including after some comments of yours). It makes sense that this company has done very well over the long term (that's easy to say now) and it is reasonable to expect that the future will look like the past. The Fogarty and the Swan Ganz catheters were landmarks and they seem to be a the right place with their newer valves (really fascinating stuff). I understand that they had developed peripheral blood vessel stent technology which they sold to Bard and that ended up eventually in BDX's portfolio. It seems that management felt that they had not achieved sufficient scale for profitability. Some could say that this looks now like a nifty-fifty stock after such growth and such recognition of growth. Obviously, the best time to buy these kinds of stocks is during downturns but that's obvious mostly in hindsight. If you have a long term mindset, if your return objectives are relatively reasonable and if the future ends up similar to the past, a PE of 61.1 can make sense. https://www.macrotrends.net/stocks/charts/EW/edwards-lifesciences/pe-ratio http://csinvesting.org/wp-content/uploads/2015/03/valuing-growth-stocks-revisiting-the-nifty-fifty.pdf Congratulations for this pick and good luck for the future. -----)Back to a better health... I bought this in 2013 when they were fighting a patent infringement lawsuit over TAVR with Medtronic. www.dicardiology.com/article/us-jury-finds-medtronic-corevalve-infringes-edwards-transcatheter-valve-patent I was working in Brasil at the time & spent a month reading up on heart function & watching youtube videos on valve replacement. There was also a group of attorneys trying to find a lead plaintiff for a shareholder lawsuit against Edwards, claiming they had overstated the potential for TAVR. I thought this was bogus as Mussalem had clearly stated that the product was indicated for at risk patients only, who couldn't tolerate having their chests cracked open for a traditional valve replacement, and that the procedure would add upwards to 2 years to their lives. I also guessed correctly that TAVR would slowly get expanded indications. They spent considerably less than MDT to get into this space. www.statnews.com/2019/03/19/the-astounding-19-year-journey-to-a-sea-change-for-heart-patients/ I felt like I understood it well enough & bought in. No lead plaintiff was found in the shareholder suit & they prevailed over MDT. As I said before, the LEAP Calls zoomed up within a year of purchase & I sold them to reduce cost basis in the equity to nearly nothing. Since then, I've sold off some shares to reduce the position & what's left is still many times over what I initially paid. I acknowledge the role of luck. --- The moral of the story: the allure of an early success can easily suck you into taking too much risk when you don't have enough conviction over both price and timing. Temperament and thinking through the worst case scenario are vitally important. My mistake with MO was a direct result of the success with the EW LEAPS. I had waited for years in search of a similar setup & thought I'd found one. Amateur speculator. --- I hope for just one more plate of acorns over the next decade (maybe BRK). --- Sorry for the thread highjack but I get so few occasions to outline a successful investment which was truly based on a measure of due diligence (instead of doo doo diligence). To actually wing another one for a future gain & share it here (before the gain) would be rewarding. Link to comment Share on other sites More sharing options...
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