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CVS, Aetna see UnitedHealth and Amazon as growing threats

The Queen of the Amazons visits Alexander the Great

By CHAD TERHUNE

For Kaiser Health News 

 

As soon as news surfaced last week about the potential merger of CVS Health and Aetna, all eyes turned to the looming threat from Amazon.

The online retailer’s flirtation with the pharmacy business is a factor, no doubt. But many industry experts say CVS and Aetna have another huge competitor on their minds: UnitedHealth Group.

UnitedHealth is best known as the nation’s largest health insurer, with more than 45 million members in the U.S. But behind the scenes, it has extended its reach deep into America’s medicine cabinets, operating rooms and doctor offices.

Its Optum unit fills more than 100 million prescriptions per month as a pharmacy benefit manager, poaching big customers from rivals CVS and Express Scripts. UnitedHealth owns more than 400 surgery centers and urgent-care clinics and runs medical practices for about 22,000 physicians across the country.

“People have gotten carried away with Amazon,” said Ana Gupte, a health care analyst at Leerink Partners. “CVS and Aetna is an Optum wannabe. UnitedHealth is the winning business model, and Optum is showing the way.”

UnitedHealth’s expansion into dispensing prescription drugs and treating patients has put the company on track to reach $200 billion in annual revenue this year and profits for the first nine months of 2017 already topped $7 billion.

UnitedHeath is admired on Wall Street for its dependable results and diverse stable of businesses, which helps insulate it from rough patches in the insurance sector. However, the prospect of further industry consolidation alarms some consumer advocates and health policy experts. And they say UnitedHealth hasn’t always been a good role model.

In 2009, U.S. Senate investigators said the company built an industrywide database that deliberately understated what insurers should pay for out-of-network care, exposing consumers nationwide to hundreds of millions of dollars in extra charges.

More recently, patients have accused the company’s prescription drug business, OptumRx, of overcharging for routine medications in order to pocket a pharmacy “clawback” that boosts profits. The company has denied any wrongdoing in response to lawsuits over the drug pricing.

Employers, lawmakers and consumer groups accuse the three largest pharmacy middlemen — Express Scripts, CVS and UnitedHealth — of keeping drug prices high and pocketing too many of the discounts they negotiate with pharmaceutical companies.

Consumer advocates also are concerned about the prospect of companies mining a vast supply of consumer data to maximize profits rather than improve care.

“It is hard to find instances where these very large companies used their market power for the good of consumers, rather than for their shareholders,” said Lynn Quincy, a consumer advocate and director of the Healthcare Value Hub at the Altarum Institute, a nonprofit think tank. “The lack of transparency at these really large companies is appalling. That’s why we’re skeptical it will make things better.”

In a statement, UnitedHealth said it’s committed to “helping people live healthier lives” and its Optum unit is trying to make the entire health system work better.

In the past, company executives have said they’re fighting on behalf of employers and consumers against high costs, as well as poor outcomes and mind-boggling complexity. Before the merger news, executives at Aetna and CVS had already hinted at working together to tackle many of the same issues through the retailer’s vast network of stores.

Last week, The Wall Street Journal broke the news about the potential merger between CVS and Aetna, which could be worth more than $66 billion. CVS and Aetna say they won’t comment on market rumors or speculation.

In general, these companies are trying to address problems familiar to most Americans: poor coordination of care. Doctors rarely talk to each other. It’s incredibly hard to share medical records among providers or even with patients. Despite a lot of talk about linking pay to performance, a surprising amount of medical care is still reimbursed under the old-fashioned fee-for-service model that rewards quantity over quality.

For some experts, CVS and Aetna are well-positioned to fix many of those issues and that might make their deal more likely to pass muster with antitrust officials.

UnitedHealth, which has reached into everything from home health care to billing technology, has won praise for some of its efforts. One 2015 study published in Health Affairs found that the company’s use of house calls helped reduce costly hospital admissions for Medicare patients by 14 percent.

“One of the big failures of the U.S. health care system has been fragmentation, and these vertical mergers are trying to cure that problem,” said Thomas Greaney, a former federal antitrust lawyer and now a professor at the University of California’s Hastings College of the Law in San Francisco.

“You want to encourage efficiencies and integration that helps promote better care and lower costs. But you don’t want that to turn into a local monopoly,” he added.

Farzad Mostashari, a former official in the Obama administration who has studied health care competition, said it’s too soon to tell whether a CVS-Aetna deal would be good or bad for consumers. But Mostashari, who now heads Aledade, a tech start-up that works with doctors, said it warrants intense scrutiny of the more subtle ways it could put rivals at a disadvantage.

“These vertical mergers can create competitive challenges where you use your dominant market position to tip the ball to yourself in another area,” he said.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation

KHN’s coverage of prescription drug development, costs and pricing is supported in part by theLaura and John Arnold Foundation.


Amazon threat one big reason for CVS, Aetna to merge

FierceHealthcare reports that  industry analysts say that multiple market forces combine to make drugstore behemoth CVS’s possible takeover of giant insurer Aetna (based in Hartford but moving to New York)  attractive  for both two companies. CVS is based in Woonsocket, R.I.

“One of the biggest ones is Amazon’s possible entrance into the prescription drug distribution business, which Leerink Partners analyst Ana Gupte says is a ‘massive threat’ to CVS, both in the pharmaceutical market and front-store sales,” Fierce reported.

The St. Louis Post Dispatch has reported that the online retail giant has already been approved by 12 states to become a wholesale pharmaceutical distributor there.

If the CVS-Aetna merger happens, CVS could respond to the Amazon-induced market pressure on its retail pharmacies by using more of its retail spaces to offer such healthcare services  as labs and dialysis, say analysts for Jeffries Group, the investment bankers.

Aetna, for its part,  has powerful reasons to want a merger with CVS.

For one, Fierce reports, “CVS’s capabilities, including its Minute Clinics and its Coram home infusion business, could help Aetna improve health outcomes and reduce costs. Aetna’s leaders have also long expressed a desire to move care closer to the consumer, and they’ve hinted at the possibility of working closer with CVS once the insurer’s long-term pharmacy benefits management  (PBM)contract with CVS expires in 2020.”

Gupte  also said that that Aetna has probably felt it should  enter the PBM business given the  announcement by another big insurer, Anthem that it would build its own  PBM partnership with CVS—and UnitedHealth’s success with its in-house PBM, OptumRx.

Aetna “likely sees solidifying a lasting relationship with its preferred partner CVS as a way to leave [Anthem] jilted at the altar,” she said.

Fierce reported that “Gupte pointed out that Anthem was likely not looking for a long-term relationship with CVS anyway, as its ultimate goal was to ‘go it alone’ with its IngenioRx PBM brand. Still, she predicted that Anthem might walk away from its pact with CVS if the company consummates a deal with Aetna.”


Companies launch their own healthcare reform

Having given up on Congress, dozens of companies have launched an initiative called the Health Transformation Alliance to change how their employees get healthcare.

Robert Andrews discusses the initiative in a piece in The New York Times. Among his comments:

“Rather than having individual companies contract with benefit managers, we worked with CVS and OptumRx on an approach under which we gain more access to drug companies’ pricing structures, strengthening our position in cost negotiations. That results in lower prices for the same medicines and allows the alliance members to achieve considerable savings. We also are working to ensure that formularies, the lists of prescription medicines covered by insurers, are the right ones for patients, not just the most profitable ones. This can increase the use of lower-cost generic drugs.”

“We and our employees spend more than $5 billion each year on four procedures and ailments: knee replacements, hip replacements, back pain and diabetes. These common problems account for 20 percent of the money our companies spend on treatment. Starting next year, we will create new medical networks in three major cities that will focus on delivering better results for these ailments and procedures at better prices. Our new networks are likely to compete with some doctors and hospitals that don’t have as good a treatment record. The health care arena needs more competition, and we will encourage it.’

To read this important piece, please hit this link.


Manic marketing of premature flu shots

 

flushot

By JULIE APPLEBY

For Kaiser Health News

The pharmacy chain pitches started in August: Come in and get your flu shot.

Convenience is touted. So are incentives: CVS offers a 20-percent-off shopping pass for everyone who gets a shot, while Walgreens donates toward international vaccination efforts.

The start of flu season is still weeks — if not months — away. Yet marketing of the vaccine has become an almost year-round effort, beginning when the shots become available in August and hyped as long as the supply lasts, often into April or May.

Not that long ago, most flu-shot campaigns started as the leaves began to turn in October. But the rise of retail medical clinics inside drug stores over the past decade — and state laws allowing pharmacists to give vaccinations — has stretched the flu-shot season.

The stores have figured out how “to deliver medical services in an on-demand way” which appeals to customers, particularly millennials, said Tom Charland, founder and CEO of Merchant Medicine, which tracks the walk-in clinic industry. “It’s a way to get people into the store to buy other things.”

But some experts say the marketing may be overtaking medical wisdom since it’s unclear how long the immunity imparted by the vaccine lasts, particularly in older people.

Federal health officials say it’s better to get the shot whenever you can. An early flu shot is better than no flu shot at all. But the science is mixed when it comes to how long a flu shot promoted and given during the waning days of summer will provide optimal protection, especially because flu season generally peaks in mid-winter or beyond. Experts are divided on how patients should respond to such offers.

“If you’re over 65, don’t get the flu vaccine in September. Or August. It’s a marketing scheme,” said Laura Haynes, an immunologist at the University of Connecticut Center on Aging.

That’s because a combination of factors makes it more difficult for the immune systems of people older than age 65 to respond to the vaccination in the first place. And its protective effects may wear off faster for this age group than it does for young people.

When is the best time to vaccinate? It’s a question even doctors have.

“Should I wait until October or November to vaccinate my elderly or medically frail patients?” That’s one of the queries on the website of the board that advises the Centers for Disease Control and Prevention on immunizations. The answer is that it is safe to make the shots available to all age groups when the vaccine becomes available, although it does include a caution.

The board says antibodies created by the vaccine decline in the months following vaccination “primarily affecting persons age 65 and older,” citing a study done during the 2011-2012 flu season. Still, while “delaying vaccination might permit greater immunity later in the season,” the CDC notes that “deferral could result in missed opportunities to vaccinate.”

How long will the immunity last?

“The data are very mixed,” said. John J. Treanor, a vaccine expert at the University of Rochester medical school. Some studies suggest vaccines lose some protectiveness during the course of a single flu season. Flu activity generally starts in the fall, but peaks in January or February and can run into the spring.

“So some might worry that if [they] got vaccinated very early and flu didn’t show up until very late, it might not work as well,” he said.

But other studies “show you still have protection from the shot you got last year if it’s a year when the strains didn’t change, Treanor said.

In any given flu season, vaccine effectiveness varies. One factor is how well the vaccines match the virus that is actually prevalent. Other factors influencing effectiveness include the age and general health of the recipient. In the overall population, the CDC says studies show vaccines can reduce the risk of flu by about 50 to 60 percent when the vaccines are well matched.

Health officials say it’s especially important to vaccinate children because they often spread the disease, are better able to develop antibodies from the vaccines and, if they don’t get sick, they won’t expose grandma and grandpa. While most people who get the flu recover, it is a serious disease responsible for many deaths each year, particularly among older adults and young children. Influenza’s intensity varies annually, with the CDC saying deaths associated with the flu have ranged from about 3,300 a year to 49,000 during the past 31 seasons.

To develop vaccines, manufacturers and scientists study what’s circulating in the Southern Hemisphere during its winter, which is our summer. Then — based on that evidence — forecast what flu strains might circulate here to make vaccines that are generally delivered in late July.

For the upcoming season, the vaccines will include three or four strains, including two A strains, an H1N1 and an H3N2, as well as one or two B strains, according to the CDC. It recommends that everyone older than 6 months get vaccinated, unless they have health conditions that would prevent it.

The vaccines can’t give a person the flu because the virus is killed before it’s included in the shot. This year, the nasal vaccine is not recommended for use, as studies showed it was not effective during several of the past flu seasons.

But when to go?

“The ideal time is between Halloween and Thanksgiving,” said Haynes at UConn. “If you can’t wait and the only chance is to get it in September, then go ahead and get it. It’s best to get it early rather than not at all.”


Rise of partnerships in ‘convenient care’

A post in the New England Journal of Medicine’s Catalyst blog reports that the rise of “convenient care” in the hospital sector is driving a wave of partnerships, including joint ventures, nonexclusive arrangements and telehealth alliances.

The piece looks at such partnerships as:

  • Non-exclusive agreements with the likes of  such nonhospital enterprises as CVS MinuteClinics, with their big customer bases and low financial risk.
  • Joint ventures that may appeal to providers willing to make a capital investment in return for more ownership and equal representation on boards of directors.
  • Leased-space arrangements in which  hospital systems operate convenient-care clinics themselves, but within a retail space.
  • Telemedicine partnerships that might include healthcare providers paying a fee for provide services and technology in return for branding and referrals.

CVS plowing ahead in medicine on demand

CVSminuteclinic

Andrew Sussman, M.D., executive vice president and associate chief medical officer of CVS Health, discusses how the huge drugstore chain will continue to expand in an age of retail medical care as provided in its MinuteClinics.

As this Hospitals & Health Networks piece reports:

“Telehealth is one growth area that CVS is warming to as a way to provide low-cost services, and consumers are, too. Oliver Wyman’s study estimates that 57 percent of consumers are now familiar with the concept of a health and wellness visit conducted remotely via voice or video chat. Some 95 percent of CVS customers said they thought a telehealth visit was ‘just as good’ or ‘better’ than the traditional model, Dr. Sussman added.”

“CVS has partnered with three players in the telehealth space — Doctor on Demand, American Well and Teladoc — aiming to build out its capabilities. Pilots tied to those partnerships include making telehealth services available through the CVS app, having one company beam its doctors into CVS telehealth clinics to look at rashes and other superficial ailments or sending patients from a telehealth provider’s app into MinuteClinic if further in-person consultation is required.”


Retail clinics might be adding to nation’s medical costs

clinic

By CHAD TERHUNE

For Kaiser Health News

Retail clinics, long seen as an antidote to more expensive doctor offices and emergency rooms, may actually boost medical spending by leading consumers to get more care, a new study shows.

Rather than substituting for a physician office visit or trip to the hospital, 58 percent of retail clinic visits for minor conditions represented a new use of medical services, according to the study published Monday in the journal Health Affairs. Those additional visits led to a modest increase in overall health care spending of $14 per person per year.

“This challenges the conventional wisdom that retail clinics save the healthcare system money,” said Dr. Ateev Mehrotra, a co-author of the study and an associate professor of healthcare policy at Harvard Medical School. “The increase in spending from new utilization trumps the savings we saw from replacing doctor visits and the emergency department.”

There are more than 2,000 in-store clinics nationwide, and they handle about 6 million patient visits annually, the study said.

They are popular with many consumers who like strolling in for care with no appointment, as opposed to waiting hours elsewhere, and they are open seven days a week. These small clinics are typically run by nurse practitioners and treat infections, mild sprains and handle other preventive care such as immunizations.

CVS Health Corp.’s MinuteClinic is the industry leader with more than 1,100 locations. Many health insurers and employers encourage people to use these clinics, in some cases waiving co-payments.

But Mehrotra said policymakers and health insurers should realize that promoting more convenient options, from retail clinics to online doctor visits, may spur more use and higher costs.

“As we make things more convenient people will use it a lot more,” said Mehrotra, also a researcher at Rand Corp., a nonprofit think tank in Santa Monica, Calif.

The study doesn’t contradict earlier research that found retail clinics provide care that costs 30 to 40 percent less than similar care provided at a physician’s office and that the treatment for routine illnesses was of similar quality. But it suggests those savings are more than offset by increased use of medical services.

Dr. Andrew Sussman, president of the MinuteClinic unit at CVS, criticized the study as “flawed” and too reliant on old data. He said about half of MinuteClinic patients don’t have a regular family physician and his clinics are able to prevent minor conditions from becoming major illnesses requiring costlier care.

The study “is not an accurate assessment of retail clinic cost savings and value,” Sussman said. “It is a step backward to think of people who did not have a primary-care physician and get care as excess utilization.”

The study’s authors couldn’t assess the impact retail clinics have on overall medical use and total spending because they didn’t have data on inpatient care or prescription drug use — two large components of healthcare spending.

The researchers looked at data on 3 million Aetna Inc. members from 2010 to 2012 and their medical use tied to 11 low-acuity conditions, such as sinusitis and urinary-tract infections. The patients were divided between users of retail clinics and people who did not visit them.

Aetna, the nation’s third-largest health insurer, said it remains supportive of retail clinics and looks forward to further studies examining the longer-term impact on costs and patient outcomes. In particular, Aetna and other health care purchasers want to know if retail clinics can help diabetics and others battling costly chronic illnesses.

“Retail clinics are a convenient and flexible option that are available during extended hours, while traveling, and for minor health needs,” the company said in a statement. “They are also a good option for consumers who do not have a primary-care physician.”

In this latest study, researchers found that much of the new use was for ailments that typically cleared up on their own, such as a fever, cough or runny nose. But Mehrotra said he doesn’t want the study to be seen as criticizing people for seeking medical help. Rather, he wants to emphasize that convenience is going to increase utilization.

“If the retail clinics wouldn’t have been around, people would have stayed home,” he said. “New utilization accounts for most retail clinic visits.”

The researchers noted some limitations to the study. It was confined to the commercial insurance population, excluding people on Medicare, Medicaid or the uninsured. It didn’t factor in benefits such as the time saved by going to a retail clinic.

And Mehrotra said this study focused on the initial visit. It looked at whether it was new utilization or replaced a more expensive option. Among visits deemed to be substitution, 93 percent replaced a doctor visit and 7 percent were in place of going to an emergency room.

Tom Charland, an industry analyst and chief executive of research firm Merchant Medicine, said retailers have had mixed results with these in-store clinics. CVS and Kroger continue to open new locations while Wal-Mart Stores Inc. and Target Corp. pulled back on the business after lackluster results, he said.

These clinics have been seen as one way to address a lack of primary-care doctors in some areas of the country as the federal health law expands insurance coverage to millions of Americans. Some major health systems, including the Cleveland Clinic and UCLA, have partnered with retail clinics to help meet the increased demand.

Sussman said about half of MinuteClinic patients are seen on weekends or during evening hours when most physician offices are closed. “The Affordable Care Act is bringing millions of new patients into the system, and it’s necessary to provide alternate types of care,” Sussman said.

But Mehrotra said health plans and employers should carefully consider how they cover care at retail clinics. “If the goal is to lower costs,” he said, “then encouraging use of retail clinics may not be a successful strategy.”

 


Bigger clinic competitor

 

Walgreens’s plan to buy Rite Aid for about $9.4 billion means that CVS will have a more powerful competitor to deal with. The would-be merger partners together have about 13,000 U.S. stores.

If antitrust regulators approve the deal, it means that hospital systems and physician groups will have both a stronger collaborator and a stronger competitor — the latter given the big push by drugstore chains to open many more clinics in their stores with some services competing with those  of hospitals and physicians.

Further, the chain would have more bargaining power with the drug companies.

 

 

 

 

 

 

 

 


Open your mouth for the dental therapists

dental

Text and WGBH podcast:

What has been happening with  the rise of such non-physician clinicians as nurse practitioners and physician assistants is now  happening in dental care, too, with the appearance of “dental therapists”. They work in the space between dentists and dental hygienists.

It’s a matter of healthcare access and cost.

Many middle-class patients forgo dental care because it is very expensive, in part because dentists have demanded and gotten very high incomes. Consider that the average net income for a general dentist exceeds $180,000 — more than the average of around $170,000 for primary-care physicians. In some places poorer people on Medicaid can get dental care, though such access can vary quite a bit across America.

Further hurting access is that dental insurance, if you have it, usually provides very skimpy coverage, forcing most patients to make very large out-of-pocket payments. It’s enough to scare a lot of people away from getting the treatment they need. And course poor dental care can lead to other health problems, including heart disease.

So  some states,  although often opposed by dentist organizations fearful of reduced incomes for their members, are authorizing a new classification called “dental therapists” to provide routine care at considerably lower prices than those charged by dentists.

We’d bet that pressure from payers will lead to a rapid expansion in the number of this new kind of dental practitioner. We may even see them soon in retail clinics run by CVS and other drugstore chains.

 


The importance of knowing when/how to stop

 

stop

Tamara Rosin, writing in Becker’s Hospital Review, reports on how various healthcare organizations stopped things to improve patient care and other operations.

Her examples include:

Cleveland Clinic removing  McDonald’s from its cafeteria; three prominent academic medical centers  moving to ban low-volume surgeries; New York City hospitals agreeing to ban reality TV filming without patient approval; Mayo Clinic stopping requiring an outmoded dress code for women, and CVS stopping its sale of  tobacco products.

She notes: “Stopping one thing doesn’t just have to be an effect of starting something else. Rather, the deliberate departure from existing approaches, systems and norms should be given equal consideration as healthcare organizations look for ways to innovate and improve the care they provide. Stopping something might be the best innovation for a hospital, even if it is uncomfortable to break from the norm.”

“Change requires that you break from habit,” Manuel Hernandez, M.D., MBA, practicing emergency physician and leader of CannonDesign’s Health Advisory Services, told Ms. Rosin. “Many of the steps and processes people are engaged in — in any industry — can become almost automatic and oppressive.”

 

 

 

 

 


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