Transcript Healthcare, once considered to be a privilege enjoyed by only those

As little as 35 years ago, when Medicare services
commenced, the process of making basic medical
care available to citizens 65 years of age and older
was considered an affordable governmental
program. Since then many additional programs and
services have been added under the umbrella of
government funded healthcare. Advances in
diagnostic, pharmaceutical, surgical, and nonsurgical treatments has resulted in the cost of
healthcare increasing to the point where a serious
potential exists for a system wide collapse to occur
within the next several decades. In an effort to
combat excessive spending, and still provide quality
care, there have been many changes initiated
industry wide. These changes, often little known to
the general public, are meant to be the medicine that
helps cure the ailing economics of healthcare. But
like most medicines, there may be unseen negative
side effects.
Photo by permission Harrington/Pearson
U.S.S. Healthcare:
Can We Plug the Holes in a Sinking Ship?
By James Harrington RN
Healthcare, once considered a privilege
enjoyed only by those who could afford it
is now thought of as a right. Programs
like Medicare and Medicaid, and
speeches from politicians either
promising or demanding healthcare for all
U.S. citizens have helped to forge this
new American mentality. Although this
fundamental change in expectations has
occurred, two primary facts remain:
healthcare is expensive, and the money to
pay for it has to come from somewhere.
Is there a doctor in the house?
During the final decade of the twentieth century
physicians began seeing significant reductions in
reimbursements from government funded healthcare
programs such as Medicare and Medicaid.
Traditionally the majority of physicians had always
been independent, having an office and employing a
small staff. Once cash flow began to be seriously
affected, (an estimated 7% reduction in revenue
between 1995 and 2003) many practitioners began
seeking safe harbor by use of physician/hospital
partnerships (DeBoer).
Although it was often economically difficult for
hospitals to finance these physician practices, it was
important to keep these providers from going to
other healthcare facilities and taking their patients
with them. Unfortunately, many of the early
contracts with physician providers became
financially oppressive to the hospitals that had
employed them, causing an estimated loss of
$100,000 per physician practice financed. During
that period there was a definite initial reduction in
government healthcare costs, however the strain on
facilities and the potential of reduced services
relative to negative cash flow caused many hospitals
to shut down, or request government subsidies to
offset losses.
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This negated any long term government
savings and actually reduced access to
healthcare in many of the poorer areas of
the country. In recent years there has been
a renewed interest in the
physician/hospital alliance. Many
physicians have lowered their wage
expectations and focused more on having
adequate time off, something that would
not routinely occur in private practices.
Physician/healthcare facility contracts are
being set up so that a base salary is
negotiated, most often lower than an
average independent physician’s income,
but with incentives for productivity. Now
hospitals may make a small profit over the
wage cost of the physician practice, as
well as benefit from any increased patient
contacts when the physician works for
additional incentive. In this latest round of
physician/hospital partnerships there may
finally be a true and measurable cost
savings in healthcare.
Can I Borrow a Pen?
Recently healthcare workers have faced
perhaps one of the biggest changes to
affect their professions since the first
penicillin mold was scraped from
yesterday’s bread to help cure patientssomebody took away their free pens! On
July 10th, 2008 the pharmaceutical
industry voluntarily revised their rules for
advertising to physicians and healthcare
workers and in doing so eliminated giving
out, among other things, free pens. So how
much could a few pens cost? In 2006
approximately $6.7 billion dollars were
spent on advertising various medical and
pharmaceutical products to healthcare
professionals (O’Reilly). A large portion
of these funds were devoted to planting
advertisements in hospitals and physician
offices via pens, pads of paper, coffee
mugs and pretty much anything else a
company could stamp it’s logo on.
In order to level the playing field for all
competitors the majority of corporations
agreed to this mutual reduction in excess
spending. Many companies such as
AstraZeneca PLC, Eli Lilly and Co., and
Merck & Co. Inc., pledged to follow these
new advertising guidelines. (O’Reilly).
Until this change the aggressive
marketing of newer, costlier medications,
even if they were not shown to improve
results over existing ones, had always
allowed manufacturers to take advantage of
physician desires for a better cure
(Ridlington, Russo Sec1:3). A reduction in
marketing may mean less of a rush towards
prescribing. This change could potentially
produce a long term reduction in expense,
should the drug not turn out to be any better
than established, cheaper generic
medications.
The important question to ask here is how
will a multi-billion dollar reduction in
corporate costs affect the high cost of
healthcare? As with all companies, the price
that products can be sold for is dependant on
the cost to produce, package, distribute and
advertise those products. If this was a behind
closed doors agreement, made by major
corporations to increase their profit margins,
I would say that we should not expect any
real future savings on these products. The
fact that it was done out in the open makes it
rational to expect that there might be a
modest affect on prices.
Ok so not exactly something to write
home about, which is good because there is
nothing to write with!
James Harrington Pen Picture
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Generically speaking, it’s all goodright?
It’s no real news that the use of generic
drugs saves money. A study in 2008 found
that in the United States generic medications
made up over 63% of all prescriptions, yet
only represented 13% of the total funds spent
on pharmaceuticals (Shrank, Cox, Fischer,
Mehta and Choudhry). Generics are basically
the same as their name brand equivalents with
respect to active ingredients, but the chemical
formulation may vary significantly in regards
to secondary or inert ingredients involved.
Modern day testing requirements help to
ensure that this alteration to the original
medication’s recipe does not greatly affect its
efficacy.
Lower cost for the same effect, could this
be as good as it sounds? Well, not quite. It is
absolutely true that there are significant
financial savings related to the use of generic
medications, but over the past several years
there has been an unforeseen negative side
effect related to the production of generic
medications.
As the manufacturers of the name brand
drugs face issues related to an ever shrinking
market share, significant measures are being
taken to cut costs and increase efficiency.
These measures are being parried by generic
medication producers who have initiated
similar efficiency strategies. Among shared
measures, the process of producing
medications in bulk has been replaced with
limiting production to meet average consumer
demand. This practice may aid in corporate
efficiency, but it does so at the cost of market
flexibility.
Recent drug recalls and this lack of
flexibility have resulted in nationwide
shortages of drugs such as propofol, an
important agent used by anesthesia providers,
and anectine, a paralyzing agent often used to
assist in intubation (placing a breathing tube
into a patient’s airway) during emergency
procedures. These are only two examples of
the 157 drug shortages reported in 2009, with
a continued upward trend seen in 2010
(Jensen).
The significant increase in production of generic
medications in the United States has, in some
cases, caused once profitable name brand
prescription drugs to decrease in value to the point
that many manufacturers have simply stopped
producing them. Because the majority of the
primary research for a specific medication is
performed by the owner of the original name
brand patent, future monitoring of side effects
falls to the generic producers who may be
unwilling or unable to carry on long term studies
due to economic factors. In that case the option of
some generic pharmaceutical producers is to
simply cease production. This creates an
environment where medications may become
scarce or even absent from our pharmaceutical
arsenal.
The use of generic medications is definitely
having a positive effect on healthcare’s financial
bottom line, but to what extent these savings may
affect future quality of care remains to be seen.
As the U.S.S. Healthcare plots its course
through the rough seas of an ever worsening
economic storm, there are many changes
occurring, both in public and behind the scenes,
aimed at plugging the holes in what some would
call a sinking ship. For all of the potential side
effects that each of these changes may cause there
remains the simple truth that if we do nothing this
ship will sink, and take us all down with it! JH
References:
O'Reilly, Kevin B. "Drug Industry: No More Free Pens, Pads or
Mugs." Amednews.com. American Medical Association, 28 July 2008.
Web. 22 Nov. 2010.
DeBoer, Aaron. "Physician Employment 2.0." Hospitals & Health
Networks, H&HN, Hospital and Health Care Business Executives,
Health Care Business Executives, Hospital Business Executives,
Health Care Management Magazine. American Medical Association,
21 Sept. 2009. Web. 22 Nov. 2010.
Jensen, Valerie, and Bob A. Rappaport. "The Reality of Drug
Shortages — The Case of the Injectable Agent Propofol." Health
Policy and Reform. New England Journal of Medicine, 16 June 2010.
Web. 22 Nov. 2010.
Ridlington, Elizabeth, and Michael Russo. "Diagnosing the High Cost
of Health Care: How Spending on Unnecessary Treatments,
Administrative Waste, and Overpriced Drugs Inflates the Cost of
Health Care in California - U.S. PIRG."
Cdn.publicinterestnetwork.org. CALPIRG Education Fund, June
2008. Web. 22 Nov. 2010.
Shrank, W. H., E. R. Cox, M. A. Fischer, J. Mehta, and N. K.
Choudhry. "Patients' Perceptions Of Generic Medications." Health
Affairs 28.2 (2009): 546-56. Web. 22 Nov. 2010.
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